Brett Hurt

Hurt Family Investments; Chair, Edgecase; Founder of Bazaarvoice and Coremetrics; Father, husband, traveler

May 25, 2015

My commencement speech for the 2015 MSTC graduates at U.T. Austin

It was an honor on Saturday to be the commencement speaker for the Class of 2015 MSTC (Masters of Science in Technology Commercialization) graduates at the University of Texas at Austin. One of the graduates, Rainya Mosher was kind enough to summarize her takeaways from my speech in her blog post and the full text of the speech follows:

From a long-time Austinite and a fellow Longhorn, I would like to start us off with a big, friendly, Texan “HOWDY YA’LL!”. Can I also get all of you to do a “HOOK ‘EM, HORNS!” with me?! 1, 2, 3… “HOOK ‘EM, HORNS!!”

It is an honor and pleasure to be here with you today, on what will be one of the days you remember best in your hopefully very long and prosperous lives. I want to sincerely thank Dean Gilligan and Director and Dr. Cadenhead and all of the McCombs staff for inviting me to be here with you today. I hope to inspire you and also give you some tips for being prosperous – both personally and professionally – in the years to come. Because both are equally important.

I want to start with a bold statement. This is the most exciting time in the history of the world for you to graduate with this degree. Let me repeat that – this is the most exciting time in the history of the world to graduate with this specific degree, your Masters of Science in Technology Commercialization.

This, my friends, is because we are in what I call the new Golden Age of Technology – and this is very different than the infamous Dot-Com Boom and Bust of the late 90s. This time in history will be remembered as the professionalism – indeed the professionalism of the world’s most advanced technology commercialization – in the history of the world. And here you are – lucky you – on your graduation day from one of the most prestigious institutions in the world – with the tools, degree, and network to capitalize on it.

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Feb 14, 2015

What I love about angel investing

Today is my 43rd birthday (you can read about what I learned over the past year in my Lucky7 post about age 42). Looking back on my last year, I've grown to really love angel investing. My wife, Debra, and I run a family office that we call Hurt Family Investments. She takes the lead on philanthropic projects, and I take the lead on startup investing. For the past two years, we've invested the same financial amount in non-profits as we have in startups. We always agree on what to invest in - she has to meet the entrepreneurs before we make a decision - and that leverages the best of both of us. Debra is a contrarian thinker and was also born to entrepreneur parents. We both learned a lot about entrepreneurship growing up, and we actually started Coremetrics, my fourth business, together. She has terrific entrepreneurial instincts and there are a number of companies that I haven't started because I listened to her (thankfully), when I was playing the song "entrepreneur" on my record of life. Now, we are involved in 34 startups (mostly in Austin) and multiple VC funds that give us exposure to at least as many additional startups (you can see our portfolio here).

I've been playing a new song now (changing your song on your record of life is very difficult as I describe in this Lucky7 post on big life transitions). My new song is harder to categorize as simply as "entrepreneur"; maybe "startup catalyst" is an appropriate name. "Startup catalyst" is more of a mosaic of activities that leads up to a cumulatively big impact. I want to look back 10 years from now, when I turn 53, and know that I made a big difference to our entrepreneurial scene here in Austin. That is what drives me now and I believe it is just as worthy of a mission in life as my original goal to found a company and take it public (I set this goal when I was 25-years old, shortly after taking the plunge into entrepreneurship). Both goals were and are about impact - creating jobs, new companies (former Bazaarvoice team members have started 22 companies and counting since leaving Bazaarvoice), and karmic ripple effects (philanthropic and helping to change the world for the better both through Bazaarvoice and these new startups).

I wake up every day energized to help the 34 companies in our portfolio. Every day that I'm in Austin I meet with two to three of the entrepreneurs that we've already backed to do anything I can to help them. And I'm constantly evaluating new companies - I've seen over a thousand pitches in the last two years. This is very intellectual work - you are always context switching and learning about new industries. One hour I've got my Edgecase hat on, the next I'm wearing my OneSpot hat. Although our primary focus is SaaS (Software as a Service) investing, the business model that I've lived since 1999, the industries are varied and the challenges are unique. Every day is a mosaic of activities for me, and that is extraordinarily rewarding. I'm working my brain like never before. I read blogs, books, and all types of social media and I find that more and more of what I read relates to at least one of the companies in our portfolio. You get to put patterns together at a much broader scale than you do when you are focused on running a single company at a time, as I was with Bazaarvoice and Coremetrics before this.

