Video Investor Panel Discussion: Curtis Feeny, Ben Narasin & Ed Lambert

Investor Panel Discussion: Curtis Feeny (Voyager Capital), Ben Narasin (New Enterprise Associates) and Ed Lambert (Bridge Bank)

Don’t miss the chance to hear from more experts like Ben, Curtis and Ed at the many tech startup events at Founders Floor in San Jose.

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Video Transcript

Ben Narasin:
Hi. Thank you. I’m Ben Narasin, I’m currently a general partner at Canvas Ventures. Been there for two years. Before that I was an angel investor in an institutional forum. I was an institutional seed investor for about eight years funding companies like Zenefits and before that I was an entrepreneur for 25 years. Third company public during the bubble in the internet space.

Curtis Feeny:
Curtis Feeny and my job up here is to talk about how great Ben is at trying to keep Ed from participating as much as possible. Early stage venture with Voyager Capital and I sit on a couple of large corporate public boards so I look at retail technologies and real estate technologies as well. Interested in data analytics and internet of things and infrastructure around those two things.

Ed Lambert:
Hi everybody, I’m Ed Lambert. I’m with Bridge Bank, which is your hometown bank here in San Jose. We work with companies all over the country from startup all the way to public. What we pride ourselves on doing is working with companies when they’re young and building them until they become big and we’ve done a number of IPOs which is pretty gratifying. We’re all over the country. 30% of us are from another country so we speak… we even write 18 different languages at Bridge as well and we tend to think of ourselves as entrepreneurs whose gig just happens to be banking. This is going to be a great panel. We’re going to have a great time.

Matt Day [Host]:
Good. Thanks guys for coming. I thought we’d have just an investor panel discussion to start out for a couple of minutes maybe. I sourced all these questions from our Founders Floor members also but I thought I’d start of because, you know investors, at the end of the day, you guys invest in sectors and technologies that are somewhat not known by the general public, that are new, and a lot of time there’s not even coined terms for these, whether it be the on-demand economy or blockchainor a bunch of another things. And so, what are some of the sectors you guys are looking at right now? Even if you haven’t made an investment in them, what do you guys feel really good about right now? Interest on market places or technology?

Ben Narasin:
I think there’s a bunch of different overall things we look at. We look at market places, we look at stats, we look at Fintech but realistically, I was talking to somebody just today about this, people have asked me, as people always do, “what are you excited about right now?” And I thought about that a lot that and the answer is, in the last two years, almost nothing. I’m really excited about my portfolio companies who’re doing exceptionally well but it has been way too long since I have seen an entrepreneur that’s made me say “wow”. I think the thing about venture is that I’ve funded about 80 entrepreneurs as a seed investor, and sometimes it doesn’t work out and then they want to get together and talk about what they should do next and that’s fine. And they usually will say “what’s hot now?” And my answer is that’s the wrong question. If it’s hot now, it’s too late for you. You need to figure out what’s hot three years from now because you’re going to be the ones that invent the future.

So at the end of the day, my goal in life is to sit down with entrepreneurs, to hear quick pitches, as many as I can, until somebody shows me something that makes me say “wow”. You know, when Renaud talked about LendingClub in 2007, that made me say “wow”, right? When Parker talked about Zenefits in 13, 14, 15, whenever that was, that made me say “wow”. They changed entire enormous markets. So, there’s five things I want from an opportunity to invest in something. I need these five things. I need five things. People, people, people, a great idea and a huge market if it works. And I bring this up because that great idea is usually one I haven’t thought of. You guys have thought of it. And if it can create a huge market, then that’s what makes it exciting and that’s what makes markets in the future that I care about.

Curtis Feeny:
You know, of course I disagree with everything you just heard there and-

Ben Narasin:
Small business.

Curtis Feeny:
The follow-on to Ben’s comments that I do think there’s a tsunami of data coming at the world, at consumers and enterprisers and most consumers and most enterprisers are not equipped to handle that data and there will be some seat change opportunities in that and that is an interesting sort of basketball hoop to hang around and see what shots are taken at that. So that’s one area where I’m launching my play role in it, around the infrastructure science and encryption and real-time computer stuff.

I’m going to mention two blockchain ideas that I think are very interesting. But the main point on the data analytics is, if you’re going to invest early in a data analysis team, and we’ve done this a couple of times, one of which we sold to Google and one of which we sold to GE, what they bought was a world-class team that had world-class algorithms and solutions that were getting rapid adoption by real customers. And so it’s very clarifying when you know that the space you’re looking at is only going to be investible for us if the team has some of the best people in existence working on that problem. And that just elevates who they can attract, who they can get as customers, who they can get as channeling partners and so on.

And the two blockchain ideas. People are right now looking at blockchain for peer-to-peer, encrypted, real-time insurance distribution so that instead of paying an insurance company to hold all the money centrally and then paying it out as claims are made, you don’t collect the money in advance, you collect peer-to-peer connected customers through a blockchain encrypted technology and then they all pay in when claims are made then pay the price for that. And then you disintermediate the entire insurance industry. But the insurance industry is concerned about it, there’s people working on it and the same thing can happen in utilities, you know it’s centralized-distributed. So I can think of centralized-distributed architectures that can be disintermediated with peer-to-peer structured blockchain periods.

