How A Kid Who Sold Snails Grew Up To Be A Successful Entrepreneur, Then Angel Investor

Before I tell you about Boris Wertz’s successful startup and how he’s investing in other startups, I want to point you to a spot in the interview that starts around minute 18. That’s when he talks about how he always wanted to be an entrepreneur and even launched small businesses as a kid — like the one where he sold snails.

Watch that spot and you’ll see why Boris started JustBooks, the German used books market place. Later in the interview, when he talks about the hard times, you’ll also understand why he didn’t throw in the towel and get a safe job. He ended up selling his company to AbeBooks. And when AbeBooks was sold to Amazon the  money helped him invest in startups. I asked Boris to tell us how he finds the entrepreneurs that he backs and what he gives them beyond money.

Boris Wertz

Boris Wertz

W Media Ventures

Boris Wertz is the Founder and CEO of W Media Ventures, an angel fund focusing on early-stage Consumer Internet opportunities mainly in the Pacific Northwest and Western Canada. Before founding W Media Ventures, Boris was the Chief Operating Officer of AbeBooks.com, the world’s largest marketplace for new, used and rare and out-of print books which got sold to Amazon in 2008. Boris joined the company in 2002 after JustBooks, the German company he co-founded in 1999, was acquired by AbeBooks.

 

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Full Interview Transcript

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Here’s the interview.

Hey, everyone. It’s Andrew Warner, founder of Mixergy.com, home of the

ambitious upstart. And before I even introduce today’s guest, today’s

interviewee, I’ve got to explain the beard and the way that I look. I

haven’t been feeling well. It’s Monday. I had a rough weekend, and just was

in bed all morning today.

But I knew that I was going to get to interview Boris Wertz, and I had an

obligation and a commitment to do it, and I wasn’t going to stay away. So

hopefully I’ll survive for this interview, and get to go home and rest, and

maybe shave tomorrow morning.

So Boris Wertz, who I kind of introduced there. He is the founder and CEO

of W Media Ventures, which offers seed investments and consumer-based

Internet companies. Previously — and this is one of the big reasons why I

wanted to have you on here, Boris — previously, Boris co-founded Just

Books in September of ’99, sold it to Abe Books in October of 2001, and

then Abe Books itself, which he helped run — which you helped run — was

sold to Amazon. And now you’re helping entrepreneurs by not just giving

them investment, but by also teaching them what you’ve learned as you built

your business.

How did I do with that intro?

Boris: That’s perfect. A very good summary of what I’ve done in the past

and what I want to do in the future.

Andrew: All right. And you’ve invested in 15 companies. So it’s not just

what you want to do in the future, but you’re already doing this now,

right?

Boris: Yes. Exactly. I started out two years ago to invest in consumer

Internet startups. Have done 15 investments so far, all consumer Internet,

and within the consumer Internet broad range of ecommerce, social networks,

content, gaming. So, yeah, we’re pretty happy so far with what I’ve

invested in.

Andrew: Okay. All right. My focus here is probably going to be about your

entrepreneurial story, but I also want to save some time towards the end to

talk about the investments that you’ve made through W Media Ventures, talk

about why you invested in them, what you learned as you invested in them,

and get some advice from you on angel funding and the whole funding

process.

So let’s go back to Just Books. I said that you launched September of 1999.

What was the opportunity that you saw when you launched it?

Boris: Yeah. I mean, it’s… think about it. That was a little more than

ten years ago, and it was really at that cusp of the Internet hype. And at

one point, a little bit crazy period, everybody wanted to become an

Internet entrepreneur. And there were a few people in my PhD program that

all gathered together and said, you know, “It’s such an exciting time to do

something. We need to start an Internet startup.”

So we looked at a few verticals that we found interesting, and founded on

books. Not the new books, but more kind of the niche marketplace of used,

rare, out of print books. Very inefficient market that had been run locally

by antiquarian bookstores, but there wasn’t national, international access

to all of that inventory that was in the local stores.

Andrew: What about Amazon at the time? What were your feelings about the

giant in the book space?

Boris: You know, I mean, it was always… at that moment… Amazon got

founded, I think, in ’95, so [??] years ago, it was already kind of the

big, you know, player in that space. But we felt that they hadn’t really

nailed kind of the used, rare, out of print experience, and they really

focused more on new goods, etc. So that’s really where we saw the

opportunity.

And in the end Amazon was always kind of a natural buyer for Abe Books.

And, you know, eight years later, turned out that this was exactly the

sweet ending for everybody.

Andrew: I see. So you were hoping or expecting that Amazon would be the

buyer from the beginning.

Boris: No. I mean, they were always a strong candidate. I think, in ’99

when we started it, there were a few other players. Especially, you know,

there was BUL, there was Barnes & Noble. I think the book market was a

little bit more open. But it was pretty clear overall for us that at some

stage we would end up with a bigger book player.

And, you know, a few years later, it became clear that Amazon would be

definitely the strongest player in that area.

Andrew: I like to see how companies evolve as they grow, but to do that, I

want to get to know first that original idea, to see why you evolved from

it, and how you changed.

So beyond just letting… beyond freeing up the independent sellers to sell

their used books, what else did you see? How were you thinking that they

would find each other? How did you think that they were going to buy each

other? Take me through some of the details that you imagined, and then the

next set of questions will be about how did that change. How did that

understanding change?

Boris: Yeah. So I think that it was always the core market collectors that

were collecting antiquarian books. And they were going to all of these

local bookstores. And there’s about a 200,000 bookstore in this world that

have local inventory. And they were meeting at fairs and gatherings to kind

of find the book they were looking for. But what was much more on tap was

the potential of here’s somebody that was just looking for an out of print

book. They couldn’t find it anywhere.

They were running from bookstore to bookstore. They didn’t really have the

time to look at that. There was a whole market of used textbooks. Students

that basically had local markets and trying to buy the used textbooks

somewhere from another student. But basically all inefficient local markets

that we felt, like if we can aggregate all of that inventory from

booksellers, from what we call private sellers, and put it on a, in a large

database on the Internet, people can, at a fingertip, find the book they’re

looking for and get that book shipped.

And there’s always great stories of students saving money. People, a person

from Australia that suddenly found the book that he was looking for ten

years suddenly in a book shop in Canada. Things like that. So it really

turned that industry upside down in terms of suddenly you have access to

local inventories from around the world.

