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1Mby1M Virtual Accelerator Investor Forum: With Susan Stone of Sierra Wasatch Capital (Part 6)

Posted on Saturday, Feb 9th 2019

Sramana Mitra: So geography. You said you’ve invested in Los Angeles. You invested in New York. Are those the two places where you invest mostly or are there other places as well?

Susan Stone: You know we’re pretty open within the US. Because we have that hands-on strategy, we really like to invest in places where we can be there.

Sramana Mitra: You said Michigan too, right? The lawn one is in Michigan.

Susan Stone: The lawn one was in Michigan.

Sramana Mitra: You don’t have any problem with investing in other geographies?

Susan Stone: No, not at all. I think that’s where some of the exciting companies come out of. I got a secret weapon in the Midwest because we have a venture partner whose name is Todd Sullivan. He’s based in the Midwest and manages the Lawn Guru investment for us. He’s an entrepreneur operator himself. He’s our operating partner and he covers the Midwest for us.

I don’t have to go to Michigan frequently because Todd is there. I would say we are location-agnostic. Chad is based in Los Angeles. That just tends to be where we naturally gravitate but we’re happy to invest in companies all over the US. We’d look internationally but then again, it’s just about bandwidth and being able to get there and spend quality time with the entrepreneurs.

Sramana Mitra: You are not chasing unicorns. Is that a fair conclusion?

Susan Stone: That is definitely a fair conclusion. We are not chasing unicorns.

Sramana Mitra: Your investment thesis is primarily around doing capital-efficient media deals that are going to get acquired at a reasonable evaluation.

Susan Stone: That’s exactly right. You said it better than I would have. There are returns there. That’s the message for investors. That’s where we’re going to grow real businesses. We are not interested in throwing money at negative unit economics. We are not interested in growing at all costs as quick as you can. That may mean that we need a little bit of the unicorn returns on the table. But we think it de-risks the portfolio just a little bit. We are really passionate about entrepreneurs who are driving profitability and who are building real sustainable businesses.

Sramana Mitra: Another piece that I recently wrote that has been trending on LinkedIn for the last five to six days. I don’t know if you have seen it – Bootstrapping to Exit. Have you seen it?

Susan Stone: I haven’t seen it. I have to admit I’ve been offline since probably for a week.

Sramana Mitra: If it speaks to you, I think I’ll comment a bit on what you just said about de-risking the portfolio. What you’re doing and what I think a lot of the micro VCs are thinking about is that there are many more smaller ideas than these unicorn ideas. There are lot of smaller TAM opportunities that can be good, solid profitable businesses that strategics are looking to acquire. Disregarding all that and the whole industry chasing unicorns is a very dysfunctional way for this industry to evolve.

Susan Stone: I agree completely. There was a nice New York Times article about that.

Sramana Mitra: Asking VCs to get lost paved the way for entrepreneurs to play this game. 

Susan Stone: I agree with that. I like that they made the point in a little bit of a controversial way because it gets people thinking about it.

Sramana Mitra: That was a wonderful conversation. I’m quite sure that we’re going to do stuff together in the months and years to come. If you’re out in the Bay Area, come have coffee with me sometime.

Susan Stone: I’d love to. Thank you so much for having me. This is terrific.

Sramana Mitra: Thank you for your time.

This segment is part 6 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Susan Stone of Sierra Wasatch Capital
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