Ed Lambert:
So, my main thing is banking. So the way we look at it is we kind of ask ourselves a rhetorical question. So first of all, what Curtis is saying is absolutely right about the team. A great team can trump a lot of different things. You could have a great technology with a crap team in a great market and it’s not going to get there. You could have a great team with a great company and a crap market and it will get there. So, at some point, at the end of the day, what it’s going to be all about, now I don’t care if you’re a banker or a Venture Guide or an angel okay, the sooner you get to being live on your dime, whatever it is you do, no matter what it is, the sooner you get to getting live on your dime, the more opportunity you’re going to have to get some kind of a follow-on investment.

Quick sidebar to what Curtis was talking about and what Ben was talking about, there are huge amounts of data going on out there and one of the things that I think for us as bank, because you also want to be able to do things for societal benefit, is that what we’re trying to do is that for every company we do that uses data analysis to get you to buy shit you don’t need and we also want to work with companies that are using data analytics to help find a better way to fight cancer. So there’s a myriad of different things going on in the data analytic field which I think… it’s such a huge field and there’s this whole ton of different things.

Supply-chain management is starting to find it’s way back. There’s a lot of social networking kind of things still that are out there. I think the idea of being able to make life more convenient for individuals, some of the things that are working out there. At the end of the day, you stand a better chance of doing things, the more things you do B2B versus B2C on an occasion. But the generality, for sure, and again I don’t care what you do, I don’t care what business you’re in, I don’t care who you’ve talked to, okay, is the sooner you are ready to look at somebody and go “we’re live on our dime”, the better shot you’re going to have.

The one thing I will leave you with too is that the longer you tell me about your technology and the less you tell me about your results, the less interested I’m going to get every minute you do it.

Matt Day [Host]:
Yeah. Ben you talked a little about this, or you touched upon it I guess, and I ask this question all the time because I love hearing the answers to it but it’s in regards to what makes a good entrepreneur. You know, you talked about you guys see thousands of pitches every year. You meet a lot of different entrepreneurs. Some of the are special. Zenefits and others, Parker, you know, it was the wow. But is there some data points you can collect and get to see some characteristics from successful entrepreneurs that you can say “yeah, these are one of two things I like to see in good entrepreneurs”?

Ben Narasin:
Sure. And Parker’s an interesting example since he’s gone through some travails, I did find his next business because that guy just will never give up. He’s a driven person. So, I was an entrepreneur for 25 years before I became an investor. I was an East Coast kid before I came to the West Coast. There’s all these little pithy comments venture guys make, “I want an entrepreneur that’ll run through walls, they’ll break glass”. And that’s fair, it’s a true point. I’ve always believed that the number one requirement for success in entrepreneurship is tenacity. You have to be willing to fight through. Because you’re not going to get funded unless you’re really, with a really good idea and an interesting market. Now whether you get funded by an angel that’s happy if you sell for 50 to 100 million or whether you get funded by one of us that wants to see a multi-billion dollar public company is a different question. He might get funded by a certain type of person but not by another.

But once you get funded, it’s going to be, excuse my language, fucking hard. And it’s going to stay hard. And it’s going to stay hard after that. And it’s never going to get easier, you’re just going to get better. And when it’s hard and when it gets dark, we’ve all lived through this as entrepreneurs, many of you probably have already lived through it and I know that I did. And I had a company where we were at a point where we were not going to make payroll. I had $200,000 of credit card loans, the whole thing. We were out of cash and I had only one shot to make payroll and I just had to make that happen. And part of being able to make that happen was not being willing to give up.

Bottom line is, quitters never win, winners never quit. If you have even a little bit of a chance in you that you’ll give up, you will because you will have never done anything as hard in your life. And that reality is a lot harder to live with than it is to talk about. Because everybody reads TechCrunch and they read all this stuff and they watch Silicon Valley and then they go “isn’t that glorious”. Overnight successes take decades. You know Parker got fired before he started Zenefits? Right? And then he got fired at Zenefits. So we’re really hoping the third one is the charm. But he spent years trying to raise money for the company before Zenefits and yet when he got to Zenefits, he had eight term sheets within nine months for his series A at a ridiculous number and then on and on and on. $0 to $5 billion evaluation in two years but nobody remembers the years before that when he couldn’t get a dime.

So, tenacity. Above and beyond all else and I love your idea and I love your intellect and everything. I’ve got to believe you will refuse to stay on the mat. When people beat you down, you have to get back up. There’s no other option if you want to succeed.

Curtis Feeny:
Yeah what he said.

Ed Lambert:
Just to add onto that specifically, you’ve got to live long enough for your luck to change. You’ve got to survive. But the second thing is, you’ve also got to have enough humility to know when you need people that are more qualified than you to join your team. If I had a dollar for every fucking entrepreneur who refused to give up a piece of what he thought, or she thought for that matter, was the next big thing, I could retire. So the other key thing at the same time as tenacity that we’re talking about is, is that know what your limitations are and have enough humility to go off and find somebody that will help you.