Andrew: I remember actually back then, in fact even earlier than your

launch, looking for Andrew Carnegie’s autobiography because I heard great

things about it, because I was moved . . .

Speaker: Yeah.

Andrew: . . . by Napoleon Hill. I went to the bookstore. They didn’t have

it. I said online, that’s why they’re going to have it. They didn’t have it

there. I went to the special used book store; they didn’t have it. I ended

up . . .

Speaker: Yeah.

Andrew: . . . I don’t remember what website I found it on but I remember it

had to be a hunt and it wasn’t easy back then.

Speaker: Yeah.

Andrew: It’s not what it is today where you can go to Amazon and find this

big collection.

Speaker: Yeah. Exactly.

Andrew: Okay, so, that was the original idea. How did it evolve in the

first few months?

Boris: You know I think we first focused on kind of the core collectibles

market, antiquarian market. And over time we really understood what the

niche markets where around then. One of things that we really didn’t

understand at the beginning how big the college, the used textbook market

was, in especially North America.

Suddenly that was really the second growth phase for [??] books. That was a

huge market that we had always underestimated. So it really, I mean, it

really adapted over time. And the last step was to add new books as well,

as we realized that we are never going to be just a new book site. We could

be as big as Amazon yet people were looking at the whole range of books

they want to buy: new, used, or out of print.

So over time it started with a kind of the niche collectible area. It, we

added niche markets on top of that which is kind of a textbook market, and

last but not least, we kind looked at, kind of the complete book market and

added new books.

Andrew: Okay, but your original idea was to go after the everyday buyer to

go after somebody who loves books, but isn’t especially a book collector.

Isn’t a college student. Was it tough to narrow yourself down do that niche

at first? Did you have any concerns? Or what were the concerns that you

might be limiting the perception of what you’re doing?

Boris: Yeah, I mean, I think it’s exactly the right strategy how to build

a company. Like what do you need to identify. Where is your passionate

community of buyers that want to really use a service? I mean, you know,

look at how Facebook got built. It was first really built in a small, in

one college. Then it expanded across other college, then they opened up.

And I think this is really how you build a successful company. Look at a

really small niche of passionate buyers, passionate users. Build your

community, your site around that and then expand from there.

Andrew: I’m sorry but . . .

Boris: [??] Yes.

Andrew: I want to go back to the mindset at the time. This was September,

1999, and when people weren’t satisfied with the niche, when there was this

feeling that you have to conquer the world. If you’re going to go into used

books, let’s go in and dominate and own this space.

Boris: Yeah.

Andrew: Why? Were you thinking any of that? How did that end for you?

Boris: Yeah, no. Funny enough, at that moment was, was the time of the

really big ideas. And a lot of people smiled about us and just laughed

about us. So why do you guys, you know, look at used books? All right. And

there were bigger ideas out there, you know. As you know pet food and cars

and whatever it is. Fashion. [??] .com, so whatever it is. It looked like a

very tiny idea.

And it was sometimes tough to stick to that in that phase while out there,

because you look at, kind of, startups that, yeah. Then online at the same

time and already expand internationally.

Andrew: So why did?

Boris: [??]

Andrew: Why did you, despite the questions you are asked by others, despite

the environment at the time, why did you focus on it? What… maybe, was

there money concerns? Was it that you had a passion here?

Boris: No, I think it was always in terms of how the team was set up. I

think we were always on the conservative side. And, I think we had our

moments when we got kind of a little bit over-motivated, and over-excited

about some of that (?), but I think overall, we always kept it pretty

realistic. We knew that we had to build a real business, that you know, you

couldn’t just bank on venture financing all of your life of a startup, and

we needed to build a real business.

And we felt that we provided a real value at that moment to (?) book

sellers as well as collectors, and despite that being a smaller niche, in

the end, we felt it was a very valuable service that we were offering, and

that’s what would count in the end. We stayed pretty conservative in terms

of developing that company.

Andrew: Okay. What was the funding at the time?

Boris: You know, in total, we raised about 10 million deutschmarks, so

that’s around $5 million, in three rounds. So, you know, it’s still pretty

big, compared to what startups raise today, but very small compared to what

other companies raised at that moment.

Andrew: What was the experience like of raising that money? Was it easy?

Was it a process that you learned?

Boris: I think we went through two different phases. It was at first

extremely easy. I mean, September ’99, we did an angel financing, and we

approached basically three angels in (?). We only had a business plan. We

didn’t even have a site. And then our first venture round, we went to four

VCs. We got four offers. It was just about picking the VC that we really

liked. It got much tougher later on, right? Once (?).com, March 2000 kind

of went bankrupt, that’s where it all broke down. What people call the

nuclear winter for funding.

The lucky thing is that we had a very good partner in (?) mentors that

supported us, and they saw the traction that we got. They believed in the

team and they continued funding it, but there was no chance to get any

external funding (?) The market was shut down.

Andrew: I want to come back to that and ask what you did when there was no

VC. Let me ask one of the questions from the audience. It’s a short one.

It’s from Oz. He’s asking who wrote the business plan. I see that you had

one, two, three, four, five co-founders.

Boris: Yes. You know, we did it all together, in different phases. There

was a, you know, different people wrote in it, but you know, in the end, I

think it also go, you know, it was such a fast development over time. I

don’t even remember that we spent too much time on the business plan. At

that moment, we were all about doing, getting together our presentation,

getting in front of angels, getting the money and then, just run.

We built the website within a month. It was crazy from the moment we got

the funding to when we went live. It was a month, and we had a full

marketplace online. So, it was all about speed at that moment. Not really

all about thought and business plans.

Andrew: Okay, let’s get to that. How did you get so many people on your

site? You’ve got a chicken-egg problem, right? No consumer like me is going

to go check out your website unless you have books. How do you get people

to list books on a site with no consumers like me?

Boris: You know, it was, in the beginning we were just on the phones,

right, talking to antiquarian booksellers, to tell them to send us their

inventory on CD. It was crazy. At that moment, people said, oh, yeah, you

know, I have it but I can only fax it to you. And we’re like, yeah, you

know, fax doesn’t really help. But it was really, 10 years ago. A lot of

people didn’t have digital inventory. They had catalogs. Printed catalogs.

