by Alex Konrad
This story appears in the April 13, 2015 issue of Forbes.
Chris Sacca's signature cowboy shirts make the trip to his new Montana home. (Credit: Jamel Toppin for Forbes)
Between the parade of wet suits and abundant seafood and yoga joints, Manhattan Beach, just south of Los Angeles, tries to cling fast to its surf town roots. It’s a tough battle. Strolling the boardwalk, I pass beach volleyball gold medalist Kerri Walsh Jennings practicing spikes close by glitzy homes locals say belong to Mark Cuban and former Oracle boss Ray Lane.
My guide, tech investor Chris
Sacca, represents another evolution: The beach serves as his de facto office,
and the 39-year-old eagerly points out spots more notable for his startup
stakes than surf breaks. Here’s where Instagram cofounder Kevin Systrom pedaled
beach cruisers with Sacca as he wrestled with fundraising options for his
photo-sharing app. Nearby, Twitter cofounder Evan Williams pondered the future
of social media. There’s the beach house from Beverly Hills, 90210 , past which
WordPress founder Matt Mullenweg and Sacca biked toward Redondo Beach. And
that’s the spot where Twitter CEO Dick Costolo and Sacca endured an early
morning workout. “Kevin Rose did half of it and told me I was crazy and he
wouldn’t come anymore,” Sacca says, mentioning, unprompted, the founder of Digg.
All these boastful highlights
have an underlying number: $1.2 billion, the amount of money that FORBES
estimates Sacca is now personally worth, up from pretty much nothing just nine
years ago. The young former Google employee suddenly finds himself in the same
financial league as veteran venture billionaires such as Jim Breyer, John Doerr
and Michael Moritz. And in terms of a hot streak he rates even higher. Sacca
has already had two ground-floor bonanzas: Twitter, in which his funds held
more at its IPO than any outside investor, and Uber, in which they hold 4% of a
company valued at $41 billion. And he’s sitting on investments in
billion-dollar startups Stripe, Lookout and WordPress parent Automattic.
“Chris has found every hot
startup in the Valley and found them all during angel rounds,” says Yahoo CEO
Marissa Mayer, who has invested in Sacca’s funds. “This is completely without
precedent or equivalent.” The 39-year-old ranks third on FORBES’ 14th annual
Midas List of tech’s 100 top investors.
Sacca didn’t study business or
engineering, doesn’t know how to program a computer, never started a company of
his own or worked at a big venture firm. What he does is buddy up with
well-chosen founders, console them when they’re down and cajole them when
they’re wary of big risks. “I don’t feel like I have a big institution to
protect,” says Sacca. “That’s made me faster than the big investors.”
But his track record is also
flecked with broken friendships and hard feelings. While he keeps a relatively
low media profile–this story marks the first time he’s cooperating for a major
story–his big mouth, incessant name-dropping and blunt elbows cause eyes to
roll. “He’s got a bit of a hero complex,” says a peer who knows him well. “He’s
an amazing investor, but that’s not enough–he has to do this heroic stuff.” At
Google he crashed every meeting he could and then wouldn’t shut up. Twitter
eventually had to pass a rule, driven in part by Sacca, barring nonemployees
from showing up at all-staff meetings. He and Uber CEO Travis Kalanick, once
close friends, now barely speak, despite Sacca’s major stake in the company.
“Chris is brutally honest about
everything,” says mentor Steve Anderson of Baseline Ventures, an Instagram
backer and No. 5 on the Midas List. “And he’s aware that he’s insecure.” But
don’t mistake insecurity for timidity. “I get close to people easily,” says
Sacca. “But do something to me, I will light that bridge on fire.”
As we’re talking on the
Manhattan Beach pier, Sacca’s iPhone buzzes. It’s a Twitter direct message from
Ben Rubin, CEO of Meerkat, a white-hot new app for live-streaming video. Sacca
is not going to invest in Meerkat but had been playing with it ahead of its
early challenge at the popular conference, South by Southwest. He rapidly types
back with a thumb and forefinger combination. “I told Ben that the festival is
the first big test, and if you keep the stream up, you win,” Sacca says,
thrusting the DM thread toward my face quickly, then back away. “You have to
offer value without expecting anything in return.” Such is how new bridges are
built, amid the smoldering embers of the old ones.
