Silicon Valley remains unique, and small — even on the outskirts, a different reality hits. Jennifer Kuan tells us how that could be changed.

Cover art for Beyond the Breakthrough episode 111 featuring Jennifer Kuan

Silicon Valley is the home of venture capital and startups — but drive an hour or two outside of the city and you are in a different world. Take Monterey, the site of our own GCVI Summit (listen to the episode to get a 10% discount code on tickets). It is a beautiful city with a world-famous aquarium and a gorgeous golf course, but it is a city of extremes: the median household income is $98,000 while at the same time more than 10% of the population lives in poverty.

The startups coming out of Monterey’s local institution, California State University, Monterey Bay, tend to be different from the technology companies up the road: they’re coffee producers, sustainable packaging manufacturers and main street businesses like restaurants.

But Jennifer Kuan, associate professor of entrepreneurship and economics at the university believes these startups can still use some Silicon Valley tactics. Not only is she helping launch ventures in her role as deputy director of innovation and research at the entrepreneurship hub Startup Monterey Bay, but she co-founded être Venture Capital, which focuses on women and minority-owned startups across the US.

It’s part of a field experiment to replicate Silicon Valley — Kuan’s research has unearthed a few tactics employed by the original VC community in the Bay Area that might just be the secret sauce nobody else has tried, and she tells us what that is.


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Please note that the intro and the outro, as well as the ad break, have been omitted.

Jenny, welcome to the podcast.

Hi, thanks so much, Thierry.

I look forward to the conversation very much. We’ve obviously talked before this a little bit, so I have a little bit of an idea of what Monterey is like, but I think it’s probably quite an interesting conversation for people who think of Monterey as I did before, a place that is for golfing. Yeah, not much else. Really nice and touristy.

But to set the scene a bit for our listeners, perhaps you can give me a bit of an overview of your work and your research that you do at California State.

Sure. So one of the things I study is the history of venture capital. And so a lot of that takes place in Silicon Valley. I still divide my time between Silicon Valley and the Monterey area. And like you, I also thought of the Monterey area as beautiful, touristy, well-to-do, and a fun place to visit, lots of diverse things to do, golfing, the world-famous aquarium, wineries, all of that stuff. So it’s been a learning experience for me also to get to know the area more comprehensively. Yeah, there’s a lot more to it than the stuff that you and I thought about.

Yeah, the Monterey Aquarium is a good mention. I really like that place, especially the one with the massive pool, has very much James Bond kind of villain cave vibes. For anyone who ever goes there, it’s a beautiful place to visit. But as you say, Monterey is a city of extremes.

When I looked into this, the median household income in the city is $98,000. But more than 10% of the population actually lives in poverty, according to US Census data. What does that complexity mean for the university? What does your student body look like?

You know, it’s, I would say one of the reasons that policymakers wanted to put a university there on the former Fort Ord military base. And so our goal is to educate our local population. That’s a normal goal of Cal State Universities. So we are a Hispanic-serving institution. So there’s a high percentage of our students who are Hispanic. And we are drawing from our local population.

Now, like other Cal States, we have students coming from mostly all over California, but the majority do come from our local area.

That’s quite interesting. How big is California State University? How many other campuses are there outside of Monterey Bay?

Yeah, great question. So it’s a 23-campus system.


I know, it’s huge.

That is so much bigger than the University of California. That is a lot of campuses. Are they largely independent from each other?

Yes, and we are one of the smaller, newer ones, so founded about 25 years ago. And yeah, they are largely independent, but there is a chancellor’s office that oversees kind of all of them. And there are policies that apply to all campuses. Some of the policies are set by the state legislature because we’re a publicly-funded university system.

Okay. We’ll get back to the kind of top-down initiatives in a little bit. But I wanted to ask you as well, moving back to the student body a bit, what kind of students generally form startups? And what do these startups look like? Are they the typical Bay Area startups? Or are they something else?

Right, yeah. So they are not, you know, your typical technology-based startup. What we do have, and I’m really proud of some of our students, you know, they start restaurants. I have a student who started a coffee company. So it is an ag region. We’re one of the biggest agricultural regions in the country, supplying all of the fresh lettuce and greens and spinach and things like that, also strawberries, other kinds of berries. So we are definitely the salad bowl for the country, as they say. And so this is an ag region.

