clock menu more-arrow no yes mobile

Filed under:

Full transcript: Venture capital firm Upfront Ventures’ Mark Suster on Recode Decode

Silicon Valley is still important, but don’t underestimate LA Tech.

If you buy something from a Vox link, Vox Media may earn a commission. See our ethics statement.

Surfers in California
Dude, it’s LA.
Bruce Bennett / Getty

On this episode of Recode Decode, hosted by Kara Swisher, Upfront Ventures Managing Partner Mark Suster talks about leading the oldest and largest venture capital firm in Los Angeles.

You can read a write-up of the interview here or listen to the whole thing in the audio player above. Below, we’ve also provided a lightly edited complete transcript of their conversation.

If you like this, be sure to subscribe to Recode Decode on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts.

Kara Swisher: Hi, I’m Kara Swisher, executive editor of Recode. You may know me as the new CEO of Cambridge Analytica, but in my spare time I talk tech, and you’re listening to Recode Decode from the Vox Media podcast network.

Today in the red chair is Mark Suster, a managing partner at Upfront Ventures. He joined the venture capital firm in 2007, but before then founded two companies, Build Online and then Coral, which was acquired by Salesforce. Mark, welcome to Recode Decode.

Mark Suster: Thank you for having me, but the red chair looks black to me.

I know, we have a red chair. We could bring it in for you if you need to. That’s all right.

I would feel more comfortable if you had a red chair.

Well, we’ll try. You can go sit in it later after we’re done with the interview.

Okay. Thank you.

He’s here in our offices in San Francisco, but Mark is from Los Angeles where Upfront Ventures is. We want to talk about a wide range of things including LA and everything else, and also your recent sale of Ring, which was one of your companies, to Amazon, which was a big deal. I have Ring at my house, now Amazon runs everything in my house.

Do you like it?

I love it, but I was trying to get Amazon and Google out of my house because they do everything, and now Amazon’s ...

Well, the nice thing about Ring is that it is outside your house. The camera’s facing out rather than in, which is ...

I know.

Well, it’s an important point because it was important to Jamie that the camera was facing out.

You know what, I love Ring. They’ve been a sponsor on this podcast, but I actually used the product before that. It’s a great product. We’ll talk about that in a little bit, but I wanted to talk about a whole bunch of things including being in LA and things like that.

Why don’t we go over your history? I like to go through peoples resume, essentially. Why don’t you tell me a little bit about how you got started in the business, and then we’ll get into LA and investing and where you think trends are going. You’re pretty much the leading LA venture capitalist, right? Would you say that?

Let me say this. You worded it that I’m from LA. I’m actually not from LA. I grew up in Northern California, and I grew up a software developer. I started my career as a programmer.

Talk about that.

I point that out because having a perspective of Silicon Valley where I built one of my startups, sold one of my startups. My wife used to work at Google. We really understand, I think, the culture here. I’ve been in LA for 10 years.

I don’t mean to diminish LA. I’m not a diminisher.

Oh no, I want anyone listening, I want them to understand that I view the lens of the world through having grown up in Northern California. I lived abroad for 11 years. I’ve worked in nine countries. I came back to the U.S., settled into Silicon Valley and assumed that I was going to raise a family here.

And be a software developer or entrepreneur.

Yeah. In 2007, I moved to LA for two years.

Why did you move? What was the thing? Wait, talk about your software development first.


You were doing software development.

I started my career as not packaged software, as custom software, so I worked for what’s now Accenture, it’s now Anderson Consulting, as a programmer working on large corporate billing systems and security systems and stuff like that. I left in 1999 to build a startup. I raised capital. I built that company in London. We were in five countries. We sold software. Back then, it was called ASP. I don’t know if you remember when it was called Application Service Providers, and then we called it on demand.

Yes, I do.

Then SaaS, and then cloud. It’s all the same shit. We were building centralized services for large European companies back in the late ’90s. I sold that company to a French publicly traded company called The Sword Group and I moved back home. When I moved here, I moved to Palo Alto and I started building my second company. The timing for talking about this is interesting because we were building what Dropbox built before Dropbox existed. I sold that company to Salesforce, and we became Salesforce Content Management System.

You didn’t stay at Salesforce?

I decided not to stay at Salesforce.

You just didn’t want to be part of a big company?

Yeah, I think at that point I was 39 and I had been running companies for 10 years. I think I felt like I was my own boss. Salesforce is a wonderful company. I have very close friends who are still there and have been there through all the years, but is very much Mark’s company, Mark and Parker, and I was looking to do my own thing again.

Right. Talk about moving to LA. You thought you’d have this serial entrepreneur kind of ...

The fund that I’m with is Upfront Ventures. I actually run the fund. I’ve been running it since 2011. The founder, Yves Sisteron, was on my board.


They had invested in me. Yves said to me, “Why don’t you come to LA, learn the business, stay for two years and then go open our Silicon Valley office,” and that was the plan.

Why did you want to go into venture from doing ...

I wasn’t sure if I wanted to go into venture. I actually called them and said I wanted to do another startup. I thought I was going to do my third. He was looking for an operator because I think he recognized that, increasingly, capital was just capital.

Anybody has money, right?

Entrepreneurs were looking for people who had actually walked in their footsteps and done their job before. Honestly, my thought at the time was, “It’s worth a try.” I was 39. If this works, this could be my career, and if it doesn’t work, I can always go back to being an entrepreneur.

Right. You moved to LA, and had you spent time down there? Did you know much about the tech?

I had lived in LA from ’91 to ’94. I did my undergraduate at UC San Diego. There were no jobs when I graduated college in ’91. It was a recession.

Plus it really wasn’t a tech center. Aerospace, right?

I wanted to live in San Francisco. That was my goal was to live in San Francisco because I wanted to work in the tech center, but there were no jobs in 1991 so I took the job I could get because I really wanted to be a programmer, and I got a job in LA and my first client was JPL, Jet Propulsion Laboratory, where ...

Yeah, it’s all aerospace, right?

... they design rockets that put a man on the moon. I traveled all over the country working for large corporate clients. I worked in LA for Southern California Gas Company. I went out to Miami and worked for Florida Power and Light. My area of specialty was distributed computing. This is pre-World Wide Web. We were working on how to take servers and connect them with clients and dealing with the network in between. It’s called middleware and what happens when a transaction doesn’t complete and you have to roll it back, and so on and so forth. I moved with Anderson at the end of ’94, early ’95, to set up an internet practice in Europe. I spent all my time with telcos helping them figure out how to launch a ...

I remember that era. When you got back to LA, were you worried about that idea? We’re going to talk more about the LA market, but it hadn’t been the center. They had all these sort of flame-outs, essentially. They had MySpace and then Demand Media.

If I take you back even further, in the emergence of the internet, what LA was really good at was monetization. You know the saying that necessity is the mother of all invention; because they couldn’t raise capital, they didn’t have big funds, so they had to find a way to monetize. Google’s model was actually borrowed from Overture, which built You probably remember that, Bill Gross. When Bill Gross went to TED and talked about a pay-per-click model, he stood onstage at TED and was booed. He was booed for talking about pay-per-click.

Right, I remember that.

He was walking to the elevator and a gentleman came up behind him and tapped him on the shoulder and introduced himself and said, “I think that’s a really amazing model. Could I be your first customer?” It’s a true story, Bill will tell you if you ask him, and his name was Jeff Bezos. He became the first big client of, and he was doing pay-per-click and driving people to buy books. It turned out that model worked so well ...

