Tae Hea Nahm is co-founding MD of Storm Ventures, a Silicon Valley VC firm investing in tech start-ups all around the world. He’s also a two-time author. His second book, Survival to Thrival: Change or Be Changed explores how all people in a startup – from the executive team to the CEO and the board – need to change their roles and skills as a company grows.
Bob Tinker is a three-time entrepreneur.
Most recently, he was the founding CEO of MobileIron, which in eight years grew from ‘three people and a whiteboard’ to over $150M in annual revenue, more than 12,000 enterprise customers, and IPO in 2014. MobileIron was named the #1 fastest growing tech company from 2009-2013 by the Deloitte Fast 500. Before than Bob was VP Business Development for wireless pioneer Airespace, which was acquired by Cisco for $450M in 2005.
In this episode, you’ll learn:
- What are the 5 stages that a company goes through?
- How does one unlock growth in a company?
- What is the difference between the VC and the CEO perspective of the business?
- How can an investor’s portfolio have synergy among the investments?
- Why are Korean startups ripe for investing right now?
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Learn more about Tae Hea Nahm and Bob Tinker
- Tae Hea Nahm
- Bob Tinker
- Books Website: http://survivaltothrival.com/
- The Company Journey / Change or Be Changed
- https://www.stormventures.com/
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- Email Shawn@thesiliconvalleypodcast.com
Pre-Intro 00:00
You’re listening to the Silicon Valley podcast.
Shawn Flynn 00:03
We are going to pick up right where we left off last week on part one of this two-part interview with Tae Hea Nahm and Bob Tinker. On today’s show, we talk about what value should entrepreneurs look for when deciding what VC to work with? What would be considered a normal fund structure? And has this changed over the years? What is the difference between the VC and CEO perspective of a business and much, much more? Stay tuned for this amazing episode. Don’t forget to write a review on iTunes. Take a picture and share with us on social media or e-mail me at Shawn@TheSiliconValleyPodcast.com for your chance to win a signed autographed copy of Tae Hea Nahm and Bob Tinker’s newest book. All right. Now let’s start the show. Enjoy.
Intro 00:50
Welcome to the Silicon Valley podcast with your host Shawn Flynn, who interviews famous entrepreneurs, venture capitalists and leaders in tech. Learn their secrets and see Tomorrow’s World Today.
Shawn Flynn 01:07
And then your portfolio. I mean, I’ve heard that an investor’s portfolio, there could be synergy among the investments. Is this true?
Tae Hea
It’s absolutely true and a critical part of our investment strategy. You know, I love playing games and the metaphor I use is that there’s this Asian Games called stones, put together you can build like a house. And then the same way I look at every one of our investments is like placing a stone. And you can build synergy amongst a portfolio. And so for us, it’s been great by just focusing on B2B software companies. We have a set of companies in the security space. They work together in sort of sharing customer leads go to market strategies, people. We have a group of companies in the H.R. space, in the Martek space and so forth. So, we found that to be quite helpful in terms of helping each other become successful.
Shawn Flynn 02:04
I’ve also heard that right now is an amazing time for Korean startups. Do you have any points of view on this?
Tae Hea
Right. We’re excited about investing in Korean B2B startups right now. And it’s I feel like the timing is right for two things the clouds and you compute platform here in Silicon Valley. Now, we’ve been on the cloud for quite a while, but in Korea is relatively new. And startups in particular are rapidly adopting the cloud and so, they’re on the modern tech stack. And the second is, is that, you know, Korean cultures become very popular United States. So you look at K-pop, you look at Parasite. It is the Korean culture is becoming popular. And what that means is that the whole UI experience is something that is becoming acceptable to Americans, not just Koreans.
Shawn Flynn 02:55
And Bob, I want to bring you back in this conversation. You tell me, how was that dynamic shift when you went from being an investment of storm ventures to coming on board, being part of the team?
Tae Hea
Actually, Bob is not.
Bob Tinker
I am not technically an employee of Storm Ventures. I’m actually a LP in Storm Ventures now.
