Exclusive in-depth interview with LinkedIn co-founder and Earlybird’s newest partner2012-05-16 5
Today LinkedIn co-founder Konstantin Guericke joined Earlybird as the VC fund’s newest venture partner to be based in the Valley. As a long-time enterprise veteran and former CEO (of jaxtr, a social communications startup with over ten million registered users, acquired by SabSe in 2009), Guericke brings unprecedented experience to the Berlin ecosystem. Here we discuss with him why he decided to join Earlybird, what he learned from his experience at LinkedIn, and what his new title will bring.
VV. As LinkedIn co-founder and former marketing VP, you led the company from launch to its first six million members. Can you briefly describe how this experience prepared you for your new position at Earlybird? Is your new role more or less challenging than your last?
KG. The role is a different one—rather than building a single company, I will be helping portfolio companies with their market strategy. In addition, I will be serving as a board member for those looking to scale up globally—for example, some CEOs may re-locate to Silicon Valley and seek out investment and partners from the Silicon Valley ecosystem. If these companies are a fit with my interests and expertise, I may join their board.
VV. LinkedIn launched in May 2003 and IPO’d eight years later in May 2011. What insights did you and your co-founders have about the 2003 market which made LinkedIn so successful? Could you have founded it two years later, or not?
I think the key has been to focus on enabling our members to become more successful professionally. For that, the most important ingredients are a purely professional context and the quantity and quality of our members. With over 160 million members worldwide (34 mil in Europe), LinkedIn now has the critical mass to add features that can help members not only find and land the best place to work, but also to be more productive —whether it is in marketing, sales, management, recruitment or research. It probably could have been built earlier or later, but hard to know…
KG. My interests are in productivity apps enabled by the APIs of LinkedIn and other major social or mobile platforms. I also see good opportunities for crowdsourcing, marketplaces and the Internet of Things. However, I will not be making investments, but rather guiding the thinking behind investments and supporting Earlybird portfolio companies looking beyond their national market or the copycat model. My focus will be on working with entrepreneurs who want to make a real difference in people’s lives —and across the world. My background is in engineering, so I especially enjoy working with technical founders.
VV. I understand you will be based in the Valley, though your critical responsibility at Earlybird will be working one-on-one with portfolio companies, many of which are based in Berlin. What obstacles do you anticipate? Did you consider moving to Berlin for the role?
KG. I will be in Berlin for visits, and I look forward to visits from Earlybird entrepreneurs focused on global success. However, the main avenues will probably be Skype and working face-to-face with those portfolio companies further developing their business in the global market and, in some cases, making the move to Silicon Valley.
VV. In European tech media, the phrase “launching in the Valley” is a heated, moreover obscure one. Does it mean the company has to have an office in the Valley? Just a network? A userbase? Or all the above? What does it mean to “launch in the Valley” in 2012?
KG. I think it is about where the entrepreneur feels their best odds are at making a global success. There are great arguments for building a startup from Europe, where companies like Rovio are tremendously successful without moving to the Valley. For some opportunities, the right strategy may be for the CEO to move to Silicon Valley—at least for the formative years of the company. This usually involves keeping their development team in Germany, but leading the business from the US. Just having a press tour and sales office is less likely to work. I can probably help startups most effectively when the CEO is on location, able to build relationships with Silicon Valley partners, investors, early adopters, etc.
VV. What makes one Berlin-based application more relevant or appropriate for the American market? What factors will you consider when determining with teams whether they should extend their marketing toward American users?
KG. My focus is on applications that get better either the more of your friends are using it or those that get more valuable the larger the total number of users. Global scale is slow and expensive to build using marketing methods. LinkedIn and jaxtr scaled globally without any marketing. The product concept itself meant that members had a strong incentive to want to get their contacts on—and then it spread based on what our members did rather than any targets from the marketing department. In fact, I never needed to hire anyone in marketing while at LinkedIn. This type of word-of-mouse distribution is slow at the beginning, but gets faster and faster the more members you have sharing your product. There is little cost to get new members, but you also don’t target any particular region of the world.
With LinkedIn, we had over 50% of our members outside of the US within a week or so because we never designed it with a particular focus on the US market and we had founders from Germany, US and France. With jaxtr, we had over 40% of our 10 million members in India, and we certainly did not target India specifically.
VV. When and where did you meet Jason and the other members of the Earlybird team? What was your first conversation about?
KG. I’ve known some of the Earlybird partners for a few years. In the beginning, we chatted about jaxtr, a company where I was CEO at the time. I also know entrepreneurs who were funded by Earlybird and who find them to operate most like a Silicon Valley firm, with high professionalism and clear focus on doing whatever it takes to help their entrepreneurs succeed. This is a great way to build an investment brand that lasts and scales.
VV. I understand that Earlybird has recently closed three new investments and is working on another two. What do you envision for the future of Earlybird? What will the fund be known for in two years?
KG. I would like Earlybird to be the fund that attracts the types of entrepreneurs who want to make a significant, positive difference on a global scale. I think this is a great recipe not only for long-term financial success, but also to have good time working on this.
VV. What is the current perception of Earlybird, and other European funds, in the Valley? Why or why wouldn’t a Valley-based entrepreneur reach out to an European VC for funding or support, particularly as regards expansion?
KG. Exceptions may happen, but we are not really looking at funding companies started in Silicon Valley. And my role is to help maximize the success of Earlybird portfolio companies with global ambitions—not sourcing deals or making investment decisions.
VV. The ambiguous title of your new role reflects the emerging need for intelligence and talent geared toward internationalization and coordinating markets. How, in your opinion, are investors in the US and Europe currently exchanging knowledge regarding new opportunities?
KG. In the Valley, many firms have venture partners in addition to general partners. The main thing that is a bit unusual is that I may end up taking board seats even though I’m not a full-time partner. This is mainly a function of the fact that as US investors get involved and the CEO moves to Silicon Valley, the board meetings will be held here, and so it makes the most sense for me to join the board rather than a partner located in Germany. I already serve on several boards as an independent director, and I will continue that work as well as my pro-bono work mentoring Stanford engineering students.
For the complete story on Guericke’s recent entry and new role at Earlybird, check out our full debrief here.