2019 Ernest Kuh Distinguished Lecture

2019 Ernest Kuh Distinguished Lecture


(audience chatter amongst themselves) – Alright, good afternoon. Welcome everyone. Why don’t we get started? Welcome. I’m Tsu-Jae King Liu, Dean of
the College of Engineering. It is my honor to start today’s, to introduce you all to today’s event. This is a distinguished lecture series, The Ernest Kuh Distinguished Lecture. Today is the eighth year
in this annual series. And it’s, it was designed to bring outstanding, preeminent leaders in the tech industry to come to Berkeley to give a presentation. The very first speaker in this series was Andy Grove, co-founder of Intel Corporation. And every year we’ve had a
distinguished, eminent leader from industry come and give us a talk. And today is my pleasure
to be able to share with you that this
tradition has, is continuing with the 2019 Kuh Distinguished
Lecturers, John Georges and Dave Cutrer whom you’ll
speak, whom you’ll hear from very, very soon. Now this lecture series was
made possible by a generous gift from Bettine and Ernest Kuh
who have been tremendous supporters, tremendous citizens of the Berkeley Engineering community. So Professor Ernest Kuh was in the electrical engineering
computer sciences. He was formerly Department Chair. He was Dean of the College of Engineering. And he really was a leader in engineering education
as well as in research. For those of us in electrical
engineering computer sciences, he is well known for his,
Professor Kuh is well known for his contributions in electronic design automation which has enabled the efficient design of
integrated circuits and systems. So today, let me just welcome Bettine Kuh and her family members, so her sons Tony and Ted are here, as
well as her sister Susan. And is there anybody else that we should? Okay, so why don’t we join, please join me in welcoming the Kuh family here. (audience and Tsu-Jae applaud) Thank you so much for your support. So, at this point I’d
like to invite Tony Kuh to come to the stage and
to give a few remarks. – Okay, well thank you Tsu-Jae. Our family would like to welcome you here to the Distinguished Lecture Series. So as Tsu-Jae mentioned, this is the eighth year of the series. My parents wanted to endow
this lecture series, Ernest and Bettine, to essentially provide for an opportunity to have speakers, outstanding, distinguished lecturers from both industry and academia. So one thing about this lecture series. Practically all, most of
the lecturers have been graduates of College of Engineering. So today we are very pleased
to have both John and Dave. They’re gonna lead a discussion
on tech entrepreneurship. So they both got their PhD’s here. And they’ll talk about their careers. So I’m very much looking forward to hear about discussion on
engineering entrepreneurship, innovation, and a discussion on wireless communications and networking. So, I am also an educator, a professor at the University of Hawaii. And then currently I’m serving
as a NSF Program Director. I’m also interested to hear about the impact of some of the big ideas from NSF and how their views on it, on especially AI, also
the human technology frontier and convergent research. So I would also like to say
special thanks to Tsu-Jae and her staff for organizing this event. Thank you all for coming out here today. Special thanks to the students. I know you’re quite busy, but
thank you for coming out here. As a student, sometimes you get quite busy with daily activities, your
classes, homework, exams, and projects, also interweaving with your extracurricular
activities, and social life. So I think this is a great opportunity to see people that have
been a student like you and to see their careers,
experiences, and successes. So thank you again. – Thanks, thank you. (audience applauds) Right, so today’s lecture
is also co-sponsored by the student chapter of
the Electrical Engineering Computer Sciences Honor
Society, Eta Kappa Nu. So let’s give a hand to the students who
have made this possible. (audience and Tsu-Jae applaud) Okay, now I get to tell you a little bit about the lecture and our speakers before they come up and
give a presentation. So this year will set a new
precedent for the Kuh Lecture. For the first time we actually
will have two speakers rather than only one. And it will be not only a
traditional lecture format, but we will also have a, sort of a small panel discussion format. So, following some initial
remarks from our speakers for about 10 minutes, I’m
gonna have an opportunity to ask them some questions. And then we’ll open it up to
questions from the audience. So let me now tell you a little
bit more about our speakers. The most important thing
that you should know is that they are both graduates, PhD graduates of Berkeley Engineering. So we are proud to call them our alums. Should I give the years
that you graduated? No. (faintly speaking) Okay, it’s right there. So John Georges’ PhD in 1994. Both are EECS. That’s why it’s From Cory
