Silicon Valley is obviously on the forefront of technology. What’s not as clear is how to keep track of trends, new companies, key players, and all the rest, especially since it’s always changing.
That’s why Bob Karr created LinkSV, a Valley-centric, comprehensive, and constantly updated social network. We talk about how to get the most out of LinkSV, whether you’re a service provider, startup looking for an angel, an investor looking for an acquisition, and beyond.
Bob’s been in the Valley for decades, so we also talk about…
- Spotting “hidden” clues that a company isn’t worth acquiring
- 4+ hot tech sectors that are getting even hotter
- How today’s market differs in key ways from the Dotcom era
- Employment trends to watch out for – outsourcing is just the start
- And more
Mentioned in this episode: www.linksv.com
Patrick Stroth: Hello there, I’m Patrick Stroth. Welcome to M&A Masters, where I speak with the leading experts in mergers and acquisitions. And we’re all about one thing here, that’s a clean exit for owners, founders, and their investors. Today, I’m here with Bob Karr, founder of a unique database called Link SV, which is short for Link Silicon Valley. It’s touted as the fastest way to connect to the people, companies, and capital of Silicon Valley. Now given my experience with a number of companies that provide data and lists to the M&A community over the last couple of years, I consider Link SV to deliver the very best value for the buck. So I’m not just an acquaintance of Bob’s, I’m actually a client. And I’m very excited to share a few minutes with him today. Bob, welcome to the podcast, thanks for joining me.
Bob Karr: Hey Patrick, thanks for thinking to invite me on your program, appreciate it.
Patrick Stroth: So before we get in and talk about the wonderful things about Link SV, why don’t you give us some context on how you got here. Tell me what got you to this point in your career.
Bob Karr: Okay, sure. So you know I spent 35 years as a corporate liability insurance broker in the Bay Area, and my market basically was the technology community. And I loved doing it, but I recognized along the way how difficult it was to collect a lot of information, and calling companies, and that was festering around in my mind. I also was a very active angel investor, going back to the late 70s, and investing in a lot of small startups. And I also started the Angel’s Breakfast Club with some smaller VC’s, and some senior people in the Valley that we ran for about 30 years. In fact, it’s still running, it’s being managed by Silicon Valley Bank these days. Yeah, there you go.
Patrick Stroth: And so from those meetings, you came up with the idea for Link SV. Now what prompted you to come up with this kind of project?
Bob Karr: Well as I said a minute ago, I noticed that there was just a lack of information that was available. This was a little bit before the internet was so pervasive as it is today. I also noticed in my own business, that information that people learned sort of went into files, was never shared, certainly things that weren’t proprietary. And it just was hard to connect dots, and meet people, and do interesting things, as which is much more taken for granted these days. And so starting from that basis, that’s literally what happened. And I along the way investing into a company, ran into an outsource VP of engineering who was helping the company that I was investing in. We got into a conversation, and he said, “Hey Bob, you’ve got a company, or you just don’t realize it.” That’s literally how we got started, yeah.
Patrick Stroth: Oh wow. So I mean this came out, born of necessity where you were trying to not just connect to people, but you were in trying to develop business for yourself as an insurance broker. Then doing these things, learning about people, just finding people and places that you just can’t find in the phone book.
Bob Karr: Well I mean just expanding a little bit on that, the kind of databases that were out there I thought were very thin. It was basically where are the companies, where are the names of the people. And I was much more interested in connecting the dots, adding more information that would be of value. Giving people a way where they could make connections better. So databases were burning in the back of my mind as something I wanted to do, and then I just popped and I did it, and started working on it really back in the year 2000. And that’s when we first got started. And spent two years just working with the developer on how we could present the information properly. We had no customers or anything. Just had fun entering data, and that’s basically how it got started. Right.
Patrick Stroth: Okay. And then in that process then, getting that information, this is why people take it for granted today. But in the old days we would try to reach out to people, and we had no idea who they were, and more importantly they had no idea who we were. So it was literally cold calling.
Bob Karr: One of the examples I like to use was you go to lunch with somebody and have a conversation, and by the end of the conversation when you’re really getting down to business, you’re starting to ask some questions, and today you already have the answers to these questions. You can start a meeting today much better prepared, much better informed. Save a lot of time, get right to the point, and actually be much more valuable to the person you’re calling on, because you’re not wasting their time. And you honor them, by having done some research on their company. And that’s really important to me.
