You have one of the best corporate venturing track records in Asia over the past 16 years. To what do you attribute your success and of what are you most proud?
Success is always a function of timing and opportunity with a bit of luck. I attribute my success mainly to three things – sector knowledge, operational experience and deep understanding of the ecosystem.
If I may paraphrase what [Silicon Valley VC] Guy Kawasaki once said, I am by no means proven as a venture capitalist. I have been in this game for about 16 years, but I do not have the financial megahits that make a fund. He also said: “Venture capital is something to do at the end of your career, not the beginning. It should be your last job, not your first.”
I relate to this a lot. I had a different beginning. I started as an engineer, designing telecoms products in the late 1980s – data switches, internet applications, real-time operating systems, security products. In mid-90s I switched to sales and eventually to general management, armed with a sponsored business school exposure through AT&T.
By the beginning of the millennium, I had figured out how to make a product and how to sell it. At this juncture of my career, I remembered what my then boss Pat Gelsinger once told me: “When you have attained a certain level of experience, what you know is far more valuable than what you do.”
So I thought that it was the right time in my career to be a venture capitalist. The opportunity came knocking from within my own employer and I joined Intel Capital in early 2000. I attribute a lot of my successes to this rising through the ranks and every stripe that is hard-earned, rather than folks who are highly coveted in the industry coming from management consulting, investment banking or accounting. So I call myself an accidental VC .
In my venture career there have been many base hits and a few home runs, On the strategic front, I am most proud of creating an investment relevance for a remote international geography like Asia-Pacific-Japan to a corporate venture value matrix. The core competencies of every geography on this planet are different. Curating the local expertise and creating the strategic thesis for the business units, sometimes as their mentor, coach and advocate, is a critical success factor in CVC investments. After you have created the deal thesis and validated it through collaboration, the rest is execution in terms of finding the right startups that fit this thesis, that have financial viability, the right level of influencibility and finally an engagement interest from both ends – by no means easy, but predictive. This is the blueprint for activities.
On the deal side, I am most proud of the portfolio clusters in early innovation cycles that were created and nurtured and have seen significant success in the industry. The first of its kind that I was able to influence was a networking and communications cluster that was market defining in the early days of software-managed intelligence in the data communications space. A few of my investments in this cluster include Tejas Networks, Deccanet, Futuresoft and Sasken.
The second cluster was in the area of data-centre-as-a-service – cloud, virtualisation, services brokerage, messaging and application programming interface, again in the early days of cloud evolution. Some of my past portfolio in this category include Netmagic, CloudFX, Parallels and WSO2.
Finally, the internet-of-things (IoT) cluster was one more recent clusters in Asia-Pacific-Japan, encompassing companies like N3N, Covacsis, Videnetics, Kii and a yet-to-be-announced location analytics software-as-a-service (SaaS) startup. These are all deals that have been publicly announced and details about these startups may be found on the respective websites of the corporate venturers I have worked for.
As you can see, my activities and my moments of truth have also evolved with the evolution of technology – software-differentiated telecoms products, cloud and then IoT with their interlinkages.
What did you learn through these challenges and wish you had known beforehand?
The biggest challenge one faces in a CVC program, especially when away from the headquarters, is mindset. You need to spend a significant amount of time educating people about your market, your ecosystem, the best practices that are followed in your part of the world. Once I heard someone say that for every deal that goes through the system there are about 14 people waiting to say no. Your team or your manager may get it but the consensus building that is necessary across the organisation is painful. Most folk in the majority of CVC teams are managers – they often lack an investment background and, most certainly, an entrepreneurial mindset.
Another problem prevalent in most CVC programs is a lack of understanding of local innovation. With an industry that is maniacally focused on outcome, technology innovation alone can not bring the desired impact on customers. Local innovation tweaks technology, integrates use cases and creates an experience that is monetisable. Every market may have its own nuances as far as use cases and perceived monetisable value is concerned. The resistance of this truth by the guardians of the technology roadmap in a big corporate set-up is a big challenge.
Finally a CVC program thrives on portfolio value addition. Value addition ranges from joint solution, access to channel, mentoring and introduction to key customers. Although my experience in this regard is mixed across the organisations I have worked for, this remains a single big challenge for CVCs in terms of overpromise and underdelivery or, even worse, orphaning a portfolio soon after investment.
I do not have any precise hindsight opinion on any of the above, but I would say the best way to handle the situation is to build your own brand and therefore credibility with the internal stakeholders as much as you are known in your external ecosystem. Try to identify a local champion in the senior leadership team, use her as your advocate to educate the other folk, and finally do not promise the moon to a portfolio company during a deal process. Let anything your sponsors deliver be an upside.
Who do you admire in the industry as your role model?
