26 Jul Tactical Thinking with Moran Bar-Kochva
Today’s guest on The Successful Pitch is Moran Bar-Kochva, who has a law degree from Tel Aviv and a Harvard MBA. He is bi-coastal now, in the States, investing in all kinds of new, interesting technologies. Everything from 3-D holograms on your phone, to how to get food from farm to table in an efficient way. They actually are doing that for airBNB’s. He has some great lines here about confidence and passion are two important parts of a pitch. But you can’t be arrogant. He said, “We really are looking to see how you think when you have to approach a challenging solution.” He talks about the three types of I’s, of personalities. First one’s those are innovators. The second one is those who are imitators, and I’m going to let you find out on the podcast what the third I is. Enjoy.
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Tactical Thinking with Moran Bar-Kochva
Hi and welcome to The Successful Pitch. Today’s guest is Moran Bar-Kochva, who is the managing partner at Unison Capital. He has a very impressive background. He has his law degree from Tel Aviv University, and his MBA from Harvard, and he has been involved in a lot of startups. It’s a bi-coastal venture capital firm that backs transformational entrepreneurs. We’re going to ask him all about that. Moran, welcome to the show.
Thank you. Pleasure to be here.
I ask my guests to take us on a story of origin. When you were studying law, did you decide “I’m going to take a couple years off and then go get my MBA”? Or how did you get from Tel Aviv to Harvard’s MBA program?
In a simple, non-simple Israeli way. In Israel, we tend to have a small less formal society. Everyone knows everyone and formative years, in reality, tend to the be the ones that you serve in the military. For me, after the service in reality, the formative time was working with Ehud Barak, who was the former Chief of Staff of Israel. On his campaign, leading in for his election in ‘1999 as the ninth Israeli prime minister. I was very involved. I was his assistant, I was involved in the campaign in different positions and capacities. I have to say, for the first time, after being in the trenches, so to speak, I had the opportunity to see things from a relatively macro-level to kind of better understand what’s going on around the world.
If you remember, the late ’90s were the era of technology, and Israel at that time became formed what I think now we tend to brand as the startup nation. In an interesting reversal of fortunes when Barak became prime minister, I kind of decided that it’s time to move to the private sector. I wanted to go into technology. I wanted to start a company or get involved in the venture business. I have to say, I didn’t know how. I had some experience, I studied technology in high school, but at that point I was not part of that, let’s call it, community. I think communities and networks are very important.
I had a friend who gave me a pretty sharp idea. He said, “Maybe you should join the press. Maybe you should join the media to cover the technology industry. And by doing that, you’ll be able to learn and study a lot about what’s going on.” At that time, Israel had basically one media outlet that was covering the business world on a day to day basis. It actually gave me a pretty interesting vantage point, both through things that were done in Israel, but mostly to a lot of the connection between Israel and the United States. I covered a lot of the Israeli startups and Israeli companies that were traded then on the stock exchange. Mostly on NASDAQ and the New York Stock Exchange.
That, by the way, made me think more and more about MBA. Then I left the paper, I joined a startup that I was one of the early founders of. That experience and after selling that startup in 2003, made me think that I would like to stay in the States, I would like to get a better understanding for how you actually manage and how you actually run business on a global scale. I thought that an MBA would be a good opportunity to do so.
I’m not sure I have exactly the same point of view today. I think that there is a different, value proposition for MBA’s, for someone who’s coming from abroad to someone who is born, bred, and spent most of his career in one of the economic centers in the States. For someone like me, it was a phenomenal experience, and HBS in particular, was just one of the most flourishing, fruitful, exciting things that I’ve done in my life. Definitely the basis for a lot of my community over here in the States.
Why don’t we talk a little bit about what you founded on the Harvard Business School campus back in 2003, The Contemporaries, this non-profit society. I think it’s always fascinating to hear how people like you are not only interested in making a lot of money with your investments, but also in giving back. Let’s just take a minute and talk about how that came about.
I have to say that part of it, again, I’ll have to go back to when I was in the service. The services tend to be very focused on very narrow-minded things altogether. I was looking for opportunities to broaden my horizons. One of the things I got very excited about after the service was contemporary art. Through different friends and activities back home, I became a little bit more involved with the contemporary scene in Israel. In some sort of natural progression, I started collecting art, in the sense of promoting and helping artists that I knew, buying their work, just to support them and their livelihood.
