Repeat Founder & Angel David Chang, Ex-PayPal & Goldman Sachs - Ep. 15

Still in his forties, David Chang seems to have a lifetime of achievement behind him. Six startup exits, stints with TripAdvisor, PayPal and Goldman Sachs as well as close connections in the world of VCs give David a most informed perspective on startups. In this candid and instructive interview, David highlights the dos and don’ts of tech startups in clear and engaging prose. He provides a wealth of suggestions on how to approach markets and technologies.

He immigrated to America from Taiwan as a child and grew up on Long Island. David Chang distinguished himself in computer science as an undergrad at Cornell. Later on he attended Harvard Business School after seven years on Wall Street.

Click here to read the full episode transcript.


Topics covered in this interview include:

  • David Chang Bio
  • Came to US from Taiwan with His Family at Age 3 – Grew Up on Long Island
  • Job Market Tight in 1992 – 38 Rejection Letters – 2 Job Offers – Wall Street vs. Silicon Valley
  • Applied to Harvard Business School Thrice - Third Time Lucky – Stays in Boston Working at a Small Startup
  • Dumb Luck Had Brought Him to a Phenomenal Company - edocs
  • Co-founds Mobicious – Just in Time for Financial Crisis
  • Quits Full-time Stable Job – Decides to Start Company – Daughter Is Born – All in One Weekend!
  • Mobicious Sells for Pennies on the Dollar – Thought Would Never Work in Tech Again – Lands in Where, a Company into Location Awareness – David Beisel of NextView Ventures
  • Decision to Sell Where to PayPal
  • Genesis of Where Angel Fund
  • David Chang’s Biggest Failure as a Startup Operator – Lacked Focus on First Startup – Guardrail to Guardrail
  • The Role of Thrift in Startups
  • How David Chang Came to Make His First Angel Investment
  • Great Startups David Chang Passed On
  • Why Is David Chang Not a Full-time VC?
  • David Chang’s Advice to Startups Raising Money
  • Be Clear About What’s Your Basecamp and What’s Your Summit
  • What David Chang Looks for In a Founding Team
  • David Chang’s Favorite Pivot – TripAdvisor Stumbles upon the Idea of Doing Reviews
  • Startups David Chang Is Excited About
  • Nightmare Mistakes Founders Make
  •  How Do Founders Decide to Raise Another Round or Shut Down? The Value of Knowing Your Place in the Market You Serve

Transcript: Repeat Founder & Angel David Chang, Ex-PayPal & Goldman Sachs

SAL DAHER: Welcome to Angel Invest Boston, conservations with Boston's most interesting angel investors and founders. I am Sal Daher, and my goal for this podcast is to learn more about building successful new companies. The best way I can think of doing this is by talking to people who have done it, people such as tech entrepreneur and angel investor David Chang. David, it's tremendous you could be here today on our 15th episode. Welcome.

DAVID CHANG: Happy 15th. Thanks for having me.

David Chang Bio

SAL DAHER: Thank you. It's great to have you here. David is an entrepreneur, an angel investor, who's still in his forties. He has extensive operating experience in developing products and building software for internet and mobile startups. He is currently Entrepreneur-in-Residence at the Harvard Business School, Executive Chair at Feelter, and Co-founder of PersonalVC, which seeks to create a better way for founders and investors to connect with each other. David has a remarkable track record at both direct-to-consumer and enterprise companies. Six of the companies in which he has been involved hands on were acquired or IPO'd. In his last full-time role, he led the PayPal Boston office, where he co-founded the Start Tank innovation space and the Where Angel Fund, which was managed by Shereen Shermak, who happens to be his wife. Earlier in his career, David held product and marketing roles at TripAdvisor, m-Qube, and edocs. In the pre-Instagram days, he was co-founder of VC-backed mobile photo sharing service SnapMyLife, which was renamed Mobicious. David started his career at Goldman Sachs, where he eventually became VP of Technology.

 David is very active in the entrepreneurial ecosystem and spends a quarter of his time speaking, mentoring students and founders, and serving as a board member and advisor. As an angel, David has made more than 40 investments in mostly Boston-area startups, one third of them founded by women. He holds a BS with Distinction in Computer Science from Cornell University and an MBA from Harvard Business School.

SAL DAHER: David, you came to this country at age three. I came here at age 11. I'm really interested to hear the story of your family coming to America.


Came to US from Taiwan with His Family at Age 3 – Grew Up on Long Island

DAVID CHANG: Sure. Sure. Thanks, Sal. Nice to meet a fellow immigrant, especially in these times. I actually forget, sometimes, that I came here when I was three years old. My first conscious memory is, really, when I was three, and it was of a drab, green couch when my sister was born, and so I kind of remember being alone, which maybe calls into question my parents' parenting skills, but it was alone in the hospital, and I remember this couch. And the first time I remember being here was, my sister was born, but before that, my father had come over to the U.S. We moved to New York, came here about a year before everyone else, saved up enough money so that he could fly my mother and myself over when I was about three years old, and-

SAL DAHER: And you were coming from Taiwan.

DAVID CHANG: Yes. I was coming from Taiwan. I was born in Taiwan and headed on over to New York, and it was more of a classic, I think, immigrant story where my parents worked super hard, tried to provide everything they could provide. We lived in a little apartment just outside of Flushing, New York, and over the course of my early years, ended up doing the classic thing where, move out to the suburbs, went to a public school, and the rest of my upbringing was more of a classic Long Island upbringing than anything else.

SAL DAHER: What did your parents do?

DAVID CHANG: My father was an accountant, and my mother also worked in the same office. They actually created a Chinese restaurant, or started a Chinese restaurant, and ended up moving to Long Island when that business grew.

SAL DAHER: So the Chinese restaurant was in Manhattan, or was it in Long Island?

DAVID CHANG: It was on Long Island, eventually.

SAL DAHER: On Long Island.



DAVID CHANG: They came on over, and then the rest of the memories, really just me growing up on Long Island.

