Ashesh Shah (The London Fund): Be Brave!

Ashesh Shah is the Founder of The London Fund. He has 20+ years of global operational experience in building, integrating, and managing enterprises from concept through IPO. He has managed a venture capital portfolio of over $1.5B AUM and returns in excess of 30%. As a serial entrepreneur, he has overseen the high-profile exits of solo sciences, Good & Co, Black Duck Software, Draft.com, Frigo RevolutionWear, and StarStreet among others. He is an active participant in the global entrepreneurial community and specializes in sourcing transactions often unavailable to the broader investment community and ahead of institutional exposure. He holds patents in intellectual property, licensing, consumer loyalty, couponing, and payment technology. He has served on a Presidential task force for the CIA, holding top secret and special clearances, and as a VP of R&D for Razorfish. He was on the Advanced Research Board at Partners Healthcare and is a graduate of Williams College.

How did it all start? How did you decide to enter the venture investment business?

My background is a bit different from most people, but I’ve been an entrepreneur for several decades. I had 4 IPOs by the age of 27. Later I was the head of R&D for what later became Razorfish. I realized that I could do a lot better for companies, not just for myself, by really becoming more involved and understanding what is going to be possible from a finance standpoint. I was then able to create a venture catalyst (like an incubator) in 1997, one of the first in the world, that ended up with $1.5B portfolio. I switched from there in the early 2000s to create The London Fund which we really talked about as a merchant bank, not necessarily a typical VC firm. 

And what the difference?

The difference between a venture capital firm and a merchant bank goes back to many years ago, centuries, in fact. Rothschild believed that a true merchant banker had to understand the industry for which they were helping. You couldn’t just simply become a banker, look around, do deals, and make money, otherwise, you don’t understand the The difference between a venture capital firm and a merchant bank goes back to many years ago, centuries, in fact. Rothschild believed that a true merchant banker had to understand the industry for which they were helping. You couldn’t just simply become a banker, look around, do deals, and make money, otherwise, you don’t understand the heart of the industry that you’re trying to service. The French term is “entrepreneur extraordinaire.” The concept is a person, for example, who understood textiles and knew how to handle the cash and the cost of capital in a way he can optimize it to really move the business forward quickly and efficiently. What we would call WACC (weighted average cost of capital) comes into play by a merchant bank. It means the merchant bank can go in and put money from their family office, from friends, from funds from, from wherever it might be and that they can also get very operational inside the company because everyone has either patterns or has built a company as a founder. And not in a theoretical way: in my firm, we have held the CxO position across every position in both public and private  companies so we’ve know how to take a company from 0 to public. As a group of investors, we are built different, we aren’t afraid of investing in or looking at what we call, “Ferraris with flat tires.“

What surprised or impressed you the most when you started working in venture capital?

I think what was interesting is how many people were not capable of seeing past the founders’ basic pitch. Let’s say that you love cars, but you want to buy only a red Ferrari and you go and look for red Ferraris. I have a black Ferrari. Because we are a merchant bank, we can take the black Ferrari, give it a paint job – and now it’s a red Ferrari. Most venture capital firms are going to look at it, if they never have done the business, they don’t realize that it takes so little to paint a car – and just reject the deal, because it has the wrong thesis and they don’t invest in black cars. That is what I was surprised by: so many people have so many amazing ideas, and sometimes they are just a little bit different from what the investment community recognizes.

Like a blue Ferrari?

Exactly. It’s still a Ferrari, it just needs a little bit of tuning or paint, and if you can do that, you can not only get more equity, but you can get a better deal and everybody wins. Otherwise, the company would have disappeared and maybe the world lost something that was going to be great. Maybe, it would be the last Ferrari of this type. But now we found a way to bridge the gap.

How did the ecosystem change over time? Both in terms of entrepreneurship and the VC world.