Hall to Silicon Valley. And Dave Cutrer who earned his
PhD just a few years later. So their research advisor
was Professor Kam Lau who has already retired
from the EECS Department. But Professor Lau enthusiastically sent me all kinds of information, stories from the time when they
were PhD students here. And some of it I really can’t share. But he did say they were
both talented students, really creative problem solvers who also a lot of fun to work with. And, I’m sure that they
actually have stories to tell about Professor
Lam, yeah, Kam Lau. Alright, but, let me
tell you a little bit. One story that I’m eager
to share and learn more about today with you is how in 1996 John and Dave together with
Professor Lau founded a company called LGC Wireless. This is the last names, their
last, the three letters are from their last names. And this is a telecom
equipment company which was one of the first companies to develop and use active distributed antenna systems for covering, for wireless
communication indoors. That company was actually
successfully acquired or exited through acquisition. And Dave and John went on to co-found another company
together called NextG Networks which pioneered the public
right of way distributed antenna sites for the entire country, for entire wireless industry, sorry. So communications infrastructure
giant, Crown Castle ended up purchasing NextG for $1 billion. So now, they’ve gone on
to additional companies. This is a never ending
thing for them I guess. Dave is now CEO of Kumu Networks which is a company developing technology to improve simultaneous transmission and reception of wireless signals. And John is now currently a partner at QMC Telecom, heading its distributed antenna systems efforts. And he’s a Senior Adviser to the Executive Team at Crown Castle. So please join me in giving them both a
warm welcome to the stage. (audience and Tsu-Jae applaud) – [Dave] Well it’s great
to be back at Berkeley. What’s it been 25 years? – Yep, been away too long. I think I’d like to start by just thanking the Dean, Dean Tsu-Jae, Christine Willand that and her staff that made
everything possible, the Kuh family especially. Thank you so much.
– Thank you. – The students, Professor Kam Lau, our advisor who cannot be here. But it’s truly an honor to be here. And I feel very privileged
to be on this stage and to be back here with such young, bright
minds, some not so young. Sorry Professor Volker. (audience and panelists laugh) – [Man From Audience] Thanks John. – Yeah that’s right. – Professor Volker was
one of the few remaining professors when we were students here and excellent and fantastic teacher and happy to sit in on a class. He was a little too tough,
so I didn’t actually register for the class, so. So, I just sat in, but. – And Connie.
– And Connie as well. We wanna thank Connie. And if I missed anyone, there you go. Thank you Connie. And, so if I missed
anyone we’re, if we missed anyone we’re very sorry,
but we’re just very happy to be here, so. – So we’ve put a few slides together, and hopefully this isn’t too redundant with the chat we’re gonna have, but maybe it’ll motivate the discussion. – [John] So. (audience laughs) – [Dave] John and I were both very fit when we were in graduate school. – We wanna warn people
that if you wanna enter the, that actually isn’t me. I was looking much better
than that actually. (audience applauds) So, but, after one or two
startups you can see a progression to the fine specimens that you
see on the stage here today. It is, I mean, I think one
of the things we wanna point out is that it becomes all
consuming to do a startup. And of course, most people have balance. We, I feel like I don’t
have any balance in my life. So this was, it was
mostly about the startup. So we wanna warn you that
it’s not just death and taxes. So. – Yeah, I mean, you need to
be sure what you want, right. So, I mean, if entrepreneurship is your passion, that’s great. Starting the company is the easy part. It’s the 10 years after that that requires
the commitment, so. – Or in our case, 20 years. – Yeah. Wanna talk about the history? – [John] So, by the way
this is unrehearsed, so we’re just jamming. We didn’t actually, we didn’t rehearse. – [Dave] Which is the right
way to do it anyway, right, so. – So our first company as
Dean Tsu-Jae mentioned, we raised about 90 million in total equity and sold the company for a 170. That was with Professor Kam Lau. He’s the L in LGC. And we’re very grateful to Kam for helping us,
introducing us to investors and helping us and focus
us to start a company. So I think you can get a lot of the professors
here, not just academics. I think they also are fairly
connected with industry. And I would utilize them
as much as possible, not just for academics. – And John, just to build on that. I mean, John and I both came from, I’ll call it modest backgrounds. – Yes, very modest.