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Feb 14, 2015

Why big life transitions are so hard and why it is so worth it to keep at it

Life is like a record album, composed of songs to form the whole. From age 24 to 40, I had been playing the song "entrepreneur". I set a goal when I was 25 to one day found a tech company and take it public - by the time I was 40. Fifteen years later, I achieved that goal (my ultimate BHAG - "Big Hairy Audacious Goal"). Society didn't know about this very personal BHAG (only a few friends, my parents, and my wife did), and they expected me to keep playing the same song over and over again. This was natural, expected even. But as I wrote about in my "time is money or is money time" post, I was determined to step back and think deeply about my next move post being the CEO of Bazaarvoice. I didn't want to just set the same goal all over again (i.e., "now I'll found a sixth company and take it public again"). I knew I wanted to help entrepreneurs - I had always enjoyed doing so while I was at Bazaarvoice or Coremetrics but I had done so very sparingly due to the time constraints that I had (managing high-growth ventures takes a lot of time). I had love in my heart for Austin and thought I should do my part, along with many others like Josh Baer of Capital Factory, to help our scene evolve. So I jumped into that part of the arena - but in a more "grandfatherly" role as opposed to being the actual "man in the arena" (a nod to Theodore Roosevelt's powerful speech in 1910). As far as becoming an entrepreneur again and going back to that song, I had to think very deeply about it.

Changing my song from "entrepreneur" to "startup catalyst" was tougher than you may think. Your mind gets into a groove - it becomes accustomed to running a program. My body and mind had been programmed for a non-stop onslaught of activity. Building Bazaarvoice - alongside a great, great team - from $0 to over $100 million in sales in six years and going through the IPO gauntlet was no cakewalk. It was exhausting but also exhilarating at the same time. So my mind started to play tricks on me. It wanted me to go back to the same groove, where it had been used to operating. To put it mildly, there were some days when I was age 41 where I woke up thinking I was a loser now - that I should be back in the arena as an entrepreneur myself. That I had all of the capabilities and experience to be there. What was I waiting for?!

It took me awhile to realize that the most powerful antidote to this feeling was to lean in more. I was not only starting to enjoy helping entrepreneurs more and more via Hurt Family Investments, I also enjoyed the time to be a very involved parent (I'm at more field trips for our kids than most dads), be a better husband (Debra had invested in me for so long and it was time to help her more too), exercise more, and take some trips with friends and vacation in some bucket-list destinations with our kids and/or Debra (I took my first daddy-daughter trip, our first son-parent trip, and other trips that I've always thought about but never had the time to really act on).

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Feb 14, 2015

Was 42 the answer to my life, universe, and everything?

Today is my 43rd birthday. As I think about the last year, my good friend and CEO coach, Kirk Dando, comes to mind. On page 141 of his excellent book Predictive Leadership, Kirk writes:

Remember, the road to heaven does go through hell... and it's worth it. You can decide it if will be a day trip or a daily trip.

A year ago, my 42nd birthday started out with a kick in the gut - it felt like hell.

Bazaarvoice had just lost the Department of Justice case, and we had to begin the process of either beginning to appeal the judge's ruling or helping to find a buyer for and then divesting PowerReviews. To say this was a nightmare come true is an understatement.

Standing in front of all of PowerReviews' employees alongside Andy Chen, the co-founder and CEO of PowerReviews, on May 24, 2012 - the day we announced the acquisition - is a day in San Francisco that I'll never forget. We were finally coming together to bring all of our solutions to our combined set of clients, helping drive more efficiency and effectiveness for consumers, brands, and retailers alike - a real three-way win. I've loved retail since the time I was a child, growing up and working in my parent's stores. This was the culmination of a dream. To build a company that was widely known as one of the best companies to work for in Austin, go from inception to IPO in just six years, have a huge impact on the transparency of commerce globally, ... and then have this happen was very humbling, to say the least. I felt enraged, embarrassed, and depressed. The government had failed to give credibility to our 100 clients that testified. Wasn't this case supposed to protect them? No one that I knew thought we would lose this case and Bazaarvoice had spent over $25 million to fight it. It was the worst thing that has ever happened in my career. In business and life you'll get some good breaks and some bad breaks. This was the worst case of a bad break I had ever experienced.

Crap. Wasn't 42 supposed to be the answer to life, the universe, and everything?! My childhood hero, Douglas Adams, said so, and maybe he was right. In all seriousness, I thought my 42nd year would be my best. After reading the brilliantly funny The Hitchhiker's Guide to the Galaxy series as a child, I had anticipated turning 42-years old for a long time. The setup for a terrific 42 had been building, as my previous two years on Earth were transitional.