But what’s super interesting about the entrepreneurs, and this isn’t just our students, but they get the kind of attention, they create interesting products that a lot of other food entrepreneurs, they try to get this kind of attention. So a student of mine created a coffee company that is a Mexican coffee. And she was approached by Trader Joe’s. And that’s, you know, like crazy level of attention. Another bakery in Salinas is a Mexican bakery. They are not alums, but they were approached by Costco. They are getting that kind of attention. So really high quality, unique and interesting products. And boy, there are a lot of food entrepreneurs who would love, would jump at the chance to even have a conversation with some of those buyers. So, you know, some of these are food companies.

We also have non-business alumni, kinesiology alumni, doing training and other kinds of things. You know, so local smaller businesses. But they really add to the fabric of the community. And our goal is to help them make sure that they survive and thrive.

It’s quite interesting to have a portfolio of companies that is more community centric, because quite often the technology startups, even if there are innovation hubs and all those kinds of things around the bigger universities like MIT or Stanford that people might traditionally think of, they don’t really impact the community on a level that a coffee shop does or another kind of small business would do, which is quite interesting — giving back to the community almost.

Right. I mean, we think of some of these as main street businesses, but, you know, a lot of our students are black and brown students. And often starting your own company is their employment of last resort. So if there’s discrimination in the job market and so on, which we know that there is, this is a really important avenue. And I think it’s a form of empowerment. They’re doing really well. So it’s really kind of exciting. We have, I guess you would say, minority entrepreneurs that are really succeeding in their main street businesses.

It being an ag region, are there any kind of agtech companies that come out of CSU as well?

I’m trying to think. Well, so we don’t have an engineering school. We are building one. So that is to come. There is a computer science department. And unfortunately, I think that the students who come out of there get sucked into Silicon Valley. So instead of starting a company, which is a good thing. So I’m really excited about that. You know, so we’re definitely exporting talent there. But on the other hand, that’s absolutely a measure of success for the computer science department.

Yeah, and you’re much less worried about an employment of last resort if you’re getting the six figure salary offers. Yeah, I would take that opportunity.

Absolutely. Yep. And it’s what I would want for that. You know, so to work at a big company, it’s boy, that’s just incredibly great experience for them.

Do you find that there’s any kind of awareness of your startups in Silicon Valley? Or are these investors just not interested in these businesses?

Oh, that is such a great question, because for years, before I arrived, you know, at Cal State Monterey, there has been a lot of effort and interest in bringing Silicon Valley style venture capital to the area. It hasn’t worked.

But on the other hand, it hasn’t worked pretty much anywhere else in the world. A really big question is why. And that’s kind of where some of my research has gone, which is trying to understand, you know, what was the history behind Silicon Valley? And why has it been hard to replicate that? Even in places like the Research Triangle in North Carolina, New York. Boston certainly has its own version of this, but it’s a different flavour than Silicon Valley, even now. So anyway, so yeah, there’s definitely been efforts to bring sort of Silicon Valley style venture capital investing to the Monterey area, the tri-county area. And it hasn’t been entirely successful.

I’ll pick you up on that then, in your own research, what were some of the reasons that you found that it did work in Stanford and not elsewhere, even in Durham?

Yeah, thank you for asking that. So one of the things that we found was there’s a couple things. So one is that to do successful early stage venture capital investing, venture capitalists actually roll up their sleeves and help startups survive and thrive. So gain a foothold and, you know, survive that infancy period. It’s a ton of work. It is just one problem after another. As you can imagine, for companies that are doing things that are absolutely new to the world. And so it’s a lot of work on the part of the investor.

What that means is that if you’re a small investor at this early stage for companies, there’s a limit to how many startups you can invest in because you’re taking care of these companies, which are a real handful. And so what they did in Silicon Valley in the early days, and by early days, I mean late 60s and early 70s, is they formed a club. It was the Western Association of Venture Capital. And they met once a month over lunch in San Francisco and they talked about companies they were looking at and they were interested in or they were going to invest in. And they worked together to co-invest in each other’s companies.