It is hard to mention a few and leave the rest, but I am most inspired by four leaders who have contributed immensely as mentor, coach and leader. First is Les Vadez, the first president of Intel Capital during the formative days of my VC career. A close second would be Ned Hooper, the erstwhile chief strategy officer of Cisco Systems. On the operational side I would name Pat Gelsinger and John Legere, who touched my life in many ways as my skip-level managers at Intel and AT&T respectively.
Most of your career has been in Asia. How is Asia relevant to the new global innovation economy?
I do not want to get into statistics, but Asia is one of the largest and highest-growth consumption economies in the world today – mobile user base, 4G and 5G, financial inclusion, infrastructure build-out, digital nation, smart cities, you name it.
From my experience of managing Asia, excluding China, I typically divide the region into four innovation hubs.
• Australia – an early-stage startup market pioneering work in cloud and SaaS.
• India – completed its transition from the core competency of business process outsourcing to business process management and developed key expertise in machine learning, natural processing, SaaS, artificial intelligence (AI) and microservices.
• Singapore – most definitely a fintech innovation hub in collaboration with southeast Asia and India.
• Japan – by virtue of being one of the most industrialised nationals on the planet, Japan is showing IoT innovation and adoption in manufacturing, robotics and a new generation of consumer electronics.
There is an unprecedented innovation nexus involving industry, academia, government and venture capitalists, as is evident from the increased dealflow in each of these hubs.
Asia has always skipped a generation or two in terms of new technology adoption, and with a large local market for technology absorption, smart entrepreneurs are innovating Asia-for-Asia products and technologies and exporting them as Asia-for-the-world where there are similarities in use cases.
What is an optimal CVC model?
Trying to create a classical or logical model for CVC investment is inadequate. From my experience, one of the biggest mistakes many corporates make is that they tie the CVC program too closely to the business units and give significant veto to the engineering managers in the investment committee. While it is important to identify investable opportunities that enhance value of an existing product and services, it is extremely important to create an option value by investing in companies that deal with technology in an entirely upstream space within the industry and are typically two to three years out from a relevance point of view for that corporation.
I would therefore recommend two approaches. First, invest in technology adjacencies for the business unit, and second, capture innovation in disruptive areas.
No matter what you do, you must be clear in terms of what success looks like and when you know you are done. A lack of such goals often leads to a mismatch of expectations and anything that is not measurable is highly fungible.
And every CVC must have a serious portfolio management team. Deal-makers are not typically good at bringing the promised value to the portfolio beyond financial governance. There must also be stringent accountability for the sponsor groups that promise the portfolio access to market, joint solution or of becoming an internal customer. Unfulfilled promises are damaging for the CVCs brand in the ecosystem.
What are the tech trends you are most excited about?
My mental model for the tech world is that there are two kinds of innovation activities in today’s software industry. One categorises those companies that are doing data discovery and selling insights that are somewhat actionable. Category two is those companies that are creating experiences out of that data – first-party, second-party and third-party data – and monetising the outcome.
Now, the problem statement for the data discovery and insight creation part is complex but relatively linear. There are significant innovation, intellectual property creations in this space backed by VC money.
However, the transformation from data discovery to experience creation with this data is a continuum that is reasonably complex. The technologies that are involved here are machine learning, predictive analytics, natural processing, micro-services, messaging and application management, multifactor authentication, chatbots and the entire gamut of data sciences.
Most of today’s innovations are revolving around this. I am most excited about this model and I see several startups across the globe and especially in Asia focusing on this.
What is the next chapter in your career?
After you have spent some significant time as a member of reputed CVCs, you ask yourself what is next. Every corporation expects its leaders to become a manager after a certain duration in the organisation. I said in a previous interview that I shall look for a change the moment I realise I have stopped learning new skills and my entrepreneurial expertise is not valued any more. There is nothing wrong in that, its just that your growth vector and what your employer can offer you are fairly orthogonal. Since January 2016, when I began thinking of a move, I started networking with old colleagues and friends. I realised there is an amazing world out there. I was extremely fortunate to be invited by several types of companies and funds to explore with them. Among them, the three I liked were an operating partnership with a Singapore based private equity firm, head of strategy for a series B startup and corporate development roles for pre-initial public offering (IPO) companies.
After thoughtful evaluation I came to the conclusion that late-growth-stage startups looking at mergers and acquisitions for inorganic growth options, trying to build a larger structured ecosystem and looking at tools like joint ventures for preferential market access would benefit from my corporate development expertise and it will be mutually win-win. And I also realised there is a skills gap in the industry in Asia in this pre-IPO space.
So, I finally decided to take up the corporate development role and I shall announce my new employment soon. I shall however continue to play a CVC’s advisory role, at NeoLeap, which is the accelerator I have advised since May 2016, and several other technology evangelism and non-profit activities. I am happy to begin the next chapter in my life – please wish me luck.