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Jan 31, 2015

Facebook made the most epic tech company pivot of this decade, and on pivots in general

Pivots are gut wrenching. The more eyes there are on the company, the tougher they are. Therefore, public-company pivots are usually the most gut wrenching. Many public companies of the past ceased to stay public because their leaders couldn't face the pivot (change is a bitch - who moved my cheese?!), their business radically declined, and they eventually got delisted from NASDAQ or the NYSE.

Two and a half years ago, Facebook went public. Initially, it wasn't pretty. Articles like "7 Reasons Why Facebook IPO Was a Bust" were written. Mark Zuckerberg's roadshow hoodie was mocked (or praised, depending on your point of view). Morgan Stanley's lead tech investment banker, Michael Grimes, was mocked by the media for months. I know Michael and think highly of him, and it was painful for me to see him go through this (note: he and I never discussed it, I just felt empathy). Facebook went public on May 17, 2012 at a price of $38 per share. Just a few months later, on August 26, 2012, you could buy a share of Facebook for $18.06. What happened?

No doubt Facebook was the most overhyped IPO of 2012. However, private-market buyers on exchanges like SecondMarket were paying around $38 per share for Facebook stock before it went public. When we were pricing the IPO for Bazaarvoice, we did so based on demand, which we, Morgan Stanley, and our other bankers assessed based on the "order book" of the funds that lined up to buy our stock as a result of our roadshow. And the demand was high enough for us to price the Bazaarvoice IPO at $12 per share, which was the max end of the range we were allowed without refiling (we had $8-10 per share on the cover of the IPO and the max you can price is 20% above your max range). So if you are Facebook's CEO or CFO, you note what the demand is and you price accordingly. You try your best to leave upside but there are no guarantees of future performance and the risks are tediously detailed in your IPO prospectus. I would argue that Facebook priced their IPO correctly. I would also argue that we did so at Bazaarvoice. If you ever raise money for your company, you know you will do so based on the demand. If you are smart, you will do your best at pricing your round so that there is upside for everyone. But you won't always get it right because tech is very hard to predict and changes much more quickly than most other industries (watch this short clip from a 1994 Steve Jobs interview on his legacy). It is only different in the private market in that it is a private event - only you and your investors choose if you want to disclose the exact price paid for your shares. But, like a public company, your private-market stock price is in fact fluctuating every day based on how your company is performing as well as how the overall US and even world economy is performing. You just don't see it because your stock isn't always being traded. In the public market, your price changes in real-time and everyone sees it, all the daytime.

Why didn't the Facebook stock price stay above $38 then? Because Facebook was caught with one of the most radical platform shifts in the history of tech: the shift to mobile. Look at what has happened over just two and a half years with this chart produced by Business Insider this week, after Facebook reported their earnings: Facebook mobile revenue shift

Since Facebook went public, non-mobile advertising has essentially stayed flat while all of the growth has been in mobile advertising. And look at the shift in users from desktop to mobile since Facebook went public: Facebook mobile user shift

This is exactly what the market was terrified of right after Facebook went public, and it was reflected in that low of $18.06 per share. The market saw the stunning, hard shift of users from desktop to mobile and Facebook didn't have a good mobile strategy. They were facing an epic pivot and needed to execute "flawlessly".

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Jan 15, 2015

Investing in natural network effects in SaaS

Sometimes startups we meet with (I've personally seen over 1,000 pitches in the last two years) talk about their network effect in a hopeful way. But most of the time it is just that - hope, and hope is not a strategy. But Bazaarvoice actually has a working network effect that benefits all participants: retailers, brands that sell through those retailers, consumers that shop at those brands and retailers, and Bazaarvoice and some of its partners. In other words, the more participants that are on the Bazaarvoice network, the great the effect of that network for the benefit of all. I wrote about this in detail in my first annual shareholders letter after Bazaarvoice became a public company.

I believe the single best report released in the past 24 months from Bazaarvoice to describe this network effect with hard data is The Conversation Index, Vol. 8, which was released earlier this week. I encourage startup founders or anyone interested in social commerce to read it.

