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Jalak Jobanputra

This Week In Startups - Episode #536
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Background
Jalak Jobanputra is the VC/Founder of FuturePerfect Ventures with 20 years financial and entrepreneurial expertise in U.S. and global markets. Jalak, who has worked in NYC, Silicon Valley, Boston, India, Africa, and Europe, talks with Jason about a wide range of fascinating topics, including: why she’s bullish on smart data, A.I., mobile health and other leading technologies, how she picks companies to invest in, why Bitcoin is so exciting for emerging markets (and how Africa is already a leader in virtual currency), the incredible potential of Abra (overall winner of the 2015 LAUNCH Festival) and its digital cash peer to peer money transfer network, male-dominated VC culture and hope for change, women entrepreneurs thriving in Jordan, the conundrum of the Middle East, the lasting legacy of booming cities, ideas that will change the world — and much much more.
Key Takeaways - min read
 
Top Quote:

“There are a lot of similarities of running a fund and running a company.” 
 
- Jolak Jobanputra
 
Key Takeaways:
 
Women in VC, Ellen Pao, And Diversity

Jalak sees a lot more women in venture at junior levels than she used to, but there was just a Babson study that said the actual number of senior women in the industry has gone down with 10% in 1999 to 6% now.
  • She isn’t sure why women in senior positions in VC has declined. 
A lot of stuff that came up during the Ellen Pao trial does happen.
  • She wasn’t surprised by the verdict. It is a very hard distinction to make. What did surprise Jalak was the amount of attention being paid to it.
The key here is that it is not just one event that happens. 

The issue is when there is enough of them where you realize there is a culture here that is not the most welcoming for other folks (women, people who didn’t go to certain schools, people with accents, etc.)

On Being A Venture Capitalist

Jalak is running her own fund, and what this means is she is an entrepreneur.

In a lot of ways she feels more aligned with the entrepreneurs than ever before because of this.

Picking companies to invest in is a combination of the person and their vision.

One of the things Jalak really looks for is someone who is very passionate about their idea, the ideas ability to change the world, their ability to sell other people on that quickly, and the idea has to be compelling enough.

Jalak has had this happen to her several times where she met with a founder and within one minute knew she wanted to invest.
  • One of those founders Jason is very familiar with is Bill Barhydt of Abra (which Jason also invested in).
On How To Get Jalak's Attention As An Entrepreneur Without A Warm Intro

Jalak’s point of view in terms of what she is interested in looking at and what she is excited about is pretty public.
  • The entrepreneurs that she responds to are the ones who make a link back to what her thesis is or what she has written about in the past on the subject, and show how their company is addressing it.
Jason said a good approach is to actually understand and target who you are pitching and show you know about them by reading their blogs, etc. This is a much better approach.
  • A lot of VC’s will actually tell you on their twitter feeds how to approach them and what works for them.
  • To not actually do your research shows a level of cluelessness that will preclude someone from investing in you because if they invest in you and you start doing that to clients they are going to laugh you out of the room.
On Jalak's Blog and Traveling

Jalak has a blog that she has been writing in for several years (The Barefoot VC).
 
The name for the blog came from the adventurous traveling she has done like hitch hiking through Burma by herself in 2007 right when the protests were starting, hiking the Himalayas, and going to the Congo and a lot of other places in an around the world trip she was doing.
  • Another reason for the name of her blog is the best VC’s are close to the ground.
On Jalak's Fund - Future Perfect Ventures

Jalak started her fund Future Perfect Ventures about one year ago. They have 15 portfolio companies and invests up to $500K.
  • She likes to lead rounds when she can.
The firm is Jalak as the founder and she has taken on a few venture partners.
 
