Part 3 of 3.
My guest for this week’s episode is Kittu Kolluri, Founder and Managing Director of Neotribe Ventures, an early- and growth-stage venture capital firm investing in companies that solve hard technical problems and disrupt non-traditional industry sectors.
Neotribe is led by a team of serial entrepreneurs with a track record of supporting and advising startups from seed round to IPO. As a Silicon Valley veteran with a career spanning three decades, Kittu has had numerous roles before his time at Neotribe Ventures. Some highlights include working as an engineer at Silicon Graphics, co-founding Healtheon/WebMD, being the founder and CEO of Neoteris, and investing in over four dozen successful companies as a general partner at NEA.
Join us for the conclusion to the conversation with Kittu as he discusses working at the VC firm NEA and how his risky initial investment paid off after the company sold for over a billion dollars. His thoughts on sourcing opportunities and the differences between being a leader in a venture and a leader at a company. Kittu also discusses his investment philosophy as well as the values that he instilled in Neotribe Ventures. We also cover the personal and professional struggles that Kittu had to overcome while founding Neotribe. Lastly, Kittu discusses his take on why personal networks are critically important for long-term success.
Please enjoy my conversation with Kittu Kolluri.
Fooled By Randomness by Nassim Taleb https://en.wikipedia.org/wiki/Fooled_by_Randomness
Thinking in Bets by Annie Duke https://www.amazon.com/Thinking-Bets-Making-Smarter-Decisions/dp/0735216355
Go long or go short? A VC reveals when it’s time to sell and how to maximize buyer interest by Kittu Kolluri https://techcrunch.com/2023/02/22/go-long-or-go-short-a-vc-reveals-when-its-time-to-sell-and-how-to-maximize-buyer-interest/
Top VC Firms for Biotechs https://www.excedr.com/blog/top-vc-firms-for-biotech
VC Term Sheets https://www.excedr.com/resources/venture-capital-term-sheets
VC Term Sheet Clauses: A Glossary of Key Terms https://www.excedr.com/resources/vc-term-sheet-clauses-and-terms
What are Your Funding Options https://www.excedr.com/resources/biotech-startup-funding-options
Getting Funding for Lab Research https://www.excedr.com/blog/how-to-get-funding-for-lab-research
Post vs Pre Money Valuations https://www.excedr.com/resources/pre-money-vs-post-money
Marketing and Sales for Startups https://www.excedr.com/blog/marketing-sales-strategies-for-biotechs
What is Capital Outlay? https://www.excedr.com/blog/what-is-capital-outlay
Kittu Kolluri is the Founder and Managing Director of Neotribe Ventures, an early- and growth-stage venture capital firm investing in companies that solve hard technical problems and disrupt non-traditional industry sectors. Neotribe Ventures is a team of serial entrepreneurs with a track record of supporting and advising startups from seed round to IPO. Kittu is a Silicon Valley veteran with a career spanning three decades, and has had numerous roles before his time at Neotribe Ventures. Some of those roles include engineer at Silicon Graphics, co-founding Healtheon/WebMD, being the founder and CEO of Neoteris, and investing in over four dozen successful companies as a general partner at NEA.
Intro - 00:00:01: Welcome to the Biotech Startups Podcast by Excedr. Join us as we speak with first-time founders, serial entrepreneurs, and experienced investors about the challenges and triumphs of running a biotech startup from pre-seed to IPO with your host, Jon Chee. In our last episode, we spoke with Kittu Kolluri about his time at Healtheon/WebMD, his experience at Neoteris, and how he ended up joining NEA and getting into venture capital. If you missed it, be sure to go back and give part two a listen. In part three, we chat with Kittu about his thoughts as a venture capital investor, his experience founding Neotribe Ventures, and his take on why personal networks are critically important.
Jon - 00:00:55: So you join NEA, you're like, okay, I think I can do this. What were some things that surprised you about working in venture capital, having clearly a long track record of being a company operator? What were some things that really stood out to you?