When I moved to the States, I wanted to continue the same kind of idea. I thought that supporting art, especially contemporary art, especially young, contemporary artists, is a really important aspect of what we do on a day to day. My big discovery when I was in school was that in reality, a lot of the people who were in school with me, highly educated, smart, ambitious, knowledgeable, many of them even have actual academic background in art, didn’t have an actual interest in contemporary art. They would go maybe to the MoMA, they might go to some other museums, but they wouldn’t actually go to the galleries that exhibit artists that are more or less their peers in age. They wouldn’t consider, even, actually buying art from, again, someone who’s in their age group.
I thought that the reason was that the contemporary tends to have this mumbo jumbo and lingo and it has some sort of mystique and mystery around it. I thought that with some education we can bridge the gap between contemporary art and the rest of us. With a friend from business school, a guy by the name of Fraud Newreed, we decided that it’s something worthwhile starting a nonprofit to focus on it. A nonprofit that will promote contemporary art, add to the knowledge, the education, the concept of contemporary art collecting, promote the concept involved with contemporary art. Tell people what’s the value of contemporary art. Why should we support contemporary and contemporary artists?
That’s it. We started in business school as a small group of friends that were just inclined to go out and look at art and artists and meet young artists in Boston. Then we moved to New York and it became a bit more institutionalized and a bit more defined in its value proposition and also in its ability to actually do stuff. New York, I think, is the biggest hotbed of art and contemporary artists today around the world.
It’s so true. Certainly, artists in Miami and then L.A. and San Francisco are also doing their part with all the new museums and architecture being built. I brought this up because I think it’s so important for the listeners to realize that investors and people as successful as you are, are people who have other interests. If you really want to develop a relationship with someone like you, to potentially invest in their startup, I think it’s so important to have something else to talk about that you might share a passion for. I don’t know if anybody’s ever pitched you and done their due diligence and brought up the shared love of contemporary art or not, but I imagine if they have, it certainly starts the relationship off on a good step.
Absolutely. I think that you’re touching on a very fundamental aspect of human interaction. Find something that connects you and someone else. It could be a specific network that both of you are involved. That’s one of the reasons, for example, that groups like Harvard Business School, but also like other different groups tend to be pretty successful and cohesive. But it could be just issues or topics that you share. I think that’s something that is definitely worthwhile researching before you meet someone. “What do I have in common with that person?”
Maybe you like art. Maybe you like music. Maybe you like comics or movies. Then use that, both as an icebreaker, but also as a way to connect and make it much more personable and discuss and create a story from something that is maybe a purposeful interaction, where basically you just want to get something.
Yes. Right. People can always tell the difference. The more specific your story is with details, the better. That leads us right into you hear so many pitches and you’ve invested in so many companies over the last several years, both here and in New York. What’s interesting for you is that someone doesn’t have to be based on the east or west coast for you to feel like you can get to know them, since you’re bi-coastal. What do you think makes a good pitch when you hear a pitch?
I think the most important aspect of a good pitch, eventually when I think about it, is confidence. It’s the ability of someone to convey a strong understanding and knowledge and power in that particular domain. Confidence is one word, maybe another word is passion. I think that it’s not necessarily a pitch that’s done by one person, by the way. I think that that’s somewhat of a mistake. I think that a lot of wise people would be wise in reality to include more than one person in a pitch, especially for a technology startup, for example. It’s pretty clear that not everyone knows everything, and we should assume that nobody’s perfect. If that’s the case, you can absolutely bring on board your cofounders and even early employees that are relevant for the valued proposition.
Then the idea is to show that you are passionate, you’re knowledgeable, you know what you are talking about, you are pretty coherent about your company, and you also know what you don’t know. I think that people who are almost, in some respect, over-confident, they have an answer for every question, and the answer is almost too fast. I tend to be a bit taken back by that, because I know that that’s something that doesn’t happen. There are some rare cases, I have to say. I did see, and I even invest in people, who really knew everything about their domain of expertise, but because some of those people are just superstars.
