😇 Angel interview #20: Aston Motes
😇 Angel interview #20: Aston Motes
"If you are a curious person if you like to understand industries, invest in someone who's doing something you want to explore."
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Here’s today’s edition:
🔍 Interview with Aston Motes, the first employee at Dropbox & angel investor
🔍 Interview with Aston Motes, the first employee at Dropbox & angel investor
Aston is currently on sabbatical, having most recently served as interim Executive Director of /dev/color, a nonprofit that empowers Black software engineers to help one another grow into industry leaders. Previously, he was the first employee at Dropbox where he led engineering for the website and API, and since then he has been involved as an early founder, employee, advisor, and angel investor in dozens of startups.
Can you give a quick introduction of yourself?
I'm Aston Motes. I was the first employee at Dropbox and a software engineer by trade. These days, I’m more of an entrepreneur: after Dropbox, I’ve been building or been a part of many early-stage companies. I did my stint as a founder in the YC Summer 2012 batch and found myself down the rabbit hole of music tech, which was a blast, but not particularly angel investing-related.
In 2012, I started investing by myself. In large part, I invested in friends, people that I knew who were starting companies that I wanted to support. Then I started investing alongside a friend of mine. Now, three of us invest together. We pool our capital, networks, and heads together to make decisions.
How does your trio decide who to invest in?
Both of my co-investing partners were software engineers initially, now entrepreneurs. As a group, we are very engineering-minded when we're looking at opportunities. We tend to search for technical excellence, product excellence, informed by our experience. We get a lot of deal flow across the spectrum: from B2B to consumer.
How did you decide to make your first angel check back in 2012?
It's been a long time since I started angel investing. When I moved out to the Bay Area to work at Dropbox, the angel ecosystem was different compared to today: There were a number of good angels from the Dropbox days who are still investors that participate in early funding rounds who were taking a chance on founders. These were people who were willing to take a bet on a project when no VC firm was willing to make that investment.
My view on investing is that angel investors are people who want to be helpful, who want to see founders do well. This was the case for Dropbox from the beginning since we were not making any money at all. We had angels invest before we even had 200 people signed up.
For myself, I started off investing in friends. The thing that made me decide to do it was a friend asking me to invest in his company. He was a friend from college. Since MIT has a lot of software engineers, it’s a good source of angel investments. My friend had this interesting technical idea to start recording video games on your phone. They ended up getting into Y Combinator. I had never invested in anyone and I didn't know if I should invest in anyone. But I really liked the founders and their project. I thought about it and eventually came around to investing. It felt like a big deal. Looking back, that was when I became an angel investor.
It was not a big investment. For a period of time, it was an amazing investment, and then it went to zero very quickly after, which is part of the journey. I learned a lot from having invested in the company: I loved the team, the technology, and the market was blowing up; however, most businesses fail. It was a good way to start investing and a good lesson.
Since then, I have gotten more formal about how I do such things. But it's always a pleasure to be able to invest in people with whom you have a long-standing relationship.
For a period of time, it was an amazing investment, and then it went to zero very quickly after, which is part of the journey.
At an early-stage company, having a relationship with a founder means that you have done some diligence in advance for the investment.
Diligence is hard for all angels. I attempt to be founder-friendly: we will have one conversation to make an investment decision. We can also do reference checks, try out the product and investigate the market ourselves.
For those select few who you dream to work with and you believe that they’re going to do amazingly, those are easier investments to make. However, with the benefit of hindsight, it’s not always true that the most talented people will make successful businesses.
For those select few who you dream to work with and you believe that they’re going to do amazingly, those are easier investments to make.
There are more aspects to building a business than the founder. Now that you have more deal flow, you have more investment opportunities, how do you decide whether or not you will invest in a company?
We have patterns that we like to see. However, we have broken every rule we have tried to write down. Part of the reason we have broken a lot of the rules is that we're trying to learn. I see angel investment as a way to learn about the world.
For instance, we used to avoid hardware companies because the hardware is difficult. But you have to test that rule. We like software companies because it's easier for us to evaluate. We’ve had more success on B2B than we’ve had with consumer investments. We look at a lot of B2B software, we over-index on developer-facing tools because we're software engineers ourselves. We know these problems really well.
When they are productivity-enhancing tools, we want to be customers, which is another pattern. If we want to use the product, it's almost always a good sign.
Since you invest with two other people, how do you make decisions? Do you have a committee? Does everyone have to agree?
Typically, one person will take the lead on engaging with the founder. That person stays the lead throughout the whole relationship, just out of convenience, however, all three of us are engaged in all the investments that we make and the lead is ultimately the decision-maker and has a lot of weight. But we take into account everybody's opinions.