It’s always up and down: more money – more companies, less money – less companies, etc. I used to teach law school classes on how to negotiate term sheets. It was always funny because sometimes you would negotiate those term sIt’s always up and down: more money – more companies, less money – less companies, etc. I used to teach law school classes on how to negotiate term sheets. It was always funny because sometimes you would negotiate those term sheets and you would tell the person behind them, “Accept everything they’re going to give you, take the term sheet and go home, despite what all lawyers tell you.” That’s the only money in the table, that’s what the market is telling you – take it. I think, the relationships are changing, I think, what’s happening is that venture itself is becoming pretty vanilla – everybody talks they have a better network, they have this or that, 10,000 connections, 20,000 followers. But the point is that everybody has come to a special connection. The reality isn’t the special connection. Can you tune and build focus in collaboration with the company? I think that ecosystem that we talked about is really missing something. Now there are a lot of angels, a lot of crowdsourcing… And, I think, true and good mentorship and the ability to shape entire platforms – that’s been missing. 

What is your strategic vision for the next five years?

To leverage a couple of areas. One we’ve done very well is Cannabis. Cannabis is interesting because we’re not necessarily investing in cannabis but rather in what we call “activated retail.” The idea in my mind is that only activated retail will survive against the online because there are things you still have to try, touch, or taste before buying. Any kind of retail that is transactional – a restaurant or a tasting wine at a shop or trying on ski boots – is activated retail. What we can do as something special is we can build technology inside that space, find companies that are not just looking at supporting activated retail, but, for example, address human capital, promotion, and sales – the most expensive and important things in activated retail. With our firm’s success in cannabis tech, we can own that in the cannabis sector and then scale from there everywhere else. We’ve done very well in the cannabis sector in technology with an exit on NASDAQ of a US cannabis technology company, and that’s something no one else has done. I was even the first US public market CTO for a cannabis tech company. If we can do it in cannabis, why can’t we do it for wine or perfumes, or in any other retail? These are the sectors that will grow fastest and that’s where we can do some amazing things. 

How did COVID impact your business?

We invested in 4 companies and built a new fund that is quite a secret but has almost $1B in value – all during COVID.  

What are the top trends that you see in the future? Anything particularly disruptive?

This is, again, activated retail survival. People went oThis is, again, activated retail survival. People went online to buy things but they realize they still need to try and taste things. So I think the trend of this hybridized model it’s going to be very, very strong.

What was the most unusual startup you ever supported? 

We’ve supported some very hidden types of technologies. They were hidden, to begin with, when no one understood at the time, for example, how important payment processing is, and the team that was working with the invented CVV number. We were able to build a  lot of the virtual card systems and that’s pretty deep technology. Another company We’ve supported some very hidden types of technologies. They were hidden, to begin with, when no one understood at the time, for example, how important payment processing is, and the team that was working with the invented CVV number. We were able to build a lot of the virtual card systems and that’s pretty deep technology. Another company where we are co-founders  is Black Duck Software – a company that was doing open source license management: it was figuring out if somebody is stealing open Source Code and using it the wrong way or “infecting” their own code with unnecessary license requirement. This was a $565M company at the exit. Almost every company that we are involved in had deep technology. We stopped the counterfeiting of consumer goods through a  company called solo sciences, inc., which allowed for the fingerprinting of all consumer packages. Another company of ours is changing the game on how you hire hourly workers by helping job seekers and companies quickly match to each other – it is called engin sciences. We’ve had some very interesting tech companies in our journey. 

What is the size of your current fund? 

We don’t disclose that, but I can say that one of the key funds we’ve just created, INFLUENCE by The London Fund  is  about $1B and is the first fund to ever leverage influence as a currency.

What percentage of the funds is reserved for follow-up rounds?

In this particular new one, we keep 20 to 30%.

How do startup teams usually find you? Do you wait for inflow or scout actively? 