Actually, research documented that there was one case of a hedge fund manager, investor, basically very similar to what Jeff Bezos did, who during his day job, he researched two very minute details, a very particular business opportunity, and then went forth and actually followed through. It’s true, he knew way more than I did and way more than anybody else on that domain, but that’s pretty rare. In most cases, it’s important also to be able to say, “Listen. Here’s what I know and here’s what I don’t know, but here is how I’m thinking of getting the answers. Now, I won’t be able to get those answers today, but I’ll be able to get the answers with the following resources.”
Nice. I think that’s a really great tip right there, is what the investors are looking for is someone who’s confident, but not arrogant, and more importantly, they’re really looking to see how do you think? If you don’t have the answer to something, how are you going to think to get it? Any time you can show how you think when you give a pitch, I think that’s what they look for in school, right? Teaching people to think for themselves and not just recite information back, so how you approach problems would be, I think, a key criteria of what you’re saying here.
Exactly. I think that … I’m, personally, especially impressed by what I call “tactical thinking.” People who actually think about it, not in a wide range, kind of almost 30,000 miles out in the sky, but people who actually think about it tactically. “How can I be able achieve certain things?” And have a clear understanding and good ideas. Again, nobody knows everything, but you need to be able to think clearly about how you tactically are going to resolve and approach certain challenges.
That’s something that conveys a lot of confidence for me, by the way. Because if I understand that you, the entrepreneur, have thought about it, and also thought about how you actually going to approach obstacles and challenges, it makes me understand that you’ll be able to deal with it on a grand scheme.
Fantastic. Unison Capital is venture capital, Can you share with us what you? Do you series A, you don’t do any C, I’m guessing?
I tend to stay away from C, but again, the way that I frame it is the following. I would like and we would like to get involved in companies where a lot of the questions are already answered. We can basically think and help the entrepreneur or the team of entrepreneurs to take the company to commercialization.
Which is, in reality, the main value proposition of people like us.
Here’s the money so you can scale, in other words. Is that right?
Here’s the money so you can scale. Here’s the money to help you recruit the right people. Here’s the know how to recruit the right people. For example, I think that recruiting a team, a very early stage team, is something that people like me, at least, have a hard time to do. But I can help in the stage where this is already an early team, the basic product was done, or at least came to a certain level of maturity, where you actually need to start thinking about executives, and about people who will be able to help to take it to actual launch. At that point, I think our value proposition is real and meaningful.
Nice. Let’s talk about some of the companies you’ve invested in. The one that caught my eye is getsourcery.com, because they have airBNB as a client. Can you tell us what that pitch was like, what Get Sourcery does?
Get Sourcery is mostly Sourcery. Sourcery is a company started by a very tenacious and I would say powerful entrepreneur called Na’ama Moran. Funny enough, we shared the first and last name, who was also by coincidence also from Israel. Na’ama was looking like a lot of other entrepreneur these days in markets that are ripe for change. Markets that basically have the ability to use technology or information technology to create value. In her case, what she focused on was the market for food, in the foodservice industry. When you think about restaurants, catering, any kind of food service business, how do they actually source the food that eventually they bring us all the way to the table?
The concept of farm to table, it’s much deeper and much more complicated in reality than that great slogan, “Farm to table.”
I imagine there’s a few steps along the way.
There are a few steps along the way. A lot of them can be done in a better way, more efficient way with technology. Sourcery was built exactly around that concept. How can we create more efficiencies? How we can bring better food, how we can understand and make things more transparent, both for, let’s say, chefs and restaurateurs, as much as it is for the farms, farmers, and the distributors that actually do the work of taking it from one point to another. Na’ama has taken that concept one step further. Nowadays, she’s actually offering a new, really interesting, I can’t say too many words, but a really interesting idea of distribution directly from large warehouse stores all the way to the restaurants.
In a way that is much more transparent and also much more financially efficient than the other options today.
I see that she won 2017’s top woman in food service technology. Clearly you invested in a great team there. How is it that she’s connected to airBNB, with Sourcery?
airBNB is a customer of Sourcery. airBNB, like many other growing startups, they have their own kitchen, where they offer food to their employees. They need that under their hat. They also need to use someone who will help them to source food. That’s basically the value proposition for Sourcery for airBNB. The question of how they are connected is one of the big advantages of Silicon Valley. Silicon Valley is actually a relatively small place. I’m not even sure what exactly was the connection, but I’m pretty certain that one of the members of the Sourcery team somehow met either the chef or one of the people involved with airBNB.
