TheLadders.com: Investment #1

February 2004. I was CEO of DB Advisors at the time, and was introduced to Marc Cenedella, Founder and CEO of TheLadders.com, though a mutual friend (one of my guys from derivatives). It took me about 5 minutes to "get it," after which I asked for all the requisite follow-up information (business plan, financial model, etc.). If Marc were to present to me today, having now been an active angel investor for almost four years, I'd probably have written him a check on the spot. But having never invested in a start-up, I really wasn't sure how I'd "know" that it was a smart investment. But my instincts were good. Then, like now, I need to be able to get the business in minute, have deep faith and confidence in the entrepreneur, and know that I can help due to my connections, business experience, etc.

TheLadders.com business model immediately struck me as being so smart, yet so blindingly obvious: create a self-selection mechanism on the part of the job seekers by making them pay for access to the best jobs, but only jobs that had comp packages $100,000 and above. I knew the problems that firms using Monster and HotJobs had, getting 10,000 resumes for a job for which maybe 100 were remotely qualified, and ultimately hiring one person. This creates a very inefficient candidate sourcing mechanism. Yet when Marc shared with me his experiences in pitching his innovative model to HotJobs (his employer at the time) and Monster (who wanted to hire him), he was turned down flat. This fueled his passion and desire to do it his way, alone, and to create a large and sustainable business over time.

Fast-forward to today. TheLadders.com is a runaway success. Huge revenues, huge traction, substantial brand awareness, and thousands of people helped throughout its life. Marc has executed his business plan and more, one of the few companies in which invested where the plan on day one is not materially different than the plan four years later. It is a tribute to Marc, his vision and his leadership. Kevin Ryan (Doubleclick) and myself were the two largest angels, and several months after the closing of the angel round Matrix Ventures (Nick Beim) lead a $7.5 million round at a substantial valuation uptick. And it has largely been downhill from there. I wish all of my companies were like TheLadders.com  and every CEO like Marc. It was just dumb luck that my first deal may well be the best angel deal I've ever done.