Little of both.  I’ve been an executive, and my team members, my partners – we’ve all been executives since 1990 in so many sectors in Europe, in the US (in New York, Boston, San Francisco, Los Angeles), in London, Dublin, in Lebanon, in Little of both.  I’ve been an executive, and my team members, my partners – we’ve all been executives since 1990 in so many sectors in Europe, in the US (in New York, Boston, San Francisco, Los Angeles), in London, Dublin, in Lebanon, in Denmark – we are people from across the world. We’ve been doing this for so long that if someone decides to work for us or knows us or has built or wants to build a team for their idea – they know where to find us. We know very well not only how to build Ferraris, but how to find drivers. 

How many startup projects do you review per year?

We look closely at 10-15-20 proposals each year, going deep into understanding a company. And we invest in We look closely at 50 proposals each year, going deep into understanding a company. And we invest in somewhere between 5 and 10 companies. 

At what stage do you prefer to enter? 

We enter anywhere, all the way up from seed to series C. The reason is we feel that we have different types of capital as a merchant bank. It’s very high-velocity capital and very high-risk capital. 

Geography of your interests?

We’re not geographically limited. We’ve done dWe’re not geographically limited. We’ve done deals anywhere from Tokyo to the US. It’s a very global market.

What verticals and industries are you interested in?

Verticals that we really look at are not limited by industry but rather by audience or technology. We have looked at anything that involves direct-to-consumer – not direct sales but technologies that support activated retail. Inside that, we see anything you touch or try, so it can be Health and Wellness, it also includes cannabis, etc. The other thing that we look at very strongly is anything that can leverage a proprietary approach that we have. This is a trademark to us – Sympathetic AI™. This is a concept that I came up with. It is the notion that most artificial intelligence or chatbots are not very interesting to us because we believe that human intervention is always required. For example, we have a company that helps hourly workers to find jobs and allows, more importantly, an employer to find hourly workers. If you had a chatbot that helps, find candidates – whether it be AI or machine learning that might look through resumes – and then actually blend a human with the computer, you would get a very real interaction, We make a human more powerful very quickly, but you deal with a human. That’s what engin sciences is about. These are two big areas that we look at and they represent for us a very differentiated ability because these are technologies we know and have built ourselves.

Can you name Industries that you really like but you will never invest in?

“Never say ‘Never’,” because our range has been everything from women’s bras and men’s underwear companies with technologies to the company building the core of the credit card. We won’t invest in chip fads, we don’t invest in Dodges or Pontiacs. We look for intellectual property-rich companies. They have to have a very strong defendable position even if some of that position comes from us. Most bankers will never see it above their very comfortable level. Sometimes people laugh and say that we are like bankers who code. 

What are the major differences between European and US ecosystems?

In Europe, what I find, is a lot of people are more conservative, they will not take a lot of cash because they don’t want to dilute, whereas in the US they will take an amazing amount of money – look at Clubhouse. And they will run as fast as they can – without revenue, without anything because if they have great technology, if they have a great concept, they will push very, very quickly. Also in Europe, the idea of trying to get to EBIT-positive and cash neutral and all of that from the venture world is a pressure so high for the local investors that it’s teaching the companies to be more conservative. When they come to the US, they find themselves completely out fueled by a venture-backed US company. 

How do you select startups to support? What are your criteria?

We look for an unfair advantage from the team – unfair team advantage or unfair technology or intellectual property advantage – for the market we have. When we looked at a company that can tackle the nearly $225 billion trade promotional space and build an AI-driven smarter promo system with the world’s first universal coupon, coupond co, the team had an unfair advantage. The team itself has two things that were very interesting: 1) Gordon Wade, the father of modern category management and all of CPG retail and manufacturing across the world. And you have with him a world-class technologist who was the CTO of Rakuten, the world leader in loyalty. So the two of them already knew coupons and loyalty. Second: the team also had a completely unfair advantage in the cannabis space, because the two other founders came from a place where they sold over a billion dollars of as the CRO of the largest cannabis delivery company, Eaze, and Greg Shoenfeld, the President, headed up analytics and operations at the largest data analytics company in the space, BDSA.. That team could go in, use the cannabis sector as a launchpad with little effort and no be locked in as a cannabis company, but software for the broader customer packaged goods industry. For us, the idea of having a company that can very quickly dominate, for example, the cannabis clients and move from there to solve the same problem in other industries like alcohol, wine, or cosmetics is very attractive. 

