Elevator Pitch: Mark Siegel of Menlo Ventures

Welcome back to Elevator Pitch, where we put top tech investors under the microscope — and pass the learnings on to you. Up this week is Mark Siegel, who studied dark matter and galaxy formation at MIT, then parlayed that into a gig at Oracle (insert Larry Ellison joke here). Siegel joined Menlo Ventures back in 1996; today, he’s a managing director at the firm, which boasts a $4 billion portfolio.

Q: HOW’D YOU GET INTO THIS RACKET?

A: I landed a part-time job at Netscape while at Stanford Business School.  This made me something of an Internet expert by default in 1996 — right around the time every venture capital firm was raising a fund to invest in this new-fangled thing called the Internet.

I had aspirations at the time to start my own company, but instead I discovered I loved investing in startups. And here I am… 17 years later!

Q: WHAT DO YOU LIKE ABOUT VENTURE CAPITAL?

A: Each day, I get to see the newest, coolest cutting-edge technology as it’s being invented.  I spend practically every waking hour with the smartest, most ambitious and creative people on the planet.  What could be better than that?

I love the early stages of company building, when strategy is formed and the product takes shape.  Figuring out how to solve a market need with a new product and beat the competition, all within the natural constraints of a startup, is like solving a big puzzle.

Q: WHAT KINDS OF PITCHES ARE YOU LOOKING FOR NOW?

A: We look at everything, from seed through growth stage companies. Our main areas of focus at the moment are cloud infrastructure, software deployed as a service, big data infrastructure or analytics, mobile, social, e-commerce apps and advertising technology.

Q: WHAT’S THE BIGGEST MISTAKE ENTREPRENEURS MAKE?

A: Companies fail because of poor execution, not because of a bad idea.  Make sure you surround yourself with the best people and constantly challenge your assumptions. I always like to say that being nimble is better than being right, because things change very fast. And adaptability is an entrepreneur’s biggest asset.

Q: WHAT’S THE NEXT BIG THING GOING TO BE?

A: I’ve been talking about the “Right Now Economy” for a while.  We consume goods and services in near real-time now.  Think about Twitter for up-to-the-second news, Roku or AppleTV for on-demand entertainment, Uber for a hailing a car, Hotel Tonight for lodging, OpenTable for dining, etc.  In just about every category, there is a company disrupting or displacing an older model (online and offline) where information and consumption can be spontaneous and immediate.

This is more than just a convenience or novelty.  It means supply and demand can be matched in real time, pricing is super-efficient, waste and excess inventory can be vastly reduced.  The move to “Right Now” consumption is going to disrupt almost every sector of our economy, and there will be new giants created in almost every existing category.

Q: AT NETSCAPE AND ORACLE, YOU’VE HAD AN EARLY SEAT AT THE DEVELOPMENT OF BOTH THE INTERNET AND OF MASSIVELY PARALLEL PROCESSING, WHICH SET THE STAGE FOR CLOUD COMPUTING. HOW DOES THAT BACKGROUND HELP YOU CONNECT WITH ENTREPRENEURS?

A: Entrepreneurs want advisors that have lived through analogous disruptive market transitions.  It’s helpful to have a historical perspective on fundamental technology, but actually the challenges young companies face are very similar regardless of their specific technology or the market they’re in.  We bring a lot of pattern recognition to the board room from our prior successes and failures.

Entrepreneurs also want investors that have empathy, who understand how hard it is to build something and will work hand-in-hand to help them succeed. That’s what we mean by “Venture Right.”

Q: MENLO HAS BEEN RESHAPING ITSELF FROM A HEAVILY ENTERPRISE-FOCUSED FIRM TO ONE THAT ALSO INCLUDES A HEALTHY SLICE OF CONSUMER TECH. IS THAT PART OF THE GENERATIONAL SHIFT UNDERWAY IN THE FIRM?

A: It’s a strategy shift that is somewhat independent of the generational change at Menlo and across our industry as a whole.  We’ve had a consumer practice for many years, with successes like Hotmail, PlaySpan, UUNet and Siri. But in retrospect, we should have had even more focus on that area, given the pace of innovation and how much economic value has been created.

We made a conscious effort in our most recent fund to invest half of the dollars in consumer deals. We’re extremely proud to be partnered with consumer investments like Tumblr, Uber, Fab, Poshmark, Roku, DropCam and others.

 

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