I was at that TED talk.

Oh you were.

It was ... Richard Saul Wurman was running it at the time. Jeff used to show up on whatever the heck gadget he had, but he was little. Jeff was little then.

The company, people didn’t really know it. This is mid to late ’90s and our firm was an investor in Overture, so that’s how I know a lot of the story.

Right, which then sold to Google eventually.

No, we sold to Yahoo.

Yahoo, that’s right. That’s right. I’m sorry, Overture went to Yahoo. That was their big ... and then Google bought the technology.

$1.6 billion. What Google bought is another LA company. I want to point this out. First of all, we created the category. Google won, and they won for reasons where I could tell you if you’re interested, but Google won. We still built a company that sold for $1.6 billion. Bill Gross graduated from Caltech. Another Caltech alumni was named ...

Started his group in Pasadena.

Idealab started in Pasadena as a result. Another Caltech graduate named Gil Elbaz created a company called Applied Semantics. What Applied Semantics did is they didn’t do search the way that Overture was doing. They would read what was on your webpage. They would look at semantic analysis and they would serve ads based on keyword density and also based on clickstream of what clicks you took before you got to the page. Well, that became Google AdSense. Both Google AdWords and Google AdSense, the two most profitable businesses ever created, were initiated in Los Angeles.


We didn’t win.

No. When you’re saying it was a place where people thought about monetization, was that a problem? They didn’t think about just spending whatever to get to ...

Necessity’s the mother of all invention.

But all the companies that succeeded were like the Amazons, which, you didn’t think of that at all. They were initially ...

When you think about Silicon Valley where people will hand you $30 million and tell you to go generate the next amazing internet service and try not to monetize because let’s try to build really big and capture the market, you have the luxury of not monetizing. When someone says, “I’ll give you $3 million and that’s all you’re getting,” you got to make money. Let’s look at who came out of ...

It’s only 400 miles, or whatever, 300 miles.

You know, especially back then, Silicon Valley VCs, most of the funds were like $150 million. They weren’t like $10 billion that they are today. They were $150 million, and they literally didn’t want to travel more than 25 miles.

Right. Marc Andreessen wouldn’t go past Hobee’s, I remember.

“I have to meet you at Buck’s. I’m not going to go past Buck’s.” Those were the days. If you look at Commission Junction and you look at Price Grabber and Shopzilla and a whole bunch of these, Lower My Bills, they were all finding ways to arbitrage money and to drive eyeballs to websites, and they were all monetization techniques.

Right, techniques. Why was that? Why?

Again, I think LA’s the place where people have to make money.

Make money, right.

Look at Myspace. Myspace actually came out of a direct marketing initiative. They started by direct marketing face creams and stuff like that. It wasn’t working, and the internet had crashed and they realized that they could go buy a bunch of email lists from all these VC-backed companies that didn’t succeed, so they bought all the email lists and they started emailing everybody and driving them to a social network called Myspace. That’s how Myspace was born. A lot of people don’t know that either.

Yeah. Data portability.

It was born out of selling face creams initially.

Yeah, there was some controversial face creams in there, by the way.

Yes, I agree with you.

I think they burned peoples face off. As I recall, it was a sketchy group of people.

I was not an investor. I was not around.

It made the bitcoin people seem ethical.

There were some good people, there was some less-good people, as is always the case.

Not my recollection.

I know some of the good people. In any event, if you look at, we had a failed start with Overture. We didn’t become Google. We had a failed start with Myspace. It didn’t become Facebook. It was inevitable that it would start to happen.

What I think is unique about LA, at least in consumer web — we can talk about hard tech in a minute — but in consumer web, we really understand the sensibility of brands, of consumers, of marketing, of how they make decisions, but also of design. Look at Gen Z, two of the leading products created in the last five years in the consumer space.:Snapchat, LA based, and Tinder, LA based. I don’t think that’s by accident. You look at other companies people tend not to associate with LA, but Riot Games, League of Legends, bought for $10 billion ultimately.

They all were created ...

Created in LA.

Right. We’ll get to that, why that is, what’s different. When you went down there, did you consider yourself an LA venture capitalist or was that going to be your focus? You are kind of the center of LA tech, essentially.

I went for two years and my wife worked at Google. I promised her we would come back. She did not want to live in LA I actually promised her we would never live in LA, so I broke that promise. She saw the film “Training Day,” Ethan Hawke in the bathtub with the gun in his mouth, and she’s like, “I’m not living there.” After nine months, no joke, she said, “I’m not leaving.”

Oh wow.

LA’s a wonderful place. It’s 19 million people. It’s very diverse. It’s not monocultural. Anyways, I was there. What I said to her, aside from the fact that she fell in love with it, what I said to her is there’s very few VCs here that have any amount of software skills, technology background, operating experience, and I think, okay, it’s a smaller pond, but I can be a much bigger fish.

Yeah, what was the guy who was talking, very famous film writer, and I think he telegrammed his brother, “Millions to be made out here and everyone’s an idiot.” You know what I mean? Something like that. It was a very famous Hollywood telegram.

All of the VCs that existed in the ’80s and ’90s, they all went away, from LA down to San Diego. The emergence of Dana Settle with Greycroft, what’s now Upfront Ventures ...

It’s small. It’s a small group.

There’s a small number of us, but Dana was new to LA back then. There were a number of these newer funds that have been created in the last 10 years.

Do you consider yourself an LA venture capitalist? Explain Upfront. It was started ...

Upfront is a national firm. We’ve been around for 21 years, so we’re the oldest VC in LA. We’re also the largest.

You do have the coolest offices, too.

We have a pretty cool office, as you know.

The VC offices in LA are better than here.

The idea for us is we’re not a regional fund. We do 40 percent of our investments in LA, 50 percent are outside of LA.

It’s still a lot, 40 percent.

40 percent is a lot, but think of it this way. A city of 19 million people, it is obviously the second-largest city in the United States. It is the third-largest venture market. It’s the fastest growing. Why wouldn’t we use our advantage to look at the top end of the funnel of every deal created locally and then just be more selective?

What I don’t want to do is have concentration risk where every deal we have is in Southern California. We do 25 percent Bay Area, about 15 percent New York City, but we have deals internationally. Two of us are dual citizen. I’m a dual citizen of the U.S. and U.K. I’ve done two deals there. My partner Yves, who founded the fund, he’s got I think three deals based out of France. We’re not afraid to get on airplanes and go do deals elsewhere.

Talk about the LA scene. How do you look at it, though, because you are the most prominent venture capitalist in Los Angeles, probably?

The way that I look at Los Angeles is this. First of all, we have incredible tech talent. We have more top-25 engineering universities in greater Los Angeles than anywhere else in the country, and again, that shouldn’t be a surprise because we’re the second-largest city behind New York. There’s 19 million people in greater LA, there’s seven to seven and a half million in greater Bay Area. We have this incredible pool of talent, and you mentioned it before. If you’re a talented engineer, you either went into aerospace and defense, you went into Hollywood or you moved up north to join a startup, but they didn’t want to move up here.