Kittu - 00:01:09: I think one thing that stood out was we talked about influence over control. That was one thing that got accentuated. As a board member, you're not running the company. But you want to influence and provide the entrepreneur with the benefit of your experience. You will never have as much depth in their field as they do, but you have breadth. And so it may or may not be the right advice at the right time, but share it. Let them decide whether they want to use it or not. So influence was a big part of who I became as a board member. I also wanted to be the kind of board member that Danny was to me. Which is I wanted my entrepreneurs to feel like they could be vulnerable with me without running the risk of being judged by me. And so that was another thing that was important to me in shaping me as a venture capitalist, as an investor, and as a partner to that entrepreneur. And in terms of What I got to do there, because of how large of a platform NEA was and is, I was able to foray into multiple new directions. I was part of the tech team, but I got us into InsurTech. We were doing a lot of clean tech. I did quite a bit of clean tech and some fintech. I did early stage. I did growth. I did some seed. So I was able to discover myself as a venture capitalist, if you will. And along the way, venture capital is a business where failure is not only an option, it is a guarantee, right? Some number of investments are not going to work. So if the loss ratio isn't sufficiently high, you're not taking enough risk. Some of the lessons that I learned along the way, one of the things that I liked to do was, like to say, make a series of cheap original mistakes. What I mean by that is, I'd like to invest in companies at an early stage, but writing a modest check and trying to see, okay, what the next card looks like. And I believed in being a bit disciplined. Of course, in a compassionate way, in the sense that if I felt like our original thesis wasn't quite panning out. I would have a conversation with the entrepreneur and say, hey, let's find a venture business. And that's worked for me really well. And honestly, it's worked for the entrepreneurs that I've worked with so well too, because sometimes timing is everything, Jon. I mean, my simple rule of thumb is this, right? You raise money at a seed stage. What's called seed today, it used to be called seed. And the whole point is, I define product market fit as sitting on two legs, proof of value, proof of market. Your first job is to find proof of value. Are there use cases where customers like literally ripping it out of my hands? If you don't achieve proof of value, you have not earned the right to raise a series A. You've achieved proof of value. Now you raise a series A, you've gotten some initial customer traction, and you've got to go out and prove out market. What does that mean? Figuring out a replicable sales model so you can acquire customers in a cost-efficient way around the same use. So that's the use case for the use cases that we talked about. If you don't achieve proof of market, you're not raising series B in all likelihood. So every financing is an opportunity for the entrepreneurs and the boards and the investors to think about, okay, do I go long? Do I go short? And I've written about this, that crunch publisher's article. And so well in advance of that, it's important for the entrepreneurs and the early investors to have a really authentic conversation. Saying, okay, how do we evaluate ourselves? Do we have proof of value? Do we have proof of market? We don't. Let's see how we can package this and find a home for it. Because if you haven't hit proof of value, maybe there'll be somebody who'll say, hey, this technology could work inside of my product, or these people could work there. So that approach has served not only me, well, it served most importantly the entrepreneurs. When I can tell you there are entrepreneurs today that have worked with me that have thanked me for saying, hey, thank you for that advice at that time point, because we would have otherwise gone off and tried to raise CVSB. And even if we had successfully raised it, we would have probably taken it in the short term.
Jon - 00:05:45: And I love hearing that because it's methodical. It's almost like I could see the engineering and operations research coming. It's the formulaic approach.
Kittu - 00:05:53: Yeah, yeah, yeah. That's the engineering.
Jon - 00:05:54: Yeah, that sounds very like engineering mindset.
Kittu - 00:05:58: It's an if-then-else statement.
Jon - 00:06:00: That's exactly it. And I love hearing that because I think exactly what you're saying, like as a board member, you want to be that a little bit of pushback sometimes to kind of like just kick the tires and say, hey, let's do an honest assessment of where things are at right now. And this will help inform our...
Kittu - 00:06:17: That intellectual honesty is very important.