– Very modest. And yeah, I mean, obviously
the Berkeley education speaks for itself, but I think all the original investors we met were through connections of
professors, either Kam or… I know Richard Newton. – Professor Newton, the late
Professor Richard Newton. – Yeah, introduced us to a number of VCs. So, the Berkeley pedigree is helpful. – Yes. So after the first
company we learned a lot. We actually, we call that a base hit. The investors did well. We did well, but it was a,
it was basically a base hit. We wouldn’t call it a home run. – But a base hit is good, right. I mean, we started a company
right out of college, and had a good exit. – Yes, and then we decided
to start our second company. That one was we’d call a home run. We raised about a hundred
million and sold it for about 10 times that amount. So everybody did very well,
the employees, the investors. And it was a lot of fun. Currently, I’m at, I’m actually helping to build wireless
infrastructure in Latin America. That’s where QMC is from. I partnered with two
gentlemen from Latin America. And they raised over 200 million in equity and doing essentially
the same thing, towers and building systems
for wireless coverage. They’re about roughly
five to 10 years behind. It’s actually an exciting venture and doing very well
doing the same thing that we did here in the US many years ago, so. – [Dave] So there’s a saying
in Silicon Valley that you start your first company so that your second company is successful. Fortunately both of our
companies were very successful, but I do think and we’ll
talk about this I think with Tsu-Jae, but you learn a lot, right. And I think one of the things
we did well was we applied a lot of our learning
from LGC to NextG, right. I’m currently at Kumu. We’ll talk about that in a minute. I have a slide, yeah. – [John] So just a little bit about QMC. So a tower infrastructure, in-building, and also what’s called small-cells. For those of you that are in the wireless industry, you may notice these very unobtrusive wireless sites that utilize
existing infrastructure. That was what we did
back in 2002 at NextG. We predicted actually that
data was gonna be huge. It wasn’t, back then it was
a very voice centric network. And we said cell sites have to come down, physics, limited spectrum, which means you gotta
shrink the cell size. So, we started to build
what’s called small-cells. And that’s what we’re doing
now at QMC in Latin America in major cities like Sao Paulo, in Brazil, Mexico City, Bogota,
Columbia, and other places. – So I currently run the company in Sunnyvale called Kumu Networks. The, this company the original
technology was developed by a group of students and
professors at Stanford. And it was spun out a number of years ago. And of course, they
needed to hire a Cal grad to run the company, so, go Bears. But, we have a fundamental technology that effectively
allows much better spectrum utilization
whether it’s for 5G or wifi. And the way to think about what we do is on a radio dial you
have a certain number of channels that you can switch between. And they have to be
spaced a certain amount otherwise they interfere with each other. With the Kumu technology
we can pack all of those radio channels much closer together. And we do that by very sophisticated
interference cancellation. And so it has lots of use
cases, enhancing wifi network speeds, mesh networking,
5G type protocols, and generally enhancing
spectral efficiency. And we’re working with,
yeah, big name investors. Cisco and Verizon are two of them. – [John] I think you’re
getting way too technical. You gotta back off a little bit, so. – [Dave] Is that, it’s a
Berkeley engineering crowd. – That’s right. So look, I know there’s some examples. The reason we put this slide up. We know that there is these
examples of Mark Zuckerberg and Bill Gates that didn’t finish college and went on to start $10s
of billions companies. The, we just took a sampling. These are all, we believe stay in school. Sounds like a commercial. (audience and Dave laugh) Stay in school. Stay at Berkeley, because all of the founders
of these companies had at least a bachelor’s
either of engineering or economics or Business
Administration degrees. So we believe that that’s
your best ticket, right. If you look at the data, if
you’re data number crunchers and probability, probability
is by far stay in school. Okay. – Yeah, I mean, as I mentioned
earlier it’s not just the classes you take
and all that, it’s being part of the, a community
of people that can give you connections, and
fundamentally the best thing about an engineering
education is fundamentally what you learn is problem solving, right. And that’s really what
business is about is figuring out how to creatively solve problems. – And the Marvell founder is
responsible for this building. So next slide. So, we wanted to in our view,
people have varying opinions, whether it’s product, but in
our view investors when you go to get seed money,
there’s different stages in a company where you raise seed money from friends and family. Seed money we consider
under a million dollars and to prove a concept. There we believe that when you line up for investors it could be a
product in that early stage. But when you raise larger
money, investors almost always look at the people
first, the market second, and the product last, okay. So they figure that if
I have the right people with the right domain expertise in a big market, they’ll figure out what the product needs to be. There’s been an emergence
of what’s called more on the business school
side of search funds, where they actually pay more MBAs. And I don’t see why engineers
cannot take advantages. I’ll be talking to Christine about that where they give you 100K, and you go into a market and
your write a business plan. And then you’re able
to just basically come up with the product and
come up with the market and the business that you wanna be in. So I think our view is that
it’s people market products. And there’s gotta be something
unique and defensible. It could be a business model. It could be a relationship
