Personal Advice from A Silicon Valley VC Veteran

Professor John Glynn (http://bit.ly/JGlynn) sadly just retired after 20 years of teaching at GSB. I can't say how lucky I am to be in his last class taught at GSB. It's often unbelievable such a humble, nice gentleman who lectured us every Tuesday and Thursday morning is one of the oldest and most influential figures in the Silicon Valley. Above all, I learned a great deal of humility from Professor Glynn.

In his last class, Professor Glynn shared with us a number of personal wisdoms. I will share them in the next few blogs with you all:

Personal Advice (my favorite):
In an era of commercialism and rampant greed, you need to be reminded about the powers of idealism, community, diversity and self-respect.

1. Begin with an end in mind. Know where you are going to understand where you are now.

2. Accept responsibility for yourself. Put the monkey on your back. Obstacles to success are usually not external.

3. Embrace the unknown and distrust the known.

4. Understand then be understood. Listen to how others see things. Try to put yourself in the other person's shoes.

5. Focus on implementation. Organize and act around priorities.

6. Make commitments and live up to them. Do what you say you are going to do.

7. Never ask people to do something you would not do.

8. Continue to learn. "It's what you learn after you know it all that really counts." John Wooden

9. Obey the absolutes of right and wrong. Adhere to your principles even when it hurts to do so.

10. Develop some humility. Most entrepreneurs are long on ego and need more humility.

11. Don't take yourself too seriously. Learn to laugh at yourself.

12. Focus on the glass being half full and not half empty.

13. Play to win. Do not fear failure. Fear of failure is often worse than inertia. Take risks and embrace failure. There is no disgrace in failure if you have acted in a fair and honest manner.

14. Be aware of the shadow you cast.
a. Avoid the total focus on what is good for me.
b. Look at how your actions affect others.
c. Put your ego in place so people can communicate with you.
d. Show your commitment to your people and their importance to your organization. Create a sense of belonging.
e. Be genuine and natural with people and be honest and consistent in dealing with them.

15 Finally, get your priorities straight:
a. Family is #1
b. Wife or husband is #1. Spend time with them.
c. You need a balanced life. Take vacations and breaks to stay sharp.
d. Enjoy life before it is gone.
e. Give rather than take.
f. Do rather than talk.
g. Say it can be done rather than it's impossible.
h. Inspire others rather than discourage.
i. Light a candle rather than curse the darkness.
j. Do more than exist - LIVE.

Key Lessons Learned from Prof. Mark Leslie on Enterprise Sales and Leadership

Mark Leslie (http://bit.ly/MLeslie) is one of my favorite professors here at GSB. It's my fortune to sit in his class and learn the knowledge he accumulated from leading and growing technology companies for the past 30+ years!

I particularly enjoyed our last day of the enterprise sales class I took given by him and Mark Stevens (partner at Sequoia Capital).

Mark shared the following key lessons:
First, he shared the virtuous cycle below about building a strong company and the value of good sales management:
(1) Set goals realistically. Set the quota at a level that allows 70% of the organization achieve 100% or more of the quota. Allowing people to succeed build confidence and a virtuous cycle of success. Positive reinforcements are most effective.
(2) When sales overachieves, company has enough end of quarter or end of year business to avoid discount pressure or channel stuff.
(3) The company can exceed profit expectations.
(4) As a public company, high stock prices build the public reputation of the company.
(5) As a result, you create an environment where you can attract the best and brightest.
(6) You also have money to acquire new products, enter new markets, build strategic partnerships, and leverage industry trends.

This comes back to the importance of forecasting and setting achievable goals. Typically, he used to set a team's overall goal as less than 80% of the sum of individual quotas, as a rule of thumb. Another tip he shared was that while you tie most sales' people's compensation directly to their revenues, you should tie the VP of sales' compensation to the company's overall goal to avoid conflicts of interests. He/she should think more like a CEO.

