TCT Exclusive: Brent Hurley (YouTube founding team), Startup Investor & Advisor

Here at The Cap Table, our mission is to help you get on the capitalization table

We’re thrilled to announce this week’s exclusive with Brent Hurley, tech operator, investor & advisor! An early team member at YouTube, Brent wore many hats while helping scale and grow the business until it was acquired by Google in 2006. He then took on a variety of roles as founder (co-founded SayMore in 2015), CFO (MixBit in 211), advisor (Graduate Syndicate) and now as an independent investor. With expertise on product positioning, business operations, finance, fundraising and strategy, we sat down to talk all things cap table related, including:

  • What early YouTubers had to do on their first day 📺

  • The creator economy and rule of 1,000 🪄

  • Angel investing advice 💸

  • Cap Table tips, tricks and cautions ⼏

  • What excites (and concerns him) about life in 2030 🔮

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TCT: How did you start out with regards to your career?

I began my career in tech by interning at PayPal when it was just starting out. The company had less than 25 employees at the time and it was before they had achieved product market fit. Initially the company thought the killer app for their money transfer service would be to “beam” money via the newly introduced Palm Pilot device but adoption was slow. Instead, we started to see eBay sellers organically use the service as a way to accept payment without needing to mail cash or checks. So, one of my jobs as an intern was to email power sellers on eBay to introduce them to the product.

At the end of my first internship, I was offered a full-time job, but that meant I’d have to drop out of college, so I turned them down. In retrospect, not the best decision, ha! (but, missing out on that opportunity was what later gave me the nudge to join YouTube). I came back for a second internship 6 months later and the company had grown to over 200 employees.

Seeing that kind of explosive growth and hanging out with the likes of Peter Thiel was eye-opening to say the least and distinctly shaped my worldview, especially in regards to the power of entrepreneurship. 

You were part of the original, bootstrapped, pre-funded founding team at YouTube, where you wore many hats and ran finance and operations up until the company was acquired by Google for $1.65 billion. What advice would you give to early operators at a pre-funded or early stage funded startup? What’s the best way to increase their odds of survival and success?

Two guiding principles that have served me well are to think like an owner and to think like a user.

As an early employee with an equity stake, you are (by definition), an owner and have a vested interest in the success of the enterprise. Thinking like an owner means prioritizing the organization as a whole over yourself as an individual. At an early stage company, job titles are pretty meaningless and roles very much undefined. You need to be willing to roll up your sleeves and do whatever needs to be done. You need to prioritize your efforts for maximum impact. At YouTube, as a rite of passage and a way to hammer home this type of “we’re in this together but no one is going to hold your hand” ownership mentality, new employees were required to build their own Ikea desk on day one.

Tightly coupled with thinking like an owner is the need to think like a user. And there’s no better way to internalize the needs of a user than to be an active user of the product yourself. At YouTube, not only did all employees watch (too many) videos, but we also tested all features and functionality, including uploading videos of our own. When interviewing job candidates, I always asked how they used the site. You’d be surprised how many people wanted a job but had never created a playlist, embedded a video on another site, or uploaded a video of their own. Actively using the product not only uncovers bugs but also teases out what new features to build.

What are your thoughts on the state of the creator economy? What aspects of the creator economy excite you most?

To me, the most exciting part of the new creator economy still stems from Kevin Kelly’s seminal post, “1,000 True Fans.” It’s the notion that to make a career out of being a creator, you don’t need millions of fans like Beyonce, just 1,000 (or less!) folks who really dig your niche creations. By lowering the fandom hurdle, it welcomes many more folks into the fold and allows anyone to participate whether they plan to be a full-time creator or not. Individuals can follow their interests as a side hustle to their main job and if it turns out they produce cool things that a lot of others appreciate, bang, you’re in business. But it’s not an either-or proposition. You can always keep it as a side project and take a more portfolio approach to your career, creating multiple income streams like a mini Berkshire Hathaway. Not only can this showcase you as an individual with multi-dimensional expertise and interests, it also makes you less reliant on a traditionally linear career path. In the words of author Nasssim Taleb, you become antifragile, and so if at some point in the future a robot takes over your job, you will have something to fall back on.

You’re part of the ownership group for Megalith Financial Acquisition Corp, a SPAC listed on the NYSE ($MFAC), which focuses on acquiring or merging with one or more  financial technology industries. Since going public, how has this thesis played out? Will SPAC’s continue to stay red hot in 2021 or will we see a pullback?

