Scott Kraft of the LA Times describes Ron Conway as start-ups’ best friend:
Conway grew up in the Bay Area, the son of a shipping company executive, and studied political science at San Jose State. After graduating, he went to work in marketing for National Semiconductor.
He co-founded and ran a computer manufacturing firm, and later became CEO of a company that produced tutorials for software programs. By the time those two firms were sold, making him a multimillionaire, he was tired of running businesses. So, in 1995, he began putting money into Internet start-ups.
In 1998, Conway raised $30 million to start his first Angel Investors fund. A year later, he started a second fund with $150 million from a stable of investors that included Arnold Schwarzenegger, Henry Kissinger, Tiger Woods and Shaquille O’Neal.
Giant swaths of those portfolios disappeared when the dot-com bubble burst in 2000. Conway and his investors were eventually rescued by the gems, including Google, which went public in 2004.
Investors in the first fund tripled their money; the venture funds sector as a whole returned just 12% over the same period. Investors in the second fund broke even, while the sector posted a 10% loss. (Those who held onto their Google stock did significantly better.)
“This is a hits business, like the movie business,” Conway said. “In each cycle, I’ve been fortunate to have one winner that paid for all the other investments and delivered a profit.”
After closing the two funds, Conway began investing again on his own. Last year, two companies in his portfolio – Zappos and Mint.com – sold for a total of nearly $1 billion. Google announced a deal to acquire a third, AdMob, for $750 million.
In March, excited by the prospect of rapid growth in real-time data companies, Conway invited several dozen friends to join a new fund. Within a few days, he had commitments of $20 million.
“Whenever he says he’s investing in something, it makes it real easy,” said Steve Chen, who became an angel investor after YouTube, which he co-founded, was sold to Google for $1.65 billion. “If Ron’s investing, I’m always in.”
Conway’s batting average hasn’t varied much over the years. About a third of his investments fail, another third break even, a few make money and a precious few are big winners.
“I’ve tried to figure out why we can’t reduce that failure rate,” he said. “But there’s really no way to do it. It’s the law of averages.”
Conway is cagey about his net worth; it’s certainly in the tens of millions of dollars, if not more. But he and his wife, Gayle, who live in a San Francisco co-op with sweeping bay views, have no second home or expensive toys, and he has no hobbies; he doesn’t read books or play golf.
Instead, he puts in 16-hour days in pursuit of his three main passions: investing in start-ups, philanthropy (he gives several million dollars a year to charities) and tending his social and business network (he has 3,000 names in his address book). Often, those pursuits overlap.
“It’s hard to tell whether he’s working or just enjoying himself,” said Biz Stone, a co-founder of Twitter, of which Conway was an angel investor. “Helping is just part of his DNA.”
An important part of what he does is make introductions. He hosts a spectacular annual holiday party and regular outings in luxury boxes at sporting events to bring together start-up founders and Silicon Valley luminaries. He serves on the boards of several charities and often leans on wealthy friends for contributions.
Shawn Fanning, founder of the audio file-sharing firm Napster, said Conway “is like family to me. He is such a big part of who I am today, and I know a number of people who feel the same way.”
Napster failed, as did Fanning’s next venture with Conway. Still, “Ron was right there to invest and support my next start-up,” Fanning said. That one, a social gaming firm, was sold last year for $25 million.
Fanning is now on his fourth venture, and Conway is again backing him. “Shawn and I have been to hell and back together,” Conway said.
“I do this because it’s in-ter-esting,” he said, drawing the word out. “It’s time-consuming, it’s demanding, yada, yada. But it’s hugely satisfying to listen to an entrepreneur tell you how his idea is going to change things – and then seeing it happen.”