So one of the companies that I’m working with that I’ve talked to Curtis about, this guy’s been at this thing for two or three years. He started off being the CEO, the chairman, he realized he can only get so far so he went off and hired two guys that were eleven for eleven in liquidity in one aspect of his business and he found a top tier sales guy in the other aspect, he didn’t care what his title was in the end. He knew that to get to where he wanted to go, he had to get the right people in and what was remarkable and why everybody wanted to work for him was because for two years, he just refused to give up and he kept getting up off the mat. So you have to be tenacious but you have to have enough humility and savvy smarts to know two things. One, give up your power within your company itself and also don’t be too greedy when you’re talking valuations. And your best best to talk valuations is to be live.

Matt Day [Host]:
Okay one more question I guess. Yeah, we’re running out of time here. We have a lot companies here that are starting their fundraising process, sometimes for the first time. What’s the best way to engage with you guys? It is events like this? Is it cold emails? Help them to kind of understand the probabilities of each of those, you know, what’s really the best way.

Curtis Feeny:
Well there’s a vanity book by Tom Perkins called Valley Boy. You should read it. It’s hard to get through his ego but if you do, and you have to be tenacious, but if you do, he has a lie in there about how the early days of Kleiner Perkins, they figured out that if the entrepreneur wasn’t aggressive, connected, smart enough to nose around and found somebody that could get him an introduction to them, that they probably weren’t that good an entrepreneur. Because a lot of it is the chutzpah and the getting up and making things happen. And so they would not look at any deal that came in cold. And the fact of the matter is that you get so many deals that you almost are looking for reasons not to do them because you can’t spend all your time looking at every deal that comes through so you’re looking at high level rejection reasons.

I literally had a friend reject a deal because he found a typo on the page and he’s like “didn’t want to look at it” and I think he probably made a mistake on that one. Meanwhile he supported a toxic CEO way to long so, you know-

Ed Lambert:
I thought Google was only one ‘o’.

Curtis Feeny:
Google was misspelled and so those of you who know how to spell Google. But I do think coming in warm is pretty much the accepted practice in the industry. It’s a lemming industry so once one person does it, everybody has to do it. It’s sort of the rule.

Ben Narasin:
Yeah I’d agree. I’m sure you’ve heard that before. Always getting warm intros is better than cold. I had on entrepreneur I funded at seed who saw Ron Conway, who’s the most prolific super angel of all time and I don’t agree with his process, it works perfectly for him, it just doesn’t work for anybody else. Just keep that in mind if you decide to be an angel one day. He saw him at a stop sign and they got out of their car and ran over and knocked on his window and said “hey we want to tell you about our business” and he ended up funding them.

So it’s not that you can’t take no for an answer, this is the delicate balance. A warm intro is better but you’re entrepreneurs, you’re going to… I give presentations all the time to brand new to this country entrepreneurs or fledglings and at the end I’m like “any questions?” And a lot of the time the don’t ask any and I’m thinking “wow good luck guys”. Because if you’re too nervous even to ask a question I know you must have because I can talk really fast and English isn’t your first language so I know you didn’t catch 80% of what I just said, good luck going out there and pitching for money.

So it’s okay to button-hole somebody. With the following caveat. Sales starts with the word no. Fundraising ends with the word no. When someone passes on you, that’s a favor. Cross them off the list, move on. There’s all kinds of euphemisms: not really fit for me, not really my sector, not sure it’s big enough. It doesn’t matter what the language is, all of those things mean “I am not going to fund you and if you want to spend the next four and a half hours trying to convince me, my mind is not going to change”.

In ten years, I’m probably working on 200 rounds. 200 rounds with major firms. I’ve turned a no into a yes once. It cost me an enormous amount of personal credibility to do it. It was a mistake to do it and it was a no that came with so many caveats, I knew he was right on the edge after I’d been doing all this work and I managed to tip him over. I shouldn’t have. That company’s out of business. I lost all my money. So did my friend. And I was optimistic. I didn’t say “hey, it wasn’t true” but I was overly optimistic and I shouldn’t have been because you know what happened to that entrepreneur? He spent the next three years trying to get something that wasn’t going to work to work and then he didn’t even get a job out of the deal. He shut his company down, he went looking for work and he had to sell his car so he could keep paying his kids college bills.

No is a favor. But you can button-hole whoever you want, you should, you’re entrepreneurs. The only thing I would ask is respect the no. If it’s not a fit, it’s not a fit. It doesn’t matter how much you think it is, you’re not going to muscle your way through that.

Ed Lambert:
Ben you’re going to have to put our-

Curtis Feeny:
And I’ve got to say, you can read his blog also He writes a pretty good blog.

Matt Day [Host]:
What is the blog by the way? What’s the name of it?

Ben Narasin:
Oh so I don’t have an official blog. I used to write for print and I have a whole bunch of stuff on entrepreneurship. I wrote a bunch for TechCrunch. It’s Narasin, there’s only me. I’m the only Narasin on the internet so it’s pretty easy.