We listed our SPAC in Q32018 and had roughly two years to run our search to find and acquire a target company. During that time, SPACs were still relatively unknown outside Wall Street even though they’ve been around for decades, so after reaching out to potential targets, we first had to educate them on SPACs. For all the recent hype, SPACs are really just an alternative path to IPO (the only other alternative path being direct listings). Compared to a traditional IPO, SPACs are attractive in that the process can be run fairly quickly and negotiations around price paid and deal structure can be done discreetly instead of via a roadshow. SPACs also allow companies that might have otherwise been picked off by a private equity firm to instead go public and enjoy the greater upside and independence that comes along with it.

In the end, we were fortunate to find an attractive target and our deal is currently pending SEC and shareholder approval. We’re hoping to close before year’s end at which point I’ll join the board to help support current management for continued success.

SPACs have had a history of booms and busts so it will be interesting to see how things play out. My guess is they will continue to be a popular option if and until investment bankers and the exchanges fix some of the common problems associated with the traditional IPO process, namely the first trading day “pop” that investor Bill Gurley so often criticizes.

You’re also an investor and advisor in The Graduate Syndicate, which invests in pre-seed and seed stage startups led by recent graduates of Harvard, primarily HBS. What are the advantages and disadvantages of investing in a syndicate? 

Despite its name, The Graduate Syndicate is actually a traditional fund structure where you commit capital upfront and then own a tiny piece of each portfolio company. The syndicate product created by AngelList, on the other hand, is structured so that investors select managers and then can choose, on a deal-by-deal basis, to invest or not alongside that manager with as little as $1k per deal. This is a great way to dip your toe into angel investing. You can tap into deal flow and, even if you don’t invest, see what types of interesting companies are currently being built. It’s also an opportunity to wear your investor hat and imagine if you had, say, $10 million to deploy whether you would pull the trigger on a particular opportunity and, if so, what your investment memo might say to justify it. These types of thought experiments can be equally beneficial to entrepreneurs when brainstorming startup ideas, framing what types of products/businesses resonate from an investor’s POV.

You’ve been an independent investor since 2016. How would you describe your investment thesis? What are the advantages and disadvantages of working independently? 

My investment thesis to date, if you can even call it that, has been to back friends working on interesting ideas. So far my investing has been mostly ad hoc but I’m planning to launch a fund with my brother in early 2021 so we will outline what we’re looking for with more clarity then. At a high level, we aim to back great founders at the Seed(iish) stage working on ideas that help folks lead healthier, more productive, abundant lives. Admittedly that’s a pretty wide net, but that’s by design.

What advice would you give to first time angel investors in 2021?

In addition to backing syndicates on AngelList as described above, I encourage new angel investors to start by writing small checks. Initially, I thought you needed to write checks of $25k or more to participate but have since learned that many prominent angels started out writing checks as low as $5k per deal. So, write more checks of a smaller size to build up an impressive portfolio company logos, and then parlay that to create a syndicate/fund of your own or to get a job at a premiere VC firm.

What’s your secret for getting on the cap table?

Today, cash is cheap and identifying interesting startups is the easy part – being able to win those hot deals is what’s tough. To do that, you need credibility and to show you bring something more to the table than just cash. For those starting out, the obvious routes to begin building your reputation are to join a rising startup or an established VC firm. 

To me, however, there’s no better way to establish street cred than to take an idea of your own to market. Whether it succeeds or fails is beside the point. Showing other founders that you have walked in their shoes is what resonates.

What’s your biggest cap table “mistake”?

By far my biggest mistake has been not investing more frequently. I missed a lot of great opportunities being too conservative. I’m fortunate that many of my friends and former classmates have gone on to build big, impactful companies. In retrospect, I should have backed all of them.

What are you passionate about outside of work?

I enjoy any activity that involves being active and being outside. I’ve been a runner all my life and a few years ago completed my first ultra marathon. I also recently picked up golf. Golf is fun because it’s an activity that you can go deep on. It’s difficult at first but provides an opportunity for instant feedback and, over time, the feeling of mastery. These feelings perfectly contrast some of the more challenging aspects of venture investing, namely: delayed feedback loops for investments you’ve made and the feeling that you don’t really know what you’re doing despite how long you’ve been doing it. 

Outside of exercise, I enjoy building things with my hands. During the pandemic I completed an extensive home remodeling project, teaching myself plumbing, electrical and carpentry in the process by watching a lot of YouTube videos.

The year is 2030. What excites you? What concerns you?

