Sydney Startups Facebook group held its second Sydney Startups AMA (Ask Me Anything) with Niki Scevak, Blackbird Ventures. I’ve taken the main Q&A and transcribed them below so its easier to read on the web. I’ve also included each smile emoticon 🙂
The purpose of the Sydney Startups AMA’s is to increase the level of knowledge in the Sydney Startup community. We want to give access to the best entrepreneurs and investors to the Sydney Startup ecosystem. Our community continues to grow. We now have 3,600 members as of 13 November 2015.
Niki Scevak Background
Blackbird is one of Australia’s leading VC firms for tech startups. It closed $200mil for its latest fund. Blackbird’s investments include Sydney startups Canva, AffinityLive, Shoes Of Prey, AutopilotHQ, Zova, Bugcrowd, and more.
Prior to Blackbird, Niki founded Startmate, one of Australia’s leading accelerators. Before that he founded Homethinking, a US-based online real estate site which helps home owners choose a selling real estate agent by ranking agents on their sales history and customer reviews.
Niki’s Specialties are marketing, product management, business development, financial analysis, forecast modeling, public speaking, negotiation
Sydney Startups AMA TRANSCRIPT
James Alexander: Big thanks to Niki Scevak for joining our #2 AMA. Niki is an investor and co-founder of Startmate and Blackbird Ventures, one of Australia’s largest VC funds that invests in global internet companies.
We’ll leave the AMA thread up for others to browse for the next few days. If you want to find out more about Blackbird visit blackbird.vc
Stay tuned for our next guest Sydney Startups AMA announcement!
James Alexander: To kick things off Niki can you tell us about the new $200m Blackbird fund?
Niki Scevak: The new fund is all about following the whole of a startup’s life versus investing in more startups. So we will still invest in 8 startups a year and we will still try to find the best founders as early as we can but we’ll now be able to invest in the Series B/C/D/E/F/G/H rounds too
Daniel Jones: What makes an investable company?
Niki Scevak: To me you need two things: 1) great ambition. the more you have the easier it will be to raise/hire the best people/get the best people to do their best work and 2) happy customers who come back time and time again and love your product. The more happy customers you have the more you will be able to raise
Sean Greenhalgh: Hi Niki, I’ve been told A lot of VC’s only really look at businesses which are international from day 1. With companies like Uber their business plans have always been go territory by territory so you can get to the point of non-displacement in one region before continuing, and it can be argued that’s why they’ve been so successful. What are your views on this strategy?
Niki Scevak: We do in particular have a focus on global from day one and that’s exactly right: we would have missed Uber, AirBNB, Seek, REA etc. because of it. I think at a higher level it’s trying to be the best in the world, so if you can honestly say how you’re 10X better than Uber rather than saying you’ll go to some city where Uber hasn’t launched yet, then that’s fine
Phoebe Adams: What do you rate more highly? Profitability vs. traction
Niki Scevak: On some level profitability means that you’ve run out of ideas on how to invest that money into your own business. Software companies have really high margins so at scale you will be profitable but I think that with all the wonderful things happening in technology at the moment we should have less profitability 🙂
Mark Bennett: “In hindsight what are Niki’s top 3 good things and 3 bad things he sees from companies that have raised money from Blackbird?”
Niki Scevak: 1) Founders on a mission to create a company with a real purpose 2) Because of the first point the ability to hire the best people and 3) The founders have an ability to learn at an astronomical rate (they start off as L platers and quickly graduate to formula 1 drivers)
top 3 negative 1) lose focus 2) pay attention to their competition too much 3) see the dark side of double sided emotions (e.g. visionary is the same base thing as delusion 🙂
Jason Allan: What NPS score range do you need to get interested in a startup?
Niki Scevak: +50 is awesome but being able to see from the metrics that word of mouth is happening is even better. So few of the great startups spent much on marketing
Alex North: “When would founders be better off in the Bay area rather than Australia?
Sydney has some advantages, California has many. In what circumstances might founders do the right thing for their company by moving to one place or the other?”