Shawn Flynn 03:16
OK. Then how about that dynamic switch from being a, maybe report to Tae Hea to being
Tae Hea
Me report to Bob yeah,
Bob Tinker
There’s a lot of funny stories there. So, yes. You know, basically Tae Hea was, you know, my lead director of MobileIron for a long time. So, I did work with Tae Hea and was great. You know, now that we do other projects together, you know, working on the two books together. Probably the funniest part about it, is talking about past situations and things that we worked on together where even though we were both there and both part of it, his investor point of view and my entrepreneur point of view, we’re not the same. And the analogy I’ll make here is if you sort of picture like somebody in a helicopter hovering above a wave with a bunch of surfers, like Tae Hea is the dude in the helicopter hovering above the wave with a bunch of people on surfboards. And, you know, as the former entrepreneur, I was like one of the people on the surfboard, just like trying not to die. So, I think the even though we weren’t really close together for 18 years now, I think the thing that was sort of the biggest surprise to me is now that we have a chance to sort of reflect on our journey together, how we would still have different points of view about situations where we both experience exact same thing. And I think that was part of the reconciliation that ended up in our two books that I think is particularly useful for entrepreneurs and investors is the ability to have the same situation and to understand the points of view of both the investors and entrepreneurs. I think that’s for me, been a really interesting learning now that Tae Hea and I have been able to look at things through the rearview mirror.
Tae Hea
Whole reconciliation process too much longer than I thought. You know, when Bob and I started working on the book, I thought, frankly, it’d be like a six month, twelve month project. But it took over four years. And in the beginning, we actually had dueling chapters. You know, Bob would write one chapter and I would write another about the same topic, but different perspectives. And this reconciliation process really just took time.
Bob Tinker
It was about one hundred and twenty drafts, actually, per book. And then if you whined in the fact that we included stories from I think twenty, twenty-two other entrepreneurs like this became a, you know, a big reconciliation project between Tae Hea and myself, also then melding in stories from other entrepreneurs, other investors. So, it became a much bigger project than I think we both thought. But I think the result is something that is new and different and really helpful for both entrepreneurs and investors.
Tae Hea
So, going back to this imagery of the helicopter versus a surfer, you know, say, you know,
Bob Tinker
There is a lot of different patterns.
Tae Hea
Let’s say you get to see the wave and where things are going. And so, you’re talk more about the wave and the direction. As the surfer, that’s sort of like the future. You know, you just don’t want to wipe out and you’re worried about what’s going to happen immediate. So that two different perspectives, even though you’re in the same place.
Bob Tinker
The other thing is like that, as a surfer. Like one of the entrepreneurs, like you, only one surfboard. You don’t have a portfolio. Right. And person on the helicopter. They’ve got a portfolio, five or six surfers on the board. Right. So, you know, it’s a different view.
Tae Hea
It is a different experience. That’s why it took several years.
Shawn Flynn 06:34
So let’s go back to the initial founding of the company, because a question that’s come up with some of our listeners writing questions for us to ask are the people we interview, Is the early decision of founders when they have to divide the equity up in a company? Can you give us some insight?
Tae Hea
Surprisingly makes a huge impact on the company. You know, I went through one experience fairly recently where we had two co-founders and it was a fairly large differential between the two. Every six months it just became a topic. So, it was like clockwork, you know, after every round of financing. It became a topic and
Bob Tinker
By topic you mean issue
Tae Hea
An issue that we would have to discuss. You know, we would adjust it a little bit each time. But, you know, it’s something that came up. And so finally, we just said, look, we just have to just, like, resolve it once and for all. And we did. But it’s setting the right arrangement between the two co-founders. This is really important because it forms the basis, is the foundational relationship for the whole company is how these co-founders work together.
Bob Tinker
There’s actually, you know, sometimes you have single confounders, sometimes you have multiple founders, you know, there’s kind of a spectrum from a scenario where everybody says, hey, let’s be even Steven. Everybody get the same to, hey, there’s clearly one founder that’s sort of the big cheese and everybody else is sort of joining in. And that is a varied version of all the rest of those, figuring out where you are on that spectrum. I think for early founders requires a level of intellectual honesty and candor about the value that each one of the founders brings. And it’s always easy to just sort of say, hey, let’s be even Steven. Or maybe there’s one this big and one that small. But it’s happened later. If you fast forward six, 12, 18 months where that initial equity allocation didn’t really reflect the value that’s being delivered by each one of those founders and the more honest the founders can be with each other upfront about their relative value for the company. And that’s an unpleasant, awkward, kind of intellectually honest, grown up conversation that sometimes founders don’t have until much later in the process. And that’s usually when you get founder drama by having those discussions up front, setting expectations of front talking about relative value and relative value brought to the company. You can avoid the drama later because the situation Tae Hea was talking about is an example of sort of a nagging founder drama. Right. It’s a nagging disagreement between one or two or multiple founders. And if you look at the one thing that can screw up a really good company, its founder drama, nothing can screw up a great startup like founder drama.
