Ravikant: AngelList is Craigslist for entrepreneurs
The motto behind AngelList is: “We stand for Startups, and always want to do what’s right for them,” says founder Naval Ravikant. At tonight’s PandoMonthly fireside chat, host Sarah Lacy described it as fixing things that frustrate entrepreneurs. According to the founder, the original vision for the site was actually modeled off of Craigslist, which at its simplest is about helping people find the connections they need for every service.
AngelList started by providing startups with intros to investors. The company tried to extend its success in the early stage arena to Series A investments, but found there to be a higher bar for these transactions which center more on relationships. As a result, while the platform has led to "dozens" of completed Series A rounds, this is not nearly as many as it would want, says Ravikant. Similarly, AngelList looked at providing small business equity financing and duplicating its US success in global markets with limited success in both verticals.
It wasn't all roadblocks, however. The second vertical that the platform has managed to disrupt is recruiting. "This is the less told story of what's working at AngelList," says Naval. The company is reportedly doing three times the volume of introductions between talent and companies than investors and company.
AngelList knows as well as almost anyone in the startup ecosystem when companies are ready to hire talent (often post fundraising) and similarly when they're going out of business and therefore shedding talent. Today, AngelList is adding 250 vetted "startup-quality good people" to its roster weekly, in Ravikant's words. In that way, he argues that anyone who is having trouble finding good talent is not looking in the right places. Convincing them to join your company is another thing entirely.
The system is circumventing the traditional recruiter market which charges a $25,000 plus fee to place a typical developer. Ironically, in its early days, AngelList actually paid a recruiter to hire its first developer who has since been responsible for developing the system that disrupts their market.
On the talent side of the equation, AngelList delivers a level of transparency into their potential employer that is not available in may other places, including details like money raised, full business plan, and equity offered for the available position.
The success in "hacking" startup recruiting only reinforces the Craigslist analogy and has convinced Ravikant to pursue other unsolved entrepreneurial problems. On his list of opportunities are sourcing early customers, service providers, and potential acquirers.
As far as monetizing these services, AngelList is taking a wait and see model. The company currently does not and, according to its founder will never charge to connect investors and companies. Similarly, the company has not yet charged for its talent services, in large part because most startups can't afford it. This said, the CEO sees an enormous opportunity in this space and will likely charge large companies to access the platform in the near future. It may even take micro-equity payments from more nascent ventures.
The last area that the entrepreneur mentioned monetizing via this macro-entrepreneurial services platform is selling service providers access to successful startups. Ravikant called out PandoMonthly sponsor Braintree, a payment processes company as a natural example of one company that would want to connect with startups as soon as they raise new financing or expand in another manner.
At the end of the day, AngelList has the largest proprietary database of early stage companies in the world, if Ravikant's accurate. The platform has nearly 100,000 profiles, 25 percent of which are actively maintained and claimed. With this volume of users and engagement, there's almost limitless opportunities to the services the company can provide. When the time is right, AngelList will charge for the value it provides.
Regardless, Ravikant is committed to doing so with the interest of startups in mind. "We will never screw over your startup knowingly,” he says. "If we do, it was an accident, and I'm sorry."
[Watch the Livestream for PandoMonthly SF with Naval Ravikant here.]
To watch the interview in its entirety, click here