Niki Scevak: I think if you have a complex sales process then it’s absolutely required that you be close to your customer. There are far more negatives though, especially with the cost being 2-3X what it was in SF 5 years ago. The other implied assumption in the question is that you choose one or the other: all of our success stories have both and usually 2/3rds of the company in AU for product/engineering/founders and 1/3rd sales, customer success, marketing in the Bay Area
James Martin: There have been quite a few SaaS products (Bugherd, Kinderloop, Happy Inspector etc) through the Startmate program. Are subscription based platforms generally a “shoe in” to accelerator programs such as Startmate, especially with pre-existing revenue?
Niki Scevak: I don’t think it’s a shoe in, you always have to examine why the founders give a shit about a particular problem but you’re right in that Australia has produced lots of awesome SaaS founders. I think with the inspiration of Atlassian and Campaign Monitor we’ve spawned a next generation of great companies. At Blackbird, 70% of the companies in our first fund are SaaS and even companies that we though weren’t SaaS when we invested (Canva) turned out to be SaaS companies (Canva for Work)
Chhai Thach: Hi Niki, for bootstrap startups who are ready to scale, is it time better spent raising an angel round first and go for series A later?
Niki Scevak: The best thing is to have happy customers and then the investors find you. That said it’s very hard to get to lots of happy customers when you bootstrap. I think the decision of whether to raise or when to raise is a function of competition. If there isn’t any, then try not to but if you see the market is starting to pass you by, then it’s almost required that you do to keep up
Vik Nithy: “How can we fix the education system?
UNSW is trying to figure out how to improve the education, wellbeing and creativity of its students – flipping the classroom, teaching mindfulness and changing curriculums, but students still aren’t motivated to be there. What would you want Universities to teach and how?”
Niki Scevak: Honestly, I have little confidence that we will fix the education system from within the education system. It will happen outside through great programs like FIRST Robotics, Club Kidpreneur etc. Basically to fix it though, we need to teach software development as an art not a science and we need to teach entrepreneurship really early on. The comment about software being an art or creative process is very underestimated – it’s not about throwing some instructions over the fence and waiting for the coder to lob it back, it’s about using technology to solve the world’s problems and being able to reach billions of people via your software creation
Jindou Lee: What are some of his fav companies that he has not invested in yet and why?
Niki Scevak: We do pass on regional businesses that are built by inspirational founders. I have a lot of respect for Tim and Jonathan at Airtasker, Bridget and Emily at Expert360, Lachlan at LegalVision and the Vino Mofo guys. I also think Tyro could be a wonderful, transformative company now that it is a bank
Phoebe Adams: When does Blackbird like to see companies? a) beta / idea b) local traction and proof the business can scale c) international traction and/or something different … and if you see a business too early but you like them do you follow their progress?
Niki Scevak: We want to see ambition! And then the two shits: why do the founders give a shit about the problem/customer and can they get shit done. Then it’s about how happy the customers are not how many. What % of your customers is the product truly indispensable to? As I mentioned earlier, we also only invest in global from day one businesses (no local copycats and no prove it in Australia first)
James Martin: The “no prove it in Australia first” is an interesting limitation that Blackbird has. To me; this approach is part of the lean methodology. Build something, release it to a small market, iterate and optimise.
Niki Scevak: James Martin Usually you get bad market feedback if you try in Australia first since we have so many depressing branch office culture companies
Jason Allan: What’s the book or podcast or other resource you gift the most to the founders you work with, if any?
Niki Scevak: Peter Thiel’s Zero to One perfectly captures the world of startups and venture capital. Charlie Munger (Warren Buffet’s partner) has a book called Poor Charlies Almanack that is the best book on business/investing/life I have ever read.
Ryan Cross: Are you concerned about the number of women founders? If so, is startmate/bbv doing anything about it? What do you think the Australian/Sydney community can do more broadly?
Phoebe Adams: Good question, glad a guy asked it.
