Inside the Brain of Venture Capitalist Mark Suster

A few minutes reading Mark Suster’s BothSidesofTheTable is all it takes to realize that you‘ve stumbled upon a witty and unapologetic resource for the type of knowledge you need in the startup and tech arena. An entrepreneur who sold his business to Salesforce before becoming a venture capitalist, Suster is currently a partner at Upfront Ventures.

Inspired by Mark's pieces on what it's actually like to run a startup and be an entrepreneur, publications on the Lolay journey are soon to come. In the meantime, no matter where you are on the entrepreneurial spectrum, Suster's insights are a joy to read.

In the post titled Venture Outlook 2016, Suster predicts what will happen to the venture capital market in 2016 and calls into question the valuations currently achieved by tech startups.

Suster makes clear he believes the “over-heated private tech markets will cool” in 2016, for our “privately held technology market is clearly in a bubble,” and adds that we are doomed to repeat the history of a boom and bust.

Suster cites the sharp rise in unicorn firms -- companies with a valuation in excess of $1 billion-- over the last 18 months. He mentions that companies such as Uber and Airbnb have managed to raise vast amounts of money, reaching valuations of $24 billion and $70 billion respectively, but that we perhaps got ahead of ourselves with these valuations.

There is an inflation for sure, and it is largely a result of new corporate investors, hedge funds, mutual funds, and the crowdsourcing entering the market.  Here, it is the corporates who are overvaluing as they are less valuation-sensitive than the VC community.

According to Suster, different profit motives that fuel corporate investors are what account for the “insensitivity,” and it can definitely be foreseen how non-VC investors will stop focusing on startups once interest rates go up and how this will cause the investment bubble to burst, as VCs will not be able to put up as much money as the corporates before them.

Other VC Pearls

Suster also shows entrepreneurs that competition should not be feared and that in any case it is important, for it will tell investors that your product or service is sexy and lucrative, it’s validation.

When the time comes that  your competitor gets funded, Suster advises companies to remain focused on their business, market, and customers. Sending a quick note to investors to reassure them of your market position and product helps too. In the event that your business isn’t as competitive as it needs to be shortcomings must be addressed. 

Other important points Suster mentions are to not feel rushed into taking any accelerated actions such as rapid increases in marketing, changing the plans around products or trying to compensate your loss by attempting to quickly raise more money.

Lolay founder and entrepreneur Bardia Dejban uses Suster's insights as a constant source of education and inspiration. "Entrepreneurs learn from great entrepreneurs, especially how to avoid costly mistakes" says Dejban. "Some think that it's just content marketing, but Suster writes about intimate and often criticized areas of business that everyone can learn from."