|How did you get into venture capital and can you tell us about your position with Norwest Venture Partners? |
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I stumbled into VC back in business school at Stanford -- during my time in the MBA program, I helped to found a venture "accelerator" on the side with former executives I had worked with at Gateway Computer Japan. Our focus was on the emerging area mobile internet in Japan -- keep in mind that this was circa 1999, when iMode was just getting off the ground. Interestingly enough, a lot of today's hot smartphone mobile social apps and services were already well known in Japan, long before the term "social media" had ever existed...services like ad hoc mobile dating and mobile gaming were already quite popular back then. I also spent a summer as an Entrepreneur in Residence at Idealab, learning how the startup formation process worked.
Coming out of Stanford, I was recruited into the world of venture capital by Gabriel Venture Partners, where I progressed from wet-behind-the-ears freshly-minted MBA associate to principal over nearly 5 years. This turned to be a perfect fit with my ADD and love of constant learning J Given my love of gadgets, games, and entertainment, I chose to focus on investments in mobile and digital media, and built those practice areas at Gabriel before being recruited to join Norwest Venture Partners in 2007. As a partner at Norwest, I lead investments in mobile, digital media/entertainment, social media, gaming, and also head up our practice in China. What this really means is that I split my time between the SF Bay Area, Shanghai, Beijing, Hong Kong, LA, and NYC doing the following:
1) Meeting with leading corporations across the value chains of my target industries, trying to get a sense of what their needs and priorities are. Combining these learnings on market needs with the hundreds of startups I meet each year looking to bring new solutions to the world, I do my best to triangulate upon “what’s next” in my fields, creating a 1/3/5 year “crystal ball” view of how these industries will evolve. These formulate the investment themes and theses that I’ll be betting money against.
2) Speaking, moderating, and sharing insights on emerging trends in my focus areas at most of the leading industry conference in mobile, gaming, and digital media – basically, I have a bright future as a game show host in case this VC thing doesn’t work out!
3) Co-hosting dinners and forums for thought-leaders and movers & shakers in my fields.
4) Looking to brainstorm and exchange ideas with the kinds of thinkers and do-ers you read about in Wired Magazine or see in TED talks – by far the most rewarding and humbling part of my work!
5) Hunting for killer talent: up and coming stars looking to leave the safety of big companies and venture out on their own, as well as repeat entrepreneurs looking to launch their next big thing. After 10 years of running around as a VC, I realize that I’m really just a talent scout with a checkbook when it comes to early stage investing.
6) “Deals” happen almost by accident as a result of 1-5 – usually the best “deals” come out of brainstorming ideas with the best talent, and I usually try to focus on the talent aspect first and foremost when it comes to early stage venture investing
7) Once I’ve made an investment into a startup, I do my darndest to help them out with everything product strategy, recruiting, market intelligence, to business development, follow-on financing, and exit planning.
| ||2. ||How does it feel to be named to the 2011 Forbes Midas List of Top VCs? |
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It feels incredibly rewarding and gratifying to be recognized alongside such legendary and esteemed investors -- it's been a career-long dream of mine to make the list! But to be perfectly candid, I simply got very lucky this year to even make it on, and I'll be the first to admit it. VC is the kind of business which will always be heavily driven by luck and "right place, right time," no matter how tempted some of us may be to attribute our success to any innate abilities or intelligence...which is why they say that venture investing is like going to Vegas, except that you get to blow on the dice a bit more than usual. (The other old saying goes "I'd rather be lucky than smart" -- there's a lot of truth in this, but I'll also say that there are ways that one can create luck, and I've certainly worked harder in the past 5 years of my life than I've ever worked before to try to do so!)