When you think about Big Data Applications (a term coined in 2012 by Raj De Datta in his TechCrunch article), Bazaarvoice is one as Raj points out in his article. I've also heard BDAs called SaaS 3.0 although the SaaS 3.0 term has evolved to become muddled since I first read what analysts in 2011 meant by it. This, by the way, isn't very different from how the term social commerce became muddled after Bazaarvoice first started promoting it in 2006 to describe what we do - unfortunately, social commerce morphed to mean solutions like Facebook eCommerce stores offered by numerous small vendors who are now mostly no longer in business. In constrast, our definition of social commerce meant social media, or word of mouth, applied in a commerce environment.

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Jan 10, 2015

Why B2C is so hard to get funded in Austin

My good friend and the founder of Capital Factory, Josh Baer, wrote a post last year saying that he will invest in your B2C startup. Well, so will we. We wrote the first check for ROIKOI, which went on to raise well over $1 million, and also made investments in Bigwig Games, Blue Avocado, Deep Eddy Vodka, Dropoff, and Thread over the past two years. We were also one of the first checks for Wisecrack, but that is based in Los Angeles, and invested in the Series A for talklocal, based in DC. And we are investors in several venture capital funds, including Lead Edge Capital, which holds early positions in Alibaba Group, BlaBlaCar, and other large-outcome B2C companies but these are not in Austin so I guess I'm diverging from my point of this post. In any case, that is a total of eight B2C company investments (if you include Wisecrack and talklocal) out of a total of 33 startups we are involved with, representing 24% of our portfolio (and 18% if you exclude Wisecrack and talklocal). Real Massive also has a kind of B2C dynamic, even though it is B2B, so maybe I should count them too as they are Austin-based. But our primary focus is SaaS, for which we have holdings in 19 startups (57% of our portfolio). Both Bazaarvoice and Coremetrics were/are SaaS businesses and we have the most experience to bring to that category. SaaS is also far less risky than B2C, and that brings me to the real point of this post.

Whenever we invest in a B2C company, we typically write a check that is 50% smaller than our typical B2B investment. I think this is a good rule of thumb for investors as B2C is a hits-based business, like producing a hit movie. It is very hard to do. There is a lot of competition. The allure of selling to the world's 7 billion is very strong. And when B2C hits, it really hits. As my 2013 Lucky7 post on Snapchat's staggering $3 billion valuation points out, the riches one can make starting or investing in B2C businesses are extreme as compared to B2B (SnapChat is now valued in excess of $10 billion). Sequoia Capital was reported to make $3 billion on it's $60 million investment in WhatsApp. Look at Apple's $657 billion valuation (as of yesterday) versus's $36.7 billion valuation as the world's best examples of B2C and SaaS (B2B), respectively. The bottom line - selling to the world versus the limited set of B2B companies produces far greater wealth.

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Jan 9, 2015

Observations on the Austin startup scene with Jason Seats, Managing Director of Techstars Austin

Techstars has become quite a force for startups, recently surpassing $1 billion in capital raised for the startups that have graduated from various Techstars program (see the stats breakdown). That is a staggering figure, to say the least. So I decided to kick off the New Year with an interview of our own Jason Seats, Mananging Director of Techstars Austin. I've been proud to be a Mentor of this great program since it launched.

"Jason, you launched Techstars in Austin two years ago. What are your top-three observations on the Austin startup environment as a relative newcomer but with a broad lens?"

Actually just a year and a half ago, although we fit a lot in over that time. Top-three observations:

1 - The startup scene is business model diverse.

From the outside looking in, I expected to find that Austin was a good place for B2B companies, SaaS products, enterprise sales, and bootstrapping entrepreneurs. I found all of those things to be true, but I've also been pleasantly surprised to find a wide variety of startups in every market and of every style. It's a big asset to have a wide base of industries active here and I'm particularly excited to see the growing level of consumer facing companies starting in Austin. Turns out that almost any kind of company can be successful in Austin.

2 - It's small town with big collaboration.

I feel like I've been here for years even though it's been barely a year and a half. The community in Austin is extremely welcoming and as a newcomer it really takes less than a month or two if you really try to get fully acclimated. Josh Baer put together a great overview of people and resources, now maintained by Damon Clinkscales. Part of the reason that Austin is so welcoming and easy to ramp up in is that it's had a lot of practice. This is one of the fastest growing large cities in the US and a really meaningful percentage of the local startup community are imports from other paces.

3 - Austin is an emerging market.

