By Sanjiv Goyal featuring Ashu Garg
What you will learn:
- A secret confession from our guest venture capitalist Ashu Garg
- Investment advice from a futurist
- What to expect from venture capital trends
- Investment criteria to live by
- Innovation predictions for the next 50 years
- The mindset that distinguishes real entrepreneurs
A Futurist and Romantic At Heart
Ashu Garg solved a Rubik’s cube at age 11. I attempted to do the same thing, except my strategy involved taking it apart, That was my confession for this week’s Wednesday episode of Confessions of a Futurist with Sanjiv Goyal. Ashu confessed that he is a sucker for romcoms and cries at the movies. I guess that makes us even.
Ashu is a partner at Foundation Capital and since 2008 he has been fostering entrepreneurship as a venture capitalist. I asked him to tell us where he thinks the future of venture capital is heading and humor me with predictions for innovation trends for the next fifty years.
The Future of Venture Capital
Almost 300 billion dollars were invested in start-up companies in 2020. This year already venture capitalists have invested 35 billion minting 22 unicorns.
This begs the question: Is too much money is going into ventures and into start-ups? Ashu tells us that when you take a broad view of the economy, venture capital makes up less than 1% of all investment asset classes. It appears there is a lot of room to grow. By 2030, VC could be ten times greater than it is today.
This growth is being driven by the role technology is playing in the global economy. Technology, predominantly software, is being integrated into the majority of products and systems. As tech continues to take a greater share of the economy, so will the VC that is funding tech innovation.
Will venture play a role in other areas of innovation, like say the food space? According to Ashu, the venture model works when you can get very high-margin products with a high degree of defensibility for a sustained period of time. This means companies like Impossible Foods are more the exception than the rule.
Predictions for Innovation Through 2070
When I asked Ashu what he can tell us about the future he responded slyly: “The only thing that is certain when we talk about the future is that we will be wrong.” With that caveat in mind, let’s see what else he had to say.
The tech revolution is just beginning. The industry is only fifty years old and the vast majority of innovation has happened in the past twenty. Ashu says we can expect the pace of innovation to accelerate.
We can expect to see large corporations across the board outsourcing mundane and rudimentary tasks to machines, increasing efficiency and freeing up time and resources. “Automation of manual tasks will liberate human beings to focus their energy on things that add value. I think that’s a massive innovation trend.”
Though there are many technologies still in the beta or imperfect phases, things like video conferencing and self-driving cars will be polished over the next decade. Technology will reconfigure every aspect of life as we know it.
“With every wave of innovation going back hundreds of years you will see giants emerge. A hundred years ago it was steel, fifty years ago we saw giant telecom companies emerge, twenty-five years ago it was giant cable companies, and now we are seeing search and cloud companies. The next wave of innovation will create its own giants.”
A Level Playing Field
The internet is turning out to not only be a great tool for connection, but also a great equalizer. It is leveling the playing field in terms of capability and opportunity. It is easier than ever to get an idea off the ground, find a team, build a product, and start a business.
The world is becoming a place where we have increasing freedom associated with where we live and work and how we live and work. We have certainly come a long way from spending the majority of our time and energy on basic survival.
Ashu predicts and I agree the implications of this desire for freedom will drive the following trends:
-cheaper faster travel
-improved collaboration and communication using technology
-more flexible living and real estate environments
The elephant in the room when we speak of the future is climate change. I believe, as does Ashu, that the very technology that created climate change will create the tools we need to solve this global issue. As will the problems of resource constraints.
“I’m an optimist. I think the world is dramatically better than it was a hundred years ago. And I think the world a hundred years from now will be dramatically better for most people than it is today.“
An Entrepreneur’s Mindset
According to Tony Robbins, we all have a core question. This is the question that drives our actions, that we ask ourselves often, daily if not several times a day. It is the question that influences our very identity.
Ashu’s core question: How do I get from good to great? This is a very useful question for several reasons.
First, it assumes that one is already good. Self-confidence is built into it. Self-belief is a vital mindset for any entrepreneur.
Second, it acknowledges where you are and where you want to go; there is a vision built into the question. Another element that entrepreneurs can’t be without, a vision. Without a vision, you will perish.
Third, it acknowledges process and implies there will be a transformative journey, a metamorphosis. It acknowledges the growth, openness, and perhaps sacrifices that it will take to achieve the desired outcome.
A Futurist’s Toolkit
The three pieces of advice Ashu would give his younger self are:
- Focus on your health.
“If I could do my life over I would spend way more time on health and fitness than I did in the last 25 years. Health matters.”
2. Focus on the future.
“Ignore the past. History does repeat itself, but with a twist. Way too many people are bogged down by their own hurt history, their own past, and other people’s pasts.”
3. Take more chances.
There is a line from a television show Ashu saw as a child. “No chance, no dance.” The show was about getting asked to prom, but he says he has never forgotten the power of that line.
“We have to have the willingness to do whatever it takes to succeed without knowing what it will take. If you can quantify what it will take then you can quantify risk- that’s not an entrepreneur… An entrepreneur says I don’t know what it will take, but I will do whatever it takes. “
It’s all or nothing. You are either willing to take the risk or you aren’t. There is a specific sense of resolve and quiet strength that comes from making the internal decision to move forward in the direction of your vision.
That is the je ne sais quoi that Ashu looks for when he is choosing which companies to back. He says his number one criterion for whether or not to invest in a company is whether or not the founder possesses this quality. In order for him to be passionate about an investment, he has to see the intensity of their commitment to do whatever it takes to succeed.
Another great question to ask is: What are you willing to give up to succeed without knowing what you will have to give up? Ashu says it doesn’t matter how much or how little money is already in their bank account, he looks for a hungry leader, one who is willing to do whatever it takes to succeed.
Indeed passion is a livewire without conviction to channel the current. Passion is certainly a prerequisite for entrepreneurship, but without conviction, it isn’t worth much.