Jon - 00:06:19: Absolutely. And I think probably in 2020 and 2021, that might've gone away a little bit. And now it's like coming back and it's like critically important. And while at NEA, I'm curious, because there's a lot of listeners out here who want to whether start their own venture fund or join a firm like NEA. And going in, this is your first time doing venture capital. This is starting to get into like the differences between being a leader at a venture fund versus a leader at a company. How did you source opportunities? Is the sales motion in a VC firm the same as a sales motion in a company.
Kittu - 00:06:54: No. At a VC firm, you're a partnership. So there's a responsibility on you as a partner to generate deal flow for the firm. It's actually closer to a consulting firm or a legal firm. So partners in those businesses also have a responsibility to bring in business to the front door. And so I had a personal responsibility to generate deal flow and quality deal flow for the firm. Fortunately for me, my IT network helped me a lot because I had a large network in the IT alumni. I was named as one of the IT 50, so the 50 prominent IT alumni across the five ITs then. So that helped me. My personal brand, if you will, helped me within the IT community and then within the larger immigrant community. And then what happens is you do deal flow. You do deals and those deals start to get talked about. One thing feeds upon another. So that's kind of how that works. Whereas, you know, in a corporation, deal flow is not at a personal level. Your top of pipeline is being done through some sort of marketing activities around the product and the company that you're running. Make sense?
Jon - 00:08:15: It absolutely does. And I think breaking those out, like breaking them into two different buckets is a worthwhile exercise. It's like, I love the kind of the comparison to like a law firm or a management or a consulting firm. It's much more like that. And you talked about the partnership model, again, different dynamics than a corporation where you have your C-suite, so on and so forth. Can you talk about what the difference is on the partnership dynamics versus running, being a CEO of a company, being a general partner at a firm like NEA?
Kittu - 00:08:46: In a lot of corporations, decision-making is typically hierarchical. Some one person in the organization is entrusted with the responsibility for making a decision on a particular aspect. There's discussion, but the buck stops with somebody. That's not quite the case in a partnership. In a partnership, it is really a collective decision. And so everyone's voicing their opinion on a deal, and we're voting on the deal. And different firms have different voting mechanisms on how to perfect the art of decision-making. But that's how it worked for us. So that's how a partnership is typically different.
Jon - 00:09:26: And I think that's like incredibly important for those, whether you're a startup raising capital or you're just starting your journey at a venture firm, knowing that there are like actual structural differences to this. Getting consensus with 14 people, very different than two decision makers within whatever, a small business sale or whatever it may be.
Kittu - 00:09:47: I mean, we had at one time, there were 60 plus people in the investment team. Not all of them were general partners, but we had 12 general partners. So you had to get a decision through, meant you had to convince the remaining 11 partners to see the value of the investment.
Jon - 00:10:03: That again is also like a baptism of fire probably where you're gonna like how do i do this
Kittu - 00:10:09: Talking about baptism by fire, I remember I brought in this little company called Weatherbill. And I was leading the seed round in that company. And I wanted to invest $1 million into the company. And boy, I got such pushback. It was almost like, okay, you want to hang yourself? The reception was very lukewarm to Weatherbill from within the partnership. Fortunately for me, one, I was in my honeymoon period. This was circa 2006. I was in my first year still. So people had a certain tolerance. Second, it was a smallish check. It was a $1 million check. The case I made was like, hey, there is an interesting mathematical model because we were taking 30 years of historical weather data and things like that. It was honestly, Weatherbill, which then went on to become the Climate Corporation, was arguably the first big data company before big data became fashionable. Anyway, so Dick Kramlich actually supported that deal. Yeah. And that gave me immediate street cred within the partnership. Yeah. And so I got the deal through. And fast forward to 2013 and Weatherbill got bought by Monsanto for $1.5 billion. That's when, I like to say this, you know, in venture capital, if you make obvious investment that fails, people say, oh, that's bad luck. You make an obvious investment that works, people say, congratulations. You make a non-obvious investment. If you make an obvious investment that fails, people say, I haven't told you not to do it. You make a non-obvious investment that works, you were right.
