SXSW: 'Excessive pride' danger for startups says Yammer founder
Trying to raise money for startups in weak economic climates is actually better than trying to in booming times according to the man who co-founded PayPal and Yammer.
"Angel investor" David Sacks passed on some of his wisdom to a group of budding entrepreneurs at the South by SouthWest Festival in Austin, urging them to "find industries you can disrupt that no-one ever thought of as a technological industry".
He also said the "biggest danger for product managers is excessive pride", and being too stubborn to copy practices and solutions that are already successful in the marketplace.
"If you don't copy you're being foolish I think. One of the worst things you can do if someone fogs you in some way is to not realise it's not a bad idea to learn from that," he added.
"Saying you're not going to copy is like saying you will never learn."
Two of Sacks' most successful previous investments were Yammer, sold to Microsoft for $1.2bn, and PayPal, which sold to EBay for $1.2bn in 2002.
But, he admitted PayPal nearly crashed and burned in 1999, when they decided to cut short a planned funding drive for $200m when they had only $100m, sensing the dotcom bubble might burst.
The Monday after was dubbed Black Monday, when Internet stocks crashed, and Sacks added: "if we had waited another week to raise money I'm pretty sure PayPal would have died."
On raising cash during down times, his capital raising for Yammer came during h 2008 financial crisis, he said: “I think there’s less competition, and if the company does get funding there’s less copy cats out there.”
He also laid out his four elements he looks for in new investments, citing a simple user experience, distribution strategy, innovative ideas which cannot just be copied, and the ability to go viral.
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