that you have, right, with a particular customer that trusts you if you make a particular product. Does, you have to have some sort of an in, some sort of, something unique. It could be a patent. It could be your location,
your geography, where you live, where you decide to do
business, what the product is, if you have execution
capability, or you team up with others that have
execution capability, and, or it could be a financial. It could be a 10X business
model improvement. We typically found that unless
you’re saving 50% off of a typical product that customers are not generally
gonna be interested, ’cause the 50% usually turns to 30%. So, you have to have some sort of an in, something unique that you wanna use to start a company with. It can’t just be an idea. It has to be an idea with
some tangible element in it. And it always goes back to the people, the
market, the products, so. – Can I talk about the square? – Yeah, sorry about that. – That’s alright, as we. John and I have drawn some version of this square many times over the years. But it’s a good reminder
that you need both the market and you need a differentiated
product, right. And so, there are lots of things that are interesting, right, that you could go write a research paper on or something like that. But finding something that’s very unique that also has high
customer value is hard, right. And it’s, but you get paid
for doing hard things, right. So that’s kind of where
the rubber meets the road. John was talking about business
model being number one. When we were talking about our two companies earlier, it’ll, there
multiple differences. But one of the main differences between the two is we
learned that a much better business model than, at least
in the business that we were in, rather than building
a box and selling it to somebody, it’s better
to take a box and own it and then lease the access to it over time and to multiple people. And that generates a much higher cash flow, recurring revenue business. And that was a key metric
to, of building value. – [John] Are you gonna talk about the box? – [Dave] Yeah, well no,
yeah, I thought I did, but… I guess you didn’t like what I said. Yeah, so where you wanna be
is on the high customer value and what the highly
differentiated technology. And you need both, right, because if you have
something that’s not unique, then everybody can do it, right. So, things that are,
things that are important, but easy, it’s, they just get done, right. And things that are unique but of low customer value
nobody cares, right. So you gotta be in the
upper right quadrant. – [John] So this is an eye chart, but we’ll just go through real quick. You really do need the vision thing. You have to have a big
hairy ass goal, a BHAG and a work, and a tremendous work ethic. – [Dave] I thought it
was an audacious goal. – I changed the wording
at the last minute, so. It’s my Queens, New York upbringing. I’m sorry about that. Organized chaos, that’s jamming. You’re not gonna create
a seed funded company. It’s basically organized chaos. If you try to become too organized in the beginning, then
something’s not right. However, if it continues
being organized chaos, then you’re not gonna be able to grow into the first stage of the company. So we call it jamming versus a symphony. A symphony becomes when
the product is more mature. Jamming is what happens
when you start the company. – Startup phase you need
your first customer, right. So, pick a customer. Do everything you can to
make that customer happy. And then you can replicate
that to other customers. Same thing on the business model. If you’re gonna go sell
something to a customer, you have to know what it is that you’re selling. And that often relates to the business model,
how you sell your product, how you price it. – And one of the things we found tough, it’s, and we’ll just go
through this very quickly. But, get the order attitude. And perfection is the enemy of good. As engineers, we actually
have to train ourselves to think like, hey, the
product isn’t perfect. And we had, and when we
hired Berkeley students, we did hire for our first
and second company’s and third company’s, we
had both of our problem was let’s just get this product. They were like no, no,
you cannot go sell that. It’s not right. It’s just not, it’s not perfect, right. So, we, and… I wanted to go sell, one of us had to go sell the, a scratched
up mock-up for the lab. And we actually sold it. We actually carried it in a plastic bag to a customer and sold that first product. And it was far from the products that
are now being used today. Our first company the
products are being used today in many buildings around the world. So perfection is the enemy of good. The new language is
minimum viable product. Whether it’s an app or whether
it’s a product, just try to sell what you’ve got
as quickly as you can, some basic minimum that
you think would add value to the customer. – Yeah, ’cause you may learn from the customer that
what’s really important to do is something you hadn’t
even thought of, right. So getting in the customer’s hands is key. – [John] Right, and then
have regular meetings. I think caden developing
a cadence is important. – [Dave] So, yeah, so we used to have Monday meetings, right. And, a lot of times people
say, well, why do we need to have meetings every Monday or whatever. And I, what I always say is
okay, well if we don’t have anything to talk about it’ll
be a five minute meeting. And it always turns out
to be an hour and a half, because there’s plenty to talk about. – And the first product
you usually sell is all from what you wanted to make. But what you sell is gonna determine the product, not the other way around. So you have to be humble enough
to listen to the customer and say right that hey this
isn’t really what I wanted. I’ll use it, but this is what you. So the first thing you sell
is what people really want, ’cause people are not willing to pay for something they don’t want. We can go on another one. I think we’re going to. So we just wanted to put this in is that you have a starter phase. You have value creation. Of course, you never wanna,