Jon - 00:11:47: That experience, that investment could have gone a different way. And that could probably scare you, a young partner, from bringing any deal to the partnership. You're like, I'm going to get skewered. And that's really fascinating because I think that this kind of, it's almost, you know, it's kind of like, you don't like, you know, as a startup, you may not know that these kind of discussions or how are we thinking about this and kind of what the dynamics at play and the partnership may be. Because, I can imagine, I can't remember who said it was, like, you got to be contrarian and right, but if you're contrarian and wrong, people will going to be like, I told you. And then, at that point, you're like well, I only want to bring all obvious things now to the table.
Kittu - 00:12:24: And that's being the thesis on which I've built my venture capital carrier. Which is to look for Alpha in on an obvious places. That's the pieces upon which I started in your trip. That was how I built my practice at any year, which is to look for companies of broadway. I called it, you know, investing in breakthrough technologies that stretch the imagination. It was actually a line that one of my LPs and good friends, Jared Fong, gave me. And I said, I'm shamelessly stealing this. That defines who I am as a venture capital and that defines who we are at Neotribe. Because when I started Neotribe, some of my early LPs said, you had assembled a portfolio at NEA that was not only unique in the industry, but it was also very different from other GPs at NEA. And so, like, continue doing what you're doing. And so, that's how I got started. And so, if you look at our portfolio at NEA, it may seem like eclectic mix, but there's a method behind the madness.
Jon - 00:13:30: And as you're evaluating, like, these kind of, like, more unconventional opportunities, like, as you're looking at product, market, and team, how would you rank those in terms of importance? Like, most important to least important before you get conviction to write the check?
Kittu - 00:13:49: I'd say team is very important because that's the least variable as a component. Because you're betting on the team and you're betting on the core competencies that team brings and you're betting on how cohesive they are and things like that. The second one to me is the product and the technology. Because data game is something that you're betting on as a capability. You can take a certain capability and try to find a new market for it. But if you say, oops, I got to build a new capability, that's a restart. That's not a pivot. So team tech market, I guess in that order. The market is important because you want to first check to see, okay, is there a target at the other end of the rope? Are the dogs going to eat the dog food? And now that may not always pan out due to some changing. But dynamics that you have no control about. I mean, I'll tell you, there are businesses that would invest in, say, circa 2001 that died because of COVID. And some that got adversely affected. And they're never the same. And so that's life. And that's what I meant when I said there's a certain amount of failure you're going to have to just be prepared for.
Jon - 00:15:08: Absolutely. And as for NEA, you've assembled this unique portfolio of companies. That you've partnered with. And when did you know it was time for you to branch out on your own and start Neotribe?
Kittu - 00:15:21: I kind of came to this realization that venture as an industry doesn't scale as easily. That is, I came to the realization that you could take a $200 to $400 million fund and you can see your way to 3x, 4x, 5x. There have been instances of 10xs, 15xs on funds of that size. So if you know what you're doing and you do it in a well-thought-out programmatic way, you can replicate access. There'll be some variations here. But if you take that and say, okay, I'm going to try to raise a $3 billion fund. That's a different game altogether. So getting to a 2x there becomes very hard. Starting off with, you know, at Neotribe, we are a small team, small partnership. With the economics we have around the table, we can attract top talent. You can't do that that easily at a very large firm. So those were some of the things that led me to think about. First of all, I tried to be a bit of an instrument of change in the insight and suggested to my team that maybe we should try and raise smaller funds. But NEA had proven mortal. And so that's what led me to starting this. You know, I define entrepreneurship as a passionate rage against the status quo. I'm appreciative of my time at NEA. I learned a lot. I wouldn't be where I am without that experience of 11 years there. But, you know, you're always trying to do something a little better. And this is my small effort.
