Welcome to Elevator Pitch, a new weekly Q&A feature that puts top Silicon Valley tech investors under the spotlight and gets them chatting about what kinds of deals they’re looking for — and the common pitfalls that can trap entrepreneurs.
First in the lineup is Paul Santinelli of North Bridge Venture Partners, who founded enterprise systems management startup NOCpulse and sold it to Red Hat in 2002. He joined North Bridge three years later.
Q: HOW’D YOU GET INTO THIS RACKET?
A: I was lured to the darkside. As an entrepreneur, there was always some mystique to the venture business, how it operates, how the players became players. But once you get to this side, you start to ask yourself, “What did I do? Is Darth Vader really my father?”
Q: WHAT DO YOU LIKE ABOUT VENTURE CAPITAL?
A: Working with founders and building from the ground up is what I live to do. There is something to be said for the energy found inside the walls of a startup, coupled with the risks that you take every day to execute a plan. It’s fun to work with sharp people and build companies that might change the world.
Q: WHAT KINDS OF PITCHES ARE YOU LOOKING FOR RIGHT NOW?
A: I’ve always been focused on infrastructure — networking, systems, storage, etc. It’s not the sexiest part of the industry, and it usually gains very little attention compared to consumer Internet companies. But without scale and performant infrastructure for Web applications and online gaming, we might still be playing nothing more than Space Invaders on an Atari.
Q: WHAT’S THE BIGGEST MISTAKE ENTREPRENEURS MAKE?
A: Having been an entrepreneur in the first bubble, I can speak from experience: Not determining if there is a real business to be built or if the market wants what you are building. As a founder, I was always enamored with what we were building, how efficient we were in building it and why it was “exactly” what the doctor ordered. Had I listened to our first VP of Sales and his feedback from the field and realized, “Hey, the market doesn’t want X, they want Y and are willing to pay for it,” I might have been able to move faster to a more acceptable solution. Without users, there’s no use for the best technology built.
Q: WHAT’S THE NEXT BIG THING GOING TO BE?
A: Good question… I have to find that crystal ball to help me with this one.
I’ve been investing on two specific themes: One, data consumption and data access are growing exponentially year over year. That means processing, storing and retrieving that data in an efficient way is going to critical.
And two, software is going to drive more of what hardware was designed to accomplish. So what does that mean? Software is becoming the cerebral cortex of networking and systems. The days of purpose-built hardware — routers, switches, high-end servers and other things that require specialty silicon — will be put on hold until we reach a point where Intel processors can’t process instructions fast enough to do the job.
Based on what I’ve seen on the horizon, it’s a pretty safe bet that the new multi-core processors will do 95% of what we need them to do in the network or within systems. So, the battle will be for more intelligent, efficient software.
Q: NORTHBRIDGE RECENTLY MOVED FROM SAN MATEO, WHERE THERE ARE FEW VC FIRMS, TO PALO ALTO, WHICH IS INCREASINGLY INUNDATED. HOW COME?
A: Serendipity really drove the decision. There’s something to be said for walking through downtown Palo Alto and running into someone starting a project or wanting to connect on an idea. Since we moved into our new space on Hamilton Ave., our ability to connect with founders, peers and investing partners has increased tremendously.
We also designed our space is an open format, to allow us to work like a startup, and we share the space with founders and entrepreneurs. It’s vibrant and invigorating.
A: “Creative outlet” is probably the best answer. Some people like fast cars, elaborate vacations, sailing, painting … and I like my guitar and a microphone. If you ask friends, they’ll tell you that it’s purely because I miss Jerry Garcia and I’m trying to recreate my younger years experiencing the Grateful Dead. Sure, that could be part of the answer.
ButI find it interesting to create an experience that I’m sharing in, versus living an experience that’s someone else’s creation.
I guess that’s why I like early stage and seed investing, too: You get to be a participant in the creation of something.