Apple v Samsung – Tom and Tracy Hazzard
Posted by John Livesay in podcast | 0 comments
Episode Summary
Tom and Tracy Hazzard are product designers and design experts of Hazz Design. They’ve collectively designed and developed over 250 products, which has generated over $1 billion in revenue for their retail clients, and counting. Their entrepreneur experiences are taught in a Harvard Business review course in 26 universities around the world. Tom and Tracy are the hosts of the 3D printing podcast, WTFFF?! They are the experts in talking about everything to do with innovation and design. In this episode, they talk about the latest ruling by the Supreme Court in Samsung V Apple and how that impacts people who have a design patent and their valuation.
Listen To The Episode Here
Apple v Samsung – Tom and Tracy Hazzard
Today, The Successful Pitch, I have a bonus episode of two really smart and really nice people named Tom and Tracy Hazzard. They’re based in Orange County, California, just down the road from me in LA. They’re product designers and design experts of Hazz Design. They’ve collectively designed and developed over 250 products, which has generated over $1 billion in revenue for their retail clients, and counting. They hold over 37 utility and design patents with an unprecedented 86% commercialization rate, which is double the national average.
Their entrepreneur experiences are taught in a Harvard Business review course in 26 universities around the world. Both Tom and Tracy have their products in all the major retailers, wholesale clubs, electronic boutiques and office super stores. Their bestselling mesh office chair has been in Costco for over four years straight.
Tom and Tracy are the hosts of the 3D printing podcast, WTFFF?!, which you have to know 3D podcasting to understand what that is, which is ranked number one in iTunes with over 45,000 listeners monthly. Besides being featured on numerous podcasts and publications like Entrepreneur, Forbes, Wired, Fortune, Small Business and CNN Money, Tracy pends a regular featured Inc column on innovation and I’ve been fortunate enough to be in one of her columns.
They are the experts in talking about everything to do with innovation and design. I asked them to record a special episode with just the two of them talking, as if you’re eavesdropping in on their personal conversation like you would on their 3D podcast. In this case, they’re talking about the latest ruling by the Supreme Court in Apple v Samsung and how that impacts people who have a design patent and their valuation. I think you’re really going to love this episode. Enjoy.
It occurred to me the other day that listeners of The Successful Pitch podcast, especially the founders that listen to the podcast all the time might be very concerned about the Supreme Court ruling, Apple v Samsung, about design patents and its affect on their valuations and their pitches.
I think it’s a valid thing to be concerned about, especially because there is, as of now, no real official test yet as to how liable Samsung is for their infringement of Apple’s patent.
Or how much less Apple gets in the process.
Apple v Samsung: This has been a patent battle playing out in the system for several years now.
Let’s go over it a little bit. This has been a patent battle playing out in the system for several years now. Most recently, I think in the summer of 2016, Samsung was held liable for patent infringement of the iPhone with their Samsung phones. This is over a design patent, which really dictated the outside ornamental look of the Apple iPhone. Samsung was found to have infringed on that patent with the outside ornamental design of one of their Samsung phones.
Then Apple was awarded a huge sum of money. We’re talking very, very large. In Apple v Samsung, Apple was awarded a huge sum of money originally, a staggering $548 million. Samsung was hoping to get $400 million of that back. They’ve appealed it to the Supreme Court saying, “Just because the outside design is the same, we shouldn’t have to be liable for all the profits of our Samsung phone because there’s so much more in it in terms of electronics and software and other things that really represent a lot more of the profits that they make on their phone.”
The idea is that something that’s an ingredient in the sales process and one of many reasons why somebody would buy an Apple phone and then Samsung happened to copy, in this particular case, isn’t a reason to get 100% of the profits of the sales of those items during that time period. That’s what they’re talking about, whether or not they should sub cut up the profit, divvy it up based on the percentage that that might have an impact on.
Honestly, that seems reasonable to me as someone who has a lot of patents and understands what goes into a patent and how big a role it plays in a product. It seems to me logical that just because Samsung copied, intentionally or not, the look of the iPhone, doesn’t mean that that look was completely responsible for all the profits they got. They have their software, their technology, their user interface, operating system, etc.
Exactly. There’s lots more reasons why you buy an iPhone versus a Samsung phone. The thing is though is that right now, while this was actually a very, very quick ruling by the Supreme Court and the decision was very clear. The process by which it’s going to be determined and used as a rule of thumb as to how to divvy up the profits and how to decide what that percentage is that’s liable is now been dropped down to the lower court that made the original ruling, which is leaving a lot of uncertainty. That’s maybe why there’s a little bit of concern, anxiety in the founder community, especially those that are depending their valuations on these patents. Because the decision here changes the valuation that your design patent, if you have one, might be valued at in that process.
The Supreme Court, I guess, declined to issue a ruling on a test or a measurement. How do you decide how much of the profits should be owed to an infringer who infringes on a design patent that represents a portion of the value of the profits of the product? The lower courts are going to have to resolve that test. That’s going to take sometime. Eventually, they will come out with a test. I’m hoping that will be a very good thing because then we’ll all know what the potential liability is in this kind of a situation.
Apple v Samsung: We’ve always treated design patents as more of maybe an offensive strategy or even a defensive strategy in certain cases.
It’d be great if it’s extremely clear. That’s hopeful thinking though. I really want to step back and start talking about this from our perspective. We have 37 patents pending and issued in the mix and probably I think close to 25 of them are utility and ten or twelve of them are design.
We don’t really rely heavily on design patents. They’re there, they’re in the mix. In practice, we’ve never treated them with a high valuation before. We’ve always treated design patents as more of maybe an offensive strategy or even a defensive strategy in certain cases where we’re plugging some holes and surrounding the utility patent with good other patents. We call it a patent fortress strategy.
That’s where we’re really building a large base of intellectual property around a certain product. Sometimes there’s a utility patent involved and other times we want to add design patents to that to make it a stronger defense against a potential infringer. Other times, there are appropriate situations where you may just want a design patent on your product. They are limited in what they can protect, but if the ornamental look of your product is really critical to the identity of your product and the success of your product, then a design patent maybe very useful for you.
We use that patent portfolio or fortress strategy that we use, we use that because it builds a higher valuation across many things. It’s like a risk assessment on a portfolio. When you have one single patent, then there’s this higher risk factor that gets mixed in by whoever is doing the valuation or the investment valuation and considering it and looking at that. When you have a mix of things that are in various states of issue, some of them might be provisional, some of them might be filed, some of them might be issued, when you have a mix of those things, it makes it harder for them to assess you at that high risk state. Some of it is more balanced here, some will likely issue, some will likely be defensible. It gives you more options and it gives you a better valuation overall and that’s what we found.
This Apple v Samsung lawsuit does show us that design patents can be very valuable.
