This is Kamla Bhatt. We bring you part two of our conversation with Yogen Dalal, Managing Director of Mayfield Fund; a venture capital firm based in Silicon Valley. In this segment, Yogen talks about innovation, Mayfield’s investment strategy and his mentors. Here is Yogen.
Kamla: How are you fostering innovations through your investments?
Yogen: Well, it’s a tricky line you know. Our goal here is to invest our limited partners’ money to make money for them and so successful investments are those that are just a little bit ahead of their time. So that when the company has a product that is ready to be launched, it fits in with the needs of customers, whether they be businesses or consumers.
So you know our job is to take risks. So we’re on the cutting edge of figuring out what is likely to be a good outcome but as you know; if you’re a little too early well they tell you about the pioneers who’re the ones with the arrows in their back.
Kamla: So how do you keep yourself informed as to what are the new things that are available out there, what is it that people are looking for?
Yogen: They always tell you that you have to have a prepared mind and the best way to have a prepared mind is to have an open mind and you start off by spending time reading, living the digital lifestyle, getting a Facebook account before it becomes all the rage, spending time with young students at the leading Universities, by being their mentors, watching what your own children and what their friends do with technology.
And then you know, talking to the innovators of the world. I think the worst that anyone can do in our business is to walk into a meeting with a closed, prejudged mind.
Kamla: What kind of a digital lifestyle are you leading?
Yogen: The digital lifestyle I lead, you know involves of course, you know, having an iPhone and an iPod but more than that you know, I’m a big email user but I spend time surfing the internet. I spend time checking out some of the new methodologies or ideas. You know, whether I do a lot of Facebooking is not critical, the important thing is that I know what it is that people do when they go to Facebook on an every day basis. So an important part of living the digital life style is to set aside time and to include that along with all the other things that you do now in your life.
Kamla: Have you asked any of your kids that they include you in their Facebook account?
Yogen: Well, you know my kids have Facebook accounts and I told them even though they invited me to be a friend that they were now young adults and that I declined their invitation you know, in order to give them the privacy they deserve.
Kamla: This is new! I’ve not heard any father declining. Usually they want to see what their friends are doing.
Yogen: Well I know but you know, I think there are so many ways to find that out and deliver digital life style but I’m also just a big believer that you’ll have to let your kids grow up and not be what people often call “helicopter” parents where you’re hovering around them all the time.
Kamla: How has your focus changed? What changes have you made when you assess companies or opportunities compared to the dot com boom and the early 1990s when you joined Mayfield?
Yogen: Well in the early 1990s we were all technology investors. That’s really what we were about. We were about building the infrastructure for today’s technological marketplace and so you really looked for entrepreneurs who have the entrepreneur drive but have the technological savvy to pull it off. As the technology foundation has become well established, we’re now looking at business innovation. How do you take all that technology that’s out there and innovate from a business model point of view in order to satisfy market needs. For example- today software, the service means that you rent the capabilities that you want rather than buying the software package. So that’s not technological innovation. It is- requires technological savvy but it’s a business model innovation.
But more importantly, Internet is the new form of media so most of us have to now think about what does it mean to invest in businesses that are satisfying consumer needs as opposed to business needs. And that’s a whole different game because as you know Kamla, you can’t guarantee that the new movie is going to be a hit or the new restaurant that is opened on the corner of the street is going to be a true success. Everybody wants to satisfy the needs of consumers, but you get flops too.
Kamla: Where are you going today that you’ve not gone before?
Yogen: Where are we going today- I think that you know, green tech is certainly the big buzz word of today. But it’s a long term market so what we’re looking at is not alternative fields or anything of that nature but how can computing technology that we’re very comfortable with in now somehow make a difference. We’re basically looking at, in the whole green phenomena that’s going to take over the world, where does information technology fit into that? There are other people that can do very successful things, like ethanol and all the variety of other bio-fuels. That’s not our expertise. Our expertise is to playing this market place by encouraging entrepreneurs to know what they do well in communications and computing and apply those methodologies to making the world more green.
Kamla: What about the India option? You know, I’ve come across a couple of places where you’ve mentioned that India is a place where companies should set up a development centre.
Yogen: Well, it clearly-we’ve always believed that having some cross border activity enable start ups to be more successful because there’s a load amount of talent not only here in Silicon Valley but also in China and in India and other parts of Eastern Europe.
So virtually all companies are going to be global not only in their structure but in their market. I think start-ups are not just looking for customers in the US but looking for customers world wide.