So we thought about all these solutions. We even bought books ourselves and

then inputted them into the system to have some inventory on there. So when

we went live, we had about 30,000 books online, and we went live with the

Frankfurt Book Fair, and it was amazing to see there were some people

coming up, and they actually found books they were looking for. We were

amazed ourselves, right? And then on the first day, we had about 20 orders.

You just look at that and you can’t believe it. It felt really unreal.

I mean, to give you an idea today, Abe Books has a little bit more than 110

million books online, so the 28,000 we started with was a pretty small

amount, and today, there’s probably not a single book that you couldn’t

find on AbeBooks. But it’s always the question of the chicken and egg

problem with the marketplace. The inventory, supply and demand. And I think

the only thing you can do is work really hard in convincing people that

there’s something there, get as much supply on there, try to show as much

traction as possible. And then, yeah, it’s a matter of time and continuous

pushing.

Andrew: Okay. What about, then, the consumers? How did you get them on the

site?

Boris: Yeah. I think for consumers, it was always a relatively easy

proposition, because there was a lot of word of mouth. When you think about

it, if you have been looking for a book ten years, 20 years, and you

suddenly find it, you tell a lot of people. So. . .

Andrew: But how do I suddenly find it on the site, when I know to go to

Amazon, I know to go to the bookstore and the library, but I kind of accept

that this is impossible, to be able to get out of print books?

Boris: I agree, but, you know, it was really about, in the beginning, about

that passionate, you know, group of collectors that the word of mouth

spread, right? And we attended fairs of where these collectors met to

really spread the word.

The problem was, at that moment, there wasn’t a lot of efficient online

marketing. I mean, the only thing you could basically buy is a Yahoo

homepage banner, which was extremely expensive. Because, I mean, you know,

tons of people want one to buy that. So it was very hard at that point.

So we tried a lot of things. We tried from offline, trying… you know, got

a little bit of word of mouth promotions. Online banners, etc. But, you

know, in the end, it was really… I think the biggest factor was word of

mouth, in the beginning. And once you have some traction, right? The more

inventory you had, the more traction you got.

Andrew: Okay, so fairs were, I’m hearing, a big way for you to get traffic.

Boris: Yeah.

Andrew: But that doesn’t scale. How did you decide to do fairs? Why did you

accept to a system that doesn’t scale as your marketing system?

Boris: Yeah. You know, because it was the only choice at that moment. We

didn’t have Google AdSense. There weren’t any affiliate networks.

Everything what we have today… there wasn’t any SEO in that respect. I

mean, Google really didn’t exist at that moment, right? You had… nobody

thought about doing SEO for products.

I mean, that was all before the time when we had an efficient marketing

system. And we think about today in terms of email marketing, SEO, pay-per-

click, affiliate networks, whatever it is. It just didn’t exist at that

moment.

So the only chance that we had was really, you know, go offline, knowing

that it wouldn’t scale. But it was the only way to reach consumers, in the

beginning.

Andrew: Okay. I asked you the opportunity that you saw when you started the

business. I’d like to go and ask… I’d like to ask you about you. Why did

you decide to get in this business?

And I’ll tell you that, for me, I started my first business out of college

because I was poor, and I saw that the people who had freedom were the

people who made money, and the people who had companies that were their

companies had the most creativity in the moneymaking game. So that’s why I

got into it. Why? What was it internally for you?

Boris: I always wanted to become an entrepreneur and run my own company.

And that was always part of the life plan, because I enjoy creating

something, building up something, creating a mission for a company.

And that… and then it came [???], and it was really kind of that Internet

hype that, you know, suddenly everybody wanted to become an entrepreneur.

And that was kind of just, “Hey, let’s just do it.” It’s the right time.

You just need to grab that opportunity.

You know, the original plan was to, you know, get a few years of experience

work in a company, and then start something. But, you know, suddenly there

was the opportunity. I thought, “Let’s just do it.” And that was one of the

best decisions in my life. And it’s something that you take very quickly.

Andrew: Let’s go back even way before 1999. You always were an

entrepreneur. What kind of companies did you have even as a kid, long

before the Internet was popular, long before you were old enough to start a

real business?

Boris: Yeah, no, I… [laughs] I did a few entrepreneurial ventures. When I

was a teenager, I started growing snails. I don’t know. In Europe, you

know, snails are something that people like to eat. So I saw an opportunity

of growing snails. So I did that work for a year. Wasn’t really super

successful.

Then, during college, I started a consulting company with somebody, and we

had a pretty good run at it. I mean, at some stage, it wasn’t really, you

know, scalable, and… it was a really good company. And then also during

college, I started a car importing company, importing North American cars

to Europe.

So I had a few ventures. I mean, none of them really successful, but it

gave me the taste of being an entrepreneur, and thinking about

opportunities. So a very wide range of things.

Andrew: Why’d you need the other four guys, then? Why not one developer, or

one guy who can help you out, but…

Boris: Yes. You know, today, yes. But at that moment, it felt like… I

mean, A) it was really the moment of a lot of big teams that you have

looked at have other founders. And, you know, yes I had started some

ventures but I had never really raised some money etcetera. So, I think it

was always the idea of putting something together with a few people. So

yeah.

Andrew: You said that you started the business in Europe and we talked

about the funding in Deutschmarks.

Boris: Yep.

Andrew: What about the business itself? Was it going to bring in revenue in

dollars? Was it going to start off by pursuing a US audience?

Boris: What we did, we really focused on Europe. So nine months after we

started Germany, we started the UK and an English website. So I went to

London and started kind of that side of the business. And then a few months

later we launched the French market. So we were in three markets. The three

biggest markets in Europe before we sold to. . .

Andrew: Abe.

Boris: Abe Books. The U.S. was always kind of out of reach because it was

always too mature. Abe books was already a big player. So it felt like this

was out of reach but we always thought we should do a really go job in

Europe and the different countries.

Andrew: Did you start off thinking that you wanted to create the European

version of Abe Books?

Boris: Yes. I mean we always looked at Abe Books in a certain way. We saw

an opportunity around textbooks that Abe Books never really pursued at that

moment. They were really focused on the hard coop electro market. We saw

way more opportunities around private sellers than they did. But we always

looked at them as one of the bigger competitors and role models.

