Venktesh Shukla: His Journey into the VC World

Interview Transcript, Venktesh Shukla: His Journey into the VC World:

Alan Olsen: Can you tell us a little about your background?

Venktesh Shukla: I was born and brought up in India. I did bachelor’s in electrical engineering my sister was in US and she thought that every self-respecting electrical engineer should be in Silicon Valley so I should come here. I had no desire to come here so instead I joined the civil service in India which was for ambitious young person in those days. In the days of socialism, civil service government services he was something that was far more desirable because all my family was in bureaucracy. So I became a bureaucrat and I was fat, dumb and happy there until I got married and my wife had done her undergraduate in engineering from Berkeley here. The understanding was that after the marriage she would come to India, I then I discovered that she had zero intention of doing that. So we lived apart for two years. Occasionally she would visit and I would visit and I thought that that was not a sustainable future. So I made a decision, which in hindsight turned out to be a slippery slope kind of decision. I always wanted to do my MBA in this country so I went to Sloan School at MIT to do my MBA and I didn’t have enough money to pay for the tuition, neither did my wife. She was working as an engineer but even that was not enough to pay for tuition at MIT so I had to borrow money to complete my MBA and then the realization dawned on me that if I went back with my meager salary as a bureaucrat in India I would never be able to pay back that loan. So I said okay let me work here for two years pay off the loan and then go back to my job in India. After two years I said, okay maybe I maybe I’ll go back when I become a director, when I become a VP, when I become a CEO… and the bottom line is she won and I’m here.

Alan Olsen: At what point in time did you decide that you were going to launch your own company?

Venktesh Shukla: That didn’t come easy. I was part of some big companies like Taradine and Cadence. But in cadence in the last job, one day I looked at where I was spending my time and that was a revelation to me. I actually looked at my calendar went back and analyzed that and I discovered that I was spending about sixty percent of my time in meetings another twenty five percent of my time preparing for meetings or following up from the meetings and another ten percent of time on HR related issues with employees and stuff. So the thing that I really enjoyed the most was spending time on product issues and with the customers was only about five percent. So I said, I don’t like this. And then the startup happened. I got pulled into a startup and that was a huge success. I got a taste of it plus I think the real exciting thing was that there was a direct correlation between every decision that I made and you could see the impact immediately. In a big company you don’t see that impact immediately you are going to meeting you’re influencing some policies and decision then it is gets communicated then they have to be trained and then it has to be rolled out- it’s a long drawn-out kind of a process. In a start-up you make a decision and you see the impact right away. That by itself was very intoxicating. So from that point on wards I always been in a small companies and startups

Alan Olsen: What are you currently working on now?

Venktesh Shukla: I started a seed stage a venture capital fund about five years ago and that has just been a phenomenal experience. Before I started the fund, I had been associated with 30 startups either as a founder or CEO or as executive or as an investor, advisor, board member… And that was that was fascinating. So I started a small front seat stage fund where we would typically be the first institutional investment in a startup and that has been a fascinating. What I find is that a lot of investors they really don’t add much value to the company. I felt as an entrepreneur that I expected my VC’s to either challenge me in my thinking or strategy f or help me with customer introductions or help me with potential acquirers or channel partner. And I rarely got that. So when I became a VC, I was determined, having had this empathy for the entrepreneur, having come from that side, that every interaction with that entrepreneur I would strive to add some value. And I don’t know if it is actually if every entrepreneur has benefited or not but enough have that now they started sending their friends and everybody else they see to to the fund. So it’s been a fascinating journey. What happens is that most of the most of the other investors have been either with funds for a long time or they’ve never done a start-up on their own. So they really don’t have that empathy for what the entrepreneur is going through when he is making those first 50-100 decisions. And it’s those first 50-200 decisions that really sets the foundation of the company, not just the foundation but the guardrails. So the culture is set not just by the founders but by the first four or five employees that you hire. I give this advice to entrepreneurs, don’t hire someone who can do the job that you have in mind well. Make an extra effort to hire someone who can not only do the job you have at hand well, but has demonstrated in his past work experience, the capacity to learn new skills and grow on the job because obviously you are doing the start-up because you hope to grow and as you grow, there will be needs see for people who can grow with the company. So make that a explicit criteria when you are interviewing and hiring people.

Alan Olsen: What are some of the current trends that you see happening in startup companies today?

