Venture Capital and Entrepreneurs | Dixon Doll

Interview Transcript

Alan
Welcome back. I’m here today with Dickson doll. He’s the co founder of the venture capital, firm, DCM. Welcome to today’s show.

Dixon Doll
Nice to be here. Thank you.

Alan
So Dixon, can you give me some background, how you led up to where you are today?

Dixon Doll
I went to school in the Midwest and got three degrees in electrical engineering and became very fascinated with technology. And this was all during the 60s, I started a consulting practice to help corporations deploy technology to strategic advantage. And I got involved in some early networking startups here in the valley, where I was asked to come and join the board and be an independent expert. And so I kind of got the venture bug that way. And then I decided to make venture capital A full time career in the middle 80s.

Alan
Well, I tell you, have you always been entrepreneurial in your career?

Dixon Doll
I actually think so. I never really realized it until I became actively involved and immersed in the Silicon Valley climate. I don’t mean, you know, the weather climate either. I just talked about the whole ecosystem, and the people, the cultures, the value systems, and so on, and the risk taking, and all that and it became something that was I think it’s fair to say addictive to me in terms of the way I wanted to spend the rest of my professional career.

Alan
Now, Forbes magazine recently listed you as one of the top venture capitalists for four consecutive years in row listing you on the Midas list. You know, what is it? What criteria do you feel about you into that? That recognition.

Dixon Doll
I’m pretty knowledgeable about the way Forbes organizes those things. Since I’ve been working in and around that space for a long time. I think it’s a combination of, of a person, more importantly than anything else is that they go out and do some good deals or great deals, because I got news for you and no background at all will get you to to that level. If you don’t make money for your investors and limited partners,

Alan
That DCM capital, what do they specialize in?

Dixon Doll
We specialize in information technology broadly defined, we our practice, is involves what we call a golden triangle, which is the United States, China and Japan. We are widely regarded as one of the first firms that entered the Chinese market for VC. In fact, our very first deal that we did, there was one where the women entrepreneurs from Shanghai had to come to a Berkeley woman entrepreneurs forum and present and we pulled them aside after their presentation and got very actively involved. For a number of years, we went back and forth across the Pacific, until we reached a critical mass of exciting projects over there to justify opening an office. And so we’re now there in Beijing and Shanghai as well. Also a similar story on a smaller scale in Japan.

Alan
Settling that the mobile I guess that’s really taken off the last couple of years,

Dixon Doll
mobile is been exploding. In the last few years, as everybody knows by now. There are a lot of areas that have been extremely hot. That are and I don’t think these are fads at all, security is been increasing in importance for reasons that we’re all very familiar with. I think the security market is going to be hot for maybe 10s, if not 100 years from now, people are still going to be worried about that. A lot of other application sectors like the cloud and Software as a Service have been areas where an awful lot of money has been made by venture capital firms over the last five or six years.

Alan
You know, they say that half the venture capital man in the world is in Silicon Valley. Why is that? So?

Dixon Doll
I think that the number, that number doesn’t sound too far off. 63% of the money that was raised in the year 2012 was raised from around the globe was raised in the US. And I think you know, three quarters of that is here in here in the Valley. So those numbers are pretty, pretty, pretty accurate. I think they fluctuate you know, depending on where the economic cycles are in different countries around the world, but it’s here because this is where the the critical mass of all the ecosystem components exists and where the model has been perfected by people coming out of Stanford and Berkeley, by the venture capital, founders that got together and provided money to startups, by the incredible ecosystem, you know, of support here, the accountants, the lawyers, but most importantly, the culture of really, really top notch people wanting to come here and understanding that building a company is a great honor. It’s okay to fail. fact one of the things that’s really unique about the valley is that success is understood and appreciated and expected. And I think there are very few other places in the world where I’m sorry, I misspoke. I think, you know, it’s okay to fail here. And in fact, it’s considered a, you know, a badge of courage. In some sense,

Alan
Dixon, we’re right, we’re running up against the clock here, we need to take a quick break. And basically here today with Dixon doll, he’s the co founder of DCM. Venture capital here in Silicon Valley. We’ll be right back after these messages.

Alan
Welcome back, I’m here today with Dixon doll. He is the founding partner, the CO founding partner of DCM Capital Management here in Silicon Valley. And Dixon, we’re talking about Silicon Valley, and the amount of money that’s flowing through here. How can the VC community benefit from the valley on a going forward basis? In other words, is it? How do we maintain the position of leadership and venture capital in this world?