There’s better weather, better lifestyle, more diversity, lower cost of living, a lot more going on, and especially when you think about so many of these people being like 23 to 35, they prefer to be in LA, but the jobs weren’t there. That’s something that changed. Because that’s changed, it’s not just that those people, if you go to UCLA or USC or Caltech or Harvey Mudd or Cal Poly, Pomona or any of these colleges, you wanted to stay, but now you’re getting people moving down from the Bay Area, and it’s not just entrepreneurs. A lot of VCs are moving down. You have David Lee, you have Chris Sacca, Fred Wilson spends every winter there now. You have a lot more people who are coming to LA.

When you create that cohesion of a group of people — because one of the things that has been powerful about Silicon Valley has been you have the VCs, the schools, Stanford especially, and then you have the entrepreneurs and a sort of iron triangle of a situation. Talk about what the atmosphere in LA is, then, for that. You have Harvey Mudd, you’ve got a lot of schools, but it’s still not quite the same thing. It doesn’t feel quite as tight when I’m down there. You guys have tried.

Well listen, let me say this, we’re not going to replace Silicon Valley and that’s not even the objective. I think we can build a dynamic, valuable ecosystem. It’s like, would Chicago really replace New York as the financial capital? Would Seattle replace LA as the creative video capital of the world? That’s just not going to happen. There’s just 40 years of developing those communities in the Bay Area, so we’re not trying to do that.

I would tell you that what I used to complain about was what I call the invisible startup. The invisible startup is someone really talented. There was a team out of USC that were security experts, and they created a company, they raised $5 million from Coastal Ventures. This is right when I arrived. Then Coastal Ventures moved them up north, which I don’t blame Coastal Ventures and I don’t blame this company, but that company’s called Lookout and it’s now north of a $1 billion valuation. It’s a very prominent mobile security company. They were Angelenos. They should have stayed.

I think there’s a million invisible deaths that we died of people who relocated, and I think the reason I’m so passionate about more capital being in LA is I think those people didn’t want to leave LA and I think we can retain them now.

With the capital there, that they don’t have to or they aren’t forced to move, to come up here so we can be close.

If people write the first check, the first $3 million to $5 million in LA and you establish your team, you’re not likely to move.

Before we move on, because I do want to talk about some of the companies there, and why they went up and down. You hate the term Silicon Beach.

I do.

Explain that. You and I had a terrible Twitter fight over it.

I try not to get in too many Twitter fights these days.

Don’t get in one with me.

That I know for sure. Listen, first of all, I think “beach” emphasizes the worst perception that people have of Los Angeles, that we’re not serious. The vast majority of high-quality companies are east of the 405, anywhere but the beach, and I don’t want to first of all be derivative to Silicon Valley.

Can you explain east of 405 to people?

Oh yeah, sorry.

That’s okay.

From the beach to the 405, which is the north/south freeway.

Santa Monica.

You just have to watch “The Californians” on “Saturday Night Light.” “You take the 405 to the 110.” It’s about four miles from the beach to the 405, and that’s called the west side. The west side of LA, it’s very expensive.

Bel Air. Santa Monica.

No, Bel Air’s actually east of the 405.

Oh it is? Okay.

You’ve got Brentwood, Santa Monica and Venice and Malibu. Those are all beach communities, and they’re beautiful. That’s where I live.

There’s a lot of startups there.

There’s a lot of startups. You tend to see a lot of people starting there and then you migrate elsewhere because it’s just too expensive. You wouldn’t build a startup on Fisherman’s Wharf in San Francisco. It’s not the right environment.

I might, Mark.

You might, you might. Actually, it’s probable these days.

And delicious crab.

Yeah, and the clam chowder bowls.

Sea lions, things like that.

There you go. It smells there.

Yeah, it does.

What I don’t want to do is emphasize the beach, and I don’t want to be derivative to Silicon Valley because I don’t think we need to. I think we can be proud of what we have. I like to call it LA Tech.

LA Tech, yeah.

I know it’s not some glamorous name, but neither is Silicon Beach. It’s just derivative.

That’s true. Okay. Do you like the beach, Mark?

I do like the beach. I do. I’m not a surfer. I’m not a quintessential ... I’m not a 6-foot-3 blonde, six pack ... I’m a nebbishy Jewish computer programmer.

Yeah, you don’t look like you’d be on “Laguna Beach.”


Neither could I, but in any case, when we get back, we’re going to talk more about some of the investments Mark has done at Upfront and about some of the big LA companies, because even though it isn’t regional, there is a region-ness about things like that. We’re here with Mark Suster. He is a managing partner at Upfront Ventures, and we’re going to talk more about Los Angeles.


We’re back with Mark Suster from Upfront Ventures in Los Angeles. We’ve been talking about the LA tech scene, which Mark refuses to call Silicon Beach. I agree with him, actually, but he wants to call it LA Tech. Let’s talk a little bit about LA Tech. Again, you have investments all over the world, but you have 40 percent of them in Los Angeles.

Talk to me a little bit about the LA scene, because what seems to have happened, one of the things that helped Silicon Valley is there’s so many successes in one place. There’s more than one, essentially. In LA, the experience has been one at a time, and then many of them have flamed out. Myspace, big and hot, then not. Demand Media was the next one, and now Snapchat is struggling even though I think it’s a really cool company. It’s never had that ... do you need to have that big group of companies there or is that not necessary?

Well, I’ll say a couple things. When a company succeeds, you end up with a lot of important things. One is what we call recycled capital, so people make a lot of money and reinvest it in younger entrepreneurs. You end up with mentors, but you end up ... what Silicon Valley has an advantage of is people who have seen scale.

That’s a really good point.

Because you can have a great engineer from Indiana or St. Louis or Florida, and that engineer is no less qualified than someone who’s from Silicon Valley, but if they worked at LinkedIn and saw scale or Salesforce or Facebook, they have an advantage. They understand both not only how to scale, but they understand consumer behavior in a way you don’t if you haven’t seen scale. An example, when I moved to LA I funded a company I know you’re aware of called Maker Studios.

Sold to Disney.

We sold to Disney. The first thing I did is I recruited a former colleague of mine from Salesforce to move down to LA to be the CTO. He had seen scale at Salesforce. He stayed for five years after we were acquired, and I really wanted to build a company that could scale. He hired 55 engineers. We built a real engineering team at Maker Studios, and so we ended up selling. He stayed for his lockup period and he’s got another startup now. That rinse and repeat process is happening more in LA than it ever has in the past.

Right, but there has to be a few companies, like Google ...

Now people have seen scale at Tinder, they’ve seen scale at Riot Games, they’ve seen scale at Snapchat, and actually you’re seeing people break out of SpaceX. People forget that SpaceX is an LA-based company, they forget that Elon lives in Bel Air. He lives in LA.

Nobody forgets that. Elon’s his own little planet.

He is.

I don’t think he mixes a whole lot.

I think he’s not even on the planet. He’s stratospheric. He’s the greatest entrepreneur of our times. I have seen him out at dinner. I’ve sat next to him at a dinner party, and it does happen because he lives in LA.

Yeah, absolutely. He used to live up here, actually, if I recall.


I remember at That’s when I met him.

Yes, which became PayPal.

PayPal. Well, no, he merged with them.

He merged with them in a combined company.

When you have one, it does create, if there’s problems like Snapchat right now. Let’s actually go back. What happened from your perspective to the Myspace and Demand? Those are all individual problems that they each had.

