Mike Maples, Jr. is a managing partner at Floodgate, a venture capital firm that has invested in many tech companies that we love today. To name a few, Floodgate has invested in Twitter, Lyft, Taskrabbit, Weebly, Refinery29, and more. To date, their investments have reached over a market value of over $30 billion. Maples, who graduated from both Stanford University and Harvard Business School, co-founded Floodgate after starting Maples Investments.
MillionaireMatch was curious to know how Maples could identify a company worth investing in, and what disappointments he has experienced. We first wanted to know what was an investment he had no idea would take off the way it did. “Twitter. It just took off. There was that time that the person tweeted that they were in prison in Egypt. Then the time they went on to the Oprah show. People started to know about it. Never in my wildest dreams I would think that Twitter would be spread across my television all the time,” Maples said. No surprise here. We were also curious as to what companies he passed on that he regrets. His answer? Airbnb. “It’s the investment that mocks you if you pass,” he said. After a pitch meeting that included two cereal boxes to represent former president Barack Obama and Senator John McCain, Maples decided to pass. He admits seeing there was something there, but didn’t think it would become what we know it to be now.
Maples also has a tradition on companies he didn’t invest in. “When we pass on a deal that wounds up doing really well, I take the owner to dinner. Wildfire [Interactive] got bought by Google. I call up Victoria Ransom and said, “Hey, I’m taking you to lunch.” He told her he was an idiot to pass. Zynga was another company he decided to pass on. “I didn’t think Mark Pincus was a gaming guy,” he explained.
So what does Maples look for? “I’m not interested in companies that are just doing a startup, but companies that are doing something hyper exceptional,” he said. “I like authenticity. We invested in a company called ModCloth. Susan Cover has been thrifting since she was 13. We just like the entrepreneur who has authentic voice for what they are doing,” Maples continued. “Out of 10,000 companies that get started a year, only about 15 truly matter. The venture capitalist has to be one of the few people who has to routinely find a way into those 15 companies. If you find your way into those 15 companies, you will eventually make money. If you don’t, you just are one of the majority of losers who will not make money,” he said.
It’s clear that Maples loves his job, and he loves the companies that he has invested in. Maples is known for his coined phrase “Thunder Lizards.” “I always thought that the thunder lizard was a good metaphor for a disruptive startup. When people ask me what my job is, I say I hunt thunder lizards,” he explained. “I only want to work with people who have those thunder lizard ambitions,” said Maples.
Many VCs talk about the importance of genuinely liking the founders of the companies they invest in. Maples explained what he looks for, not just in the company itself, but qualities of the founders. “A visionary entrepreneur. Huge potential market. Fundamental advantage. Modest capital requirements to prove the idea. The visionary entrepreneur has to do with authenticity for the idea. I like people who are non-consensus and right. That’s the first thing I look for,” he said. If they hold those qualities, he can give them the guidance that they need. “Sometimes what founders need is for someone to say, you got this. It sucks right now, but you got this. I’ve seen it before. I’ve seen it worse than this. Your company is freaking awesome, and we are going to win,” he said.
Maples does warn about founders falling into the trap of looking at the competition. “The fundamental advantage is where I see a lot of startups trip up. Capitalism and competition aren’t synonyms. They’re opposites in my view. A real capitalist is someone who figures out ways to avoid competing,” Maples said. He continued, “Don’t be the best, be the only one. I call that the Jerry Garcia law of capitalism.”
For more information on Floodgate, check them out online at www.floodgate.com.