Jon - 00:16:58: As you mentioned earlier, you and your founding team setting the North Star, the values that you stand for. What is, with your founding team and Neotribe, what are the kind of pillars of value that you guys stand for, mission and focus?
Kittu - 00:17:11: We talk about authenticity, talk about transparency, intellectual honesty, respect, affection. These are all the things that we care about. So we've actually put it up on our website. One, because that's what we believe in. But you also want to be held accountable to those by our key stakeholders. Which is our entrepreneurs and our LPs.
Jon - 00:17:33: And as you kind of like are living these values and what does that mean? Mentioned the stakeholders being the entrepreneurs and the LPs, how does that manifest in terms of your interactions with a company? Let's say, let's start with the company. What is that interaction? What is a Neotribe interaction and involvement with a company who you decided to partner with?
Kittu - 00:17:53: I like to say capital is the least expensive part of what we bring to the table. We're company builders at heart, given our experiences, we empathize with the entrepreneur. You know, the journey of a startup is not a straight line. It's a meandering journey. And I understand, I've been there, done that. I've been through the trials and tribulations of being an entrepreneur. And so I have empathy, I have patience for that. I can tell you a lot of VCs don't have that, don't have that patience because they have never been that. And so I want to create a partnership with an entrepreneur such that that entrepreneur feels like, okay, I can give Kittu a call at any time if I'm not feeling good about something and I'm feeling like vulnerable about something. Because God knows entrepreneurs go through a lot of difficult times, a lot of things not going right. Like, what do I do? Time like this. And so that is what I want to be. And that's what we all pride ourselves in. But at the same time, that pact comes with a certain responsibility. We just to be able to tell the entrepreneur what they need to hear, not what they want to hear in an authentic, nonjudgmental way. You're not a cheerleader. Remember, we talked about trust earlier in the conversation. You have to build a level of trust with the entrepreneur where you can disagree or agree to disagree and have conflict, but there's no attribution agenda. The entrepreneur is like, oh, you're doing this because of that. Or we're not feeling the entrepreneur has got some hidden agenda. So it's all in the open and everyone knows, okay, we're all working towards a common goal.
Jon - 00:19:36: That's music in my ears, I think. It's that healthy disagreement that's important, whether it be your investor, your board member, your co-founding team, and having that healthy ability to disagree, agree to disagree, that fosters these strong teams across the board. The joke I say internally at Excedrs, if you're a musician, you don't want just yes men in your studio. You go to record, you say, everyone listen, and everyone's like, yes, yes, this is amazing. But in actuality, it was not amazing. You don't want to release that. You need someone in the studio to say, yes, That wasn't it. Retake. Let's do a retake. It's incredibly important. And it hurts. Sometimes it hurts to hear it, but it's actually not that good. And not only, you know, partnering with startups and entrepreneurs is part of being a venture capitalist. There's also the element of having to work with LPs and raise the fund. What was your experience raising your first fund from the perspective of a venture capitalist?
Kittu - 00:20:31: Hardest thing that I've ever done. Because when I set out to do this, there were lots of objections that people raised. The world of startups is very different from the world of funds, in the sense that as a venture capitalist, I'm looking for an excuse to say yes. And my experience, and I could be very wrong, is when you walk into a health care office, they're looking for an excuse, they know. It's no unless proven otherwise. For me, when I'm talking to a startup, it is a yes unless you prove me otherwise. So that's kind of my mental approach. I'm looking for an excuse to say yes. So that was kind of what made it hard. And the other thing that makes it hard is, as a startup, all you need to do is convince one, maybe two investors to say yes. To raise a fund, you need to get 9, 10, 11, 12 people to say yes. Because everyone's writing different check sizes. So that makes it a bit hard too. But the thing that was hard, was I had a track record coming out of NEA, but there were questions around, okay, how much of this track record is because of you and your personal brand versus NEA's brand? And so I had to prove to them. And then the other question was, okay, you're trying to execute on this investment model here at Neotribe, but how much of your body of work at NEA mirrored that investment model? So I had to demonstrate that. And how successful was that investment model inside of NEA? And things like that. And then team composition. Oh boy. 2016 was a very hard year for me. Because I lost my mother that year. My wife fell very sick. My son was applying to grad school. My daughter was applying to college. And there was a lot of stress. And I was trying to raise Neotribe.
