The Exchanges

Q How did your path take you from that initial angel investing to what became SOSV?

A It was called SOS Ventures initially, and it was retitled SOS V 10 years later. I didn't actually consider it a full-time job, because I was just a guy with a checkbook going around, and I knew the technology, and I knew the people, and so I was just investing in friends technologies. But after, I'd say, eight years of doing other things, I was running other businesses, I was in the music industry, I was in the film industry, I was a humanitarian worker. So after a while, I noticed that this had grown to be worth 70 or eighty million dollars. And so I said, okay, I probably should treat this a little bit more seriously. And so I brought together a couple of people in the back office to just manage the financial aspects. And then I brought on some investment partners as it grew to be more like a hundred and fifty million or something a few years after that.

AI assessment note: “I brought together a couple of people in the back office to just manage”

Q I'm really curious to ask, what was your childhood like?

A I had a happy childhood. It was a difficult childhood. I was born one of nine children. I was the eighth of nine, and my biological father was a lawyer in New York City, and when I was three, our family, because of abuse, effectively, had to leave New York City to get away from him, and so we Went up to upstate New York in Schoharie, New York, where we had a hardscrabble existence for a bunch of years with having to, for example, go on welfare. He was a deadbeat dad, so he wasn't paying the child support. All nine of us were under the age of 12, so she had to rely on public assistance. So that was a difficult experience growing up because we were underfed, and it was a very cold place to live. In upstate New York, and we had wood stoves, and if we went to sleep at night in the winter, maybe you'd put a glass of water by your bed, and it would be ice in the morning. So it was a really, really hard way to grow up. But summers were fine. I would work on farms. The West Timers had a carrot farm, and they would pay a buck an hour for, you know, weed. Started working there, I think it was eight. I worked on hay farms bailing hay. But I got away from that hardscrabble existence by the world of reading. I read a lot of books. I actually set a record in fifth grade for the most books ever read. It was like 535 books in one year. Actually, it's just the school year, so if you think of th…

AI assessment note: “I had a happy childhood. It was a difficult childhood.”

Q And where does that company sit relative to maybe more commonly today you think of Waze and Google Maps?

A So MapInfo created the industry of street mapping on computers. So if you type an address into a computer, whether it's your smartphone or on your PC, and you see a street map, that's what we invented. But we never went to the consumer side of it. There were about a thousand different companies that used our core technology and our products and built their products around it. So everyone from the Microsofts and the Oracles would bundle it into their products and Also, just hundreds of smaller value-added resellers, we called them back in the day, who had a variety of different applications for school buses or for using routing or whatever type of other mapping you should have.

AI assessment note: “But we never went to the consumer side of it.”

Q How does the operating model work to support all those people?

A When we do a startup development program, we will give the company, say, 500,000 dollars, and there'll be, say, 75,000 dollars or 50,000 dollars that will go towards their costs at the program level. All the free rent, the free beer, the free pizza, but also to cover some of our staffing expense for the people that are working to support their businesses. And then we also have sponsorships and things like that. We recently got two twenty-five million dollar sponsorships. One for the IndieBio New York program, multi-year sponsorship, and then a twenty-five million dollar for the Hacks USA, both from the states, one from the state of New Jersey, one from the state of New York, which economically makes a lot of sense because for every fifty million dollars we invest, there's about a billion dollars that goes into the startups. So this year we invested over a hundred million dollars and over two billion dollars is going into the startups, creating a lot of economic activity.

AI assessment note: “to cover some of our staffing expense for the people that are working to support”

Q So you mentioned D-Lab and your dive into blockchain technology. It's obviously a very popular space. I'm curious, how did you find your way into that ecosystem?

A Actually, we backed the leading Bitcoin futures trading company through our China Accelerator program. It was two Americans and a Brit that started a company called BitMEX. They were working on Hong Kong. They went to a China Accelerator program in Shanghai. They have done extraordinarily well. They've run into some tussles with the SEC more recently, but we're generating hundreds of millions of dollars in revenue within a few years after attending China Accelerator. So It was a huge success. We were the only venture company to have backed them, and then they became profitable very quickly after exiting our program. They were as profitable as NASDAQ was for a couple of years in there. They've been challenged by Binance, which is now, I think, the world's most active or leading trading platform, but they're still generating many hundreds of millions in revenue and profits, God willing, every year. It's great. They've kicked off huge amounts of dividends and whatnot. We've been happy with that. But because we've been successful with that investment and other investments in the space, we decided to create more of a studio kind of thing with D-Lab. And we're backing, say, six or 10 companies a year that are in the blockchain space, particularly in financial control systems or fintech style innovations in blockchain.