If during the pitch or diligence process you see that there is no market for a product, especially if that market doesn’t exist yet in a chosen industry, but the product is interesting and may be used somewhere else – do you help them pivot to different markets, where that would be a fit?

Always. It’s my central quote: I always look for a Ferrari with a flat tire. If it’s an amazing company, an amazing team that has the unnatural idea, I will go in. Because sometimes we have the market. We had a technology company in Always. It’s my central thesis: I always look for a Ferrari with a flat tire. If it’s an amazing company, an amazing team that has the unnatural idea, I will go in. Because sometimes we have the market. We had a technology company in Sweden and the owner had patents on men’s underwear, and we brought it back into the US market out of the Swedish market where is doing well and we were able to bring in Derek Jeter, 50 Cent, Carmelo Anthony, Zeke Elliott – we could do this for RevolutionWear company because we realized that they had such a superior product, but in Sweden. If we could bring the right investor and the marketing and the right positioning, it would do very well. We’ve done that several times: we found a company that was very focused on a small market, and we worked with them to increase the opportunity that they have by showing them that their technology is more than just that small market. Again, if you look at engin sciences, we are very much interested in showing them that their solution for the cannabis industry to hire the front line people can also be used in the grocery industry, in the wine industry, in the restaurant industry, etc. We’re always very happy with that and we’re never afraid.

What are your red flags?

I’d like to know do the founders have scars and badges. When someone tells me, “I’m perfect! I’ve done everything!” – you should be very scared because nobody is perfect. I’ve had 2 companies go bankrupt. One from 9/11, where I thought our company was amazing, and then terrorists killed 65 people in my firm – you can’t control something like that. I’ve had another company that was incredible, funded by MIT, by everybody, by Draper Fisher – and an early guy stole $3M. So, you have to have had experienced bad things. If you see the general with all of the badges, but no scars, it’s less impressive than someone like Marvel’s Nick Fury, who has one eye – that’s the guy I’m the most afraid of and have the most respect for as well. Another thing I look at do they understand that this is not the last time they sell equity. Some of them get emotional about their equity, but if you want to scaling in the US or you want to grow quickly or you want to do something very massive, you need fuel. You have to be able to hire talent, and you have to be able to reward this talent. I need to know are they willing to grow, and do they understand that this is not a lifestyle business and it’s not just something like where they’re going to run a local shop. Are they trying to do something really big? And do they have the ability to understand that maybe this company will be something like Facebook for Zuckerberg or Microsoft for Gates, but maybe, instead, it’s going to be like one of many companies for Elon Musk. 

What other qualities you are looking for in founding teams? 

We run a 2-day event, called a Lal Toofan (“red storm” in Hindi) before we make the investment, using everything from marketing to brand and psychological analytics. I’ve spent many years as a psychological profiler for the CIA, and one of the things we do is to watch the team together. We want to understand core team dynamics if they’re going to help each other. You look for families in a way: families fight, and that’s okay, and families that are good stay together. We want people strong enough and smart enough and who complement each other. Lots of people talk about complementary teams, but that’s nothing because nearly everyone has a complementary team. What I want to know is that can the marketing guy yell at the computer guy, saying, “Your code is garbage!”? I want marketing to explain why this product is unwanted or computer person to explain why the marketing doesn’t feel right. I need this tension between the two in a positive way. That’s the team we want. 

Who you would prefer to work with, Steve Jobs or Steve Wozniak?