Myspace in particular, I think, didn’t architect its technology right for scale, so I think that was one of the problems. No. 2 is I think they made a mistake, which is Rupert Murdoch when it was ... YouTube was bought by Google and it really pissed him off because they wanted to buy YouTube because YouTube became successful on Myspace. Video became popular in the era of social media, photos became popular.

What he didn’t have was he didn’t have the currency the way that Google did because it had this stratosphere of public market valuation that it could pay $1.65 billion to buy YouTube. He was really pissed off, he went off and bought the trophy prize, which was Photobucket, because he thought, “Oh I’ll buy the photo one,” and then he shut down the API. He didn’t allow developers to build on Myspace.

No, that’s the thinking.

That’s right when Facebook opened up. You had Zynga and you had Slide and you had RockYou.

It was a mentality.

They had opened up, and they opened up the platform community at exactly the time Myspace shut it down. I think that’s really what happened, and Rupert just thought he could innovate internally. Facebook eventually, as you know, shut down their platform as well, but they were open at the right time.

Sure. Well, right now it’s coming home to roost at this very moment.

It was architected better, and that’s a story I’m happy to take on if you’d like to.


I will tell you, the example is Amit Kapur, who is the COO, Stanford graduate, COO of Myspace, then went and created Gravity, another LA-based company which we backed and we sold that to AOL. Amit now has a venture fund and is funding companies ...

There creates that seed.

Yeah, that kind of rinse and repeat. I’ve got capital to spend. I’ve seen scale. I’m going to create my next generation.

Is geography an issue, because it’s so spread out? That’s another, the concentration. I always think of Los Angeles as New York, if you slapped everything down, it just spreads out.

I know you’ll think that I’m spinning this, but I’m trying not to. I think that’s mythology, I really do. If you look at the Bay Area, you’ve got the crowd who lives north of the bridge and they’ll never go to San Jose. They’ll never go to Palo Alto. They only will take the boat over to San Francisco. You have the San Francisco community, you have the East Bay community. You have the Palo Alto / Menlo Park community. You have the San Jose community. People don’t do that in the Bay Area. You’d sooner get on a plane and fly to LA than you would go to San Jose.

The same is true in LA. You have pockets. Our main pockets now are Santa Monica / Venice, which is the west side.

Where Google has been big and Snapchat. They’re moving. They’re all moving.

Well, so they’ve all moved down to the second pocket, which is going to be, 20 years from now, the big thing in LA, which is Playa.

Explain where that is. That’s near the airport.

That’s just north of the airport. It’s about 20 minutes south of Santa Monica, but the important thing is it draws from Redondo Beach, Manhattan Beach and Hermosa Beach south of the airport, and the reason that’s important is you can draw all the young people because the young people want to live down there and it’s more affordable. It’s also by freeways, so you can take the 405, which we talked about earlier, you can easily get in there. It was undeveloped land, and you’ll see a lot of development down there.

Yeah, but it’s controversial development initially.

It was. What I think you’ll see over time is actually the growth of downtown Los Angeles, because there’s tons of industrial space, it’s much cheaper, and you can actually get there from North LA, from over in the Valley, but you can also get there from east. It’s a lot more affordable and it draws from many more parts of Los Angeles, and you probably know this, we actually have public transportation now. You can take a train, a light rail from Santa Monica to downtown. You can go from North Hollywood to downtown. As the rail system has been built up, I think it becomes a lot more commutable.

Right. Then you have that area, the downtown, Nasty Gal, there’s a whole bunch that were down there.

A lot of people that are in e-commerce are downtown LA. Media and e-commerce has really been downtown LA.

Been in downtown LA. Then not much in Beverly Hills, in that area, right?

No, because Beverly Hills is too expensive. It’s like building a startup in Atherton.

Tinder’s around there, right? It was in Beverly Hills.

Yeah, but that’s because of IAC.


It was started at IAC. You have West Hollywood, and there’s a lot of stuff. You have West Hollywood, you have North Hollywood, you have downtown LA, you have the west side, but there’s air pockets.

Then the types of companies, you’re saying there’s a lot of creative stuff, because I considered Snapchat a creative company more than an emotional company. I don’t know how else to put it. It has more creativity.

I’m going to give you a metaphor for how I think about consumer businesses. We’ll talk about B2B in a minute. Consumer businesses, you have infrastructure. In order to build, let’s say, an era of shipping and an era of airplanes, you needed airports, you needed deep-water ports for shipping. Then once you did, valuable stuff happened on top of that infrastructure. The infrastructure of the internet had to be built first, so it was routers and switches and databases and browsers and caching software, and all of that happened in Silicon Valley, or most of that happened in Silicon Valley.

Once that was built, I would argue that everything you do as a consumer on the internet falls into three categories. I call them the three Cs: Content, commerce and communications. When you think of it, you are spending time because you want to buy shit, so those are done from e-commerce companies. You want to communicate with other people. You’re lonely, you’re bored and you want to consume media and information. I think not just LA but LA and New York are really well positioned for the three Cs.

Because they’re media oriented.

We also understand consumer brands and we understand how to create products and we understand international trade. I mean, 43 percent of all products that come into America come through LA. It comes through either Long Beach or the LA Port. We’re a great import/exporter. I think we’re really the entry point for Asia into the United States.

Really you are, yeah.

We also are the northern capital of South America. There’s five million Mexican people in Los Angeles, and unlike what Trump would try to get you to believe, the vast majority of them are hardworking. They’re not first-generation immigrants. They’re professional. They’re not all educated. A lot of them are educated, and they’re productive. We have a large population of South Koreans, the largest population outside of South Korea. We have the largest population of Persians outside of Iran. It’s this great melange of people that are building those three Cs.

And we also have the celebrities that can endorse products. Back to Ring, you may know that Shaquille O’Neal was our spokesperson.


If you go into a Best Buy and you look at 12 products, and they’re all announcing their different video specs and this has this much storage and this much RAM and this Wi-Fi, consumers don’t want to buy products like that.

Marketing, media.

We have the ability to brand, market, have endorsements, have consumers be able to figure out how to buy products. I think we do well in the three Cs. Then you look at the hard sciences. There’s a reason SpaceX is there. It’s because we have JPL and Northrop Grumman and we’re the place where there was the birth of the aerospace industry. Howard Hughes. All of that talent is still in LA, it’s just never been in the startup community.

Right. What’s the negatives? Is it just the hard computing or the geekishness? I think of it in a similar way. I find LA companies more emotional — I don’t mean that in the negative term — and the ones in Silicon Valley very cold. It’s very different. There’s not a lot of storytelling, except for Apple, obviously.

Apple’s certainly an exception. I will tell you this, is that there are categories I don’t think LA will be good at, and one of them is SaaS, software as a service, because to be a product manager, to be a sales rep, to be pre-sales or post-sales support, there’s just such a concentration of those people because of historically Oracle, PeopleSoft, Siebel, Salesforce now, Workday and all those people are aggregated here. It’s really hard to find experienced people in LA who have done that. I think we’ll create some of those, but I don’t think we do as well on that. But we do really well on trade, transportation, logistics. We do really well, I think, on hard sciences. There’s a great robotics program at USC.

Yeah, there is.

We’re starting to see a lot more robotics come from LA.

Is there more cooperation from the universities there? You’ve got USC, UCLA, Harvey Mudd.

Caltech. I don’t think so. I would love to tell you that there is, but I don’t think so.

Why is that? Stanford’s been such a critical element to Silicon Valley.