For example, she has brought on a design partner who really helps portfolio companies out with product because with a lot of the stuff she looks at the thesis is around smart data analytics and decentralization.
  • This means there is a lot of technology in these companies so they need help in figuring out product and user interface, and this is why Jalak hired a design partner.
Jalak also has a great advisory board, including Naveen Selvadurai (who was one of the founders of Foursquare) and Deborah Estrin who is a professor of Computer Science at the new Cornell campus and focuses on mobile health (which is a very interesting area).
Table of Contents (Full Notes) - 14 min read 

*You can use the table of contents links below to jump to that section only on laptop and desktop.*
Top Show Links

People Companies  Miscellaneous
Women In Venture Capital
Jalak sees a lot more women in venture at junior levels than she used to, but there was just a Babson study that said the actual number of senior women in the industry has gone down with 10% in 1999 to 6% now.
  • She isn’t sure why women in senior positions in VC has declined.
Venture in general has drop off between junior positions and who eventually gets promoted up to partner.
 
Regardless of gender there is a lot of drop off in venture where associates may leave and go get some operational experience and realize they really like being operators and never come back.
 
A career in venture is not as glamorous as people tend to think it is.
  • It really requires a lot of resilience and loving all of it.
Jalak spent three years on Wall Street so she is very familiar with these male dominated strong culture environments.
 
A lot of stuff that came up during the Ellen Pao trial does happen.
 
Hopefully things are changing, and the trial was great in terms of shining a light on some of these more subtle biases, and most of the time they are not malicious.
 
Yes, it does because a lot of the deal making and networking happens out of the office. It is really key to building those relationships for a long career in venture.

Jalak loves seeing women come in to the industry because women make great investors.
Ellen Pao And Diversity
People keep asking Jalak about her reaction to the Ellen Pao verdict.
  • The lawsuit was filed three years ago so it has been out there for a while.
Jalak was in San Francisco during the trial, and everyone was talking about it, but in contrast to that in New York a lot of people were not even aware it was going on.
 
She wasn’t surprised by the verdict. It is a very hard distinction to make.
 
If you look at what the jury was being tasked with, it is hard to directly link the discrimination to the lack of promotion, etc.
  • This is especially true for an industry like VC where there is not a lot of documentation.
What did surprise Jalak was the amount of attention being paid to it.
 
A lot of things have happened in the market since the lawsuit was first filed that make people pay more attention to diversity.
 
Jalak didn’t know enough to know if Ellen deserved to win or not because she never worked at that firm.
 
The key here is that it is not just one event that happens.
  • Women who are at a certain part in their career in a male dominated world have most likely encountered many of these different situations.
  • Some of these on their own are a big deal, but some of them aren’t.
The issue is when there is enough of them where you realize there is a culture here that is not the most welcoming for other folks (women, people who didn’t go to certain schools, people with accents, etc.)
 
This is one of the areas where Jalak’s fund adds value is that she has done business in many different companies, and invested in a broad range of diverse people.
  • Jalak didn’t speak English when she moved to this country at age 5, and grew up in an area where there wasn’t much diversity.
  • When you come from that background of experiencing it you are much more sensitive to it.
On Starting Out In VC
A junior position in a VC firm is usually an analyst or associate, and can be pre-mba or just post-mba.
  • They are responsible for sourcing deals and doing diligence on deals. It really varies by the firm in terms of how much decision-making or input they have.
Not a lot of venture firms have the role of Chief of Staff (which is what Ellen Pao was at Kleiner Perkins), so Jalak can’t speak exactly to what Ellen did there.
 
Jalak started off in venture capital in 1999 at Intel Capital and Andy Grove had a Chief of Staff that was a very senior person in the company.
  • Jalak did not start out as an Associate. She started there as a Strategic Investment Manager and was responsible for sourcing all the way through sitting on boards.
  • It was very much in line with the responsibilities of a partner.
Intel isn’t set up that way as far as starting as an associate because what they were doing at the time was taking people with experience, people who can interact with their business units, and external investors.
On Being A Venture Capitalist
Jalak is running her own fund, and what this means is she is an entrepreneur.
 
She is spending just as much time working as the entrepreneurs she invests in.
  • In a lot of ways she feels more aligned with the entrepreneurs than ever before because of this. 
VC’s have to fundraise and have LP’s and investors they have to send updates to, along with quarterly and yearly financial audits.
 
