Investor, coach, and executive, Dr. Ronald Weissman has a tremendous experience in technology management. He is Chair of the Software Group of the Band of Angels, Silicon Valley’s oldest angel group. As a guest speaker, he delivered a public lecture in the series of RAU TECH TALKS organized by University’s IT Association. Dr. Ronald Weissman spoke to Gazeta.RAU about startups, investing, and Armenia’s technological prospects.
Dr. Weissman, could you first start with the Band of Angels? What kind of investment company is it? What is the difference between angel investing and venture capital?
Sure. Angels are the individuals who invest their own money, while venture capitalists usually invest in funds: from pension funds, retirement funds, big companies’ money, or often university endowments. So, we in the Band of Angels invest our own money. The Band of Angles is the oldest business angel investing group in the Western half of the United States. We were founded by people from Intel Corporation back in 1994. There are about 160 of us and we invest in any kind of technology: it could be medical technology, could be agriculture, could be space technology, and we typically invest around half a million dollars, we pool the members’ money.
You have worked in various technological companies. How did you start your career?
I have a usual career - I am a professor of European History by training. And when I was doing my Ph.D. thesis, I found records that needed to be analyzed statistically, and I took some time off and learned statistics, I learned programming; and over time my university put me in charge of computing. I was a Humanities professor who also knew a lot about computing, that’s how I got my start. I started serving on advisory boards for big companies in the industry and one of them was Steve Jobs, and Steve asked me to join his company, which I did. I did that for a while, I ran a company, then I became a venture capitalist. So, I’ve actually had six or seven different careers, which is going to be normal for people in your generation. And I do teaching every day. I am lecturing somewhere all the time, so it’s a pleasure to be here.
What do you think of Armenia’s technological potential and prospects?
I think it’s fabulous. The population is extremely well-educated. On my last trip to Armenia, I visited TUMO, and that was one of the most impressive things I’ve ever seen. When I worked for Steve Jobs, I would visit hundreds of universities around the world over the course of my five years there, and TUMO was one of the most impressive things I’ve seen. Given what you are able to do here, given the innate technical skills in the population, the fabulous human capital, there is great human potential. There are some issues for Armenia, but by and large, I am extremely positive. The biggest negative is that it’s a small market, so it’s hard to build big companies here. I am a big believer that you ought to be building a regional market with parts of Russia, parts of Iran and Georgia to create a bigger market for Armenian people and products. The raw potential is extremely high. And there are a lot of successful Armenian entrepreneurs in the US.
Are there any plans of further collaboration with RAU and our IT Association?
That’s up to my friends from RAU. We in America love to collaborate. In fact, Silicon Valley was built by collaborating with universities. We would be very open to any kind of partnership that they might find interesting.
Do you think that the values and experience of Silicon Valley could be suited to developing countries like Armenia?
Yes and no. There is so much around Silicon Valley that happened for very unique historical reasons, that’s hard to replicate elsewhere. But I think some of the values, the entrepreneurial values, are certainly exportable; when I meet entrepreneurs here in Armenia, they are very similar to the entrepreneurs I meet in America, in Silicon Valley. There is a kind of common global entrepreneurial culture, and my Armenian friends feel very much at home in Silicon Valley and so do many of my Silicon Valley Armenian friends who come back to Armenia to help. So, there is a great cultural similarity.
What advice would you give to our students who want to build their own startup?
Do it! Right now the barriers to entry to build startups are very low. You can get most of your equipment in the cloud, you don’t have to buy anything; it’s very
inexpensive to start a company, so I would do it. And because you sell over the internet, you have an immediate access to global markets. The only problem emerges when you start to get big. One of the limiting factors here… there is not a lot of venture capital in Armenia. There is Granatus, there are some wealthy individuals, but if you want to address global markets, you need to get big, where you go for money; and that’s why so many Armenian entrepreneurs end up going to Europe or America, because they need to raise more money to build a big company. That’s the only problem. So, I think there should be more venture capital here in Armenia, and people could stay home.
What do you personally look for when you invest?
I look first of all for smart people, I look for honest people, I look for people solving big important problems. What I don’t look for is people building things like ‘how do I find a bar after work’ or another one of the four hundred dating applications. I want people to solve big problems, so I like people solving medical problems, I like people solving tough transportation problems, I like big data and the understanding of your business, of how the market works. The other thing I look for is people who understand their business model and how to measure what they are doing, we call that ‘matrix’. How did you do last quarter, how many new customers did you have or where do they come from, what do they want… Being able to understand your business model is for me very important. That suggests that the company is going to win. These are the kinds of things that I look for: great people, big markets, tough problems.
Could you a share a success story for our students?
Absolutely! I have open houses for startups, people can come and meet the Band of Angels, and we can get them advice, there is no cost and we can take a whole day and meet up to eighty companies. So, a number of years ago three guys showed up from Munich, they just landed in Silicon Valley and didn’t know anybody there, but they had a really good idea: they had an interesting financial application company named Taulio and they had a customer from US already. When my friends heard their story, suddenly this company was surrounded by investors - six different groups wanted to invest in them. They had built a similar company in Germany, where they had two US customers, one of whom was PepsiCo. So, we all gave them money and we gave them three times the money they wanted, because we said ‘You need more money than you think you do’. This was a little baby company with three people who came out of nowhere, so what are they doing today? They’ve recently raised money at around 130 million dollar evaluation for the company; the US White House named them one of the leading small business software that every company should use. They now are a big company with probably 50 or 100 employees; they are number one in their market and a total star.