AI assessment note: “we backed the leading Bitcoin futures trading company through our China Accelerator program”

Q So let's fast forward to where we are today. How do you describe your current strategy?

A Well, from China Accelerator, which was differentiated just by its geography, we really always wanted to invest very deeply into a set where we would be the world leader in, and so from China Accelerator, which was started in Dalian and now is in Shanghai, mostly, we then launched the Hacks Accelerator because in China, there are a lot of people that create hardware companies, and it just didn't make any sense to have a software and a hardware company There's very little overlap in terms of what the problems are, who the investors are in those spaces, and in terms of how they need to deal with the physical issues versus the SaaS businesses of the world. So we decided to create new accelerators, deeply focused on deep tech verticals, where we would be the only people in the world that had that level of focus. And so we created Hacks, which was originally in Shenzhen and now is in Newark, New Jersey as well. We just announced the expansion of that to the US. It's also in Tokyo and, and one other place, Xi'an and San Francisco as well. We have locations for hacks. So that's the world's first hardware accelerator, a physical device accelerator built on the theme that if you're going to create new physical devices, they need to be cloud connected. They need to have computing capability in them in order to vastly increase What's possible for humanity to do with these new devices. And…

AI assessment note: “we decided to create new accelerators, deeply focused on deep tech verticals”

Q How do you think about the commercial side of it? So you're bringing in noted scientists who are developing interesting products, say an indie bio. Eventually they have to have the skills to commercialize it as well.

A I think it's much easier to train a scientist to be an entrepreneur than it is to train a business guy to be a scientist. So we start with people who are incredibly focused on customers and have a desire to see their change be made in the world. For anyone to be an entrepreneur, they have to have a really strong internal drive, that they're unsatisfied with the status quo, that they don't Like the world the way that it is, and they're incredibly motivated to see a change happen. And those are people that will actually do things that are very unnatural to them, like go and make sales calls when forced. And we will actually force them to make sales calls. We'll give them assignments. Okay, here are 20 people on LinkedIn. Make sure you get through to each and every one of them and let me know next Monday how you did and what they had to say, what were the feedback on the survey. So it's about getting people out of their comfort zones, and that's where growth happens. Sometimes it doesn't work just because of personalities. They need to add to their team, and so we will help them to some extent. But really, this is their business. We are only a pretty minority player. We aim to own 10 or 12% of the business up to Series A. So it is their business and it's their responsibility and their drive that is making the success of the business possible. But it's also their responsibility to …

AI assessment note: “I think it's much easier to train a scientist to be an entrepreneur”

Q Well, Sean, I want to ask you a couple of closing questions, but before I do, I have to ask you, why is it that you're so well known in Ireland?

A Well, in Ireland, I was on a TV show called Dragon's Den, which is the equivalent of the U.S.'s Shark Tank. So I was on that show for a couple of years, and for some reason, people watch that show avariciously in Ireland. 40% of the televisions when that show is running, which doesn't happen in the United States, you don't have a show where even 10% of the market turns it on, but it was like 40% of the population would turn that TV show on the night that it was airing, and I was one of the five judges on that. And as a result of even being a judge on that program, I was sort of drafted into writing the national entrepreneurship policy for the government of Ireland, and I created a movement called Open Ireland, which helps the technology industry and Irish society by allowing the free entry into the Irish population of anyone that had an engineering degree from anywhere in the world. They could just basically get into Ireland and start working.

AI assessment note: “I was on a TV show called Dragon's Den”

Q How'd you go from that early experience in engineering to the business side?

A Well, I started a company right out of university. So RPI had one of the first, back then you used to call those things incubators, where you had startups that wanted to be tenderly coiled in the arms of the mothership. So I was inspired by all of the companies, all the students that were basically starting Companies out of school. And I thought, wow, I would love to be able to start my own company. So I had had some experience while working my way through school. I went to IBM and worked for some bigger companies. And so I had that experience working for bigger companies. And I really decided early on that I wanted to start my own company, just have more impact and more control over my destiny.

AI assessment note: “I started a company right out of university.”

Q What does your team look like that's helping all of these startups?

