Silicon Valley Has a Century-Old “New” Player in Town (Part II)
Q&A with Kevin Ye, Corporate Venture Advisor and Partner at Mach49
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This story is part of the Entrepreneurship of Life series, a collection of interviews with immigrant startup founders, venture capitalists, and tech business leaders.
Corporate Venture Capital (cont’d)
Q: What KPIs should one use to measure a CVC’s performance? How do you quantify strategic value creation?
The financial KPIs for CVCs, such as IRR (Internal Rate of Return) and MOIC (Multiple on Invested Capital), are often no different from those of a traditional VC. But measuring strategic value creation, which is equally important to a CVC, can be quite tricky and there’s no “one size fits all” answer.
Ultimately, you want a set of metrics tailored to your strategic goals. You can have monetary measurements such as corporate savings or revenue increase driven by the CVC, or you can use something that drives the mothership to move forward more broadly, such as the number of new ideas explored, conversations with startups, new partnerships, or even internal teach-ins of market insight by the CVC team.
Unless balanced out by others, any metric alone can mislead or induce undesirable “indexing” behaviors. For example, if you fixate on incremental revenue from partnerships, you might be biased towards pursuing limited near-term benefits and forego moonshot ideas with longer payoff periods. Always use a portfolio of strategic KPIs that reflect the appropriate balance between near- and long-term goals for your organization.
Q: What is your work like day-to-day?
I love working essentially two full-time jobs in one. The first one is to be an extension of my clients’ CVC team, involved closely from hiring and marketing to deal sourcing, analysis, and portfolio company support. I look at a number of deals each week like a venture capitalist would, except I need to cover all verticals rather than specialize.
On top of this, my other job is to help grow Mach49 as a young company and build our Disrupting OutsideIn team as “a startup within a startup”. I was the first external person hired into the team after Paul, and given the growth we’ve experienced over the last year, we continue to hire aggressively to keep expanding our reach and expertise. I help manage our P&L and budget, develop new service offerings, drive business development, and create internal processes to permit efficient scaling.
I am equally excited about both my roles, and the scope of my responsibilities keeps the job stimulating.
Q: For young professionals interested in CVC, how do they break in?
You need largely the same skills as for traditional VC jobs, and you can find openings through the same channels — for example, I’m a big fan of John Gannon’s blog for posting my opportunities and seeing what roles are being filled out there. My only advice is to try and understand the difference between the two and see which path speaks to you more. CVC is less about building a personal brand as an investor, and more about driving large industry shifts that impact you and me by creating strategic value from the corporate-startup synergy.
Angel Investing and Innovation “off-Silicon Valley”
Q: Can you tell us about your angel investing experience? In particular, what makes you bet on a specific company?
Angel investing is relatively new for me. I started last year and have made three investments, including one LP investment in a micro fund. All of my opportunities so far have come in organically through my network — some introduced me to founders, and others are founders themselves.
While I also evaluate their ideas and their market potential, the #1 consideration for me as an angel is always the founding team themselves. Great founders have their way of finding shots worth taking and pivoting out of bad ones.
Having interacted with hundreds, if not thousands, of founders in my career, I know I’d always back someone highly ambitious but also practical and transparent. They should dream big, sell passionately, but remain cool-headed and disciplined enough to tell you reality: where potential obstacles lie and what is best for the company, rather than what they think you want to hear. This can be a surprisingly rare combination of qualities to find in people, especially in an industry that so often feels like it runs on self-promotion and “smoke-and-mirrors.”
For one of my investments, I met with the founder through a VC friend and decided to invest after a 30-minute conversation. I asked him pointed questions about the business and heard honest, well thought-through responses. It gave me confidence that he has what it takes to make something work, whether it was the idea he presented that day or an entirely new one several pivots away.
Q: You are a venture ambassador for the New Zealand government advising their startups on international expansion. As I’m sure you have witnessed first-hand, innovations are increasingly flourishing outside Silicon Valley, and Covid accelerated this trend.
Apart from a lower costs of living, which has more sway now given remote work is common, what other advantages do the emerging tech hubs, such as Austin, Denver, and Miami (taking U.S. as an example), have over the Bay Area?
If you think about it, historically Silicon Valley is best known for computing hardware and software, including SaaS. But if you look at other, newer tech verticals, many tend to cluster somewhere else and build upon the strength of homegrown industries developed over decades, if not a century. Think about Detroit and mobility tech: the city has a head start in this race thanks to all the OEMs, supply chain, expertise, and specialized talent amassed over a hundred years. For similar reasons, FinTech and AdTech find their Mecca in New York, Media Tech and CPG in LA, Healthcare Tech in Boston and Nashville, and AI and Cybersecurity in Israel.
As Covid makes remote work common practice, the tech industry is decentralizing faster. The once famous Sand Hill Road motto “I don’t invest in startups that I can’t bike to” is now a thing of the past.
The rise of Miami is an interesting case study. Earlier this year, tech professionals in San Francisco started to notice a large roadside billboard that says “Thinking about moving to Miami? DM me,” along with the twitter handle of Miami Mayor Francis Suarez. Many liked the idea of escaping the 50-degree Fog City for an 80-degree Sunshine State.
Entrepreneurs and VCs have been migrating to Miami at a growing pace since the start of Covid, but the momentum reached a critical point at the “Miami tech week” in April 2021. It was probably the biggest tech networking event of the year and yet completely impromptu. [Keyi note: the Miami tech week started out as a few loosely related, small-group local events organized via Twitter, which generated buzz in Silicon Valley and eventually drew a head-turning turnout of founders and investors.]
