Inside corporate venture capital

Mr. H is a good friend and frequent collaborator who works for the Silicon Valley-based corporate venture/strategy arm of a large Japanese company. He travels the world evaluating startups for investment and helps define the company's innovation strategy. He graciously agreed to uncover some of the secrets of corporate venture capital for us. Read on to get the scoop.

Eliot: Why do big companies invest in startups?

Mr. H: Several reasons:
  • Risk hedge: if the company's not sure if a technology will be successful, they might invest a little and see how it goes, it's much cheaper compared to allocating your own employees to work on it internally.
  • Speed: investing in a startup might be the fastest way to introduce a new technology (with a viable business model) into the larger parent company.
  • Innovation: if there is little momentum developing new technologies internally large companies will buy startups to fill the gap... if you can't make something new, buy it.
  • People: by investing they get access to both the technology and the experts who created it, killing two birds with one stone!
  • Trends: companies might make bets on a startup with a technology that might become important in the future, it gives them an inside track for monitoring trends.
Eliot: What makes corporate venture capital investors (CVCs) different from traditional VCs?

Mr. H: CVCs invest in things that make sense financially and strategically for the parent company in medium/long span whereas traditional VCs focus only on financial return. For example, if you are in the car business, maybe it would make sense to invest in a biofuels startup. It might make sense financially and it also might make sense to have some knowledge of complementary technologies in the future that are relevant to the car business. But it really depends on the nature of the individual CVC. Some may just want to get accrue capital gains without thinking too much about the strategic impact for the parent.

Eliot: How would a potential investee make your day?

Mr. H: Do their homework in advance and give us hints to a new "blue ocean"! They should also be explicit about "What's in it for us?" (i.e. the CVC) and "Why haven't people done it yet?"

Eliot: What will technology investing look like in ten years?

Mr. H: I think technology investing will become more and more distant from technology itself. People will start to invest more in people than in technology (i.e. investing based on founders, not product/market).

Eliot: What's the single biggest thing new entrepreneurs struggle with?

Mr. H: Many new entrepreneurs think their good idea is everything. But solid execution is far more valuable in terms of company building and technology commercialization. Good ideas help, but they're only the beginning.

Eliot: What kind of culture clashes have you experienced on the interface between Silicon Valley style startups and a large Japanese corporation?

Mr. H: Wow, there are a lot! I think the two most important ones are decision making and sense of urgency. Individuals are not given much authority to make decisions in large Japanese corporations and teams often must fall back to consensus based decision making. That can take a very long time... During that time, the startup may be bought by someone else or go out of business! Sense of urgency is also lacking in large Japanese corporations because we've had good market success within Japan and are generally complacent about exploring new global markets. By comparison, Korean companies have had a lot of success outside of their home turf. This is partly because the Korean market isn't that big and because they had foresight and were hungry to succeed internationally. They recruit a lot of talented international employees too. The comparative diversity of their workforce is a big asset in the current era of extreme uncertainty. Japanese companies are starting to change but becoming more global should NOT be the goal, the real end-game is accelerating the process of innovation.

Elmore Leonard on writing

Famed crime novelist Elmore Leonard passed away this week. His gritty, dialogue-driven thrillers have helped to distinguish American popular fiction since he began writing more than fifty years ago. He published a famous op-ed in the New York times in 2001 summarizing all the essentials a beginning (or experienced) writer needs to know. I found his straightforward, timeless advice invaluable when drafting my manuscript and now in the re-write process as well. Some of his gems include axing adverbs, using only 'said' for dialogue and re-writing anything that reads like writing. If you're a writer, or want to become one, don't miss his advice.

22 hours in Dubai, 16 hours of eating like maniacs

A one hour long urban hike to Terminal 1 at 2 AM (don't ask) and an incredibly uncomfortable "nap" at the arrivals hall at the Dubai Airport until 6 AM was a very rough welcome to the city. We were cranky. We were tired. We were not so excited about being in Dubai for 22 hours anymore... until we stepped into our first super market.

Holy hell there's good food in Dubai! We had such a great time devouring this city, we just wish we had a little more time and way bigger stomachs to handle all of Dubai's deliciousness.

Here are a few simple steps you can take to eat the city in just one day:
Lots of affordable drink selections at local supermarkets

1. Eat a few snacks at the local supermarkets before breakfast.

The morning consisted of two stops at a couple of local supermarkets. There are tons of supermarkets all over the city and this simple fact already livened us up a bit.

We tried one of the date milkshakes and got enough sugar to bounce around for an hour or two before our big breakfast.

2. Sign up for a breakfast at the Sheikh Mohammed bin Rashid Center for Cultural Understanding.

We signed up in advance for this pretty cool breakfast that they only do on Wednesdays at the SMCCU. The Cultural Center feeds its guests a traditional Emirate breakfast and the wonderful hosts then answer any and all questions from the audience.
Drea volunteers to try on the local clothing
The purpose is to promote an open dialogue regarding the local culture and traditions. They explained how, in the UAE, women are free to wear whatever they want, many just choose to cover up as a personal preference plus it helps prevent sunburn. We also learned that husbands need to have their wife's permission to marry a second wife and that becoming pregnant before marriage lands you (and your kid!) in jail. Apparently jail in the UAE is quite posh though and they take good care of you. Another interesting fact about Dubai is that this year Ramadan, the fasting month, is during the hottest month and you can't drink water!