This allows you to spread out your bets while at the same time making sure somebody is doing the hard work of helping that company survive and thrive. So the companies now in venture capital that are succeeding at this are not household names, but they’re really doing the work. So that’s still out there. That piece of how hard it is to build these companies as an investor, I think that’s lost a lot of times when you look at the headlines about big investments in middle stage or later stage companies.

It really takes a village, I guess you could say, that you need that core group of investors to get something going. And it can be a small number. That was actually true. Less than a dozen venture capital… yeah, really, really tiny. And then, of course, once you start succeeding, success breeds success. So it attracted more and it was great and it took off. So if you don’t have that, I think the club was essential. And so I haven’t seen other regions try that as a structure to get the ball rolling.

I don’t, and admittedly, I haven’t really looked into the history of Silicon Valley, but I wonder how well known that is, that you need this club. I am really surprised by the small number because I would have thought the critical mass would be much bigger. So yeah, less than a dozen is, that is really surprising. I mean, that kind of shows that you could build it elsewhere because it’s not…

Exactly, exactly. I think that’s the question now is to see if we did that somewhere else, would that work? So we’re actually trying to do something like that. We’re just, it’s super in the infancy stage right now, seeding that with women venture capitalists, because why not? We know that they’re way underrepresented in the industry. And so if you could get a sort of a community going where you had that club, if you will, could you get something going? That’s the question, yeah.

We will get back to supporting women entrepreneurs in a little bit because I think that is quite interesting. But I want to stay on the student and startups for a little bit. Is there a specific support that you do offer to your student entrepreneurs? Are there incubators or makerspaces on campus?

Yeah, so we have an institute, the Institute for Innovation and Economic Development. And that is, you know, we do entrepreneurship events to encourage people to think about entrepreneurship. And that is for our campus community and beyond. So during the pandemic, we did online events. And that, of course, you know, was open to people across the country and across the world. So we’ve done that, but normally they’re in person. And so, you know, they’re drawn from our local community, which is great. And they’re very externally oriented. So we do advertise the events to outside entrepreneurs. And so it’s really fun. And that’s sort of the idea. It’s a lighthearted, intentionally inclusive, encouraging environment.

We’ve gotten sort of more community members than students. But we’re trying to change that as well. Now that we know that a lot of students, like kinesiology students or psychology students and so on, as alumni become entrepreneurs, you know, we’re gonna really work hard to reach them and let them know, you know, we’re here and we’re here to help. So yeah, it’s definitely, you know, open to the community. And we have monthly office hours, if you will, and that are completely open as well to the community. So you can talk to a faculty member and a volunteer mentor business community. So we’re trying to build a little community for community and the alumni, as well as our students.

We have a small makerspace in the library and they have done an incredible job serving our students, really just growing over the past, I wanna say four years, originally grant-funded and now supported by the university. That’s my understanding. And yeah, it’s getting students excited about making things and, you know, using their creativity to create and making it fun.

Do you find that working with these students, they typically already have a kind of entrepreneurial drive or is that something that they more often than not discover through these maker spaces and other programmes?

Yeah, I would say they don’t. And I think, why would they, right? Like if I think about myself, you know.

True, yeah.

Right, the farthest thing from my mind. I would definitely say that that’s kind of not what they’re thinking about. On the other hand, our students are, I think pretty typical in that there’s always a small percentage, you know, this component of students who have done things like custom-made t-shirts and sweatshirts and sold those to friends and stuff like that as high school students, or they’ve done things like nails and other kinds of things that are just, where they have skills and avocation. Yeah, so definitely we have that. And that’s very, I would say typical, but yeah, we teach entrepreneurship classes and it’s a different type of idea. And we definitely see the light go on for some people that there’s, entrepreneurship is a whole thing.

I mean, it certainly did for me. I went to business school for my post-grad and then I hadn’t really thought about launching my own startup. And then it was part of the curriculum. We had to write business plans and we had to pitch. And I kind of learned that it’s not for me, but it was a very interesting experience and I wouldn’t have wanted to miss it for anything. When people think of entrepreneurial institutions, as I said, they often think of Stanford or MIT or Berkeley.

