By Rob Coneybeer, Wharton MBA 1996; Co-founder, Shasta Ventures
Together with two co-founders, I started Shasta Ventures from scratch. Questions like “When did I decide to start a new company?” “What was that like?” and “Where did it begin?” are often asked. Here’s where it begins.
A startup is a product of your imagination, fueled by a burning desire to serve your customers and create something new. When I teamed up with Tod Francis and Ravi Mohan in early 2004, Google hadn’t gone public yet, Amazon was about to go out of business, and eBay was at historic lows in the stock market. At the time, no one thought the consumer mattered in the technology world. Venture firms were openly abandoning their consumer practices.
When we started Shasta, the three of us took a deeply contrarian view. We believed in the importance of the end-user and started with a core belief in the power of consumer-driven technology businesses. We wanted to serve entrepreneurs (our customers) who shared that same point of view.
Our early slide decks talked about the rising influence of consumers in technology. Computing technology was originally used in the 50’s by governments to compute ballistic missile trajectories, and then in the 60’s by large companies to automate payroll. Next came minicomputers in the 70’s for medium-sized business, and the rise of client/server technology in the 80’s led to the adoption of PCs by millions of small businesses. Then came the consumer, with the Internet in the 90’s, but hype outpaced reality, leading to the boom of 1999 and bust of 2000.
Despite the aftermath of the Internet bubble, the underlying consumer demand for technology was clear to us. Consumers loved technology as it became cheaper, more powerful, and far easier to use. Internet traffic continued to grow rapidly. Based on our convictions, and a strong investing track record, we went on the road in 2004 to raise a $210 million inaugural fund based on an end-user-oriented strategy for investing in technology startups. We had well over 120 “first meetings” with prospective investors. Thanks to our track record, most institutional investors wanted to meet with us, but because the three of us hadn’t worked together before, and consumer startups were completely out of favor, many prospective investors found it easy to quickly say “no”. The “no’s” rolled in faster than we expected. Would we ever be able to raise the fund?
As you might imagine, we had quite a few sleepless nights in 2004.
Raising a first-time venture capital fund requires a LOT of investor due diligence, so each “yes” took longer than we hoped, after a litany of “maybes”. Eventually, we closed the fund after six months of active, full-time fundraising. In 2005 we started to invest, and since then we’ve built our firm by helping entrepreneurs build great end-user oriented companies – both consumer and enterprise focused – with early investments in companies like Mint.com, Lithium, Apptio, Nextdoor, Zuora, RelayRides and Nest Labs. We’ve also had our share of failures, with plenty of investments in companies that haven’t succeeded.
I must say that I’ve found it interesting how accurate we were about the skyrocketing influence of the consumer in technology start-ups. I’ve also been surprised by how rapidly other firms pivoted back into the space. Even enterprise technology has been redefined by the widespread consumer trend of “bring-your-own-device to work” instead of company-issued phones and laptops. Being correct about this trend certainly helped us, but our strategy wasn’t contrarian for long.
Reflecting on the last nine years, I’ve often thought about when exactly I decided to found a company. The answer is, I don’t really know. I think most entrepreneurs will tell you the same thing. There wasn’t a single moment in which the company was started – it was a continuum of events, starting with leaving my former firm. In fact, I still feel like it hasn’t ended yet. We still have so much to build and prove at Shasta and we work every day like our lives depend on it. Most entrepreneurs feel the same way about their companies, even after an IPO or other liquidity event.
Bio: Rob Coneybeer brings to Shasta Ventures deep experience in building startup companies. Prior to co-founding Shasta, he was a general partner at New Enterprise Associates (NEA) where he led 15 early-stage investments in core infrastructure technologies spanning semiconductors, software and networking equipment. Prior to joining the venture-capital industry, Rob served as a lead integration and test engineer in the Astro Space division of Martin Marietta. While at Martin Marietta, Rob helped build the first EchoStar spacecraft. Rob earned a master of science in mechanical engineering from the Georgia Institute of Technology and a BS in mechanical engineering from the University of Virginia. He also holds an MBA from the Wharton School, where he was named a Palmer Scholar.