Last night I attended an event in Sydney, Australia, to see Dave McClure, the founding partner of 500 Startups. McClure was visiting New Zealand as part of his Geeks On A Plane (GOAP) tour and made a brief stopover in Sydney. He was interviewed by Rick Baker, partner at BlackBird Ventures, in a fireside chat. More than 100 people attended to hear the talk from one of Silicon Valley’s most colorful characters. These are some of the key points from my perspective of the talk.
500 Startups has invested in 10 Australian startups, including Bugherd, Happy Inspector, Kickfolio, and SwitchCam. The best way to reach McClure is through his extensive network, which includes 700 founders of the companies he has invested in and the 100 mentors in his 500 Startups network. They also have relationships with overseas organizations such as Seedcamp in London and Startmate in Australia.
There was a discussion on “what is traction for mobile apps?”. For free apps, you need to have several hundred thousand downloads. McClure insisted that downloads are “such a fucking vanity metric.” You also need to consider, Dave said, DAU (daily active users), MAU (monthly active users), and revenues. In terms of revenues, several thousand dollars would be interesting. He also discussed how startups could use their local markets. If your startup is in a country with a population of 20 to 50 million, you can use this to test the market, then bridge to larger overseas markets. This is advice that many Australian startups can appreciate, as the local Australian population is 23 million and we need to bridge to bigger markets in Asia or the US in order to grow.
With McClure’s investing thesis, his aim is to be as objective as possible. For example, when discussing investments in startups in overseas markets, he uses frameworks such as looking at mobile/PC penetration. However, he said that “investing is a personal and subjective business.” He has a group of 500 Startups partners with diversity in gender, age, business experience, and ethnicity to try to balance any bias. He also mentioned that we tend to “focus too much on valuation, rather than equity dilution.”
I am interested in languages, so I asked him about the trends and opportunities in the language industry, as 500 Startups has invested in Gengo, Babelverse and Mindsnacks. He described the Chinese, Arabic, and Spanish-speaking populations as large markets and rapidly growing. There were opportunities in the translation market, particularly in areas such as niche translations (e.g. Chinese to Czech), e-commerce, and Chinese outbound tourism. McClure also revealed that he has recently invested in TranslateAbroad, which has an interesting app called Waigo (which a TechinAsia colleague will look at in-depth soon) to translate Chinese menus into English. Language, Dave said, is also an area that he is personally interested in.
Overall, I found the discussion with McClure to be very refreshing, honest, and insightful. I believe that the Sydney startup community grew a little bit more savvy and smarter with McClure’s visit. He couldn’t commit to bringing GOAP to Australia next year, but the local community will do our best to pull out all the stops to bring him back!
[UPDATED: Added in a clarification about the ‘niche translations’].