I find it quite interesting that until recently you did teach entrepreneurship as part of the core curriculum at Cal State. How do you think generally Cal State compares to these other bigger institutions that might be more what people think of when they think of entrepreneurialism?

Yeah, I think, again, we do have a different student population. And I would say for us, we’re not getting the technology students or the engineering students, at least not yet. And so for me, what’s so important about entrepreneurship education is, I see it as empowering. It’s also a different way of thinking that is useful, not just in business, but in life. And so that is where you think about breaking big problems down into smaller hypotheses and take one step at a time and learning as you go. It’s just so important for our students in empowering them to approach the world and big problems in the world in this way of breaking problems down. But also as a way where this could be their employment of last resort. So that, again, we’re seeing that.

But I think that Cal State in general can do really incredible things. And San Diego State has proved this. Babson College at the national level, which is not a Cal State, so they’re a private school in Boston, they broke the top 10 with their emphasis on entrepreneurship. So they are in the top 10 of the Wall Street Journal’s ranking of undergraduate programmes and this is for everything. So you have the Ivy Leagues in the top 10, and there’s Babson at number 10, beating out a whole lot of other incredible schools.

So there’s definitely a lot that can be done at a Cal State. One of the things that I would love to see is to bring in entrepreneurship classes in freshman year. Cal State’s a tough environment to do that because we get a lot of transfer students who come in junior year. And so trying to figure out just institutionally how we can get students taking entrepreneurship in a packed schedule, you know, in a curriculum that’s just really jam-packed is tough.

And then again, with more than half your students are transfers, we definitely have a different challenge than a Berkeley and a Stanford where transfers are a much smaller percentage of things.

I’m guessing the transfers are from community colleges.

Exactly, yeah, yeah. And that’s a good thing. It makes college affordable, right? So I 100% endorse all of that. So question is like, what do we do with that?

Is there something that you think the big boys, so to speak, could learn from places like Cal State or Babson or others that are doing it well?

I don’t know. My guess is that they do things differently than what we would do. You know, when I think about pedagogy at schools like Cal States, which are teaching universities, you’re teaching a student population that has much more diverse background in terms of their preparation coming in. And also a different, you know, I’ve heard my colleagues talk about confidence. So students’ self-confidence and things like that, right? So right there, you’re probably dealing with a different mindset coming in than if you were at Stanford or Berkeley, where students probably have a certain level of confidence, at least in their abilities as students, you know? So we have that as a different starting point.

On the other hand, entrepreneurship is a type of course where you can actually address some of those issues. And that’s one of the things that I really love about the class. So it’s even almost more than the subject matter. It’s more about what you can do to change how students see themselves and how they see the world through a class like entrepreneurship.

Yeah, that is very true and very interesting, actually. I suppose it’s because so much of what is entrepreneurship are things that can be taught, like pitching to an investor, writing an elevator pitch, writing a business plan. They are very hard skills that you can show someone how to do and having skills increases confidence, generally speaking. So I can definitely see that working.

Yeah, and the other thing that I think is super interesting about entrepreneurship, and this is something I learned teaching the class, is how you break a problem down into small testable little hypotheses and you just kind of keep learning. And if you teach the class as testing these hypotheses one after another, the students start thinking that way and taking themselves and their own self-confidence or whatever issues with self-confidence out of the equation, right? It’s no longer about can I do this or am I good enough or smart enough or whatever enough to do this and more about their own curiosity about, “hey, I wonder if this is true or not. Let’s go out and test that”.

And it has nothing to do with how smart you are or how talented you are or how prepared you are. It’s really just, here’s a question I want to know the answer to and how am I going to find the answer to that? Let’s do that, you know?

And so to me, just seeing that transformation is huge and my hope is that begins to infuse how they live their lives.

Yeah, well, one of the things that I definitely learned as a student was that asking the questions and kind of, I mean, they always say that there are no stupid questions. I’m always willing to be the person that asks the stupid question. But yeah, it’s quite interesting when you realise that something that might seem obvious so often is not. And no one has asked the question because everyone assumes that it’s obvious. And once you do, you’re kind of finding very interesting results. I can definitely see how that would change your view of the world. And be a good skill, whether you then create a company or not.