I think you need both. You have to have the vision and the absolute unrelenting discipline, but you have to remember I think you need both. You have to have the vision and the absolute unrelenting discipline, but you have to remember that Woz is a genius. My first Apple computer was in1980 delivered and probably created by Woz. They couldn’t have done one without the other – you need the Dreamer and the Doer. And you need them to fight a bit. Without the Dreamer there are no crazy features that you would expect, but without the Doer it’s not going to happen. I had a dreamer without the ability to do, and we’ve seen that that’s a problem and we had to bring in the doer. Jobs was very smart: he knew what he didn’t know (whether he gave them the credit or not, that’s different), so he would have others to take care of it.

Investors prefer to work with teams. Have you ever supported a one-person startup?

Yes. I’m in the middle of something right now. It’s not really quite one, rather one-and-a-half, but yes. Because it’s Yes. I’m in the middle of something right now. It’s not really quite one, rather one-and-a-half, but yes. Because it’s really a person with a very very amazing level of understanding, showing success and dramatic rise, but, again, they’re missing a couple of people or components, and we can fix that. That’s why it’s OK for us.

What is your process of working with startups, once you invested in a company?

We are very very hands-on – somebody from our team will be even on daily stand-ups. We will take a board seat, we We are very hands-on – somebody from our team will be even on daily stand-ups. We will take a board seat; we will join large product roadmap meetings – we are seeing ourselves as very capable of that ability to add value beyond money. Like I said, in many of our companies we’ve written the marketing packs and go with the founders to the meetings with investors, as we did it for Black Duck Software.

What are the most common mistakes startups make?

Not taking money when it’s there is the biggest one. Getting caught up on valuation. They should worry about their piece of the pie, do they have some kind of liquidity, are they profitable. Another mistake is not rewarding their team – all of it. I think people should be extremely generous across equity and across reward structures and don’t try to cap on bonuses. It’s usually the human capital alignment that’s a major mistake by many companies. 

What is your target multiplication on exit?

I mean, everybody says, ‘’Whatever possible!” What makes us special is that we, my partner Palle Pedersen and I, have I mean, everybody says, ‘’Whatever possible!” What makes us special is that we, my partner Palle Pedersen and I, have been over 25 years in this business and we have had 95%-plus of our companies exit from 2x to 2,000x. We haven’t zeroed except for one or so from dozens and dozens. We don’t go in with this notion, “Oh, they should all be beautiful” – this is like children. Who could ask, “How many ugly children do you want?”  

What percentage of ownership of a company does your fund take for investment?

A much better question then what is the normal valuation. I always answer that the valuation is what’s going to keep alignment for everybody and move the needle. You have to give between 20 and 40% – no matter what happens. If you can give a new person that much (and I’m talking up to the Series B to C), that is, actually, your first serious hire: you’re hiring the venture person and you’re hiring that capital. You’re not taking their money and running away: they’re in there because they believe in what you’re doing. You should test your theory with them. If they don’t have the percentage that makes sense, they’re not going to be interested. This is the same as if you hire a head of marketing and you give them some junk deal.

Have you ever rejected a startup and then regret it? 

There have been some great opportunities that I’ve missed or seen but I wasn’t senior enough to make a deal at the time. Jerry Yang from Yahoo! came to pitch our fund – and the fund said “No,” because it was too early, something like 1995, their A round. Another one came when we were very young and were staring our fund at the time. He gave us a three-fold brochure, and that was his business plan: he wanted to start selling Beanie Babies™ through an auction. We could take our money and either create our own company or take 5% of his. My friend said, “Listen, does he really think there are a lot of people who have collectibles and want to sell them on the internet?” The guy’s name was Pierre Omidyar, and his company name was eBay. The third company, I was, like, 13-years old and I was in college – quite young and doing Computer science. I used to work on what was known as a Vax system 5 and I used to be a beta tester and used to write lots and lots of reports from my internet account (it was 1983). So the guy on the other side decided to hire me (remember, I was only 13 years old at the time) as a beta tester. He wrote, “ We can offer you a job to be a beta tester. We don’t have a lot of employees, but if you agree, we can give you $13,000.” I told my father, “I’m getting $1,000 per year of my life!”, but he told me that I’m completely crazy and have to go back to school. The guy who offered me the job was Paul Allen and the job was at Microsoft. I would be employee 34-35 at the time.  These are my three biggest, or very close to the biggest, life lessons, I would call them. Sometimes things come right next to you and that’s great. I think the best way to remember it is that it happened three times and it means it’s going to happen many more times, so I can keep getting smarter.