Still, what this Apple v Samsung lawsuit does show us is that design patents can be very valuable. Even if the courts end up saying, “Apple, you have to give back some of that $548 million to Samsung because you don’t deserve all the profits they got from their phone,” certainly, Apple is going to get to keep a lot of the money that they got. At least $100 million probably or more. It was certainly a worthwhile endeavor to those who …
Worthwhile patent to have filed.
To have filed and then also to litigate. Samsung, let’s face it, the major competitor to Apple, probably did want to make their phone look as much as an iPhone as they could because they didn’t want the look of their phone to be something that would keep people from buying a Samsung phone.
In this case, once you’ve defended this once, it’s also a deterrent to future infringers and more knockoffs get settled quicker than go to court. That’s really the other important part of what they’ve done here. I want to go back to as a founder or a patent holder standpoint, really what you can do to help yourself and protect yourself and address some of these valuation issues that you’ll have as you go into that.
Really the thing that we found over time is that when you go to file a design patent and when you include a design patent in your patent portfolio is to dial it in and make it very specific on one element. You might file, and this is exactly the case of what Apple did, is they filed one on the shape of the overall phone, they filed another one on the shape of the icons. They had a different design patent for the shape of the icons that were on the home screen of the phone. By divvying up all of those design patents and not doing all in one is an extremely important strategy. We learned this the hard way on office chairs.
We have.
Or our clients have, I should say.
Us and our clients have both learned, for sure. We have experienced a client that had a design patent on the entire ornamental design of an office chair. Mostly, especially on the upholstery stitching of that because that was a unique look that they wanted to protect. They filed it, the design patent got issued and then a competitor knocked off that chair completely with one slight detail difference.
Which what constituted about a ten percent or less change. It wasn’t really major.
I would say less, quite honestly. From my perspective at the time, I thought this is really enough of a knockoff that this company will surely be found to have infringed by the courts. This case actually did go all the way to court, to trial, the whole thing because both sides, I guess they wanted to fight about it and they couldn’t agree. There was just one difference in stitching on the back side of the chair, because this design patent included not only the appearance of the upholstery from the front but also the back. There were many, many drawings covering all the elements of this design. The competitor added one stitch seam on the back side of the chair to the knockoff that did not exist in the original. Very surprising to me, the jury came back and said that the competitor did not infringe on the design patent because of that one additional stitch change, that it was not considered the same design. Personally, I didn’t agree with that. That’s what the court found.
Apple v Samsung: All the elements are broken up into multiple design patents.
Since then, the strategy has always been, in this particular case with office chairs, is we file one patent for the chair back, another one for the chair seat if necessary, the arm pad design if it’s different, the base of the chair. All the elements are broken up into multiple design patents. Now, it’s more costly to file, but in this particular case, you would have, now, with this new ruling, you would have more of an opportunity to stop someone from infringement based on just an element.
Or certainly a better ability to recover damages from a company that clearly did copy your design. By breaking it down to the upholstery on the upright back cushion of the chair, and you can even break it down into the front side, the front face of that cushion design if it’s really unique, and then the back side separately or don’t even file a patent for the back side if you don’t want to, that if somebody then incorporates that design into their design, the rest of the chair could be different and they could still infringe. We had made a recommendation to another client of ours at a later time to do the same thing. We came up with a unique design for an upholstered pattern. It was the hallmark element or signature design element of this chair design that ended up being a very successful design in Staple stores across the country. We then recommended to our client they file a design patent for that.
They refused because they thought design patents weren’t that valid, weren’t that valued. They refused on it. A year later, Staples decided to buy direct and cut our client out of the loop. They lost $4 million of value for that one single chair because they didn’t file a design patent and couldn’t stop Staples from making it. What would’ve been a few thousand dollars, under five probably for filing a design patent, they lost $4 million a year.
It was really a short sighted decision. Our client learned the hard way unfortunately. Going forward then, they were all the wiser. If they think they have a product that is going to succeed well and it has a unique element, then they could protect it. Because it’s true, we have witnessed a company like Staples. In fact, actually Staples, even though they wanted to go around the supplier and direct source of product, if there was a patent involved, they stayed away from it and they didn’t do it. In this case, they probably would have kept buying the chair from our client had there been a design patent.
It just would’ve been too risky to go at it.
Very unfortunate.
That’s where we talk about offensive and defensive strategies to using patents. In this case, I think that this ruling actually only reinforces it. Even though it’s not known what the test will be by that lower court yet, we think this is really critically important for those of you out there pitching and worried about valuations, which are so fuzzy anyway at the early stages of business when you’re really in your early seed stages or just beyond your market proof stages. These kinds of things create the company value that someone’s buying into.
They’re buying in more to the idea, they’re also buying into something that’s an asset of the company. Having these patents and having multiples of them, including design patents, make or break that valuation for you and that investment for you. We really want to encourage you to continue to do those. Don’t be discouraged by the design patents, that they have lower value and they’re not worth doing. There are so many reasons that they are worth doing and you should continue and move forward with that plan.
Apple v Samsung: Intellectual property portfolios, patents in particular, add tremendous amount of values to a corporation.
Absolutely, I agree with that, Tracy. There’s just all kinds of evidence, certainly in our experience and in other business experience that you can read out there in the media, that intellectual property portfolios, patents in particular, add tremendous amount of values to a corporation, especially when they’re seeking to be acquired. We encourage really an offensive and in some cases a defensive patent strategy. I agree with you. This case just shows that there is a value for the patents, that the courts do recognize them. They’re just talking about where does it begin and end.
Semantics of dollars.
Having that defined at some point hopefully will be a very good thing and it won’t be so ambiguous. Unfortunately, if any of you end up in a patent litigation at some point, it won’t be as much of a unknown. “If we get down this and get a ruling in our favor, is there really going to be any money there?” I think there can be and there will be proper tests for determining what that value is.
Clarity of standards can always help settlements happen quicker so that there’s less likely to be litigation involved in the process because it’s been ruled all the way up at the top, at the high courts. We want to encourage you to do that. We really hope that you have a successful pitch and that patents become a strong part of that asset that creates that success level that you have. We thank John for inviting us on the show and we really appreciate it. If you need to contact us in any way or ask us questions about that, please reach out to John directly and we’d be happy to answer them for you.
Thanks for listening everybody. Hope you enjoyed this. This has been Tom and Tracy on The Successful Pitch podcast.
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The Intersection of Technology and Health – Interview with David Whelan
Posted by John Livesay in podcast | 0 comments
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Episode Summary
David J. Whelan is a seasoned strategy, business development, and general management executive building businesses and inspiring entrepreneurs at the intersection of technology, health, and wellness. David discusses how he combines his love for health and the tech industry into one, and what a successful pitch looks like, when aiming towards these types of investors. Listen in for so many great nuggets of wisdom from David on the topics of investing, raising capital, and building your network.