| ||3. ||Not a lot of tech execs can say they moonlight as a bass guitarist in a funk band, can you tell us about your life as a musician and how your bands BlackMahal and CoverFlow got started? |
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Well, I’ve actually been a musician for 20 years longer than I’ve been a VC, so maybe it’s more accurate to describe me as a failed professional musician and actor who is now a full-time VC and part-time performer. Like all offspring of classic Tiger Mothers, I grew up with a regimen of classical piano and violin – right up to competitive piano recitals through high school, until I finally rebelled and dropped Chopin for Chuck Berry on the electric guitar, after watching Marty McFly save the world and get the girl through rock’n’roll in “Back to the Future.” I thought, “Hey I can do that!” and taught myself to play guitar in high school. I’ve been playing in bands ever since – in fact, rock’n’roll saved my soul in high school, where I was one of only a handful of Asians in a predominantly Caucasian high school that often felt less than receptive to other ethnicities.
My favorite memory was how rocking out Living Colour, Joe Satriani, and Aerosmith tunes at the school assembly turned my former burn-out tormentors into my personal groupies, asking for rock guitar lessons. From there, I barely made it through undergrad and grad school at University of Michigan as I was spending all my time either acting in stage productions or in the recording studio with my college band. Even when I entered the working world and moved to Japan to begin my career as an engineer with General Motors in Tokyo, I lugged all my music gear with me and played the Tokyo night club circuit with a funk-rock outfit called CitiZen-X. We were really going for it: did a stint as house band at the Hard Rock Hotel Bali, and even came close to a development deal with major label at one point. Ultimately, that fell through and I decided to come back Stateside to get my MBA at Stanford – where I spent much of my time leading the student band there as well.
Post-MBA, I formed a neo-soul outfit called BlackPorch that performed around San Francisco. However, as my VC work became more and more all-consuming, I was unable to continue juggling an acting and music career on the side. First to go was acting, as stage productions and indie film have intensive time demands. Soon, I gave up on music as well, and fell into a soul-sucking period of “work = life” for the next few years. Even though I was gaining more confidence and recognition in my work as a VC, I felt pretty creatively dead – and that I had basically sold out and became the one-dimensional, blue button-down shirted VC stereotype I originally despised and tried to differentiate against through my artistic pursuits. Two years ago, Vijay Chattha, an accomplished PR exec who had been representing one of my companies learned that I was a serious musician, and invited me to join his Punjabi hip-hop/funk project BlackMahal. I gladly accepted, and thank God that I was able to rediscover my love of writing and performing music again! BlackMahal has also been the most commercially successful project I’ve ever been involved with, and I’ve decided to make time for music again, even though this means late night and weekend rehearsals, as well as having occasionally take vacation days off to tour with the band. I’ve also joined a whimsical and fun cover band called CoverFlow, comprised of leading tech execs and VCs, including a couple senior guys from Facebook. This has been a wonderful way to blend work and play, as we usually perform at tech events and parties, and it’s a great way to show the younger entrepreneurs that VCs don’t always have to be old, stuffy, or pompous dudes in blue-button down shirts. They get to laugh at us while we have fun interpreting both 80s greatest hits as well as the latest tunes from Lady Gaga, Katy Perry, BlackEyed Peas, and Maroon 5. Turns out the guys in CoverFlow are also pretty accomplished musicians, so the best part there is having people expecting us to suck, but then realizing that “hey, they’re actually pretty good!”
|4. ||Do you see any parallels with your technology based career and your active music lifestyle? |
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My big learning and take-away has been this: when I first started working in VC, I approached it very seriously and tried to fit into what I thought everybody expected of me, with a strict separation of creative/fun pursuits vs. “serious work.” This artificial dichotomy actually made me pretty miserable actually, and over time I realized that people actually connect with you more genuinely if you don’t necessarily try to segregate your personal and professional passions. I stopped trying to hide the rock music side from the techie world, as well as the hardcore biz side from the creative world, and something magical happened: the two sides started re-inforcing each other, and made me a happier and more interesting person for people from both sides to interact with. Turns out that this is clear example of a principle I learned back in Organization Behavior class at Stanford: value in a network is created from heterogeneous connections – e.g. when two worlds that normally don’t overlap begin to connect with each other, there’s a lot of room for new learnings, insights, pattern recognition, mash-ups, ideation. So now I try to advise everyone to relentlessly pursue your personal passions and also find a way to meld them into your day job!