this is IBM in the last. So, you wanna basically
kinda energize the company with the new products and opportunities. One of the things that we found is it’s an
emotional rollercoaster. Being in a startup is an
absolute drain, right, drama filled, emotional rollercoaster. And, the first company it just, for me, it wore me down. I mean, I just got worn down. But now I realized that there were so many opportunities in
those drama filled weeks. So the analytical Berkeley mindset kicked in finally after several years. And I said wait a minute. Every new problem really
is an opportunity. And we found a way to shift it to continue to create value. – Well, and I think
it’s an important point, ’cause when you read
things in the newspaper and magazines about the startups. And they almost kind of
romanticize it, right. We started this company, and
it was wildly successful. And, it’s the dark days
they don’t tell you about, right, the red eye
flights to the east coast and customers telling you
they don’t like doing business with startups and then your,
when your engineers calls and wants to leave, ’cause somebody else
offered them more stock and can bring their dog to
work or something like that. (audience laughs) I’m not making that one up, but. So, those are the things
you have to deal with. I mean, these are the drama filled weeks. – I mean, we had a site. We really did pioneer
these small-cells you see on lampposts with antennas. They’re very well camouflaged. But effectively, one didn’t work. It was an east coast customer. And he forcefully made us get on calls at 5 am Pacific time until
we got the problem fixed. And if you didn’t respond, they
were gonna cancel the order. So, this is the stuff you
have to be prepared for. It’s these up and down
drama filled weeks, so. Wanna go the next slide. So, I just wanna turn
this over to you have to have a way to make money. I understand some of you
may wanna launch an app and make money via ads and all that stuff. But I mean, there’s gotta
be a real definitive way to make money and, or create value. Value, making money does not necessarily equal creating value, okay. In our case, after the first company, as Dave mentioned, we sold equipment. Equipment was valued at two times revenue. Well, that’s a pretty low multiple. So, you should ask yourself
what is the multiple of revenue that your company
is gonna be valued at assuming it’s successful. And we found that the value
creation of lease, of owning the sites, so the second
company we actually owned. We raised more capital,
and we owned the site. And said instead of just selling the site and the equipment on
the site, we leased it. So we signed a 10 year contract which produced $500 a month in rent. That’s called cash flow. Okay, now we didn’t get
to keep all of that. There are costs to maintain the site. So let’s say you keep $300 a month. That’s 3,600. How much is that per year? $3,600 a year. Well, if you have $3,600
a year on one site. And you multiply that by 15,000 sites. And now the multiple instead
of being two times revenue or two times cash flow which is what the equipment business
is, now it’s 20 times. So you can see how you can get to a billion dollars really fast, right. So there has to be a way to create value. How is your company gonna be valued? What multiple of revenue,
multiple of cash flow, is someone gonna value your
company when it’s mature. That’s very important before you start. – Yeah and if that number on
the, yeah, the cash flow times the multipleth, it that’s
a attractive enough number, then it’s easy to get the capital. And in fact, you want the capital, because that allows you
to scale the business and make the overall number much bigger. – Right, go to the next slide. So, we actually started the company NextG at the same time another
competitor did literally. We each raised about 10 million of capital from different VCs in Silicon Valley. 10 years later because of the exceptional engineering talent, most
of the, most of which was from Berkeley and other places. The intense focus of meeting
customer expectations, a strong technically trained sales force. The days of just selling without
understanding the product and just being a pat on
the salesman are over. Okay, I mean, that’s
not gonna work anymore. Our competitor got sold to Crown, the same
company for six million. And after about 100 million and because of we did some things right, I feel like we were very disciplined. At the time, city wifi was coming in. And we saw no money in that. We rejected it. So there’s, you have to make some disciplined
decisions based on your BHAG. This is what I wanted to do. This is what I wanted to stay focused on. Sometimes rejecting is the best thing. You could like rejecting stuff coming in is the best thing that you can do and staying disciplined. Sometimes as engineers, let’s
just try that, let’s just. It’s absolute discipline, almost to the point of boring, okay. And then we created a
company that had a billion in values, so same competitors. We were acquired a year
after they were, so. – [Dave] So we were very focused, and we scaled the
business very efficiently. – [John] I think, maybe we just go through this very quickly. We wanted to differentiate
between the jamming and symphony. Where does the startup phase seed funding? And what’s a growth phase, right? So, yeah. – [Dave] Some of you may have
read the book Zero to One. So the startup phase is about going from nothing to something
which is really hard, right. I mean, you have to have
something of high value. You have to show someone
that it’s high value enough for them to wanna pay you money for it. And then the growth phase is more about thinking that once
you’re at one replicating it to 10 or a hundred or a thousand. And both are important. Both are important. – [John] So this is for
your personal viewing, so. – [Dave] I think that’s it. – [John] Thank you. (audience applauds) – So I got sit in the middle. Wow, okay. – Keep my head out of the… – I’ll just start with
just a couple of questions and then open it up to the audience. So thanks very much for
that plug for education. – Yeah absolutely.