The Intersection of Technology and Health – Interview with David Whelan
Welcome to The Successful Pitch. Today’s guest is Dave Whelan, who is a seasoned strategy business development and general management executive, which builds business and inspires entrepreneurs at the intersection of technology and health and wellness. He’s a consultant and advisor and operating executive. He devotes his career to building successful businesses. He was an integral part of the creation of the New York Genome Center, a unique not for profit scientific research institute where he was a chief strategy officer and collaborated on the development of the business plan fund raising of $115 million. He launched one of the first fitness tracking wearables with 24 Fitness. He holds an MBA with honors from UCLA Anderson School and a BS in Symbolic Systems from Stanford University. Dave, congratulations on all that accomplishment and welcome to the show.
Thank you so much. I forgot about the with honors parts. I’m not even sure if I deserve that. Thank you for reminding me.
What is Symbolic Systems? What is that?
It’s Symbolic Systems. Essentially, it’s an artificial intelligence human computer interaction major at Stanford. It is indeed a real major. Marissa Mayer is probably a more famous alum of the Symbolic Systems program than me. Hopefully I can catch up with her at some point.
You’re in great company. How fantastic to be able to be that cutting edge on artificial intelligence, which is sort of the future internet of things and all kinds of stuff.
Exactly.
Wow. Let’s dive back into, what made start there? I want to hear about that. How did you even decide, “I want to learn about artificial intelligence and make that my major.”
The intersection of technology and health and wellness
You mentioned this intersection of technology and health and wellness. I’ve been in technology my whole life, or passionate about technology my whole life. The health care part came accidentally later. I was definitely one of those computer kids growing up. My first computer was a Texas Instruments, TI 994A, which was discontinued about a month after my parents invested in it for me. I switched over to Apple and I’ve been an Apple guy forever. In fact, I purchased the first Macintosh for my school district to run the high school newspaper back in the late 80s. Early adopter, and all of that got me excited about the world of artificial intelligence, which seemed to the next big thing at the time.
That led me to Carnegie Mellon for a year and then I transferred to Stanford. Loved Stanford, loved the program and was still passionate about technology. I graduated into what was not the best market for artificial intelligence. AI was in a dormant stage at the time. My first job out of college was actually with a biotech incubator, probably even before they were calling them incubators. I was hired not for my biotech expertise since I had none, but I was literally hired as the IT guy in this firm and that quickly evolved into more of an operations role. I guess I’ve actually been connected to life sciences my entire career but took a pause there after that job and spent about six years as a retained executive search consultant.
Again, this is mid to late 90s in San Francisco. It was just an amazing time for technology businesses, for telecom, eventually internet. Probably the best time ever to be a search consultant. We were building venture backs, senior management teams for again, technology companies, telecom companies, some biotech, some consumer, automotive. It was a lot of fun. I probably could’ve stayed doing that forever but I was about to turn 30, really wanted to get my MBA. At the same time, the dotcom crash was happening so it was a perfect time to take a change of scenery. I moved to LA to attend UCLA Anderson School as you mentioned.
As I said, I really loved Stanford undergrad but Anderson I think was absolutely the best time of my life. Amazing professors, especially in the world of entrepreneurship, an incredible network that I draw on every day and some great opportunities. Even though I love LA, it gave me a chance to study at London Business School on exchange, which was just an amazing opportunity in one of my favorite cities. This was beginning of second year of business school. I actually arrived in London on, I think it was the first, maybe second flight from LA to Heathrow after 9/11. Just a weird time to be travelling, weird time to be leaving the country but also an amazing time to look back and see what the world was thinking about the US during those days. A sidebar, but interesting time.
I graduated with my MBA in 2002 and I’ve spent the past almost fifteen years now as strategy consultant, advisor, interim executive. That’s been areas as broad as technology generally, in aerospace, in defense, but more and more the health and wellness space. You mentioned the wearable world, which was my entrée into that. I was working with a subsidiary of 24 Hour Fitness and we had a chance to launch what was one of the first fitness wearables and online nutrition programs. This is way back in 2004. We were absolutely ahead of our time. Lesson learned there is do not launch a fitness wearable in a world that doesn’t have the iPhone or Facebook. It will fail.
Let’s talk about that for a second because I think one of the most important things when you’re pitching an investor, there’s two questions, why you and then the big one is why now? If you have this great idea but now is not the right time for Uber or fitness wearables if people don’t have enough smartphones to use them.
Technology and Health: We had this intersection of need and technology and an amazing solution.
Exactly. First of all, we were, in some ways, lucky enough to be part of this large global organization that was looking at investments perhaps a different way than a venture investor would, but the same questions I think apply. The why now aspect in some ways made a lot of sense from a standpoint of the need was there, the technology was coming together. We had this intersection of need and technology and actually an amazing solution. The challenge comes essentially from the network effect aspect or the lack thereof in this case. When you think about something that’s very personal like fitness data, fitness tracking and ultimately hitting your goals, or when you think of anything that involves connecting with other people, you’ve got to have the tools and technology to allow for that network effect.
Again, in a world without smartphones, without Facebook, we were launching into a vacuum. The exciting thing about that is ultimately the company that we were partnered with, which is called BodyMedia, got acquired by Jawbone. Their technology is still involved in what I think will be Jawbone’s new clinical work. The founder of that company, BodyMedia, is Astro Teller, who went on to run Google X or Alphabet X, whatever they’re calling it now. The cutting edge, a bunch of new technologies. There was some amazing people that were part of that. A lot of the efforts lived on. I took that experience about health care data, again, put it in the back of my mind for a little while. I was doing some work in aerospace and defense.
A few years later, this is back in 2010, ended up getting a call from a friend of mine who was in the life sciences real estate and economic development world in New York. She had a colleague we’re working on this for, what they were calling New York Genome Center. I basically saw this as a three month consulting opportunity with a trip or two to New York that ended up being a three year crazy ride with almost weekly commutes between LA and Manhattan, where we launched this large scale, non profit research institute. I was the first business person the team.
As you said, helped to write the business plan. I was part of this massive fundraising effort, helped to recruit the launch team and ultimately set the wheels in motion for what is now a world class research facility that is part of multi million dollar NIH funding grants for things around Alzheimer’s and autism. They’re doing some amazing work. I’m convinced that someday, some aspect of cancer is going to be cured there or something like that and it’ll an amazing thought that I was involved from the beginning.
That must make your passion really strong for making a difference in the world. Talk about the fundraising for non profit of over $115 million. Is that from one big government grant or do you go pitch it, like you would if you were a profit company with Angel and VCs?
This was very much multiple funders and very much like a pitch for venture backed startup. In fact, while this was a non profit, we were in some ways running it very much like a technology startup in terms of how we built the plan, built the business model, even recruited. From a funding standpoint, we started out by talking to what will be the course stakeholders, which were the academic institutions, the large hospitals in New York and literally going door to door, drumming up support. This was maybe a little bit different from an early venture effort.
