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Summary:

Bijan Sabet and Fred Wilson continue a long tradition of a couple investors utterly dominating their sectors by betting on what they know, and getting in early before others even know there is an opportunity.

fred-wilson

For every wave of opportunity that comes through Silicon Valley you’ll find a lot of newly minted millionaires, and even some billionaires. But for each sector there’s usually a couple of investors that so utterly own the space that they invest in that it’s like they wrote the rules of the game, and they alone know how to play.

Following the news that Yahoo will acquire social sharing platform Tumblr for a massive $1.1 billion in cash, it’s becoming clear that two of these investing svengalis are Bijan Sabet of Spark Capital, and Fred Wilson of Union Square Ventures. They’re the venture capital rockstars of the social web as their jaw-dropping track records shows — they have been very early investors in companies like Twitter, Tumblr and Foursquare. Wilson was also early to Zynga, Etsy and Kickstarter.

paidContent Live 2013 David Karp Tumblr

David Karp, Founder and CEO, Tumblr paidContent Live 2013 Albert Chau / itsmebert.com

We’ve seen this pattern before. During the networking boom of the late 1990s, it was Vinod Khosla and Promod Haque of Norwest Venture Partners who scored many of the top deals. Khosla was early to the table with companies like Cerent, Siara and Juniper Networks.

For the first wave of the consumer Internet it was John Doerr who owned it all, and later during the search boom, he and Sequoia Capital’s Mike Moritz led the charge by investing in Google. Similarly, the shift to the social web (or post Web 2.0) has been a happy hunting ground for Wilson and Sabet.

bijansabetWhile there are others such as David Sze of Greylock and Jim Breyer of Accel Partners who have found success in social with Facebook, the Sabet and Wilson team has a better on-base percentage. And one of the reasons why these two guys have found gold faster than others is because they are active participants in the social web and invest in what they know.

Sabet, who moved up to number 51 on Forbes’ Midas List in 2013, was described by Tumblr’s founder and CEO David Karp as someone who “lives and breathes,” social media, and as Karp’s “mentor, friend and partner from day zero.” Sabet said in a post this morning that he met Karp when he was 19 and “was immediately taken with his passion and drive to create wonderful things.” His other investments include Twitter, Foursquare, OMGPOP (sold to Zynga for $180 million), and thePlatform (acquired by Comcast), as well as RunKeeper, Boxee, Jelly, Lyft and Stack Exchange.

Wilson, who writes the popular blog AVC, is one of the most winning venture investors thus far in the new century. He rose to number 16 on Forbes’ Midas List in 2013. In addition to Tumblr, Wilson has backed Twitter, Zynga, Etsy, Kickstarter, FeedBurner, Lending Club, Zemanta, ComScore and Tacoda (sold to AOL in 2007).

In a sign of the new power of the New York startup ecosystem, Tumblr is run out of New York, and both Wilson and Sabet are East Coasters — Wilson in New York, Sabet in Boston — but of course spend a lot of time in Silicon Valley. It’s through these two investors, who live across the country from Sand Hill Road, that a major chunk of the web’s leading social brands have emerged.

Pulling out lessons from these master’s investing practices, would be a good topic for a book. But I’ll run through just a couple I see that are obvious. Sabet clearly has an eye for finding the passionate creator founder early, and has an ability to see the future. Wilson has long practiced what he has preached, is utterly immersed in social and has a unique way with words. He writes this morning on his blog about one of the cliches of VC investing: “success has a thousand fathers.”

Clearly Sabet and Wilson are two of the main fathers of this morning’s success story.

Updated at 1:20 PM on May 20, with comment from Fred Wilson. Wilson attributed some of the deals to his Union Square venture partners and says that “investment syndicates are a team.”

  1. fredwilsonavc Monday, May 20, 2013

    i really appreciate all the kind words you wrote about me and Bijan here. working with Bijan is an absolute pleasure and i would jump at most any opportunity to do that

    but i do need to correct a few things. my partner Brad Burnham worked with Bijan on Tumblr. they led the seed round together and to the extent that the investors were part of Tumblr’s success, Brad and Bijan should get that credit, not me.

    likewise, Foursquare is my partner Albert’s investment. i help from time to time on that one, but Albert is on the board for USV at Foursquare.

    and Lending Club is primarily my partner John’s responsibility. I helped with the initial transaction and do get involved from time to time. but John leads for USV on Lending Club.

    the bottom line is “success has a thousand fathers” as I blogged about today
    http://www.avc.com/a_vc/2013/05/success-has-a-thousand-fathers.html

    and USV is a team and investment syndicates are a team. it is never just one person and certainly never just me.

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    1. Thanks Fred, I’ll update the post with your thoughts.

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