Jon - 00:22:25: Oh my goodness.
Kittu - 00:22:26: So there were five things that caused an immense amount of stress on me. And, in the spirit of being vulnerable, I am being vulnerable here. And I had to be kind of the rock of Gibraltar. And I did not know. There's a lot of self-doubt, but that I had to overcome. And thankfully I had some phenomenal friends along the way who supported me. And there were several individual investors who were like, we're in for 25K, 50K, 100K, 250K, million. But finally I was able to attract the institutional capital. And the thing that I was fortunate about was also, I had three companies of mine from my near portfolio that all got liquidity events and impressive liquidity events in a very short period of time. Literally managed a matter of three months. And generated 1.2 billion in enterprise value and things like that. And that helped a lot. Because everyone was like, okay, we know you like to do these things that are a little off-Broadway, but does it work?
Jon - 00:23:28: Here you go. The timing was perfect. And I think sometimes it can be kind of, you know, maybe overlooked, but like venture capitalists also have to go fundraise as well. So like, it's a, an element of like, you, you also empathize with a company, not only on the operation side, but it's like, I know what you're going, like fundraising is not fun. When we were doing our original kind of like friends and family, I just remember, I didn't know better. I just went into Wells Fargo with my startup idea and a business plan. I got laughed out.
Kittu - 00:23:56: So, you know, I'd say while fundraising was hard, and I'm sure that a lot of VCs will relate to this comment. I've built some phenomenal friendships along the way within the LP community. And my CEO at Healtheon Micron used to use this line, which has stuck with me forever. You say all business is personal. And I believe that to this day. So there are some phenomenal personal friendships that I've built along this way within the LP community. Because there is the professional part of it, which I take very seriously. When you raise money from a pension fund or an endowment, these are very important funds. And you have a responsibility to generate the right kind of return for them, because these are people's life savings. From an endowment point of view, it could determine whether a project gets funded or doesn't get funded. And so I take that responsibility very seriously. But along the way, it is important. It's important to also cherish and enjoy what you're building and enjoy the partnership with which you're building this. And so I have some LPs that I can literally pick up the phone, call and say, hey, I'm thinking about this. What's your advice for me? And they've been awesome.
Jon - 00:25:13: I couldn't agree more. I think, especially with the businesses personal, I 100% believe in that too. And also just like not losing sight of, you have your eyes on the prize, but just like having a gratefulness and appreciation for the process going along the way and the relationships that you make too. And you're like spot on. Every time I'm thinking about, for those who run funds and the responsibility of making sure the pension is taken care of, and that could be your father, mother, brother, sister, that could be literally everything that they are banking on. And that is a great responsibility.
Kittu - 00:25:48: How do you balance that responsibility with trying to take the right amount of risk? Because in venture capital, 40, 50% loss ratio is the norm. And LPs are saying, hey, if you're not generating, if you're not taking that kind of risk, you're not going to generate the return. They're right. They have all the data in the world to support that. And so how do you balance that is important.
Jon - 00:26:09: It seems really hard. It's like, it seems like it's kind of like threading the needle and also probably fortitude, stomach fortitude, because like, when something doesn't work out, you can kind of like feel like a gut punch.
Kittu - 00:26:20: And there's this wonderful book that I'd highly recommend reading, Jon. It's called Thinking in Bets by the poker player, Annie Duke. And she talks about how success is a function of two things. The quality of your decisions, right? And luck. You don't control luck, but you can control the quality of decisions with the data at hand. And honestly, in venture capital, at that very early stage, you either don't have a whole lot of data or the data is imperfect. But when you do have data, it behooves you to use the data. You can't just say, I'm going to cherry pick this data and not use the data because it doesn't suit my hypothesis. You can't do that. But that's how you make quality decisions. And then once you make the quality decision, thereafter, you try to work hard to influence the outcome. But there's certain things that are not going to go your way because of factors outside of your control. And that's life. You're not going to win every hand in poker.