I think Stanford is really unique. I think the UC system overall hasn’t done a great job at trying to figure out how to support entrepreneurs or how to spin out companies, because they had a royalty system and they didn’t think about the equity culture. I think Stanford’s really led the country in that.

Why not? Harvey Mudd, come on, or Caltech.

I don’t know why it is. I can tell you at Caltech, my perception — even though we have incredibly successful alumni from there — is that it’s more a theoretical school. It’s less practical applications. So MIT, I think, has done a better job in the startup world at creating startups and breeding that culture. The places I love, I love Carnegie Mellon for startups.


I like ... actually Wharton is doing a fantastic job of creating startups. They have these combined programs that are management and computer science together. I don’t think we’ve done a tremendous job in LA.

What could happen? How could that be done?

People have been trying ever since I’ve been there. I wish I had a good answer. They set up tech transfer offices. We went and spent a bunch of time on universities. I think there’s a lot that could happen. I don’t know what the winning formula is. I’ve tried.

Do you know what ...?

No, but outside of Stanford where else does it happen?

You’re right. MIT doesn’t translate it as well.

Cal. Cal’s a wonderful place. I haven’t seen the same level of startups from out of Cal.


It’s right across the Bay.

Exactly. You’re right. When you’re thinking about those companies, obviously Snapchat’s been the latest big name, can you diagnose ...? Were you an investor in Snapchat?

I was not.

Why? Were you offered it? You had to have been.

Listen, here’s what I tell people about Snapchat, and I authentically believe this even though it sounds like post hoc rationalization. When they went out to raise, there were a million photo-sharing companies.

There were.

I didn’t think that it would be exceptional relative to all the other ones I was seeing. I was looking at a company called Scout, and Scout was like location-based networking.

I remember.

A lot of young kids. I was really nervous, honestly, as a parent, about protecting children and what would happen if children were groomed on a website like that. I was super close to investing and the founder is a wonderful guy. I think he’s Finnish, if I remember correctly.

I remember him, yeah.

Maybe Swedish. He spent so much time, energy and effort in building systems to protect the children, but still, three children were raped through this system that were groomed, and you can’t control everything, right?


I just had so much nervousness over investing in something. At the time, Snapchat was inappropriate pictures being shared. I felt like that ... they hadn’t built Stories, it hadn’t been the same kind of app that its become. That was that. Then all of a sudden, it took off and it became massive and Mark [Zuckerberg] famously tried to buy it and then created an app called was it Poke or something to compete with it?

Poke. Doomed from the start.

That actually just gave it more oxygen. By the time it just really had taken off, I don’t think I could have competed and won because Benchmark came in and they offered him, I don’t know the exact numbers, but I think order of magnitude, like $12 million at a 60 pre.

Back then, we were a smaller fund. I’m not saying we would have won it if we would have competed, but Benchmark had the success across their portfolio to take a bet like that, and then again, this is many years ago. These days a lot bigger checks are being written. I just think even if I wanted to compete, I don’t think I would have won it by then.

So it’s a rare exception of one that went from super early stage, Jeremy Liew giving him $500k because he was spreading around a lot of bets on talented teams, and he got a few of them very right, and then just immediately stratospheric success, where I couldn’t have won it.

What about now? What do they do? It was an IPO, and you take them where you get them in LA. It’s a big IPO. Tinder was owned by someone else.

I’m sorry, what’s the question you’re asking?

What do you imagine has happened now with them? Obviously Facebook came right back and managed to do Instagram Story.

There’s a few things that I think Silicon Valley reporting gets wrong about Snapchat, and there’s a few things that maybe I could elaborate on.

Sure, please.

I think the narrative in Silicon Valley, because so many of the people that comment on Snapchat are not avid young users of the product, and they compare it to Instagram. I think Snapchat really is more like WhatsApp than Instagram.

I agree.

It has a network effect, where once people are communicating with all their friends on it, it’s very hard to disrupt that. I’m not saying it can’t happen, but it’s very hard to disrupt. I think it’s a lot more sustainable than people think.

No. 2 is they went from brand advertising — which helped them grow very fast because you didn’t have to prove it to go sell a $2 million campaign, you didn’t have to prove efficacy — and they shifted it towards a direct marketing or a CPA model where people now are doing a lot more DR. That’s more sustainable because it’s direct bidding and they have a bidding platform, and they’ve shifted all that revenue without falling off a cliff, which I think is a monumental achievement that people don’t talk about.

The things that I think they didn’t get right were two-fold. No. 1 is I don’t think they understood the world of influences well enough, and I think Evan really was reluctant to serve them.

That’s his personality.

It’s his personality.

Though he did marry a supermodel, too.

They chose not to lean into that, and a lot of those people ended up at Instagram and I think you could have sucked the oxygen out of the room and enabled them to stay on Snapchat, and it would have been harder to get Instagram to bring them over.

No. 2 is I believe that you had to build a management infrastructure that over time learns how to decentralize power and to hand off power and build a hierarchy and a campus and a company culture that can withstand the trauma and the changes, and I don’t think they’ve done that. That’ll be their big challenge going forward.

Do you think they can do it? I mean, look at Facebook with Mark.

I don’t know.

It’s hard.

I don’t know. At least Facebook has a campus and a culture.


You have Sheryl that at least has had enough power to build organizational structure that I don’t think Snapchat really invested in.

Right, and they need to do that.

That’s what I believe.

What do you imagine they need, those two things? I agree with you on the communications part. I think they’re much more robust. They’re also much more innovative. Facebook just borrows and borrows and doesn’t come up with anything fresh.

It’s the funniest thing to me because if the situations were reversed and Snapchat was a Northern California company and Instagram was an LA-based company, everybody up here would be screaming bloody murder about how we’re stealing IP. Nobody seems to care. I asked someone about this recently. I asked a VC. He said, “Well honestly, people do care but no one wants to complain about Facebook because they still buy all our companies.”

That’s interesting. Actually I did an interview, a podcast with Kevin Systrom. He just flat out said, “Yeah, that’s what we did.” He said they built a radio.


Well he just said it. He didn’t even bother ... I appreciated that, actually. He said, “They built a radio and we built a better radio. So what? Do they have the thing on radios?” I was like, “Hmm, okay. All right, you’re going to defend your behavior, that’s fine.”

Instagram has reached a point where some of the product is better, and I think Snapchat’s paying attention. I think Snapchat also has an innovation engine of things that are in the pipeline that are coming.

I agree. They’re more innovative. They’re 100 percent more creative. It’s not innovative, they’re more creative. That’s the difference.

Look at even Bitmoji. Look at the success of Bitmoji and bringing in characters into your Stories. What we talk about, augmented reality, but really they kind of led in augmented reality.

They did, 100 percent.

The question is can they keep that innovation engine coming? I don’t know.

It’s hard. We’re here with Mark Suster. He is a venture capitalist at Upfront Ventures in Los Angeles, talking about LA. We’re going to talk about the broader stories, but I do want to get to Ring in our next section, and more about where he thinks venture capital is going, especially with the huge amounts of money from SoftBank and others and how its changing.


We’re here with Mark Suster. He is a venture capitalist in Los Angeles at Upfront Ventures. He runs the firm, which is a really cool firm down there. You just recently had a big hit with Ring. Explain how that happened. You sold it to Amazon, but pre that.

