Brett Hurt

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

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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Oct 26, 2014

What I've learned about eating animals - and what the future holds (Part Two)

This is Part Two of Two in a series about our love for food, cultural practices, nutrition, the way we treat animals, what the Torah (Bible) says about eating animals, and where I think the puck is going (Part Two is the one bit about entrepreneurship, or future forecasting what I believe will be a very lucrative opportunity for the right entrepreneurs). This is more about what I've learned about these topics over the past four years in adopting a mostly vegan diet than my typical Lucky7 posts about entrepreneurship (with the notable exception I just mentioned above). I will not be offended if you stop reading now, and you now understand the context if you continue to read this series. I want you to know what you are getting into before you proceed; I believe this series will be a Matrix-type learning for you ("take the red pill, Neo") and once you know the truth you cannot "unlearn" it. You have been warned. :) Having said all of that, this is a topic that I'm very passionate about. My drive to write this series comes from the many questions I get from people about my diet, so I'm writing this to openly share what I've learned and this will also be more efficient - and comprehensive - for me than telling bits and pieces of this learning each time in conversation. My drive also comes from losing my father to a heart attack because of his diet. He was too young to pass away, and I miss him very much. I wrote a tribute to him here - he was an amazing entrepreneur and man.

Before I begin, I would like to thank my good friend, Ryan Cush (one of our best for many years at Bazaarvoice and an executive of Food on the Table, recently acquired by The Scripps Network), for discussing and reviewing this series with me. He is a wise and good man, and I always enjoy collaborating with him.

Part Two

If you haven't read Part One, please do so first. That will give you all of the context for this last Part of the series.

Ok, so now that you have some of the learning that I do from the past four years of exploring this (sometimes sensitive) topic, what do you do if you want to make a change in your life towards a more humane diet - the original diet prescribed for us by G-d in the Garden of Eden? In this post I'll first address how to change your diet and next I'll address what the future holds, which is the entrepreneurial part of this series with the capitalist in me speaking.

First, let's talk about health. You can be an unhealthy vegan. A famous venture capitalist once told me, "You don't see any fat vegans, do you?" Well, actually, I do. Just like any diet, there are the junk-food alternatives in the category. If you haven't watched the documentary Fed Up, I highly recommend you do so. There are all types of vegan junkfoods that have high processed sugar content and will, in fact, make you fat and unhealthy if you eat them often. For the best vegan diets, I recommend you read The Engine 2 Diet or Thrive, as I mentioned in Part One. Also, there are many great Indian, Chinese, and Thai cookbooks and it is easy to eat healthy - but very tasty - vegan on those diets. When I want to splurge in Austin, I eat at restaurants like Sway, Clay Pit, Thai Fresh, and La Condesa, which all have great vegan options and are pretty healthy overall. When I want to eat really healthy vegan, I eat at Casa de Luz, which has many fantastic options. Here is a cool article on how vegetables are "becoming cool again" as according to Zagat. I recently had one of the tastiest vegan meals ever at Millennium Restaurant in San Francisco (they have a cookbook available for purchase, by the way). When I do have a craving for meat - or a recipe that is usually made with meat (such as a bolognese pasta) - I turn to the great products by Beyond Meat (carried by Whole Foods and others). Their beef and chicken products have the same protein content as the real deal and satisfy the craving for me. They are also made with minimal sodium, sugars, fats, and junky additives.

But the bottom line is - the best vegan diet is one that is a whole plant-foods diet, not processed and not using heavy oils and sugars with no offsetting fiber (again the documentary Fed Up will explain the sad processed sugar situation to you as it pertains to tantalizing our taste buds at the dire expense of our health).

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Oct 18, 2014

How I define the soul of entrepreneurs: you change the world (part 3 of 3)

This is part three of a three-part series on entrepreneurship. The parts:

  1. 'Is it too late for me to start my own business?', and other sheepish questions (Lucky7 post)
  2. Who this new generation of aspiring entrepreneurs are and the new Golden Age of tech (Lucky7 post)
  3. How I define the soul of entrepreneurs: you change the world

Part Three

You create the future. Others dream about it, some write about it, many read about it. But the rare few actually create it. You are one of those rare people, and you are to be cherished by humanity for being so brave to define the future for all the rest.