That’s great social proof, isn’t it, to have that as a client for the next round of funding and everything else?
Yeah, absolutely. Absolutely.
Let’s talk about another. You have so many so it’s a little challenging.
Maybe I’ll pick and choose, if I can.
I’ll maybe mention another really cool company that I’m very excited and very passionate and quite involved with. A company called Ostendo. Ostendo, in Latin, means “to show.” Ostendo is a company that, I have to say, is one of those unique experiences for an investor. Eventually, all of us would love to see a relatively fast turn of investment to a return. Obviously, if you can invest money today and get a great return for your money within two years, you’ve done very well. But the reality is that that’s not the case. When you think about it in Israel, and maybe throughout a lot of the technology world a few days ago, the big news were about acquisition of a company called Mobileye by Intel, for 15 and a change billion dollars, which is not a small amount of money.
Mobileye is an Israeli technology company that was dealing with computer vision focusing on the car industry. For many years, I think it’s a company that celebrated, its 15th or 16th year around the time of this transaction. It’s a company, that for many, many years, I think for more than a decade even, was just in development stages. Until they actually reach a point where the market was mature enough, as well as their technology. Maybe I’ll do a little caveat now and later we’ll wrap it in another way.
I talk about one of the theories that I tend to follow as an investor and also I discuss it in a book that I’m writing these days. When you think about it, I always say that in technology investment, but it’s true for almost any kind of development, there’s a good theory that will take the three I’s. Three types of people that start with the letter I.
The first are innovators. Second are imitators. Third are idiots. Let’s start by saying that being an idiot is probably not a useful thing to do. Idiocy, in that aspect, is when you come to someone that was done and overdone, and you tried to find some other way to do it, where the market is in reality mostly exhausted.
When you think about innovation and imitation, both of them are places where there is a way to create value, but it’s worthwhile to remember, both for us as investors, and also of course, even more so as entrepreneurs and people who want to do something, that the value generated by imitation, is substantially higher than innovation. It’s interesting, because I think in general, in our business and in society in general, we tend to elevate, almost to a mythological level innovation and innovators. But eventually the people who actually change the face of things and make reality, tend to not be innovators. Other people who almost came and did something out of nothing, but mostly the people who actually took things that were created before them and made a powerful, easy to digest reality out of them.
One example for that, I think that is pretty good, is a band called The Beatles. When you think about it, The Beatles, although, in their relatively large work, you can see certain aspects where they did actually innovated things. One example would be the use of Indian motifs and Indian music into their western rock music or western pop music. But altogether, they mostly built on building blocks that were created before them. In the blues, in the early rock music. They basically just took all of it and were able to place it in this perfectly amazing music that was both unique and still exciting and at the same time, relatively easy to digest.
I think that’s the reason why they became the quintessential rock band of all time. In similar ways, we can think about the emergence of Google, as a search engine, compared to a bunch of other search engines that came earlier. Or to the emergence of Facebook as a social network compared to Friendster and a bunch of other networks that actually I think the Jonathan Abrams from Friendster needs to get that award of innovator of the entire social networking world or industry. Eventually the people who actually reap all the value, most of the value, from that innovation were the founders of Facebook, and to a lesser extent, the founders of a company like Myspace and LinkedIn in the professional world. We can go on and on.
It’s interesting. What you’re saying, if I’m hearing you correctly, is you don’t have to be an innovator to be successful. If you imitate something and put your own spin on it, you can still be successful. Would that be accurate?
More than that. Even more than that I would say that, in reality, not only that imitators can be very successful, they can probably even be more successful.
I think that when we think about it from a more macro point of view, eventually the imitators are the one who actually make the world that we see and shaped around us, rather than any innovators.
Well, I can even bring it back to the art world, right?
You can look at certain artists.