Andrew: Okay. We started off talking about how you had a vision for the

business. We talked about how you executed that vision. It sounds too

clean. I want to get into the dirty part of it. The tough parts where you

thought you were going to go right and you ended up having to take a sharp

turn and go left. Or, actually yeah, what were some of the big changes in

the business?

Boris: I think there were three things that I would do differently today

where, you know, we learned a lot and we have made a lot of mistakes. The

first one was we had way too many resources?? in the beginning. And that

led us to believe not to work too much on the core product but adding bells

and whistles where we didn’t need them.

And quality was also linked to a second problem which was too many

founders. If you have five founders you have too many in the beginning to

have business support. So I think the big problem was focus on too many

additional features that weren’t really related to the core product and

improving the core product. Having too many founders in the room. And last,

but not least, expanding too quickly into the different markets when we

didn’t have an idea how to do that right.

So in the beginning what we did, we really just copied the website and

translated it. So it didn’t really work on the infrastructure. But it was

all about speed. So I think part of that was inexperience. Part of that was

just the time that, you know, required a lot of speed. So yeah.

Andrew: Okay. Let’s break those down. You said too many features. What

extra features did you add and how did you decide to take some of them

away?

Boris: Yeah. So, for example, we added then a manual search service. So if

you didn’t find that book on the site then you could kind of place a manual

search on the site. [??]

Andrew: I’m sorry. What kind of search?

Boris: A manual search. So some people, basically in the background, search

for that book in other databases, in other catalogs, etcetera. It just

didn’t scale. It didn’t really make sense. It was a nice service but it

didn’t make sense. We had a reprint service so you could reprint some

books. Again, nice idea but didn’t really improve the core experience.

Andrew: How did you make the decision to kill those features? Let’s take.

Boris: No.

Andrew: The great one that was manual.

Boris: We basically killed it after we merged with Abe Books. When Abe

Books bought us, that was the moment we needed to merge the product. And

that was the time to review what had worked, what had scaled, what hadn’t

scaled. And that’s when we basically killed it.

Andrew: I see. So even though you knew that it wasn’t going to the scale,

even though you knew that it was taking resources, you just didn’t have the

ability to kill it. Why?

Boris: No. I would say at that moment we didn’t really realize it. We were

. . .

Andrew: Okay.

Boris: I think in hindsight I look at it and say listen these were big

mistakes that we made. But at that moment we didn’t really realize it.

Andrew: So it was Abe Books looking at your business and helping you think

it through that made you realize that this wasn’t the future.

Boris: Yeah. A) that. And secondly if you just think about the new product,

and then it forces you to think about, hey, what really worked in the past

or not. Sometimes you just don’t value that hard enough. You just keep on

using the product.

I mean, killing features is a very tough time, because nobody likes to do

that. You invested the time and the money into it, and energy, etc. You

don’t really like to kill it.

Andrew: Yeah. And the people who respond first to something you kill are

the people… the few people who actually like it and used it.

Boris: Yeah. Yeah.

Andrew: Okay. You said too many founders. What do you do about that?

Boris: Yeah, I mean, one of the founders didn’t work out, so he left the

business within a year. And then, again, when we merged with Eight Books,

it was clear that, you know, just because we had… you know, even more

people on the management team. Another two founders left the team.

So it really, you know, the two of us, [??], who is still running Eight

Books today, and myself, we stayed with the business. Just today, if I

started a company again, I would have perhaps one co-founder, perhaps two,

but definitely not four.

Andrew: Okay. And that seems to be the way that tech companies are founded

today.

Boris: Yeah.

Andrew: Okay. Finally, on that list that I wrote down, you said too…

expanded too fast. Where did you go, and why was it too fast?

Boris: Well, I mean, in the end, because it was all about speed. We didn’t

really think about the right structure. So we basically replicated just

books that we have built in Germany in the UK. And that was not the way you

would, today, you know, roll out international.

What you would do, you would, you know, use the same code base, but have

language files and make it really scalable. You probably wouldn’t even open

an office right away there, but run it out of the original company, and

just hiring these speakers out of that.

It’s just at that moment, we didn’t know any better. I mean, it was…

everybody opened offices. Everybody just, you know, opened a website. So

from that point of view, it was the way people did it. Today, you know, we

would do it much, much more different.

Andrew: Okay. So you guys just rewrote the site? Or did you rewrite the

site for… in English, for the English audience?

Boris: Yeah. Basically, we just copied the code, and then… and translated

it. And then you have basically two sorts of… you know, two types of

code, right, out there. So completely stupid. I mean, if you… suddenly if

you started, added a new feature in Germany, you had to add the same

feature in the UK again. I mean, you had twice the coding work.

Andrew: Okay. All right. We talked about… actually, let’s talk about one

other bad part, and then we’ll go back to the good part. No… the trouble

with venture capital. What was that like?

Boris: Well, I mean, I think external funding just completely died down in

March 2000. There was just no way that anybody would invest in anything

anymore. As I said before, I think we were really lucky to have a really

good partner that looked at the team, looked at the progress, and believed

that we could build a really good business in the long run if we just, you

know, hammered away at it and continued to grow it.

And I think some other entrepreneurs weren’t that lucky, and got dropped by

their VCs. So I think, yeah, the lesson that I learned from that is, you

know, probably look at people… at investors that you feel, you know,

trust you and support you also in the bad times.

And sometimes, you know, people optimize too much in the short term, in

terms of the better evaluation they get to go to the VC, etc. But I think

it’s important to work with people that have a long-term vision that you

share with them.

Andrew: Someone in the audience is saying that he didn’t see that there was

an interview on the calendar today and he’s glad he checked the website.

Yeah, I’ve got to thank you for that, Boris, that I had a last-minute

cancellation and I needed to find a replacement, and I’m really grateful to

you for coming in and helping out and talking about your story, without the

prep that a lot of people like. They like to check it out for a while. They

like to make sure we’re okay.

All right. Let’s talk about, now, the good part. How big did the revenue

get?

Boris: You know, in the end, I mean, Eight Books was a very small business,

and I don’t even know how big we were at that moment. Roughly a million

deutschemarks, in terms of revenues. Eight Books itself, I mean, it sold to

Amazon, was about $35 million in revenues. And so that’s commission and

subscription fees.