– That’s great. But I’m sure there are a
lot of lessons you learned after you left Cory Hall in the transition to Silicon Valley’s. What are some lessons
that you really don’t, we don’t teach or we shouldn’t teach here in the university that you
learn in the real world? – So one of the big things
is learning to be a leader. So if you have opportunities,
leadership opportunities, be sure to capitalize on them. Learning to run organization. Business and actually life
in general is about people. So, whether it’s customers
or employees, investors, so learning kind of those organizational skills I think is a key thing. – Yeah. Selling and marketing. – John was the sales guy. – You’re saying people
should go get an MBA. – No, I’m saying stick with engineering, but have someone’s
gotta sell your product. I mean, without sales
nothing happens until something is sold, really. It’s just trickle down economics. I mean, as much as you may hate that word. – It’s a ’80s term John. – It’s an ’80s term. Sorry, that’s my generation. But, and also financial
planning, learning how to read a balance sheet. And I’m not saying that’s
being corrected now through the MET Program. We’re learning, we have to learn all that stuff
from the beginning. We didn’t have those opportunities. So financial planning, learning how to read a set of financials,
negotiating a term sheet with a venture capitalist. I think that’s key. – I was joking with John
earlier that I think when we got our first term sheet,
I don’t think I understood half of the things that were in there, because as an entrepreneur
you think well, okay, how much money do I wanna raise and what percentage of my
company do I need to sell. But there’s a lot of other things, how the company’s structured, how the board composition,
the voting rights. I could go on, but… And it’s kind of unfair, ’cause the VCs do this hundreds of times. And here you are right out of school, faced
with this negotiation. So yeah, anything to
prepare for that would be. – And don’t be afraid to pair
up with the evil side of sales and marketing and business side, but because it’s very important. You may give away a
little bit more equity. And don’t be afraid to raise
more money than you need, ’cause cash really is king. That’s key. And sometimes I used to go back and say oh my God, if I
accepted another million, I’m gonna lose this much this, I’m gonna lose point,
1.2% more of the com. Forget that. You need a lot of cash,
’cause there’s gonna be those market crashes and rainy days. So it’s okay to give up some equity. It’s okay to raise more money. It usually sometimes even
50% more than you need. – All companies fail for the same reason. They run out of money. – That’s right, so. – That’s easy to remember. Thanks. (audience and panelists laugh) So I know, I think John you alluded to the opportunity, you
were gonna tell us how your experience with the
first startup helped you with the second startup. – Yeah.
– Maybe you can speak to that. – So, we were, this was, think
this is an older generation, but and I’m not sure they
still behave this way. But they were, they told us,
hey, you guys are engineers, you can’t run the company. You gotta bring in senior management. They just kept feeding that to us. And being from New York, I started to push back a little bit. But we felt as though we had
a good handle on the company. They did bring in, we ran the company for the first couple of
years, LGC Wireless, that is. And then they did bring in senior manager. But then we said to ourselves after that experience, hey
you know, we can really run the next one on our own. And we kinda made that, Dave and I decided we’re gonna
make that table stakes. Founder led companies
generally, they do better. Some cases, they don’t. But, the, where the old
days where they, you say, no you gotta bring in
professional management, ’cause the engineers
were the entrepreneurs, I think those days are, in
my opinion, are almost over. I think founder led companies,
if you have the right selling and business and team around you, and you don’t horde things, right, and you have some humility, to admit that you can’t do
some things, I think you’ll be in a good position to lead the company. – Yeah, I mean things have gotten better. So John and I, we’ve obviously
changed over the years. But, we used to be the bookends, right. So, I would make it. I ran engineering and operations. And John would sell it, right. And I think that was very
effective partnership. Over time, hopefully, I’ve learned some of your salesmanship, but. – Thank you.