Patrick Stroth: Yeah, I think when we’ve spoken in the past, it was the whole concept of turning cold calls into warm calls. And it is not only showing respect to somebody, but you’re valuing their time, because you’re not going to go waste their time with the trying to get to know them, and whether or not they’re the right person. You already know, you’ve got a better idea of it. And I think that’s one of the things, elements great about Silicon Valley, is a lot of people out here will give you a couple of minutes. Whereas in other parts of the country, unless they know you, they won’t give you the time of day. And that’s part of the magic here.
Bob Karr: Yeah, and on your point, giving someone a couple minutes, you want to honor that, and you only have a couple minutes. And you want to be really prepared to take advantage of that, and be smart about that call, and that introduction. So along the way, so what I was thinking about was what if I could do that from a business perspective, turn that into a business to a small monthly subscription charge? Where people would have a lot of access to information, and be able to make a stronger, better approach. So that was the idea.
Patrick Stroth: I think that’s very appropriate today, and didn’t exist a few short years ago. Now Link SV concentrates largely on companies, investors, VC firms and so forth. And in and around Silicon Valley, so just for the benefit of the audience right now, why don’t you define-
Bob Karr: Sure.
Patrick Stroth: What you consider Silicon Valley, and then why did you look at here as opposed to all of California?
Bob Karr: You know it’s funny you mention that, because when people think of Silicon Valley, you think of the old Ellis street, basically where Fairchild got started, and expanding from there. But the whole region today, what I call the greater Silicon Valley, because there’s tech companies up in the Santa Rosa area as well. So, we define for Link SV, from Santa Rosa down to Santa Cruz, then over to Livermore and as I like to tease, as far as you can swim. So it’s a pretty tight region, but it’s pack full of companies. There’s basically … we track 14,500 companies in this region, and we focus on all aspects of technology. All the technology companies, plus we do the bio tech sector, and the medical sector, but for example, we wouldn’t be doing a hospital per se. But we certainly do all technology companies that have medical impact. The medical sector.
Patrick Stroth: Medical devices and such like that.
Bob Karr: Yeah, and beyond, sure. Exactly.
Patrick Stroth: Okay. Okay. Fantastic.
Bob Karr: And again, what makes this area unique is that these companies have high growth, they require outside capital, they’re chartered for growth, they’re global, and there’s a lot of employee turnover. So if you think about that, there’s so much going on in the company, literally it’s hard to keep up with. And the changes in the company can be dramatic, I hate to say it, but in a 90 day or six month period, it could be a makeover of a company. So tons of stuff going on.
Patrick Stroth: Well and this is a challenge, because this is a recording, and people really can’t see it. But if you could, paint a picture, what are the practical applications for Link SV? I mean when you’re doing searches, I guess-
Bob Karr: Sure.
Patrick Stroth: It’s short of a search engine. But paint a picture on what it looks like, what it does, what it provides-
Bob Karr: Okay.
Patrick Stroth: To give people an idea.
Bob Karr: Right. Well first of all, I’ve been told by so many people that Link SV just saves them a lot of time. I mean if you start doing a search in Google, it could take you forever. And Link SV allows you to laser information a lot more quickly. But the main I’d say probably 80% of our business has always come from the service provider community. Because service providers really are sitting in a situation where they are taking care of existing clients, and looking for new clients, or new customers. And in any given year they’re going to lose 25% of their business just to attrition. Just by the companies are being acquired, or they’ve gone out of business, or they lost an account to somebody. So they’re always on the prowl for new business.
And another important sector to us would be technology companies that are looking for customers, particularly companies that have customers that are … I mean after all, intel doesn’t need us. They know who their defined customers are. But smaller companies who are looking for smaller ticket items. They love Link SV. They’re looking for customers. And inside of companies, our database is useful to M&A people. A financial group of companies, sales and marketing folks, all kinds of people inside the company. So I would say those are the categories of people that like to look at Link SV. And then I guess what they’re looking for is that for example, in merging companies, coming here they’re looking for customers, alliance partners, key people to hire. Looking for board members. They’re looking to be acquired. They want to go see what are the tendencies of certain company staff for the acquisitions they’re making. In other words, we give people a lot of clues, and a lot of ways to find information. So I’d say that’s probably a good overview.
Patrick Stroth: Yeah, and to give people an idea of just some of the categories under there, you’ve got a VC search where you can pull up any number of venture capital firms. Not only by name if you knew the name, but Bob help me out here. You could do either by how many rounds? The capital they’ve provided, if they’ve done recent activity in the last six months?