People who’ve been listening carefully, they will have noticed that I said, until recently, entrepreneurship was a core part of the curriculum. It’s not currently. What happened and are you looking to make it mandatory again in future?

Yeah, because we’re part of the Cal State system, there are all kinds of rules that we have to follow from the system level. And a lot of it has to do with trying to get students four-year degrees in a reasonable amount of time and at a reasonable price, if you will. And so trying to get the students in from community college and then through the four-year programme in two years, if they come in with two years of community college. And so there’s all kinds of rules about how many units you can require in the last two years.

And so we had to cut some units from that required core curriculum. So what we had to do was take three of our courses and let people choose two of them. So these are really kind of important classes like entrepreneurship, supply chain and information systems. So a lot of people were bummed about that across my department because these are now kind of technically, they’re not required in the sense that students can choose two of those three.

Everybody wants to try to fix this because all of these classes are super important. One of the things that we could try to do again is to start students taking entrepreneurship freshman year. Now, what does that do with the transfers who come in without that class? So there’s a lot still to work out, but what Babson has shown is that freshmen can — ’cause they require this at the freshman level — freshmen not only can do this, but they really benefit in terms of sticking with, motivating the rest of their four year degree, kind of like, why am I doing this? How does this all fit together? So freshmen really can handle the entrepreneurship content and it has this effect of really motivating the rest of their four years.

So I think there’s definitely interesting and important ways that we can restructure this, but it’s not going to be easy because we’re not Babson. We get a lot, you know, like only half our students come in as freshmen, so…

Yeah, I’ll get back to you on that in a couple of years time and see if you’ve found a solution.

As you said earlier, you are also working in venture capital, specifically kind of women-focused venture capital. You’ve founded a VC firm called être Venture Capital with Hillary Talbot a few years ago. Can you tell me a little bit more about how this fund came together?

Yeah, so the hypothesis was that if you had a club of venture capitalists that you could get the ball rolling in an ecosystem, an entrepreneurial ecosystem. And so I started teaching a class online. It happened just as the pandemic was getting going. So it went from an in-person class, which is what we had planned, to an online class.

But so I started this class for women thinking, women are actually kind of set up to be good venture capitalists and often have access to their own private wealth or other forms of capital. And so I started teaching this thinking, if I just explain it to women, they’ll start their own venture capital firms and it’ll be great. And they’ll do this little club. I’ll get to observe this whole thing and it’ll be a field experiment. So what happened was I was right and I was wrong. So I was approached afterwards by a couple of students. And by the way, the students are really accomplished professionals, some of them very senior. So it’s almost funny for me to call them students. But anyway, I was approached by a couple of students saying, “We need to do this. We should start it.” And I said, “Great, yeah, you should do this.” And they said, “No, we’re not doing this without you.” And so I found myself not being able to say no. And I thought, “Well, this is the next experiment. Let’s see what happens.”

Hillary and I started this and we’re hoping other women do this. So we figured, “Okay, well, look, if we do this, we can explain all of the details to all the people who wanna do this.” So we think that we have a few that are almost ready to take the plunge with us and get this whole thing rolling. That’s our hope. But it’s been really, really interesting to see everything I know as an academic, to see it in the real world happening. And yet it’s one thing, of course, to understand something in your brain and then another to understand it in your gut. So it’s just a completely different field. But it is absolutely, you know, kind of all the things that we know, all the things I would teach to students is what we’re seeing, yeah.

Were there any surprises or moments that threw you where you thought, “academically, this makes complete sense, but now that I’m doing it in practice, it doesn’t work at all”?

Well, so one thing we didn’t know was what kind of companies would we be able to find. And what surprised me was how many great companies there are, how many really great founders there are as well. And so what I’m starting to think is that there are a lot of good ideas, there are a lot of great people, and they absolutely do need the care and feeding from VCs who have the business training. So again, sometimes the entrepreneurs are PhDs in a science or engineering field, or they’re doctors and things like that, which is great, which is where you wanna see, you know, technology-based solutions coming from.

But they definitely need the help from people who understand business. And I try to teach my students that, that they don’t have to be the engineer or the scientist, and that they are bringing a really necessary skillset.

