Lessons to Seize and Succeed in Transformative Times

Ms. Bryant jumped right into her presentation by saying, “I have not started a company... just so we're clear. I spent 33 years - first at Intel and then at Google - but, I do know firsthand what it takes to invent; whether inventing a new business, a new product, or even inventing a new market.

The world of intrapreneurs does exist - inventing from within big, public corporate walls; whether it's done organically or done through the acquisition of a startup. And, I have done many acquisitions of startups. Some of them have gone very well and others have been complete disasters... but I'll save you those details.

So, a public company's greatest risk is success, because success breeds complacency, and complacency breeds failure. Whether you're an intrapreneur or an entrepreneur, we all must continuously invent and reinvent to survive. And this has never been truer than today.

The technology sector is in a state of massive disruption. That cycle of continuous advancement of technology through evolution and even revolution. And today, obviously, the two biggest disruptors of technology are the cloud and artificial intelligence, AI. The disruption of the tech sector in turn disrupts all industries. The digitization of business, as it's called.

Whether it's healthcare, or industrial, or energy... all of these industries are being disrupted by technology. Now, with all disruptive forces, there are winners and there are losers. And, as entrepreneurs, you are positioned to be the winners. You're the ones that seize those opportunities created by disruption.

The legacy guys will, all too often, see the disruption as a threat, hunker down, put their head in the sand, and hope it all just passes as a big fad. So, whether you're the disruptor or the disrupted, the key is to act... and to act quickly.

But, to act before it is too late requires vision. The word visionary gets tossed around a lot with references to people like Elon Musk, or Jeff Bezos, or Steve jobs. Someone will say that a truly great leader is a visionary; that they can see the future. A visionary is not someone that sees the future... that's a psychic. A visionary is someone that sees the future before everyone else is connecting the existing dots that foreshadows the inevitable.

Identification of those dots, those inflections that are occurring, is the first step you need to take. The second step is connecting those dots in a way that predicts the future outcome. The third step is to have the courage to act. The fourth and final step is to rally all of your stakeholders to engage others in your vision; whether it's the venture capitalists, the industry experts, your direct customers, indirect customers... and you need to do it in a way that doesn't make you sound crazy.

One thing I have learned, about predicting the future, is the importance of the past. ‘Jevons Paradox’ is my foundation for prediction. William Jevon, in 1865, he predicted that if you - this was in the context of coal burning factories - make a resource more efficient, the demand for that resource doesn't decline, but rather the desire for that resource increases.

It's counterintuitive, but with efficiency, new usages will emerge. New applications are uncovered; new ways of using that resource emerge. And the barriers of entry are reduced.

So, this is actually quite evident - the value of efficiency - in the three biggest IPOs of 2019. You may know these. Uber recognized that your personal car is only 6% utilized... obviously hugely inefficient. And they IPO’d at a valuation of 82 billion. Slack unleashing corporations from the very inefficient way of communicating with email. They had a 23 billion valuation at the start of trade. Roku who made your TV viewing easier and cheaper. They IPO’d with a valuation of 1.3 billion.

So, my advice to all entrepreneurs is to seize those disruptive forces that deliver greater efficiency. There are so many smart people, so many in this room, with amazing ideas. What, beyond the invention though, is required for success?

What I have seen as an advisor, and an investor, and a board member of startups, is that success comes when - early in the company formation - the idea, or the invention is put to the test. You have to stress-test that invention, in the context of a strategy. And the first place to start is feasibility.

So, can your invention actually move from idea to product? And can you do it in time, before your competitors emerge, or... clearly, before your funding runs out? Who do you need to make your product successful, in entering the market, and can you convince them [to be] a part of your ecosystem?

Whether that ecosystem is technical partners, endorsers, direct customers, channel partners... if you believe they will support you, why? What's in it for them?

So, feasibility is the first step. The second step is desirability. Is there a real market for your idea and do you have proof that a market exists? What drives your confidence? How many end customers have you actually talked to about your idea? In a startup, engaging with customers early is a frequent gap. What is your market intelligence, and do you have a market intelligence system that is evergreen?

Because, the world is incredibly dynamic. If the market exists, who are the incumbents? Who do you need to displace? What will make you more desirable than them; that allows you to overcome the cost of conversion? What needs to be true for the market to desire your invention? So, desirability is the second one.

Then, third is obviously profitability.

You need to make a profit. I realize some startups - that have gone IPO - still aren't making a profit. But, profitability, at some point, is going to be needed. So how does your product-cost, and your operational expense, scale with revenue? How complex is your business model? How dependent is your business model on others behaving as you believe they will behave? How are competitors going to respond to ensure you're not profitable? What elements do you control and what do you not control? How much time do you actually have to gain relevance in the market?