We had a few small cups of delicious saffron and cardamom coffee followed by a feast of lemon chickpeas, home made pancakes with a creamy cheese and honey, local bread and a traditional noodle dish. Not a bad start (finally!) to our already long day.

A beautiful setting for a traditional Emirate breakfast


3. Lunch up at the mall. Any mall!

Sushi treat @ the mall
We decided on the Mall of the Emirates for our next food stop. We walked around Dubai a bit and eventually the 100 degree weather got the best of us so we decided to run and hide in the mall for a while. We're both allergic to malls -- we hate shopping! -- but the heat was just unbearable.

We were on a mission to get sushi (hadn't had it since February) but were distracted by so, so many things inside this gargantuan place like: penguins, american food chains, indoor slopes for snow skiing and way too many stores. We had a whole tray of sushi and we each got a pot of loose leaf green tea... heaven.

For dessert, we headed to another spot within the mall that specializes in chocolate: Galler owned by a Belgian chocolatier. A rose dark chocolate cake, a chocolate dome thing and two coffees later, we were stuffed!

The "Dome" at Galler


4. Call up Al Bait al Baghdadi restaurant to order Iraqi Masqouf. Then go there and eat it!

Masqouf: a phenomenal way to eat fish!
We had never had Iraqi food before and after reading about it on this great Dubai foodie blog: www.iliveinafryingpan.com, we decided we absolutely had to try it.

Masqouf (apparently pronounced more like "masgoof") is an amazing fish dish: the fish is cut open in a long half, salted for a few hours and then slowly cooked by the heat from wood embers. Order the fish by the kilo (three of us stuffed ourselves with a 2 kg order -- that's 4.5 pounds!) and eat up. They served the fish with amazing pickles and hummus, baba ganoush, tabouli and fatoush as side dishes.

Oh and before the feast, we had a complimentary dal (lentil) soup that we loaded with fresh squeezed lemon juice. At the end they give you cardamom tea (for free!) to finish it all up. What a dinner!

Well, if you still have time or an appetite after all that -- wow! We went straight to the airport after our delicious Iraqi dinner to catch our flight to Sri Lanka. With all that wonderful eating, we were able to sleep as well as one can sleep on a budget, red eye flight.

Cheers, Dubai! Way to redeem yourself with your wonderful, eclectic, diverse, fresh, delicious grub!

Iraqi food treasures in Dubai

Chillin' like a villain in East Africa's version of paradise

Zanzibar, the perfect place to escape from it all!

Spending 3 months in land-locked countries (Nepal, Ethiopia) made us realize we really missed the ocean. Feeling worn down and exhausted, we booked a last-minute flight from Ethiopia to Zanzibar. We splurged and went against our quasi-scientific budget. Oh well, sometimes we just have to treat ourselves to a little something.

It was hard to contain our excitement
Zanzibar is a wonderful little island off the coast of Tanzania and with a rich spice trade heritage. It's a semi-independent part of Tanzania (you have to show your passport upon entering and leaving) and the economy mostly relies on tourism. The capital, Stone Town, is a bustling little place, full of tiny little streets that often turn into mazes where you can happily get lost.

Hard to take life too seriously in Zanzibar!
You can walk the entire 'city' in about a half hour if you know your way around and don't get accosted by too many touts (taxis, hashish, spices, they have it all). The harbor is nice to walk around and they have a really scenic waterfront public park where you can get amazing passion fruit juice and even free public outdoor wi-fi!

Stone Town has delicious fresh seafood and tropical fruits to offer and we enjoyed amazing dishes such as lemon fish soup for breakfast, coconut ginger lime smoothies, freshly pressed lime sugar cane juice and beautifully spiced seafood dishes with cinnamon straight from the tree and fresh, whole vanilla.

We ate from sea to table, every day
Our brief stay in Stone Town -- just a day -- was enhanced enormously because of our wonderful Couchsurfing hostess  This amazing Brit showed us the entire town and gave us an amazing hookup at Evergreen Bungalows for the remainder of our stay in Zanzibar.

We left Stone Town and headed east to one of the least touristy beaches on the island on an overcrowded local bus. Because of low season and our hookup, we got to stay in an amazing eco-lodge right in front of the beach in Bwejuu. Our huge bungalow was so close to the water, we usually fell asleep to the sound of small waves crashing on Zanzibar snow, aka fine, powder white sand.

For 10 days, we did absolutely nothing with the exception of one awesome snorkeling trip. Oh and a few en-suite full body massages.

Beautiful snorkeling site
Doing nothing felt great. It re-energized us. We felt amazing! We'd take turns going from the hammocks hung between palm trees to a quick dip in the perfectly calm azure ocean. We even dared to go on a tremendously difficult 15 minute walk on the flat, white sand beaches to the main part of town just to switch up lunch. In between our incredibly relaxed activities, we'd either take advantage of the free wi-fi, drink and eat meaty, sweet fresh coconuts or eat freshly caught seafood.

If this isn't paradise then we're all screwed.

When life gives you lemons, make a mint lemonade with a tad of sugar and an optional shot of rum and bring it over to Zanzibar. We guarantee you'll relax in ways you never even thought possible...

Perfect chill out spot -- our awesome hotel

Co-posted on www.dreacastillo.com