I met Kyle when he was starting at Business Insider & took notice of our investments ahead of his peers. Of course this meant he was brilliant, and we struck up a friendship. When he was in discussions with a16z, it was a pleasure to provide him context on why I thought it would be a great role for him, and I’m thrilled it’s been a place where he can grow his curious mind. So here are five questions with Kyle Russell, Investment Team at a16z.
Hunter Walk: Ok, so you’re over at a16z now after stints at TechCrunch and Business Insider. How’d the discussions with a16z start and what’s the job like?
Kyle Russell: I started working at Business Insider when I was just 20, and later dropped out of college to join TechCrunch full-time. My main interest was learning how the tech industry actually operates, and journalism let me contribute to a public good and spend time with incredibly smart people in tech. We joke about the “TC to VC pipeline,” but I never expected to move to a startup or VC so soon.
At demo days and on Hacker News, I found that many of the young companies I was excited about shared a seed investor, Chris Dixon. Since I only really joined the tech scene in 2013, I wasn’t immediately aware of his background as an entrepreneur or as an investor, but in 2014 he became a board member at Oculus, putting him at the top of my radar.
A mutual acquaintance gave me an introduction to the firm last spring. I met with Chris at A16Z’s office, and we discussed where Bitcoin, VR, and drones are going. I’m not sure he expected to engage in such a technical chat (I started coding when I was 10 because I wanted to make video games and held a few technical jobs before my stint in journalism). The next day, there was an email in my inbox asking if I’d consider a move to venture capital.
Fortunately, my new job doubles down on my favorite parts of working as a reporter. I get to meet founders while they’re still figuring out what their companies might become, and really dig in on their technology and how they’ll bring it to market. I get to spend hours perusing research coming out of companies and universities to better understand where things are going, and people I really respect and admire listen when I voice an opinion.
HW: Once you were inside of a venture fund, versus talking with VCs as a reporter, what was most surprising or otherwise contrary to your previous assumptions?
KR: As a reporter, it’s a very rare opportunity to get to witness an actual pitch from a startup to a VC, or the discussion that takes place after that pitch. I think that leads to most reporters (and their audiences) having a caricature of the process in their heads — a longer version of a demo day pitch followed by a discussion that’s either dismissive or excited because of FOMO.
It’s a cliche, but the best pitches quickly turn into discussions with both sides of the table contributing and learning. My first few months here, I was always shocked to see how open the investors are about their struggles and failures. As a reporter my assumption was that investors want to make themselves look infallible, but I’ve come to understand that having been through the rough times is precisely what makes you an attractive partner.
HW: Being part of the investment team, what are you looking for in a startup before you start to discuss them with Chris Dixon about a potential investment?
KR: Most of my time is spent meeting companies in emerging categories like VR or machine learning, so I usually don’t have data on traction to look at when deciding whether we should move forward with a startup. The biggest things I’m looking for: a technical breakthrough; data network effects that lead to a company getting smarter faster than the competition; a team that brings skills to a market that other competitors can’t just buy; and massive improvements to user experience.
HW: Venture has historically been called an “apprenticeship business” — do you think that’s true? How does a16z teach you the investing side of the business?
KR: It’s absolutely been true in my experience, though I don’t want to speak for an entire industry since this is only my first venture job. Everyone here at a16z seems to appreciate the value of mentorship and passing knowledge on to others. For instance, my manager on the investment team, Frank Chen, makes time for regular one-on-one discussions with each of us to go over things we’re working on and any challenges we’re running into. There’s lots of emphasis on passing along insights he and other members of the team have picked up on over the years. After a day of pitches, Chris and I will have a discussion to talk about what we both saw and he will advise me on things I may have missed due to a lack of context or experience.
Plus, each week, the whole partnership sits down for a round-table discussion about startups who came in to pitch. It’s unusual to see everyone have the same reaction to a pitch, and the discussion that emerges from the different perspectives has been valuable in understanding what to look for when considering investing in a startup. It’s here I get to hear general partners and other members of the investment team explain the situations they’ve encountered that shape the lenses they use when looking at companies today.
HW: What’s an area of emerging tech you think is underestimated & what’s an area that might be a little overheated?
KR: Virtual reality as a computing platform is still very underestimated here in the Valley and by enthusiasts who’ve only followed news coming out of tech and gaming blogs. There are a few arguments I hear from people who are skeptical: we’ve tried this before and it didn’t work (as if they’ve forgotten that Moore’s Law also applies to graphics processing); it’s too expensive (same answer); and that headsets are so goofy looking that people won’t buy it out of fear of becoming social pariahs. I think that last one is a result of people not having tried it yet, which is a real problem during these first few years while it’s so expensive. Personally, I haven’t met anyone who’s still a skeptic of the category overall after trying a demo with the consumer Oculus Rift or HTC Vive headsets — the feeling of “presence” significantly outweighs any concern about looking like a nerd.
With that said, I think people understand that it’s something gamers will want. It’s the other big use cases that will emerge, like creative productivity tools, education, and virtual inspections of real-world work sites that will be really shocking to see take off for some people who feel uncertain about the category.
As far as overheated spaces go, it’s been interesting to follow AI closely over the last year. It’s incredibly exciting to see significant improvements to the underlying technology from the teams inside research labs and startups pushing the space forward, but the flip side to it being “real” now is that everyone is claiming that their startup is using deep learning or machine learning to somehow be better than the competition, even if they’re too early to have the huge data sets you need to really pull useful insights out of or build working products atop of. This is partially a continuation of hype around “Big Data” from the last few years, but I imagine it’s gotten even harder for the average investor to tell what to think about these claims because in some areas, we’re seeing improvements where learning systems really are reliably better than humans.