So, profitability is the third one. And, without asking these questions, and building a strategy across these three vectors, success is a difficult row to hoe. Once all of this is clear, once you have this strategy, and you've stress-tested, the next step is obviously funding.

There's great news here. There is more money available from VCs today than ever before. And that's evident by the fact that there are currently 119 private companies valued at over a billion dollars worldwide. That’s a record. So, the VC market is exploding; in part, due to traditional financial institutions entering into the private equity world - because private-returns are now better than public company returns - and public companies continue to shrink year after year.

So, the venture space is seemingly money-infinite; it's growing on trees. But it's not necessarily yours to pick. Investors have a reputation that they need to preserve, right? They have a reputation for picking winners. When you pitch to them, and you ask for a little bit of money off of that tree, how do you do it to ensure a success?

The first thing that VC is going to look for is the founder. Is the founder brilliant? Is the founder a genius? Are they more brilliant than all the other startup founders that are pitching their idea and asking for money?

There's a very successful entrepreneur and venture capitalist, Hadi Partovi. He made a very provocative statement.... he said, ‘We will invest in something we think is a bad idea, if we like the person.’ So, if the founder is brilliant, the product doesn't matter because the founder will eventually find a path to success.

Second, is the invention itself. The VC is going to look and say, Is that invention unique? Do you have any intellectual property around it? Do you have a sustainable competitive advantage? Do you have a moat that is going to protect you and hence protect their investment in you?

Third, is the market itself. Can you convince them that the market you're addressing is big and growing? And is it believable? Is it believably big and growing? Ideally you're going to have some proof of that. You're going to have some customer testimonials and proof of concepts. They're going to look at whether that market has a potential of growing over time; expanding with adjacencies that open up new markets for your product, new revenue streams, and new customers. And, is your business model just too complex to be successful?

So, given this straightforward path, to take your invention to success, why are the stats so bad? There was a study - over a decade long - of tech startups and it found that 60% of all tech startups will fail in the first three years. They collapsed before they ever completed series A funding.

Just 17% of all startups actually make it to a successful exit; whether that exit is IPO or acquisition. And the ratio of IPO to acquisition is one to 16 so just 1% of all startups will make it all the way to an IPO. So why do 83% of smart entrepreneurs with brilliant ideas fail? And why do 17% end up with a successful exit strategy?

My opinion is... the winners do all of this. The winners are visionaries. Those founders are visionaries. The world is moving at such a breakneck pace; successful founders will keep their eye on the industry and are quick to identify changes. Quick to connect those dots. And quick to predict the new outcomes.

And those founders have the courage to act. They are not so wed to their original idea and their original strategy, and invention, that they can't adapt to those changes in the market.

The second thing is, the founders spend time early on, during the company formation, to create that strategy and to stress-test the feasibility, desirability, and profitability of their idea.

And, third is talent. This may surprise you, but very brilliant people aren't great at highlighting their deficiencies. You need to know what you don't know, and you need to seek out people that are smarter than yourself in those domains.

There's a very, very natural tendency to recruit people like ourselves, but you don't need more of you. You need the anti-you. I'm well aware that with critical hires, especially if you're in a small company - a group of 10 - every hire is a big, risky decision, and it's human nature to look for ways to mitigate that risk.

What happens though, in mitigating that risk, is you move to the action of hiring what is familiar. You hire more people like yourself. Yet, I hope you believe that diversity of experience, diversity in expertise, and diversity in thought is critical to success. So, your ability to hire diverse talent is critical to your success.

I was interviewed once, and I was asked to talk about a time I had failed. Completely failed. I was surprised by the question. I drew a blank and struggled to recall a time - in my 30 plus years in tech - when I had a complete fiasco and failed.

Honestly, I came up empty and I thought, I've got to think of something or I'm going to come off as incredibly arrogant. But, clearly several of my well-thought-out strategies and plans did have to be rethought and reworked over the course of time. Course correction is inevitable, given the rapid changes of the market, and the risk that's inherent with what we all do.

So, whether change is coming from the competitors, the marketplace, economic changes, customer changes, or whether we just had the inability to execute against our internal plans, there exists a tremendous number of external and internal forces that force you to adjust, adapt, and pivot.

Yet, I believe all of those forces can be seen and addressed long before you fail. And I love Thomas Edison's view on innovation. It resonates with me. I have not failed. I've just found 10,000 ways that won't work. So, it's clear… success is not guaranteed. You just need to be the visionary, not the psychic kind, but the visionary. That is a great leader.”