SAL DAHER: Now, David, you did your undergrad in computer science and spent seven years at Goldman Sachs on the technology side before going off to do your MBA. Please tell a bit about the decision and what you got out of your time at Goldman Sachs.


Job Market Tight in 1992 – 38 Rejection Letters – 2 Job Offers – Wall Street vs. Silicon Valley

DAVID CHANG: Yeah. As an undergrad, I had a huge dilemma. I remember back in my sophomore year talking to ... I think I want to say guidance counselor, but I think they weren't called guidance counselors in college, but asking him, "What should I do with my life? I think I'm interested in technology. I'm also interested in business, and should I pursue both?" And one bit of advice from him was, "If you think you're going to pursue business in the future, try to just get really good at one thing," and so ended up just focusing on computer science. Graduated in a pretty tough time in '92. As people may recall, there was a pretty rough economy then. During my senior year, I had about 38 rejections from companies as I interviewed one after another, and we ended up posting them on the wall. It was lucky that I got into two companies, and so I got an offer from Goldman Sachs and an offer from Oracle.

 And they were two very different kinds of roles, and I could either stay in New York as a technologist or move out west to take on a business analyst role at Oracle at a major tech company, and spent a week out in the valley. And I just couldn't see myself living there, and so I ended up starting in New York, and I was really happy about that decision. Shocked that I actually stayed over seven years at Goldman. That's a pretty long run. I've yet to have a job that lasted that long.

SAL DAHER: Yeah. Yeah, so let's just set the context a little bit for people who perhaps, today, don't really understand what Goldman Sachs was in those days. It still is the premier investment bank, but investment banks were much more independent in those days, and so it was a business where technology is not the thing.

DAVID CHANG: That's right.

SAL DAHER: Contacts and the connections that they had, knowledge of how to raise funds and that sort of thing, do acquisitions and so forth, was the business. You were more providing a support role. You were very good at that, but it was sort of a support role, so I suppose you wanted to be in the center of the business, where technology was in the center of the business.

DAVID CHANG: Yeah, over the time that I was there, I actually didn't perceive our role to be in a support role, mainly because the group that I was part of was so driven by technology. I worked for the same manager for seven years, which is, I think, also unusual. I'd moved around a little bit in terms of location, lived in the U.S., I also lived in Asia and Europe, but tech was a major part of what we did. And the business grew I think seven or eight times, maybe even closer to like 10x growth over the time that I was there, but the number of people didn't increase at all, and so all of that was attributed to us doing things more efficiently, and I loved my role. On a scale of one to 10, it was a nine. I woke up on certain days at five in the morning, running into the office because I was thinking about the next thing I could do, and so the job satisfaction was actually really, really high.

SAL DAHER: That's awesome. So what led you to think about going to business school after that?


Applied to Harvard Business School Thrice - Third Time Lucky – Stays in Boston Working at a Small Startup

DAVID CHANG: Yeah, I think it goes back to that college discussion that I had with the career counselor around, if you think you eventually want to do something that's deeper in business, then maybe an MBA is a good choice, and so I had applied to a couple different schools, didn't get in the first time, didn't get in the second time, got more experience. My girlfriend at the time, Shereen, who is now my wife, helped me rewrite some of the applications. And for me, the driver was more about being able to have a broader view, and then my intent was actually to go directly back to Goldman. So when I came up to school, up to HBS, I thought New England was a great place to spend two years, and the full intent was to return back to New York. And I even remember some of my essays around, I'd ideally like to be a CIO, right? Back in an investment bank, but ...

SAL DAHER: Right. Right. Right.

DAVID CHANG: ... get up here, you meet different people, and plans change.

SAL DAHER: That's how life goes. So out of business school, you landed a product management role at edocs, the fastest growing private company in the U.S. until it was acquired in 2004. How did you manage the shift from big bank to a scrappy startup?

DAVID CHANG: Yeah, I failed to appreciate all of the things you had at a larger place, right?

SAL DAHER: I can imagine. Yeah.


Dumb Luck Had Brought Him to a Phenomenal Company - edocs

DAVID CHANG: At the time, I think Goldman was about 7,000? Or maybe 6 or 7,000 people, and the resources that you had, the ability for you to just walk into any meeting, kind of drop down your business card, and people knew who you were. And joining a small company, sub-100 people or just right around 100 people or so, in the middle of nowhere, right? You go to a meeting now. You're dropping them a card from edocs. They don't know what edocs is. It's from Nattock, Mass, and they're like, "Nattock?" "No, it's Natick," and so you go into this conversation about where you're actually from, and it's really, really tough in the beginning, but you end up doing so much more.

 And for me, in the three and a half years that I was there, ended up spending about a third of my time doing the classic product management blocking, tackling with engineers, and that part was a little bit of a natural role, because I had been an engineer. Another third of the role was more outward facing, more kind of product marketing, positioning. And then the last third of the role was complete sales, something I'd never done before, very, very tactical, little tricks like camping out in front of the decision-maker's office when they're getting coffee, and then you and the salesperson and the sales engineer swarm on that guy. And these are things that I didn't do back at Goldman, but-

SAL DAHER: At Goldman, you were insulated from all of that.

DAVID CHANG: No, no. We were the ones being swarmed, and so ...

SAL DAHER: Yeah. Yeah. Yeah.

DAVID CHANG: ... it was a, but it was a great experience, and I threw a little bit of a, really kind of dumb luck, ended up at a company where the founders were phenomenal. I ended up working for someone that I worked with at another startup after that, and that pretty much set the path, and I've been here for the last 18 years, and there's been no regrets.


Co-founds Mobicious – Just in Time for Financial Crisis

SAL DAHER: After edocs, you continued to work in product development and marketing, first at TripAdvisor, and then at m-Qube, which was acquired in 2006. With seven years on Wall Street and two exits under your belt, you left your job at m-Qube and went off to co-found what would become Mobicious, just in time for the financial crisis to hit. It must have been a really wild ride.


SAL DAHER: Can you tell us what-

DAVID CHANG: My timing's terrible when it comes to this stuff.

SAL DAHER: I can imagine.


Quits Fulltime Stable Job – Decides to Start Company – Daughter Is Born – All in One Weekend!

