Ryan Sarver on Life as a VC, Twitter’s Future, and Why Startup Spillover Out of SF is Inevitable

Ryan-Sarver5By Semil Shah

It’s been nearly a year since Redpoint Ventures appointed Ryan Sarver, Twitter’s former Director of Platform, as a partner. At the time, Sarver was making the occasional angel investment, but he has spent the last 10 months or so getting up to speed as a formal, full-time investor. We caught up with him last week to find out how it’s going.​

You recently left Twitter for Sand Hill Road. What was the process like talking to VC firms? What about the process do folks on the outside perhaps not fully appreciate?

Originally my plan when I left Twitter last year was to take three to four months off and then start something on my own. I had a few ideas brewing that I was curious about and if you had asked me, there was no doubt in my mind that was what I was going to do.

When I signaled that I was leaving Twitter, a few firms reached out to talk — some about EIRing and some about doing investing full time. I was still pretty focused on starting something in the fall, but after spending the summer getting to know the Redpoint team, I started to seriously consider the role. I spent a lot of time thinking back through my career to what I felt most fulfilled by and realized that I most enjoyed the early, foundational days of a company. Team building, vision setting, figuring things out when you have almost no information and no resources. I didn’t enjoy being part of a larger organization as much and realized that venture could be a way for me to do more of the parts that I loved and less of the parts that I didn’t.

I think the most unique thing about the hiring process is that, unlike a startup, you’re being hired into a partnership which makes the process fairly complicated. There isn’t a single hiring manager but many, and your time horizon is much, much longer. It’s a more complex process in many ways, but rightfully so.

What are your first few deals as a VC, and how did you go from “interested” to “having conviction” as an investor?

I’ve done two deals so far, but only one, Secret, has been announced. I think the idea of having and maintaining conviction has been one of the hardest parts for me in the role. It’s much easier when you’re an individual making angel investments to find founders and companies that you get passionate about. It’s a whole other thing to do it as part of a partnership with much bigger checks. To me the difficulty is in the lack of information and time in a deal. Founders are dealing with very imperfect information and they are living and breathing the space. As an investor, you’re getting to spend very little time with a team before you have to make a call. Naturally, I’ve found the deals that I have the most conviction about are the ones where I am coming to the deal with a lot of background in the space. There are a million reasons companies can fail, so you have to find the few things about the team and their approach that you can hang your hat on and that give you optimism that this one is going to beat the odds.

As someone with deep experience at Twitter, do you believe Twitter can grow its user base?

I think of it like “could Twitter as a product be valuable to more than 300 million people” and I have no doubt that that’s true. In many ways, I think it can be more widely applicable than Facebook even. Twitter is a real-time information service, similar to news, with messaging layered on top of it. Twitter’s biggest problem is twofold. First, it needs to better explain itself to the masses so that the next billion users know why they should be using Twitter. Everyone has heard of Twitter, but most people have no idea what role it fills in their lives. For those of us who have figured it out, it’s magical, invaluable and addictive.

Second, the product itself has to be more understandable to the masses without losing its soul. Tons of people have signed up for the service only to churn out because they don’t get value from Twitter. I don’t think this is a reflection of whether or not they can get value from Twitter, but instead a failing of the product to make it easy for the average user to get that value. Really it comes down to helping them find great accounts and delivering relevant content to them quickly. They have a huge challenge in front of them to accomplish those things, and I don’t think there is a silver bullet for them, but I feel strongly that it’s a product that could touch a billion users.

Give us an idea of how much time you spend in San Francisco versus the Valley.

I’ve gotten asked this a lot recently and I think the prevailing thought is that all deals have moved up to the city and out of the Valley. While it’s definitely true that there has been a big shift to the city, I’m still seeing some great deals down in the Valley. An overwhelming majority of consumer and mobile deals have moved to the city, so if those are the only deals you’re looking at, then you’re in the city 90 percent of the time. With that being said, we’ve seen some great deals down in the Valley [that] are typically more focused on b2b and infrastructure. RelateIQ and Jaunt, two of our more recent b2b deals, are both based down in the Valley, for example, whereas Secret, Coin, and HomeJoy are three recent consumer deals up in the city. On an average week, I’m probably splitting my time between Menlo [Park] and San Francisco.

Residential and commercial real estate in the city continues to get crazier and crazier, and I do think you’re going to see that trend push some new companies to open their first offices outside of San Francisco.

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