Yeah. You do focus on underserved entrepreneurs. That’s kind of where you’ve landed with your VC experiment. Are these people typically based in Monterey, or have you been investing nationwide?

They’ve been nationwide. I taught at Tulane for a couple of years, so I met our first portfolio company in New Orleans. And boy, talk about really promising companies that would get overlooked, that really need the help. And I don’t mean that they need help. What I mean is that there isn’t already an ecosystem. There aren’t a lot of technology firms. And so just, you know, what little help or perspective I’ve been able to bring has been, I think, hopefully useful to them. But yeah, like, and so just all kinds of opportunity.

Another one is in the Seattle area. And I don’t know that she needed our help at all, because she’s won the Cartier Women’s Initiative Award, and that’s an international award. So very high profile for her.

But definitely, you know, there are just some really interesting things going on that are outside of the places she normally looks like Louisiana, who’s looking there? You know, no one. And so really some interesting stuff happening. Sometimes they need a little help, and sometimes they need a little capital. And that’s been really interesting to see.

Now, locally, the question is, are there things that are investable? We’re looking around, and I definitely think that there is opportunity. So we are in the neighbouring county to Santa Cruz County. UC Santa Cruz is there, and there’s always interesting science happening there. So there’s a genomics institute there that’s got all kinds of promising science, materials science as well. Yeah, some really exciting stuff. We’re just working on that now, so yeah.

What is generally kind of the reaction when you talk to these founders who may have been ignored by VC firms previously? Are they even still willing to talk to yet another investor, or have they almost given up by that point?

Yeah, no, that’s a really great question. So we make no secret that, you know, we’re interested in women and minorities. And so people are very eager to talk to us. For them, they are seeing an opportunity to get our time and attention and be taken seriously, I guess. And so we’re definitely that kind of niche where the people who would come to us are looking to be seriously considered.

Does this focus have any advantages as an investor? Is it, I’m assuming, potentially cheaper to invest in these companies because they don’t have the sky-high valuations? But are there advantages outside the impact?

Yeah, I would say so in terms of valuation, our goal is always, and this is traditionally, like in the history of what I’ve studied, the goal is to get the right valuation. And so we actually often have higher valuations than what I would consider bottom fishers or people who are trying to take advantage of a tough funding environment and stuff like that.

We have no interest in undervaluing a company. This is not good for either party because if the entrepreneur feels like you’re trying to take advantage of them or you’re not getting a fair shake, it’s gonna affect how they approach their company. And as weird as that sounds, given how passionate they are, undoubtedly feel about their company. And so, no, we never want to be a part of any kind of undervaluation of a company. Where the advantage is, and this comes from economic theory, so there’s a theory, Gary Becker’s theory of discrimination.

So Gary Becker’s a Nobel Prize winning economist who studied discrimination and kind of formalised what that means. And so what it means, if you’re discriminated against, it means that there’s a higher bar for you. And so for us, what that means is there are a bunch of really good companies who didn’t clear that higher bar and that’s the only reason they’re being overlooked. And so we’re looking there.

In theory, there should be a bunch of companies that are being overlooked simply because of discrimination, just because of their gender or race. And yeah, you could find all kinds of opportunity there with a fair valuation.

It’s something that I… I mean, I am not a VC, but I’ve always thought that the point is to make a lot of money and ignoring entire categories of businesses just because they’re led by a woman or a person of colour or a migrant of some sort. You’re just closing off so many potential avenues for getting a financial return beyond the kind of, you know, I imagine it’s also quite nice to build relationships with these people and hopefully they’ll be at some point paying back into the ecosystem themselves.

It just doesn’t, I don’t know… I don’t really have the discrimination mindset.

Another kind of explanation is, and you know, for my research on the history of venture capital, I interviewed people, I had the great good fortune almost 20 years ago to talk to the people who were doing venture capital in the late 60s and early 70s and they were absolutely a different generation of VCs. They were the pioneers and I would say also they were very open-minded about who to invest in, what to invest in and they were just incredible people and I just feel so lucky to have been able to talk to them about this.

