Maveron's Levitan: Seattle's entrepreneurs "need more wins"

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by RENAY SAN MIGUEL/ KING 5 News

KING5.com

Posted on June 10, 2014 at 9:46 AM

Updated Wednesday, Jun 11 at 1:11 PM

Back in 1998, former investment banker Dan Levitan and Starbucks founder Howard Schultz thought that the last thing the world needed was another venture capital firm.

Their twist: an investment firm called Maveron that would focus only on consumer-based companies, particularly ones that use technology to build relationships with customers. 

"We've seen a radical shift in business models in consumer companies in the last 16 years," said Levitan, co-founder and partner of Maveron.

Thanks to the rise of the smartphone and tablet, he said, "In effect, you have the psychology of good consumer brands, but the ability to connect one-to-one through technology that didn't exist in 1998."

The mix of technology with consumer-based companies is having an impact on a firm that already had a run of successful brands that have either become publicly traded companies or were sold to larger firms: eBay, Groupon, Zulily, Julep, Drugstore.com, Shutterfly, Decide, Potbelly Sandwich Shop, Cranium.

Maveron's latest success is Zulily, a daily deals website for moms. The firm's initial $5 million investment in Zulily is now worth billions, thanks to last November's successful IPO.

The photos of Maveron-supported CEOs on a wall in the firm's offices near Seattle's Pioneer Square are evidence of its focus on people - not just customers - but the entrepreneurs who bring their ideas to Levitan and his team.

We sat down with Levitan to ask about current tech and market trends, and where Maveron is focusing its investments in 2014.

What do you think of the current crop of tech IPOs?

"Most of these companies have been around longer than the previous IPO booms, so I would say the quality of these companies are better. The breadth and depth of the management teams, the quality of the business models are very solid, so in general I would say the IPO market is taking a healthy correction and that most of the companies that are coming public are significantly better than the 1999-2000 period."

How is the mobile revolution changing the consumer space, and how should companies adapt?

"In the web products and services world, you have a real-time interaction with your customers, and then a real-time editing of how you as a company are doing. Everybody has a soapbox on Twitter or Facebook or whatever. We always talk about how you have to build a brand from the inside out, not the outside in. Brands are not wrappers. Brands are based on the values of the founders, and then they spread to the people who work for the company, and then that psychological contract is spread to the customer."

What trends/business segments are getting Maveron's attention these days?

"I think you're seeing a tectonic shift in education. It's been the same way for many years, and everybody's kind of assumed that getting a liberal arts education is the right way to start, and you should spend four years and $150,000 - plus or minus - to get it. I think that (Maveron portfolio company) Koru is addressing the problem of, well, now that I've spent $150,000 and my kid still can't get a job, what can I do? I still believe in the principle of general education, but I think there's a pragmatism that a lot of these new technology-focused education companies are trying to drive people into successful opportunities that maybe they haven't trained for."

How does Seattle rank vs. Silicon Valley in terms of entrepreneurial opportunities? Does Seattle need to do a better job of marketing itself?

"Seattle is a fantastic place to build a great technology-enabled consumer company. Zulily is the latest example of many that can go from an idea to a billion-dollar company in under five years. Seattle's got a great work force, relatively low cost of starting a company, and just a really good, innovative entrepreneurial DNA. To me it's less about Seattle tooting its horn and more about bold, confident, dare-to-be-different entrepreneurs grabbing on to big ideas. There's a great entrepreneurial ecosystem here that just needs more wins."

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