Originally published by Hunter Walk on LinkedIn: LA Founders Have More Diverse Backgrounds: Seed VC (& LA Fund) Erik Rannala

I don't remember when, how or why I met Erik Rannala, although I'm fairly certainly we did have lunch at Google during my tenure there. Unbeknownst to me at the time, my future would end up mirroring his, moving from product leadership roles to starting a seed stage venture fund. Based out of LA, Erik runs Mucker Capital (plus an accelerator Mucker Lab)

Hunter Walk: After a career in product management you moved over to seed investing in 2009. Now, seven years later there's a narrative that former operators make better VCs than non-operators. True?

Erik Rannala: Ask me in another 5-10 more years!  While I am somewhat biased on this one, I do believe there is a strong argument for former operators -- both in terms of making investment decisions based on their past experience building products and companies, and also in terms of adding unique value to companies based on that experience.  This is particularly true at the seed stage, where companies are more nascent, and their operating experience can help inform whether businesses/products/technologies/etc. might be viable, as well as help companies to refine their products, acquire customers, drive sales, among other things.  Again, I am clearly biased, but I find myself often relying on experiences and insights from my time at eBay, TripAdvisor, MVP.com, etc.

HW: How has the LA startup scene developed and do successful companies there look or feel any different than ones from the Bay Area? Is there a competitive advantage in any way to being in Los Angeles?

ER: The LA startup ecosystem has developed a lot in the 4+ years since I moved here from the Bay Area.  In many ways, successful companies here look very similar to the Bay Area -- mission-driven entrepreneurs going after very large market opportunities.  But, there are certainly differences, as well.  LA has always been underfunded in relative terms vs. ecosystems like the Bay Area and NYC, which can sometimes be good (e.g. responsible management of burn) and sometimes not (i.e. not thinking big enough / "swinging for the fences").  The profile of entrepreneur is also somewhat different, in the sense that backgrounds are very diverse.

LA overall is a very large and diverse economy, so we often see entrepreneurs who don't have a traditional tech company background that is more common in the Bay Area.  LA is also a very large and diverse population -- ethnically, socioeconomically, etc., so it is probably one of the best places to launch a consumer product or service.

HW: In addition to the Mucker seed fund, you also run an accelerator called MuckerLab. How do you define "success" for an accelerated company? Is simply whether they're able to raise funding coming out of Mucker? Are there other goals or milestones?

ER: Raising financing can be viewed as one measure of "success" in the sense that fundraising is often necessary for survival, but we don't view it as a destination.  It's just the oxygen that enables them to survive and build a real business. Raising capital without other success metrics can be difficult, so it is a fleeting measure of success because it is -- in and of itself -- not intrinsically a measure of a successful business.  We work very closely with a small number of companies every year (i.e. 10-ish) in annual cohorts, and focus the vast majority of our time with them on business milestones, not fundraising.

HW: Pre-Mucker you worked with Michael Dearing at Harrison Metal. I assume you guys knew one another from eBay. Why did you choose to work together and what lead to you splitting off to your own firm?

ER: I'm fortunate to have had the opportunity to work closely with Michael not just once, but twice in my career! We first worked together at eBay and both left around 2006.  From eBay I went to TripAdvisor until 2008; then after leaving TripAdvisor was thinking about starting or joining a new company.  After spending time with Michael during that process, we decided to work together on Harrison Metal.  For me, it was an easy decision because Michael is, without a doubt, one of the smartest people I've ever encountered in my career.

Fast forward a few years moving to LA and starting Mucker was really a perfect storm of circumstances. One part was a personal decision to be closer to family in Southern California.  Another part was partnering with William Hsu (another eBay colleague), with whom I'd been talking about starting a company together for almost 10 years, since our time working together at eBay (coincidentally, he had moved to LA a few years prior, also for personal reasons). And finally, the LA ecosystem was showing signs of taking off, yet there was no accelerator program or institutional seed-stage venture fund in LA.  So, all of that together led to us starting Mucker.

HW: What advice would you give to someone in their 20s who eventually wants a career in VC?

ER: See question #1 :)