– That’s great. (audience laughs) So, as in life, it’s important
to pick the right partners. – Yes. – What were the key
challenges that you faced in your entrepreneurial experiences and how did you overcome them? – So I’ll mention one. We can talk about it. So actually through both
of our companies, we went through both of the crashes,
right, so the dot com crash in 2000 and then the
financial crisis in 2008. And in fact both companies, LGC and NextG. We actually filed S-1 registration
statements to do IPOs. And my wife now jokes
that whenever that happens the, a crash is coming, ’cause that’s what happened both times. And in fact, I don’t
know if you looked back at the NextG prospectus, but most of the banks on that
don’t even exist anymore. It’s Bear Stearns, Lehman Brothers. But oftentimes when that happens there’s silver lining, right. So in an economic downturn,
for example, it’s a great time to build a team, right. You’re not competing
with 10 other companies to hire top talent. And it can be, it could
also focus you, right. So when the financial
crisis happened we… We had to take a hard look at our strategy and our partners, and it really
tested our business model. And obviously it worked out. – Yeah, we rai, we ended up raising money and then selling two years later for a billion which is great. But that’s the emotional
rollercoaster, right. You imagine filing an S-1. Everyone’s excited. You’re about to go public and then boom. Half the banks on your cover are gone. And, I mean, it was a really. – Well, we even had, we
had vendors calling us. Are we gonna get paid next week, right? – Yeah, I mean, we had to call in vendors, because we were gonna be running
out of cash in six months. And we had to call vendors in, negotiate millions of dollars off of the purchase orders that we owed them. We were dealing with union
labor in New York that needed to, they were building our sites for us on the poles in Manhattan. It was a, and at the same time trying to raise money so that we can, ’cause the IPO was gonna be
the way to raise money, right. So this is the, I kinda
laugh at those days, but it was a grind. And I think just learning that there’s, there is another, there’s the other side. So don’t give up. Don’t give in. There’s value, even when
you think it’s really low at the moment, and man
why am I in this thing. And believe me you have those
days everyday, every morning. It can be a grind, and the
grind may last for a while. But there really is value. If you created something that’s earning revenue, there’s value, right. So, I think that stick with it. That’s what I learned. Thanks for asking that question. – Excellent. I’d like to open it now to
questions from the audience and usually we give preference
to the students first. But faculeto are welcome to ask. Please stand up and introduce yourselves. And if you’re a student,
your major and your year. Definitely multiple faculty who
would like to ask questions. Let’s start with. – [Woman In Audience] Thank you very much. – Professor Chang-Hasnain. – [Chang-Hasnain] Thank you
very much John and David for coming by, sharing your experience. This is really wonderful. My question is actually very simple. Out of all your hires,
how many of them are fresh out of school, and what
criteria do you use to choose the people, to hire the people? What are you looking at? Certainly not just GPA, right. So, I’m wondering. – Maybe I’ll go first.
– Yeah. – So, part of your question is percentage. So it’s a lot of things
I’ve had a lot of success with is pairing new grads with
more experienced engineers. So, I don’t know what
percentage I’d put on that. But, it’s 60, 40 maybe,
something like that. And, in terms of criteria,
I mean I always ask the GPA question later, but what I really wanna see is can somebody problem solve,
right and can somebody… Do people understand the fundamentals? So actually, sometimes I interview people, and if you ask them a specific question about how to calculate
signal-to-noise ratio or something, they’re fine. But if you go off of
that, they’re lost, right. And so I like to find people
that really understand the fundamentals and
can apply them broadly. – For me I look for attitude. And if their person is,
whether they’re young or more experienced, it’s
all about being humble. And if it’s a new entrant, and they, they’re, they
don’t mind understanding and learning and that they
have something to learn. And they can be a very mature new grad which can do a lot of great things that an experienced person can. But they have to have the right attitude. And generally, I don’t hire PhDs, ’cause they’re too snobby. I’m just kidding. (audience laughs) I’m just, that’s a joke, that’s a joke. – Spoken like a true PhD. – That’s a joke. No, but really, to me GPA used to matter. It doesn’t matter as much,
and some basic education does. But, I mean, there was a
period at NextG where we hired. They were like military veterans
for to manage the projects out in the field. And they were incredible, right. And we had, so we had
the engineers designing the product on the site. And then we had people that were, that had a very disciplined, 6 am, 6
pm schedules that we needed to be in the field. So, to me, it’s just, it opened up my eyes to a whole new… My next company I wanna 65 and older only. I’m serious. They just come to work, they’re not. Sorry millennials, I love you all, but… Go head.