DAVID CHANG: It was actually even worse. The starting of the company over the course of a weekend, I quit a full-time job at a company that had been acquired, and so that was a pretty stable job, started an unfunded company, so jumping right into it, and also had our daughter, so that was a nice, long weekend of change. For me, it was, I wouldn't recommend it for other people. I think you may want to space those things out a little bit, but-

SAL DAHER: But what caused you to do this all at one time?

DAVID CHANG: The driver was, at the time when we were at m-Qube, which got acquired by Verisign, the experience there was really positive, still really liked the team, but the co-founder that I was working with at the time was thinking about creating a business to leverage all of the mobile content that was being generated. So, much like the explosion of the internet in the early 2000s, there was a lot that was happening around mobile in late 2000s. Right? 2006, 2007. And the idea that we had was this unique one where if we could leverage all the content and produce a place where people could discover it, then we thought we could have a pretty interesting business around that, and the timing for me, and the fit for me, was pretty ideal, because it took elements of what I had learned at TripAdvisor and also elements of what I had learned at m-Qube.

 And so this rare confluence of events where I thought I was uniquely capable, or uniquely qualified, for that particular role, and it was one of those things where knew it was a high-flyer, tons of risk, but at the end of the day, the risk level wasn't as great as I actually perceived it. So for me, I'm not sure whether I'd do it over one weekend again, but I would 100% make that choice again today.

SAL DAHER: Okay, so basically, your co-founder was kind of ready to go, and it was a time to try it.

DAVID CHANG: That's right.

SAL DAHER: So after the bumpy ride of Mobicious, how did you connect with Where?

DAVID CHANG: Yeah, so my experience at Mobicious was about two and a half years. Ended up growing the company to a place where we had consumers in 190 countries around the world using the product, but we couldn't really monetize, and so as part of that process, we brought on board a new CEO that would help us scale and get to that point. And after about a couple weeks where we looked hard at the business, looked at him, and thought that to grow the business, to really grow the company, we thought we'd have to take a pretty distinct pivot. Right? Move into the B2B space, versus the B2C space, and frankly just told him, "I don't think that B2C makes a ton of sense, so why don't we consider making this really hard pivot? And I'm not sure if we really need the consumer marketing group, and frankly, I'm not sure if you really need me at that point," and the new CEO was like, "No, no, no. That's crazy. Let's sit on that for a little while."


Mobicious Sells for Pennies on the Dollar – Thought Would Never Work in Tech Again – Lands in Where, a Company into Location Awareness – David Beisel of NextView Ventures

 And then come in the next day, he's like, "We thought about what you said," slapped down the papers on the table, was like, "You know what? All right. Great, so I think today should be your last day, and if you can just let the rest of the company know, we can go ahead and move forward with the company," so I ended up calling everyone together at noon. Half the company on this side of the table didn't have jobs, and I was sitting on that side of the table, and the other half would continue on to do something else, and that was absolutely a bumpy ride. At the end of that, I didn't think I was going to ever get another job in tech, right? So I took a couple million in venture capital, ended up selling that company for pennies on the dollar sort of thing, and looked at a few other opportunities, but it was within a couple months, ended up seeing all of these interesting things that were happening just at the cusp of mobile and internet.

 And one of them was with Where, and actually another opportunity was with Waze, so we're pretty close to the current CEO, and at the time, he was looking to grow the company. He's like, "Hey, I think I'm going to move out west, and you can help join and help me grow the company?" But consistent from before, I didn't want to move out west, and so I actually stumbled upon Where just through an old VC. You guys might know David Beisel, so David's at NextView Ventures, and when David was in college, he and I first talked a little bit about what his next role would be, and I remember back in the days, he wanted to get a sales role, but had reached out to him, and I think that network job search works really well for these kinds of examples, and so ended up meeting with the Where team.

 Didn't have a specific role that they were recruiting for, but it was one of those, "Looks like a lot of great stuff that we could do together," and, another sort of dumb luck, just ended up with a fantastic team, and no regrets there.

SAL DAHER: So what was the activity of Where?

DAVID CHANG: So Where was founded back in 2004 with the premise that GPS would be really important, and over the next couple years had done everything related to GPS. We kind of joked that if it moved, we could track it, so we did pet tracking, people tracking, all kinds of tracking, and when I joined the company, it was at a time where it was just the beginning of providing local content for consumers. And ultimately, Where got purchased by PayPal, and we did a few other things with the company, but it was all about location, location awareness.

SAL DAHER: So that was at what time, so it had been founded in 2004, you said?

DAVID CHANG: 2004, that's right.


DAVID CHANG: Walt Doyle.

SAL DAHER: But you stepped in at what time?

DAVID CHANG: I joined in 2009.

SAL DAHER: 2009. Oof. Still a rough time, but recovering.

DAVID CHANG: Getting better.

SAL DAHER: The stock market had hit bottom by then, although we didn't know it. So PayPal's acquisition of Where made a big impact on the local tech scene in Boston. What drove you to sell the company to PayPal?


Decision to Sell Where to PayPal

DAVID CHANG: We were looking at a couple different options, and so the company was growing well. We were thinking about another round, and it was going to be a relatively large round, and that's always a natural time to take a look around to see if there's strategic interest. And on our side, we had a couple natural candidates that would be our parent companies, and one, in fact, was one we were really close to in terms of our day-to-day business, and that, you could see as a commercial agreement that would just extend. But in the PayPal case, it was all about when eBay and PayPal, back in 2010, 2011, their premise was that omnichannel, so being able to reach a consumer anywhere, was really strong, and over that time period, they did something like three billion dollars' worth of acquisitions to try to stitch together a number of assets, and we fit very cleanly into that world.

PayPal had come in. When they initially acquired us, it was kind of a question like, "Why would a payments company buy this mobile ad location media company?" And from the outside, it looked really hard to see what that would look like, but from our standpoint, it was a really good fit, because we could help drive that company forward. And one of the exciting things for the Boston area was that we grew the team quite a bit, and we created a big space in the financial district, changed a lot of the face of what the financial district would look like over the next couple years, and so really, really happy or psyched about the amount of work that we did there that's going to change things for the better.