Bob Karr: So, in other words, we have like 40 different filters you could use. A very practical example would be if you’re trying to hire a VP of sales, a world class VP of sales, and that’s going to be important to the funding you’re trying to achieve, and for example, that particular … the VC firm you’re talking to is Sequoia Capital, and you went into Link SV and found a former VP of sales for a really good company who was funded by Sequoia, that might be a pretty good place to start. Because we track, we could show any VC firm all the companies that they’re involved with, and give them a whole database of people and information, just about their customers. In fact, we can provide anybody with their own private database of activity about their organization.
But what you asked was the use of filters. So in fact, you can start a search from anywhere. You can say gosh, why not a Stanford MBA, that person’s got a huge Rolodex, I’d love to get that person to become my you fill in the title. Go from there. And then you could plug in for example, working in cloud companies. Or for example, if you’re looking for board members, we now have which we just released only this week, a really fast access to identify board members by the type of companies that they serve on. So for example, if a CEO’s looking for a board member who has a background in cloud companies, we just type in cloud, and put in who might be sitting on third round companies, or early stage companies, and up come all these people. So it’s just a quick way to get access to a lot of information, and then using our great data resources, which are LinkedIn, and Google, virtually everybody who is out there. People will take our information and be a lot closer to being able to get an answer that they’re looking for.
Patrick Stroth: Tell me how has with all these filters, and I believe that really the best way to do this is that you’ve got to get on www.LinkSV.com to get a look at it. But why don’t you describe real quick what are the most recent changes? What’s been the most fundamental change recently? Or upgrade that you’ve had
Bob Karr: Sure.
Patrick Stroth: With the site?
Bob Karr: Okay. Well we’ve done some, I’ve always wanted for example, to get email addresses on our site. And it’s always been hard to do, and we’ve just partnered up with a firm in France who’s got some great algorithms. And so now we can produce about a 70% return rate on emails. And I think we have the price on this now for basically through Link SV 40 bucks a month that people can get up to 300 emails a month. So that’s always been, I’ve always been asked that question. We’re really pleased to be able to offer that. The other thing I’m excited about as I just mentioned is this fast search on board members to be able to identify by keyword and where they are, that’s a really important thing to me.
And then another brand new thing for us is that we’ve added a collaboration tool onto Link SV. Which allows a number of people inside a company, or a hyper group, it could be you Patrick, and a lawyer friend of yours, and somebody else. In other words, a group of people to get together, and then share the same information. So that you could for example, look at a group again of security companies that you want to track that have all raised more than $25 million, and on any given day, on the 80% rule, you’ll recognize 20% of the companies, because you have either as a target customer, or a client or whatever.
But the other 80% is fodder for, or opportunities for companies. And so what we want to do is allow people to gather information. Like gathering the storm if you will, so they can acknowledge when they’ve met somebody through soccer, or through an event, or a trade show. And all of a sudden these cumulative notes and sharing add up to a company, gosh we have enough information, and I think we can make a warm call. So that’s new, and that allows us to get to the enterprise business. For which we’re starting to do now. So I think those are three things. Yeah.
Patrick Stroth: Yeah? Well I think those are very helpful, particularly the email thing can help, just because people don’t necessarily like getting a phone call out of the blue. But the emails, you get a lot of traction, a lot more traction than you think with that.
Bob Karr: Well I was always thinking, oh go ahead.
Patrick Stroth: Oh no, no, I was just thinking this is really right along the line of the last question, but there are other databases out there that are focusing on M&A, or private equity, or tech, tech company databases and so forth. How is Link SV different from those?
Bob Karr: Well that’s a good question. I mean that’s what actually spurred me to start doing this in the first place. Because the original databases that I used to look at, they wouldn’t go deep, and I wanted to connect the dots. In other words, I wanted you to be able to go in and say I’m really interested in IOT companies. Or cannabis companies, and be able to see them horizontally across the board. All the companies that are out there, and then dig down for further information about a group of companies. And so we connected us all throughout the system. Wherever you start, you can keep moving on to something else. So that’s different for us. Another thing I think maybe differentiates us is that we have the LinkedIn connection on our database. So you can quickly go from there, and just click on somebody’s LinkedIn profile. And of course, we’re tracking venture capital, angel capital, and corporate capital. Which the traditional databases don’t.
