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Venture Profile: Bill Tai, Charles River Ventures
By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search
Angel Mehta: Given the choice between an investment philosophy that is about the 'big vision', and one that is more pragmatic, which do you favor?
Bill Tai: There is no easy way to answer that question. My thoughts on this subject reflect something important I learned from a mentor of mine named Dave Jackson. He was a great entrepreneur and the founder of a company called Altos Computer Systems back in the 1980s. Dave was a guy who had incredible common sense. He had the ability to boil everything down to the core issue and deal with it immediately. I think a lot of this business is really just about optimizing time and capital efficiency, and believe that the best outcomes are driven when you've optimized both of those. Time is money and if you are first to market in anything and have done it the right way, you have a better chance of succeeding.
To your question, Dave was an incredibly efficient thinker. He didn't waste his time chasing FALSE visions; he didn't spend his money on ephemeral things. People like Dave are very efficient thinkers and their resources are applied very efficiently to areas where they really can realize value. Dave lived his life that way. Every Board meeting I've been in with him was a lesson learned in efficiency.
Angel Mehta: Did you find that a technical degree gave you a significant advantage in venture investing?
Bill Tai: It's been proven that people can be successful in venture capital without a technical degree. However, technology changes so quickly that having a background that enables you to understand the fundamentals and therefore have a handle on what may be coming next is very helpful.
The more relevant experience for me was a technical marketing position I held at a company called LSI Logic. My job was to look at people's system designs and figure out how to shrink them down to an implementation on a piece of silicon. A technical marketing background can be very relevant to the role of a venture capitalist as you spend your time thinking about how products and technologies may lead a market going forward, what needs exist that are not being fulfilled, and, therefore, how to fulfill them. In a marketing role, unless you are a general manager or product manager with a budget, your role is to gather support and resources that you don't actually 'own" to go and fill that vision to bring something to market. So, in a way, a venture capital role is a step removed from that - we're basically supporting those kinds of efforts outside of a corporate framework.
Angel Mehta: I noticed that your track record for liquidity events is quite strong…out of maybe 32 deals you've got 16 IPOs and 7-8 acquisitions…is there a magic formula?
Bill Tai: I don't think any success happens without some luck. My entry into the venture business occurred in 1991, which was the bottom of the cycle. I will bet that anybody who entered the business in '91 and has left it to this point has seen success in at least half their companies.
Angel Mehta: By virtue of the market appreciating?
Bill Tai: Partially, yes. Timing matters. After LSI Logic, I joined Alex Brown & Sons to start their semiconductor practice and ultimately took a number of small companies public that later became very big companies. I left the job at Alex Brown and took a 70% pay cut to get into venture when no one else wanted to be in the business, primarily because I thought it would be more fun. It was right around the time that Saddam Hussein was invading Kuwait the first time. The economy here was in shambles. We were in the middle of a rolling recession. Venture capital as an asset class had underperformed treasuries for 10 years, and I thought it would be interesting precisely because it was at a low point. From there I was up and to the right for almost a decade from an environmental standpoint.
Angel Mehta: Does that mean you were motivated more by the market timing than the content of the job as a venture investor?
Bill Tai: I would say I was fundamentally interested in the content on a long term basis, but my gut told me that entering at a low was good timing…I learned in my first industry - semiconductors, that most businesses are cyclical - in a cyclical business, the notion of 'buying low, selling high" gets embedded into your nervous system.
Angel Mehta: What are some of the interesting business problems that you've funded startups to address of late?
Bill Tai: In OpenSource, one of the companies that I funded prior to my joining CRV is 'IPInfusion', which is essentially a Linux-based, modular and scalable functional equivalent of Cisco's IOS. It's a software fabric that allows anybody building any kind of connected device to pull down whatever piece of connectivity they need, including RIP, OSPF, IPv6 and its extensions, MPLS, etc. The company now has over 80 customers, including the likes of Ericsson, Nortel, Lucent, NEC, UT Starcom, and all the Chinese router companies. People in Taiwan like Accton make routers, layer 2 and layer 3 switches and home networking gear that is fully network compliant using IPInfusion without having to own big in-house development teams.
In the digital media area, I've got a software company, AVVENU, which provides remote access and management of your digital media. Any consumer with a cell phone can dial their PC and view their photos or any other media they have on their hard disc from their cell phone screen. They can also instruct their PC to send a link to any of their friends to view those photos on their hard drive. Motorola invested in the company recently and will be launching five cell phones this fall with AVVENU as a partner. It's the functional equivalent of 'dot net" for Motorola - a dot mot of sorts. So if you take pictures with a Motorola camera phone, the phone will automatically upload it to your PC and that media will be shareable from your PC to anyone that you instruct it to share with. While the first launch is around photos, it can work with other media types as well like music, videos, PowerPoint and Acrobat files.