Tae Hea
And we’ve seen the flip side, two companies that went through some very hard times had to pivot lot of the issues, the one the core founder stuck together, power through it. We’ve had great outcomes.
Shawn Flynn 09:45
Have you ever had it where a company looks great, I mean, look amazing, you’re excited about it, but then when you did some due diligence, you found out that just couldn’t be saved?
Tae Hea
Yes. It goes back to creating problems amongst the founders, so if the initially the relative ratios work out and that you’re just sort of creating this germ of founder drama, that’s going to get worse. And so we’ve avoided situations like that in the past.
Bob Tinker
The other thing is, is that when we look at companies, it’s like being part of a long journey. And that we as investors are joined the bus and we’re usually in the back seat of the bus and the CEO is the driver of the bus. And the thing you rely on as the CEO to make good decisions. So if they’ve made poor business decisions in the past, then that’s probably an indicator that they will make poor ones in the future.
Shawn Flynn 10:42
And then Storm Ventures, can we talk a little about fund structure in the valley or in general? Has that changed over the 20 years pier?
Tae Hea
Its fund structure worldwide has changed dramatically and is probably best illustrated by the Softbank Vision Fund. The billion fund and then have it fully invested in a few years and you go out and raise another fund. So, what we’re seeing is, is that growth is becoming highly valued. So if you can have high growth and be the worldwide leader in this winner take all world, then people want to invest in that company.
Shawn Flynn 11:24
So maximum growth is what you’re focused on, is that is that correct?
Tae Hea
Yeah, there are two ways that people traditionally have looked at investing. One, is this a growth investor and the other is a value investor where we invest and this is typical for Silicon Valley and firms that are investing in Silicon Valley like firms is that where growth investors. And so we’re looking for this or a hypergrowth company. And that’s why unlocking growth is so important. And so growth is what generates the unicorns and so forth. The other way is, is that you can be a company that’s cash flow break even. So you don’t have to raise money. You know, you don’t have to suffer dilution. And then that can become also a very successful investment. But that’s typically more based on value than high growth. Obviously, there are some companies that can do both, but that tends to be rare.
Shawn Flynn 12:24
In your history as a CEO, what did you look for from a beast fund or organization?
Bob Tinker
Really important question, and I think it varies a little bit, depending on what stage of growth, the company that if you look at the first scenario at the very, very beginning when you’re founding the company, bringing in your first investor capital. That is a really big, very personal decision or a CEO and founding team to bring in their first investor. It is like hiring another co-founder. I mean, this is the first person that’s going to be the person that’s going to be with you the longest. It’s the one taking the most risk. And so finding that very first investor that shares your passion for the vision, understands the business, is willing to ride the ups and downs and frankly, feel like you can work with. It’s a marriage. Now, let’s move on to the next stage as the company starts to add milestones and thinks about bringing in the second or third round capital, the decision criteria for me changed. It’s less about hiring the next co-founder. It was more about finding investors that could bring value to the company beyond their capital and play a position on my board. And whether that’s helped upon hiring talent, help accessing customers, help on advice. There is and first time CEO who did I want to work with. So finding those board members that bring value. And I mentioned this earlier, but it’s worth repeating that. I think for me, the thing I accidentally tripped into that turned out to work out really well that I would recommend other CEOs as they think about who to bring out of their boards. When you’re CEO running a company, everybody plays a position on your executive team. You have somebody that leads sales, somebody that leads marketing. Somebody leads product, somebody that leads customers. And that’s how the company runs. And if you think about building a board over time, one of the things I learned that ended up working out really well for us was bringing board members on that then each play a position, bringing on a bunch of board members who are all product experts. Everybody wants to sit around. Doesn’t actually really helped me in the company as much. But bringing on a board member who brings a great strategic view of our market, bring on a board member who has got a market expertise, bring on a board member who is building engineering expertise. And what was great about that then is our board meetings became super productive because each of the board members would then defer to the other one about. Oh, Frank is the expert on engineering teams, Frank, what do you think? Oh, you know, Matt is the expert on early technical sales. What do you think about hiring sales engineers? You could actually everybody could play a position and defer to each other. So, you get the experience around the table rather than having a bunch of board members were all look the same. So, my number one piece of advice for thinking about hiring, bringing on board members is thinking about them like you think about building your management team where everybody plays a position.