Dixon Doll
I think that all the forces of nature are lined up for the valley to continue to be, you know, the world leader in venture capital. An interesting statistic, Silicon Valley Bank opened up more new bank accounts in the first half of last year than they have in any six month period in their history. And much of this money was coming from large corporations and governments from overseas that want to come to the valley and try to learn what they can about it and then go back and replicate Silicon Valley and in their respective countries. I think that’s a very difficult thing to do. Because there’s so many intangibles and the critical mass here that are just not exportable the culture, for example, is very difficult to export. So I think the if the Valley continues to be a meritocracy, which is one of the key words that people use to describe it, and to continue to, you know, to really attract top notch people in every discipline that contributes to the success of a company, I think it will be it’ll be very prosperous for many years to come and probably remain in the best position in the world.

Alan
So why is the vibrant VC community, important for everyone living in this valley?

Dixon Doll
A vibrant VC community leads to innovation and innovation leads to job creation, and that leads to economic growth. I was recently involved in a study with the National Venture Capital Association, which I chaired five years ago, to figure out ways to help stimulate the capital markets. And the things that that we learned in the study is that there are only three places where jobs get creative in a meaningful scale in the US. One of them is small businesses. Another one is venture backed startups. And then the third bucket or category is bigger venture backed companies like Google, and so on an apple after they go public. So it’s a really critical driver of job creation. I don’t think our governments do enough to really understand how job creation is critically dependent on venture.

Alan
So what can all of us in the valley ecosystem do to make this valley more attractive?

Dixon Doll
I think we have to make sure that the, the critical resources that we need for success, one of the big ones that’s That’s creating a problem right now is engineering and technology talent. There’s so much critical momentum here going forward with startups right now, many of the people that I’ve talked to starting companies claim that the talent market in in the valley broadly defined now to include San Francisco is the technical talent market is as tough as they’ve ever seen it. So we have to figure out ways to improve the quality of education. We need to deal with immigration reform. That will be big help as well.

Alan
Amazing here to David Dixon doll. He’s a co founder of DCM, a venture capital firm here in Silicon Valley. Dixon, we need to take a quick break, and we’ll be right back after these messages.

Alan
Welcome back. I’m here today with Dixon Doll. He is a co founder at DCM, a venture capital firm located here in the Silicon Valley. And then Dixon, I want to turn the page into talking about the venture capital model. Is it is it broken? Or does it need some type of pivotal change?

Dixon Doll
I we had a panel over at Stanford the other day that I was privileged to participate in and I think the three people with very different perspectives on the industry all concluded that the model as we know it today is not broken. It’s just going through some changes. And the worst thing that ever happened to venture capital and all the money was forced on it literally back in the 99 and 2000 timeframe and company’s values and everything went crazy. And that led to the bursting of the internet bubble that we’re all painfully familiar with. And it’s taken us nearly 1314 years to be get back on our feet. And the real reason I think that that it’s fair to say that is that the amount of money that had been being raised by firms, the number of firms is shrinking, the number of practicing general partners is shrinking, there have been a lot of people hugely successful, some are retiring, some are just moving on. And I think that’s bringing the industry back into a state of balance, where we have an adequate proper amount of capital to supply the you know, the the best entrepreneurs that are out there raising money.

Alan
So what can or should VCs local, the local community or government do to work together? In better cooperation?

Dixon Doll
There’s a long list of things I’ve always said that the proper role of government in venture capital is to support a vibrant ecosystem that is conducive to job creation and company formation. We have some good examples, you know, that were when we passed the Jobs Act, you know, at the federal level about two years ago, which I was actually very involved in helping create. The, you know, the path to an IPO was made much more straightforward. There are some plans on the table right now that I think desperately need to be followed up on. That would make it possible, for example, for startups that raise venture capital that’s invested for five years to pay no tax, no capital gains taxes on that. I think the California state income tax is going to sooner or later, have a perverse effect on entrepreneurial activity. What governments don’t understand is that that’s a competitive market out there. There used to be a sign not many months ago on 101. We’re the Government of Canada was advertising to entrepreneurs. If you have a plan, come up here and we’ll give you us a green card and and you know, an office and get you started. This is happening all over the world. And so many times there’s either an ignorance or an arrogance on the part of either state or federal governments about just being so overconfident that we don’t have to do anything and all all of us just going to come here and we can’t we can’t afford to take that view.

Alan
Do you feel that that ally is coming back right now?

Dixon Doll
Well, I absolutely do. I think it’s, you know, a point about the valley broadly defined because a lot of the, the new activity is taking place in the city of San Francisco, where I live, some of the venture firms that are traditionally headquartered on Silicon Valley have now opened offices in the city. So there’s a shift. But that’s not a shift. It’s, it’s still within the valley as broadly defined, I would put it that way.

Alan
Are there? Are there current trends out there that concern you?