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|We've heard you carry at least eight devices on you at all times, that's got to be some kind of record. How do you pull it off? |
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One phone in each blazer pocket -- the belt holster ain't acceptable under any circumstance unless you also carry thermite, bat-arangs, and go by the name Bruce Wayne by day. Guys -- you should also try to avoid keeping hi-power smartphones near your temperature and microwave-sensitive nether regions -- this is the so-called "Local Warming" crisis that usually gets overshadowed by the whole Global Warming thing... The rest of the devices sit in various pockets in my briefcase, waiting for the right occasion.
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|What would you say is most important to you when you make your decisions to invest and fund companies? |
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I have a very simple formula I call the "3 Ts":
1) Team -- this is actually THE most important factor, as most good business ideas are actually pretty obvious when key trends emerge, and dozens of entrepreneurs will recognize the same wave concurrently. At that point, the only real difference is in the quality of the teams pursuing the idea. In fact, quality of the team (usually measured by track record, pedigree, and experience set) is SO important, that we VCs actively hunt for repeat entrepreneurs at the early stage, and would prefer to write a check to a proven serial entrepreneur before he or she even has the next business idea, vs. investing in first-time entrepreneurs who seem to be off to a good initial start with their business.
2) Traction -- having organic traction with customers is obviously a good thing. For consumer-facing internet companies, this is often the only potential indicator of success you'll early on, as the very best consumer internet companies are typically founded by young, first-time CEOs without the typical track record described under "Team" above. Fast traffic growth of a website and exploding viral installs of an app are great, but to me, I'd rather see a smaller set of addicted users (as measured by repeat, ongoing daily usage) vs. a large number of users with low percentage of repeat usage. I think in general we've shifted away from just "eyeballs" and traffic and more towards "DAUs" (daily active users), especially for "freemium" business models, where you give away a subset of functionality with the intent of upselling the user to a microtransaction, premium version, or subscription.
3) Tier-1 Co-investors -- talent attracts talent, and having top-notch co-investors creates a powerful syndicate of backers which confers additional credibility and branding to an early stage startup. This creates an unfair advantage for hiring and attracting follow-on funding.
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|What do you like about Privy or the promise it offers? |
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Now that half the online world is connected by Facebook, I believe we’ve established a baseline, general purpose social graph with Facebook Connect. So what’s next?
I have a thesis that each of us has multiple interests and sides of our personas that lend themselves to overlay affinity and speciality “graphs” that go deeper into our specific interests, and help connect us with others with similar interests but are not already part of our friend list. Think of this as “overlay social graphs and networks” on top of Facebook, like a “gamer graph” connecting folks who are into games, a “professional graph” for work-related networking (like my portfolio company Branchout, which is recreating a “Linked-In on top of the Facebook social graph,” or even a “healthcare graph” where individuals with specific conditions can connect and support others with similar afflictions. Note that these overlay graphs are well suited for meeting new people with similar interest whom you don’t already know, and in some cases, would allow you to mask your authentic identity or hide specific interests and activities from your true friend graph and newfeeds (quick example: imagine you’re dealing with a medical condition which you’re highly sensitive about sharing with your true friend graph, but desperately want to connect with others out there dealing with the same thing – you’re looking for genuine connections, but may want to have an alternative screen-name which hides your true identity).
This is where specialty social networks like Privy make a lot of sense to me: a focused, curated community around a set of shared characteristics and interests that allow its members to connect with similar people they already know, as well as meet new people and then engage around a specific context. In Privy’s case, the ability to meet other multi-region professionals who work between the US and Asia is hugely valuable to me, as these are folks who identify with the challenges and opportunities that I face in working both sides of the Pacific, and are very likely to be the same people I want to be working with and socializing with going forward!
If you'd like to know more about Tim Chang, check out his Privy 5 for San Francisco.