There are a lot of similarities of running a fund and running a company.
  • You are running a company.
You have to do deals, manage the investments, and manage your time appropriately.
  • This means knowing when you have to spend time with certain entrepreneurs, and that is where it becomes a real people business.
On Picking Companies To Invest In
Picking companies to invest in is a combination of the person and their vision.
 
Markets are moving so quickly now, and there are so many competitors in any space popping up.
 
One of the things Jalak really looks for is someone who is very passionate about their idea, the ideas ability to change the world, their ability to sell other people on that quickly, and the idea has to be compelling enough.
 
Jalak spends time with her portfolio companies and is constantly thinking about them.
  • She wants to be passionate about what her portfolio companies are doing, and that is how she can be most helpful.
Jalak gets hundreds of proposals each year, and she really looks at how can she and her fund help the entrepreneur.
 
Jalak is out there selling the company with potential partners or later stage investors and she wants to believe in that company just as much as the entrepreneur does.
A Founder Jalak Knew She Had To Invest In
Jalak has had this happen to her several times where she met with a founder and within one minute knew she wanted to invest.
  • One of those founders Jason is very familiar with is Bill Barhydt of Abra (which Jason also invested in).
Abra just launched at the Launch Festival (and won the “Best Overall Company” at it).
 
They did a round about 9 months ago, and Jalak met Bill while he was raising that round.
 
Abra is using the blockchain (the Bitcoin infrastructure) to create a network of tellers around the world that are connected by smartphones.
  • Kind of like an Uber for remittance and cash transfer across borders.
Jalak has spent a lot of time in the emerging markets, and specifically Kenya (she was more in Nairobi).
  • She also has another similar portfolio company in the emerging markets called BitPesa.
Bill is a very experienced entrepreneur in the cross border remittance/cash transfer space.
 
When Jalak first heard about Bitcoin she immediately thought of M-Pesa, which is the mobile money system in Kenya, which the majority of their GDP goes through.
 
She thought Bitcoin  and the blockchain infrastructure could be the M-Pesa for the rest of the world where there are no real boundaries , and you can do these transactions on your phone with lower fees than if you were going through all these intermediaries.
 
Jalak thought that Bill and Abra represented some of the real potential for what this new infrastructure could be.
  • You then combine his passion for it, as he spent a lot of time learning about Bitcoin and thinking about it in a really smart way about how you work with the current infrastructure, and how does it build over time.
He also has a lot of experience as a “grown up founder”.
 
This is a big vision, and knowing that someone knows the space and has been working in it for a while made a difference.
On M-Pesa
  • Jason mentioned that from his understanding of M-Pesa it is (in Kenya) you buy minutes for you phone, and the minutes for your phone somehow equal currency.
  • People don’t have bank accounts, but they have minutes on their phone that they can trade to do commerce.
  • There are people who then buy and sell minutes using cash that are like virtual ATMs. 
It’s not just minutes, but they can use their mobile phone account to buy M-Pesa (the digital currency), which they can then send to other people who can redeem it and get cash at these kiosks.
  • If you travel to Kenya you see these green M-Pesa kiosks everywhere.
M-Pesa first started in 2004.
 
When Jalak was there 5 years ago learning how it worked, they couldn’t believe that we didn’t have it in America.
 
It is hard to replicate what M-Pesa is to Kenya because it is a joint venture between the State, Safaricom (which is essentially a telecom monopoly), and a bank there.
 