They were always, you know, of the mindset that you, as an investor, as a VC, make your own judgments about, you know, this company or that company and invest, you know, based on your own assessment of the company. Nowadays, I think there are certainly still those VCs, right? But what you also see is people looking for what I call convergence, you know, so like if everybody sort of agrees that this is the hot company or this is the hot area or something, maybe you feel reassured in your assessment, you know, but it’s not really the way that the pioneers approach this.

It was more, you know, we need more different people out there looking at different things and trying different things and that’s how you get a good diversified portfolio of great companies all trying different things and if everybody’s converging on the same ideas and the same companies, the same founders, you don’t get that same outcome.

That would be another way of explaining that kind of herd mentality and overlooking, you know, really good opportunities but I completely agree with you, of course, that it’s not good business.

It makes complete sense, the herd mentality, and then, yeah, you end up with things like WeWork or Theranos where you stop asking questions and just put money in because everyone else is. Disasters for entirely different reasons, those two companies, but there we go.

What first got you interested in venture capital and entrepreneurship?

Oh my gosh, so I had absolutely no interest in it. I stumbled into it, which is really the best fun in doing research. I was interested in understanding the network structure of co-investing. So we know that venture capitalists invest as syndicates and that whole like syndication network was interesting to me organisationally and I had this idea that there was some quid pro quo and there’s a whole theory about hostage taking and stuff like that. And I thought, oh, Eureka, this is a great place to look for hostage taking behaviour statistically and boy, was I wrong.

And happy to be wrong because what I then discovered was something way cooler, way bigger, which was how they actually did it, which was collaboratively here on the West Coast, even though the idea for venture capital investing started on the East Coast where all the money was and is.

So it’s super, super interesting and this is the fun part about doing research is actually sometimes being completely wrong.

That’s quite interesting. I never actually even thought about the fact that the wealth was on the East Coast, but yeah, the old Vanderbilt’s and Rockefeller’s and so on, they all made their money.

All the banks started in New York.

Yeah, that makes complete sense actually. I really need to look more into the history of Silicon Valley because this is really fascinating.


If you had a magic wand, is there something that you would change about how venture capital entrepreneurship works today?

Oh boy, that’s such a great question. I’ve been thinking about whether there’s a way to use an industry association. So again, this club kind of thing to make it easier for big investors to invest in early stage companies. So we know that big pension funds and banks and so on want to invest in high-risk asset classes, right, and so venture capital, private equity, et cetera.

And so what happens is large amounts of money get invested in big venture capital firms because they’re the only ones who can handle that amount of money. It hurts returns. It’s hard to make the kind of outsized venture capital returns with that amount of capital. In other words, there are economies of scale in venture capital investing. How do you deploy hundreds of billions of dollars in startups? You see that kind of WeWork, Uber, that kind of situation where it just gets really hard to make money investing at that stage.

So what if there were a way to get a club, if you will, of smaller earlier stage funds, sort of one giant investment, but somehow that gets distributed across smaller funds that to me could solve a problem, but I’m not sure. Yeah, there’s a lot that could be done. And I would obviously love to see more diverse founders and companies getting the help that they need, which is not just capital, right? So also the managerial rolling up of sleep.

Yeah, human resources, yeah. We are sadly almost out of time. Is there anything else that you want people to know before we say goodbye?

Well, you’ve covered a lot of ground, more ground than I thought. Yeah, one thing that I’ve been thinking about is how to create an entrepreneurial ecosystem outside of Silicon Valley and how to do it in a way that supports the people who live there. Because Silicon Valley has imported a ton of talent, you know, and that’s been hard for the people who live there who get priced out of things. So that to me is still a huge question, and it’s something I’m thinking a lot about and hoping to find some answers and still a really, really important question for people who study entrepreneurship…

I feel like this is a conversation that we need to pick up again in a few years’ time. Obviously, I would love to talk to you in the meantime as well, but there’s so many still big open questions and your research sounds absolutely fascinating. So I’d love to learn more in future.

Thank you so much for your interest and for inviting me to do this.

It’s been hugely fascinating and it’s been a lot of fun talking to you. Thank you so much for joining me, Jenny.

Thank you.

Thierry Heles

Thierry Heles is the editor of Global University Venturing, host of the Beyond the Breakthrough interview podcast and responsible for the monthly GUV Gazette (sign up here for free).