Saad Khan, venture capitalist and
thought leader in the fields of technology, design and media, spoke
recently at Startup Weekend Alexandria about why he believes
entrepreneurs are “the new asset class.” He invests in people, not
companies, he said, because, “the ideas can change- it’s the people
that matter.” Khan also explained that the best entrepreneurs
all possess three distinctive traits:
1. They rewrite the rules. Imagine that someone is beating you in chess, but you reframe the rules of the game so that you’re now playing checkers- this is the kind of flexible thinking that entrepreneurs use in innovation and competition. As an example, Saad mentioned Rich Skrenta, who created Blekko, a search engine that uses slash tags to facilitate topic-based search (Saad is an investor). Rich is credited with writing and releasing the first computer virus, which he did because he wanted to create the maximum amount of impact using the least effort.
2. They never say die. Saad gave the example of Tim Westergren, who founded Pandora over a decade ago. In 2000, Pandora was poised to be the next big thing, but legal battles and bad timing and planning caused Tim to blow his initial $1.5m in funding in no time, leaving him facing financial ruin. At the time, however, Tim believed in his product enough to use his personal credit cards to keep Pandora going. As Pandora’s strategy and product evolved, Tim met over 300 investors over the years who all said ‘no.’ But he persevered. His staff also believed in the product enough that they worked without pay for 3 years! Finally, in 2004, he got a VC to say ‘yes.’ This year, over 10 years after its launch, Pandora reached an IPO of $3 billion.
3. They inspire. Salman Khan (no relation to Saad) was a teenager who wanted to help his friends and family, so he made a few tutorial videos about standard school subjects and shared the videos with them on YouTube. He found that it wasn’t only his friends and family that watched these videos, however- thousands of others did as well. So he began creating more videos and got others to contribute as well. What he ended up inventing was the world’s first open-source virtual school, the Khan Academy. Salman is now Bill Gates’s favourite teacher.
At the end of his speech, Saad was asked whether an entrepreneur should ever quit- surely some reach a point where the only option is to stop? Saad replied by saying that good entrepreneurs fail fast and move forward by changing strategy. In short, great entrepreneurs “don’t quit, they pivot.”
Saad Khan is a Partner at CMEA Capital. He’s a seed and early
stage investor (in Blekko, Pixazza, Jobvite, Lending Club),
passionate about the future of the Internet, a film fanatic
(co-founder of the Film Angels), and an advocate for social