Can you name the three most breakthrough startups in history? 

Clearly, Microsoft was one. I think everyone, looks at Microsoft and wonder if they disappeared or not. It’s clearly one of the most impactful in what it’s done. The other one that is really transformational in its approach is Google. They started to look at individuals as a data model, and nobody did it the way they did and nobody understands how powerful their acquisitions were. They were the first people to acquire a company called Picasa. It was acquired because everybody was buying a painting company and photo editor. In the reality, Picasa was the only company that had the ability to tag faces before there was AI machine learning. Immediately you had this huge concept of being able Clearly, Microsoft was one. I think everyone, looks at Microsoft and wonder if they disappeared or not. It’s clearly one of the most impactful in what it’s done. The other one that is really transformational in its approach is Google. They started to look at individuals as a data model, and nobody did it the way they did and nobody understands how powerful their acquisitions were. They were the first people to acquire a company called Picasa. When it was acquired everybody thought they were buying a paint and photo editor company. In the reality, Picasa was the only company that had the ability to let people tag faces, a critical component of data for all AI machine learning systems targeting people today. Immediately you had this incredible concept of being able to associate the massive cookie structures and behind-the-scenes data structures from Google with third-party crowdsourced data. It was a massive maneuver. It’s what people now do, but they did it so far ahead of everyone and they were ahead of how everyone thought. People may not understand the level of social transformation they created. Likewise, Amazon. I knew Jeff Blackburn from back when they bought PlanetAll (it was one of my friend’s company) and we used to provide all of the message boards and chat rooms technology at Delphi Internet. Amazon and Delphi, I think, are very interesting. Amazon was incredible because of the full distribution layer that it created: from their first play into software with AWS when they first took it out of South Africa, which most people don’t remember or know, all the way to the fact that the distribution systems are built into their own logistics system. And the last one I would give is Delphi Internet, which you may not even remember or know, was the first internet ISP. A friend of mine and fellow alumnus from Williams College, Dan Bruns was the founder and CEO of Delphi the world’s first ISP, he eventually sold it to Rupert Murdoch and then bought it back. For my partner and I, it all starts with Delphi Forums, it was  one of our first investments for our Venture Catalyst firm and we created the way people replied to stories or talked in chat rooms and forums, we built communities back in the mid-90s. We eventually had a buyout offer that would have been valued at almost a billion dollars from Naveen Jain, the creator of InfoSpace. So if you look back in time, it is incredible that Delphi set the stage for all most all of what we call social media –  but it didn’t have the economic success of things to follow. That said it was providing 30 million unique people per month the ability to comment and converse across everything from ebay to about.com all by 1999 – it’s crazy. They transformed the internet without people really recognizing how much. I’m sure, everyone will say Apple is a startup that created the consumer bridge device, but I think they really just moved the needle around the sort of world of IBM-Microsoft had already started to create, they just did better marketing. It was already kind of in play by the time the others stated to “invent” things. It was a crazy time – the late 70s – early 90s.

Venture capital is a long-term game. What keeps you going on? 