SAL DAHER: Excellent. Excellent. How did Start Tank come about?

DAVID CHANG: Yeah, for me, after five startups and five acquisitions, there was this big part of me that still wanted to become, remain really involved with early-stage companies, and when we had created our space in One International in downtown, it was a massive space, and so we had extra space where we could take startups, and very frequently, at the time, for an early-stage startup, they had difficulty finding space. And this is a world before WeWorks and the Workbars, and what was pretty common at the time, as I'm sure you recall, was that if you had two or three people that were working on a project, squatting was something that you just did, and we kind of formalized the squatting arrangement and ended up creating a formal innovation space.

 And for us, it was a great, great opportunity to both give back to the local ecosystem and also engage employees that were entrepreneurs themselves, and so it actually, I think, was an employee retention tool.

SAL DAHER: How about the Where Angel Fund? How did that come about?


Genesis of Where Angel Fund

DAVID CHANG: Yeah, that was also an interesting thing. Right after our acquisition, a number of us former operators, or current operators and entrepreneurs, wanted to angel invest in companies, but, as you know, it's a very, very haphazard process if you do it alone. And what we found was, about a dozen people on our team were individually making angel investments, and every now and then, we'd sort of lean over, "Hey, I'm looking at something," and someone else will look at something, and so-

SAL DAHER: So this is a team within PayPal, or what-

DAVID CHANG: This was the original Where team, so ...

SAL DAHER: Oh, the original Where team.

DAVID CHANG: ... at the time ... Yep, sorry, at the time of the acquisition, we had about 100 employees, and after our acquisition, a couple people were in a position to angel invest, and we ended up doing it in a very ad hoc way, and so the Where Angel Fund was really an attempt to both pool our capital, but at the same time create a way for us to collaborate on a more regular basis. And a handful of us were pretty plugged in, so we probably had more leads than time. A handful of the angels that were in that group were more of the, "I really want to get involved, but I want to learn more," and so they probably contributed more time than money, and then another third were ones where they loved the overall process. They were actually the very first-time angels to begin with, so I think we grew the ecosystem quite a bit through the angel fund.

SAL DAHER: And where is the angel fund now?

DAVID CHANG: So we fully invested it, so yeah, we raised, it was south of a million, so it wasn't big, but it was a very structured fund.

SAL DAHER: Well, early stage, that's a lot of money.

DAVID CHANG: Yeah. Well, we ended up making exactly 13 investments over the course of one calendar year, and ...

SAL DAHER: Makes perfect sense, yeah.

DAVID CHANG: ... we had a very good process around that, and this is the process that Shereen Shermak ran.

SAL DAHER: Excellent. Excellent. Who I've had the pleasure to meet very briefly ...

DAVID CHANG: Oh, great.

SAL DAHER: ... at a presentation. Just a wonderful coincidence.

DAVID CHANG: Yeah. We end up bumping into each other more often.

SAL DAHER: I can imagine.

DAVID CHANG: More often, and half the time we don't tell each other where we're going, and we end up at the same coffee shop, but with different people meeting.

SAL DAHER: That's funny. It must quite an experience. So in your 15 years as a startup operator, what was your biggest failure?


David Chang’s Biggest Failure as a Startup Operator – Lacked Focus on First Startup – Guardrail to Guardrail

DAVID CHANG: So many to count. I think in retrospect, I'm able to look at some of these failures with a little bit more distance and objectivity. One was, for sure, the startup that we sold for pennies on the dollar, right? That's a failure from a financial return standpoint, but I don't think it's a failure from a personal standpoint, but you learn so much from these failures. And for me, one of the lessons learned was around focus, and I think one of the things that we did not do well at that company was, we went from guardrail to guardrail all the time, so we initially thought, for SnapMyLife, that we could do the Instagram thing, we're, share with the world. And then we went back and forth between that and the, "Oh, this is to send a picture of your kid to your dad," kind of thing.

 And those feature sets are so different, and when you end up going guardrail to guardrail, you end up failing at both, and that's a mistake I certainly will not make again, but that was a pretty big one for me at the time.

SAL DAHER: Well, your tough experience, I'm sure, will benefit many people who hear this.

DAVID CHANG: Hope so. Yeah.

SAL DAHER: [I thought so 00:20:40].

DAVID CHANG: If they can avoid what I did.


The Role of Thrift in Startups

SAL DAHER: Frank Ferguson, whom I interviewed some months ago, was able to invest more than a year's pay the beginning of his career in a startup, which would eventually give him 1,400x return, all because of amazing thrift. What examples of thrift have you seen in your startups?

DAVID CHANG: In every single startup, there's thrift. There's scrappiness. There's something very powerful about limited resources to hone in and focus, and one great example's probably the TripAdvisor example. So I joined TripAdvisor arguably at a time that was relatively risk-free, right? So the company was about 30 employees. We were generating a great top line. It was in the, I think it was like 80 million or something, and much of it dropped into the bottom line, and you'd think with a company doing that well, that there's no need to be thrifty. But even when I joined, everyone had a separate job. My job, in addition to running product and new products, was to, on Fridays, make sure that we had enough beer in the kitchen for the Friday get-together. CEO, Steve Kaufer, also had a side-job. I think he had to make sure the owl mascot in the front was always up, and so everyone had these side-jobs.

 And I think the culture at startups, the successful ones, are, you do everything that you need to to move the business forward, and there's no task that's too small or too big, and I think it goes beyond just thrift. A lot of it is, when you dig in deep enough, you really understand what people are really thinking about, and for Steve, I recall him poring through customer service emails, and we were getting a ton at the time. Right? Like questions about hotels, questions about process, and very frequently, he'd be the ones that would reply to it, and I think today, it's probably not a shocking thing to see very engaged high-level CEOs doing that, but I think you find that at all these early-stage startups, and I think it's actually really key to their success.


How David Chang Came to Make His First Angel Investment

SAL DAHER: Excellent. David, how did you come to make your first angel investment?

