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What I Learned During My Day With A Venture Capitalist

Ever wonder about the conversations that go down once a startup secures funding? Our takeaways from a day at Metamorphic Ventures.

What I Learned During My Day With A Venture Capitalist
[Photo: Benjamin Loo, Getty Images]

David Hirsch, like most venture capitalists I’ve met, skews toward the hyperactive. When I met him at the office of his company Metamorphic Ventures, he jumped quickly from subject to subject. The venture capital firm was just moving into new offices on a tech-heavy stretch of New York’s Park Avenue South. Furniture was being brought in from the hallway; Hirsch was eager to show a spray-painted mural of the Brooklyn Bridge and Golden Gate Bridge next to each other.

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A large part of his firm’s branding centers around bringing the East Coast and West Coast tech scenes closer together. Hirsch joked to me, a New Yorker-turned-Los Angeles transplant, that the mural should include the Hollywood sign as well.

David Hirsch

In a telephone conversation, Hirsch–one of Google’s earliest East Coast employees–explained his company this way: “One of the things distinguishing us is being a bridge between the East Coast commercialization–that is, categories like consumer packaged goods, financial services, and health care–with West Coast innovation and platforms,” he said. “My whole Internet career has been about leveraging East Coast distribution with West Coast innovation.”

At Google, he spent much of his career as part of their first wave of non-engineering, non-West Coast hires. Prior to that, Hirsch was at an Internet advertising network. In 1998, future Google exec and now-AOL CEO Tim Armstrong hired him at first-wave dotcom firm Snowball; the two joined Google in 2000.

As a journalist covering the technology industry, I sit down with venture capitalists frequently. But Hirsch and his publicist had approached me with an interesting offer earlier in the autumn: to stop by his offices, shadow him on a workday, and watch him meet with advisers and portfolio companies.

That’s how I found myself in their office early one morning talking to Hirsch about his company’s portfolio, which skews heavily toward advertising tech companies, payments firms, and e-commerce. One of Metamorphic’s companies, fantasy sports site FanDuel, ended up facing huge legal headaches a few weeks after my visit, thanks to a clash with the New York attorney general’s office. But there was no sign of that during my visit.

It wasn’t a “true” shadowing–the mix of portfolio companies and contacts Hirsch met with were clearly devised for a visiting journalist–but the meetings were, well, damned interesting. Here’s what I learned during my day with a venture capitalist:

You Want To Be Early–But Not Too Early

8:30 a.m.: Over coffee and the half-pint-sized bottles of Poland Spring water with pastry and fruit salad platters that are mandatory at New York and Boston morning business meetings, a patent lawyer, an angel investor, and a virtual reality expert were discussing the virtues of VR sonograms for pregnant women.

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Eric Greenbaum, a patent attorney with an interest in virtual reality, was discussing the virtues of non-gaming uses for virtual reality with Hirsch, Metamorphic associate Joshua Nussbaum, and Rich Greenfield, an analyst and investor. The meeting seemed to be set up to show why Metamorphic was investing in virtual reality–not for games, but for everything from movies to medical innovations (like interactive sonograms).

Much of the meeting consisted of Hirsch grilling Nussbaum on specific aspects of the presentation and virtual reality sphere, with Greenbaum and Greenfield jumping in to speculate on various aspects of the industry.

Hirsch wound down the meeting by explaining, “The hard thing for us as investors is to make sure to be early–but not too, too early.”

A lot of virtual reality, it seemed from the conversation’s tenor, is too, too early.

Photo: courtesy of Metamorphic ventures

In Corporate Culture, Honor Humble Beginnings

9:30 a.m.: The next meeting of the day was an interesting one. Hirsch appeared to have used this journalist’s visit and his office’s relocation as a pretext for a reunion of some of his old Google coworkers. The room had some prominent names.

Huffington Post CEO Jared Grusd, former Buzzfeed president and Daily Mail North American CEO Jon Steinberg, PayPal executive Kristen Morrissey Thiede, and Pinterest executive Robert MacDonald were sitting around discussing the old days.

Grusd quickly bought up his memories of playing ping-pong for three weeks with a table-tennis-loving potential investee at Google to seal a deal, as the group discussed Google’s corporate culture. He then went on to explain, “Tim Armstrong says it is like Disney on Ice–similar in each city, but with different iterations.”

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Thiede, who worked out of Google’s offices in Zurich for six months, compared the international feel of the office–mostly made up of non-natives–to “college.” She also noted that a large percentage of the Zurich office consisted of engineers who were unable to receive U.S. visas.

Hirsch then discussed Google New York’s unlikely birthplace–a Starbucks coffee shop on 86th and Columbus located near Armstrong’s apartment. In September 2000, Armstrong, Hirsch, and other early-stage New York Googlers set up operations out of that coffee shop until they leased space elsewhere in Manhattan.

Conversation then turned to who was the most accessible high-level executive at Google; the consensus was Eric Schmidt. Schmidt, apparently, was in lockdown in New York for three days after 9/11, which altered his feelings toward the nascent New York office. Schmidt’s first visit to the New York office of Google, Hirsch said, was scheduled for the morning of September 11.