My team. From my longtime partner, Palle Pedersen to my newest partner, (award-winning executive) Katie Flannery, and everyone in between, we thrive by working closely with each other, holding each other accountable, sharing ups and downs. A favorite part of my job is knowing I can sit with a world-class creative director (yes we have one), Jamie Leo, and start to build a story together to repaint that Ferrari the way the investors want. I cherish working with Melissa O’Brien and Michele Tousignant to pull together the communities and products we need developed in the portfolio companies and for our own growth.  My team has been working together between 5 and 25 years. I’ve been in this industry, this business since the beginning – from 1977, when I was 7-years old, I was a programmer, a hacker, a developer – whatever you want to call it. To me it’s not about the money – I genuinely mean that. I think of it like cavemen, like somebody who invented the wheel or hammer or a spear. If we can use these tools to make our lives better, so we have more time to enjoy yourselves and more time to work with family, and we can feed people, and if we have people who can love and care and see and do, and you can make it transparent, then you should do it. More importantly, I think everybody has a skill, a superpower. I used to worry if I was really good at seeing the products, and I don’t worry about it anymore. I know that I’m one of sort of profound in that space and I also know that everybody has that. We have the responsibility to give back to society, we believe that we’re connected – all of us. It’s not a long game for me – it’s part of my life.

What are the most important things you have learned from founders?

Founders will tell the emperor he has no clothing. That means sometimes you come in, you explain something with how it’s done in Venture, how it’s done in banking, how is done this and that, and then a founder will ask you a question – and you’d never thought this way about the matter. So I’ve learned from founders that they are profoundly capable, almost like children, and they have no baggage – the really good ones. They don’t have the baggage of society or learnings that we think was the right way. When people say, “I want to be disruptive,” it never means, “I want to be disrupted.” The good ones really do that. I’ve learned from founders how to have a heart. I think, there are more founders with more internal mission-driven actions than anybody really knows. The world and society talk about billionaires and unicorns and, I think, we confuse real founders with celebrity billionaires who want to look flashy. The founders are often mission-driven. And I’ve also learned that their journey is as important as their skills, that we all share really interesting journeys, and the more we can share these journeys with each other, the more we build this tapestry, this fabric that shows why there is strength within the fabric, why there are differences, why there is a richness to it. It only happens when you sort of go back in time with them to understand their journey: were they alone, were they a single parent, did they have money or did not have money, did they live in the slums or were they rich, were they athletes or were they nerds. Race, gender, color, creed – all this doesn’t matter; it matters how it impacted them. I never look at diversification – it’s a completely stupid concept. We are diversified and we should be diversified. I’m Indian, born and raised in the United States by parents from a foreign country. They came here with the $100, two families living in a studio apartment in Brooklyn. You look at it and you say, “How did the journey turn out?” The journey turns out that you make decisions like your son shouldn’t go and take a job in Microsoft at 13. Is it a smart one or a bad one? No, it’s the right one! Because my father grew up with no shoes after the age of 5 until he was 15. Because there was nothing where he was, he had to get scholarships. But if you don’t ask the question, you don’t understand where this diversity comes from. I’ve been thrown in jail for my color, I’ve been persecuted for different beliefs. When people tell me their stories and do not pretend to be perfect (scars and badges, again), they’re going to be incredible. I think those stories should really come out.

By the way, what was your dream job as a child?

I was going to be a cardiothoracic surgeon. My father is a cardiologist, by the age of like 9 or 10 I was already working on building an artificial heart, I had read the book on most of the causes of atherosclerosis. I was even doing studies at Cold Spring Harbor Laboratory under Dr. Watson for genetics. Until about 13-14, I was 100% sure that I’m going to become an incredible surgeon and change the way that the world operates on humans. By the time I completed my computer science degree and everything, it became completely clear that I had never seen this concept of business or how these things from the business world could be merged with my passion for all this technology stuff, and I realized then, that there are so many other incredible things to do. The first thing I tried to create was an offshore development company in 1989-90. My grandfather introduced me to industrialist and philanthropist Ratan Tata – they were friends—and he had me pitch him the idea and Mr. Tata told the president of Tata Consultancy to work with me so we can build an offshore development team together. Again, my father said, “Go back and study.” My idea was to build a software package to help doctors to do all of the scheduling and appointment and unified patient record. You might recognize that company – not mine! – that is called EPIC, a multi-billionaire company. And TCS is one of the largest offshore technology development and consulting company in the world. 