And I think when countries like India in particular are completely re-structuring their economic foundation, with the creation of a massive middle class, the infrastructure needed to satisfy the needs of this very, very large middle class will rely on information technology.
Kamla: I have a product related question. How do you think entrepreneurs should build products?
Yogen: We all know that true innovation comes because there’s a passion driving that innovation so if you want somebody who’s willing to leap the charge, who’s got a sixth sense that helps him decide whether they’re going to take door A or door B and in some ways it’s no different that another metaphor I’ve been using when you talk about people who climb mountains. Why do they climb mountains? They don’t climb mountains- you have to have the team but you also have to have the leader. The leader has to have supreme self confidence that they know how to take the team to the finish line.
Kamla: But the young start-up often are in a lot of flux. And there is ego involved and you know, if there is more than one co-founder, it becomes a little bit difficult to figure out who’s the leader. What are some of the common problems that you’ve seen time and again with start-ups that can be avoided?
Yogen: The most common problem with start-ups is that there isn’t a leader or two that is magnetic in their ability to pull together a team. So the leader has to be brilliant, clearly with an idea but they also have to be able to create a team that will follow them. You want a person who has a sense of their destiny and who is able to attract other people- and I would use the Google metaphor or the Hewlett & Packard metaphor to men in both cases who had a sense of their destiny, and who were able to inspire people to join the journey with them.
Kamla: What kind of leader are you?
Yogen: What kind of leader am I? Well, I think I may have been a sort of a hard charging leader in my technology days because we made some sort of major inroads into how the world should operate but I would say these days, I’m much more of a collaborative coach-oriented leader. That’s the stage in my life and the stage in my partners. They look to me for that kind of a role in leadership.
Kamla: Who mentored you?
Yogen: I’ve been fortunate to have some of the most important people in this industry mentor me. From Vint Cerf who was my thesis advisor to Bob Metcalfe, who hired from my first job to David Reddan who ran the product program at Xerox and then of course, Bill Campbell who is known to be the ultimate coach was the president of Claris. And so these people have given me the tools to think about how you encourage people to make a difference.
Kamla: Do you have a sense because you keep talking about the sixth sense... I want to take advantage of that sixth sense of yours and find out where do you think these new centers of innovation would be?
Yogen: I think that Silicon Valley be continue to be the centre of innovation. If you just go to Stanford and look at the new $ 400 million engineering court that has been constructed, it will produce some of the most amazing innovation you know, 10-15 years down the road.
But I am quite confident that if you look at the history of Silicon Valley, that centers in India and in Beijing will become new centres of innovation after a cycle. It’s really companies like Fairchild and Hewlett Packard that began Intel and all of these other companies. So eventually smart engineers will leave Infosys and Wipro to become entrepreneurs. So what’s been created is a foundation of infrastructure in cities like Hyderabad, Mumbai, and Bangalore at least in India, where the foundation will be laid for a new generation of entrepreneurs.
Kamla: I know I said it was the last question but I can’t resist sneaking this question about Jack Gibson. The last time I spoke to you, you were going to become a blogger, now you I see you’ve become one. Tell us about your blogging experience and Jack Gibson. This is the headmaster of Mayo.
Yogen: Well you – I didn’t sort of list him as one of my mentors but I would have to say that he is probably the first one of them. He is the renowned principal of the Mayo College during my days there in the mid-60s. That was the man who sort of influenced a generation of students to make a difference to the world and March was his 100th birthday anniversary. And a bunch of his students, including me have constructed a blog site where we’re collecting memories of this incredible man and along with that, three of us impart on using the internet and the digital lifestyle to take his memoirs and to have it re-published as an electronic book.
So this is our tribute to a man who deserves to have his memory preserved forever.
Kamla: Do you think he’d be surprised by this digital tribute?
Yogen: I think he would be. He was clearly a man who was not afraid to look around the corner but I think that he would be amazed if he was looking down how all of us pulled together, without actually being in the same room, at the same time.
Kamla: Yogen, it’s always a pleasure to talk to you. Thank you for this conversation.
Yogen: Thank you Kamla. I’ve enjoyed this very much and I look forward to many more!
Kamla: You were listening to Yogen Dalal, Managing Director of Mayfield Fund, located in Silicon Valley. This is Kamla Bhatt. This interview was brought to you in association with Livemint Radio and as always, thank you for tuning in.