And so for example, if you just did some research on LinkedIn, which is wonderful, and you saw some interesting people, you’ll see those people and their profiles. But you don’t know about the companies that they’re in, and what is the status of those companies? So you can really kind of get a higher … If you list of a 100 people, you’d rather call on a company that just raised $25 million of capital than somebody who hasn’t raised any money for eight years, and is maybe fading out. So it gives you clues on how to prioritize who you want to call on. And again, we have search by keyword, and again these collaboration tools that we’ve just put in. I think you give people just a stronger touch and feel to make the database really work for them.
Patrick Stroth: Yeah, great idea.
Bob Karr: To be responsible.
Patrick Stroth: Yeah, one of the great ideas you gave, and I just want to touch on this before I forget it, where you mentioned when you want to look at companies that possible raise a particular round of capital in a short period of time. And why don’t, because you and I have talked about this. Because I’m in the mergers and acquisitions field, and we’re after talking to you about a year ago, we were talking about targeting companies that raised at least $30 million in the last 18 months. 30 million plus in the last 18 months. And we were able to look at that filter through Link SV. But why don’t you talk to us about what’s that reasoning about if you’re-
Bob Karr: Well sure.
Patrick Stroth: Raising that much money, there’s only a couple things you’ve got to be thinking.
Bob Karr: I mean just through my own investing activity, I’ve been involved in about 25 to 30 deals in the valley over the years. I mean every company in Silicon Valley is building a company with a dual strategy. One is to just grow like mad and be a great company, and the other is an acquisition strategy. And I’ve talked to a bunch of VP’s of corporate development throughout in the valley. And clearly, they’re turning over 400 companies a year on average. So companies are getting called all the time about being acquired, without a doubt. And one of the standards in Silicon Valley is that these emerging companies are raising new capital every 18 at the outside 24 months in their growth cycle.
And so you can go into Link SV and identify companies that haven’t raised money for three years or four years. And that’s got to be a clue that if they haven’t raised money for four years, either they have all their own internal capital, which is very, very unique, or they’re running the company of inventory like HP is to sell printers, and that’s really unique. So these are troubled companies, and they’re looking to be rescued. They’re looking for alliance partners, they’re looking for capital. So if you’re trolling for companies to be acquired, I mean that’s a place to start. And that’s why I mentioned that by using multiple filters, you can really narrow down your search to something that’s kind of interesting for you. Okay, if that helps you.
Patrick Stroth: No, no, no, that’s fantastic. What trends in tech, because you’ve been able to see this on a broad perspective in Silicon Valley, which is tech. But what do you see trend wise just from observations, either tech investors, or M&A in general that you’ve seen as somebody has put together this database? I mean you’ve got this great 10,000 foot view that you can narrow all the way down to 10 inches. And you could see the forest for the trees, what are you seeing out there? Or what have you seen?
Bob Karr: Well I mean clearly I see what everyone else is seeing, I probably see it in a more aggregated area. But certainly security has become just completely their own sector. It’s been around for years and years but with all the terrorism and things that are going on, it’s become so important. IOT, connecting the dots on everything is important. Cannabis would be another. And what happens is when these sectors begin to become interesting, and they heat up, then lots of companies jump in. So it doesn’t take long. I mean when cloud first became popular, all of a sudden cloud companies popped up. You can go to Link SV right now, I think if you typed in the word cloud as a key word, you’d come up with 935 companies in our Silicon Valley that have the word cloud in their business description.
Virtually any new area, just put the key word in, and it will pop up with a group of companies that are emerging. And that’s the exciting thing about the valley, there’s people are jumping in early, but when it’s not automatic, when things don’t happen … things are hard. It’s tough, but they get in, they chew on the tough problems, so they’re early to market. Which makes it interesting.
Patrick Stroth: That’s really interesting. What other trends are you seeing Bob?
Bob Karr: Well first of all, I think that in this era, as opposed to the dot com era where companies were just put together, glued together with resumes, I think you’re seeing a lot stronger business models today, with experienced people. Which is really good, so we’re out the gate. You’re getting companies that are going to get a good footing, and what they really have to do of course is build their company, which is still a challenge. The other thing that’s interesting is today there is with social networking, and all aspects of digital marketing, there’s just a much lower cost that companies have on getting the word out. And I think that’s important. And when you mentioned new markets and things that are going on, certainly you have BitCoin, BlockChain, Cannabis, IOT, are clearly areas.
And there are new areas getting started all the time as we speak. Another thought I have was about acquisitions. Is that there’s a big surge in the area of PE firms, lots of new ones getting started. You can’t go public these days, I mean it’s very hard. As a matter of fact, we’re having the biggest boom IPO year we’ve had since 1999 and 2000. But still it’s only 35 or so IPO’s.