If you think about getting in front of Angels, in front of incubators and accelerators, just in front of the movers and shakers in your community. This was very much what we were doing. Helping them understand what the vision was, why New York needed this, what the opportunities would be for them and their institutions as well as beyond. Those academic leaders, academic and medical leaders in New York, then led to some of the major philanthropic funders, led to some commercial funders. Ultimately with that momentum, we were able to go to the city of New York, the state of New York and ultimately even some other, as I mentioned, more recently they’ve got an NIH funding. This builds on itself.
Technology and Health: There’s a lot of similarities in terms of how you tell the story, how you get in front of one person, which leads to others.
While I can say that raising money for a large non profit in New York is in some ways much easier than raising money for a for profit venture in San Francisco or Los Angeles. I think there’s a lot of similarities in terms of how you tell the story, how you get in front of one person, which leads to others. Ultimately, how you use one success, one small success to move the next one. Eventually, you can bring in hundreds and millions of dollars to get this thing off the ground.
You’ve talked about networking twice, once with your experience in how the UCLA Anderson MBA continues to help you with your network and now you just brought it up again, which I love, which is one network connection gets you into another network connection. Can you give an example or a case study story of that happening for you?
Sure. Again, you hit the nail on the head in terms of networks leading to other ones. Actually, I’ll start with a story. This just came to me last week. One of my inspirations in the life sciences world, who also has a connection to UCLA Anderson School, is a guy named Larry Bock. Larry lived in San Diego, actually he just passed away last week after a struggle with cancer. That’s why he’s been on my mind very much recently. I never met him but inspiration to me in terms of this guy literally built 50, 60 life sciences companies in San Diego and beyond. He was part of the Illumina founding team and the genome sequencing space. He also had a passion for STEM education, launched science fairs, science festivals.
The Rainforest: The Secret to Building the Next Silicon Valley
He was highlighted a few years ago in a book called The Rainforest, which was talking about the Silicon Valley eco system. He was highlighted as, what they call, a keystone species in anthropological or ecological standpoint. Keystone species are these standout species that somehow make connections and exist in different eco systems or pull them together. In the context of innovation, this book highlights keystone species as someone who connects people who could benefit from working together. They might not work together under normal circumstances because of things like geography or cultural differences or trust or things like that.
When I think about it, and I’ve been inspired by that my whole career as trying to be a connector. Ultimately the idea is everyone is part of hopefully several networks, maybe many networks. This could be schools, it could be workplaces, it could be religious organizations, it could be geographic communities, it could be volunteer efforts. Each of those networks hopefully is a source of amazing connections. Everyone needs to think about how they keep each of those networks fresh, how they stay connected to them, how they contribute to those networks.
Back to this idea of the keystone species and Larry Bock, how do you actually take the leap to help connect people from these vastly diverse networks in a way that they would never meet each other but once they do, something amazing comes from it? I think it’s the idea that you can be at a cocktail party with your friends and have a conversation with someone and realize that this ties into the business meeting you were in last week or the conference that you were attending last month and you start to connect the dots and start to bring people together in a way that creates these really rich interactions. Hopefully, what comes out of that are businesses that would never have existed or investment connections that wouldn’t have happened. Eventually, you can change the world because you’re connecting people in a way that is very unique, very creative and hopefully redefining an industry.
Wow, that’s great. You’re almost like the catalyst, set up those connections that would never have made. If you connect the dots first and see the big picture and then step out of the way, magic can happen.
Exactly. I was at a conference a few weeks ago called Ideas Los Angeles, which was an amazing multi cultural, multi faceted conference around both health technology and entertainment technology in LA, Silicon Valley and beyond. First of all, I invited a ton of people to this event and so I ended being able to introduce people who, not only might not have met but were in the same place. There was one person I met there who was working on an amazing integrative health and wellness business and another one of the companies that I advise, which is building conference app tools for the life sciences industry. I saw some connections there and couldn’t introduce them directly at the event and tried to introduce them after the event.
[Tweet “Technology and Health: It takes vision and creative foresight.”]
One of the individuals said, “That sounds cool. I don’t really see the connection. It doesn’t make sense right now.” I actually pushed both of them to get together and talk about their commonalities and where they might be able to collaborate. Both of them after this meeting said, “Wow, this is great. We never would’ve even thought about this. Thank you for making the connection.” Again, sometimes it takes some vision, sometimes it takes some creative foresight, sometimes it just takes luck where you hope people will connect. If they do, great. If they don’t, there’s honestly no harm and maybe they’ve met someone that at least they like socially.
You’re creating real value so when they come across someone that they can refer to you as a potential client, as a consultant, they’re more than happy to do it, which is a great way to drive business.
Exactly.
Let’s take a little dive into when you raised over $25 million with the Precision Medicine venture. That was a for profit I’m guessing, yes?
Yeah. Again, another unique angle on fundraising. This was a commercial spin off from a hospital, from a cancer hospital, that was a public benefit corporation in New York. Which means it’s a non profit enterprise that’s got ties to the state, operates somewhat independently but in many ways like a state organization. In that effort, we were really focused on the typical starting point of let’s understand what the opportunity is and build the plan and start to build the story. We were putting together relationships where we were seeking funding both from the hospital system itself as well as from, ultimately from the state, both existing state moneys, Empire State Development Corporation, which is the state’s economic development arm, and eventually teeing this up for broader external investment.
[Tweet “Technology and Health: See the opportunity, build a plan, build the story.”]
Again, a little bit of unique twist on funding. In some cases I think, when you’re in a funding situation, and you could argue it happens to people in any company when they’re going to their boss, when they’re going to the general manager, their division, and they’re trying to fight for budget for the next year. Ultimately, planning for your budget for the year, planning for budget for a product launch, a marketing strategy or an invest in a company, there’s a lot of similarities. It’s really about having your plan straight, having your numbers straight. Being able to tell a story in a really strong way to get these people not only wanting to be a investor and a funder but ultimately being an advocate, being an ally, being someone who can then take your story to the next funder. Whether that’s moving in an organization, whether it’s going to the board or whether it’s going to a larger a investor down the line. Again, I think there’s a lot of common ground there.
When you’re talking about health care and you’re saying the importance of a story when you’re pitching for this kind of money, do you give an example of one particular patient and that person’s story so it’s really specific? “If we get this money, then we can do this for this cancer hospital and save someone like XYZ person who was suffering and who doesn’t have to suffer,” for example?
I think that’s absolutely one angle. The great thing about health care is that while it’s a large industry, really the largest industry out there by some measures, it’s also very personal. Everyone has dealt with health care on their own, they certainly dealt with it with their children, with elderly relatives. Health care is just, by definition, a very personal topic. This idea that when you’re telling a story, how do you do something that can provoke, that can inspire, that can challenge, that can tease what the solution will be? Bringing it back to something that is very personal, very relatable.