Second, he warned that inertias exist in a company's revenue plan. You cannot expect to change things and expect a 180 degree change over night.

Third, it's important to inspire people to be heroic and to not rest on your own laurels. NEVER, NEVER read your own press clips. Remember where you come from.

Fourth, set each of the operating function's expenses at a proportional share of the revenue dollar.

Fifth, build trust with your VP of sales to avoid gaming. Realistically ask for the "highest number you're certain you can make. Anything less will inhibit our investment in the future of the business."

Finally, the most important thing for a leader is to create a "high-trust" environment above the mission of "self". Talk to people in the frontline and filter out the BS. Never shoot the messenger and provide as much transparency as possible in the organization. Ask yourself "is there any good reason why people shouldn't know this?"

A quote he shared at the end was very inspiring for me, especially as I'm pursuing an entrepreneurial path:

"Regret for the things we did can be tempered by time; it is regret for the things we did not do that is inconsolable. - Sidney J. Harris (1917-1986)"

Peter Thiel Speaking in Class

It was one of my highlights at Stanford GSB! Peter Thiel, the legendary founder of Paypal and famed venture investor (Founders Fund) came to speak at my class "Entrepreneurship and Venture Capital" taught by Professor and Venture Capitalist John Glynn.

The Paypal Mafia is known for its streak of impressive successes in the silicon valley. Last summer, I also enjoyed reading the book "the Paypal Wars" by Eric Jackson, one of the early employees at Paypal.

I've jogged down some of my key learnings from Peter's talk, as well as some of my thoughts.

With Founders Fund as the case in point, we discussed problems facing the venture capital industry today:

1) Too much VC money is chasing a limited number of good ideas.

2) While fund sizes grew, costs to start up a company have significantly come down due to better technology infrastructures. There are also more veteran entrepreneurs why rely less on VCs.

3) VCs' interests are likely less aligned with the entrepreneurs' given the large management fee VCs generate from the large fund sizes.

4) VCs often take too many board seats and have limited time to bring real value to each portfolio company. They also have very limited time to respond to new deals.

5) There are fewer liquidity events, making exits hard.

6) Many venture capitalists are professional investment managers who do not have hands-on entrepreneurial experiences and cannot relate well with entrepreneurs.

Founders Fund, founded by Peter Thiel and a few Paypal co-founders, made a few changes accordingly: a smaller fund size ($100-250M), a team of seasoned serial entrepreneurs, an opportunity for entrepreneurs to partially cash out as their companies grow through the Series FF stocks, and the investors' own direct involvements as entrepreneurs outside of Founders Fund.

Peter discussed Founders Fund's approaches:

1) Contrarian: he used SpaceX as an example. Few other VCs would have thought about investing in a rocket company!

2) Partnership with Entrepreneurs: Will not fire original founders. No need for a board seat.

3) Not Constrained by Structures: He discussed his willingness to invest $500K in Facebook and get a <10%>

4) invest in people who are really smart, sectors that are not too crowded, and think hard about why it is a great company and why others do not see it.

I particularly liked a few perspectives he shared:

1) He would invest in "terminal technologies" - technologies that marked the end of an era - such as Google, after which search technologies only experienced incremental improvements rather than breakthroughs.

2) There are two types of business: monopoly and commodity. Google and Microsoft are both monopolies. it's VERY HARD, in Peter's opinion, to unseat a monopoly. In that sense, Google and Microsoft's efforts at "mutual destruction" (Chrome OS and Bing Search) may be just a waste of shareholders' money. I've long thought that if I were at Microsoft, I would not continue to sink money in the direct search battle against Google. Try something else! For example, Microsoft is better at enterprises. Use its know-how and customer base to build a more robust suite of cloud services. For God's sake, move Microsoft Office online and make it 10x better than Google Docs!

3) When asked where he sees opportunities in 2010, he refers to certain hard technology areas which need improvements, ranging from space technology to genomics.