DAVID CHANG: By accident. Actually, I was job hunting. I ended up doing these coffee meetings. You talk to people, and ...

SAL DAHER: Yeah. Yeah.

DAVID CHANG: ... every one of these, as you know, you don't know who's selling who, and in this case, it was an interesting early-stage startup called xPeerient, and met him at a coffee shop thinking that it could be a job for me. And it turned it wasn't a great fit, but it was an interesting enough business that I leaned forward and wrote a small angel check, along with Shereen. One big driver was that Kevin Laracey, our CEO at edocs, was one of their investors, and so that really helps kind of open the door, and that was the easing into the angel investing world.

SAL DAHER: So yeah? So that fits the pattern of investing with a friend, with a colleague?

DAVID CHANG: Yep, to get you pulled in, and ...

SAL DAHER: You get pulled in because of that, yeah.

DAVID CHANG: ... then I believe my second one, luckily enough, was Crashlytics, and ...


DAVID CHANG: ... this is, you never want to mistake success for excellence, right? So ...


DAVID CHANG: ... it was one of these cases where right after the Where acquisition, had a little bit of capital and ended up meeting the founders, Crashlytics, over a drinks event that we ended up sponsoring, and so it was right in the South End. After I heard a little bit about their business at the time, for me, it was a really natural fit because exactly what they were working on was in a space that not only I personally knew but our business was also in, and so we were one of their early customers ...


DAVID CHANG: ... and you got a really, kind of, early inside view, and I think once that ball got rolling and that return came, it ends up creating this momentum where you just, you have one exit, you really want to pour it back to another early-stage startup, and it just continues to roll.

SAL DAHER: I see that you lead an AngelList syndicate and are an advisor to Flybridge Capital. How do you decide where to direct founders you meet?

DAVID CHANG: Yeah, it's still a little confusing, right, when someone hears, and when a founder hears that you're a potential investor. Their ears perk up, and you get this when you get into ...

SAL DAHER: Oh, yeah, yeah, yeah, yeah. All of a sudden, there's-

DAVID CHANG: ... coffee shops like, "Oh, let me just throw a million things at you." And for me, there's a couple different vehicles and I think people don't quite appreciate, or at least first-time founders don't quite appreciate the different vehicles that a lot of people have to invest in, and I didn't appreciate that when I was fundraising. But today, there are a couple different ways that I direct founders, and so the AngelList syndicate one is very focused on Boston companies, so it's the BOSS Syndicate program. It's run on the AngelList platform. Accomplice is the primary backer behind that. There are a set of maybe 40 to 45 individual leads that are out there, that are really more operators than anything else, than professional investors. And for me, any companies that sort of fit in that web, mobile, internet-powered world where I have some insight into it, those are the ones where I tend to lead, and that's when I pull the trigger on the AngelList syndicate.

 For the majority of founders that I meet, whether it's a multiple-time founder or a student entrepreneur, very frequently, it's not something that I am, it's not in my wheelhouse, so you end up spending so much time just redirecting them into the right places. So sometimes it could be Flybridge. Sometimes it could be another early-stage venture capital firm, or it could be another angel, and finally, you spend so much of their time, nine times out of 10, you're actually referring them to some other place, and it's not because you don't think it's a good investment. It's more of the, you think someone else can actually add more value, and so that becomes part of the algorithm, in terms of trying to figure out where to send founders.

SAL DAHER: Yeah, so I think you're pointing in the direction of PersonalVC with this conversation.

DAVID CHANG: Yeah, it's a passion project, and the big problem was exactly that. You see this all the time, both on the investor side and the founder side, where there's this huge friction, and part of what we're trying to do is just reduce that friction and do some of the matching, and we do have a premise around, you can take a look at past investment behavior and also some signals that investors give, with respect to their investments, and their theses, and be able to at least provide a more personalized deal for them. And then it helps founders, because then they're avoiding all the investors that wouldn't be a particular fit, right? And so either because of stage, or because of location, or because of some other attribute, there's multiple factors that go into whether it's not an initial fit. And so we're spending a little bit of time trying to help founders that way, and if we can help a founder reduce the amount of time to raise capital, and if we can help an investor find a great founder, then I consider the effort well worth it.


Great Startups David Chang Passed On

SAL DAHER: Makes a lot of sense. Makes a lot of sense. What was your best angel investment, and what's your greatest miss? What's your counter-portfolio, so to speak?

DAVID CHANG: Yeah, yeah, the anti-portfolio. So today, Crashlytics has been a fantastic one for lots of reasons. They continue to grow the company. There's a handful of other angel investments that have returned a decent amount, 4 or 5, 5x, but nothing close to the 20, 30x, depending on where Twitter stock was. Definitely had some misses around companies that I'd met really early that, in retrospect, would've been great. The Playster team, so Matt and Fredrick had come in and done one of their very first pitches back at the Where office, and ...

SAL DAHER: That's a pity. Maybe if you had heard them on their 10th or 12th pitch.

DAVID CHANG: Yes, that's right.

SAL DAHER: They might've sold you.

DAVID CHANG: We'd seen them super early, and it was one of those, just nothing really jumped out about the business, right? The founders seemed great, but it was just, with all that noise, it was very difficult, and I've seen over time, and founders have seen, that very first data point, it's hard to extrapolate, and when you see multiple ones, then you can extrapolate. But in that case, it was just a one data point, one day sort of thing and ended up passing on it, but I think that team's continued to do great. The founder is, so Matt, I think, is someone that's very introspective and understands areas that, where he wants to grow, and I think that that's definitely one that's a miss. Another one that I was recently reminded of, since he's actually a neighbor of ours, is Jason Robins at DraftKings, so I still have-

SAL DAHER: Oh, geez.

DAVID CHANG: Yeah. So Ryan Moore was on our board at Where, and Ryan was one of the initial investors at DraftKings, and I was cleaning out my inbox the other day and I have the AngelList notice that, "Hey, we're raising our first million with a six million cap in this company." And of course, that was one of the ones where kind of too much noise, "Ah, seems too risky," would kind of pass on it, but that's also another one that, in retrospect, would've been great. But it's really hard to kick yourself on things that you've missed out, right? Fear of missing out is also very strong, but you got to stick to your areas that you know well, and so yeah.