Sacca is busy building what
will be one of the premier houses in Manhattan Beach, a terraced
5,000-square-foot place powered by solar panels. It should be ready by August,
but until then, he, his wife, Crystal, and their two young daughters (a third
child is on the way) have been camping out at a nearby guesthouse.
Due at a board meeting, Sacca
bounds in, ripping off his beach T-shirt to get into his investor uniform.
Steve Jobs had his black turtleneck. Chris Sacca has his embroidered cowboy
shirt. He bought his first one, impulsively, at the Reno airport en route to a
speech, and the reaction prompted him to buy out half the store on his return.
He now owns almost 70, in various flavors, which he keeps near his front door
and in the trunk of his car in case of emergency. “Entrepreneurs get
disappointed when I show up without one of these,” he says, donning a black
shirt with silver stitching.
The Howdy Doody look is just
one more of Sacca’s incongruities. He’s only from the West if you define it as
western New York. He grew up in a suburb of Buffalo, the son of a college professor
and a lawyer. A top student, he wound up at his father’s alma mater,
Georgetown, and then Georgetown Law.
Sacca did not, however, make
for a natural lawyer. As an associate at Fenwick & West’s Silicon Valley
office he sat in on a meeting one day with John Doerr, the famed partner at
venture firm Kleiner Perkins Caufield & Byers. “It became obvious to me
that the investing side was where the action was.” Let go during the dot-com
bust, Sacca wound up cold-calling members of the FORBES Midas List for a job,
with no luck. Finally he landed at a startup, Speedera Networks, helping to
fend off continual lawsuits from its larger rival Akamai.
In November 2003 he jumped to
Google, where he got a job on the legal and business development team going
undercover to scout locations with low taxes–and cheap electricity–for Google’s
new data centers and then creating nondescript holding companies to buy up the
land.
Sacca started sponging up intel
in whatever senior executive meetings he could muscle into. Former Google
manager turned investor Hunter Walk remembers walking into a meeting with Larry
Page one day to update him on AdSense. Sacca, with no advertising role or
background, chimed in with advice. “Google then was a culture that rewarded
people who got things done,” says Susan Wojcicki, a longtime Google executive
who is now the CEO of YouTube. “He gravitated toward interesting projects and
the new important ideas, always trying to work on the next big thing.”
He sometimes put his foot in
his mouth. Sacca was on a fellowship at the University of Oxford when, speaking
publicly at a conference, he blamed wireless carriers for Google Maps not
appearing on U.K. phones, sparking a headline that embarrassed the Google
Android group. His boss, general counsel David Drummond, told him to start
prepping his résumé. Instead, Page reassigned Sacca to work on wireless
projects, including an ambitious but ultimately failed effort to bring free
Wi-Fi to San Francisco. “During one of our meetings Chris volunteered to drive
around the city and rubber-band routers to street lamps,” says Mayer, who got
to know Sacca at Google because of the project.
Sacca tried other projects as
well, such as head-faking a multibillion-dollar bid in a spectrum auction (a
ploy that succeeded in driving up the price for carriers), but hit a wall with
Eric Schmidt when his group pushed to acquire two satellite companies. Schmidt,
then the CEO, wanted Google to hoard cash and brace for a downturn. In December
2007, with most of his options vested, Sacca quit.
For the next 18 months Sacca
took his spectrum project and helped execute it on behalf of Philip Falcone’s
investment firm Harbinger Capital, netting several million dollars in fees for
himself. While he spent an increasing amount of time at a house in Truckee, a
town that sits atop Lake Tahoe, he decided to focus on angel investing in
Silicon Valley.
He’d done a bit of it at
Google, but it was somewhat rogue. One of Sacca’s Google friends had gone off
to launch a podcasting startup called Odeo. By 2006 the guy, Evan Williams, had
decided instead to start a new microblogging service called Twttr and asked
Sacca if he wanted in. Sacca wrote a check for $25,000 and started tweeting
madly, intrigued by the service’s revenue and data potential. Sacca even caused
one of the service’s first gaffes, when he privately messaged graphic details
of a fatal car accident he had witnessed in San Francisco and Twitter posted it
unintentionally on a public feed.
