Ron Conway on mega-trends, non-bubbles and the joys of angel investing

Ron ConwayOn a random recent Friday evening, Ron Conway showed me why he has the reputation he has. The Twilio Blog is not TechCrunch. We are not Charlie Rose. We haz good traffic, yes, but it’s not otherworldly. Despite this, the legendary angel investor took time out of his insane schedule to sit with us for an interview, all to help us, one of his many portfolio companies, promote ourselves to the outside world.

We sat down with Ron to discuss how entrepreneurs can reach him, the trends that excite him and why he loves being an investor.

Ron Conway: The Twilio Q&A

Dan Kaplan: What’s the best way for an entrepreneur to get your attention?

Ron Conway: If you can find a CEO of a company that we are already investors in and get that CEO to provide a reference to us, you get instant credibility and move to the top of the list. If you don’t know one of our CEOs but know someone high up in a corporation, get them to do the intro. The single best mechanism for getting our attention is a reference from someone we know, trust and respect.

DK: Do you have a specific investment thesis?

Ron: Some people invest in market size and market potential and the idea itself. We start with the people first. We think the ideas that entrepreneurs start with evolve and change dramatically from the beginning and sometimes end up unrecognizable, so we believe in investing in the people.

DK: Ok, but you’ve got some sense of hot markets, too, right?

Ron: Of course. At SV Angel, we have a chart of “mega-trends” that we follow closely. The first and most obvious is social. We see a new kind of entrepreneur emerging in social. We call them “Behavioral Entrepreneurs.” These behavioral entrepreneurs understand that hardcore algorithms are no longer essential for success. Great UI and UX are becoming the new IP. Thanks to the low cost of computing, these entrepreneurs find innovation in human behavior, not pure technology.

Another mega trend we see is the intersection of real-time data and collective wisdom, where audiences contribute value the bulk of the content, enabling other services to build value by mashing up the layers. Quora is the perfect example.

Social commerce is also huge, as are big data, online-to-offline and, of course, mobile.

DK: You’re an investor in Airbnb. What excites you most about them?

Ron: Airbnb is a fascinating company. It’s an example of consumers moving to non-fixed costs, where you don’t have to own everything but can rent and share based on immediate needs. That’s a huge mega-trend trend as well. We call it “collaborative consumption.”

DK: Do you believe there is a bubble in early stage valuations?

Ron: I absolutely don’t believe we are in a bubble. I believe some of the best companies ever are being created right now. I survived the bubble in 2000, and that was a bubble. Today, these companies have business models that are rational and defensible.

DK: What’s making startups better these days?

Ron: I think entrepreneurs are getting smarter and wiser. But there are also new greenfield opportunities that didn’t even exist a year and half ago. To me, this means we’re still in the early days of the internet. It’s going to keep evolving for the next 25 years. You can tell its early days when you have multibillion dollar opportunities that no one ever predicted 3 years ago.

DK: What question do you wish someone would ask that you don’t get asked?

Ron: I never get asked “Why are you still investing when you could be sitting on a beach?” The reason I want this question is that it lets me point out that angel investing is the most interesting occupation anyone could ever have. As an angel investor, you have the privilege of having entrepreneurs share their crystal balls. Entrepreneurs share the future with you.

DK: What excites you the most about that? Is it the front-row seat to the cutting edge, or is it something else?

Ron: The excitement comes from watching the entrepreneurs succeed as they mature. Six years ago, I met Mark Zuckerberg and I have been able to watch him mature into one of the most successful CEOs on the internet. Watching that logarithmic maturation process is where I get the satisfaction. The fact that I might have helped along the way with that process is a big part of it, too. Watching Mark take some of my advice and watching him turn it into a massive success is what makes it personal and interesting.

Dan Kaplan is Twilio’s Product Marketing Manager. Ron Conway, founder of SV Angel, was a keynote speaker at the Twilio <Conference>.

Image credit: TechCrunch.