A significant percentage of our investment at Lux Capital are thematic. i.e. we find an area of particular interest (e.g. computational sound) and then investigate the space to find people and opportunities that could lead to incredible investment opportunities, including formation of newcos. We sometimes find our way to strong technical founders and then work with them to find strong business co-founders as a part of the startup sausage-making. May not always be the case, but usually it takes two to tango. Or as my friend Dharmesh Shah (founder of HubSpot) has said in the past that companies need at least two people to start. One to build the product and another to sell it.
This morning a technical co-founder and I were chatting about what to look for in business co-founders. This could be a long post, as certainly this might be the most important decision he is about to make…but here’s the gist of what I told him.
Evaluate these people for:
interest in, and knowledge of, the space
their ability to attract and retain the best talent
their networks in potential customers and partners
their entrepreneurial DNA, drive
thinking big strategically. Wanting to hit it out of the park and win
management sophistication, esp in early stages when there is much ambiguity
nice people to work with
Would love to hear what others might add to the list. Or how others think about finding business co-founders.
There was a time when Best Buy, Circuit City, CompUSA, and their smaller cousins like Frey’s (Bay Area) and MicroCenter (Cambridge) etc, were awesome places to visit. These stores carried, above all else, the latest and the greatest in electronics and hardware products. I used to go and spend hours in such stores.
And then these stores got into trouble. Some went bankrupt, others shrunk in size/scope, and others continued to struggle on with enthusiasts and hobbyists frequenting them. There were lots of reasons for their demise but that’s not my concern here…what is to be noted is that while these stores’ futures were sinking, another amazing chain of hardware retail stores was surging at the same time: Apple. Yes, Apple stores had an amazing futuristic design which attracted an eclectic audience, but its hard to miss the fact they also had amazing products. Beautiful, simple, consumer-friendly devices that consumers wanted.
I spent a few hours at a Best Buy store this weekend (San Carlos, CA). I have to say I was quite surprised at how different it actually looked from what I remember of such stores. While the store looked different, and more modern with LED lighting, wider aisles and neatly laid out sections, what was really cool was that the stores prominently displayed and carried tons of products that were actually exciting! It wasn’t just all various sizes of TVs and DVD players, rather similar home entertainment systems, and aisles upon aisles of CDs and DVDs…the large sections were dedicated to aspirational, practical stuff people actually want. The hardware tsunami had clearly invaded the electronics retail store.
The store had large sections dedicated to products from large companies that define hardware (+software) technology today: Apple, Microsoft, Google, Samsung. I comfortably browsed through the various phones, tablets, laptops, computer monitors, accessories etc. In one place I was able to compare the Google Chromecast with Apple TV, and decided I wasn’t ready for either as yet. I saw 4K TVs and the latest cameras utilizing 4K sensors (e.g. GoPro Hero4). I didn’t see a 3D printer but maybe I didn’t look hard enough.
In another section I looked through a variety of robots, drones and fun things to play with. In yet another I saw the latest technologies for connected home displayed. From various types of IP cameras and associated cloud services to digital thermostats, smoke alarms, water flooding sensors, ice sensors, and connected light bulbs. I saw a young couple buying a Philips Hue internet connected LED light bulb to add to decorations for their newborn’s nursery!
I am glad to see this new generation of hardware/software products are finding relatively prominent shelf-space in big box retailers like Best Buy, Target, Home Depot etc. It is good for the stores and good for the consumer hardware industry. Kickstarter and Indiegogo have been great in promoting new hardware products to enthusiasts and to early adopters , but these companies eventually need distribution channels above and beyond the web, and choices have been limited in the past. In the process these retailers can possibly also rebrand themselves, and once again become an attractive place for young consumers to spend time (see also NYTimes: Electronics Retailers Scramble to Adapt to Changing Market). If done right, its a win-win for all parties.
In his book Zero to One, successful entrepreneur and investor Peter Thiel writes that he asks every interviewee the following question:
Q: What important truth do very few people agree with you on?