Dixon Doll
I think that one of the concerns that, that I have is that a lot of Angel, you know, investors and small funds have been set up, you know, over the last five or six years, especially from entrepreneurs that are that have sold a company and been successful. And there’s a a potential problem on the horizon, if these smaller funds don’t have the money in reserve to provide the series B, and the Series C rounds that are needed to successfully create companies. And so I’m concerned about this large number of startups that have received angel money, and that may end up being orphaned, you know, when they can’t obtain the second third round capital for whatever reason,

Alan
what current trends out there excite you right now,

Dixon Doll
I think innovation is never been more prevalent. You know, the new technologies that everybody is excited about lots of new waves of security companies, the explosion in the mobile internet payment systems, there’s a, you can’t even begin to itemize all of the new innovations in the financial services and the payments areas, wireless cloud services. And believe it or not, there’s actually some innovation beginning to happen in universities and in education with the trend to using and relying more upon the massively open online courses. Although I think we have to be realistic, and assuming that, you know, these are not going to transform universities, because nothing ever happens as fast and very diversity as it does in a purely commercial establishment.

Alan
You know, we talked about that before the Golden Triangle, the US, Japan and China. Do you feel that the the, the governments are cooperating to build a competitive landscape right now.

Dixon Doll
I don’t think that they’re cooperating as much as, as they should. The US government has done some kind of silly things like the, you know, the NSA data gathering episode that scares the heck out of, you know, all of foreign countries that including some that might want to work with us, but they don’t trust us. So that’s led to some sharp declines in revenue for companies like Cisco that try to sell into China. And these, these governments get scared by that. And so they don’t want to go out of their way to support us vendors. I think that has to change.

Alan
And visiting here today with Dixon Doll. He is the co founder of DCM, a venture capital firm located here in Silicon Valley, and takes on one whole job for the last segment, I want to talk about the emerging entrepreneur and trends and things that they should be working towards the day that we’ll be right back after these messages.

Alan
Helping you here today with Dixon Doll, he is the co founder of DCM, a venture capital firm located here in Silicon Valley. And, Dixon, I want to turn the page and talk about the young entrepreneur coming out of school today. What advice would you give them?

Dixon Doll
I would give them some advice to to get involved in you know, in some business or sector that they’re excited about where they can go and learn the most. Maybe in a, you know, an initial assignment that might last two or three years and where they ideally it’d be great if they could get involved in one It’s venture backed, so that they see the dynamics of the way the management interacts with the investors. But most important thing is to get yourself in the middle of an entrepreneurial situation that, you know, either is fairly far along and well established and adventure back where you can get a lot of knowledge, or where you can, you know, work with a smaller group of people that, that you really trust. Most important thing, though, is to is to be involved around quality people.

Alan
What’s the best time for a young company to go out and seek outside investors?

Dixon Doll
I think it’s hard to generalize on that answer. But the the things that, that I really look for, when I see new teams come in, that get me the most excited is, if I can see that this team is, is realistic, and that they, they understand the competitive dynamics in the industry sector that they want to go and pursue. But the most important single thing is when an entrepreneur comes in to present to me is does he understand he or she understand what it is that I’m trying to do when I back them. So many people that come in to raise money, don’t understand or don’t sit down and do their homework of what is the model, whereby a venture capitalist is successful, because you want this partnership to be mutually successful. Therefore, an entrepreneur really needs to do their homework and study. You know, what it’s going to take for that venture, whether they get the money for that venture to be successful in the marketplace?

Alan
What level do you typically invest it with companies that

Dixon Doll
it varies, as I said before, and one of the prior segments will start sometimes with a smaller investment that you might say, is a call them noncore in our, or a seed or something like that, and then if a company makes progress, they can graduate to what will provide them with a next round, which would be equivalent of a full blown series. And we’re always looking to see how they progress against what they said they were going to do when we gave them the last tranche of money. And what’s

Alan
the most common mistake young startup companies make?

Dixon Doll
I think it’s not not being grounded in reality and and not doing their homework about the dynamics of the sector that they, you know, are going to play in and not really getting the relationship with the venture investor off to a good start.

Alan
And visiting here today with Dixon Doll, he’s a co founder of DCM, a venture capital firm here, Silicon Valley. Dixon, if young entrepreneur wants to contact you, how would they go about that?

Dixon Doll
Just go to our website www.dc.com and click on my my name in there.

Alan
Alright, thanks for joining us today Dixon on America dreams. Join us again right here next week on AM 12 20k d o w

 

We hope you enjoyed this interview; “Venture Capital and Entrepreneurs | Dixon Doll”.

To receive our free newsletter, contact us here.

Subscribe our YouTube Channel for more updates.

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.

Alan L. Olsen, CPA, Wikipedia Bio

 

 

GROCO.com is a proud sponsor of The American Dreams Show.

 

The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more.

MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  I’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.