Tae Hea
Right. You know, this whole decision-making process. You know, finding a matching process between entrepreneur and V.C., is very important. From my perspective as an investor, When I look at each investment, I look at us like, do I want to be part of a long journey? You know, it’s not a quick in and out, but making sure you have a shared vision, shared value and fundamentally trust in the founders in the endeavor. As an investor at the end of day, we’re going back to the bus metaphor. We are not the ones driving the bus, but we’ll be in the back of the bus.
Bob Tinker
I’ve got something to add there, which has been sort of an interesting experience for me. Now that I’m no longer an operating CEO, I’ve been doing some seed investing in early stage companies. So now sort of on the other side of the table, in a way, it’s been interesting for me to sort of decide as a former CEO, how do I decide which companies I would want to invest in as a seed investor? And, you know, I think it’s given me a lot of empathy or sort of the choices that venture investors have to make as well. And it turns out one of the things that I have added to my list as a seed investor that’s very important to me is that the CEO is coachable because I think companies go through ups and downs and things work and things don’t work. And I think one of the things that would be incredibly frustrating to me and I think it would be incredibly frustrating to other venture investors, is that if a CEO is kind of hard wired, like they always think they know the right answer, and there’s only one way to solve this problem and it’s damn the torpedoes and not willing to take coaching their feedback. Like for me, that just gets frustrating. That’s just not fun. And frankly, it’s not worth your time. So for me, that’s become my most important criteria beyond do I just like business’s CEO coachable?
Shawn Flynn 17:10
Tae, can you add what Bob just said right there with what he looks for in a CEO?
Tae Hea
All right, for me coachable is important, but it’s less important. The first thing that I look for is the CEO is really passionate about the vision, trying to understand sort of the vision and the passion, both of those two together, because in a way, that’s the engine that’s going to cause to the founder, the CEO and the company to go through the ups and downs because there’s going to be bad times. And without that passion, people give up. And the CEO gives up the whole company is done. So the first thing is sort of the passion for the vision is something that is it has to be there and look for versus someone who’s, let’s say, a professional manager or someone who says, you know, I want to make the right business decisions and all kinds of stuff. So, first thing is sort of passion for the mission. The second is maybe what Bob mentioned is coachable for me is we talk about it some more, but self-aware.
Bob Tinker
Yeah. That’s a better way to put it, actually. Passion and self-awareness. Yeah.
Tae Hea
And what I mean by that is that they’re self-aware to understand how they need to change, how the company is changing and all that sale they can unlearn it, whether they can unlearn through me or others. It’s that’s not as important as the fact that they unlearn and sort of move to the next stage and some. And everyone does. And importantly, so is passion for the mission is number one. And the second is this self-awareness so they can succeed at the next stage of the company. And then the third is sort of the fundamentals, but it’s about, you know, integrity and values, because that’s going to be the foundation for the culture of the company and for the people that you bring on board. And so this gets back to how you treat other co-founders, how you treat others and so forth is having that integrity to form the right culture of the company. Because I found that culture is surprisingly critical to a company’s success.
Bob Tinker
Yeah, that is a spectacular point, that if you look at culture in many ways, the culture is the company, right. It starts as a product and you hire a team. But the culture becomes the soul of the company that helps the team deal with ups and downs, and it holds the company together and the team together as it grows, evolves and changes. That culture comes from somewhere. And interesting sort of backstory is the very beginning of MobileIron. The second meeting we had as a team was what type of culture do we want? And it was a really powerful conversation because in many ways, giving birth to a company is sort of giving birth to a child. And how do you want to raise this child? What’s important to you, like those same types of conversations you have with your wife or husband about what’s important about raising children? They need to be having those same types of conversations, the very beginning of starting a company, because those are the foundations of building culture and those early in sort of emanate from the CEO. So, you know, a culture that says one thing on the wall, but everybody behaves differently isn’t a culture. It’s a gym poster.
Tae Hea
Actually, it is worse than a gym poster because the people sense the hypocrisy.