Technology and Health: Build a story that can provoke, inspire, challenge, and tease.
I’ve certainly seen, not so much in an investor pitch, but certainly in public pitches or public presentations. Even the ability to bring a consumer, bring a patient into the story physically, bring them into this presentation to have them tell their story. Have them talk about where they’ve come from, who their family is, where this disease, this condition, this situation came about, what was the discovery process, what was the diagnosis process? Then either they’re pushing for a cure, which is that big north star vision, a massive goal we can think, about or they’re sharing how this solution might have helped. I find that something that the public loves, investors love but it’s also something that I think really is the way to connect the scientist and physicians to this whole investor conversation and customer conversation.
I think there’s a lot of people who give scientists or physicians a bad rap because they’re not always business people and they don’t have that business mentality. That might be true in some ways but from my standpoint, when I work with scientist and physicians, I help guide them and help them realize that in many ways, the scientific method and scientific research are really a lot like entrepreneurship. You got to identify a problem, create a hypothesis, find the funding, pilot your solution in some way, you asses the results, you course correct and then you keep at it until you’re successful.
When I get in front of scientists and talk to them about this fundraising effort shouldn’t be scary, shouldn’t be foreign. It’s actually something you do all the time anyway. This whole idea of building a company is not that different from putting together a massive experiment and hopefully coming out with some great results. Once I make those connections for scientists and physicians, it clicks in a way where they become a really strong part of the process, which then makes them that much more sellable or approachable or understandable to not only investors but ultimately the customers or consumers who are buying this.
What you’ve done is you’ve given them a story, an analogy to follow to create a story. You say, think of it in terms of how you do scientific work and then just transfer that to the ability to run a business. You create story that they are familiar with and that’s the power of storytelling. When you can get people to put themselves in the story, then they come alive. I really like what you said, when you pitch, you want to provoke, inspire and tease the solution. We’re going to tweet that out from the episode, that’s a great line. Let’s switch gears really briefly here about what you did at the Chinese Casino Game Leasing venture. That sounds interesting.
There’s some good lessons and some cautionary tales in that one for sure. As I said, the intersection of technology and health and wellness, sometimes that is very much in the health and wellness space. Sometimes it’s a little bit more on the tech space. A few years ago, actually through a business school network connection, I got introduced to a Chinese, almost family office investment group, that was in the process of assembling an investment fund to acquire some casino game leasing operations in Taiwan and the Philippines. This is a few years ago. I’ve traveled a lot of places, but at the time I had never been to Asia.
First of all, I saw this as an opportunity to learn more about Asia and hopefully I get a chance to spend some time there, which I ultimately did. A whirlwind due diligence trip to the Philippines, to Taiwan and being up in Shanghai to meet with the family. We were building, very much building a story about what this business could look like and ultimately trying to pitch it to US investors. That was my connection, was building this bridge of a story between the Shanghai family, these businesses in the Philippines and Taiwan and then US investors. We went really far down this process. Again, there’s not going to be a happy ending here. We went really far down this process. Interestingly, I was actually thinking about this longer term because the family also had investments in the massively growing, if you could imagine, retirement community business within China. If you think that the US has a large aging population and a large retirement community population, just imagine what China has with many more people.
They were actually looking at leveraging some of these technologies into mind games and games and tools for maintaining mental acuity, mental sharpness in old age. I was thinking about this from a health care standpoint all along. As we pushed forward with this effort, sadly, unfortunately, this will be my second time mentioning death on this life sciences health care podcast, not by design. Anyway, the senior member of this family passed away from a kidney transplant that didn’t take. Obviously, their business was in turmoil from that. Literally, the entire business not only collapsed and unwound, as might happen with any family business anywhere. But it was sucked back essentially to the party, to the government financial entity.
[Tweet “Technology and Health: Leverage opportunities even if they go wrong.”]
Long story short is I’m still trying to collect on that project. I’ll call it a loss at this point. Very much lessons learned about doing international business. I did learn a lot. I’ve actually been back to China twice since that for other ventures. I think if anything, what’s my personal takeaway? It’s leverage opportunities even if they don’t turn out the way you’d like to, to be able to start to get comfortable with a new market or a new geography. Now, I feel very comfortable doing business in China. I’d have to find a different way to structure a deal. I guess, you really can’t plan for everything.
What a great thing to be able to say, “I feel comfortable doing business in China.” There’s not a lot of people today that can say that. That, in and of itself, makes you extremely marketable. Before I let you go, because the half hour is already up, it goes so fast with someone like you. What is a book you would like to recommend about business or personal that you think would be inspiring for entrepreneurs?
I’ve got two books, if I can do that.
Sure.
Book about Technology and Health: The Checklist Manifesto
Because they’re so different. One, it’s a business book that’s also a health care book called The Checklist Manifesto. This is about a six, seven year old book by Harvard physician, Atul Gawande. It’s got some amazing business lessons, life lessons. Simple but powerful. How you can use checklists to get business done, get health care done, improve results. Why I love it is, I actually first encountered it back when I was doing consulting to Boeing engineering teams. They were using this as part of a way to improve their engineering efforts. Interestingly, it comes full circle because the book is about health care, using checklist in health care to improve results.
Atul Gawande actually was inspired originally to write this book and develop this process based on checklists that Boeing, once upon a time, used, Boeing test pilots used back in the 1930s. It was this aerospace into health care back into aerospace where I first saw it. Things really come full circle. If you think about going after funding, launching a computer, whatever, making sure you’re following the basic checklist and not missing a step is critical. That’s the business side.
Ready Player One by Ernest Cline
The other one which is, it’s a fiction book that everyone needs to read because it will help redefine what business looks like. It’s a five year old book called Ready Player One by Ernest Cline. Again, it’s a fiction book but if you work in technology you need to read this. It’s intersection of media and culture, virtual reality and social networking. A couple years ago when Facebook acquired Oculus Rift, there were a bunch of people who popped up on Twitter and said, “Look guys, Ready Player One is happening here.” This book is just an amazing fun read. If you’re an 80s pop culture buff, it’d fall in there. I think it really points to where the future of social media, virtual reality, augmented reality and to some extent, life, is going. If you look at the buzz of the Pokemon Go over the past week, you see how people can get so excited about some of these technologies. We’re going to see a lor more of that.
I love it. We’ll put both of those books in the show notes for people. Dave, how can people follow you on social media? What’s your Twitter, and if somebody wants you to hire you to help them in a wide variety of things from China to health care, what’s the best way to follow you on social media?
My website which has my bio and ways to connect to me is BespokeStrategy.com. I live on Twitter and I was an early person on Twitter @DJWhelan. I think I’m @DJWhelan on every social media tool out there except for Snapchat where I missed the boat. I’m @BespokeStrategy on Snapchat. You can find me there. @DJWhelan will get to me almost everywhere.