Patrick Stroth: Yeah, that’s just it.
Bob Karr: Yeah, which means everybody’s being structured for an acquisition whether they like it or not. And so that’s really interesting when you focus on that. And the other thing I’d like to point out is that people’s engagements with companies are really much shorter. I mean I’ve heard people talk about the fact that you can hardly distinguish a 1099 from a W2 these days. Because in reality, as opposed to being hired by a company for seven years, which was the average 20 years ago, today you might be hired for six months to do an assignment. To solve a problem. And if you solve the problem, then you may decide to stay on and engage, or go to something else. But there’s a lot more of that going on. And there’s also a lot more outsourcing. Today you must have an outsourcing strategy, whether it’s China, or eastern Europe, or India. But you must have a strategy in place for outsourcing.
And also, two companies are using a lot more outsourcing for all their other functions locally. There’s a lot more involvement with people that with consulting on sales, and marketing, and communications, and everything you can think of that helps build a company where they don’t have those people in the house. There’s a lot of that going on. So these are some changes that I certainly see.
Patrick Stroth: Yeah, yeah. Well I’ve got to tell you, I’ve used and we own Link SV over here, so I’m familiar. But I just get excited as I hear you talk about this, because there are a couple of the searches now I want to do. And so I would really encourage our listeners to check out www.LinkSV.com, to look at it for yourself. But you know what? You can’t really appreciate this unless you go through a demo with Bob. Bob, how can our audience come and reach out to you other than just trying to find you on the website? But how can they get ahold of you themselves?
Bob Karr: Well first of all, just go to the website, and peruse around and sign up, and when you sign up, we see you signed up anyway, so we reach out with a series of onboarding emails. And we’re always happy to be connected, because we have a questions box right on the site, you can write a question. And we can be approached that way, and of course just with my email. Which is Bkarr@LinkSV. But see I like to talk to people who like our data, and it’s fun for me. And great things happen from it, because it’s a chance for me to maybe give somebody a couple searches they haven’t thought about, I do that a lot by the way.
Patrick Stroth: You do that with me all the time.
Bob Karr: And at the same time, yeah-
Patrick Stroth: Yeah.
Bob Karr: But see that’s the fun part about this. It’s for me to a way to be connected. I can work from my home office, talk to fun people, help them do something that helps them. I really enjoy that. And the other thing of course is if somebody likes our database, and they find us to be helpful and engaging, the chances are they’re going to tell their friends about us. And what a better way to get new business, or at least grow our database than that? And of course, we have a premium model, so that yes, we sell data and subscriptions. But people can also come on for free. It’s a little lesser amount of data. But it’s certainly we do a lot of good things in the premium model as well. So, I say that’s how.
Patrick Stroth: Yeah, that’s sometimes the element in the room. Element, the elephant in the room there. Is this is subscription model, and I don’t want to lock you down in this, but if you had a couple ranges just on what that looks like, and let’s put this in context, because we get approached by the real established organizations like Pitch Book, and a few others. And they want four or five figure monthly subscription rates.
Bob Karr: Oh right.
Patrick Stroth: Which was unbelievable, but give us an idea if somebody wanted a premium membership, which I think you do get again this value times 10.
Bob Karr: Sure, okay, exactly.
Patrick Stroth: What’s the range right there in full disclosure for the audience?
Bob Karr: Right, so we have individual memberships that range from $25 a month, to $100 a month. And the only difference in that pricing, is the amount of information that you can actually download and take reports on and so forth, and so on. But you can see our entire database. So yeah, for $25 a month you can go in and do a lot of research. And the other thing is that we’re really focusing … I should say we’re trying to do more business in the enterprise. And that means get involved with a corporate client, get a group of their people together who are all trying to work in a target area. Band them in a group, and then sell a membership that way. And so we have corporate memberships that range from $100 a month I think to $300 a month, depending on the number of people that are going to be enrolled.
Patrick Stroth: Yeah.
Bob Karr: There you go.
Patrick Stroth: Well, I think this has all been really helpful. As a matter of fact, I’m going to go … you gave me an idea for another search I’m going to do real quick here. Bob, I want to thank you very much, and again, the email address for you, is it B-K-A-R-R, there’s two R’s there. So it’s B-K-A-R-R, at Link SV.com. And I would definitely encourage you to check out the site, Link SV.com. And you’ll enjoy it. Bob, thanks again for being here, and helping us out today.
Bob Karr: That was wonderful, thanks for having me.