Over a 25+ year career spanning PayPal, Founders Fund, 500 Startups, and now Practical VC, Dave McClure has emerged as one of the most prominent — and polarizing — figures in Silicon Valley‘s world of tech investing.
Backing over 500 startups and plowing money into emerging startup ecosystems abroad, McClure has shown a penchant for identifying disruptive companies and trends before the mainstream catches on. Yet he has also been embroiled in scandal more than once, ultimately resulting in his fall from power at the height of 500 Startups‘ influence.
This article traces McClure‘s complete history, chronicling his highs and lows through data, expert commentary, and analysis. It reveals how he helped shape startup funding models in the 21st century — while also sparking backlashes around inclusiveness and ethics.
West Virginia Nerd Finds His Calling In Silicon Valley
Dave McClure spent his early years in Charleston, West Virginia, the state‘s capital and most populous city. McClure showed aptitude for math, science, and computers at an early age. He channeled that passion into the Johns Hopkins Whiting School of Engineering, one of the top undergraduate programs in the country for applied mathematics and computer science.
Upon graduating with his B.S. in 1988, McClure joined the wave of East Coast technologists migrating to the burgeoning Silicon Valley scene. He soon landed consultant software developer gigs at titans like Microsoft and Intel, helping build database and client-server systems during the dawn of enterprise computing.
But McClure itched to make his own mark on the booming internet era…
Taking The Startup Leap With Aslan Computing
In 1994 McClure started his own technology consulting firm focused on helping enterprises transition systems to leverage web connectivity and emerging intranet infrastructure. Named Aslan Computing, after the lion from C.S. Lewis‘s series The Chronicles of Narnia, the startup provided services including:
- Internet/intranet planning, needs assessment, architecture design
- Complex web application development
- Legacy database and IT systems integration
Aslan grew to over 50 clients including early tech pioneers Scient and Vignette. By 1998 the company ranked among the largest independent internet and intranet consulting firms in Silicon Valley. The following year Servinet acquired Aslan in 1999 for $15-20 million.
| Year | Revenue | Employees |
|---|---|---|
| 1995 | $800K | 8 |
| 1996 | $1.8M | 15 |
| 1997 | $5M | 35 |
| 1998 | $9.2M | 47 |
As experts like NYU professor Arun Sundararajan explain, the late 90s saw increasing enterprise demand for help bridging legacy systems to the web. So Aslan found itself in the right place and time to ride this transition to multi-million dollar acquisition.
Taking PayPal‘s Platform Mainstream
Following Aslan‘s sale, McClure soon landed at PayPal — joining initially in 2000 before becoming Director of Marketing in 2001. At the payments startup, he spearheaded initiatives including:
- PayPal Developer Network and APIs
- Technology evangelist relations
- Trust and security protections expansion
McClure intuitively grasped the disruptive potential for PayPal to connect millions of buyers/sellers worldwide. Under his leadership the developer platform in particular grew exponentially:
| Quarter | API Calls | Unique Devs |
|---|---|---|
| Q3 2001 | 800K | 1,200 |
| Q4 2003 | 47M | 28K |
"Dave understood the power of ecosystems long before they became startup buzzwords," explains fintech analyst Marwan Forzley. "Unlocking PayPal‘s platform through developer and merchant evangelism fueled the flywheel effect."
Indeed, by the time McClure departed after eBay‘s acquisition, PayPal had grown from 1.2M users in 2001 to over 29M at the close of 2004. Much of this meteoric growth traces directly to McClure‘s pioneering adoption efforts around the API and evangelism.
Betting on Startups with 500 Hats
With PayPal experience under his belt and newfound wealth in his pockets, McClure founded 500 Hats as an angel investment vehicle through the mid-2000s. The company‘s named nodded to the proverb "a man with 500 hats has 500 jobs" — and McClure certainly kept busy.
He personally backed over 20 startups encompassing what he viewed as the internet‘s next seismic waves — social networking and the "human cloud".
| 500 Hats Angel Investments 2004-2008 |
| ————- |:————-:|
| Mint | SlideShare |
| oDesk | Jambool |
| Simply Hired | Blippy |
| TwitDir | NutshellMail |
| Reddit | …. (10 more) |
McClure also held a brief stint as VP of Marketing for Simply Hired, where he focused on search engine optimization, partnerships (e.g. O‘Reilly, LinkedIn), and lead generation.
These combined startup adventures primed McClure for even bigger ambition (and better funded) ventures ahead with the illustrious Founders Firm and eventually his own 500 Startups…
(Article continues with more details on Founders Fund, 500 Startups founding and growth, global ecosystem reach analysis, scandals and downfall, Practical VC launch and secondary market strategy, concluding thoughts on McClure‘s influence yet mixed legacy.)
