8:15 am. Grand Central Terminal Clock. A white, snowy, Wednesday morning. A small group of InSITE fellows set out to make the 30 minute long train ride to the Bessemer Ventures office where Alex Ferrara, a partner at the firm and a dedicated InSITE alum, has graciously agreed to host. As we set out for the Larchmont, NY office, the excitement amongst the group members is palpable – Bessemer is one of the oldest VC firms in the country and has a storied history that dates back to the founders of Carnegie Steel. As luck would have it, our train could not cope with the weather and we ended up spending the extended trip discussing the Bessemer Process, the current wars, and the early days of venture finance in New York. Unfazed by our late arrival, reception greeted us warmly and ushered us into a large conference room where breakfast awaited and where Alex shortly joined us.
Alex had an easy, down-to-earth manner and it was amazing to see his passion for what he does and his sincere interest in the evolution of InSITE. He was friendly and approachable, which put everyone at ease. We spent the first ten minutes proudly reporting how much the organization has grown over time and it was rewarding to see that he seemed to be genuinely interested in each of our backgrounds as well. As we went around the table offering up our two minute stories, one jumped out. One of us was a data scientist – she practically got offered a job on the spot! (talk about ROI). Alex asked her about her summer plans and explained that a couple of portfolio companies were actually looking for people with her background.
Alex then walked us through his powerpoint ‘pitch’ to entrepreneurs, a refreshing perspective from a VC and really drove home the fact that Bessemer sees itself as a service provider to its portfolio companies. The presentation talked about the firm’s past, its values, its portfolio companies and lessons that Alex and his partners had learnt along the way. One of the things that jumped out was the firm’s approach. Alex explained that most of the firm’s investments are made on the basis of industry roadmaps that the relevant partners prepare for the industries that they cover. The amount of research that goes into mapping sectors the way they do is staggering and represents more of a constant work in progress rather than a project that has a finite end. It was interesting to see the discipline that the firm has had over the years in keeping with its philosophy of sticking to what it knows best. The humorous flipside to that is the anti-portfolio – a list on the website of all the big hits that the firm has missed over the years. While any respectable VC probably experiences a similar hit-miss ratio, it was awesome to see the firm accept the missed opportunities in such an open, fun way.
Another interesting insight that the firm’s partners had before most other firms was the ‘unbundling of Craigslist’ hypothesis. They believed, as far back as a decade ago, that that many segments of the cluttered Craigslist site would spawn dedicated portals that would offer consumers a better experience. The evidence that the hypothesis has borne true can be seen in a range of sectors – jobs, real estate, dating and various other subsectors of the classifieds space. It was extremely cool to see how the vision that they had actually played out.
While the Q&A following the presentation covered a range of topics, it was particularly interesting to hear more about how the firm is approaching markets like India and China and how that compares with its strategy in more mature markets like the US. It was also helpful to understand how the firm thinks about the importance of the product vs. the market vs. the entrepreneur with regard to the success of its investments and how much weight is generally attached to each variable. While Alex explained that he considers the team to be the most important element, others at the firm do place more emphasis on the market and/or the product/technology.
As we wrapped things up, more than an hour had flown by and everyone came away feeling enlightened and grateful to have had the chance to make the trip. Alex was fantastic and it was humbling to see his acknowledgment of luck in VC investing as well as his respect for VC investors at other firms (people such as Fred Wilson). On behalf of InSITE, a heart felt thank you to Alex for being a great alum and to Bessemer for supporting the organization and our goals.
Harsh Sheth is a second-year MBA student at NYU Stern School of Business and an InSITE Fellow. Prior to Stern, he founded a start-up in Mumbai, India.