The Nomad VC: a16z’s Newest Board Partner Boris Wertz
Boris Wertz is one of those people who seem to be everywhere all the time. Based in Vancouver, B.C., Wertz’s early-stage fund Version One Ventures is a fixture in the Pacific Northwest. But you would be wrong if you pegged Wertz a Canada specialist, or even someone who sticks to the West Coast. North America – most of it – is Wertz’s startup hunting ground, an enormous expanse between two oceans and on both sides of the U.S./Canada border.
That wide-angle view has led Wertz to investments in companies that range from Toronto-based social reading service Wattpad, to Seattle-based online cosmetics company Julep, Montreal-based fashion house Frank & Oak, and Palo Alto-based hardware marketplace Tindie.
Wertz’s nomadic impulse gives him a unique and valuable vantage point from which to view the startup ecosystem, one that we are fortunate Wertz is bringing to Andreessen Horowitz in his new role as a board partner at the firm. If you want to know who the up-and-comers are in Waterloo or Austin or Portland you talk to Wertz, something we already do around here at a16z. Now it’s just going to happen a whole lot more.
Wertz will continue doing what he does best, scouting out great people and companies for his own fund, but when it makes sense he’ll also bring a16z into the equation, as well as representing a16z on the boards of select startups.
During one of his many jaunts south from his Vancouver home, we sat down with Wertz to discuss the process of building startups outside of Silicon Valley, what he looks for in founders, and what he learned in scaling his own company acquired by AbeBooks and ultimately Amazon.
a16z: Let’s back up a bit. You are German, how did you end up in Canada?
Boris Wertz: I started an online book selling company JustBooks in Germany in 1999, and we ended up being bought in 2002 by AbeBooks, which was based in British Columbia. I moved out as part of the acquisition to run marketing, business development, and international among other things. I didn’t figure I would stay, but then I met wife, and well, I changed my view on staying.
a16z: AbeBooks was a sort of eBay for hard to find books, is that right?
BW: That’s right. By 2008 we were doing several hundreds of millions of dollars a year in transactions between buyers looking for rare books, used text books, offerings from small, independent publishers, or out-of-print books, and the sellers who had them. We had created an international database of 100 million books, it was the largest selection of books worldwide.
a16z: And it was around then that another large bookseller took notice.
BW: Yeah, (he laughs) Amazon bought us in 2008.
a16z: As you look at investing and helping other entrepreneurs build companies today, what stuck with you from building AbeBooks?
BW: I think the common problem everybody has is how do you spin up supply and demand? There is no single strategy to do it. It depends on the market structure, and your competitors. If it’s one over the other, let’ say it’s supply, how can you spin it up quickly enough without it being too quick? It’s really one of the things that I’m continuously thinking about.
One of the other things that AbeBooks taught me was the importance of community. We had an incredibly passionate bookseller community. Which, on one hand, was one of the biggest strengths, and then also potentially one of the biggest challenges. When you have a really passionate community they can help your business tremendously, buy sometimes they can take over. Look at Digg. Digg was such a great site until the community basically blocked any integration going forward because they felt like they owned it. It’s finding the right balance of getting input from the community, giving them some feeling of ownership, but then making sure they don’t run the show either. It’s a very tough balance to strike, but that was really something that I learned in a big way at AbeBooks.
a16z: The Amazon acquisition allowed you to start your career as an angel investor, which you did as a solo-act for four years. In some ways you bootstrapped your current fund.
BW: That’s a good way to think about it. Because companies had gotten much cheaper to build, I was able to do 30 investments as an angel with the proceeds from AbeBooks. I think that period as an angel gave me the confidence in two key areas: my ability to really help entrepreneurs and make a difference in the early stages, and secondly, my ability to really understanding how to invest, and to go out and attract more deal flow. It looks much easier than it actually is, and I can tell you I learned a lesson or two on my own money. But once I had done that, I was able to find a good product-market fit for my fund – just like any startup.
a16z: How does being in Canada give you a different perspective?
BW: I wouldn’t say it’s Canada, as much as being outside of Silicon Valley. I think there is Silicon Valley, and then there are smaller ecosystems in places like New York, Toronto, Seattle, and other places. Compared to Silicon Valley, they all lack consistency of deal flow. That said, great companies do get built outside of Silicon Valley, and there are great opportunities. And this is the interesting thing, when you find an entrepreneur outside of the Valley usually they have this extra passion for what they are building because in some ways they have to work much harder to pull it off. They know it’s hard to raise money. They know it’s even harder to build a company. Yet they are still doing it.
a16z: Is that ability to just keep plowing ahead something you specifically look for when investing in an entrepreneur?
BW: That’s definitely part of it. Usually we look for three things when evaluating an entrepreneur and a company. The first is: Do they have a concise and compelling way to communicate their vision? Can we, or anyone, understand very quickly what the opportunity is? If we don’t get it then there’s something wrong either with us or with the entrepreneurs, but in the end, it just doesn’t click.
The second thing is that passion to build something no matter what. Often that passion has shown itself over years in a founders’ work on a similar problem, or in a similar space. They just need to figure something out, and they would do it independent of getting funding or support. We get excited about people that have been going at something for a long time, and are passionate about a certain market.
The third thing we look for are just smart, talented people. We can offer all the help we want, but in some ways they don’t need it. We help them anyway.
a16z: Are there any advantages to building a company outside of Silicon Valley?
BW: I think the initial advantage is you have much better access to talent when there isn’t like 20 companies competing for the same people. At the same time, the challenge is lack of senior talent. It is actually a relatively easy to build a great company and these smaller ecosystems up to 20 or 25 people. But when you need to hire the first VP of sales, and the first VP of marketing, you often need to start looking elsewhere. So starting companies is one thing, but scaling is tougher outside of Silicon Valley, often much harder than the initial phase of a company.
a16z: Does that often mean companies need to relocate to Silicon Valley?
Boris: I think it’s a nuanced perspective. If you end up in the enterprise space, I think you need to relocate to where your customers are. There’s just no way where you can build an enterprise company out of the smaller ecosystems today. On the consumer side you just have to think about what’s best for the company. Sometimes that does mean relocation. Sometimes that means putting marketing and sales in the Valley, but keeping your product engineering teams wherever it is you started your company.
a16z: You see all kinds of startups – in all kinds of places – what’s really interesting to you out there?
BW: The things we’re excited about sit in a few areas. The first one connects to what is going on in the hardware revolution. For us it’s the platforms that support hardware companies. So we have invested in companies like IndieGoGo, Upverter and Tindie. We feel like this is an ongoing trend that is just going too accelerate.
The second area that we are focused on is healthcare. For us it feels like this year is the year where the organization of healthcare with the help of technology is at a tipping point. We’re super-interested in is creating networks of patients-to-patients, doctors-to-doctors, and doctor-to-patients. It’s the idea that we can spread knowledge in a much more positive, efficient way among all the players using technology. Another healthcare trend we are focused on is how to serve up and effectively use patient data. Why shouldn’t I carry around all of my blood test results from the last ten years on my phone to help me cholesterol, diabetes, whatever health concern it may be.
The third area of investment focus is around government and employment. What will new forms of government look like? What tasks might be better fulfilled by the private sector and technology?
Then, the last thing we’re interested in at a very high level is mobile. We think there’s still tons of work left where the desktop is not the best user experience and mobile can disrupt the entrenched players. That is something that we continuously watch. It could be mobile encroaching on the enterprise, or it could be a consumer play. We don’t think mobile’s march has yet played out across all verticals.