Sounds great. Thanks again Dave, for being such a great guest.
Really appreciate it. Thanks for the opportunity.
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Getting Over Rejection – Interview with Eileen Tanghal
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Episode Summary
Eileen Tanghal is the Vice President of New Business Exploration and New Business Ventures at ARM, a UK-listed chip designer. Eileen shares tips on overcoming imposter syndrome, why there’s a lack of women in venture capital, and she even dives into China’s startup culture. Eileen believes good entrepreneurs have resilience, but they also know when it’s time to move on after receiving enough rejections from investors.
Getting Over Rejection – Interview with Eileen Tanghal
Hi. Welcome to The Successful Pitch podcast. Today’s guest is Eileen Tanghal. Eileen has an amazing background. She was named in the Global Corporate Venturing Power List of 2014. She was one of the general managers of Applied Ventures and has her career soar. She’s had over nineteen years of experience working with early stage technology companies across the globe.
She led several tech investments and collaborative partnerships with companies before joining Applied Ventures, she was an investment director in the London office of a venture firm Kennet Partners. Before that, she was an investment associate at Amadeus Capital. She has been in-charged of a $200 million portfolio with over 40 companies. Now, she is the VP of new business expiration at ARM, which is a semiconductor IP design firm in the Valley. Eileen, welcome to the show.
Thanks so much.
I’m so impressed when someone’s been doing something globally, like you are, with your MBA from London Business School and your BS in Electronic Engineering and a Computer Science degree from MIT. You are one of the few women who have that kind of technical background and are in the venture capital world. What do you think that is all about, that that there’s so few women doing what you’re doing?
I’ve had this question a number of times. The first thing that people really talk about is the pipeline problem within STEM and that there are just so few women studying electrical engineering, computer science. I’m here to dispel that. I went to an MIT reunion of electronics and computer science majors in San Francisco just a couple of months ago. The chair of the department told me for the first time, out of the sophomores declaring their major, half of them are women. That’s of course up from the ten percent. I struggle to see the pipeline issue that many are talking about.
Getting Over Rejection: There’s not enough advocacy of women getting into that venture capital field.
What I think is more of the issue is, there’s not enough advocacy of women getting into that venture capital field. My own experience was that the head of the firm that I first worked for, the co-founder, woman named Anne Glover. She made it her goal and mission to find young women who she could mentor and build up. She herself is the first BVCA female chairman. Standing for British Venture Capital Association. There’s not enough advocacy.
How do you that? You probably need to start programs, Kauffman Fellows is one of them, where you encourage women to look at venture capital, to understand what it’s about, to see that really this isn’t an old boys club that people from certain schools that have certain degrees and certain connections can only get into. It is open for everyone. Again, unless I had had that mentor, someone really pushing me up, I wouldn’t have known to have gone into this field or how to be successful in it.
I’ve also heard the, I won’t name who but let’s just say, very famous venture capitalist told me the reason why it’s hard for women to be venture capitalists is because they don’t have the connections into the startup column guys. Of course, the reality is that the majority of startups are going to be these male engineers coming from certain schools. That is true, that’s unfortunately, I think, still true because of maybe the risk appetite. What he told me is that women, they don’t know how to therefor relate to that or have those guys talk to them and be comfortable talking to them.
[Tweet “Getting Over Rejection: You need advocacy to try to bring women up”]
I think that’s hogwash honestly. Last time I checked, they have no problem talking to a women and telling that woman what they’re doing. I think that if you have that mentality, that’s going to stop. This person is a very, very senior person in the industry who said that to me. You need to dispel those, whether they’re conscious or unconscious biases, and then you need advocacy to try to bring women up and show them that this is possible. I can tell you, there is a dearth of female VCs. It’s very, very hard to find any … I think it starts with you got to have advocates, you have to have training, you have to show them, bring them in as analysts and associates and then show them they can be successful.
I think that’s great, especially since you had a mentor that allowed you to get into this world, I’m guessing that you’re a mentor yourself. Is that true?
I try to be. I think at Applied, before I came over to ARM, where I am now, I did recruit a woman into our India office. I did try to train her in the industry. That was my way of maybe giving back. Yes, I do a lot of informal mentoring but formal mentorship, I’m trying to get into. The one thing that’s interesting is that whenever you think of the word mentoring, sometimes you think it’s just about women coming up.
Getting Over Rejection: A lot of women think they’re impostors, not realizing how much they’ve accomplished.
I’ll share an interesting fact with you. People who are just my peers and maybe even a couple years younger, for whatever reason they lack confidence sometimes so I do a lot of maybe talking to other women who are my peer level, trying to explain to them, “You were a lot more qualified than perhaps you’re making yourself out to be.” There’s a lot of studies on this, about when a job requisition is out, a female will not apply unless she meets 100% and a male will apply if he meets like half or less than half. There are studies.
There’s a lot of women thinking that they’re impostors, not really realizing how much they’ve accomplished. I’ll give you just an interesting case in point. I have a very close niche set of girl friends from MIT. These are very, very accomplished. They went to the hardest schools, some of them have PhDs. I don’t. There was this confidence test, how confident are you? Roughly eight or nine of us all took this. Seven of them are in the non-confident.
Wow.
This is like, “You have a PhD from Cornell, a PhD from NYU. You are near the top of your field and you don’t …” Thanks to my parents and my mentors, I am more on the confident side. They make fun of me and the other one that happened to be on there. The rest of us are going, “I don’t understand how this can be your view of yourself.” Very interesting.
A lot mentoring, yes, you mentor the young women. I’m very proud I have a niece who is currently at the Stanford Coding Camp and she’s one of just a few women. She told me she wanted to be a lawyer or the president, which of course is very heartening to me. Of course I’m going, “You should be a venture capitalist.” I’m trying to explain to her what it is. Start early like that.
You got to start somewhere. Sure.
She has a lot of confidence and I think that’s from her parents. For the girl friends that don’t, you need to help them out and say, “You’re a lot more than what you think you are.” It is really amazing how often I have to do that, and a bit sad.
It’s a subject near and dear to my heart Eileen, because I work with clients all the time. I’m telling them the importance of being confident when you pitch to investors like you. If you got a founder that doesn’t have any confidence, pitching to an investor that doesn’t feel confident in who they are, it’s a lose-lose situation. Everyone has to feel confident in who they are and what they bring to the table.
That’s right because we can tell. If you don’t feel confident, you may actually have a wonderful product and a really well executed plan but we’re getting a vibe like you don’t know what you’re talking about so then you turn off unconsciously.
Let’s take a little deeper dive into that concept of feeling like an impostor. I think everyone has a sense of that, even with the most accomplishments, whether it’s a PhD from a top school or a successful exit from another company. What is it, something inside has to snap and turn the switch for you to finally feel like you’re enough and that it’s no longer an impostor? Do you have any insights on how you have done that?
