How David Bell went from teaching entrepreneurs to investing in them
As a professor, David Bell made a name for backing student ideas that turned into billion-dollar companies. Now he's left academia to try his hand as a venture capitalist.
David is one of the guest speakers at this year's Melbourne Business Analytics Conference on September 3, where he will share his expertise on go-to-market strategies in the millennial economy.
That's a topic he knows something about, having been an early investor in some of the largest retail startups in the US – including two valued at more than US$1 billion.
David worked as a professor at Wharton Business School at the University of Pennsylvania for 20 years before co-founding Idea Farm Ventures, a venture capital studio in New York.
It was during his time at Wharton that David first came across the chance to invest in a student startup. The company was an early online retailer, and the opportunity grew out of a research project.
"As a graduate student and a junior professor, I'd been doing research into the retail industry and studying traditional offline stores. The opportunity to take a look at an online store was really interesting, to try to understand how it could grow organically over time and over space," David says.
"Through the process of doing that work, I ended up putting a small cheque into the company."
That company was Quidsi, the owner of several online retailers including diapers.com. It was founded by Marc Lore, an Executive MBA student at Wharton's San Francisco campus, and was acquired by Amazon for more than US$500 million in 2010.
After the success of Quidsi, David began investing in other student ideas – including eyewear company Warby Parker, which began as an online retailer and then moved into bricks and mortar. It currently has more than 100 stores and was last year valued at US$1.75 billion.
"I would never invest in the company of a student while they were still a student," David says of the process.
"That was the case with the guys at Warby Parker. They did an independent study project with me, under my supervision, where we looked at the various things like pricing and go-to-market strategy, and then they launched the business while they were still students.
"About a year or so after graduating, one of them called me on the phone and said: 'Hey, we're raising a little bit of capital now. Since you were involved early in helping us out, would you be interested in investing?' That was the typical cycle."
Investing in early-stage companies is a risky business, and David doubts the practice is very common among academics – despite a few famous examples.
"It probably varies a bit from campus to campus and department to department," he says.
"I haven't investigated this in any rigorous way, but I think in general academics tend to be fairly risk-averse."
David has proved to be the exception to that rule. For him, investing is new ideas has been so fulfilling that he's now pursuing it full-time with his own startup company, Idea Farm Ventures. He says the biggest change in lifestyle is the pace.
"You're under more pressure. You don't have the luxury of wandering into the office at 10.30 with your Starbucks," David says.
"I mean, obviously I had to work hard sometimes as an academic, but as a founder the pressure is more acute.
"Sometimes in academia you have to do things that are fairly menial, like committee work, but in this business context I can sometimes be doing everything – literally – from running to the post office on a Saturday to send boxes of stuff to our investors, to answering emails.
"It's a broader assortment of things, some of which can be really menial, because you're part of a lean team that just has to get everything done."
To see the full list of speakers and register to attend, visit the Melbourne Business Analytics Conference website.