I’m most concerned about the continued and increased polarization of folks through manipulated media and algorithmically-driven consumption of content. Bad actors are increasingly taking advantage of and weaponizing the openness of the internet. And striking a balance between openness and censorship is a fine needle to thread with seemingly no elegant solutions readily available. 

I am also concerned that although I believe technology will usher in a new era of abundance through cheap food/energy/etc, at the same time, automation will dramatically shrink the workforce and even if the government provides folks with a UBI stipend from which to live, the lack of a real job –– and the purpose it provides –– will leave many feeling wholly unfulfilled and susceptible to bad habits.

On a happier note, over the next 10 years, I’m super excited about the advancements we’ll likely see in clean energy, self-driving cars, and progress in biotechnology to cure diseases, rapidly develop vaccines and extend the health-span of individuals.

On balance, I’m pointedly more optimistic that we’ll be in a better place overall.

Follow Brent on Twitter (@BrentHurley) for more insights into all things tech and investing!

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Deal News 12/11 - 12/18

Secondary Markets

Pre-Seed:

  • Presso: $1,600,000 led by Pathbreaker Ventures. Presso offers distributed micro-retail solution for ultra-fast dry-cleaning.

  • Attn: Grace: $900,000 led by Tusk Venture Partners. Attn: Grace is the first sustainable wellness brand for women, by women, as we age.

Seed:

  • DASH Systems: $8,000,000 led by 8VC. DASH Systems is a tech company developing hardware and software to enable precision airdrop deliveries.

  • The Routing Company: $5,000,000 led by The Engine. The Routing Company provides turnkey fleet management solution for on-demand shared cars, shuttles and buses.

  • Storyboard: $4,500,000 led by CRV. Storyboard is an enterprise podcast and audio platform.

  • Avenue 8: $4,000,000 led by Craft Ventures. Avenue 8 is a residential brokerage platform built for modern agents.

  • Sesh: $3,000,000 led by Polaris Partners. Sesh is a mental health company providing access to group support via a mobile app.

Series A:

  • ZeroAvia, Inc: $37,700,000 led by Breakthrough Energy Ventures, Ecosystem Integrity Fund. ZeroAvia is building the World's first practical zero emission aviation powertrain, based on hydrogen fuel cells

  • Provide: $34,000,000 led by QED Investors. We're the modern practice finance company, innovating for dentists, veterinarians, and other healthcare professionals like you.

  • Ramp: $30,000,000. Ramp is a technology company that develops corporate cards designed to save businesses money.

  • Noname Security: $25,000,000. Noname Security is a holistic security platform that allows enterprises to see and to secure managed and unmanaged APIs.

  • CloudTrucks: $20,500,000 led by Caffeinated Capital. CloudTrucks offers a virtual trucking carrier application designed to reduce operating costs for truck drivers.

  • Foresight Risk and Insurance Services: $20,500,000 led by Brick & Mortar Ventures, Builders VC. Foresight Risk and Insurance Services is an innovative workers compensation market for brokers.

  • Tive: $12,000,000 led by RRE Ventures. Tive is a Boston-based startup that builds a hardware and software platform to help track the conditions of shipments in real-time.

  • Grin: $10,000,000 led by e.ventures. GRIN is a marketing software that enables direct-to-consumer brands to collaborate and manage their relationships with influencers.

  • Carlsmed: $10,000,000 led by U.S. Venture Partners (USVP). Carlsmed leverages AI and predictive analytics to utilize prior outcomes data for personalizing the treatment of complex spinal deformities.

  • PostHog: $9,000,000 led by GV. Open source product analytics. Track every event with a one line install, and stay in control of all your data, featuring hedgehogs.

  • RunwayML: $8,500,000 led by Amplify Partners. RunwayML is a machine learning tool for creators.

  • Tonic: $8,000,000 led by GGV Capital. Tonic offers a synthetic data generator platform designed to make data available and secure to customers and partners.

Series B:

  • Singlera Genomics: $150,000,000 led by CICC, DT Capital Partners, Furong Capital. Singlera Genomics is a fast growing company focusing on non-invasive genetic testing.

  • Locanabio: $100,000,000 led by Vida Ventures. Locana is a RNA-targeting gene therapy company

  • ClickUp: $100,000,000 led by Georgian. ClickUp is a customizable productivity platform that replaces other workplace apps for all users and all departments in an organization.

  • Epirus: $70,000,000 led by Bedrock Capital. Epirus designs and builds high-powered microwave products for the defense and commercial sectors.

  • H1: $58,000,000 led by IVP, Menlo Ventures. H1 develops a healthcare data analytics platform intended to help companies make smarter scientific decisions.

