Everybody knows PayPal co-founder Peter Thiel put the first money into Facebook. But who put the first money into PayPal?
Meet John Malloy of BlueRun Ventures. The Menlo Park firm, which specializes in mobile computing investments, began life as Nokia’s venture arm in 1998 before spinning out.
Malloy, a telecom veteran, a year later used a Palm Pilot to beam $3 million into the account of a tiny Palo Alto startup called Confinity. In 2002, eBay bought the company — by then known as PayPal — for $1.5 billion.
Q: How’d you get into this racket?
A: I was in my own mobile startup that led me to work for Nokia running M&A in the mid ‘90s. I then co-founded Nokia Venture Partners, with Nokia as the anchor investor. BlueRun was launched in 2004.
Q: What do you like best about venture capital?
A: Disruption. Constant learning. People.
Very early in my career, I was taught by (MCI founder) Bill McGowan to look for big markets to disrupt. The excitement of actually doing the impossible, or at least improbable, is addictive.
This is a very humbling business. It’s absolutely critical for early stage investors to listen and keep learning from the entrepreneurs they back. Experience can make things seem familiar, but it’s a new path every time.
Early stage venture lets me participate in this creation cycle with incredibly talented entrepreneurs. The pressure is immense; you can either be crushed by it or prosper. The bonds formed during those times are incredibly important to me.
Q: What kinds of pitches are you looking for right now?
A: Mobile. Mobile. Mobile. Did I mention mobile?
Seriously though, the opportunity cost for me makes it hard to get excited beyond mobile. I always try to remain open-minded, though the probabilities of persuading me to invest outside of mobile are low.
I am most interested in great entrepreneurs who are leveraging the scale and ubiquity of mobile to disrupt a large market. Areas for mobile disruption I am currently exploring are education and health care.
Q: What’s the biggest mistake entrepreneurs make?
A: Too often, we can confuse motion or hype with progress. (Entrepreneurs need to) measure real progress and talk about what is not working.
Internally, remember that problems are opportunities, and platitudes are not to be trusted. Externally, don’t get distracted from the mission that led you to start this thing in the first place.
Also remember to have fun along the way and try to stay healthy.
Q: What’s the next big thing going to be?
A: We are still very early in the transformation to mobile-first services. There are plenty of real-time innovations and disruptions to come. Mobile will grab a bigger and bigger share of actual commerce in the brick and mortar world.
On the back end, we will need breakthroughs in anticipatory computing, so we can meet the escalating demands of users and give them contextually relevant services that make a difference in their daily lives.
A little farther out, I’m excited abut the opportunity for cheaper, ubiquitous sensors and the services they may eventually enable.
Q: It’s been just over 10 years since eBay bought PayPal, an event that made possible the rise of LinkedIn, Tesla, Yelp, Facebook, YouTube, SpaceX, Palantir… Did you have any inkling when you made that first investment that it was going to change Silicon Valley?
A: Indirectly. I believed Peter Thiel and Max Levchin were extraordinary people, who in turn hired some of the most insanely smart and driven folks one could imagine. I’m not surprised by their successes.
However, I am in awe of what Elon Musk is doing right now. For one person to simultaneously disrupt such large and important markets has to be unprecedented.
Q: What one company in your current portfolio has the potential to be as transformative as PayPal?
A: I actually strive to meet this incredibly high bar with every investment. But the immediately obvious answer is Waze. (Note: This interview was conducted shortly before Google agreed to buy the social mapping app for $1.1 billion.)
The team is immensely talented and driven. They completely disrupted the old notions of map creation, and they’re now redefining this critical interface at the exact right time for mobile consumers. Waze maps are now real time, and soon they will be much more social and informative in a way that will improve our lives.
It is a true pleasure to work with such talented people.