So overall, the platform revenue was over $200 million. So basically, the

sales that went through the platform. So… yeah.

Andrew: So did the investors consider this a positive sale for them?

Boris: Yes. I mean, I think everybody made good money on the whole

transaction.

Andrew: What did you guys sell for?

Boris: Unfortunately, I cannot disclosed [??] want to keep that for

themselves. Let [??] for the good sale.

Andrew: The sale of Eight Books I saw some hints online that it sold to

Amazon for 90 to 120 million dollars. That’s a big band. It tells me that

there isn’t enough information to really know where it landed. But what

about the sale of Just Books to Eight Books?

Boris: That was a complete sales transaction, so, basically we got a piece

of the company which was roughly 20% of the books at that moment. It was a

great exit of us because at that moment, they were a much bigger partner

and they were already profitable. We provided them with kind of a growth

perspective in Europe so it was a huge upside. But again, in October 2001

it was a few days after 911 that we closed the sale.

So it was a pretty tricky period where not a lot people had confidence in

the business world anymore. So we were lucky to get that through and again,

it worked out for everybody involved.

Andrew: Did you have to sell at that point because of what was going on in

the overall tech market and because of what happened later on with

terrorism?

Boris: Yes. No, I mean we had to get some new funding partners in there. It

was clear that Burt, as loyal and supportive as they were they couldn’t

really plan on what was going on in another 3 or 4 years. It’s just the

market wasn’t there at that moment. We had been looking for strategic

partners and that kind of lead to the exit-decision talks by Eight Books.

So it was a little bit of a lucky moment for everybody.

Andrew: How did you and Eight Books hook up? I’m imagining that,

Boris: We saw each other a little bit at [karos] already, and then one day

we started talking to the CEO, Eight Books [Burt] James. He wanted to look

at our business and within three months, basically, we closed the deal. He

came over to Germany. Within two or three months of that call, we

negotiated terms when he was over and then we closed this whole thing

within 3 months, which was pretty fast. Just like the terrible events of

911 in between, that kind of got a lot of people scared but we marched on

and closed the transaction, and never looked back.

Andrew: The feeling from Eight Books, is that something that you can talk

about now? How they were negotiating considering they had the upper hand at

the time. Is that something we can talk about publically? Or Boris, is that

something we would need to have a drink or a private meal and talk about

it?

Boris: Ha, ha, ha, no I think it was a very friendly organization. We

really believed in the business, so despite having problems raising more

money; we felt we were building a great product. I was not built on hype.

It was not built on some fluke. We felt that that it was a fundamentally

good business, despite financing problems that everybody had at times.

So from being in that position of relatively good self-confidence, I think

we negotiated pretty hard. They knew what the opportunity was to very

quickly grow in Europe. Overall, you look back and say, it was a good deal

for everybody involved. That’s the best thing, you look back and that’s now

eight years, nine years ago. You look back and I think everybody that

participated in that deal said it was a great deal for everybody.

Andrew: Why did you stay on board at Eight Books and take such an active

part? You started your own business, you knew what it was like to run a

business, to launch it, to raise the funds for it. You knew the whole

thing. Why stay on with Eight Books?

Boris: In the beginning the plan was to stay on in Europe and run the

European section. Within a few months, we realized that, that wasn’t that

exciting. I mean, you loss, [kind of] product development to North America.

You lost [??], finance, etc. In the end, it was really about market

development and adapting an existing product to local languages and

currencies, etc. So, actually, we all had in our [explanation] and said

listen, you guys run with it. It’s just not exciting anymore, for us.

That was the moment when, Burt James, the CEO of Eight Books offered

[Hammond] and myself to come over and co-run the company. He had intended

to leave and do something else. It was a great opportunity of us, to semi-

run the mother-ship, move over to Canada. So we took the opportunity. It

was probably one of my best choices in life. Not to leave at that moment

and leave the baby but run the bigger entity.

Anyhow I look back at these eight years with just [??] books and an

incredible wealth of experience from starting, co-founding, and starting a

company, setting up a desk and painting walls until the end co-running a

business that had 140 employees and $35 million in revenue. So in terms of

when you think about different experiences that you need, to understand how

to scale a company it was perfect, everything from starting out to running

a mid-sized Internet company.

Andrew: I interviewed Ron Drury, the founder of Zero.com and he said that

every time he sold one of his previous businesses he learned something

different because he was exposed to a new size company and new environment.

And it raised his outlook and made him find a whole other higher tolerance

on the horizon, if that’s possible.

I wonder for you, what did you learn from being in a bigger business? What

did you learn about scale specifically? What did you learn about having so

many employees. What did you learn in general?

Boris: Yeah, at first we were just a small team but then co-founders and up

to five, about 20 people in total. So in the end you were very much still a

big part of doing things, actually. Once we moved over to the much bigger

organization, so it’s really much more about a management role and managing

employees and setting a vision and setting the framework, define the

framework, define the strategy, etc. than actually doing any of it.

I think it was a hard situation for an entrepreneur, right? That is hands-

on and likes to do things, and suddenly you’re more kind of in an

overseeing role, in a managing role, etc. than actually a doing role. So I

think that was kind of the challenge for me in the beginning to transition

over to more kind of a managing role than actually a doing role.

Andrew: Okay. Did you find that you weren’t that person that you’re not the

manager at that stage? Or did you find that that’s a part of you that’s

just been there that you didn’t know existed before?

Boris: No, I mean, I think in the end I always like to dig into details

again but them pull it up again and say, “Listen, I also like to think

about the strategy, think about if we’re able to do it. I think it’s a

phase in life. I probably will never be the entrepreneur that Todd Lewis

[SP] who wants to define the last feature on the website. I love managing

people. I love setting a vision. I love setting a strategy and then letting

people executing it. It’s just that in the beginning it was just a little

bit of a traditional period until you get to that point.

Andrew: Why did you sell?

Boris: To Amazon?

Andrew: Mm-hmm.

Boris: Yeah. No, I think that I left the business a little bit before that.

Andrew: I see.