Here is how I think I may have answered it:
A: Most people believe they benefit by learning from their mistakes. That may be true, but I think this whole idea of learning from your mistakes is over-hyped, and people actually learn as much, or perhaps even more, from their successes than from their mistakes.
Some more thoughts below, especially in the startup/entrepreneur context:
Success ends up highlighting what you are good at, what you know, and what heights you are capable of reaching. As noble as improving on our weaknesses might be, reality is most people tend to lead with their strengths, and it is nice to know what those are and how to flex those muscles when needed.
When someone has seen success before, they tend to grow tiny antennas that alert them when things are not going right, be it strategy, momentum, morale, fundraising etc…knowing when it might be time to rethink, regroup and retarget is important, esp in early stage startups.
Success has side effects: it leads to growth of organizations which leads to learning about managing more complex teams/systems, bigger networks (to recruit from), and more opportunities to build relationships with important vendors, partners, investors and customers.
Success tends to instill confidence, and having faith in your own abilities (and decisions) through the ups and downs of a startup can be a good thing.
Of course, I don’t mean to say people don’t learn from their mistakes. They do. I have learnt a lot from my mistakes…In fact I am still looking for the kinds of successes that I can truly point to and say look what I learned from them. Successes can also sometimes get to people’s head and mess with their egos. Those are the unfortunate side-effects, and regrettable.
“The only people who can change the world are people who want to. And not everybody does.” –Hugh MacLeod
These days one doesn’t often read something positive about Pakistan. My country of birth faces a lot of problems – some that have been thrust upon it from the outside, but many that are systemic and endemic. But it is a nation of 180M people, and there is tremendous talent in its people that remains shackled. Every once in a while when such talent combines with deep passion and perseverance, a company like Markhor is born.
Markhor’s founders, Waqas Ali and Sidra Qasim, hail from the historic town of Okara in Pakistan. Growing up they witnessed shoe-makers in their town practice their craft, but were astute enough to realize that the ancient craft of hand-made shoes was dying in Pakistan. They worked diligently for 8 months to launch Markhor - a company that designs, manufactures and sells amazing hand-crafted designer shoes around the world. They didn’t just find a way to sell locally made shoes, they reinvented the craft for the modern customer, and have brought the local shoe-making industry into the 21st century. With each shoe that is sold a little bit of that ancient craft is also preserved.
I met Waqas in my office many months ago. I don’t even remember how we got introduced. He is a slim, young man with a neatly trimmed beard. He speaks fast and he speaks with an accent. He also speaks with determination. He had so many ideas when we met. As he rattled them off to me I felt he may be trying to do too much at the same time. Imagine a young lad who didn’t know what internet was 6-7 years ago was trying to tell me he could design and build better than Italian shoes in Okara, Pakistan and sell to demanding customers around the world. That he would get people like Jack Dorsey and Mark Zuckerberg to wear and promote his shoes…and that he wanted to become the biggest shoe company in the world.
As I often do, I took him to the white board and we worked together for a couple of hours to clean up some ideas, organize them into a few big themes, and synthesize a few key milestones for his company. Starting an international e-commerce company in a category that has been dominated for decades by well-heeled (no pun intended) competitors from fancy romantic locations in Western Europe seemed an uphill battle. I wondered if Waqas and his team had any idea how hard this was going to be. I asked him bluntly. I remember him looking into my eyes and saying “We are going to win. I may not know exactly how but I didn’t start this to fail. We will win”. At that point I knew this man was going places…
Waqas and Sidra’s dream, Markhor, is now live on Kickstarter. They are off to an awesome start and I am a customer. They have already reached more than double their kickstarter goal in less than a few days. But their ambitions are so much bigger. As Sidra said to me recently, “[we are] #notstoppingnotsleeping”. Go Sidra, Go Waqas! May you win big!