Jon - 00:27:20: In the hand in poker, too, there are times to fold. Like you don't go all in every single time.
Kittu - 00:27:24: Exactly. So this is what I'm when I talk about going long, going short is what I mean, which is when do you stop? Chasing a sunk cost. I like to say this. Don't chase a sunk cost and give up on the opportunity cost of capital that could otherwise be applied to something else.
Jon - 00:27:43: That insight at Excedr, and we always have this kind of mindset, too, within the company. Where are we going to allocate company resources to this project? You kind of have to take this same thing.
Kittu - 00:27:54: Because you as CEO or leader of a company, you're an investor. You don't know this, but you're an investor. You are allocating precious company resources to various initiatives. And so your CEO might be the person who is responsible for vision, mission, strategy, execution, all of that. But they're also a steward of investor capital and making financial decisions. So I've actually written about this. Entrepreneurs putting on their venture shoes, the best VC shoes. So you have to make those. And how do you evaluate and measure the ROI on each initiative? These are all things that you have to think about.
Jon - 00:28:36: That completely resonates with me. And my co-founder is actually the one that really just drilled it home on this concept of capital allocation and thinking about long and hard. And it is quite painful when you see an experiment or a project doesn't pan out. And that sub-cost that you're talking about, it's just like, oh, maybe we keep going. But-
Kittu - 00:28:57: Can I say something on that? So this is the difference between operators and VCs. And what I mean by that is, and this, in some ways, I think operators have an opportunity to learn from VCs, which is this. A venture capitalist is going to assemble a portfolio. And the reason they're going to assemble a portfolio is because they're going to say, hey, I know that some subset of these initiatives are not going to work, but the ones that are going to work, I'm going to put the wood behind that arrow. And hopefully that will more than make up for the ones that didn't work. The thing about venture is this, right? When something doesn't work, you're only down one X that can. But when something starts to work, it generates multiple times of the capital that you invest. But that kind of thinking doesn't come naturally to operators. What are operators thinking? Like failure is not an option for me. Every initiative I invest in has to work. Cisco is the one company that actually changed that. Back in the 90s, Cisco went on an acquisition spree. I think they acquired like over 100 companies. And a vast majority. But they're not the only ones that are doing that. And they're the ones that are trying to make it work. But boy, the ones that work, like Crescendo, Stratacom, they've just killed it. Nicera. These are airspace. These are all companies that just absolutely added so much value to their market cap. And that's an approach that doesn't come naturally to a lot of leadership teams. A lot of leadership teams in large enterprises are like, oh, shoot, if I do this, my EPS will get diluted. My market cap could take a hit. Blah, blah, blah. Yeah, don't think short term. Think a little long term.
Jon - 00:30:43: Yeah, and also the VC concept of like getting shots on goal, getting as many as you can and learning from that quickly. And we try to employ that.
Kittu - 00:30:51: This guy, Nassim Taleb, wrote a wonderful book called Fooled by Randomness. You may have read that book. He talks about what the hedge fund guys do. They make 10 small investments and usually they go short on 10 companies or so. And but nine of them don't work out, but one of them works out and boom. That's like media fun. And so we don't do shorts in venture capital. We go long. But it's not dissimilar.