Boris: I was communicating between Vancouver and Victoria, and it was time

for me to settle down in one place which is Vancouver. We had invested in

there, so at some stage it was clear that they should be next to get the

money back to the investors. And it was the right moment. I think we had

internationalized the business to five countries. so five regions. You had

North America. Then you had the European business, the U.K., Germany, [??],

Spain, and then later even Italy.

We had internationalized the base into the biggest markets. The whole book

market was getting mature. We had a good job on monetizing the business and

streamlining the business. And then there was an opportunity to hand it off

to a bigger firm that could take it to the next level.

I think what I’ve seen in the past two years what Amazon has done to the

business is amazing. They had just had other technical and marketing skills

that we ever had and at the size of our company. They can really take that

business and go.

Andrew: And you left because?

Boris: In the end it was time for me to move on. I had eight years with the

business, an amazing learning experience, like I said, for starting up a

business and getting it off the ground to grow to a company of 140 people.

For me it was time to do something else and settle down instead of the

commuting part.

Andrew: Vesting? What part did vesting play in this?

Boris: No, I mean, vesting?

Andrew: Yes.

Boris: No big part. I left something on the table. In the end I never

really looked at money driven decisions. I looked at where I can learn

more, where I really have fun on a daily basis. It just felt like I wanted

to do something new.

Andrew: What was the new thing going to be?

Boris: That was kind of the investing part. So, I want to work with

startups to help them, you know, grow their business, develop their

business. And I have been doing a little bit of investing in the years

before I left, had done two or three investments and …

Andrew: What size?

Boris: It was, you know, usually in the range of 50 to $100,000 dollars per

investment, and from there on, I wanted to take it to the next level and do

that kind of full time. So, that’s what I did and so that’s (?) two years

ago.

Andrew: Okay. And in the audience, Todd is saying he wants to hear more

about that, what you’re doing now, but let’s go back to a question that

Pedro asked earlier, that I wanted to ask, too. Which is, can you take us

to the moment where Abe Books sold to Amazon. You get to cash out. What was

that like?

Boris: Well, like in the first sale, when we sold Just Books to Abe Books,

there was a little event called the Lehman bankruptcy coming our way. We

had signed the deal just before in August 2008, and then after that, as you

know, the financial world fell apart. So, it was a pretty nervous time. Are

we going to follow through with the deal? We had been negotiating for

almost a year, and had worked on that deal for almost a year.

But then, you know, I think that the day was kind of a happy and sad day.

On the one hand side, you’re extremely happy for the financial outcome for

everybody, the employees, the investors, happy that there is a company with

Amazon, is an extremely visionary company, that has taken over Abe Books,

sees Abe Books as a standalone company that they can take to the next

level, but at the same time you also…

Andrew: What about where you got to actually look at the rewards on paper?

And I think it was, you sold for cash, so you got to look at a check at the

end of the day. What was that like?

Boris: Not a check, but basically, a line on your bank account that… you

look at it, and you still can’t believe it. I showed it to my wife, and

said, have a look at that. It won’t happen so often. It’s an incredible

reward, right? By then, it was almost nine years of really hard work, so

yeah, I mean, it’s a great feeling. It’s a feeling that every entrepreneur

you know, dreams of and fights for and works for.

Andrew: How did life change after that?

Boris: Not really much. As I said before, I was never a financially driven

guy. I think that exit helped me now to do the things I want to do in terms

of investing in startups. If I didn’t have that exit, I couldn’t do that.

So for me, it’s about giving back to the startups. Certainly, I’m also

making a return on that, and hopefully a good one. But in the end, it helps

me and allows me to lead a life that I would like to lead, being an angel

investor in (?) startups.

Andrew: In W Media Ventures, let’s spend a lot of time on that because

people are asking for more information…

Boris: Yeah.

Andrew: W Media Ventures is all funded by you, or do you have other money

in there?

Boris: No, it’s all funded by me, but I’ve worked with a range of angels on

a regular basis to um, you know, co-invest. Usually, I’m not ever

completely alone in the deals, but the money itself is all from me.

Andrew: How do you find the deals?

Boris: It’s really through the network of entrepreneurs. If you’ve been

around, and especially if you look kind of in defined geographies, Seattle

and Vancouver are probably the two biggest markets that I’m in. You get a

lot of referrals from other entrepreneurs, from people that you’ve invested

in previously. So, that’s really how I get, you know, from time to time,

there’s the odd deal that’s intriguing that ends up in your inbox, but

usually, it’s really by being in the market and talking to people and being

out there that you get the deal.

And most often, a lot of the deals that came together over a year. You meet

the entrepreneur. He’s working on an idea. You provide feedback. You stay

in touch. And you do four or five iterations. And at some point, he’s ready

and you’re ready to invest. And then you go for it.

Andrew: And so do you limit your investments to companies that, or do you

try to limit to companies that are in Seattle and Vancouver?

Boris: Usually, Pacific Northwest, so you know, these are the two biggest

markets. That would be Portland, Calgary, Edmondton. I’ve done a few deals

around it, but I would never lead a deal around outside the geography.

Just, you know, if you want to provide the added value that I aim to

provide to entrepreneurs. You need to be close, and I can’t really help

people that sit in New York or sit in an office, no matter where it is,

right? So I’ve done a few deals with other investors like [inaudible].

Andrew: Sorry, I can’t hear you. Deals with other investors and then we

broke off after you said that.

Boris: Sorry, Union Square investors and First Run Capital, but these are

cases where they need to be on. And if I can add some value, great, but

that’s not part of the deal.

Andrew: Let’s take somebody from the audience here. Let’s assume Melvin Ram

[SP] decides that he wants to start a new business, a new web app. He’s

willing to move to Vancouver because his girlfriend’s there. I don’t know

the situation. So let’s say a friend of his is there and wants to partner

up with him. He knows that you’re in the area. How does he start before he

even builds his app? How does he start getting to know you, working on that

relationship so that he can potentially pitch you and get funding from you?

Boris: I always love to meet with entrepreneurs that have an interesting

idea over coffee and just discuss it, right? Or meet at an event and see

how it went in Vancouver that I attend. I’m looking forward to discussing

with entrepreneurs. It’s a give and take. If there’s kind of a chemistry

developing with the entrepreneur and the investor, then you’ve just got to

continue to have discussions about the product and pushing each other and

discussing it.