SAL DAHER: I think that's really good advice. I think thinking too much about the things you've missed can be counterproductive, gives you this FOMO (fear of missing out) attitude, and there, you can lose a lot of money. Better to just ...

DAVID CHANG: Absolutely.

SAL DAHER: ... stick to the stuff that makes sense. If stuff doesn't make sense, it didn't make sense for you. Warren Buffett hasn't invested in everything, but the stuff he's invested in has made him a lot of money.

DAVID CHANG: That's right. That's right, and if we could do a little bit of that, I think we'd all be in good shape.


Why Is David Chang Not a Full-time VC?

SAL DAHER: Absolutely. Why aren't you investing full-time as a VC?

DAVID CHANG: I end up doing a lot of things that I think are in the investing world, but I think at the core, I gravitate towards early-stage startups and, really, an operator. So when I wake up each morning, I spend half of my day today working with early-stage companies where my sleeves are really rolled up. I'm doing work. I'm helping push the company forward, and I really find that that's much more rewarding, personally, than on the investing side. I think the investing is, for me, a means to an end, and so the quarter percent, or the quarter of my time that I spend as an angel investor and connecting people, a lot of that, I think, it really is driving back to getting in deeper with founders and helping the founders.

 And there's something to the thrift, to the scrappiness, to just doing all that work yourself to really kind of understand a company, and in the last couple weeks, I've had booth duty where I've stood in front of a booth, handing out brochures for one of my startups. It was another one where we're getting really deep.

SAL DAHER: So you really roll up your sleeves, huh?

DAVID CHANG: Oh, sleeves are completely rolled up, and I think that's where, personally, I gravitate towards, so I don't think I see a full-time investing role in my future.

SAL DAHER: I understand. I understand. Coming up next, I will ask David Chang what he, a serial entrepreneur and operator, considers the most important piece of advice to give a founder of a startup. First, I wish to thank listener MMA MLB for this review. "Great podcast, even if you're not in Boston. The knowledge shared is helpful for angels and startup companies looking to understand how to attract top of the line angels." Thanks a lot, MMA MLB. The Angel Invest Boston Podcast has outstanding guests, such as David Chang, is professionally produced, so you get a really, really great sound, has no commercials, and comes to you free. The only thing we ask in return is that you help get the word out about our podcast. Please tell an angel, or potential angel, or founder about us. Take a minute to review our podcast on iTunes. Sign up at to be notified of new episodes and of upcoming, in-person, free events. So David, I'm sure you see a lot of pitches. What tips can you share with founders who are fundraising?


David Chang’s Advice to Startups Raising Money

DAVID CHANG: It's the endless pitch cycle, and you do see ...

SAL DAHER: That's all you do see.

DAVID CHANG: ... so, so many of these. I guess there's a few things that come to mind, or three or four that come to mind, in terms of basic tips, especially for first-time founders. One big one is just knowing your audience and knowing how much to share at a particular point in time. I think startups that are-

SAL DAHER: That is tremendous. That is really, really huge. As an angel investor myself, oftentimes, I see people coming in with pitch decks that are really more geared towards venture capitalists. Very thick.

DAVID CHANG: Going right to the super deep-

SAL DAHER: Instead of explaining what they're doing and so forth, because a venture capitalist is specialized much more than angels do, so, that is very, very true ...


SAL DAHER: ... in my observation.

DAVID CHANG: And I think the really tough thing, as an audience, is you don't know, one, how much time the person has, two, to your point, what kind of background that person has. And so these pitches, some of them become this very, very one-way, just, "I'm going to jam as much information into you as quickly as I possibly can," and it's really, really hard, right? And one bit of advice is to know the audience and know, again, what depth you want to go to.

 So at the very highest level, it is the elevator. You're stopping in between floor six and seven, and you've got 10 seconds, and, "What is your company?" That's the one-line thing. And then the opposite end of that extreme is the, "All right, I've got five partners in a room. I've got my whole team here. I'm going to do two hour ... "

SAL DAHER: Three hours to close.

DAVID CHANG: " ... deep dive ... "

SAL DAHER: Yeah, yeah.

DAVID CHANG: " ... tons of Q&A, multiple appendices," and so there's a really wide range. There's the one-pager. There's the what happens when you have 10 minutes coffee, what happens in the followup meeting, and so advice one is, just really understand when to pull out those materials. And it's not rocket science, right? It's a matter of just making sure that you're attuned to that, and I think that's a tip that everyone can learn. Another one that resonated well with me was David Aronoff at Flybridge Capital ...



Be Clear About What’s Your Basecamp and What’s Your Summit

DAVID CHANG: ... said this to me, where he likes to understand, from a founder's point of view, what their summit is, what their goal is, and also what their base camp is, like what's achievable. And I thought about that a little bit and took it one step further in watching some people pitch, where if a founder describes the summit and the base camp but, in a case where they're not able to do both, right, where they kind of throw in just one or the other, the challenge is, the audience doesn't know which of the two you're referring to. So if you, as a founder, are describing your ultimate summit, ultimate vision, and the investor is thinking, "This is your next step," then ...


DAVID CHANG: ... well ...


DAVID CHANG: ... "Hey, this person doesn't know what the ... It's way unrealistic. They don't know what they're talking about," and the reverse is just as bad. If you're talking about your incremental thing and then someone thinks this is your ultimate goal, you end up thinking it's way too small of an idea.

SAL DAHER: Yeah, "Oh, he doesn't have vision," and so forth. Yeah.

DAVID CHANG: Yeah, and it's really tough to get those two concepts in, so you ...

SAL DAHER: So you have to set the context.

DAVID CHANG: ... anchor them in.

SAL DAHER: You have to say, "This is my base camp approach. Our summit is that. Let me talk about base camp first, and then we'll go to the summit."

DAVID CHANG: Absolutely.