Douglas Engelbart (inventor of the computer mouse)
Robert Langer (prolific bioscience inventor & entrepreneur)
Raymond Damadian (inventor of the MRI machine)
Thomas Fogarty (inventor of the embolectomy catheter)
Dean Kamen (prolific inventor – Segway and infusion pump for diabetes)
James Fergason (inventor of liquid crystal displays)
John Rogers (inventor of bendable silicon electronics)
Angela Belcher (inventor of bacteria inspired catalysts)
All of the above, and many others, are recipients of the prestigious Lemelson-MIT Prize. It is the largest prize in the US given to an individual inventor. All of the above are inventors, and their inventions have saved lives, changed how society communicates, made our industries more sustainable, and have profoundly impacted lives across the globe.
I first heard about The Lemelson Foundation in the context of their sponsorship of the Lemelson-MIT Prize when I came to MIT in 1998. It was easy to tell even back then that the foundation truly sought out and supported the most inventive people in our society – people whose scientific and technological inventions would impact millions, and perhaps billions, of people around the world and change the course of history. As a scientist researcher, then an inventor who became an entrepreneur, and now an investor in startups built around breakthrough technology innovations, it was a matter of great honor that over this past summer I was asked by the Lemelson Foundation to join their Advisory Committee. I agreed, and will proudly join their Board meeting this week in Portland where the Foundation is headquartered.
The Lemelson Foundation was created by prolific US inventor Jerome Lemelson and his wife Dorothy in 1992. Jerome (Jerry – see brief video biography here) had more than 600 patents to his name (earning more than one patent a month over 40 years), and both he and his wife were strong advocates for STEM (Science, Technology, Engineering, Mathematics) education even before creating the Lemelson Foundation. Jerry’s inventions ranged from industrial robotics and machine vision to medical devices, communications equipment and toys. Jerry has now passed away but Dorothy and the Lemelson family have continued their strong support of invention, innovation and entrepreneurship in the US and in several other parts of the world. As the official statement on the website reads: “The Lemelson Foundation uses the power of invention to improve lives, by inspiring and enabling the next generation of inventors and invention-based enterprises to promote economic growth in the US, and social and economic progress for the poor in developing countries.”
The Lemelson Foundation today sponsors multiple programs to support STEM education, inspire invention and promote entrepreneurship. During time I recently spent with Carol Dahl, its Executive Director who came to the foundation via Bill & Melinda Gates Foundation, I learned about their focus on the following:
The above totally resonates with me as it leads to new technologies that advance humanity, save lives, protect our fragile environment & earth’s ecosystem, create jobs and improve livelihoods across the globe. Lemelson’s programs inspire youth to identify interesting problems and solve them via inventions, they provide tools to young inventors to help invent, and help college student entrepreneurs in the launch of invention-based enterprises. In doing so, the Foundation is able to maintain its vision of strengthening the US economy and helping the poorest of the poor in developing countries.
Over the past 10-15 years I have been fortunate to participate in some of the kinds of activities that The Lemelson Foundation promotes at a much bigger scale. I am proud of the effort some friends and I put into launching the first science and engineering research university in Pakistan (LUMS SBASSE), StartLabs, an organization focused on engineer founders at MIT that I helped start, will be holding their annual Startup Bootcamp next week, and Roughdraft.vc, a student venture fund I co-founded in 2012 has now funded nearly 25 student startups, some of whom have gone on to raise much larger venture financings. Now as a partner at Lux Capital, I am fortunate to be able to spend all of my time meeting amazing inventors, entrepreneurs, and people who wish to change the world for the better. My partner Larry Bock - founder of several companies including Illumina, leading company in genomic sequencing – subsequently founded the National US Science and Engineering Festival, and several other partners are themselves PhDs and inventors on multiple patents. All of them are equally strong supporters of The Lemelson Foundation’s mission.
I very much look forward to learning and contributing to the mission of The Lemelson Foundation. My primary responsibility will be to advise the executive leadership of the Foundation in their planning, execution and assessment of the programs. As such I will be on the lookout for new ideas and feedback. So please do share any thoughts that I can pass on to the Foundation.