Niki Scevak: Deeply concerned. Some of our most successful investments (Canva and Shoes of Prey) are women led but our overall percentage (both in terms of funnel and % of investments) is quite frankly embarrassing. We’ve focused our efforts by sponsoring women led teams in things like FIRST Robotics, we organise a conference for school age kids to learn about technology and entrepreneurship and make sure the majority of attendees are women (we had 150 for our Sunrise Alpha conference and we are doing a similar thing with Above All Human in Melbourne in January) and personally I am going to make sure my two young daughters help to fix the ratio too 🙂
Dailius Wilson: Niki thanks for your time! I spend most of my time empowering sales and growth marketing for startups – who is the best sales person you have ever encountered ?
Niki Scevak: I think Steve Jobs was the master – convincing people to subscribe to a world view which in turn means that you bu every product he ever created 🙂
Ryan Cross: Is “tech” really a differentiator still, or are all companies/startups tech companies at this point?
Niki Scevak: Exactly. It’s not a differentiator by itself but you certainly notice it when it’s done well and when it is not done well.
Ryan Cross: What does an average day in the life of Niki Scevak look like?
Niki Scevak: That has changed now. It took us 2 years and 500 meetings to raise our first fund 3 years ago so there was a lot of selling the dream. Nowadays it’s more meeting early stage founders and trying to help them and spending time helping the companies we have invested in. I try to say no to all the other meetings with Gov, service providers and other hangers on
Sean Nunan: Niki, what qualities are you looking for in a founder and a startup team? You’ve mentioned BIG ambition, global focus, F1 fast learners. What else do you look for? – thanks
Niki Scevak: Grit and determination are big qualities. We call it ‘the mongrel’. That almost obsessive competitiveness. I can usually see it when I play poker with them 🙂
Sean Greenhalgh: If you came across a business with very big, international aspirations but were focusing on proving a business concept on a local level would you ever consider it or would you wait until it became international before looking into it?
Niki Scevak: I would deeply question why they started in Australia because often if you’re selling to companies we have a very branch office culture or large companies that are fat and happy in oligopoly situations. But if you truly were trying to be the best in the world we’d still be interested but just initially sceptical
Sean Greenhalgh: Very harsh but true insight! Thanks Niki! 🙂
James Martin: With the increase in the number of VC rounds growing in SF (according to the NVCA), are you seeing a similar pattern here in Sydney? Is Blackbird getting pitched more than ever? Or do you feel Australians prefer to keep 100% of their business and grow the business at a more conservative pace?
Niki Scevak: Definitely more rounds because there are more people (there were practically zero 4-5 years ago so we could only go up). The number of pitches has gone up but not hugely so. The number of applications to Startmate for example has roughly been 200 for the last 3-4 years
Nathan Waters: What broad trends are you seeing and excited about in technology over the next 5-10 years? My issue with Australian seed/incubators/VC is that it seems to focus around niche incrementalism. “Global ambitious startups from day one” is what is said, but what seems to get funded are small cashflow startups helping solve one very specific enterprise niche problem or local arbitrage plays. We need to be funding Australian startups that create new markets, have inbuilt network effects and potential to become monopolies in their category.
Niki Scevak: Driverless cars are very exciting to us and the more we learn about that, the more excited we get. Also, we’ve got two Space startups in next year’s Startmate. I think there are really exciting opportunities (e.g. http://www.theregister.co.uk/…/virgin_qualcomm_back…/) there too
Sahil Bhandari: “How hands on is Blackbird Ventures with their investments?”
Niki Scevak: As hands on as the companies like but usually we meet with the founders once a month to go deep on one issue and try to then help with that by intro’ing to people we know that have gone through the same problem
Ahm Ed: What should founders avoid when pitching you/blackbird?
What’s the worst pitch you’ve heard? what did they get wrong?
Niki Scevak: Don’t tell us you have an exit strategy! We like to say that we want the founders to be doing their life’s work. Venture capital only works when there are big success stories and big success stories only happen when there is a success company AND the founders say no to acquisition offers over and over again. So many founders think that investors want to hear you have an exit strategy and that’s just complete bullshit. Also, your 5 year forecast isn’t ‘conservative’ 🙂
Phoebe Adams: Do you find the time to work on your own startup ideas?