While how much of it was hype remains to be seen, the Miami tech week testifies to one of my long-held beliefs — that technology innovation should not concentrate in just Silicon Valley or a few East and West Coast regions. New startup ecosystems will sprout up if local governments and community builders leverage local strengths and think outside the box about incentives for both investors and startups. The Nevada Governor has even proposed allowing tech firms to establish their own local jurisdictions with power similar to those of county governments. The idea is highly controversial, but it goes to show the range of possible tools contemplated by policymakers.
Being an Asian American
Q: You grew up in Tennessee in a family originally from Shanghai, China. How do you relate to these two sides of your cultural identity?
As my homestate, Tennessee has shaped me in countless ways, from a love for country music and whiskey to trying to embody the signature Southern hospitality and etiquette wherever I go. And I constantly yearn for the Southern food I grew up eating. The South lives in me even a decade after I left to study and work on the coasts.
Meanwhile, I’m also grateful for my family’s commitment to keep my brother and I connected to our Asian roots. We can read, write, and speak fluent Mandarin (Shanghai dialect, too), thanks to having our grandparents live with us and our mom who conveniently was a Chinese school teacher for our local community. Thanks to them, my brother and I never really had to rediscover our heritage, as we had been immersed in it since we were born.
Growing up in a mostly white area however, we knew we were different early on. For every kid, there is a phase where you just want to fit in, and any difference can feel like a burden. What I came to quickly realize is that once you grow up, nobody wants to just be a face in the crowd, and you realize that it is your uniqueness that sets you apart, and you come to own those parts of your identity with pride.
Q: While at UPenn, you were a member of PennYo, the first collegiate Chinese a cappella group in the U.S. What was your favorite song performed?
Zhu Fu, a 90s mandarin pop song meaning “blessing”. PennYo actually took its name from the first two words of this song, ‘Peng You’, meaning friends.
My father always enjoyed listening to Chinese pop when my brother and I were growing up. Though the music style may seem a bit old-fashioned by today’s standards, I still love it as the lyrics often convey a depth and poetry that are hard to find in modern music. Zhu Fu was a song I grew up with, and the lyrics revolve around the blessing and reassurances that you want to give your friends and loved ones when you part ways. I originally auditioned for PennYo with Zhu Fu, and understandably, it felt fitting to choose it as my graduation song when it was my time to bid farewell. It served as great bookends for my college experience.
Q: As an Asian American, what do you think is the #1 thing, big or small, that individuals in tech can do to make this group more visible?
One of the challenges about being an Asian American in tech is that our large numbers in the industry often obfuscate the more subtle issues we face. For example, the concept of the “model minority”, with beliefs such as “all Asians are good at math” or “Asians are smart and obedient,” has often been positioned as something positive for our demographic that makes certain paths easier. But a closer look at this myth reveals that it’s yet another tool that can be used for repression. Stereotypes like these are damaging despite their benign appearance, which only makes them easier to internalize unknowingly, even by ourselves. For example, the unspoken words behind “smart and obedient” are often that someone lacks assertiveness and leadership qualities. We must all stay vigilant and defy such biases to move the industry forward.
Meanwhile, just because we are not done fighting our own cause does not mean we cannot, or should not, support other minorities in theirs. We are fortunate that we have already gotten our foot in the door to some degree, and we should use what influence and positions we have to support more underrepresented groups.
Q: What is your favorite media piece either about Asian Americans or by Asian Americans?
I find the HBO TV series Warrior to be a true gem. It is both made by and about Asian Americans. The series is based on an original concept by Bruce Lee and co-produced by his daughter Shannon Lee. The story is set during the Tong Wars in late 1870s San Francisco Chinatown, a tumultuous period with rising anti-Asian tensions that culminated in the 1882 Chinese Exclusion Act.
The story follows early Chinese immigrants in San Francisco as they built the Chinatown, dealt with racism on all fronts, fought against mobs, and got entangled with various other interest groups. There were business oligarchs (who desired and profited from cheap Chinese labor), Irish immigrants and white Americans (many of whom felt economically threatened by the Chinese and were hostile towards them), and local government officials (who were eager to leverage racism for their political agenda). [Keyi Note: SF was the earliest major landing portal for Chinese immigrants due to the California Gold Rush in the 1850s and the Central Pacific Railroad construction in the 1860s.]
What’s captivating about the show is how its story portrays interracial dynamics from 150 years ago and yet reminiscent of what you still see today. For example, you still see more assimilated ‘old’ immigrants hold hostility towards newer ones, who in many ways are merely following their forerunners’ footsteps. Once “legitimacy” is deemed earned, the discriminated often joins the discriminators.
Apart from taking a bold shot at the complicated topic of racism, Warrior is also a Game-of-Thrones-like epic with beautifully choreographed martial arts scenes and badass Asian characters, who do not appear on the American screen nearly as often as they should. Also, since I live in San Francisco, it is fun to learn more about the city’s history, even if it’s a heavily fictionalized version of it. It better connects me to the streets I walk down today, through an interesting dialogue between past and present.
Keyi (Author): If you enjoyed this story, check out my other interviews in the Entrepreneurship of Life series (catelog with links at the end) and follow me for new story alerts. You can also find me on Twitter and LinkedIn.