DAVID CHANG: And I found that some founders have a very natural way of doing so, and so some are great at giving the big idea first and then ...


DAVID CHANG: ... kind of building up to it, and others feel that that's sort of selling too hard, right, and they go kind of bottom-up. But it is important to anchor the audience when you're doing those pitches, and that's something, for sure, that founders could do a better job of.

SAL DAHER: Yeah. To your first point, actually, fitting the presentation to your audience, at Walnut, frequently, something that I wish more presenters would do, pitchers would do, is just talk to the people who are sponsoring them, to ask them, "Does this work? Is this the level of detail," and so forth, that's presented. Don't just kind of say, "Oh, I have the pitch deck that I'm going to give."


SAL DAHER: No, no. Tailor your pitch deck. David is absolutely spot on in this.

DAVID CHANG: And I'm surprised that more people don't do that, right? Like you've heard ...


DAVID CHANG: ... your internal champion.

SAL DAHER: And people are glad to help you.

DAVID CHANG: They want to help, right?

SAL DAHER: Exactly.

DAVID CHANG: They, like-

SAL DAHER: Exactly, yeah.

DAVID CHANG: "Help me help you."

SAL DAHER: Yeah. Some of the smartest founders that I've seen talking to investors do that, but a lot of people, for unexplained reasons, just forgo it.

DAVID CHANG: Yeah, I think they flip into this mode where, "I have to pitch. I have to do this. I have to get this out there," and you just steamroll over people, and it's sort of Sales 101, right? Know your audience.


What David Chang Looks for In a Founding Team

SAL DAHER: What do you look for in a founder or founding team?

DAVID CHANG: As an investor, my big driver is around trying to get involved in businesses where I can add value. I know that's kind of a trite statement, but if it, peel that back a little bit, they tend to be fields where I either know the players, so I'm able to make some connections, so the Rolodex side, or I'm good at a particular function where they have a gap. So when I look at founders, I tend to look for founders that either know a space really well, so maybe they've lived and breathed that space within a big company, but, like, "You know what? I just keep on seeing this problem. I want to go solve it," and so that's one class of founder that's really handy. And then the other is the founder that is just really, really good at something that can be transported into another industry. Jeremy Allaire is probably a great example of that, right? Doing the same thing. Steve Jobs was probably the ultimate example of that ...

SAL DAHER: Right. Right.

DAVID CHANG: ... like multiple industries. And so if I could find founders that have one or two of those characteristics, really helps us get started, especially if they have other founders where they have complementary skills, right? So that's sort of the ultimate, like you have a founder that knows a space. They have a certain expertise that can be applied really well in that space, and they're building a team around them to make them stronger. Those, for me, are a great way to look for at least a founding team, regardless of the idea itself.

SAL DAHER: So your thought is, start with a core of strong technical competence and then bring in someone else who might help with other things, such as go to market, or just the execution, and so forth?

DAVID CHANG: That's right.

SAL DAHER: Or the operations?

DAVID CHANG: That's right, and I think like the accelerators and incubators that are out there today do a really good job of, especially if someone only has one side of things ...


DAVID CHANG: ... because I do think you very quickly need to get to a point where it is complementary so you don't have these blind spots.

SAL DAHER: This is a perennial in this podcast, the question about a pivot. A pivot is when a startup realizes the original plan is not working and comes up with a new one. It happens a lot. David, do you have a favorite pivot story that you like to tell?

DAVID CHANG: Oh, there are so many pivots. Some that work well ...

SAL DAHER: Tell a couple.

DAVID CHANG: ... some that don't.

SAL DAHER: Yeah, tell a couple, yeah.


David Chang’s Favorite Pivot – TripAdvisor Stumbles upon the Idea of Doing Reviews

DAVID CHANG: I think one fun one was back at, it was actually slightly before my time at TripAdvisor. So TripAdvisor, in the early days, was actually more about trying to grab interesting travel information for consumers and consolidating them in such a way where, sort of a replacement of Fodor's and kind of those guides, and it had some traction, but not a ton of traction, and ...


DAVID CHANG: ... one of the pivots was, they had just thrown up a, "Hey, let's just stick a button that says, 'Write a Review,'" and everyone internally was like, "Who's going to click on this button? This is ... All right, fine," but in the spirit of testing, and pivoting, and trying new things, and recognizing that the market is smarter than any one individual, put it out there, and then that was the beginning of the collection of all that user-generated content that ultimately is a major, major asset for TripAdvisor. And I'd argue today, for most businesses on the web, how they leverage user-generated content has really changed a lot, and it's extremely powerful, and that wasn't ever in the business plan, and-

SAL DAHER: That's amazing. So it was just a second thought, "Oh, maybe we could put this on there," and it turns out to be just a major factor.

DAVID CHANG: Yeah, yeah, and I'm sure some of the startups that you've seen, when you look at their original business plans, I think very few of them actually end up in the place where they thought that they would.

SAL DAHER: I actually have a statistic for this.


SAL DAHER: From the show.

DAVID CHANG: What's that?

SAL DAHER: From the podcast, Michael Mark was invested in over 200 startups.

DAVID CHANG: Super angel.

SAL DAHER: Yeah, super angel. I asked him this, and I said, "Michael, can you think of any of your startups that ever went according to plan?" And he thought for a minute, "No, none. No, no." And then he thought, "No, no, no." He said, "One. Progress Software," so one out of 200, in the sample.

DAVID CHANG: That's right, [4.5 00:39:49], and then, I guess, it's even worse if you include the multiple pivots that a startup does, like so that's ... Yeah.

SAL DAHER: Oh. Pixability. I mean, they had, depending how you define the pivots before they really found, you can say three or six pivots before they really became one of the fastest-growing companies in New England. Yeah, it's something that's worth paying attention to and to think about. Are there any other startups that you like to talk about, stories that you have that are interesting?


Startups David Chang Is Excited About

DAVID CHANG: Yeah. I end up, just even outside of my own direct 40-company portfolio, I think there are some really smart people that are doing cutting-edge things in the Boston area, and I don't know how I ever became to be such a big Boston fan. I'm originally from New York, as you know ...