And sometimes it’s not developing, right? Then that’s also a kind of good

outcome.

Andrew: But it would start even with a coffee with someone. You wouldn’t

take a cold for coffee, right? You don’t know if the guy is a mental

patient or not. Or would you?

Boris: [inaudible]

Andrew: I’m sorry. We lost the connection here. Just take a moment and wait

for the connection to catch up with us. Okay, I think it did. Sorry, as I

was saying, would you do a cold call request?

Boris: No, the forearmed instruction is always good from somebody that I

know and you look at LinkedIn contacts or Facebook contacts or whatever it

is. There’s tons of connections out there. And that’s probably always the

best way to start.

Andrew: Okay. If I wanted to or Melvin or Todd or someone in the audience

wanted to get to know you, what we’d probably do is go to the portfolio

section of your website, it sounds like, and where it says, “Ad Marketplace

is a company that you’re investing in or Fit Brains or Flurry.” They might

want to contact the entrepreneur behind those businesses and say, “What’s

this Boris like? I heard him on Mixergy. What’s he really like? What’s he

looking for?” Does that sound right?

Boris: Yeah, the more information you can collect about an investor and

what he likes, what he’s interested in, the better, right? And I think

that’s really something that a lot of entrepreneurs don’t do that. They

pitch you an idea and it might be out of scope because it’s too late at

this stage or it’s not what you’re really looking at, etc. So the more work

you can do to understand what the investor is interested in, the better

your pitch will be.

Andrew: Okay. All right. And then that’s talking to other entrepreneurs,

reading a website. Are you a blogger, an active blogger?

Boris: You know, I blog. I just looked at my 2009 stats. I blog about 35

times a year, so it’s every two weeks. I would say I’m not a great blogger,

probably a better tweeter than a blogger, but I’m also not inactive. So I

always want to do more. It’s always a matter of time, but I have a blog.

You can read my blog. You can follow me on Twitter.

Andrew: Let’s give people a few points of contact so that they can find out

more about you and get to know your thinking and maybe interact.

Boris: Yeah, so there’s the website, MediaVentures.com. That’s the website,

/blog is the blog. /Portfolio is the portfolio company, and then on Twitter

it’s BWertz on Twitter or WMediaVentures is the company account. I think

that’s the best ones and also LinkedIn BWertz on LinkedIn.

Andrew: All right. Can we take one of these companies from /Portfolio and

talk about how you met them, how you invested, what it was about the guys,

and how you helped them beyond the funding? Is there one that’s especially

interesting and helpful?

Boris: Yeah, I think it’s interesting. Indochino is one of the interesting

companies out there that I’ve invested in. It’s a website for tailor-made

suits. So you basically measure yourself or get measured by a tailor. You

enter that measurement on the website, and then you order the suit that is

custom made for you with additional customization options, if you wish to.

And they being produced in China. There it costs between $300/$400

delivered to your doorstep within two weeks.

Andrew: Before you continue, I just want to make sure that people, and the

transcribers especially, get to hear the name. We’re talking about

Indochino. That’s I-N-D-O-C-H-I-N-O. Indochino. I’m sorry. So you’ve given

us an overview of the business and you were taking us through the story.

Boris: So I met them very early together [??], my co-founder over at

AbeBooks, and they only had a business plan. So I invested a little bit of

money to go with two other angels to help them get a website. So they

started getting a website, evolved that. Then we helped them get a first

find thing [sounds like] round . . .

Andrew: Actually, let me pause it, slow it down so that we can really

absorb the steps here. Did you say that a co-founder of yours works with

the business or was advising the business?

Boris: No, we just met them together.

Andrew: I see. How did they get to you? How did they get some time from

Boris?

Boris: In this respect, it was through my co-founder, Hannis Broom [sounds

like] at AbeBooks. He was a mentor at one of the universities and met these

guys through that mentoring program. Right. And then we helped them get the

next [??] round with [??] Mentors, which is the big company that had

invested in Just Books. And then from there on, Buck did a great addition

to the board. Jeff Mallett, who is the ex-president of Yahoo, is now

sitting on the board. And that’s in a company that has a great Silicon

Valley contacts from his past history.

Andrew: What was it about these guys before then? In that first meeting,

you and an old friend and an old business partner are meeting with this, is

it one person who you met with, or two people?

Boris: Two founders.

Andrew: You’re meeting with two founders. What was it about them that made

you say, I at least want to hear more, if not, really, I’m interested right

now.

Boris: You know, these guys always had, despite the greedy [??] in first

time entrepreneurs, always a very clear vision of what they wanted to

build, the value of the product that they were building, and then, kind of

where they want to take the business. I always found that very impressive.

It’s often entrepreneurs that you see that first say, you know, I need two

million to do it, and then the exit is going to be in three years for

twenty million, or whatever it is. Right.

So you have people that, sometime I have the feeling they’re there only for

the financial gain or the potential financial gain. If you meet

entrepreneurs that have a true vision of building the best product out

there, that creates real value for customers, and they’re very consistent

in communicating that vision, and very ambitious to get there, that’s when

your work gets impressive and interesting.

Andrew: Okay. So they won you over with this vision. What was it about the

vision then? They’re not coming in with a conventional business model.

They’re not saying we’re going to build a website, we’re going to grow it

and monetize it using social media and advertising. They’re saying, we’re

going to be selling atoms. Selling online is tough. Atoms in general are

tough. Why were you drawn to it? What did you see? What was your vision?

Boris: It was kind of the good news, bad news about that. I think the

biggest critical point was always how can you scale that business. But then

the good news is, you know, it will be hard for everybody else to scale

that business because you need to figure it out. And there was everything

from how you do really online measuring and how do you help that process to

how do you scale a student production. I think there’s a lot of hands-on

operational things that need to be figured out.

And I wouldn’t say we have figured them out completely, but there has been

such tremendous over the last two and a half years. And I think the

ultimate vision is, the biggest problem in fashion online apparel and

online fashion is returns. So companies like Zappos, they average turn

rates of about 40%. So the question is if you really nail the customization

aspect and the online measuring aspect, then reordering will be so easy.

[TD].

Andrew: Sorry, looks like we lost the audio again. But it’ll come back to

us in a moment. I’m hearing some . . .

Boris: [??]

Andrew: Oh, there we go. It came back.

