After 500 Startups Demo Day on Thursday, I sat down to talk to investor Dave McClure about the strategy and vision behind the early stage seed fund and accelerator program, which he hopes will eventually encompass 500 actual startups (currently the portfolio is at around 110).
In the interview McClure talks about the perfect formula for a startup (hacker + hustler + designer) and why the three Ds — Design, Data and Distribution — are important for young companies. He says that the fund basically makes its $25K to $250K bets on companies with simple revenue models, “Things that are easily understood and make money.”
He compares the 500 Startups to Ichiro, a smaller Japanese baseball player who has built a career around smaller hits. He then extends the baseball metaphor further, “If Sequoia’s the Yankees, we’re the Oakland A’s,” referring to Michael Lewis’ Moneyball, a book that chronicles the unexpected success of underdog Oakland A’s because of their strategic building of a winning team.
While 500 Startups may not have the pedigree of venture capital biggies like Sequoia or Kleiner Perkins, it can still eek out some wins simply by being scrappier and more unconventional.“We say we like to hit singles and doubles, occasionally we’ll hit a home run,” McClure said, driving the point home.