What books would you recommend to founders?

I’m terrible about books. I read a lot of crazy fiction and an incredible amount of real-time news from everywhere. My approach is very different. One thing that I learned while being an intelligence officer is that I don’t believe in fake news because I think all of them is sort of fake. When I look at information, this one thing I learned is “Find the native source and find 5 sides to that native source.” It is impossible to understand the situation based on only one source or I’m terrible about books. I read a lot of crazy fiction and an incredible amount of real-time news from everywhere. My approach is very different. One thing that I learned while being an intelligence officer is that I don’t believe in fake news because I think all of them is sort of fake. When I look at information, this one thing I learned is “Find the native source and find 5 sides to that native source.” It is impossible to understand the situation based on only one source or one interpretation. If you see my feed from Google or BBC or my search results, it’s an incredible amount – hundreds, maybe thousands of articles. All the dimensions: I want to know what the pro-Trump people say and what the anti-Trump say, I want to know what the right, the left, the upside-down, the crazy, the not crazy, because at the end of the day it’s all lenses into a perspective. Then you can use all of that to formulate something exciting. I don’t read the books, but I’d rather meet the people, talk to them, see what happens, and I’ve been lucky enough to be able to do it.

Is VC business chess, checkers, backgammon, go, card games?

It’s probably somewhere between go and chess and cards. You don’t think as much as in chess where you think many moves ahead. Ingo, you’ve got even more moves with more complexity in multiple dimensions. And then you look at pIt’s probably somewhere between go and chess and cards. You don’t think as much in anything as much as you do in chess where you need think many moves ahead. In go, you’ve got even more moves with more complexity in multiple dimensions. And then you look at poker where you have bluffing. I think if you blend it all together, that’s what a startup is. In old days Microsoft would announce something years before someone else and it didn’t even exist but it’s ok they had to do it. We called it “vaporware” and it was all about – could you get there? Because something hasn’t even been invented by the time we were operating, but we knew we could get to that point, right?

Well your three pieces of advice to founders

I’m going to use the first and single piece of advice that I came up with one day with my children. Someone said, “What are you gonna teach your child?” And I said, “I don’t know.” Are you going to teach them Newtonian physics or wake up one morning and try to teach them quantum, are you going to show them the world, teach them to love will – what? I realized that it’s really really complicated. So I said, “What if I could boil it down to just two words?” those words are “Be brave!” And the advice I give to the founders is “Be brave. Be brave enough to tell someone they are full of shit. Be brave enough to change what you think is normal. Be brave enough to take the money and dilute yourself. Be brave to hire someone that may not have the right qualifications but you felt they were the right person. Be brave to take a phone call. These actions will define fundamentally your path. Those actions of bravery will inspire people, will provide you with cover, and will provide you with the kind of light when everything gets very dark.” During those  2 day events I always tell people, “As a founder, it’s definitely not a straight line and definitely not always clear vision. Life is the really tough one, and it’s very lonely for the founder. It’s also one where you will need all the help that you possibly can all the different places.” We came with this 2-days all branding and technology, alignment, psychographic, analytic, etc., etc. event we call “Lal toofan.” In Rajasthan, in India there is a desert. If a storm comes, it’s called “lal toofan” because of all this red dust that comes up and you cannot see anything. Our idea has always been that a company’s development follows S-curve: it builds slow, that the big hockey stick up, and then it starts to flatten again, and sometimes you have to drop to a lower point to do the same curve again and go up. So the idea is if you’re not prepared when a storm happens, you won’t survive, you’re going to lose your way. We came up with this idea but we needed a name, and as we’re sitting, having a beer in Murray Hill, in New York City, the beer was called “Lal Toofan” and had this story on the back. You know, at the end of every event someone always asks for advice, and I say, “Be brave!”