Boris: Yeah. So if you really nail that, then repeat purchases will be very

easy to do, return rates will be really low. So what really fascinates us

about that opportunity is to build kind of the online custom clothier of

the world in a huge market, online apparel.

Andrew: Okay. We’ve got a couple of questions from the audience. Moses is

asking, are you using an ecommerce platform? I know that Moses, for his

site, monoGiggle, uses Magento. Or did you guys or that site build

something proprietary?

Boris: They built something proprietary. Because that whole online

measuring system and the merchandise, that was a little bit too tricky.

It’s not a standard product. If it were…

Andrew: Oh, we lost the audio again. I’m sorry. I don’t know what it is

with Skype, but it’ll come back in a moment. And, still hasn’t come back.

Let’s give it a little bit of time. You can hear me though, right?

Boris: Yes, I can hear you.

Andrew: Okay. The audio came back, and I can hear you, too. All right. One

last question about this. That is, you help… Actually, two. You help

entrepreneurs.

How did you specifically help these entrepreneurs? What ideas, what insight

did you give them?

I know that it’s hard to take credit for an idea and an insight because

there are so many people talking and so many people influencing it. But, is

there one that you can describe to us even if you don’t get full credit for

it?

Boris: Yeah. For Indochino I think one of the things that currently I’m

pushing very hard on is analytics and really understanding the customer. I

think the most important role of an investor is being that experienced

partner along the way in whatever question comes up, if that is what to do

next financing round, how to really scale marketing, how to position a

brand, how to choose the right people for your startup.

I think everybody has different priorities and different challenges, et

cetera. But, being that experienced partner that has gone through that

process once with his own startup and being able to provide that feedback

along the way is really where it’s valuable.

There’s probably not one single point where you say hey, listen, I took

that decision or I helped them with that decision and that changed it all

around. I think it’s ongoing process. I meet with all startups on a weekly

basis. From that point of view it’s on a weekly basis that you help create

a little bit of value for your investment company.

Andrew: Okay. Adam in the audience is saying that he saw the website

Indochino and he says it’s a nice looking site.

Boris: That’s good.

Andrew: Here’s something that I didn’t plan to ask you, but my head keeps

going to this one. I talk to investors. Everything that you seem to be

looking for in a company that you invest in doesn’t exist as an angel or

venture capitalist. You look for the exit, but there’s no exit for your

business. You’re not constantly looking out and saying can I say this

business to Clearstone Partners or to somebody else.

Boris: Yeah.

Andrew: It’s also not a growth business, right? We’re not seeing that much

extra financial activity being done. If it doubles sometimes it’s

inappropriate, because there’s just so much money that the space can take

in. So, why?

Boris: Why am I doing what I’m doing? No, I think if you’re a smart

investor that picks his investment in a consistent way and really helps

them grow then you can make a lot of money as an angel. That’s certainly

the one thing… I mean it would be dishonest to say there’s no financial

interest in the whole thing.

But, in the end it’s what I love to do. I love to work with entrepreneurs

and help startups grow. That’s the reason why I do it.

In the end, as I said before, for me it’s about having fun at work, going

to work every day and enjoying it, and what I’m doing for the moment is

probably I think the best job in the world that I could have. That’s the

reason why I’m doing it.

If there’s no big growth [??] in terms of I don’t want to really raise a

venture fund on my own, I don’t want to really sell the business, I’m

hopefully going to make some good money on some good exits down the road.

But, you know, it’s also clear that you’re looking at seven to ten years

until you have an exit. It’s not a quick flip business. It’s grinding away

a lot of years with a lot of companies.

Andrew: Okay. As somebody who’s sold lots of books and is in sales… We’re

all in business. We’re all in sales. You could appreciate this.

I want to know why you decided to do an interview with me so that when I

approach someone else who’s an investor or who’s an entrepreneur who sold

his business I’ll know what it is that worked for you and maybe understand

their psychology and what will draw them in. So, why? What kind of

insight…

Boris: Why [??]. Sorry?

Andrew: What kind of insight can you give me?

Boris: In terms of…

Andrew: Why you came here to do Mixergy, to do an interview here that’s

live on a kludgy system that involves Skype that sometimes goes out.

Actually, I’m sorry, it looks like it went out again. So, let’s see. Okay,

it came back in.

Boris: Two things. The first one is. Again, I think…what you’re doing is

really great. [??] Pass some knowledge about the nerves. And we think about

when we started in 99′. There weren’t any [??] resources. Right? In the

end, Internet just started. And then you were on your own. So I think today

it’s amazing to see how much information there is. How much knowledge [??]

And that in the end will help us build better companies across…the world.

From that point of view I think being part of that system and passing on

knowledge, either one to one to my start-ups or one to many in

opportunities like this is not a big part for me. I mean the second thing

is I also like to tell a story of AbeBooks and W Media Ventures as part of

what I’m doing and where I’m building my career for the moment.

So from that point of view, there’s always the interest to get more

exposure. Perhaps there’s another deal out there in our area that I haven’t

seen and one entrepreneur that watches your show comes and contacts me and

that is going to be a good outcome for everybody.

Andrew: That’s what I’m hoping for. I’m hoping you’ll get hit with

invitations for coffee… just from the right group of people. Not from

people who just want to have coffee.

Boris: Yeah.

Andrew: I’m very grateful to you. The reason that I wanted to have you here

is that…you had an interesting business story, you’re an investor who has

experience, and…I just was so curious about the experience, and I’m

grateful to you for coming here and being as open as you were, and for

spending the time with me. Thanks a lot.

Boris : For sure. Thanks, Andrew.

Andrew: Okay. And for everyone who is watching, I’d love your feedback on

this interview or the whole process here at Mixergy. I keep getting better

and better because of the feedback that I get and I keep getting better and

better guests because of people like John Bish[SP] and Coreen Mine[SP] who

introduced me to Boris Wertz. I would especially like feedback on how I

did, considering I was sick.

I didn’t think that I would survive. I thought my head would go plop down

on the desk and I figured I’d just move the camera away so you could keep

talking, but I didn’t have to. We were able to keep going. Alright, well

thank you, thank you everyone and I’ll see you in the comments.

Who should we feature on Mixergy? Let us know who you think would make a great interviewee.

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