We use everybody's experiences, intuition, and knowledge to help us make good decisions. But it's not the sort of thing where we need to have three thumbs up in order to make it happen. There is no system; we are trying to make good decisions since we have no one holding us accountable, except ourselves, which has lots of upsides and downsides.
What are the upsides of angel investing?
I started a music tech company in 2012 during YC and I spent half a decade of my life learning about music tech by building companies and working with companies. I probably could have learned almost as much just by investing in a handful of music tech companies.
That's one of the upsides of angel investing. If you are a curious person if you like to understand industries, invest in someone who's doing something you want to explore, stay in contact with them, and ask them how it's going, what challenges they're running into.
I know so much about other industries that I did not spend any time working in because I have a friend who's working in it or because I invested in a company within the space.
If you are a curious person if you like to understand industries, invest in someone who's doing something you want to explore, stay in contact with them, and ask them how it's going, what challenges they're running into.
That’s an interesting approach. Angel investing seems to be a great way to learn about an industry or even become a potential founder. It’s a great way to explore different industries and ideas and what works and what doesn't work without actually having to dedicate 100% of your time.
There have been a couple of times where I have invested in companies because I wanted to build that company. It puts you in a weird situation. Sometimes, you would have approached a situation or problem in a different way than the way the company did, but it’s a good way to learn by proxy.
What was the last investment that you made? Why did you choose to invest in them?
We just invested in a company that's building a flower marketplace called Gather Flora by Hannah Brannan (Writer’s note: I personally invested in Gather Flora).
First off, I was surprised to learn that the flower industry is gigantic. It's ~$60B dollars a year. It’s a complex industry, with the same sort of crazy international shipping and logistics that you have for computer chips.
The flower industry is like music, an artisanal industry. It's filled with people who love it for the thing that it is. These industries are always ripe for disruption. What was cool about this opportunity is that this founder loves flowers, and she's worked on flower farms. She's worked with a large number of people in the California flower industry. She was someone that I felt I could trust even before even knowing the startup idea. She happens to be a software engineer who I've worked with before.
This is what we talked about before, about betting on a person you know and trust how they can approach the situation. In this situation, there was a combination of a founder-market fit and an interesting market. I would be surprised if in a decade, the flower industry functioned in the same way it does today.
It's a great example of the type of angel investment we love to do. It is different from angel investments that we've done recently, meaning companies that have been through YC, that have already shopped a deal, or a few venture firms.
A genuine angel investment is when I believe a person has a great idea, even if the project is not making millions of dollars a month and is not clearly working, I want to make a bet on this project that I think can grow into something big.
A genuine angel investment is when I believe a person has a great idea, even if the project is not making millions of dollars a month and is not clearly working, I want to make a bet on this project that I think can grow into something big.
What is the number one piece of advice you would give to people considering angel investing?
I have some countercultural advice: don’t make your first investment in a start-up. Wealth building is important and there's a lot you can learn from angel investing, but it's super risky. I have been surprised by how long it takes for the best cases and for the worst cases to work themselves out. There are other things in life besides letting your money sit with a startup for 10 years.
My main advice would be to invest in yourself or in more traditional assets before you start angel investing. Once you pass that, use your edge when you angel invest. When you invest in the public markets, you don't know that much more than anybody else. When you angel invest, you might know a lot: you might know the founder personally, you might know the space really well, you might have worked on a similar product before.
If you can find the things with your own knowledge and expertise, it gives you an edge over the rest of the market. Those are your moments where I think it's a knockout punch in terms of an investment because you're not just following the crowd.
My main advice would be to invest in yourself or in more traditional assets before you start angel investing.
Aston sits on the board of /dev/color, a non-profit that accelerates the careers of Black software engineers. If you'd like to support them, you can donate here.
We are at Interview #20 for All the Angels and I can’t thank you enough for joining me to explore angel investing. I started this newsletter in July 2020 for two reasons: 1. I wanted to provide a role model for diverse angel investors who wanted to explore angel investing but didn’t see someone who looked like them doing it and 2. to provide some frameworks and perspectives from experienced angel investors for those considering angel investing so that they could get over that first barrier of lack of information. I can’t believe I’ve gotten to +550 subscribers and I appreciate every one of you who is considering how they can start angel investing and support a founder in their journey building their start-up.
I’ve been angel investing for 1.5 years and I have learned so much from supporting founders: I’ve found the opportunity to support them in understanding their product strategy, hiring their first product manager and it’s the most rewarding activity I’ve done during this abnormal year… I’ve also juggled my full-time product manager role and part-time investing role and for this reason, have slowed down with writing. You might not hear from me as often in the future but I’ve appreciated all of your support in this experiment. Please do reach out to me if you want to chat about investing at angela.santurbano@gmail.com and have a great weekend. ☀️