There is a ton of activity here and great overall feeling of energy, but we are very much in the first innings still. From downtown you can see cranes hoisting up new buildings in basically every direction. The startup community here is operating on a backdrop and major tailwind of a massively expanding city and populous. That being said, the actual tech and startup footprint in Austin is still quite small. I say this not as a negative but as a positive, because there is huge opportunity for newcomers to join in the efforts and become part of the legacy of the building of a great tech empire. The trajectory in Austin is fantastic and I feel privileged to have a ticket to watch this thing unfold.

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Jan 4, 2015

What I learned from my top three Lucky7 posts in 2014

December 5th marked my second year of blogging personally (I had previously been a corporate blogger for 7 years at Bazaarvoice as our CEO). I began blogging primarily as a service to entrepreneurs - a form of giving back to the community that I believe is the greatest force for change. If you are wondering why my blog is named Lucky7, it is as a tribute to my amazing mother, who passed away two years ago. My first Lucky7 post on December 5, 2012 was a revisit of my manifesto written to the Bootstrap Austin community on March 15, 2005, months prior to starting Bazaarvoice. Much has changed in the nine years since and it wasn't unusual at all for Austin startups to raise seed capital vs. bootstrapping in 2014.

My wife, Debra, and I were very active with Hurt Family Investments in 2014, growing our startup portfolio to a total of 33 companies, of which 23 are headquartered in Austin. We feel very fortunate to work with so many dynamic leaders across a wide range of industries, although our primary focus is Software as a Service (SaaS), with 19 of our 33 portfolio companies in that category.

Looking back on my most popular Lucky7 posts of 2014 - as measured by how many comments they received (the blog is, after all, named - the .io stands for input and output) - it appears that authenticity reigned just as it did in my most discussed 2013 post (titled "Listening to your soul").

My most discussed post of 2014 was the longest one I've written since I began blogging - at over 8,000 words - and it was on a topic that on one level is very complex and on another is very simple. That post was my in-depth review on what I've learned about eating animals and how I believe our food supply will evolve. In some ways, what I wrote is the ultimate "inconvenient truth" and that is one of the reasons I believe it was so discussed. Also, changing your diet is one of the hardest things that one can choose to do (New Year's resolutions, anyone?) because it requires one making a choice at every meal. I want to sincerely thank the people that commented on this post as I learned a lot from their perspectives. The discussion was very civil but no less provocative; read for yourself!

The runner-up was my three-part series on entrepreneurship and Part One and Part Two were tied with the most comments. Part One started the series exploring a typical question (one I see often on Quora, for example), "Is it too late for me to start my own business?") as well as other questions that hold people back from diving into entrepreneurship. Part Two explored who the new generation of entrepreneurs are and why I believe we are in the new Golden Age of the technology industry. And Part Three wrapped up with a poem of sorts to explore the soul of entrepreneurship. The comments made writing this series a lot more fun for me (I encourage you to read the comments to learn from others) and if you look at retweets, Facebook comments, or the fact that Wharton Magazine republished the series, the reach was far greater than my two-part series on eating animals.

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Dec 10, 2014

How to select the right gift for someone you appreciate (in business)

With this being the season of giving and saying thanks, I wanted to share some thoughts on the right way to do it. Unfortunately, it is common in business to rush through your to-do list and quite often that means not thinking hard enough about what gift to give, especially when it comes to giving chotskies at tradeshows. In business, there is much mediocrity.

First, I'll give you a little background on Bazaarvoice and some of the gifts we chose and then I'll summarize with how you can select gifts that are meaningful, rememberable, and impactful.

When Brant Barton and I first started Bazaarvoice, we wanted to be known for being different from the herd. Bazaarvoice itself was to be a disruptive business for commerce - leading to an unprecedented level of transparency for 70% of the economy (that dominant portion driven by all of us, the consumer). So we named it after a disruptive book and specifically Chapter 4 of The Cluetrain Manifesto, which I believe is the greatest chapter written in any marketing book (you can read it online for free). Literally translated, Bazaarvoice meant "the voice of the marketplace" (I wrote about naming your company in this Lucky7 post).

When we first started attending tradeshows to promote Bazaarvoice, we asked ourselves what chotskies we could remember given out by others ... and there were very few. So we came up with a personal, memorable, and meaningful gift, which both reinforced what our company would do as well as spoke to our roots in Austin. We selected a bottle of wine - Texas wine.

Becker bottle back with BV logo

Becker Vineyards is our best Texas wine and they have a great claret - a blend of Bordeaux grapes. It is different than a California red in several ways, one of the most notable being that it uses some Texas oak in aging, which adds a layer of spice. They also use quite a bit of petit verdot.

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