"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man." - George Bernard Shaw (1856-1950)

You create the jobs. There is no company that anyone goes to work for that didn't have a brave creator at the beginning of it all. Your company can grow beyond you, but no one at your company today would be there if it were not for you giving birth.

You define the soul of the company. It was your unreasonableness, your "craziness", your dream, and, perhaps most importantly, your values that were seeded in its birth. Others can lead and tap into that soul, but if it weren't for you there would have been no soul in the first place.

You know the triumphs and the defeats like no one else. You have ridden the emotional highs and lows like no one but other creators can understand. The company means more to you than it can mean to anyone else - because you were there at its inception. You were in the hospital room for its birth, along with perhaps a few other proud parents (your co-creators). The parent has the most history with the child, even when the child grows into an adult. It is easier to be the grandparent, cousin, or just the friend, acquaintance, or bystander.

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Oct 6, 2014

Dear Bazaarvoice, the love of a founder never dies

To: The Bazaarvoice team, both past and present

Dear Friends (for I consider each of you to be just that),

My most sincere thanks to each of you for some of the most memorable, fascinating, and uplifting days of my life over the course of the last decade.

As my time on the Bazaarvoice Board of Directors draws to a close today, I look back on what we achieved together since this company was created over nine years ago with a combination of pride and humility. Pride because together, we built something from the ground up that revolutionized how transparently commerce would be conducted. And we did it incredibly well, expanding all over the world and winning the trust of thousands of clients and many partners. Humility because I will never take for granted the great privilege it has been to lead, to serve, to learn from all of you, and to be part of our outstanding culture.

In life and in one’s career, there are periods that shine for one reason or another and for me, the most transformational period has been my Bazaarvoice years. And that’s because of all of you. What we created together is one of a kind. The effort and skill it took amazes me. The devotion and care you brought to your work, the spirit of inspiration I saw thriving around me, and the eagerness to take a big risk on a new idea will inspire me for the rest of my life. I mean that with all of my heart.

One has to look forward as well as back though, and as deeply as I have loved my time serving with you, I have confidence that Bazaarvoice has many great days that lie ahead. The same spirit of ingenuity that drove us at the beginning still churns today. The excellence of our team is unquestionable. The soul of Bazaarvoice is very much intact and the heart beats strong.

I plan to continue watching, applauding, and taking great pride in your successes as one of our largest shareholders and a most loyal fan. But most of all, I will remain grateful to all of you, every day of my life. The love of a founder never dies.



Sep 18, 2014

Three need-to-meet startups at to see the future of digital retail, plus the latest from Bazaarvoice

Every year I look forward to the Annual Summit. It brings together the smartest experts and entrepreneurs working in the digital retail space for discussions about the state of the industry and solutions to some of our biggest challenges. It’s an expansive showcase of innovation and insights.

There are a number of companies exhibiting this year that I’m excited to speak with, but I wanted to highlight three in particular that all of my retail friends should check out: Edgecase, Shelfbucks, and Together Mobile.

In the interest of disclosure, I’m an investor and/or advisor (Hurt Family Investments portfolio) in all three of these companies (and also a former three-term member of the Board of Directors). But there is a reason I’ve been impressed by these companies and believe in them and their value - and think retailers and brands should as well. They are all transforming multi-channel shopping in important ways. They are focused not only on conversion (still a primary pain-point in digital shopping) but also revolutionizing the customer experience.

So much of the experience of multi-channel retail in the past decade has been focused on social engagement and multichannel infrastructure. While those are of course necessary solutions for retailers, we can already see a trend emerging for the next great leap in the space, and those innovations are being led by wholly rethinking the shopping experience -- what it truly can and should be as we begin correlating shopper’s experiences across the online and offline divide.

These imperative experiential trends are evident in the three companies below. Edgecase’s unique mix of machine learning and human curation to produce an agile, adaptive online platform takes us beyond filtering for a more natural and intuitive shopping experience; Shelfbuck’s innovates in the opposite direction by bringing online comprehensiveness to stores with their out-of-the box beacon ecosystem; and Together Mobile bridges both experiences by integrating user-generated content into a their mobile-first marketing platform to add robust, curatable content around brand’s commerce owned-media properties.

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