“He became an investor, an
advisor, a friend,” says Williams. “But the most helpful thing was that he’s
such an enthusiast. He made us believe in our own product more.” When early
celebrity adopter Shaquille O’Neal sent out a viral tweet or when a Twitter
handle appeared on a TV talk show, Williams and his core team would get a
one-word note from Sacca: “BIG.”
Through 2009 Sacca continued to
make savvy individual investments in companies like Kickstarter, Twilio and
Lookout, until he started running out of cash. He’d joined Google too late to
make tens of millions. Hans Swildens, an old contact from his Speedera days,
was running a firm called Industry Ventures in town. Swildens liked what he saw
in Sacca’s angel investments and suggested he raise a fund. Industry would sign
the first check for Lowercase Capital, joined by Google friends like Mayer and,
improbably, Schmidt. “It’s easy to forget now, but in 2009 or 2010 early-stage
stuff was still risky-feeling, and the market was still a big question mark,”
says investor Brad Feld, a mentor and eventual investor in the fund.
His bet on Instagram, started
by another ex-Googler, Kevin Systrom, would follow, but in late 2009 he scaled
up his investing to another level when he decided to deepen his position in
Twitter. “I wasted months trying to get others to believe it could be a real
business, not just a toy,” he says. “And I decided to just buy it all myself.”
Emulating his Google land-buying, he created four funds with generic names to
buy up privately held Twitter shares from former employees. He wasn’t the only
one. Ron Conway, a former mentor and the cofounder of SV Angel, began raising
tens of millions with much the same goal.
Sacca had been content to raise
a few million more, but a little-known friend with billions under management
named Suhail Rizvi convinced him to go big. The coup came when Ev Williams
approached Sacca to sell $400 million of his Twitter shares. Sacca then went
traveling in Southeast Asia, with a secret plot to propose to his girlfriend
(now wife) in the place where her parents had gotten married. That
accomplished, he rolled up his sleeves on the Williams deal.
Sacca secretly secured
commitments for up to $1 billion in 30 days from J.P. Morgan and municipal
endowments. He and Rizvi spent it over the next 18 months, buying out former
employees and other investors right up until the cap table closed in May 2013,
before the IPO. When the positions became known, other investors were ticked
off to see Sacca’s camp had accumulated the largest outside position in Twitter
right under their noses. “He was an innovator with that secondary, structuring
a number of vehicles that didn’t really exist like that before,” says Anderson
at Baseline. “He saw the chance before other people saw, so they asked: ‘How
did this no-name dude come up with all this capital?’ ”
The person who gave up the most
potential upside in raw dollars, Williams, sees no problem with what Sacca did.
“
In retrospect, if I had perfect knowledge I wouldn’t have sold any stock then,” Williams says. “Some people didn’t like what he was doing, but he did what anyone would.” The value of Sacca’s first Twitter fund, Lowercase Industry, has soared about 1,500%. All told, his various Twitter deals have returned $5 billion to investors.
Jamel Toppin for Forbes
Well before the Twitter
machination came to light, Sacca was cementing his reputation as a reliable
friend to startups post-financial-crisis. A group of San Francisco
entrepreneurs and investors would often soak for hours in Sacca’s hot tub at
the Truckee house, drinking and laughing and talking. The so-called Jam Tub had
its own check-in on Foursquare, and serial entrepreneur Travis Kalanick was its
unofficial mayor.
The Jam Tub was an annex to
Kalanick’s Jam Pad, his home in the Mission district of San Francisco, where a
rotating crew of techies would brainstorm, party and enjoy a home-cooked meal.
Sacca went at times, but Kalanick’s friend Garrett Camp, the founder of the
website discovery tool StumbleUpon, was a fixture. Camp, who sold StumbleUpon
to eBay for $75 million in 2007, had the idea to make an app so his friends
could book a black car to take them around town. He first called it UberCab.
Camp’s friend and early advisor, the author Tim Ferriss, remembers that the
idea seemed “ridiculous” to many outside the Jam Pad circle. “People who had
the opportunity to invest laughed it off as this one-percenter vanity service,”
Ferriss says. “Chris was not one of them. He had faith very early on.”