To this day, Hirsch notes, there’s a huddle room at Google’s mammoth, 4,000-strong Chelsea Market headquarters in New York called “Starbucks at West 86th Street.”

“How Can I Help You?” Is A Good Question To Ask

11:15 a.m.: The day then switched from meeting with media executives to status updates from a small startup. Nowsta is a modestly sized communications company in Metamorphic’s portfolio that develops employee logistics tools.

Armand Patella, the company’s 27-year-old cofounder, explained Nowsta’s progress to Hirsch and brainstormed what sorts of potential customers the company should market to. For much of the morning, Hirsch seemed like a ceaseless multitasker doing 10 things at once and not focusing on one particular area. But with Patella, as he repeated “How can I help you?,” he was all business. Nowsta’s particular challenge seems to echo that of many other companies that are scaling as they receive funding. While it seemed to me that Nowsta had a roadmap for growth and a clear understanding of their industry, they were also coping with many small challenges that, combined, create larger obstacles for the company. A big part of Patella’s conversation with his investor skewed toward finding new approaches to tackle these smaller problems.

Taking A Breather Is Key

12:00 p.m.: Gears shifted from tech to meditation. In Metamorphic’s main room, the company was hosting a lunch get-together for their portfolio companies to show off their new offices. I discussed drones with the CEO of content marketing firm Taboola, and made small talk over sandwiches about Jon Ronson’s book So You’ve Been Publicly Shamed with someone from another company Metamorphic invests in. But while the networking and schmoozing took place over sandwiches, Hirsch went in for transcendental meditation.

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As these things go, Metamorphic has an official “fitness adviser,” yoga instructor and author Eddie Stern. For the session I partially sat in on, Hirsch meditated with Mario Orsatti of the David Lynch Foundation. I did a basic breathing exercise with them before leaving them to their session. Venture capital, it seems, is a place where bringing in an instructor to conduct a lunchtime transcendental meditation session is a regular thing.

Photo: Neal Ungerleider

Mom Blogs Are Still Hot

1:15 p.m.: The next meeting on the agenda for Hirsch was with e-commerce cosmetics firm Stowaway. They explained the company’s business model of selling smaller-sized cosmetic products: “Our value proposition is that we sell smaller, half-size, and half-price makeup you can use before it expires.” The company’s cofounder, Julie Fredrickson, spent the session discussing marketing tactics with Hirsch.

Fredrickson and co-founder Chelsa Crowley represent a female-owned and operated company navigating the very male world of venture capital. Investors include Gary Vaynerchuk of Wine Library, entrepreneur Jason Calacanis, and fashion designer Marc Ecko. Part of the conversation switched to the discussion of the term “female entrepreneur.”

Frederickson seemed at times amused by the challenges involved in male investors understanding the intricacies of the cosmetics businesses, and frustrated by stereotypes of women in e-commerce and the tech world in general. As Fredrickson put it, “One of the problems with being a female entrepreneur is that half the time, the word ‘female’ comes before entrepreneur . . . But we’re just entrepreneurs with vaginas.”

For Stowaway, a larger question is finding the right channels to advertise in. A large part of their conversation was based around the positives and negatives of advertising on YouTube and blogs. “Mom blogs crushed for us with astounding conversions,” Fredrickson added.

Making The Right Bet Is Just One Part Of Making Money

2:00 p.m.: I spoke with Hirsch a bit more regarding his day-to-day life as a venture capitalist, and he was careful to follow up by emailing me an article from The Economist about entrepreneurs. Called “Reinventing the Company,” it centers on the role of individual entrepreneurs in starting high-earning private companies, or “unicorns,” as the terminology goes.

My impression after spending the day with Hirsch is that he very much sees himself as someone who helps his investors make more money. That is to say, his role is twofold: First, his firm chooses which horses to bet on. Then they decide how best to make sure the companies they invest in become profitable. For the companies receiving funding, access to Hirsch and Metamorphic’s network of contacts also sweetens the deal.

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But it was also an incomplete picture. I have been to the offices of venture capital offices having rough days, and it wasn’t a rough day. There were no screaming phone calls or frantic, hastily improvised Skypes. None of the meetings I sat in on involved companies discussing financial trouble; there was no discussion of companies changing their business models, and the meetings I sat in on were preplanned by the firm. Metamorphic is one very particular venture capital firm, and one that’s invested in a particular mix of ad-tech companies, SaaS services, e-commerce startups, and virtual reality companies. Despite their frequent nods to their California portfolio, they’re very much a product of Silicon Alley rather than the parallel worlds of Sand Hill Road or SoMa.

But seeing the firm and their portfolio companies in action was worthwhile. Nowsta’s Patella was blunt when he spoke with me: Venture capital was what allowed companies like his to scale. Understanding in part how they go about that is integral to understanding the startup ecosystem. Sure, some of these companies will fizzle out (the rule of thumb is that nine out of 10 startups go kaput), but odds are good that a few of them will make venture capitalists like Hirsch very, very rich. In the meantime, there will be no shortage of startups knocking at the doors of Metamorphic and their competitors, looking for the funding that lets them scale in turn.

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