A There's about a 135 people. I know that sounds ridiculous because we're not a 16 C and we don't have ten billion or twenty billion in our management. Half our people are in Asia and our focus for all of our people is working at the program level where they're helping the entrepreneurs one-to-one with the teams. We also do a tremendous amount of deals a year. We're the world's most active investor in life sciences and hardware and also just generally we would rank as Perhaps the world's third most active seed investor. And I think we make a top 10 in the world's most active Series A investors as well. So we have a lot of needs in our back office and our legal teams as well. So each one of the co-working centers, we spend many millions of dollars building out these facilities with the wet labs and with the co-working space. We like to have the teams there on site, which was tough during COVID, but it's great now. And there's the greatest level of learning when everyone's physically together and learning from the Other teams, as well as from the mentors that we bring in. We have adjunct partners that come in, and they're very distinguished folks from Stanford and MIT and Harvard and whatnot. The George Church would be a very famous person in the life sciences area. He was an adjunct partner for the IndieBio programs, and we have other leading thinkers for various other industries,…

AI assessment note: “There's about a 135 people... Half our people are in Asia”

Q Take me inside the development program. What is it that you and your team do to help them out?

A If we were to look at, say, IndieBio, we have a wet lab facilities where they can do their biological work and experiments, and we would have certain scientific goals that we would expect them to achieve during the program that would de-risk them. So obviously, most early stage investors are looking to de-risk everything about the investment that they're making to make it comfortable, make the water safe for later stage investors to be able to come in. And so we have to de-risk the science, we have to de-risk the team, and we have to de-risk The marketplace. And this is why we always require founding teams. I admire the iconic image of one founder driving a business, but that's not realistic. To accomplish anything of significance in the world, you have to build a team around you. And so we're looking for founders to have come in with co-founders from the very start. So they would come in and we'd be working with the team on multiple issues at the same time. Maybe one of the founders would be more focused on the marketplace traction side. And by traction, this could be pharmaceuticals or small molecule therapeutics or other things that may not be actually getting that much traction from a revenue side for years. But we still want to make sure that there's traction in the marketplace with those partners, those pharmaceutical companies, or those researchers that are known in thos…

AI assessment note: “we have a wet lab facilities where they can do their biological work and experiments”

Q How do you think about funding in future rounds of the companies that have successfully made it out of the program?

A We fund companies at that relatively high level for a first check, and where we're the only check in the business, the only investor in the business, and then we will go on at a similar level on the subsequent rounds. So a couple hundred grand to 500,000 on the follow on rounds, and then up to a million and a half on subsequent rounds after the seed round out of the program. So when a company comes into the program, they may be valued at whatever the typical valuation is, a couple 1,000,003 million, and When they leave, they generally raise two to three million out of ten million pre money or post money, depending on how hot the company is.

AI assessment note: “a couple hundred grand to 500,000 on the follow on rounds”

Q So let's dive into a little bit the startup development program and maybe walk through in stages, starting with where did these ideas come from?

A The best ideas always come from the entrepreneurs, and we can be researching themes, and we know areas that we care deeply about. We're super active in climate change. We're super active in the future of food. We're super active in medical devices. In fact, if you wanted to look at our general themes, it's human and planetary health in IndieBio. In HACS, it would also include human and planetary health, but also the reindustrialization of society. In particular, the Western societies and the rebirth of our manufacturing sector. But where are the ideas coming from? They're always coming from the entrepreneurs. They know where we can help, and they know we have facilities and capabilities and financing to help connect them to later stage capital as well. But we're always finding that the best ideas are straight out of the minds of the entrepreneurs.

AI assessment note: “The best ideas always come from the entrepreneurs”

Q So taken as a strategy as a whole, what do you see as the drivers of what constitutes those successes?

A The funny thing is it's kind of a mix. There's a lot of impact investors in the world today, and I'm in this business for the impact that we create and the societal change that I think we need, and we have an obligation as venture capitalists to provide to society. That's also a big factor in what we choose to invest in. The responsibility that you have as a VC is taking something that has never been made available to the public before and actually making something. There's an expression The future is already here. It just hasn't been evenly distributed by the science fiction writer, Bill Gibson. And that's really the job of the venture capitalist, to see a future, pick it, back it, and then make sure that it's evenly distributed. You could say that the internet has loads and loads of problems with it. It does, but it is a spectacularly enabling force for billions of people in terms of knowledge, in terms of capabilities, and in terms of productivity, and the lowered cost of life as well. So when we look at things like the future of food, back in 2014, we said, okay, what if we were able to say, a company came to us and they said, we're going to make milk without cows. We said, okay, that's a ridiculous idea. I like that idea. Let's look into that idea. And that was possible back then, and it was possible in gram quantities. But if you're going to make a world where you can mak…

AI assessment note: “to see a future, pick it, back it, and then make sure that it's evenly distributed.”