Kalanick became a mega-advisor
of sorts to the fledgling startup, and Sacca wanted a piece. The pair cemented
the startup’s angel $1.3 million financing at the Truckee house, with Sacca
ponying up $300,000, a large check for an $8 million fund. “I went all-in,” he
says. More than just money, he helped negotiate Kalanick’s compensation and
secure the Uber name from Universal Music Group. Lowercase would add another
$400,000 worth of Uber at the Series A round in early 2011, led by Benchmark Capital’s
Bill Gurley (see story, p. 78), and Sacca would make more side investments
later on.
Through a spokesperson,
Kalanick declined to comment, but conversations with those with knowledge of
the pair and the startup’s early days indicate that the Uber CEO got upset with
Sacca for trying to repeat his Twitter move of buying up secondary shares in
Uber from other initial investors. “Travis was 110% about the company, and with
Chris it became a ‘What about Chris?’ issue,” says one of these sources. Kalanick
told Sacca to stop coming to board meetings, which Sacca monitored as an
advisor. They barely speak today.
“What’s frustrating is I
honestly don’t know what’s wrong,” Sacca says. “I’ve apologized multiple
times.” When pushed, he concedes that his efforts to buy shares might have
created a rift. Kalanick kept telling him it was impractical to do, Sacca says,
yet Sacca kept coming up with workarounds. “I guess I wasn’t hearing what he
was really saying, which was ‘Don’t f–king do it.’ ”
If shunned by management, Sacca
remains loyal to the product: Back in Manhattan Beach Sacca orders an Uber to
take him, cowboy shirt and all, to the board meeting.
En route a famous founder asks
him to tweet in support of a new hire. Sacca gobbles up every one of the ensuing
Twitter mentions before we arrive at a small, poorly ventilated office building
in Santa Monica. This, he says, is the home of his next big score.
Sacca met InVenture CEO Shivani
Siroya at a TED dinner when he spotted Siroya sitting by herself on the fringe.
Hours later he was sold on the former financial consultant and UN analyst’s
vision for a new way to score credit in the developing world. “
Once I determined she wasn’t allergic to money, it was a no-brainer,” Sacca says. Sacca greets Ted Rheingold, the COO he helped match with Siroya, and the other staff like old friends as each discusses the group’s progress.
Six months ago these meetings
were depressing. In Venture’s business wasn’t working in India, and since it
didn’t handle the loans itself, the payback wasn’t there. Now it’s growing
rapidly in Kenya, and the team shows Sacca detailed breakdowns of how Kenyans’
spending varies in different neighborhoods and what they take loans for and
why. Their repayment rates, Siroya tells him, are higher than those for loans
in the U.S. “How much more fun is this?” he asks one manager whose last project
was shuttered. Sacca then leans forward and looks across the table right at his
founder, waiting for eye contact. “You’ve got more data on users even than Travis,”
he says. “This is freaking big. It’s time to move from the dreamy hypothesis
phase to wanting to fan the flames.”
Friends wonder out loud,
though, how much more fire Sacca has for the kind of startup discovery and
coaching that has defined his rise–especially when success seems twinned with
friction. Sacca now oversees a few billion dollars in more than a dozen funds,
with cowboy names like Stampede, Frontier and Spur. But he’s going to far fewer
meetings, preferring to spend time at the beach and a new house in Montana.
Rivals feed this narrative, whispering that he’s dialing back. Sacca is not
denying it. Two years ago he brought in his first partner, Matt Mazzeo, a
rising CAA agent, who is taking on more of the seed investing for Lowercase’s
funds. Says Mazzeo: “I don’t think Chris is one of those guys who makes a ton
of money and drops the mic and leaves the room. He loves the people in the
room so much that he’ll stay.”
“He’s young,” adds Sacca’s
close friend actor Edward Norton, who has cofounded startup CrowdRise, “and I
could imagine the appeal of not wanting to manage other people’s money
forever.” If Sacca wants to amp it up, given his base in L.A., his outsize
personality and his signature look, there’s surely a future for him in show biz,
extolling and beating up entrepreneurs in the vein of a Cuban or Trump. Sacca
smiles at the thought: “Being quiet is not a natural state for me.”
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