Bob Tinker
Yes. And then it becomes it introduces cynicism. Yeah, you’re right. It’s actually net even worse. You know, where does culture come from? You know, it comes from those early founders and CEOs, how they behave, how they act, they make decisions and culture can evolve organically and just sort of become what it is. But the reality is, by the time a company gets to 15 or 20 people, it has a culture. So the other model is be proactive and prospective about what you want the culture to be and sit down to talk about its founding team and think about it and take it seriously, because once you get to 10 or 15 people, you already have one. If you think about the long run would actually enables a company and a leadership team to deal with the ups and downs and the growth that you have that cultural foundation do have a solid soul to the company. And I think it sounds like a mushy topic compared to product and sales efficiency and all those other things. But it turns out that it’s one of those intangibles that is the difference often between OK companies and great company.
Tae Hea
And, you know, one early decision on MobileIron, which had a tremendous, profound impact on the culture of the company, was the simple question of what is Bob’s initial compensation as CEO?
Bob Tinker
Yeah it is true. Little things about like self-interest versus team. Or how do we make decisions or are we allowed to talk about what’s going wrong? All those things. It’s about a mission. It’s about the team. It’s about we’re trying to build together. It’s not about any one of us. And when you get that right, magic happens because then people want to be onboard. And people believe in the course. And it’s a blast. When you get there.
Shawn Flynn 22:25
Now, we talked about so much on today’s episode, I’m going to be relisten to this myself many, many times. How much the information that we talked about today is covered even in little bits in your book? Can you talk about your book and kind of content?
Bob Tinker
Thank you for asking, we have actually two books. Believe it or not, that’s why this has been such a big journey. That one is really about the company journey, which is helping entrepreneurs understand where they are right now and building their company and anticipate what’s next. And probably the most talked about part of that book is really been about go to market fit, which is that missing link between product market fit and unlocking growth that so many B2B software companies get stuck in. So that book’s been out for about two years. If you do a search on enterprise startup book, it shows up one, two and three and Google. So that’s been getting pretty good reviews. The second book just came out this summer and it’s about the people. It’s called Change or be Changed. It comes from actually a frustration. Like many things, sort of inspiration comes from frustration. And I think one of things that I was frustrated about as a first time CEO trying to build a company is that I don’t think we do a very good job in Silicon Valley helping entrepreneurs as their company changes they have to change themselves. I think this kind of gets lost, doesn’t get passed down. And so book two is about that. And the theme is unlearning. And it’s a lot of personal stories from me, from Tae Hea co-founders and executives about their journeys of success, failure, learning and unlearning. And it’s not just for CEOs. There’s a chapter for CEOs. There’s Chapter four leaders. There’s a chapter for the team. There’s a chapter for the board and chapter on building culture. Because really, at the end of the day, it’s about the people that make the difference between a successful startup and an unsuccessful startup and a successful business and an unsuccessful business. And I think the book two is much more personal. I think for both of us.
Shawn Flynn 24:18
So we actually got an autographed copy of Book two that will be raffling off to anyone that leaves a review on iTunes or other podcast platforms for this episode. So, please like and share that encourages us to make more episodes. Tae Hea, Bob, if anyone wants to find out more information about yourselves, what’s the best way to go about doing it? And do you have a last share with our entrepreneur and our investor community out there?
Tae Hea
So, the best way to reach me is over, LinkedIn is just connect with me over LinkedIn and then send me a message. And the one message I want to share with everyone is startups are emerging and becoming successful anywhere around the world. But each startup, especially the founders, feel this as a very lonely process and that people feel like they’re going through these problems to their first time, or am I struggling here? And we will we hope is through this podcast and through the books as so people understand that this is just a standard process of building your careers and building successful leaders.
Bob Tinker
The best way to connect muse over LinkedIn as well. Or also Twitter @Bobtinker. It’s funny, Tae Hea was about you’re not alone. That also is my takeaway point, that when you’re building a startup, there are some bad days and dark times and it feels really lonely. Sometimes you feel like you’re going through things that nobody else is going through. Entrepreneurs have gone through the same thing. And so we are all in this together and you are definitely not alone.
Shawn Flynn
Bob, Tae Hea, I want to go on thank you guys for your time and all the information, the contact information will be in the show notes. And we look forward to producing more great content for everyone out there. All right. Once again, Bob, Tae Hea. Thank you guys for your time today. Thank you.
Outro 26:10 Thank you for listening to The Silicon Valley Podcast. To access our resources, visit us at TheSiliconValleyPodcast.com and follow our host on Twitter, Facebook, and LinkedIn @ShawnFlynnSV. This show is for entertainment purposes only and is licensed by The Investors Podcast Network. Before making any decisions, consult a professional.