One downside is when the system goes down it halts the economy (which happened a few weeks ago).
  • Jason mentioned that it is scary when you think about the Mt. Gox implosion, which could lead to a “run on the banks” in a sense.
On Common Entrepreneurial Mistakes
Jalak sees often from pitch all the way through as the company grows that you need to be aware of the competitive landscape, and where the potential competition can come from.
  • This is not just the obvious ones with competitors who are directly in your market, but rather understanding a more holistic view of the market.
If they are doing their job, this is where advisory boards and investors should be alerting entrepreneurs about a broader view about the market.
  • Jason mentioned that getting out in to the real world helps, and sometimes we find they lock themselves in an office and go down the feature death march. 
Jalak does not think this whole idea of working 24/7 is healthy for the individual or the business
  • Jason always tells his entrepreneurs to get out in the real world.
On How To Get Jalak's Attention As An Entrepreneur Without A Warm Intro
Jalak does take cold intro’s, which often come in through LinkedIn or someone gets her email address somehow (which also shows some initiative).
 
Jalak’s point of view in terms of what she is interested in looking at and what she is excited about is pretty public.
  • The entrepreneurs that she responds to are the ones who make a link back to what her thesis is or what she has written about in the past on the subject, and show how their company is addressing it.
Sometimes a link is tenuous and she can pick that up, and other times it is a stronger fit.
 
She responds to people who have done their research.
  • Jason mentioned that Chris Sacca sent an email out with a quote, “If I could just have 30 minutes of your time to explain my idea.” 
If VC’s accepted that 30 minutes from everybody who asks for just a little bit of time then they would never sleep. They would be triple booked.
 
Jalak’s day is spent with back-to-back meetings all day except for Friday’s where she tries to not schedule meetings.
  • Asking for this time shows a lack of understanding for what this person does all day.
This goes the same for asking for 5 minutes or “I will take you to coffee and pick your brain”.
  • Jalak would love to accept more of these, but it is just not possible.
Jason said the better approach is to actually understand and target who you are pitching and show you know about them by reading their blogs, etc. This is a much better approach.
  • A lot of VC’s will actually tell you on their twitter feeds how to approach them and what works for them.
  • To not actually do your research shows a level of cluelessness that will preclude someone from investing in you because if they invest in you and you start doing that to clients they are going to laugh you out of the room. 
Yes, the approach to getting VC is the same approach they will use with potential customers or employees.
On Getting A Job As An Associate VC
If you are going to add value to VC you need to have a point of view around thesis areas or companies that you find interesting that you would potentially bring to the VC, or even companies already in their portfolio that you are particularly excited about.
 
When Jalak is hiring she will ask what companies in the current portfolio do you think are the most interesting or the most questionable and why?
  • The idea is to find out what the thought process is of this person who wants to pick and source companies.
The other advice is to be persistent. There are certain larger VC’s that have associate programs, and they will list those.
  • Get to know as many people on their team as you can over time. Try to add value before you even have a job their.
  • Send them companies you find interesting.
 
If you send a really great company to Jalak you are going to catch her attention.
  • Jason said you should also develop an expertise on a certain topic. 
You also need to ability to learn new areas. Adding value is also coming up with new areas of expertise and showing you have the ability to do that.
On Board Of Director Diversity
It is very important to have diversity on boards.
 
We have seen so many scandals get swept under the rug because we have this network that is very chummy with each other and they really fail on the governance side of what a Board is supposed to do, which is to hold management accountable for things.
 
There are tons of women who have the ability right now to serve on Boards, they are just not being asked.
  • This idea of them needing training to be on Boards is not the problem.
Jalak is seeing more and more companies take on independent directors earlier in their evolution, which is also a great way to add diversity.
On Jalak's Blog, Traveling, And Global Change
Jalak has a blog that she has been writing in for several years (The Barefoot VC).
 