  • Vise: $45,000,000 led by Sequoia Capital. Vise is an AI-driven portfolio management platform built and designed for financial advisors.

  • Vercel: $40,000,000 led by GV. Vercel is a platform that enables users to develop, preview, and ship Jamstack sites.

  • CHAOSSEARCH: $40,000,000 led by Moore Capital, Stripes. Store Everything. Ask Anything - Transforming "your" object storage such as S3 into a big data Multi-Model Analytic Database

  • Cypress.io: $40,000,000 led by OpenView. Cypress.io develops a front-end automated testing application for running unit and integration tests in a browser.

  • Openly: $40,000,000 led by Advance Venture Partners. Openly is an insurance company that specializes in premium home insurance sold through independent agents.

  • Lyte: $33,000,000. Lyte is a technology platform that makes it easy for fans to buy, sell, and exchange tickets to live events.

  • Octave Bioscience: $32,000,000 led by Northpond Ventures. Octave Bioscience an early stage molecular diagnostics company focused on neurodegenerative diseases and conditions.

  • Curai Health: $27,500,000 led by Morningside Ventures. Curai Health is a virtual care company that uses artificial intelligence to provide chat-based primary care at a lower cost.

  • Parsec: $25,000,000 led by Andreessen Horowitz. Parsec gives you the access to your technology, work, and games from anywhere, across any device

  • Indico: $22,000,000 led by Jump Capital, Sandbox Insurtech Ventures. Indico provides Intelligent Process Automation solutions for unstructured content.

  • Ovation: $21,500,000 led by SignalFire. Ovation provide technology for molecular diagnostic laboratories that enable them to speed up development of tests and treatments.

  • Diameter Health: $18,000,000 led by Centene. Diameter Health transforms patient information into the quantity and quality of interoperable data for healthcare organizations.

  • ConsejoSano: $17,000,000 led by Magnetic Ventures. Multicultural engagement and navigation solutions

  • Zoomin Software: $14,000,000 led by Bessemer Venture Partners, Salesforce Ventures, Viola Growth. Zoomin’s intelligent platform delivers personalized and dynamically updated Product Answers whenever and wherever your users need them.

  • Conio: $14,000,000 led by Banca Generali. Conio's mission is to help you understand and handle Bitcoin. The Conio Bitcoin Wallet lets you buy, sell and keep Bitcoins safe.

  • Iris Automation: $13,000,000 led by Bessemer Venture Partners. Iris Automation is an artificial intelligence and safety avionics company building collision-avoidance systems for autonomous drones.

Series C:

  • Paxos: $142,000,000 led by Declaration Partners. Paxos is a regulated financial institution building infrastructure to enable movement between physical and digital assets.

  • Bestow: $70,000,000 led by . Bestow is an insurance technology company offering term life insurance that is accessible and affordable to families.

  • Public.com: $65,000,000 led by Accel. Public.com is a social investing network company that allows companies and individuals to buy public stock with any amount of money.

  • Modern Health: $51,000,000 led by Battery Ventures. Modern Health is a mental well-being platform for innovative companies offering therapy, coaching, and self-guided courses all in one app.

  • Aceable: $50,000,000 led by HGGC. Aceable is an education startup that develops a mobile app to provide accredited driver’s education courses.

  • Uhnder: $45,000,000 led by Sensata Technologies. Uhnder develops a digital automotive radar-on-chip designed to automate systems for safety and better feedback response.

  • Vivace Therapeutics: $30,000,000 led by Boxer Capital. Vivace Therapeutics is a venture-backed start-up dedicated to discovering and developing cancer therapeutics by targeting a novel pathway.

  • Rec Room: $20,000,000 led by Madrona Venture Group. Rec Room is the online universe where you can play and create games with friends.

Series D:

  • Zenoti: $160,000,000 led by Advent International. Zenoti is a provider of cloud-based software for the spa and salon industries.

  • BigID: $70,000,000 led by Salesforce Ventures, Tiger Global Management. BigID is a data intelligence company developing software that helps companies secure customer data and satisfy privacy regulations.

  • Self Financial: $40,000,000 led by Meritech Capital Partners. Self Financial is a venture-backed fintech startup that helps people build credit and save money.

Series E:

  • Lyra Health: $175,000,000. Lyra helps businesses find the best care for the mental and emotional well-being of their employees.

Series H:

  • Discord: $100,000,000 led by Greenoaks Capital, Index Ventures. Discord is a chat and communication service to talk and hang out with their friends and communities.

Sources: Crunchbase, LinkedIn, Twitter.