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Venture Spotlight: Amal Johnson, Lightspeed Venture Partners
By Angel Mehta, Managing Director, Sterling-Hoffman Management Consultants
Having successfully climbed the ranks at supply chain software leader BAAN (where she would eventually serve as President of the Americas), Amal Johnson found a new challenge in the world of early stage venture investing after joining Lightspeed Venture Partners in 1999. All of a sudden, the rules of the game changed: for the first time, winning meant slowing down. Angel Mehta, Managing Director at Sterling-Hoffman, talks with Amal Johnson about the transition from 'Leader" to 'Coach.'
Angel Mehta: Tell me about your transition from operating executive to venture partner. How did you come to be involved with the Lightspeed team?
Amal Johnson: When I was running BAAN Americas, I was recruited to be an outside Board director for a software company called, “Kiva”. The two investors were Greylock and Weiss, Peck & Greer (which later became Lightspeed) - so I got to work with both David Strom from Greylock and with Gill Cogan and Peter Nieh from Weiss, Peck and Greer. When I decided to leave BAAN it was a natural transition to talk to one of these two firms about potentially joining.
Angel Mehta: Are the psychic rewards greater in venture investing than in running just one particular company?
Amal Johnson: No, just different. Very different risks and rewards, if you will, and the satisfaction you get from running an operation…building the team…accomplishing the milestones – it’s very very different than the rewards you get out of selecting the right investments. The rhythm of the business in the operating world is very different than the rhythm of the business in the investing world and getting used to it….well, let’s just say there is DEFINITELY a transition period.
Angel Mehta: I remember reading Ruthann Quindlen’s book and she talked about the pressure of being a venture partner….everyone knows that being CEO is pretty intense. So which one was higher pressure for you? Running BAAN or being a venture investor?
Amal Johnson: The pressure is intense in both places – but again, it’s a very different pressure…meaning that when you’re an executive, it’s all about the daily event that you deal with right? It’s about the large deal you’re trying to win… the very high profile sales executive you’re trying to recruit…it’s a partnership you’re trying to secure. You’re competing day in and day out in a very intense game.
Angel Mehta: So in the venture business…
Amal Johnson: In the VENTURE business you have more room to maneuver because things don’t happen that fast…events don’t unfold with that level of intensity.
Angel Mehta: But doesn’t that mean that it’s a higher pressure role in the operating environment because you have so much less time and things happen so quickly?
Amal Johnson: In a certain way, yes.
Angel Mehta: That said, would you have moved into the venture world had you known that the bubble was going to burst a year later? I mean, you joined in ’99…I’m not sure I would have…[Laughing]
Amal Johnson: I joined the venture business in March of ’99. But it had nothing to do with the bubble…I joined for a couple of reasons. First, I thought it would be an interesting next move to join the other side of the equation. Nurturing young companies as a coach, rather than as the leader…..I thought that was a very interesting CAREER move regardless of the financial aspect of things. The financial rewards are excellent at an operating company that is doing well…
Angel Mehta: So it isn’t like you were moving from no financial rewards to a money tree….
Amal Johnson: Right. The bubble made both environments lucrative. But the other reason I made the move…just on a personal note…I was traveling incredibly at BAAN … working at a Dutch company with acquisitions all over…we acquired a company in Quebec, we acquired a company in Atlanta, we had an office in Menlo Park, we had an office in Reston; I was traveling all over the place. And after a while… It wears down on you.
Angel Mehta: You spoke about a transition period when you came into Lightspeed…
Amal Johnson: Yes…
Angel Mehta: Most executives go through a transition period when they move from one company to another…it’s tougher when you move from one career to another…So the challenges of people that are ‘new’ to the venture business have always been interesting to me. What were those critical things you had to figure out about being a venture investor?
Amal Johnson: Well really it’s not just lessons learned…it’s more the style…as I said, the rhythm of the business is very different. In the operating world you learn to make 10 decisions, 20 decisions, 30 decisions per day. The nature of the business is to not be the bottleneck. And you make decisions knowing just that. Knowing that you do not have nearly enough data to make those decisions, you have to make them anyway. You have to move – you can’t just be standing still until the market clarifies itself. A bad decision in the operating world is better then no decision. Correct?
Angel Mehta: Sure…
Amal Johnson: But in the venture business, ‘no decision’ is ten times better then a bad decision. Because you know if you end up making a bad decision you’re stuck with it. You can’t say, “I just changed my mind… I don’t want to make this investment” – it’s too late. Your money is in, your name is on the deal, and you have to make it work – or else. Time is your friend in the venture business. The more time you have, the more data you have, the more understanding of the environment, the more companies you look at…the better and smarter you get about that particular space.