Venture capitalist and principal at Highland Capital Partners Alex Taussig presented a talk titled “Entrepreneurship from the Trenches: 10 Things Every Hacker Should Know About Venture Capital” in Jones Hall on Thursday afternoon.
In the lecture, Taussig explained that venture capitalists are looking for ambitious entrepreneurs who can change the world, not just make incremental improvements. There are several traits, he noted, that all venture capitalists value in potential investments.
“You can make a lot more money solving big problems,” Taussig said. “And the most fun you have is when someone is doing something really disruptive to way the world currently works.”
According to Taussig, the most important traits for entrepreneurial teams are “hunger” and relevancy. Most entrepreneurial teams include two or three people in their mid- to late-20s, he added.
“You need to have a fascination with a certain type of problem that just bothers you to no end and that you need to solve,” Taussig said. “You also need a level of compassion and empathy that make you think like your customer, so you can design a product they will want to use.”
As an example, Taussig discussed the founder of RentJuice, one of the companies supported by Highland Capital Partners.
A former teacher in Atlanta’s public schools, RentJuice’s founder was frustrated that teachers’ carefully written class plans were filed away at the end of the year and rarely reused. His company created a system for these teachers to share and reuse their class plans.
Its founder is especially hungry, Taussig said, because he is personally invested in his idea.
Taussig also stressed that Highlands Capital was comfortable working with young entrepreneurs as long as they had relevant knowledge. Of the 230–240 businesses in which Highlands Capital has invested, he said, a number were founded by recent college graduates.
“Matt Lauzon finished Babson on a Friday and started Gemvara the next Monday, downstairs in our offices, when he was 22,” Taussig said of one of the entrepreneurs.
Most importantly, Taussig said, the product on which a team works must be a necessity, not just an improvement to consumers' lives.
“We want your product to be a pain killer, not a vitamin,” Taussig said. “It should be an ‘I need this thing,’ not just something people would like to have.”
He added that the presentation of an idea is crucial, because few ideas are completely new, and that prototypes are particularly useful in engaging investors’ attention.
Looking ahead, two crucial arenas of development are robotics and education, areas in which, Taussig said, the products are particularly exciting. His company is currently working with Rodney Brooks, he explained, who created Roomba.
Taussig also warned potential entrepreneurs that many venture-capitalist firms are now low on funding and that they should be cautious in deciding with whom to partner. Since the dot-com bubble burst in the early 2000s, he said, many venture capital firms have generated little money.
Ultimately, however, he advised the audience to be resilient in pursuing their ventures.
“Founding a startup is the hardest thing in the world — really tough decisions must be made and you must have an unbelievable amount of faith in yourself,” Taussig added. “For all the times you think are fun, there are just as many when you want to kill yourself, and it’s inspiring to watch people who don’t let anything get them down.”
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