The Wild World of Wireless According to Tom Huseby, a Well-Connected Seattle VC
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it from the bottom up, you had to guess what they were going to need way, way, way ahead of time, be patient enough to work towards that, and you had to make sure they were more afraid to not buy stuff from you than to buy stuff from you. You could work that by making the product really attractive and lowering the fear factor.”
After 17 years at Raychem, he came to work in Tacoma, WA, in 1991 to run a TV antenna company, which became a digital microwave-radio company, Innova. Three years later, he got together with Doug Reudink, a wireless inventor from Bell Labs, to start Metawave Communications, a successful company that made smart antennas and cellular infrastructure.
It was from there that Huseby decided to try his hand at venture capital, in 1997. The established VC firms Sevin Rosen, Oak Ventures, and Venrock Associates helped him start SeaPoint Ventures, originally in Bellevue, WA (now in Seattle). Why did he make the switch? “I think I’m better spread too thin than too thick,” he says. “I’d gotten to observe, sort of late in my career, what VCs did. I got fairly good at predicting what they’d do. I thought I’d be good at it, but I didn’t know.”
Among the companies he’s started in the last few years are Bellevue-based SnapIn, Seattle-based Zumobi and Ontela, and Mojix in Los Angeles. The latter is a bit of a departure from mobile consumer applications: Mojix makes radio-frequency identification readers that can read passive RFID tags from 600 feet away, for tracking assets and products in warehouses and assembly plants, using smart-antenna post-processing.
We talked about a lot of other intriguing technology ideas, but here are some business observations from Huseby that I found enlightening:
—On what makes a good VC: “It really does help to be smart… but if you’re really smart, looking at countless deals, a lot of people fall into how to decide not to invest. The real trick is to find out why you should invest… You can’t succeed without being focused in this business. I look at 300 or 400 wireless deals a year. Oh my God — an incredible number of people pitch me deals around that space, so after a while you know one when you see it.” Huseby says he stays away from medical, enterprise software, and real-estate deals.
—On how he likes to do financing deals: “Seattle is really collegial compared to the Bay Area. Up here, if I want to do a wireless deal, I love investing with Ignition. After a while, it’s like dancing with someone, who knows all your moves, you know all theirs. They’re quite predictable and they’re a big help.” Huseby says he also got involved with Frazier Technology Ventures to invest in SnapIn.
—On what makes a wireless deal attractive: “There are no secrets. I am most focused on the value of an idea. I am more willing to go much further for a good idea than most VCs are. If somebody comes at me with a good idea, and they’re not the CEO or CTO or anything, as long as they’re willing to commit their energy and effort to it, I’ll say “OK, what else do we need?”—if it’s a really good idea. A lot of the stuff I do, I know there’s a need for the company. Like I knew with SnapIn—oh my God, mitigating calls to help [customer support], that’s a non-scaleable expense. Every time they add a million subscriptions in a wireless carrier, they open up a call center somewhere in the world. So I’ll go through a lot of trouble to follow up on a good idea.”
—On the importance of a strong management team: “I’m not enamored with management teams that have done it before, so now they’re going to do it again… There’s a lot of that in our field. Just because it worked once doesn’t mean it’ll work again. So I get leery of the management team, because they may have had a perfect idea in the first one, and that doesn’t mean they’ll come up with a perfect idea in the second one… I really believe that good management makes a difference between a painful, long, miserable slog and something more like a marathon. With good management, you can run a marathon. With bad management, it’s like trying to run a marathon through a swamp. So you’ve got to get really good people on board, but I don’t have to have really good people when I start. I do have to have willingness to go get the really good people.”
—On working with startups: “I can’t work with anyone that thinks my idea is what they have to do. And I really can’t work with anyone who won’t listen to another idea. So I really want to see if I can have conversations with the management team. I want people whose focus is on the success of the company first.”
—On mobile and wireless exits: “I like deals where I can imagine the exit. At times it’s unexpected, but I always had an idea of what it would be sold for and why, and what we had to do to get there… Selling to a wireless carrier is the Holy Grail for most startups… In order to get through the castle walls you have to give a carrier an almost but not quite unbelievable value proposition. You have to make it so valuable for them to look at it that you can get through the guards… Will customers like this? They really worry about the consumer.”