Lightspeed Ventures partner Ravi Mhatre sat down with ITBusiness.ca last month at TiECon and talked about the nuances of investor-entrepreneur relationships and the future of Lightspeed Ventures. At TiECon this year, Ravi was announced “Venture Capitalist of the Year.”

Lightspeed is one of the few venture capital firms at the top of the food chain in Silicon Valley. With an appetite for disruptive innovation in enterprise and consumer specifically, the firm’s $4 billion committed capital goes well beyond the borders of the Valley.

Bromium, docker, Nutanix, Mulesoft, as well as Blockchain, Grub Hub, Snap, Task Rabbit and Nest are just a few of their enterprise and consumer portfolio companies.

Beyond the role of partner, Ravi is a founding member and managing director of the firm.  Their roster includes Canadian Arif Janmohamed, who has been with Lightspeed since 2008.

Organized Chaos

Lightspeed’s mandate is to accelerate early stage startups that have the potential to disrupt the enterprise and consumer sectors. That term ‘disruption’, ‘disrupt’ and ‘disruptive innovation’ get thrown around a lot, especially in tech hubs like Toronto and Silicon Valley. The entrepreneur behind the “Uber for dogs” is just as likely to think they’re as disruptive as the inventor of the very first hover car.

For those startups looking to create a new market or displace an existing one, the secret formula according to Ravi has a lot to do with intention.

“The most important things you need to do to foster disruptive innovation are be deliberate and systematic,” Ravi said.

I’m reminded of the story behind Wikipedia. Their team managed to upend the most popular encyclopedia companies in both print and and digital. Wikipedia’s free access and openness for volunteer editors meant that their content base grew contagiously, which is something Microsoft’s Encarta couldn’t compete with its paid-writers. Britannica closed its doors after 244 years because they also couldn’t compete. Unsurprisingly, users preferred 5 million free articles online to 120,000 articles in a $1,000 collection of 100lb books.

It seems like a no-brainer looking back, but at that time it would have taken a bold plan and an even bolder people to execute it, to Ravi’s point.

Relationship 101

The relationship between an entrepreneur and an investor is as important as a marriage. It’s success seems to be equal parts a science as an art. So what does a good VC, board and CEO relationship look like in real life?

Lightspeed’s own credence is to provide entrepreneurs with the support, guidance and resources they need to become successful CEOs.

“Investors that care about your business don’t need to be controlling, instead they’ll take an active part.  In the early days, your board should be in the trenches with you,” Ravi said.  Ravi also iterated that your investors should help balance accountability from the management team and keep the company honest about goal setting.  More notably, “This role should change over time.”  The further along you are, the more responsibility that will be bestowed upon you whether you’re ready or not.

Like any romance, the relationship only works if it’s 50 – 50. I asked Ravi what two questions he wished more founders would ask him during first meetings.

“Ask about what makes Lightspeed a strategic partner for their strategy and how we’re different. It’s a collaborative partnership, so it should be a two way match.”

VC GPS

In most situations, when you use the term rock star or royalty, it’s referring to a group of famous musicians or the British monarchy. In Silicon Valley, these terms are more synonymous with unicorn founders and VCs. Why? You’re more likely to stumble upon a Peregrine Falcon than Dave McClure of 500 Startups or Mark Zuckerberg in the Valley.  At least that’s the general perception.

“We don’t see ourselves as elusive or out of touch. That’s actually the last thing we want. We genuinely want to meet CEOs with new, great ideas,” Ravi said.

As a fellow entrepreneur, I had to ask the obvious follow up question. Then, where exactly?

“We try to stay engaged in the local community, so that’s the best place to start.  We send out reps and engage in events like TiECon.”

As a notable mention to Ravi’s point, his email is shown publicly on the Lightspeed website, which says a lot about this openness.  Capturing their attention is another art and science in itself.

The Exit Row

To one of Ravi’s earlier points, being deliberate and having a strategy is an important part of tuning your business. At the same time, knowing what your end-goal exit strategy is, is just as important.  Scaling a company is not easy, unless you’re in it for the long run. And endurance certainty doesn’t guarantee anything. Especially considering that 50 percent of businesses won’t make it to the end of the filth year (tech.co).

Ravi made a simple and powerful point about this. “Beyond finding a way to have a product that the market wants, the company has to have a strong foundation of repeatable systems. For companies not set up for growth or scaling, if often takes retooling the business. These types of decisions can be hard.” Do you pick innovation vs shoring up the business?

At the same time, not everyone builds a business for the long-term and it’s all about the short to medium-term win.

While doing background research on Ravi, I began to see a trend with his Lightspeed portfolio, specifically the companies he serves as  board member or board observer for.

Some of Ravi’s portfolio include: net.Genesis (NTGX), Verio (VRIO), Riverbed (RVBD), Lifeminders (LFMN), Kosmix (acquired by Walmart), TutorVista (acquired by Pearson), Virsa (acquired by SAP), Waveset (acquired by Oracle), Rapsphere (acquired by Appsense), Masergy (acquired by Abry) and Webspective (acquired by Inktomi).

Was it a coincidence that so many have been acquired?

Ravi was quick to point out that Lightspeed’s mandate is to find the most effective ways to support the goals of each company.

“We provide management consulting based on where they (entrepreneurs) want to go. We help provide the best opportunities for the company going forward.”

Lightspeed Ahead

With everyone at TieCon buzzing about AI, VR, nano, fintech, and biotech, I had to know what keeps Lightspeed and specifically Ravi up at night.

“Data. You can use data to be drastically smarter about solving business problems and sciences problems. It can be used through software and technology to create better solutions.”

Specific to Lightspeed, Ravi said they’re interested in enterprise and how data can be used to create platforms and make enterprise computing more efficient.

As a Toronto girl in the Valley, I can’t help but think back to some of the companies in Toronto in this industry, and hope to see them at upcoming events here in the valley to meet VC’s like Ravi.

Thanks to Ravi for taking the time to meet with ITBusiness.ca. His passion for tech and change is certainly contagious.

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