Jon - 00:31:19: It's funny because there was one specific aspect within Excedr's history where I learned this, really like internalized it. And it was a weird place I learned it. I decided to talk to my co-founder, but early days when Excedr was just me at a table, I realized me doing sales by myself was not scalable. Like there are only so many like doors you can knock on and phone calls you can make. And then everything else in your company still needs to keep going. So basically what I learned was how to use Google AdWords. And Google AdWords was what taught me exactly what you're describing. You're having constant feedback from Google AdWords. You're either getting a lot of clicks or not getting a lot of clicks. And quickly I was like, oh, I should just not let this one advertising campaign run too long because I put my life savings in this company and it is going into Google's pocket right now. So we need to make a change or outright just turn it off. And that lesson has been seared into me in terms of as we think about sales initiatives, marketing initiatives, it's like, okay, like we've given this ample time to kind of run its course. I think we need to fold. I used to take it personally, but now it's kind of over time, you kind of get the thick skin. It's just like, okay, we can move this resource elsewhere and maybe find somewhere else to reallocate. And I think especially for deep tech and hard tech, these are, these are hard problems that you dedicate a lot of time to and you probably get very attached to it personally.
Kittu - 00:32:49: What you're alluding to is what channels of customer acquisition are working. And so for any business, any entrepreneurs starting out there and they're going down the path of customer acquisition, you want to throw some ions in the fire and say, okay, should I do some marketing? Should I do some lead gen? Should I do Google ads? Should I do Facebook ads? Should I do Instagram ads? And, or should I actually hire a sales team? So depending on your business, there could be multiple tools, multiple arrows in your quiver. And it behooves you to try small, cheap experiments to see, okay, is it working? And if it's not working, kill it. If it starts to work, okay, let's put more behind where that came from.
Jon - 00:33:35: Yeah, that's spot on. And back then, there wasn't much literature on it. And now this is like very well, you can find how to run these A/B tests very much on the internet and such. And I think also the, you know, for folks that are in R&D focused, you know, just thinking about getting shots on goal and as many as possible that way. So you're not just banking on one specific all in eggs in one basket, but to kind of round things out, it sounds like I'm really excited for Neotribe and everything. And thank you for sharing your story thus far.
Kittu - 00:34:06: Thank you, Jon, for having me. And I hope that this has been useful for you and for audience. And I hope that there are some tidbits of knowledge, wisdom, experience that your audience will find useful and happy to chat further with anyone that wants to reach out.
Jon - 00:34:22: And before we head out, where can people find you online and how can they get in touch?
Kittu - 00:34:28: Either on LinkedIn or an email to firstname.lastname@example.org would work also. K-I-T-T-U @neotribe.com.
Jon - 00:34:36: Perfect. Kittu, thanks again. You've been really generous. I hope we get to do this again.
Kittu - 00:34:40: I really enjoyed it, Jon. Thank you.
Outro - 00:34:43: That's all for this episode of the Biotech Startups Podcast. We hope you enjoyed our three-part series with Kittu Kolluri. Be sure to tune into our next series where we chat with Stephanie Sirota, Partner and Chief Business Officer at RTW Investments, a full lifecycle life sciences investment firm dedicated to solving the most challenging unmet patient needs. Stephanie is a seasoned expert and leader in business development, development, strategic partnerships, communications, and investor relations. Prior to joining RTW, she was a director at Valhalla Capital Advisors and worked in the New York and London offices of Lehman Brothers, where she advised on various merger and acquisitions, IPOs, and capital market financing transactions for the firm's global corporate clients. Her deep insights into investment banking, strategic partnerships, and business development, offer founders many lessons to learn from. The Biotech Startups Podcast is produced by Excedr. Don't want to miss an episode? Search for the Biotech Startups Podcast wherever you get your podcasts and click subscribe. Excedr provides research labs with equipment leases on founder-friendly terms to support paths to exceptional outcomes. To learn more, visit our website www.excedr.com. On behalf of the team here at Excedr, thanks for listening. The Biotech Startups podcast provides general insights into the life science sector through the experiences of its guests. The use of information on this podcast or materials linked from the podcast is at the user's own risk. The views expressed by the participants are their own and are not the views of Excedr or sponsors. No reference to any product, service or company in the podcast is an endorsement by Excedr or its guests.