TFS 006 - Varun Jain
What was disruptive for the last three years?
Varun Jain is the Head of Early-Stage Fund of Qualcomm Ventures. In this episode, he shares what was disruptive for the last three years in the autonomous vehicles. Varun leads Qualcomm Ventures' Early Stage Fund, focused on Seed and Series A opportunities in IoT, AI, Robotics and AR/VR.
You probably own a Qualcomm product without knowing it. They make chips that allow all the devices —from smartphones to the devices in our home and cars— to connect to the Internet. Qualcomm Ventures is the corporate venture fund of Qualcomm with 140+ active investments and numerous exits, including 6 billion dollar plus outcomes in the last 5 years.
In 2017, Varun Jain was recognized as one among the global top 20 Rising Stars in the corporate venture industry by Global Corporate Venturing. In this episode, he told us how Qualcomm Ventures became the third investor in Cruise, the startup sold to GM for over 1B$ seventeen months ago.
GM surprised the automotive and tech world by announcing the acquisition of Cruise Automation, a startup that makes autonomous cars technology. Thanks to the vision and strategies of Varun Jain, Qualcomm Ventures invested in Cruise Automation. The deal happened a few weeks before the acquisition by GM.
Listen to the fascinating story of Varun Jain who, based on his experience, taught us three important lessons to become a successful investor. Have fun while listening to the expert trying to apply his advice on your Road Map for successful investors.
Varun Jain started to work at The Wall Street Journal in India to launch a new digital project before coming to the USA to do an MBA in Finance at Northwestern University - Kellogg School of Management. His interest in technologies and in industries that technology can disrupt led him to the idea that he could become a venture capitalist to enable a lot of these transformations across industries using these technologies. Searching for interesting companies, he discovered Qualcomm where he became an intern and got a job after his internship.
Varun had been looking for investments in the autonomous cars industry since 2014. He met almost all the actors in that field. As he said: "I was a newbie investor with hardly a Rolodex, I had very few connections in Silicon Valley." He wanted to reach out to the co-founder and CEO of Cruise Automation and convince him that the 60 minutes he would spend with him wouldn't be a waste of time. He succeeded!
Kyle Vogt saw his email and said that it was the best core email he had never seen from investors. Varun met him, it was a great conversation. Their project was interesting but not to the extent that he would want to invest.
Six months later, when he was talking to the CTO of one of his other companies, he asked him if he knew about Cruise. Apparently, they had changed their project. Varun wrote back to Kyle. "You met a company, you chose not to invest but, in this case, we spoke six months later and he said I’d love to talk to you again." This time was a good time, they were building a kit for self-driving taxis and Varun felt that Qualcomm should now invest.
During his talk at Startupfest, he showed the email from where everything started. The theme of the conference this year was luck, his story is a good example of what entrepreneurs answered to my question what is luck for them for my vlog episode Get Lucky.
A SUCCESSFUL INVESTOR
1. Live in the future.
What needs to happen for something to become successful.
"The most disruptive companies are often the ones that are trying to shape a future that seems farther away than it actually is. They use this limited “window of uncertainty” to solve some really hard problems that will eventually become their moat. Not just Cruise but effectively all the other investments I’ve been fortunate enough to lead have been driven by this belief — Even (interest-free alternative to payday loans) and Flirtey (on-demand drone delivery service). In fact, this is a theme that reverberates across our portfolio, which includes companies such as Waze, Magic Leap, Fitbit, Xiaomi and others."
2. Be less opportunistic and more thesis-driven.
Develop a point of view for a given market. What truly is happening in this market?
"While there’s some level of opportunism in every deal, at Qualcomm Ventures, we generally resist the temptation to invest without having delved deep enough and independently formed a “point of view” on what will it take to succeed in a given market. Cruise was no different. I started looking at the autonomous vehicles market early last year and spent significant time in understanding the nuts and bolts of the underlying technology, the strengths and weaknesses of each small/large stakeholder and identifying areas where startups can make a significant dent. For instance, it was clear to us quite early that since a self-driving car at its core is a machine learning application on steroids, it is critical to collect high-fidelity training data by test-driving vehicles in hyper-congested city traffic where these vehicles are finally supposed to operate and not just in closed parking lots or highways. Once we realized that Cruise was the only company that was successfully and safely navigating this non-trivial hurdle, it was clear that they were building a very unique asset, which will be of tremendous value even if the regulatory framework doesn’t evolve as quickly as we hope."
3. This is a sales job.
Learn how to sell.
"While VC is different from a traditional sales job given the amount of attention we pay in selecting who we do business with, it often requires many of the same skills. I’m in my third year in VC and yet to reach a point wherein every person I need to get in touch with is within two-degrees of separation. Moreover, it is not immediately obvious to most founders why they should accept capital from a corporate fund at an early-stage. That said, I constantly try to not let these factors be a limitation and have never shied away from using every tool in my arsenal to get a meeting with founders I really want to know. For instance, when I first came across Cruise, I was immediately impressed with Kyle’s background and wanted to learn more about his thesis. However, since we didn’t have any immediate connection to him, I sent him a thoughtful cold-email explaining why we should meet and what we can bring to the table. It worked, Kyle and I kept in touch and we moved super quickly to lead an opportunistic round once the company reached the desired milestones.
Net-net, the investment in Cruise has been an incredible learning experience for myself and the entire Qualcomm Ventures team. We wish the Cruise team the best of luck as they, along with GM, work to turn self-driving cars from a distant dream to an everyday reality."
During the past three years, disruptive events happened. "In 2014, Google, a media company, with their self-driving cars, helped people to acknowledge and accept that autonomous cars could become a reality. In 2015, Tesla came out with the technology to make it available to the public at large. In 2016, GM met the most important player in that field, Cruise Automation. In only three weeks, the efforts and the support they needed to level the play field was brought," explained Varun Jain.
At the Fortune's annual Brainstorm Tech event in Aspen, Colorado, the co-founder and CEO of Cruise, Kyle Vogt, said that: "Working inside of a large company has not been smooth sailing, it took us probably six months to a year to really figure out how to work well together and to achieve what we have now, which is mutual respect."
Now you play
If you wish to become a successful investor, download our printable to practice the lessons learned with Varun Jain.
As another good example, Elon Musk knows very well how to sell an idea. You just have to read his tweets or follow him on Instagram to see how good he is. He never spent money on ads, he prefers to invest in R&D, manufacturing and design to make the product better.
When you are convinced that you are creating a superior product, it's much easier to sell it to investors. He also encourages entrepreneurs to not just follow the trends: "Solve huge problems in emerging markets where there is little competition." This is exactly what Cruise Automation did and it paid off.
This advice works for entrepreneurs and for investors as well. As Varun Jain explained, a good investor has to go deep enough and independently to form a “point of view” on what it will take to succeed in a given market.
If you need more inspiration about the future and who is making it, watch these two interviews of Elon Musk:
1) To know more about the entrepreneur and listen to his advice.
The creative mind trick of the day!
Let us know how was your experience?
Sylvie's best sales books:
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