Eight questions for a Silicon Valley tech investor
US Trade Envoy and GlobalScot Suneil Mishra offers his insights on managing risk, launching start-ups, and the highs and lows of entrepreneurship.
Perspectives from a Scot in Silicon Valley
Glasgow-born, USA-based investor and consultant Suneil Mishra has helped early-stage companies that collectively have raised over $100 million, with exits nearing a billion dollars. So far.
These days, he's mostly advising and consulting. But entrepreneurs like him don't sit still for long – they always keep their eyes open for the next potential unicorn. It’s a personality thing, he tells us, and he's excited by what Scottish start-ups and innovators are doing right now.
After delivering a successful masterclass on risk, Suneil sat down to answer some questions on what Scottish business leaders can learn from Silicon Valley – and why ‘failure’ isn’t a bad word.
Eight questions on leadership and risk
We asked for Suneil's insights as a USA-based start-up consultant on eight questions for Scottish businesses. He discusses starting out, common challenges, and managing risk.
1. When is a company in a good position to grow and take on risk?
"The short answer is: always.
"In reality, the metric is the pace of growth, and risks associated depends on the on the company profile and market environment. My background is in early-stage venture-backed start-ups which are designed to take risks. In fact, it's a must.
"The investors in those spaces are specifically looking at risk capital – high-risk stuff. Organically grown companies aren’t of interest, because those investors don’t want to put money in and wait a long time for a (relatively) small return.
"The concept, in this space, is that if you're not growing fast, you're shrinking. But more broadly, growth depends on the stakeholder expectations and, more than anything else, on money ROI requirements. Being in the race is the first requirement for success.
"But if you’ve started a company, regardless of your location and maturity, you should be on a journey of discovery to figure out the opportunities.
"The key to success is how closely you can match the speed you need to be moving with the speed you're able to."
2. How does Scotland's risk culture compare to America's?
"It depends on the environment you're in. In Scotland, risk tolerance is far lower than the U.S. It comes down to traditional industries and the investment climate – people are less likely to risk capital, and the available resources are of course incomparable.
"Scotland isn’t competing with America as an economic power, so it’s critical not to attempt to replicate the same entrepreneurial model wholesale but incorporate the universal ideas now driving modern businesses worldwide.
"Failure is also considered more problematic in places like Scotland and other traditional markets. Of course, Silicon Valley is an aberration – people are more accepting of failure - as long as you ‘fail fast’ and learn something from it so you don't fail the same way the next time.
"You could argue it’s too risky an environment for other places to replicate fully, but there are lessons that countries – the ones Scotland competes with – are incorporating now.
"We need to develop is the attitude that one or two failures doesn’t mean the end of the world. Once we build up our tolerance, and temper it with our natural restraint, we'll be fusing the best of Silicon Valley and the best of Scotland."
3. What do first-time entrepreneurs find hardest to manage?
"Letting go. One of the points I made in the masterclass was about learning to delegate and trust your co-workers. It's important to have the right people in place.
"When you start a company, you've either got a small team or you're working as an individual. You're wearing all the hats of that business.
"The product, the customers, the finances, and HR – all those things are on you. Part of the goal should be to take off those hats and give them to people. First-time entrepreneurs, particularly, want to keep control of all of that stuff. It's all in their head, and it's their 'baby'.
"But you can't scale a company that way – you can't be in control of absolutely everything. It’s one reason early-stage investors primarily invest in the founding team, on gauging their willingness to accept feedback.
"Of course, once you let go, you might find your staff do things slightly differently than you. But you have to grow a level of trust with your employees so you can listen to their ideas, recognise their expertise and then remove the friction that slows them down."
4. How can leaders embed psychological safety into their work culture?
"You want people to give you productive feedback and tell you when something’s not working.
"An employee should feel comfortable coming to you, as a leader, to say, ‘I'm doing what I'm doing to the best of my ability but something’s not working out. I need help’.
"You need to respond to that correctly, because the employee might fear you’re going to react negatively and complain about how they’re not doing their job, which doesn't help anybody.
"But if you can be genuinely open and encourage your employees to come to you with a problem, so you can solve it together, you’ll create a collaborative, creative, upbeat environment that deals with change and risk more successfully. And for entrepreneurs, that’s basically every day."
5. What support is there for people who are starting out?
"There's a network of people who want you to succeed. Let people and organisations help you.
"In Silicon Valley, there’s a culture of helping and wanting entrepreneurs to do well for not much in return, and that’s probably because it’s so open and collaborative. Someone will always know someone who’s interested in what you’re doing and wants to contribute.
"There are fractional CFOs and CMOS and lots of new AI tools available – that's a good way to start things off. The goal is to replace those fractional people, and kickstarting tools, with full-time people and larger scale systems only when you need them."
6. How can companies keep motivated after setbacks?
"It’s about being honest with yourself and looking at failures for their learning potential.
"Not everything is within your control – the economy could take a dip, there could be a recession or a pandemic. Figure out what you had control over and ask what you could have done better.
"You're doing something new, so it’ll never be perfect. But it means you're growing and taking risk.
"Another thing that stifles growth is analysis-paralysis – overthinking and fear of making big decisions can prevent some leaders from making any changes at all.
"In saying that – if all else has failed, you need to know when to call time on an idea. Sometimes, it's just not going to work out. It’s best to learn that lesson earlier, with less risky behaviour. Don't try and sell to a million people if you can't sell to the first one, for example. It's not going to get better.
"Also, humans tend to gravitate to people who say ‘yes’. So even if you find people who love your pitch, seek out those who critique it. You need to get out of your comfort zone so that you can keep developing."
7. Can you give us an example of the biggest risk you’ve taken in business?
"I often give examples where taking a risk didn't work out.
"But those experiences help me warn new companies of dangers. A lot of the stuff I do as a consultant or advisor is telling people that their plan won’t work because I – or people I know – have tried it, and it was a disaster.
"Coming out to America was a big risk. I came out here to do my master's degree in virtual reality before it was worth a lot of money. I joined a VR start-up which failed after about a year – one winter in Chicago was enough for me, anyway.
"Then I moved to Silicon Valley, and I’ve been involved with start-ups ever since. As an employee, executive, founder, advisor, consultant and investor in various incarnations my career has centred around risk and I’m fortunate that it’s worked out.
"But every experience – good or bad – taught me how to make the next one better."
8. What would you say to anyone interested in starting up?
"One of the big advantages of doing the start-up thing is you have more diversity in scope and ownership of your work than you do at a large company, working 9am to 5pm in a more structured role typically. There’s nothing wrong with the latter – it just depends on the person and their circumstances.
"Another upside to entrepreneurship is hearing about new ideas first. Of course, 99% of them are wacky and will never amount to anything. But that's okay. There’s an atmosphere of promise that's exciting.
"In Silicon Valley there’s such a positive environment of people dreaming and building and then picking themselves up when it doesn’t work out. Then doing it all again.
"And of course, you can now live in Scotland and reach people in Silicon Valley, and beyond. It's an incredible time for talented people with the nerve to take a chance.
"The downside to start-ups? You might not have a job tomorrow. Taking risks was easier before I had a family and a mortgage – I know it's not workable for everyone.
"But if you've got a great idea, and are willing and able to take a chance, you should do it. Find likeminded people who are passionate enough to walk your path – long hours, weekends, whatever. Ultimately, it’s the people across all the start-ups I’ve helped that made them incredible experiences.
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