DAVID CHANG: ... and that's a good thing I no longer have any sports affinities, because that could be ...

SAL DAHER: Oh, you're not a Yankee.

DAVID CHANG: Yeah, it would make it really, really tough, but the Boston ecosystem, I think, has been extremely strong, and some of the notable people that are world-class experts in their fields are within walking distance of where we live. And one of them is, given my work in the startups that are in the web field, is Tim Berners-Lee. Right? So Tim Berners-Lee may not be a household name for anyone that's in the industry ...

SAL DAHER: Yeah, yeah, he's ...

DAVID CHANG: ... or if anyone uses the internet, the web ...

SAL DAHER: ... a giant, the internet, yes.

DAVID CHANG: ... was absolutely pivotal. So Tim Berners-Lee, founder of the web. One of the challenges for where the web is today is that a lot of power's concentrated within these large companies. Love Google, love Facebook, but there's a lot of data that's captured in that, and one of the challenges that we could see, that Tim sees, is, "Is there a way to unlock that for consumers?" Right, so to have you, as a consumer, own more of your data, control more of your data. So one of the efforts that he's working on is called Solid. If you go to, you'll see a little bit about it, but at the highest level, it's essentially a way for consumers to own their own data and for apps and data to be separated so that you can imagine consumers with their own data repositories, but letting applications access it.

 So it's changing the entire paradigm, and don't know where the world of the web will go in the next 50 years, but you can imagine it evolving quite a bit, and I think this is one of the key pivotal things that's happening in the industry, and again, happening right in our backyard.


Nightmare Mistakes Founders Make

SAL DAHER: Yeah. Yeah, yeah. Really next-door. What are some of the nightmare stories of mistakes that founders have made?

DAVID CHANG: Oh, my God, as a founder, you end up making mistakes all the time. Some of them are legitimate mistakes, and that you're learning about a market, but some are absolutely avoidable. One big one that I see time and time again is hiring the wrong people, right? And it happens at multiple levels, and even the best founders will bring on board people that aren't a great fit. Sometimes, it's the co-founding level, where you need to actually change the underlying composition of the founding team, and sometimes it's hiring people that are toxic to a particular culture. When we were at eBay, one of the really interesting guest talks that we experienced was Jim Collins, who wrote Good to Great, and he looked around the room and asked us all, "How many of you have had to fire someone?" So 95% of the hands shoot up in the air. "How many of you have fired that person too early?"

 And every single hand dropped, and so it was a realization that when you hire the wrong person, it's really hard, I think it's human nature to want to try to work it out, and inevitably, and when it doesn't work out, it's one of those cases where you could have let go of that person earlier, so I think that's a big mistake that I see some founders that now, kind of aware of that, are able to address that, so I suppose the point is not to fire really fast all the time, but ...

SAL DAHER: Right, right.

DAVID CHANG: ... really cognizant, and be careful when you bring on board-

SAL DAHER: But the pathological cases that are just destroying your company, get rid of them as soon as you can.

DAVID CHANG: Yeah, absolutely, and the short-term pain is sometimes very hard to bear, but the long-term consequences are too great for you not to do that, so that's definitely one thing I see a lot.


How Do Founders Decide to Raise Another Round or Shut Down? The Value of Knowing Your Place in the Market You Serve

SAL DAHER: So our last question is another topic that's always on the mind of angel investors, is whether the founders will have the wisdom to know when to call it quits. How does a founder figure out when to raise another round, or sell the company, or cash the chips in?

DAVID CHANG: Yeah, it's ... Any founders will tell you they have highs and lows, right? And those highs and lows are part of an operating role. I have a pretty firm belief that as you're growing your venture that you should be courting bigger players all the time. Now, you're not always trying to sell to the players. In fact, most of the startups I've been a part of, the CEO founders have been very, very direct with the employees saying ...


DAVID CHANG: ... "You know what? We're going to stick to our mission, stop thinking about the market, or think ... "


DAVID CHANG: " ... about the competition, focus on what we do. We're going to develop a great product, develop a great customer base," and I think that's really, really important. But I think the other thing the founder needs to do is, while they're shepherding and marshaling their team a certain direction, they do need to be aware of the other players that are in the industry. So they could be acquirers. They could be major strategic partnerships, but all of those relationships are ones where it's your job as the CEO/founder to be aware of them and, as a result, whenever there's an inflection point in the company or another stage in the company, there is the math that you go through as to whether to raise round or whether to sell. And very frequently, during those times, if that strategic interest arises, it's not out of the blue. It's because of something you've been doing all along, so ...


DAVID CHANG: ... the advice I have ... Oh, sorry.

SAL DAHER: A natural progression, yeah, a natural progression. Yeah.

DAVID CHANG: Yeah, that absolutely is-

SAL DAHER: So the advice you have is?

DAVID CHANG: It's absolutely a natural progression, and so the advice is, for founders that are building a business, make sure that either you or someone else on your team is very attuned to what's happening within the market. Less on the competition side, but more about your role in the market and how it fits ...


DAVID CHANG: ... and only through that will you be able to surface opportunities in an organic way where you can be really educated about when to sell, when to raise. And you want to be an expert in the field that you're in, in order to take advantage of those shifts, and so sometimes the best alternative is just to get out, right?

SAL DAHER: Right, right, right, right.

DAVID CHANG: That's a unique time. The signs are on the wall, and then other times, it's like, "Let's double down," but then you want to be in a position to be able to make that decision.

SAL DAHER: Really, really excellent point. Yeah, people frequently don't think in that way, and then they end up making decisions on the spur of the moment and so forth, and the thought that these decisions sort of make themselves over time, if you're doing it right, that's very instructive. David Chang, most grateful to you for participating and helping make this a great podcast. I'd like to invite our listeners who enjoy this podcast to review it on iTunes. I'm Sal Daher. This is Angel Invest Boston, conversations with Boston's most interesting angels and founders, and thanks for being here.

DAVID CHANG: It was great being here. Thanks for having me, Sal.

SAL DAHER: I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McCusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.