Jamie Siminoff is a longtime entrepreneur in LA. I try to explain this to people who invest in venture funds, because they all say, “Well can’t the Silicon Valley funds just fly down and do all the best deals?” The reality is a lot of the people we back we’ve known for 10 years. Jamie created a company called Phone Tag. I don’t know if you ever used that, but it was a great product.

I did.

In the early days of voicemail where most of us didn’t want to sit and listen to voicemail all day, it created transcriptions for you. I think the company name was called SimulScribe, the product was Phone Tag. I knew Jamie through that. He then created a second company. It was called Unsubscribe. It wasn’t for me, but he was creating products, innovating.

Then he created something called Edison Labs, and Edison Labs was going to start spinning out a lot of companies. They came up with this idea they called DoorBot. I was hanging out with Jamie at a local conference and he was telling me about DoorBot. He said it was security doorbells. I thought, “That’s a clever idea.” I’ve got ADT as an alarm system, but it’s kind of a crappy system. They kind of provide crappy service. There’s no video, and I believe in computer vision and I think there’s a huge trend towards not just video but video and laser and infrared and other ways to interpret the physical world with computing devices.

That’s what Jamie was building. I didn’t know would people care or not, but I knew he was a great entrepreneur. We brought him in, and my partner Greg Bettinelli was new to the fund. It was, I think, his first. The first deal he took over became Goat, which is another company we haven’t talked about doing hundreds of millions in sales, LA-based. Greg really was a large part of the reason why Goat was created, but this was his first de novo deal, was Ring. We knew Jamie and we just wanted to back his vision.

It struggled for a little bit, with complaints.

We co-led the seed round, and they launched the product.

Which was how much? What did you put in there?

I think in total the round was like $1.5 million, something like that. He sold $3.1 million of product like that. It was amazing. They sent him out ... And this is the thing about hardware. If you have problems in hardware, you can’t just do an update. Yeah, we struggled somewhat with product quality early days, but for a company that was so new, so innovative, so ahead of its market, I think they did a fantastic job. Jamie’s the consummate service professional.

We raised the next round with True Ventures. We participated also in the A round, and then he had enough capital where he replaced a lot of the malfunctioning products and he built a better version and then a better version and then a better version.

Then they had Shaquille O’Neal.

Well, Shaq came in later, but where we really struggled was the next round of capital, because there was a Silicon Valley narrative.

They had spent a lot of money on hardware.

The narrative was Nest would be us.

Oh Nest, yeah.

Yeah. They just kept saying, “Well, Nest is eventually going to do this and Dropcam’s going to do this,” and they never did. They never.

Well, they just did.

Look at their product, they basically copied Ring verbatim.

They did. They have very nice commercials, I have to say.

For years, though, they really struggled to innovate, where Ring has outpaced them at every step. Actually, it was a venture fund set up by a home builder who understood the market, which was Shea Ventures. I think they’re called Calibrate now, that stepped in and led that round, and then Kleiner Perkins came in and Richard Branson came in, and then Shaq.

Right. The idea was that they couldn’t do it. Also hardware was hard. They had struggled here with not Fitbit. A bunch of them like that. There was sort of an anti-hardware thing after they poured lots of money into it.

Who’s they?

Venture capitalists here had the narrative that hardware was too hard, essentially.

The difference — I’m not a Fitbit-negative person, so I’m not trying to say negative things about them — but here’s the difference with Ring. With Ring, if you buy a security doorbell, you use it every month and you get utility out of it every single day. With Fitbit, a certain number of people get a huge value out of it forever, and a certain number of people it goes on the desk, right?

Yeah, absolutely.

With Ring, that doesn’t happen. We have a huge, huge attach rate of people who do not just buy the Ring, but they buy the subscription product.

Subscription, yeah, which I did.

He started with the doorbell. Then he did a flood lamp, which you can just literally unscrew your flood lamp and screw it in. Then he had a stickup cam and then he sold a solar charging unit, and then he sold a sign that went outside your house. Because he delighted customers, they kept coming back and buying more product.

Sure. Why sell to Amazon? This is a huge market. Nest was coming.

I think it’s not just Nest coming. It’s also Amazon wanted to be serious in the category, and I think Jamie took a view that, “Here’s a chance for me to not only get a great financial return for investors and employees,” and himself as founder, but to join arguably the best-run company, maybe in the world now, and to be a large important part of that. I think Jamie found that attractive.

Right, and you didn’t want to hinder him. Did you see a bigger market for that? It is tough. Nest was coming at you, though.

Our job is to support founders, and when they decide they want to sell, we never fight against them. If I had my choice, I would have rather taken more risk and tried to go long, but I’m a VC and that’s what my job is, to go long.

Yeah. Exactly. It’s kind of hard to turn down.

I didn’t want to sell Maker Studios to Disney either. My goal is to build long-term, lasting, successful companies that can IPO and create communities around them.

Well, not selling does have its appeal. Mark Zuckerberg didn’t sell. Google didn’t sell. Myspace sold.

The road is lined with people who didn’t sell and eventually didn’t success also. Those stories just don’t get told.

Yes, agreed. Agreed.

We have collective amnesia and memory. Honestly, I am super proud of Jamie for getting to the finish line. I think it’s the largest tech acquisition that Amazon ever made.

Yeah, it is.

I know they paid more for Whole Foods, but the largest tech acquisition, and I am super proud of him. He’s staying in LA. The team’s staying in LA. Amazon’s investing in LA.

Smart to do that. I was sort of like, “Oh the one thing that Amazon doesn’t own, or Google.”

Now they do.

Now they do. What can I do? I can’t resist Jeff Bezos, apparently. He also has created a juggernaut in Seattle in that regard. They’ve had Microsoft and they’ve had a bunch of companies.

Talk about where you think trends are going. SoftBank has this enormous amount of money. I just interviewed the DoorDash CEO last night in Las Vegas at Shoptalk at our Code Commerce event. I think it was $535 million and half of that was from SoftBank. They’re handing out checks of hundreds of millions of dollars. How are you all being impacted by them and what’s happened? At first it was Marc Andreessen doing that, handing out giant sums of money, but now he’s being Marc Andreessen, essentially.

Well, let me say it this way. One thing I’m sure you’re aware of is the trend that companies are staying private longer. There’s a certain attractiveness to entrepreneurs to staying private and not being conditioned to the public markets. Because of that, capital is actually chasing the opportunity to still get investments because they can’t wait until it goes public. I think there’s an appeal also for entrepreneurs. I would also say with this large pool of capital, not just SoftBank, and there’s a lot more sovereign wealth funds out of Middle East doing direct investing, LPs are investing, hedge funds are investing, mutual funds are investing.

Two things are happening. One is, founders are able to sell stock in the secondary so they can get some monetization and so they don’t feel the pressure to go public. Some of the seed in early funds are actually selling their stock in those transactions. Actually some VCs are. It’s actually being seen as a potential exit for some people. When large pools of capital come into companies at early stages, that distorts markets. There’s going to be some positive stories and there’s going to be a lot of negative stories too.

It’s a lot of “Godfather,” like, “Take this money or else,” kind of thing. I’ve heard a couple where they say, “Take our money or we’ll walk over to your competitor.”

Look, that’s life.

Does that matter, all the money, or does it really?

You remember the famous story, which is Steve Case running this little tiny company called AOL.

I wrote the book. I remember.