Given Peter's track record at building an all-star team, I couldn't help but ask him about his secret sauce at discovering superstars. Here's his feedback:

driven, motivated, individually talented, teams that work well together

He also suggested a rule of thumb: what's the CEO's salary. If it's above $150K, it'll most likely fail.

Finally, when asked again why the Paypal team was so strong, Peter said that Paypal was a "difficult success". This made the Paypal team special, compared to people from other successes that almost came to easily, from Microsoft to Google.

An Inspiration from Listening to Jessica Jackley's Talk - Education Microloans

Jessica Jackley came to give a talk in a class last Friday. It's hard to believe that a young lady who looks just like my peer has done something so impressive - Kiva has facilitated over $100 million microloans since its founding four years ago. Hearing her story is further inspiring. She started so small, just by writing stories of entrepreneurs in developing worlds who need some small amounts of lending to start their businesses, and sending those stories back to friends and sharing them on a website. It all started there. The human one-to-one touch is what really made Kiva special. Traditional lending syndicates multiple borrowers, and in doing so, disconnects the human touch between the lenders and the borrowers. Kiva allows one to build a direct connection with the person he/she is helping and it's not charity - the lender only gives up a small amount of interest income.

I've always kept a list of interesting ideas, and one of them I spent some time on last summer was to build a "Kiva for Education" - allowing individuals to lend small amounts of money to help more people get access to education. The assumption is that education is the best investment you can make and potentially yields high ROI. Investing in a person and empowering that person to take on a more productive life should yield a positive outcome. However, education lending itself has several challenges: (1) education is a longer-term investment, especially if you want to invest in the younger children; (2) the field infrastructure is much less available than the wide network of MFI partners which help make Kiva scale so fast.

I'm still interested in that idea and hope to revisit at some point in the future.

Bing Gordon's Talk at GSB

Bing Gordon, former Chief Creative Officer and co-founder of EA and General Partner at KPCB, came to speak at GSB last Thursday.

I met him when he and Marc Pincus (founder of Zynga) came to give a talk at Stanford's engineering school last quarter. I really enjoyed that talk and the concept of "digital skyscrapers".

Some great stories and tips from Bing:

When he graduated from Stanford Graduate School of Business (GSB), he had three goals in mind: developing people, designing organizational process, and making money. Not bad goals! What are my goals? I think they are: building amazing products that people love, building great organizations, making money, and make the world more fair.

I always have a love hate relationship with video games, sometimes feeling it's mental porn like the tabloids - a waste of time. At other times, I think they are good as long as they make people happy. Bing had an interesting theory. He quoted some research saying that games are a key driver of human evolution!

Bing also gave this great career advice that you want to join an org where everything is measured by metrics. You don't want to join a company that doesn't have any young people in the senior ranks.

He talked about games as a great educational tool to motivate students to learn. I've personally thought quite a bit about this. Given my boyfriend is working on it, I will do something different :)

when you come to think of it, gameplay has played a big role in making the most popular consumer web startups, ranging from Yelp to Twitter or Facebook. It's all about converting your social status and relationships into numbers. The numbers are more measurable and people can be obsessed with them - how many follow you, how many retweeted you, how many photos tagged you, how many friends you have, etc.

Bing talked about how games train people to test the edge of rules, to measure by data, and to cooperate - all key ingredients for a modern success in career!

Some interesting data he shared (don't quote me, I jogged down the data too quickly to verify): Zynga $10 ARPU, facebook $3, WOW $0.25/hour, and Google $35/hour! In Asia, games make $6-10/year.

The best are his tips to GSB students:

1) do 3 outside projects - not only build your imagination but also support it with facts. Well I did one last year in mobile payment space, then I got too busy with my own startup.

2) build personal relationship with one to several professors. yes, amazing profs at GSB!

3) write 3 business plans! - Ha, I guess I'm well on my way. have gone through 2 detailed plans and so many more briefer versions in my pocket.

Thank you, Bing, and sorry that I forgot to order lunch beforehand!