Welcome back to Elevator Pitch, the Q&A that grills top tech investors on what kinds of deals they’re looking for — and which common mistakes trip up entrepreneurs.
Since Father’s Day is just around the corner, we’re chatting this week with Ethan Kurzweil of Bessemer Venture Partners. Kurzweil was just 28 when he broke into venture capital five years ago, and he’s since led the venerable firm’s investments in such high-profile startups as Playdom, Twitch.tv, Reputation.com and Piazza.
His father, Ray, was also an early bloomer: As a high schooler in the 1960s, he won national headlines (and a meeting with President Lyndon Johnson) for inventing a computer that could compose its own music. Ray Kurzweil went on to pioneer the flatbed scanner, reading machines for the blind and some of the earliest speech-recognition technology. He’s also a best-selling author. Oh, and head of engineering at Google. No pressure, Ethan!
Q: How’d you get into this racket?
A: I actually pitched Bessemer on a startup I was launching. They hated it! But they liked me and talked me into joining the firm instead.
Q: What do you like best about venture capital?
A: Hearing about the latest, cutting-edge technology and ideas. I see everything – from flying cars to augmented reality to new Web frameworks. I enjoy that. And the founders we get to work with are some of the coolest, most forward-thinking, most determined (and craziest) folks I know.
Q: What kinds of pitches are you looking for right now?
A: I’ve always been excited about the developer ecosystem, and the increasing influence that developers get to make decisions and spend money in the enterprise. There’s a lot going on in this area – from Twilio pushing the bounds of communications, to other cloud technologies that allow developers to deliver experiences that would have taken years to build in the past.
Consumer startups are also continuing to push the envelope of what’s possible. The space isn’t as hot as it was a year or two ago, but there are still some very serious entrepreneurs building stuff that allows people to take greater control of their education, health, work and social lives. We’re just at the tip of the iceberg here.
Q: What’s the biggest mistake entrepreneurs make?
A: Chasing the meme of the moment — just knocking off some fleeting consumer fad without truly understanding it or having a passion for the product they are building.
On the enterprise or developer front, lots of entrepreneurs don’t think about the experience of their users. That’s a mistake – even business users deserve a good experience with your product, just like Apple thinks about delighting their users. And if you don’t deliver a good experience, someone else will.
Q: What’s the next big thing going to be?
A: Technology that enhances our world by blending the real and the virtual. Why do I have to interact with a clunky-looking box to access the Internet or use technology? Smart mobile devices are only the first step.
Q: Bessemer traces its roots to the founding of Carnegie Steel in 1872. More recently, the firm’s backed Yelp and LinkedIn. How does that kind of track record help you get into deals?
A: We have experience working with entrepreneurs on the cutting edge, whether that’s building steel refineries or live game streaming or Pinterest. We’ve seen it all. Well, almost; none of us were actually alive in the steel days.
In addition, we’re extremely collaborative. So in any relationship with Bessemer, entrepreneurs get access to the cumulative experience of the entire partnership. Here’s a recent example: Intucell, a deal that Adam Fisher identified out of our Israel office.
Adam brought in Bob Goodman, a wireless industry veteran and long-time partner in our New York office. Adam worked closely with the team in Israel, while Bob made introductions to carriers and helped identify AT&T as a potential partner. The resulting $50 million contract with AT&T allowed the company to grow from six people at the time of the deal to 85 now and to prove their technology in the market — ultimately attracting Cisco for a $475 million acquisition, just two years after we led their Series A.
We couldn’t do that working alone, and without Adam and Bob’s combined knowledge and experience.
Q: Your dad is has been likened to a modern Thomas Edison. Would you call technology the family business?
A: My father always worked on projects that seemed crazy at the time, but ultimately had a significant impact. He taught me the importance of thinking big about what will be possible a decade from now and working backwards from that point.
Does anyone think computers that augment our intelligence won’t ever be possible — 1,000 year from now, or 100? Of course it will happen, so I learned to put my initial skepticism aside and figure out what it will take to make that future a reality.
In the VC world, it’s challenging to put an idea from an entrepreneur into broader context. Will it be a trivial feature, or something that fundamentally changes the way we live or work? Often disruptive technology seems unremarkable at first; this was true of both Google and Facebook. So, I’ve learned to evaluate an idea by stepping back to see if it’s part of something groundbreaking versus chasing the latest meme.