GQ South Africa — May 2017

Words byRowland Manthorpe

MAY 2017GQ.CO.ZA 57

THE TROUBLEMAKER

WHO’S CHANGING

SILICON VALLEY

Venture capitalist Dave McClure is ready to be taken seriously

D

ave McClure doesn’t

like venture capitalists.

‘Most VCs don’t work

that hard,’ he says. ‘hey think

they’re great stock-pickers.

hey’reallfullofshit.’here’s

onlyoneherespects:himself.

McClurebelieveshehas

cracked the code of early-stage

venturecapital.Ratherthan

focusingonafewhigh-value

companies, the traditional

measureofVCsuccess,heis

pursuingahithertountried

strategy:investmentinbulk.

Since launching Silicon

Valley seed fund and

accelerator 500 Startups with

ChristineTsaiin2010,McClure

hasinvestedinmorethan1600

companies, making ‘lots of

littlebets’ataratethatnow

exceeds500ayear.‘We’rethe

most active investor in the

world.’ VCs have traditionally

seen themselves as skilled

craftspeople guiding carefully

selected startups towards

asuccessfulexit.McClure

describes 150-person 500

Startupsasafactory.

So what is his strategy?

‘It’sstupidlysimple.Ibeton

a lot of stuf that’s low priced

andmostofit’sgoingtogoback

down to zero. But some of it’s

goingtogoup.’Accordingto

venture capital database CB

Insights,nearlyonein100seed

dealsendupbeingworthmore

than$1bn.SoifMcClurehas

500 companies in his portfolio,

he should getive unicorns.

McClurearrivedatthisthesis

aftertwoyearsasaninvestorat

Sean Parker and Peter hiel’s

Founders Fund. McClure went

ona‘prettyfuckingamazing’

streak,backingTwilio,Lyft,

SendGrid,CreditKarmaand

TaskRabbit – all multimillion

dollar companies with strong

prospects for exits. But he left

in 2010 feeling his success was

largelydowntoluck.

‘I turned down Uber at

a$10mvaluationbecause

I thought Travis [Kalanick] and

Garrett[Camp]werelazyand

richalready,’hesays.Selecting

unicorns was impossible, he

decided: one could sense

someonewascleverandhard

working,buteventheperfect

candidate failed often.

He sees himself as a rebel

against Silicon Valley

consensus. ‘Everybody in

theindustrythinksI’mthe

crazyperson,’hecomplains,

‘shootingmygunsof.’Butyou

getthesensethathecouldn’t

stop,evenifhewantedto.

Atatimewhenrival

accelerator Y Combinator

strugglestoexplainitslinks

with Trump-supportinghiel,

McClure hopes to become the

go-to for founders outside the

SiliconValleybro-ocracy.

His brash manner causes

himdiiculties.Headmitsthat

largelimitedpartnerships–the

fundswhichprovidemostof

thecapitalforVC–havebeen

putofbyhisswearycriticism

of their approach, or even just

byhisappearance.So,as500

Startups raises its fourth fund,

McClureistryingtowin

himself respectability.

Hetookthestepofreleasing

detailed data on 500 Startups’

performance, to prove that

limited partnerships ‘should

give us money’.

Foramanwhosayshis

biggestthreatis‘otherpeople

realisingI’mright’,McClure

spendsalotoftimeandenergy

advertising his approach to

investment.Hetweetsand

blogs. He appears on podcasts

and speaks at conferences.

hebadnewsforMcClure

is that his message might be

gettingthrough.YCombinator,

his biggest competitor, has

started investing in much

greater numbers.

But McClure isn’t worried.

Forhim,therealcompetition

isn’t among accelerators, but

between accelerators and

traditional business. Where

many people see a bubble, he

seesaworldinwhichstartups

are becoming the dominant

form of business. ‘Cost of

computing is cheap, the

accessible audience online is

very large... it’s less intensive

to build online businesses that

can access the world.’

Butinthemidstofallthis

innovation the venture

system has remained largely

unchanged.‘It’sanincredibly

ineicientindustrythat’sin

thebusinessofdisrupting

everybodyelse–butithasn’t

been disrupted itself. Why is

therenoAmazonforVC,why

istherenoGoogleforVC?Well

thereis–it’sYCombinator

andit’sus.Butwe’rejust

getting started.’

INVESTING

‘I turned down Uber at a $10m valuation because

PHOTOGRAPH BY RAMONA ROSALES I thought Travis and Garrett were lazy and rich’

Dave McClure