Nick Hanauer is an entrepreneur with a broad range of experience across manufacturing, retailing, e-commerce, digital media, advertising, software, aerospace, health care and finance. In 2015, he also founded Civic Ventures, a small group of political “troublemakers” devoted to ideas, policies and actions centering on significant social change. He holds a degree in philosophy from the University of Washington.
Investment you’d characterize as your biggest success. For sure, aQuantive. I founded it and funded a big part of it and sold it [to Microsoft] for $6.4 billion. Also, Amazon as a first-round investor.
Company you passed on and now wish you had invested in. Rich Barton asked me to invest in Glassdoor, but I was too lazy to do anything. That was a screw-up.
Most important things to look for in a startup. My first screen is “Nick’s rule of transformational value.” Every great business is predicated on a product or service that creates what I call transformational value — that is, it is either 10 times better or 10 times cheaper or, ideally, both. Second, of course, the quality of the people. Bad people can kill a great idea but great people can evolve a mediocre idea.
Best location for closing a deal. My office.
Kinds of companies you’re looking for and why. My partners and I look for very early-stage-ideas companies. We try to be hard core about them being headquartered locally, but have made exceptions for entrepreneurs we already knew and trusted. We are somewhat agnostic to industry, reasoning that it’s the stuff you have not considered before that may be the biggest opportunity. For example, one of our best and most exciting investments was Insitu [acquired by Boeing for $400 million], and they made drones before anyone knew what drones were.
The most effective entrepreneur you’ve encountered. It’s hard to beat [Amazon’s] Jeff Bezos. My pal Rich Barton [of Zillow] comes close.
Top two deal makers. Simplicity and focus
Top two deal breakers. Complexity and confusion
What do you do for fun? What don’t I do for fun? I believe that one of my finest and rarest qualities is my ability to efficiently convert money into fun.
What kind of car do you drive? Tesla Model S P90D
You might not know. Hanauer is a co-author (with Eric Liu) of two best-selling books in the political genre, The True Patriot and The Gardens of Democracy. He has been featured in two documentary films on economic inequality — American Winter and Inequality for All.
Matt McIlwain joined Madrona Venture Group in 2000 and focuses on a broad range of software-driven firms. Current investments include Apptio, Envelop VR and Smartsheet. A graduate of Dartmouth College, he holds an M.B.A. from the Harvard Business School and a master’s degree in public policy from Harvard’s Kennedy School of Government. He was named to the Forbes Midas List in 2008, 2009 and 2011.
Investment you’d characterize as your biggest success. Isilon Systems [acquired by EMC for $2.25 billion]
Company you passed on and now wish you had invested in. Airbnb
Most important things to look for in a startup. Customer-driven problem/need; differentiated and technology-driven solution; compelling founding team that can build a great company
Best location for closing a deal. Coffee shop or a great restaurant
Kinds of companies you’re looking for and why. Virtual reality/augmented reality companies and “application intelligence” companies that leverage machine learning to make apps smarter
The most effective entrepreneur you’ve encountered. Sunny Gupta [of Apptio] is world class at customer focus, attracting great people and product-market fit.
Top two deal makers. Great judgment, passion for the opportunity
Top two deal breakers. Not focusing on the customer’s problem, lack of transparency
What do you do for fun? Travel, play (and watch) sports, discuss policy issues
What kind of car do you drive? 2011 BMW 535i
You might not know. McIlwain came to venture capital investing from an unlikely place: the Genuine Auto Parts Company in Atlanta, Georgia, which owns NAPA Auto Parts. He ended up spending a lot of time with venture capitalists and venture-backed companies that were interested in investing in the sector. He worked with Madrona on some projects and joined the firm in 1999.