Niki Scevak: Nope. I am constantly humbled by how much better the ideas of founders are than my own. With that said, Blackbird itself was a startup and we’ve always built it with the same care and passion
Brandon Cheung: What is the most memorable thing a founder you have came in contact with has said or done? If any, who and why has it resonated with you so much?
Niki Scevak: I don’t really have a good answer to this one. There is a company we have invested in that is designing, manufacturing and then operating its own network of driverless cars and that was an epic pitch. Really excited to say you’ll hear more about them in the next few months!
Su: the Charity and Not-for-profit sector offer a lot of social value to the broader community however they don’t produce profits – when investors decide on whether to fund Tech tools for the NFP sector what are they looking for ? (given the lack of profit motive)
Niki Scevak: It is all about maximising impact. I think as you’ve seen with companies like Kickstarter, Warby Parker, Tom’s Shoes, Patagonia and the B corp movement that charity and not for profit doesn’t have to be mutually exclusive. There is the same skew of quality and crap in the NFP sector and I think the crap end of the scale tend to make an excuse that they are different when they are just not particularly well executed
Ahm Ed: Does Blackbird invest in companies that are domiciled outside of Australia? I’d imagine a lot of the companies are incorporated in the U.S but what about say Singapore or London?
Niki Scevak: Yep, usually it’s a Delaware C Corp but we’d be open to elsewhere. Our mission though is to partner with the best Australian founders so although they can be anywhere, they still have to be Australian 🙂
Daniel Jones: “How he would improve the regulatory environment in Aus to cultivate a truly world class startup scene?”
Niki Scevak: I have a bit of a different personal opinion in that I don’t think it matters at all. Look at California: nearly a bankrupt state, high taxes, you pay for your employees healthcare in a system that is truly fucked up and yet it is home to the mecca of startups! I really do think that the government needs to focus on fixing the education system which is absolutely in the wheelhouse of its influence
Sean Greenhalgh: Hi Niki, expanding on this, what are your feelings on the way Australia taxes Employee share scheme programs?
Niki Scevak: Sean Greenhalgh Used to be f*cked up but now is fine
Rayn Ong: Should I say NO to investors trying to “tranches” their investment into my startup? ie they bank the fund over multiple months based on milestones?
Niki Scevak: Absolutely tell them NO and then tell every other founder you meet to not to talk to those investors!
Matthew Ho: What do you think of the “Quantum Harbour” plans for Sydney?
Niki Scevak: It’s all bullshit. A noisy sideshow. Suddenly startups are flavour of the month with politicians but their imaginations are limited to wearing a hard hat and cutting a ribbon in front of cameras and for some reason the only way they think they can help is to build more buildings!
Nat: “Hi Niki – We are building a very niche professional services marketplace. Do you have any advice when it comes to building both the customer/user and supplier database at the same time – to ensure that it’s a balanced approach? (We are bootstrapping so aren’t using lots of $$ for customer acquisition)”
Niki Scevak: Focus on the demand side of the marketplace. Too many people overbuild supply for a vanity metric. I like the number of full time wages supported metric. Josh’s blog also has lots of great marketplace insights (he was an early team member of oDesk)
Sean Greenhalgh: What is the one biggest mistake you see when founders pitch Angels/VC’s and what are some of the best things you’ve seen in a pitch?
Niki Scevak: They prattle on and on. Being able to precisely describe what you do in bold, inspiring words. Somewhat related to that is the crocodile meeting they spend 95% talking and 5% listening (crocodile has huge mouth and tiny ears).
Rayn Ong: My startup is too early for VC but 20 angel investors are interested to put $10k in each. Will that be a problem later on when I am ready for VC?
Niki Scevak: No just don’t give them control rights which mean that you need 20 signatures each time you go to the toilet!
Matthew Ho: We’ve now finished the Sydney Startups AMA with Niki Scevak. On behalf of Sydney Startups, I’d like to thank Niki Scevak for the awesome AMA session. Thanks everyone! We’ll leave the discussion pinned here for a while so everyone can read it. More info about Niki’s VC fund and accelerator program can be found here:
Stay tuned for the next Sydney Startups AMA!
Niki Scevak: Thanks everyone for having me!