Venktesh Shukla: One of the biggest change that that you see happening is that every company in the world every organization in the world is getting digitized there is no escape from that. Which means that the problems that only big companies that that adopted technology in its early stages, they’re not the only ones facing all these challenges. Challenges of cyber security for instance. The other good thing that’s happening is that industries that you didn’t think of as a technology companies are becoming technology companies because think about for instance mining. Now mining is as removed from technology as you could get and you just send the mining vehicles- the most sophisticated mining vehicles to extract the thing out and get it going. But it turns out that there’s a huge economic compulsion to make those mining vehicles autonomous and this is the cutting edge, autonomous driving is a cutting edge application of artificial intelligence, machine vision and all the sensors and IOT and everything that you can think of, it’s it brings it all together. So the biggest trend that I see is that traditional industries now are getting digitized and it’s opening up the consumption of technology massively all over the world.

Alan Olsen: Recently a survey was done in China of diagnosis and they put a number of doctors against artificial intelligence and they found that the AI was able to get the right answers some ninety percent at the time the doctor sixty percent of the time. What’s your opinion here on the proper use for machine learning or AI as we look into the future? Are we going to need people surrounding us to help with it or or eventually where you see the most practical pragmatic applications will be?

Venktesh Shukla: So I think this is very tightly related to the larger question that is AI machine learning going to eliminate jobs and will that create a crisis. I think there are two answers to that. When it comes to the example that you took, I think what will happen is that application of technologies like AI would change the role that a doctor plays. So you’re absolutely right when it comes to diagnosis people will rely more and more on these automated techniques but those doctors would be able to spend more time on other things related to the treatment part of it or to figure out to see how unique this person’s problem is and what kind of a treatment fits this this unique individual. So the things that get short changed today, doctors is that will get to spend more and more time on that. So the nature of work is going to change, the work itself is not going to be eliminated, so this is for the white collar kind of workers. On blue collar stuff I think any work that is a repetitive, any work that is monotonous and hazardous, chances of that getting automated are very high. That’s not that’s not all bad and I think there’s a lot of debate going on across the technology and the policy circles that cumulatively is this all going to be for good or for bad? I don’t know the answer but I think that we are a long ways off from that.

Alan Olsen: So why do some companies succeed and others fail?

Venktesh Shukla: I’ll tell you from a start-up standpoint. The failure rate in Silicon Valley is about 50%. Fail meaning they don’t return a penny to the to the investors and there’s a good reason for it. The reason is that Silicon Valley is full of very smart technology people and they have solved some tough technology problems. Then they start a company and look for a business problem to solve and sometimes they are able to find the business problem and successfully transition to solving that problem and sometimes they are not able to before the money runs out. So the kind of thing that I like to invest in is typically the first kind. Before starting, at least one person in the founding team should have a deep domain expertise in one area and his partners are technology people. So they have figured out that what the problem in that industry is and they figure out how technology can be used to solve that problem. That’s my ideal combination of a team so I’ll give you an example. I just funded a company that is automating a job that has not changed in the last 200 years. Whenever a container comes from outside into the US or any port in the world, someone, a lowly paid individual, custom clearance broker goes through 1,000 pages of a tariff sheets to figure out what tariff to apply. If a wood going into a table is one tariff, wood going into a into a closet is another tariff, wood going into a chair is another tariff. So they spend three to four hours looking through that. Then they take it to US customs and they go back and forth. It’s a very inefficient process. So the company was started by a person who was in DSL for 23 years and lived this pain every single day of his working life. He got together with some of his Silicon Valley friends and started a company to digitize and automate this process. That’s the kind of thing that that I look for- deep domain expertise combined with technology insight.

Alan Olsen: What advice would you give for the aspiring entrepreneur today?

Venktesh Shukla: I have this conversation with entrepreneurs all the time. Anyone who starts a company is going to spend four to five years of his or her life on chasing this dream. One of the first things they owe to themselves and to their family is to go out and talk to 30 of the potential customers. It’s not easy to do that. If you’re trying to solve a some Hospital has in terms of security or some mining company has, go talk to at least 30 potential customers and tell them what you plan to do. Ask them if they have that problem and if they have that problem, are they spending money on it and if they’re spending money on it, are they happy with what they are getting. How would they like to see it improved? And then ask them, if I can do XYZ, would you pay for it and how much would you pay for it? Have this conversation with 30 people, nothing else will bring you to reality. Despite all the wisdom, all the tribal knowledge available in Silicon Valley, I am still surprised that a lot of entrepreneurs haven’t done this fundamental work before jumping into it.

Alan Olsen: What’s the best way to get a hold of you?

Venktesh Shukla: My website is MontaVistaCapital.com. They can go to the website and there’s a form they can just fill out their information and send it to me and I’ll respond.

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This transcript was generated by software and may not accurately reflect exactly what was said.

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world and is a proud sponsor of the American Dreams Show.  For more interviews and information about the American Dreams Show, please visit our home page.