Q&A with Haykin Innovation’s Randy Haykin

Click here for his introduction. Haegwan Kim (HK); You’ve been an entrepreneur for many years before forming your own venture, so what got you started as an entrepreneur at first?

Randy Haykin (RH); Well, I first caught the entrepreneur bug back at Brown University. There was a spinoff company called Sphere Technology, and it came out of the Engineering labs at Brown and was venture funded. I took a couple of years off from school and actually had a chance to work with the start up directly with the CEO and the team. That’s where the first bug got planted. But then I think moving out to the Silicon Valley in 1988; I really loved the Macintosh and loved Apple.

But, I actually went to Apple because I knew if I went there I would be surrounding myself with other entrepreneurs in the Silicon Valley, and some day some of those people would be creating companies. And that’s how it panned out through the people I’ve worked with at Apple and Paramount and Yahoo and many of the other companies, have all gone on to start more companies and so I think that was the root of really getting involved as an entrepreneur.

HK; I noticed that you’re focusing on the topic of creativity. Where does it come from and why do you have an interest in that field?

RH; My dad who grew in the depression era here in America was a highly creative guy and I think it rubbed off on me very early. He was a puppeteer, advertising agency director, amazing cartoonist and a musician. And all those things I experienced early on. I got a myself in a group in Buffalo New York, at the State University Buffalo, called the Creative Problem Solving Institute. Each year every summer they have this conference that 1,500 people from all over the world — teachers, business people, artists — gather to talk about the creative problem solving process. And what happens is people bring their own approach to that and present to others, and it’s like a meet up of sorts. And I was exposed to that in my teenage years and learned a lot about creativity through that. So I think it’s a combination of myself getting involved in creative activities as a teenager and then experiencing that.

HK; I want to ask you about the mentor capital which you are running today. First, what is a mentor capital? And what is your criteria for investing today?

RH; Mentor capital is a cross between angel investing and hands-on “mentoring” of the team or some aspect of the company (marketing, product, business model, etc). I often take a Board role while doing this…so think of it as investor-Board member plus hands-on work with the company. My criteria for Mentor Capital starts with innovation – the first thing I look for is an innovative concept or an innovative team. And by innovative team I mean a founder or a team that thinks out of the box.

So they’re likely to discover something that nobody else has discovered about a new product or a new business model or approach to what they’re doing because they think out of the box. Or if it’s an innovative product I’m looking for the intersection usually between two different worlds. For example, when I first met the guys at Yahoo my recognition there was this could be the merging as the Internet or online space and advertising, because no one’s really brought the advertising model at that point to bear on the web or Internet. So I always look for intersection.

I also look for interesting new business models and in my career historically I have followed a variety of different new models and seemed to latch on early to these models. Examples of this included portals (Yahoo), search (Overture), yellow pages (BigBook), and Reply (lead marketplace). I like to help the companies build the models out and see if we can create a whole new industry or a whole new direction with in a market.

HK; The development of technology is so fast, can I ask about what kinds of abilities are required for start ups?

RH; Being nimble and able to shift quickly with the market or customer needs. For example, one of the things we joke about in my new venture finance class at Berkeley is when you fund a company you look at the business plan right before your fund it and you can kiss it goodbye, because basically two weeks after you fund the company you can almost guarantee something will change in the market or on the team or a new idea will come along and you’ll be off in a different direction. So the ability to change will is one.

I think the other thing is, coming back to this idea of creativity and the creative mind. The creative mind tends to be open to new approaches. So again, we talked before about the intersection idea, the creative entrepreneur is looking for opportunities when they’re meeting with customers. They’re looking for opportunities when they’re talking to their competitors. They’re going to be looking for opportunities when they’re interviewing candidates to work for them who may not even come to work for them, but they’re looking for opportunities and ideas all the time.

Then there’s the team element. I like to see a balanced team. When I see a start up company that is heavy technology but no business element or prior background in starting a company, then I look to help them if I can to bring the business skills in. Because I think the key things needed in an early stage company are the idea or concept leader, so you have someone who understands deeply the market that you’re going after and can build a product to address that need that the person needs.

But the other key thing it needs is knowledge of the steps and stages that a start up goes through so you’re not stumbling through each stage. So if you’ve done it before or you have someone on the team with that maturity to know what comes next. How to contact with investors, how to land the first customer, when to fire someone because it’s just not working out and to not hang onto that person for longer than you should be. All of those things are learned. So I always feel it’s good to have a mature business process person who understands the stages are historically part of that start up.

And then of course there’s an operational element and then the other thing is just someone on the team has to have a good leadership stance so that they can make sure the team is always on track and measuring itself and getting things done, because sometimes if you’ve got a lack of that you’re coming up with lots of great ideas, but there’s no resolution to issues and things aren’t getting done. So I think those are the key elements.

