20 VC 006 Google Glass & Founding Teams

In this episode of the 20 minutes VC, host Harry welcomes Ifty Ahmed, a General Partner at Oak Investment Partners with a rich background in technology and venture capital, having worked with Goldman Sachs, Fidelity Ventures, and having investments in companies like Wonga.com and Ativio Inc. Ahmed shares his journey from engineering to VC, emphasizing the crucial role of passion, dedication, and the right team dynamics in startup success. He advises entrepreneurs to rigorously vet potential VCs, as the investor-entrepreneur relationship is akin to a marriage. For those aspiring to break into VC, Ahmed suggests networking and gaining startup experience. He also recommends two books for entrepreneurs: "Super Crunchers" by Ian Ayres and "Blueprint to a Billion" by David Thomson. Additionally, Ahmed provides his insights on the future of Google Glass, the valuation of Snapchat, and the bright prospects of cryptocurrencies in revolutionizing financial transactions.

• Episode six of the 20 minutes VC podcast is being introduced.
• The podcast has achieved high rankings on iTunes.
• The host expresses gratitude for the support and reviews received.
• Ifty Ahmed is introduced as the guest for this episode.
• Ifty has a notable career in technology, with experience at Goldman Sachs, Fidelity Ventures, and Oak Investment Partners.
• The host also mentions a promotional opportunity for listeners to win books and pitch to venture capitalists.

"Hello and welcome to the 20 minutes VC. You're listening to episode six. What an amazing week it has been. Number two in the investing section of iTunes and number ten in the business section and over 25 five star reviews."

This quote introduces the episode and highlights the podcast's success on iTunes, indicating its popularity and relevance in the business and investing community.

• Ifty Ahmed grew up in India, studied engineering, and ran businesses operationally for four years.
• He moved to the U.S. for business school, where he developed an interest in finance.
• Despite his new interest, Ifty wanted to maintain his engineering roots.
• Venture capital appealed to him as it combined technology and finance.
• He has been in the venture capital business for 15 years.

"And I thought the best way to marry the two, which is my training and love and affection for engineering and excitement for engineering and technology, and yet also keep finance. And so I think venture capital is kind of like the perfect marriage between technology and finance."

The quote explains Ifty's rationale for entering the venture capital industry, highlighting his desire to integrate his engineering background with his newfound interest in finance.

• Ifty believes that venture capital is primarily about the people involved.
• He emphasizes the importance of passion, hunger, and excitement in startup teams.
• Ifty looks for commitment to innovation and the ability to persevere through challenges.
• He describes successful entrepreneurs as "technology jihadists" due to their intense belief in their mission.

"But when we get it right, the real guys who are going to innovate and disrupt the world are the ones who truly believe and maniacally believe in what they're trying to do."

This quote underscores the significance of belief and passion in the success of entrepreneurs and their ability to disrupt markets and innovate.

• Ifty has developed a personal toolkit over 15 years to evaluate founder passion and drive.
• He acknowledges that assessing these qualities is an art, not a science.
• Venture capital is seen as an apprenticeship business where skills are honed over time.

"Obviously, it's not science, it's an art. And that's why I think venture capital as a business is an industry, it's an apprenticeship business."

The quote reflects the subjective nature of evaluating entrepreneurial passion and drive, and the importance of experience in the venture capital industry.

• Entrepreneurs often have a personal attachment to their business idea.
• The motivation to innovate comes from personal experiences with a problem.
• This emotional investment is a driving force for disruption and innovation.

"They've experienced a difficulty, because of which they are drawn towards a new business idea and they're going to solve the problem. They almost talk about it in an emotional way. It's personal in lots of ways."

The quote underscores the personal nature of the motivation that drives entrepreneurs. The speaker believes that personal pain points and problems are significant motivators for creating a new business to address those issues.

• Entrepreneurship can be a lonely journey, especially in the beginning.
• Having a partner or team can provide emotional support and facilitate the exchange of ideas.
• A balance in team size is crucial; too many members can be counterproductive.
• Complementary skill sets within a team increase the chances of success.

"But having a partner, I think, really helps to run ideas by, to make sure that you guys are teed up and you run things through and you kind of challenge each other."

This quote emphasizes the benefits of having a co-founder or team in entrepreneurship. The speaker believes that a partner helps in the ideation process and in facing the challenges of starting a new venture.

• Entrepreneurs should conduct due diligence on potential investors.
• The relationship between an investor and an entrepreneur is compared to a marriage, not dating.
• Entrepreneurs should feel free to ask investors any pertinent professional questions.

"I think entrepreneurs should take that very seriously and should ask as many, if not more questions. Because getting into this investor entrepreneur relationship is like a marriage."

The quote stresses the importance of entrepreneurs asking thorough questions and understanding the investor they may partner with, as the relationship is long-term and significant, much like a marriage.

• Entrepreneurs should be well-prepared before pitching to investors.
• It's crucial to research the investor's background, investment history, and sector expertise.
• Being aware of an investor's past failures can help tailor the pitch to address potential biases.

"And so it's important to understand who that investor is, what they have been investing is, what their experience has been, and what their successes have been, and what their failures."

