Jason Mendelson is one of the premier Venture capitalists in the U.S. As well as establishing his fund ‘Foundry Group’, Jason has been a software engineer, an attorney and author of the bestselling book Venture Deals: Be smarter than your lawyer and venture capitalist.
I spoke to Jason via Skype on what was a snowy New Year’s Boulder morning for him, a cold British evening for me…
XP: Thank you for agreeing to speak to The Worldly, it’s a great privilege. To begin, it would be interesting to know your predictions for the next five years?
JM: I believe in five years we’ll be interacting with computers in a way that is completely different to how we do now, something we can’t even imagine today. I think we’re just about to hit the inflexion point for artificial intelligence which is going to transform the way that we interact with these things, some better, some worse, but definitely more interesting.
Then I’m hoping, I think I’ll be wrong, but I’m hoping that the big appliance companies – car manufacturers or refrigerators or washing machines – which are marginally connected to the internet, will take a page out of Tesla. Your Tesla car, when you wake up in the morning, has brand new features which automatically update. Compare this to needing to drive and wait 5 hours whilst they replace every line of code – whilst I watch on wanting to shoot myself in the head. This is the process for anything big which has software in it!
XP: These are very interesting ideas. I recently read some fascinating predictions for venture capitalism, which stated that there would be fewer funds and yet the sum of funds would be greater. Do you agree?
JM: Well I see the systemic problem with large funds is that very few of them do small deals. How is a fund, which has a billion dollars under management, going to write a check for one hundred thousand dollars for an entrepreneur to start their company? In a billion dollar fund, suddenly a million or two million dollars doesn’t matter any more!
There will always be large funds and there will always be medium funds, ranging from $300m-$900m, and there will always be smaller funds. My question is how many micro funds do we need? If I had a dime for every time someone said they were raising an $8m fund then I’d be able to fund an $8m fund.
XP: I’m sure. Do you think this would be a positive development?
JM: Well you see, that’s a bigger question! People say there are going to be these crunches – abnormalities in the market – and new companies aren’t going to get funded. How horrible! I get it, it’s horrible when companies go out of business and investors lose their money but let’s look at this from a world-wide perspective. What’s a better education – going to grad school or you going into a startup and failing? I’m going to say it’s the latter.
I’m going to argue that if you’re living in a country that has the resources to fund these early stage companies, even if they have a lot of mortality, then you’re playing the long ball with an entire ecosystem driven towards entrepreneurial education. You’re increasing entrepreneurship and improving the opportunities for growth.
The world has changed and we need a new type of thinking
XP: Your latest book ‘Venture Deals’ was a great success. Do you think you’ll ever write another book?
JM: Yes! So I co-wrote that book with my partner Brad and now I’m thinking about writing a book for lawyers, telling them how to be lawyers in the new age. I think law school in general does a crappy job on preparing people to be lawyers, especially in the United States. However, I don’t believe being a great lawyer is rocket science. The world has changed and we need a new type of thinking.
We need a new type of entrepreneurial lawyers who can take risks. Law isn’t about minimising risk it’s about maximising judgement. Law school doesn’t teach you about judgement, just minimising risk. That is the complete opposite of how entrepreneurs work and so I’ve started thinking about the outline of a book I want to write in the next couple of years. I’ll propose how the legal industry and training could change for the better.
You better be able to get kicked in the teeth and get back up, smile, dust your self off and keep going.
XP: I really look forward to reading it. On another note, you work with a lot of founders and entrepreneurs, but what do you think is the most important skill or attribute?
JM: I’m not sure there is one, but if you peg me on one then the one that comes to mind is resiliency. You better be able to get kicked in the teeth and get back up, smile, dust your self off and keep going.
If I had to have another one it would be self-awareness. Know what you’re good at and what you’re bad at. Know how you affect the people around you. I’m behind a lot of smart people; there are a lot of people who could kick my ass on an SAT score. There are not a lot of a people who have my emotional intelligence and that’s a secret weapon of mine and of most successful entrepreneurs as well.
XP: You’re given a magic wand and granted the most ideal investment opportunity. What would it look like?
JM: Well even though I’m a software guy, I would love to fund the next generation of jet engine. I would love for jets to go four times as fast but with half the fuel and without the noise. This would reduce the astronomical deadweight loss wasted by passengers spending time on planes.
XP: A more personal question – how do you spend your time away from investment?
JM: Well I’m recently married, I got married in August, I love to spend time we my wife. We love to be outside, go hiking and be active. I’m also a huge music freak. I am part of a very serious working band – we’ve got an album out and another one on the way. We’ve opened up for bands like Train and we’ve played in a lot of big venues. I love playing music. I used to be a drummer but now I’m the lead singer and backup guitar player. My partner Ryan Mackie at Foundry is the lead guitar player, so we’re business partners and band mates. I have a host of other interests as well. I build drones and remote control airplanes then fly those. There is certainly not enough hours in the day for me!
Everyone has some entrepreneurial spirit within them
XP: What does the future hold for you long-term? What do you want to see happen in, say, 10 or 15 years time?
JM: I would like the start-up eco-system to be more inclusionary of all walks of life from all over the world. The US can learn from Africa, from Asia, from Europe and they can all learn from the US. I believe that everyone has some entrepreneurial spirit within them. By allowing entrepreneurs to do what they do will be more effective than governments trying to fix problems. There is such a tech backlash in the US, for instance, and I don’t know who else is creating jobs. Somehow it is perceived that tech companies are somehow evil. I think we need to be more inclusive in this industry and then people will be able to see how magical it is. I think this would make the world a better place which is why I want to see it happen.
XP: Thank you so much for your time, Jason.