The name for the blog came from the adventurous traveling she has done like hitch hiking through Burma by herself in 2007 right when the protests were starting, hiking the Himalayas, and going to the Congo and a lot of other places in an around the world trip she was doing.
  • Even though some of these places are somewhat dangerous it is important to get out there.
  • The media reports one thing, and the reality is on the ground is usually much different.
Another reason for the name of her blog is the best VC’s are close to the ground.
  • They aren’t just sitting day in and day out in a nice office taking pitches, but rather are out in the real world experiencing what everyone else is experiencing.
  • This is how you spot trends and stay ahead of things.
A few years ago the Aspen Institute asked Jalak to be on a delegation when the King of Jordan was opening up an incubator space (Oasis 500), and she was amazed that they had 50% women in the incubator.
  • The perception we get sitting in the US is that these places are not great for women’s rights (which is true for some places), but here you have a country in the middle of all that and their ratios are better than what we see here in the US.
India is really hot right now from a startup and tech perspective, and so many of these companies are founded by women.
  • This is in a country where you still have child brides in the rural areas.
Engaging and showing support where you can to further that change matters.
On Jalak's Fund - Future Perfect Ventures
Jalak started her fund Future Perfect Ventures about one year ago. They have 15 portfolio companies and invests up to $500K.
  • She likes to lead rounds when she can.
She invested in former Launch Festival company, Open Garden.
  • They created this wireless mesh network technology so you don’t need access to the Internet because phones connect to each other in a sort of daisy chain via Wi-Fi and Bluetooth (without having to pair it like Bluetooth normally).
The firm is Jalak as the founder and she has taken on a few venture partners.
  • For example, she has brought on a design partner who really helps portfolio companies out with product because with a lot of the stuff she looks at the thesis is around smart data analytics and decentralization.
  • This means there is a lot of technology in these companies so they need help in figuring out product and user interface, and this is why Jalak hired a design partner.
Jalak also has a great advisory board, including Naveen Selvadurai (who was one of the founders of Foursquare) and Deborah Estrin who is a professor of Computer Science at the new Cornell campus and focuses on mobile health (which is a very interesting area).
 
Another company in their portfolio that she finds very interesting is BitPesa.
  • They are creating a Bitcoin network in Africa for remittances. BitPesa can do this for about 1/3rd the fees of Western Union.
  • This can also be used for paying employees.
Jalak is also very excited about a portfolio company called Fuse Machines.
 
They are based in New York, and have built an artificial intelligence natural language platform for customer service automation.
  • It is a next generation of what call centers do, and can empower call center folks with better and searchable information at their fingertips, or can interface directly with customers on an AI basis and know when to switch over to human interactions.
Jalak is also an investor in The Muse.
  • Kathryn Minshew (CEO/Cofounder) is great and is one of those entrepreneurs that Jalak loved her persistence, vision, and willingness and wanting to learn.
  • What she has learned over the last three years, and how she incorporates feedback would be great if all entrepreneurs did.
On Mobile Health
The Apple health kit is aggregating a lot of our data in terms of stacks and they are opening up an API where other companies can build on that data and integrate in to it.
 
We are seeing more and more people collecting their own information. They are empowering themselves with that data, instead of that data residing at the hospital or doctors office.
  • What we need to do is not only collect that data, but also analyze it.
The person shouldn’t have to do this, but rather companies will come up that are using this data in a very personalized way for this person.
  • It is going to empower people to live healthier lives.
We can take a lot of the costs out of the healthcare system.
 
Right now we are so reactive. We can move medicine and care to a much more preventive model, which is better for individuals and the industry.
On Globalization
Part of the thesis of Jalak’s fund is using her global network she has built up over time.
 
A global network is much more valuable to startups than it used to be.
  • It used to be that they got one market and then would go to other markets.
The emerging markets are in a pure growth mode across the board (multinational companies, freelancers, etc.)
 
There is this whole idea of this freelance economy and all these services like Postmates, etc.
  • They have to figure out how to maximize the human capital they are utilizing. They aren’t quite there yet because there is a lot of churn. 
We just have to start thinking about work and the way people work very differently.
 
Jalak has a lot of friends in the urban planning world and they talk about this a lot.
 
There is one group of folks who think we will become more urban societies globally, and another that thinks because of the Internet and being able to work remotely we will start to see a more spreading out.
 
Jalak prefers living in a city, and believes there are so many benefits to living in a city.
 
The proximity and having the ability to be face-to-face has been a huge factor in the startup world, and she does not believe that this is going to go away.
 
Jalak spends a lot of time in India, and if you look at a city like Mumbai it is booming. People are still moving in to the cities.