Scott Stanford Discusses the Future of Hi-Tech Startups

June 10, 2013 Marcus Black In the News

Scott Stanford, Goldman Sachs’ global head of new media and internet investment banking, has moved on to a new venture called Sherpa, which Stanford says is designed to “build, invest in, and accelerate,” the launching of innovative internet companies.

Stanford sat on a panel recently at the Future of Media Conference hosted at the Stanford Graduate School of Business. During the panel discussion entitled Investing in New Media, Stanford was able to discuss a variety of topics including any big technology deals that he missed, when a startup should monetize, and his opinion on last year’s IPOs.

When asked what investment he is sorry he missed, Stanford answered: “One company is Twitter. It is definitely a different type of media company. It’s an awesome company and has its place in the ecosystem, clearly.”

He also commented on at what stage during development of a startup the entrepreneur should begin to concentrate on monetization.

“I’d start with what your exit strategy is. So, if your exit strategy is to get acquired, then I’d say just make sure you’ve got the right consumer doing the right thing at the right time, and that will be of value to somebody. Frankly, to maximize your monetization, you should not even begin to hint at the potential of monetization or lack of monetization. Honestly, once you start to monetize, your value might go way down again, and then you have to prove yourself back up to that point. I agree with building scale first and worrying about monetization later.”

Asked his opinion about which IPOs were the either the weakest or most oversold, Stanford replied:

“I can’t comment on any specific transactions for a lot of obvious reasons. At the end of the day, all we’re really talking about here is how much will somebody pay for growth, and how far will somebody be willing to lean into the future growth potential of the company? The beauty about the investing that we do on the private side is that we lean pretty far. The analogy I used with a very high profile IPO not too long ago is that getting an IPO right is like a bobsled race. You’ve got eight people running alongside — one’s the market, one’s the [stock] exchange, one’s the company, one’s the underwriter. Everyone’s got to jump in at the same time. You want to go online as fast as possible, but that’s just the start of the race. Then you have a course. But the reality is every little bobsled reaches terminal velocity; it’s just a matter of when. So, if you’re long-term focused, there are plenty of great opportunities. I wouldn’t be myopically focused on how the IPO performed on a single day.”

Goldman Sachs, IPOs, Scott Stanford, Sherpa, Stanford Graduate School of Business,

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