Mohr Davidow VC Bill Ericson on Rocket Fuel, Chegg and $1B 'unicorns'

Toby Burditt

Bill Ericson of Mohr Davidow Ventures was an early investor in Rocket Fuel, the ad tech company whose value soared to more than $1 billion after going public recently.

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Bill Ericson is watching with interest the large number of so-called "unicorns" — startups with billion-dollar valuations — that are being created in Silicon Valley these days.
The managing director at Mohr Davidow Ventures has had plenty of experience watching such companies in in his 13 years as a venture investor here.
He was an early investor and sits on the board of one of this year's unicorns — Redwood City ad technology company Rocket Fuel — which shot up to a valuation of nearly $2 billion shortly after it went public in September.
Ericson spoke with me about that IPO and the billion-dollar startup boom in a conversation, which is excepted here.
Before joining Mohr Davidow he was founded and ran Venture Law Group's Seattle office and he sits on the board of his alma mater, Northwestern University School of Law.
There has been a lot of talk lately about "unicorns," the companies valued at $1 billion or more when they go public, get bought or are nearing an exit. There appear to be more of them than ever now. What are your thoughts on that?
Statistically, if you include every startup that gets seeded — tens of thousands every year — it’s a very small number that turn into unicorns. I think it’s easy to take for granted what it takes to grow a company that large. The number of them until now has been very small, other than the unreal valuations of the dotcom bubble 10 or 15 years ago. It is really hard to build a billion dollar company and it will be interesting to see whether the proportions change up or down over time.
I think we are in an era of a kind of frictionless scalability where there are a number of these billion dollar companies. They will get there faster than their historical counterparts, which took many, many years usually to get to that point. The ones who get there now tend to do it reasonably quickly, in five or six years. I bet it's roughly half, maybe even a third of what it was, if you disregard the bubble years.