This quote highlights the necessity for entrepreneurs to research and understand their potential investors, including their investment patterns and past experiences, to better prepare for a pitch and engage in meaningful conversations.

• Preparation is crucial for a productive outcome in venture capital (VC) interactions.
• Understanding both the individual VC and the firm they represent is important.
• The individual VC will likely be involved on a day-to-day basis, potentially sitting on the board.
• Different personalities within a firm can have varying characteristics, making it essential to understand the firm's diverse nature.

"And so I think it all comes under preparation. And the more prepared you are, the more diligent you are, the better the odds of having a productive outcome."

This quote emphasizes the significance of thorough preparation to increase the likelihood of a successful engagement with venture capitalists.

• Recommends "Super Crunchers" by Ian Ayres for its relevance and insights into the importance of data-informed decision-making.
• Suggests "Blueprint to a Billion" by David Thompson, which provides a roadmap for achieving exponential growth and navigating the challenges of scaling up.

"That book was written quite a few years ago, but it's probably one of the most relevant books I would encourage entrepreneurs to read."

The speaker is highlighting the enduring relevance of "Super Crunchers" for entrepreneurs, despite it not being a recent publication.

"The Blueprint to a billion gives a very good roadmap in terms of how to be thinking about it, how to be dealing with that scaling up challenge that most entrepreneurs hopefully face as they grow their businesses."

This quote explains the value of "Blueprint to a Billion" in offering strategic guidance for entrepreneurs facing the challenges associated with scaling their businesses.

• The approach to entering the VC industry depends on the sector one wishes to specialize in, such as biotech or consumer internet.
• For consumer internet, in-depth subject matter expertise is less critical.
• Networking is key: attending events, setting up informational interviews, and engaging with alumni in the VC industry.
• If direct entry into VC is not possible, joining or starting a startup is the next best preparation.

"It's a lot easier because they don't have to be. If you wanted to get into biotech, I would say, hey, get some real subject matter expertise because it is very important."

The speaker is contrasting the entry barriers between different VC sectors, noting that biotech requires significant expertise, whereas consumer internet does not.

"Exploit every single opportunity and avenue you have and get into the industry."

This quote encourages those aspiring to enter the VC industry to take advantage of all networking opportunities to break into the field.

• Emphasizes the importance of gaining practical experience, comparing it to learning how to swim by jumping into the pool.
• Suggests that doing a startup is a valuable experience if one cannot immediately enter the VC industry.

"You've got to do it and just jump in."

The speaker is advocating for a proactive approach to entering the VC business, emphasizing the need for direct action and experience.

"Sure. I mean, if you can't get into the investing business right away, because of course it's a small industry and it doesn't scale as well in terms of human resources, the next best thing is to start a company or join a startup team."

This quote provides practical advice for gaining relevant experience in the startup ecosystem when direct entry into VC is not feasible due to the industry's limited capacity for new entrants.

• Google Glass is considered "doomed" due to advancements in wearables.
• Regulatory issues and the inconvenience of wearing them over prescription glasses contribute to their impracticality.
• Concerns exist about the health implications of having electronics close to the brain.
• Despite initial excitement, the product is seen as having been surpassed by other technologies.

"Doomed. I think wearables have moved on and will go into different ways."

The quote suggests that the speaker believes wearables have evolved beyond what Google Glass offers and that the market will continue to innovate in different directions.

"I worry about is that there isn't enough research to understand what it means to have a processor and other electronics right next to your brain."

This quote highlights health concerns associated with wearable technology, particularly the long-term effects of having electronic devices so close to one's head.

• Snapchat's valuation is seen as "inspiring" because it reflects the potential of digital social utilities.
• The shift from physical to digital greetings creates a scalable revenue model with high margins.
• The valuation is justified by the massive user base and low cost of digital goods.
• High valuations are considered beneficial for the entrepreneurial ecosystem.

"Inspiring. I think people can argue, and there's a lot of debate that can happen whether that valuation can be justified or not."

The speaker finds Snapchat's valuation inspiring, acknowledging that while there is debate over its justification, the potential of the platform is significant.

"These are all going to be bits of electrons and all electrons. It's not going to be physical cards anymore."

This quote emphasizes the move towards digital communication, which has a near-zero marginal cost, influencing Snapchat's business model and valuation.

• Cryptocurrencies are viewed as a bright future for financial transactions.
• The speaker compares the disruptive impact of digital technologies on telecommunications to the potential impact on financial services.
• Cryptocurrencies offer a cost-effective, instant, and seamless way to transfer money.
• The speaker sees cryptocurrencies as the financial equivalent of the IP protocol, signaling a significant shift in how transactions will be conducted.

"Cryptocurrencies and bitcoins is the future as to when that transaction will be like an IP transaction."

The speaker believes that cryptocurrencies will revolutionize financial transactions in the same way the internet protocol transformed communication, making transactions more efficient and cost-effective.

"I don't understand why I should be paying a third party a 20 or 30 or $45 rent to do that, to make that exchange."

This quote criticizes the high fees associated with traditional money transfers, highlighting the advantage of cryptocurrencies in reducing or eliminating these costs.