I probably read it. He went to see Bill Gates, and, “We can buy you or bury you. Which is it going to be?”

That was the first line of my book.

There you go.

He must have read it.

I must remember that line. You think that’s such common behavior, and I had that in my two startups. I had people saying, “I can buy you, I can buy your competitor,” and the first time I didn’t listen to them and I just kept building and the second time, I thought, “I’ll have what’s behind door No. 2.” Those are very personal decisions.

Of course people feel that pressure, but then you look at companies like, I’m not so sure — again, I hate saying negative things because I don’t really know the company, but let’s just take as an example Magic Leap. The enormous amount of money going into a company pre-product launch, I think it just distorts so many things.

To distort, what does it do?

First of all, you take the pressure off of founders from launching products, because if you can ...

If they’re not desperate ...

I always say necessity is the mother of invention. If you give someone $2 million and they have to launch on $2 million and they have to wake up a little bit earlier and not have as big a team and not waste money on parties and all this other stuff, sometimes it produces more innovation. The scene I have in my head is “Apollo 13,” when they’re trying to get the spaceship back and they have ...

Yeah, “it’s all we have.”

... these 11 materials and you got to sit around and come up with some way to get the spaceship back. That’s the mentality I have, is I think the creative pressure of not being over-capitalized actually helps with the innovation.

Here they are. What’s going to happen with this? Is this going to be a lot of failures, a lot of money?

Look at the dot-com era.

There’s not enough rat holes to shove all the money in.

Look at the dot-com era. We over-capitalize all the companies. It distorts markets, because if you can create a company that doesn’t have to monetize and you have eight companies that don’t have to monetize, the three that try to build successful business models can’t because why would you pay for product if I can get everything for free? It does distort markets in the short term. I think when the markets eventually crash, I don’t know when that’s going to come. I thought it was going to be three years ago, so don’t listen to me, but eventually markets go through cycles and that capital sum of it will be pulled back out and put into other uses.

Yeah. I love it’s the guy from LA that’s prudent on spending. What about the big companies? One of the things a lot of startups here are saying is it’s not the era of the startup, it’s the era of the big companies now.

Well, I think most of the innovation is still coming from startups. If you look at the success of Facebook and Google and even Salesforce, a lot of their innovation now is coming through acquisition. Salesforce just bought MuleSoft for six billion plus dollars. They had bought two or three companies before that. They bought Quip. They bought a number of companies. If you look at Facebook buying WhatsApp, buying Instagram, buying Oculus, I think they’re buying innovation. And I think Google has done it too, and I don’t think anything’s wrong with that. I think that’s going to continue to happen.

It’s just so hard to create the environment. When you’re at Google and you’re paid, I’m going to make it up, $300,000 a year, plus half a million dollar a year in stock grants and you can turn up when you want and it doesn’t really matter if you don’t win in your market, it produces a certain conservatism.

Right, so they can’t ... they don’t think ...

I think it creates the wrong environment for it, and then there are the rare unique breed of people who are just built to take the risk on to create next-generation products, to go out there every day against all the odds, like Jamie Siminoff with Ring when everyone said he couldn’t do it.

Well, Amazon, too. You’d have to call them pretty innovative, for a big company.

I think Amazon is really an outlier. I don’t understand, they’re freaks of nature, they’re so good.

Well, he’s so hungry. He’s always been like that.

It’s unbelievable to me because he can just sit the rest of his life on a beach and so could his great-great-grandchildren.

We had the head of Nordstrom at our Code Commerce thing yesterday, and I told a story of going to, I worked for the Washington Post, Nordstrom was invading all the cities with their innovative stores, and I was out there in Seattle to meet the Nordstroms. I had extra time, so I went to see this little startup Amazon. He wasn’t little-little, but he was little and had five people. It was an afterthought. That was the ’90s.

You may not know this, but our firm was created by ... Yves Sisteron was the head of North American investments for a retail company called Carrefour, if you know Carrefour.

Yes of course, French company.

French company.

Which was very innovative.

Very innovative, and Denis Defforey, the co-founder, decided he didn’t want to come to the U.S. because he didn’t want to compete with Walmart but he wanted to learn from U.S. consumers who are leading consumers. Carrefour ended up not just staying in Southern Europe. They were created in France, but they went to Eastern Europe, China, South America.

Essentially the Costco, for people who don’t know.

Well before Walmart did. He said, “Yves, why don’t you go invest in these companies in the U.S.?” He invested in a small company with three warehouses called Costco.

Costco, yeah.

They took 20 percent of Costco, 8 percent of Starbucks. They were investors in ...

Very innovating. Very innovative retail.

... Dick’s Sporting Goods, PetSmart, Jamba Juice, PF Chang’s, Ulta Beauty and Cosmetics. They basically dominated the category. Yves met Amazon in the early days because all of the Costco team had seen the retail sales and the numbers were just up and to the right.

Right, absolutely.

I think Jeff had this outrageous price in mind, which was like $60 million valuation. Companies back there were funded at like $5 or $10 million valuation.

Yeah. He had a lot of ambition. I want to finish up talking about where we are. Right now we’re in sort of a crisis around Facebook. Tech is disliked. There’s all these massive technologies coming, automation, robotics, that could be problematic for society. It’s not a good time for tech. Tell me where you think things are going from a venture perspective.

I would say it’s not a good time for democracies.


It’s like we all thought that all the trends were heading in positive directions, and you could very easily talk yourself into dystopian future. In general, I think technologies have been more good than bad. I just shared this on Twitter yesterday. In all the dystopia that we see every day, I saw a tweet from a guy, I think he was in India who was teaching poor inner city people, homeless people how to do design work using a product called Canva.

It’s from Australia.

Yeah, C-A-N-V-A.

It’s led by a woman.

I don’t know that company all that well. Led by a woman. They just raised earlier this year $40 million from Sequoia.

Bridget. I did a podcast with her. Melanie.

Melanie. At a $1 billion valuation. I don’t know her.

Listen to my podcast with her.

I was trying to learn more about the company and the space, and just interested in it. I see this tweet from this gentleman, and he’s using their product in a remote village in India to teach homeless people how to be better designers, to improve their lives. There’s a lot of that in the world.

That’s the happy shiny tech feature story.

And we can focus on our own little dramas.

Right, but it’s pretty serious.

I’m not saying it’s not serious.

Robotics is serious.

There’s both. There’s the positive consequences of everything that’s happening and there’s the negative consequences.

Where are you looking? Are you looking at cryptocurrency? What is it that you are like, “Mm-hmm”?

I’ll tell you, cryptocurrency, I’m not as big a believer in cryptocurrency, but the underlying technology, which you hear a lot, this blockchain.


I think is transformative and so I am spending a lot of time trying to understand that. I just released a primer video on YouTube. If you search on YouTube for Upfront Ventures, you can find my primer video, and I release slides. I’m trying to educate myself, and a lot of times by educating other people it forces you to learn.

Yeah, then you can have discussions.

I’ll tell you, what I spend my time on is computer vision. I’m a really big believer in computing being able to interpret the physical world in better ways than we as humans can. I’ll just give you some examples.

Give me examples.