I think that, again, these things are a theory that in reality works very well in all those worlds. You can apply it, of course, like I just did for The Beatles, you can easily discuss how someone like Jeff Koons and a bunch of other artists, that are immensely successful and relatively known today, are eventually people who mostly stood on the shoulders of people who preceded them and actually innovated certain aspects of art. We can even discuss of how certain aspects of the real innovation that Andy Warhol did, eventually materialized way after his own death.
It takes time for us to actually digest, to actually accept innovation.
Now we’re back to the innovation that Ostendo is doing with your phone and tablets doing 3-D holograms, my goodness.
Even before that, the founder of Ostendo, Dr. Hussein El-Ghoroury, who is a pretty fascinating force of nature for an entrepreneur, a decade ago was already working and thinking about how we can create a technology that will be able to offer us the level of visual experience that will make the mobile experience really immense and powerful. Think about it, he did it around the same time that Apple released the iPhone, so that was pretty early. That was just the time we started actually experiencing video and other visual content on our mobile. He was already saying that the technology that we’re using, basically technologies like LCD, are a bit outdated. We need to rethink the entire display technologies.
What he did, and I can’t say too many words, because it’s still a company that is very much under the radar, was completely rethink the way that we generate shape and consume light or, even more accurately, visual content. One of the outcomes of that, and it’s something that was seen in the past, was basic, real 3-D holograms. Something that all of us kind of experienced since Star Wars and ever since, but in reality, what we mostly saw were things like Tupac and Michael Jackson, which are basically what we call smoke and mirrors. It’s literally the use of smoke and mirrors in order to create the illusion of a 3-D hologram.
What Ostendo’s doing is completely different and I will maybe stop at that point.
Okay. Fantastic. Do you have a book that you would recommend, either about life or startups or anything that you find inspiring?
There are so many. There’s one big that I would highly recommend. I think it’s one of the most fascinating that I read, I have to say, recent years. It’s a book by Yuval Noah Harari. He’s an historian who wrote about evolutionary history. Again, it’s a very macro-level thinking about who we are and how we were actually shaped to what we are nowadays. It’s called “Sapiens,” and I’ll tell you what’s the full name, for people to find it. It’s called “Sapiens: A Brief History of Humankind.”
It’s not very brief, it’s about 400 pages, but it should be a pretty easy read and an interesting one.
Another book that I recommend, it’s called “Super Forecasting: The Art and Science of Prediction.” It was written by a Wharton professor called Philip Tetlock.
Nice. We’ll be sure to put both of those in the show notes. Can you tell us anything about your upcoming book or is it still a secret?
It’s basically a work in progress. Unfortunately, I don’t have enough time. Eventually we are very much and I apologize for all of my military metaphors-
No, I like it.
We tend to come from the trenches, at least for me. Once you are in the trenches, and I have to say that technology startups are always a very intense experience. You tend to, as I said, to think tactically and have very narrow-minded focus on making something successful. I was trying, a few years ago, to think about it in a more macro way. Ask myself, “What are the things that actually allow certain companies to be successful or certain entrepreneurs to be successful, and which aren’t?” Then I start formulating them into different ideas. One of them is those three I’s: innovators, imitators, and idiots concept. Another one is something I called the “blowfish strategy,” which basically means that the trick for a lot of startups, which are by nature, relatively small, is to find ways to make themselves look and act larger.
It’s kind of a blowfish trick.
I love that analogy.
Yeah. It’s a good one. It even looks nice. In the book, I’m trying to offer different ideas of how to do that. How you as a small startup, can actually become bigger. How you can actually create an efficient process of growing fast.
I have a lot of other kind of concept and ideas that maybe we can talk about in another-
I would love that. When your book is ready. I can see the cover of your book already is a blowfish.
That’s fantastic. Thank you so much for being a wonderful guest and sharing your insights and all the exciting companies that you’re funding. I think we’ve learned a tremendous amount. I’m going to remember the three I’s forever. I love that.
Remember, don’t be an idiot.
Yes, I’ll try. Thanks.
All right. And thank you.
- LinkedIn: www.linkedin.com/in/moran-bar-kochva-14842
- Book: “Sapiens: A Brief History of Humankind” by Yuval Noah Harari
- Book: “Super Forecasting: The Art and Science of Prediction” by Philip E. Tetlock and Dan Gardner
- John Livesay Funding Strategist
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