Jan 2015 - Sep 2016
Day 3 of the Silicon Valley module began with luminary VC legend Brook Byers, founder of Kleiner, Perkins, Caufield, Byers, joining our class and participating in an interview by Allen and a Q&A with EMBA-12. Feeling very much at home and at ease, Brook perched up on a chair, kicked off his shoes, and began to share his story. He started his career in the 1970s and has raised over 117 funds. His most recent was capped at $450 million and he’s raised a $1 billion growth digital fund. His firm bifurcates investing along two tracks: venture – “betting on the jockey”; and growth – “making a bet on an inflection point.” He was candid about the fact that the business is “super vague” and that “there is an inherent tension between the firm and entrepreneurs.” Brook laid out a framework that centers on risk evaluations for the following areas: 1. white hot (market) risks. 2. Product risk. 3. Regulatory Risk. 4. Financial Risk. 5. Team Risk. His firm sees anywhere from 500-1,000 deals annually and invests in about 15 ventures each year.
Much of the remainder of the day centered on valuation theory and understanding financial structuring. We learned how to forecast future results; determine likely valuations; convert future value; examine comparables; know the key metrics; dilution; premiums; liquidation options and much more. The evening speaker was a treat and provided an extraordinary lens into the VC world – Michael Malone – a renowned technology writer and investor. Michael was one of the first technology writers and has covered all the legends and luminaries over the years. He spoke about the “pendulum between hardware and software,” and that we are now in one of “Silicon Valley’s longest waves.” Future growth trends in his words include: Robotics, “making stuff”, autonomous vehicles, mono-rails, 3-D printing and drones. He also laid out the case for the beginning of a new 12-15 year cycle that is, “moving from code to platform” with hardware rising over software. He calls this a “giant wave,” and pointed out that “the Valley is a bubble that will leak slowly and is definitely slowing down.” Another theme that he underscored is that the ecosystem is fueled by ideas. “If you have an idea, it has value,” he said. The three attributes for success in Silicon Valley, according to Michael Malone are: being entrepreneurial, being a risk taker and having a good idea!
The day wrapped up with summer cocktails and fare at McArthur Park restaurant located at the foothills of the entrance to Stanford University.Back to top of article