I invested in a baby monitor, it’s called Nanit. What we do is we help monitor the wellbeing of your child when they’re sleeping. The idea is monitor less, sleep more. Or sleep more and monitor less. Most of the people who had baby monitors, it was like, “Oh my god, is my baby dead? Are they alive?” or whatever. Our goal is to give you stats every day to help you be a better parent and not feel like you need to rush in all the time, but a byproduct of that is we believe we can predict autism younger than anyone else can because we believe from about six months on we can start to see signs that doctors can’t yet diagnose. I won’t bore the podcast with why, but we have a bunch of data out of Israel to suggest that.

I believe cameras can also be used to predict Parkinson’s because you develop a twitch in your finger and a shuffle in your walk. Alzheimer’s, you develop both a change in your voice pattern and a shuffle in your feet. These things are observationally ... A doctor can’t pick up because they see you once or twice a year, a computer can pick up the changes.

Yeah. The monitoring. There’s Cardia here. There’s a whole bunch of things.

We also invest in a company here in the Bay area called Density. What they do is they hang a little device above doors that uses lasers to track the patterns of how people move around spaces.

Mark Cuban was talking about a different one.

Oh did he?

Near shopping malls to watch peoples’ tracking patterns.

Part of what we’re doing, we’re not in shopping malls. We’re used a lot in space planning, so working with large people who have real estate. You take a meeting room like this, is it used 80 percent of the time or 20 percent of the time? Of the 80 percent of the time it’s used, does it have six people in it or two people in it? It doesn’t matter if you’re a small building ...

Oh I like this, Mark.

... but if you’re in a ...

See, you bring a fresh idea. It’s sensors. I’m obsessed with sensors.

It’s sensors.

I talk about sensors a lot. There’s going to be sensors everywhere.

Industrial-scale sensors. I’ve invested in six companies in the category and across all different applications. Other examples, insurance policies. If you can’t have too many people in a room, we’re doing line busting, so you can actually see how many people are in the line at certain places that you want to go. We’re helping businesses with things that sound mundane, like HVAC. When do you turn on your heating and electricity based on when employees come in?

Sure. I think line mechanics are fascinating. I spent an hour talking to the Disney expert on this.

If you’re ever interested, I will show you a demo from Density that we have a real-time monitor that shows you line patterns going into queuing up at restaurants.

I love that. Literally, I spent an hour with the Disney person in charge. That person’s a genius because they know how to move people around.

It’s important.

Things they say in signage and how you signal crowds. It was riveting.

The other thing that businesses don’t know a lot about is something called tailgating. When you go into a building and someone swipes their card, people follow them in even though they’re not supposed to.

Oh yeah, we know that. Yeah.

With Density, we can track tailgating and we can help you know when there’s a problem, but we do it with lasers, not cameras. The important thing about that is we’re building an anonymous service.

I see.

In a world where people increasingly don’t want to be monitored with cameras, we made a conscious choice to make it anonymous.

Except we’re always monitored.

You may be monitored by other people, but we’ve made a conscious choice for people to not be monitored.

It’s fascinating. It’s interesting because right now this Facebook thing’s about that. What are you following around?


Yeah, it’s really interesting. It’s computer vision. I like that, Mark. You’ve made me think there for a second. I’m going to come see all these companies.

I want to finish up. You’ve run a big conference there, too, where you have everybody, and you had the mayor of Los Angeles who may be running for president, apparently.

He said onstage with us that he is.

That he is, okay. Does he have a good chance?

I think he’s probably one of six or eight people who could really do it. I think he would make a great candidate.

Yeah, it’s interesting, I just did an interview with Anthony Scaramucci and he thinks Trump will win if the Democrats put up a Communist, essentially. He thinks they’re going to put up a Communist, that’s why he’s going to win, instead of ... I said, he’s sort of in the middle, isn’t he?

I mean, he’s definitely a Democrat. I think he’s done a great job at protecting immigrants. He’s done a great job at running the second-largest city in the country. I think he’s right on a lot of positions, but he’s very pro tech. He’s pro innovation. He’s pro trade.

Is that important? You do that in LA. You do sort of serve.

I’m a big believer that international trade is a net positive for everybody. I don’t think our ailment as a country is the fact that we’re trading with Asia. I think we get a lot more benefit from cheap products provided to everyone that give them more disposable income, but I believe that we need to take the gains that we have from being in a world economy, and invest them in education and infrastructure for people affected. I’m a Democrat, and I believe in taking those gains and reinvesting them.

I’m not to the far left, so I don’t believe in, like, Elizabeth Warren’s view that we should not be part of TPP because I believe that China will just dominate trade in Asia, and that’s a lost opportunity for us.

Lastly, tell me one thing that people don’t ... again, I don’t want to regionalize you, but you are the most prominent venture capitalist in Los Angeles now. What is something that you think is wrong that people get up here and elsewhere about LA tech?

The No. 1 narrative that people have about LA tech is they perceive it as just the place where you’re building video and advertising and kind of lightweight tech. I think they misunderstand that we have phenomenal engineering talent, that we’re really building some big ambitious projects. Some of them are going to be very successful, maybe not at SpaceX level, but that’s a phenomenal success.

I’ll just give you a couple examples. I will mention that they are Upfront companies so that I’m not sounding like I’m talking my playbook without disclosing that. uBeam, which is a wireless energy company. They’ve had some positive press and some skeptical press, but they really are innovative, and they’ve really pushed the boundaries. We have gotten direct feedback from the market that nobody has done the kind of wireless energy transfer that we’ve done.

Great idea. We debuted them at AllThingsD.

In fact, you’re right. I remember that. Meredith’s just fantastic. She’s really truly an entrepreneur, an innovator, and I think she’s going to build something very successful. You never know.

Another is Rebecca Cantor, who has created a way to do cognitive assessment using computer games. You run simulations where you have, I’ll give you an example, a virtual world of fish, of coral and plant types, and you have to assemble the right fish, coral and plant types in an ocean environment with the right level of salinity and sunlight and depth to create a self-sustaining ecosystem. How you make the decisions tells something about how your brain processes information. She built that because she wants the SAT to go away because she wants to teach children differently.

I have two kids that have to take it. They’re very nervous.

We’re teaching rote memorization to children where rote memorization isn’t what’s required.

No, we show them how to think.

Her first client is McKinsey and they have used it to start to enhance their recruiting process, so they had under 1,000 people go through it and compared it against their own recruiting process. They like it so much that they’re now ...

That sounds fantastic.

... embracing it as a technology. That’s being built in Los Angeles. It’s real true breakthrough technology.

The concept. It’s the idea that it’s not this ... the latest ...

It’s the right way. We’re building real technology.

... the latest Matt Damon startup, essentially.


Although does he have one? I’m kidding.

The Kardashians deserve a lot of credit.

Oh, you know, I’m a big fan. You can’t insult a Kardashian to me.

They deserve a lot of credit.

Kidding. I had her onstage at Code Media.

I think they’re wonderful.

Everyone was shocked by it. I think they’ve done a lot of really interesting things. Whether you like them or not, or like their messaging, it’s still, they’re very fascinating.

They’re amazing business people.

They’re innovative people, they’re amazing. Anyway, Mark Suster, thank you so much for being here.

Thank you for having me. I appreciate it.

I’m sorry I fuck up your name all the time.

That’s all right.

It was great talking to you. Thanks for coming on the show. You’re one of my favorite VCs to talk to because you’re so smart. I don’t know if you know this, not all of them are. Thanks again for coming.

This article originally appeared on

Sign up for the newsletter Today, Explained

Understand the world with a daily explainer plus the most compelling stories of the day.