What Works for Women at Work: Four Patterns Working Women Need to Know
Yes. I have had a lot of help in that. I have a really supportive family around me, especially my parents. They are complimenting me constantly. I think sometimes it actually does take someone outside to point out to you what you have done. It was nice to get some of these awards because of course you’re like, “Oh, I didn’t realize you noticed that I had done all that.”
One of these books, What Works for Women at Work. I don’t know if you’re familiar with that book, which I think every single women should read. It’s true for everyone. A lot of women unfortunately face this ‘prove it again bias’, meaning you’ve done it before but you didn’t do it here so do it again. One way to combat that is as soon as someone gives you a compliment or recognizes what you have done, you should ask them to write it down and email it to yourself. You should keep a little bit of a book like that.
I love that.
When I’m feeling a bit down, I look back at some of those. The other thing is, I’ve just been on this leadership class. There’s something called a ‘reflected best self exercise.’ You ask your peers, not just business peers but of course people outside, when have you seen me being my best? They answer and they’ll explain. I have fortunately received that from people I work with, from my friends. Again, anytime you’re feeling a bit down, you read the reflected best self, these things that people have recognized that you’ve accomplished.
That little voice of, “You don’t know what you’re doing,” will eventually get drowned out because you’re going, “Self, look at what other people are saying.” A lot of it should be aid self-confidence buildup. That is good too. I think, what is my advice for, “Look, Eileen. I don’t want to ask 100 people to talk about how great they think I am. I want to find it in myself.” I think a lot of self-reflection, meditation, writing down what you’ve done, that will help. Again, definitely, when other people are commenting, it’s nice. It drowns out any doubt.
[Tweet “Getting Over Rejection: When have you seen me being my best?”]
I love that analogy of drowning it out. To me, it’s that great story of if you pour enough clean water into a bowl of dirty water, it will eventually get clean. That same concept with enough positive reinforcement internally and externally will drown out that negative self-talk.
For me, I always want to be liked for sure. A friend of mine, very wise friend was saying, “Look, not everyone’s going to like you. You are going to encounter situations where it isn’t going to go your way.” A lot of it too is just to say, “Look, it happened. Accept it. Move on.” That moving on part, not dwelling in the past or living for the future but living in the moment is also extremely important I think, not to keep you down if you face some setback or crisis or confidence issue.
[Tweet “Getting Over Rejection: Move on and don’t dwell on rejection.”]
That’s what it takes to be an entrepreneur and a founder, doesn’t it? Especially when you’re pitching and getting a lot of no’s from potential investors, you have to let it go. You can’t drag in that negative no or feedback from a previous investor to your next pitch.
Absolutely right. I think one thing that entrepreneurs should see is, you know what the Midas list is, the list of people who have done the best investments. I think there used to be something called the anti-Midas list, which was venture capitalists were listing the top ten or fifteen deals that they turned down, which of course ended up becoming wonderful companies. As an entrepreneur, you just got to keep that in mind. We’re human too, we make mistakes. We wake up, we get out of bed every day and have a certain mood when we get to see you.
It’s just like the movie studio business. There’s certain executives that turn down hit movies.
That’s right. You just got turned down by somebody, you go look and say, “Person missed this deal and that deal and maybe they’ve just missed mine. Move on.” It’s usually never personal. It is never personal I think. Unless you’re some fraudulent … That’s different. It’s normally, there’s no X factor or there’s no, “I’ve seen that a million times or I lost money in that already before and I don’t want to take the chance,” whatever it is. Keep going. Resilience is extremely important. Definitely, entrepreneurs need to have a high reserve of resilience.
[Tweet “Getting Over Rejection: Entrepreneurs need a high reserve of resilience.”]
I like that. A high reserve of resilience. We’ll tweet that out. Eileen, you heard so many pitches in your career. What makes a good pitch to you?
Remember, I was a venture capitalist in both Europe and here in the US.
Tell us about the differences.
Of course, the European style is much more understated. If you go there and you’re expecting the typical, The Garage Guys and Art Of The Start and sort of, “We’re going to be the Uber of dry cleaning or whatever,” that’s very American. Extremely American I’d say. I don’t want to say, “Yes, you should use a one liner to describe what your business model is and comparing it to a successful business and therefor you will get everybody’s attention.” Yes, there’s place for that.
That’s really nice because it shows enthusiasm and you’ve got it down succinctly, you understand your high value problem, you’re explaining why you have a unique solution and then the correct team that you’ve hired. If you hit all those elements, that’s really nice. I love it when I see that. “We are blah, blah, blah. We have the five world experts. We are 10X about our competition. The TAM is a couple billion dollars and growing 50%. We’re going to take that. Just in case you didn’t realize, people in our industry who’ve already exited 10X.” There’s that. That is very American style pitch.
Getting Over Rejection: The really good entrepreneurs, they tease you a little bit.
What I really like about some of the other pitches, some of the really good entrepreneurs, they tease you a little bit. They go, “We think this is …” Then some of the venture capitalist just start talking and they just let them talk and they go, “Yeah, actually we’ve seen that.” Then they’d come out with another piece of information that directly addressed whatever the thing was the venture capitalist had an issue with. I love when that happens to me actually because I’m like, “Oh God, that person really just put me in place.” Because it’s like, wow.
After you feel like you’ve looked at 20 pitches of the same thing, you go, “I know where this is going.” They say something and then they wait and then you start chiming in like, “Well, blah, blah, blah. Last time I looked at that pitch, that didn’t work. I invested in this company and they never got the X or Y, Z to work.” They just let you talk. In that stop they go, “It turns out, we’ve done ABC to address those problems and we’ve hit it.” I love that. I really, really love that. That’s my favorite because it’s like, he or she totally anticipated what I was going to ask him or her and nailed it. A lot of that is because the entrepreneur did research about me knowing what boards I sat on, knowing what companies I looked at, knowing what I’ve invested in or looked at and what my issues are.
[Tweet “Getting Over Rejection: Anticipate questions and do your research.”]
When they come, this is not, “Who are you, Eileen? Explain yourself to me.” It’s like, “She sat on the board of Plastic Logic. She has probably severe biases against doing anything plastic semiconductors. Let me find out a little more about what went wrong there and then explain why I have a breakthrough in plastic semiconductors that is going to blow her mind.”
Love it.
Like I said, that’s my favorite.
It’s basically anticipating the questions the investor will you and having really great answers to it. You’re doing your due diligence on the investor like an investor does due diligence on you.
That is the best. It’s not for flattery. I don’t really like that. Some entrepreneurs will do that. “Oh, I saw that da, da, da, da, da.” I’m like, “Yeah, that’s nice. Tell me why I’m going to like your thing better than what I’ve invested in before.”
I see you also have done some work with China at ARM. Can you tell us what’s going on with China?