HK; In China, Japan, and many other countries, there are plan to create ‘their’ Silicon Valley; do you think that they will succeed? And how just one part of that world would be highly creative or innovative over other parts of the world? Is there any condition to be so?

RH; Well, I’ve studied several parts of the world, because I’m here in the Silicon Valley, so intuitively I know what the mix is. What we seem to have here is great educational institutions where we’ve got very smart students from around the world coming through the institutions. Then you’ve got everyone says, oh, you have venture capital money, but it’s more than venture capital money, it’s a system and an infrastructure by which new ideas are made and brought to life and given a little money to get started with etc. So you have all the elements in a place like this all set up to match the start up process. Then you also have knowledge, you’ve got knowledge on biotechnology, you’ve got knowledge on chip technology obviously for Silicon Valley and many different areas.

I think it’s quite possible that what we’re seeing today right now is a shift, because of the networking and the Internet we’re seeing a shift to shared or what we call an open innovation. And the idea behind open innovation is that it doesn’t quite occur in any one place, but the person that brings all of it together, he becomes a winner. I think it’s highly likely that China or other parts of the world could be leaders and innovators in certain technologies of certain areas, because they’re funnelling lots of money in and they’re creating these infrastructures that you see here in the Silicon Valley, it’ll take some time to bake, but I think we’re beginning to see that other parts of the world could be emerging.

Here’s a great example, look at all the remote technology that has come out of Norway, Sweden, Denmark, Finland and that whole part of the world, even several mobile game companies and other kinds of things in mobile space are emerging in that part of the world, and you have to ask why. So in a place like Helsinki, Finland, what you see is lots of young people arriving from all over the world and settling there, working there, going to school there, so there’s a mix of ideas and cultural milieu from all round the world coming together.

And, I think that’s what actually caused that little mobile revolution, that plus a couple of universities and the focus on telecommunications by several larger companies. And that was enough to spark some significant things for example, Skype. Skype was a huge innovation that came out of that part of the world.

HK; As my research is on the law of success, could you tell me your definition of success?

RH; Well, I coach a lot of younger people and success is the question that comes up both at school and my own children; I have three girls. Success could be measured first of all in any part of your life. It could be measured in your relationships, it could be measured in your family life, it could be measured in your relationship with God. So, I’ll define success as a broader term here and not just business, but it could be any of those areas. And to me it comes down somewhat of a mathematical equation.

In the classes that I teach Berkeley and in my day to day life I tend to coach a lot of younger people on this area of success. To me it can be measured in a number of different areas; it could be success in your business, it could be success in personal relationships, it could be success family wise or it could be your success in spiritual matters, your relationship with God, for example. So I’m going to look at success about all those areas. I view this entire thing as similar to a mathematical equation.

The equation has a numerator and a denominator. Let’s start with the denominator. The denominator of the equation is the expectation that you set up, so it’s the goals that you set for yourself and it is the vision that you have for these different areas of your life. For example, if I tell myself that my measurement of success in business will be how many people I impact, and I tell myself I want to impact in my day to day business will impact several hundred different people. That’s the expectation I’ve set, that is my denominator.

Now, the numerator is perception – what is my perceived accomplishment? How much do I believe I’ve actually accomplished or got done? So I set the rules up so that my numerator exceeds my denominator and my perception of what I’ve accomplished, if I look at it in a positive term, is greater than the goals that I had set out for myself, then I believe I will feel successful. Again, if the outcome or the perceived outcome is greater than the expectation I set, I will feel successful.

Now, for example, let’s take family, I have a child, and I’ve set goals that are important and lofty and things I want to drive towards but I look for ways that I can measure my outcome in positive terms. And then with each outcome I compare it to what I set out to do and hopefully I have a successful situation when my perceived outcomes with that child are greater than what I had wanted to do. Now, these things are not always this simple obviously, but I think it’s a way of looking at the world and that’s how I view success with that mathematical equation.

HK; Can I ask your advice in a general sense to be successful?

RH; The approach to becoming successful becomes easy, because if you think of it to start with as baby steps, come up with things that are within your control and write them down as these are areas that I’d like to have small successes in. You’re setting your expectations at a level at which you can exceed. If you exceed the expectation level you will feel successful and you’ll be more likely to want to go to the next step and create a bigger goal. So I think if you start with small things that are achievable and then exceed those then you’re rolling along, now you can define success in increments as it goes on.

So I think the advice I would give younger folks who are struggling to find a way of being successful is find a different way to measure success. Set a group of smaller stepping stone goals that you can achieve and feel successful and then move onto the bigger goals. And also of course try to focus on your own personal achievement instead of comparing yourself to others, because I think one of the great diseases of the human race is comparing yourself to others and always feeling like you need to have more. You look at your neighbour and you say, well, he or she has more, I need to work harder and I’m not successful because I don’t have what that person has. So it’s an individual thing, it’s not a group exercise in my opinion. And the best advice is set your goals according to what your heart tells you you’d like to do with your life, not what other people around you are doing.