China represents obviously a huge opportunity, not just for ARM, but for everyone. The pace at which innovation acceleration is happening is I believe faster than the Valley. There are some articles that are saying the typical cycle here might be five to seven years for startup, from start to transformation or exit, meaning IPO exit. I think there, it might be four, three or four years.
Getting Over Rejection: What’s been fascinating is indeed the speed at which things are getting done.
One is, we use a term called China speed. It’s probably used by a lot of people. What’s been fascinating is indeed the speed at which things are getting done, things are being innovated, ideas are coming in. I’m very proud that ARM has basically started an accelerator last year to help accelerate IOT startups in China. It was announced in China but not necessarily worldwide yet.
We are working on a fund there to invest in next generation technologies that are home grown. Not made in the US and transferred over, which is the second point, which is this mentality of we do everything here in the US or in the west and then we localize it for China. That’s not going to work. You need to, made in China for China.
It’s a cultural thing, isn’t it?
I think there’s lots of talents there to do it. It’s much faster.
When you say China speed, faster than even Silicon Valley. Is it twice as fast? Five times as fast?
It’s about, I think, 50% faster is my view. There is a sales guy here that has explained it like building a boat. Some cultures or one nation, when they’re trying to build a boat, they would put some architecture plans together, the materials, and they put it together and then they sail it. Others might look at several architectural plans, several types, try different experiments and then sail it. When they’re saying about China is they throw the wood and assemble the boat.
Got it. As it’s floating out the sea.
It’s go first then think later. You could say that seems irresponsible but actually I might argue that that’s the, talk about, lean model or fail fast. That’s definitely that model like, “Oh, guess I’m not floating. These pieces of wood are not coming together.”
I love that.
There’s a lot of them.
What you just gave us Eileen, is a great example of storytelling. Painting that picture of the difference between China speed versus Silicon Valley speed with the boat analogy. The more people put analogies and stories into their pitches, the more memorable it is and the more compelling it is. Thank you for that wonderful example.
Of course.
What is the type of company you like to invest in? Now, as a venture capitalist, I’m guessing you need to see certain amounts of revenue. It’s not seed funding where you’re pre revenue, correct?
I’ll talk in an ARM context. We at ARM are stage agnostic. Above and beyond, it should be strategic to us. Publicly, you’ll see that ARM of course is the architecture for most of the mobile devices out there. We are moving into IOT or actually already in IOT, so many of IOT type devices are ARM powered. We are incubating some businesses within ARM that are more on the software side of IOT. If you have a business that is related to connecting people, devices.
We provide technology invisibly to enable a global connected population.
What we like to say is that we want to provide technology invisibly, and that’s why a lot of people don’t know who ARM is because we try to be behind the scenes. Provide technology invisibly to enable a global connected population. If you have a piece of technology, whether it’d be software or semiconductor IP, we’re interested. Like I said, we’re stage agnostic. That is what ARM’s trying to do.
I think as most people perhaps know, when you got to corporate, it is very important that you have an executive sponsor for the investment. It’s not really about the stage, it’s about to what level are you, number one, related to ARM’s core strategy? Number two, to what extent does the executive sponsor believe he or she can influence you to be successful with ARM rather than without ARM?
How does a founder get an executive sponsor? Warm introductions?
I think the corporate development team or the incubation team or the new business venture team is like myself. We will facilitate those. We are acting like maybe the first filter. What I do is when I see something then definitely I will involve the next person and then that person will then bring it up to the exec. Because as you know, the execs within corporates are very, very busy doing their day jobs of selling. There are a couple of empowered groups and people who are able to look at a number of ideas, filter them down to a couple that they believe will make sense and then push those forward with the executive they work for or another executive. That’s how it works within ARM. I don’t want to generalize other companies.
We’ll just focus on ARM.
But in ARM’s case, that’s the way.
Can you give us a story or an example of some company that got an executive sponsor and is involved with connecting devices and people together that you heard that pitch and you went, “This is something that fits our strategy and we want to invest in it.” Now, they’re off and running and it’s already public that you funded them?
We have, in the connected device realm, we’ve actually made more acquisitions and investments. This connected device theme is pretty recent. That’s maybe the last two or three years. We acquired a company called Sensinode three years ago and we acquired a company called Sansa a year ago.
Tell us a little bit about what are those companies. What made it so compelling?
Sensinode is a connectivity platform for IOT devices. It’s to allow you to securely connect a device up to our platform. We have embed device services platform, which allows OEMs to securely create, deploy and provision IOT devices. Sensinode was really the connectivity layer, some security, some registry part. Sansa, which we bought last year, really allowed for the security. They had some novel IP for securing it, making sure the device was secured, as well as provisioning software to allow for the customer to provision, to say, “This device is a trusted entity in your network.”
Create, connect, secure, deploy, monitor, analyze IOT devices
If you want to think of it as we’re looking for technologies that can help each one of those verbs that I’ve just said, which is create, connect, secure, deploy, monitor, analyze IOT devices, that’s the spread of what we are looking at. I’m trying to think, the other companies that are related in which I believe it’s public is we are investors in a company called Trestonic. I’m trying to think of anything else as public. I don’t think there is except for Sansa, Sensinode and Trestonic.
That’s fine.
The rest are in negotiations.
Got it.
In the non IOT world and just looking at advanced semiconductors, we made an investment in a company called Pragmatic, which is about next generation plastic semiconductors. That’s an example of someone within the research group having an idea, reaching out to this company, bring it up through the CTOs organization and then the CTO ultimately sponsoring the investments and us having joint work with that company.
Apart from the connected device realm, which new business ventures, which I’m in, focuses on, there are other areas of interests within ARM. Specifically, even in the CTO and researches group around memory, next generation semis, people who are familiar with semiconductors and chips would probably … Next generation servers. That’s business as usual in terms of what ARM does. This connected is a newer, new business strategy that we’re focused on.
How wonderful for the early investors like Sansa for ARM to acquire them. That’s the ultimate successful exit, boy.
You bet.
Eileen, I love what you’ve said about confidence, getting over the impostor syndrome, getting over rejection and having what you call a high reserve of resilience. Most importantly, really anticipating the questions that you’re going to get asked when you go in to pitch. That’s been really, really helpful. We’re going to post this book that you recommended, What Works for Women at Work as one of the books that people should check out. How can people follow you? What’s your Twitter and all that good stuff?
I’ve been a little bit remiss to tweeting. My Twitter is @ETanghalVC. That is where I tend to post things. I also am avid an Facebook poster but I’m limited who I add. I sometimes post on LinkedIn so if you want to connect with me on LinkedIn. My @ETanghalVC, my tendency is to post quite a lot of things regarding women and venture capital.
Fantastic.
You want to know about that? Then definitely become one of my followers.
Great. Thanks so much, Eileen. It’s been a pleasure.
You’re welcome.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Crack The Funding Code!
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