– Alright. – I’m signing up.
– Okay. (audience and panelists laugh) – Oh my goodness.
– I’m kidding. – Alright, I know Professor Yablonovitch up in the front had a
question, but is it one from a student in the back first? – [Male In Audience] Yeah, thank you for all the information. That was very insightful. I have a question. When you started out, since
one of your defenshears is your tech, how did you keep
your competitive advantage against larger companies
when you didn’t have a lot of funds and resources? How do you get, keep your tech so powerful from the start and not just at the end? – So how do we, I caught, how do we. – [Male In Audience]
Keep the tech competitive from the start when you
didn’t have a lot of funds. – So the question is how to. – How do you maintain your competitive advantage with minimal funds. – [Man In Audience] Against the big boys. – [Man In Audience] Yeah,
tech, on the tech side. – So, I’ll go first, if that’s alright. So, basically, it’s almost
entering like I said something unique that you know there, the big guys are a little
bit too slow to catch up or something that you’re
a little bit ahead. It’s better to be early than late. So we were, and we were very frugal. Dave and I paid ourselves
practically zero. I’m sorry to say we shared
hotel rooms as well. I mean, so… And they were double, two. – I’m a better sleeper than he is. – Or a clarification, two
double beds, just to let. (audience laughs) So, and, I just had to have
some of that foot spray, just. – Alright. – Sorry Dave.
– For you. – Yeah, so but, no really
you have to be very careful with the cash and just
really be a little bit ahead so that the big guys can’t move. Crown Castle is a $60 billion
company that acquired us. They just did not see it coming. So be frugal, right, but now in this day and age, you have to pay your employees better
than you did back then. So the key is being ahead
and sticking with it and making sure you have
the cash to last, right. – So John showed the equation earlier, cash flow time multiple. You need something to work, right. Until you have something
working, it’s hard to reinvest into new things, right. So, yeah, that’s why you have to be frugal till you have
that first thing that works. – Did we answer your question? – Yeah.
– Okay. – Okay, up in the front,
there’s a question. – [Man In Audience] So
it’s a similar question about competing with big companies. So Erickson distributes radio
signals over optical fibers. And so how did you deal
with such a potential big, they could either be a competitor or they could be your customer? So what happened there? Were they just behind you? – Okay, guys are there. Yeah, so that’s the simple answer is… Let’s talk about LGC. So we were first or one
of the first companies. But it’s interesting
you ask that question, because the right engineering
solution would’ve been to partner with someone like an Erickson and integrate our stuff into their stuff. But there’s no way that
was gonna happen, right. So we intentionally designed our system so that it could be
purchased separately, right. So Verizon could buy
something from Erickson inside their base station. And we were a bolt on to that, right. Now, many years later, it all worked out. And now Erickson has an
integrated solution, right, but that was at least 10
years after the fact, yeah. – [Man In Audience] So
you were essentially ahead of Erickson. – Ahead and in the early stage, you have to design your product so that you’re not dependent
on them doing anything, because they have no incentive to. – In our first trade show they
actually came to our booth. – Yeah, they’re looking at the product. – And they’re looking and
said hey, this is great, but it’s a little too little too late. That’s actually what they
told us at the, it was in the Moscone Center which
is our first trade show. – [Male In Audience] Hi
guys, my name is Andy, and senior EECS. I just have a general
question that do you guys have any advices for college
graduates who are interested to start a company like,
any ideas that could help them sort of stay successful
rather than just filling in the next five years. – So any ideas to, on. – [Man In Audience] To stay on track until successfully launch a company. – Okay. – So, first of all you
wanna start a company right out of school, make sure
that’s what you wanna do. We already talked about that. That’s a, it’s a big commitment. The second thing I would say
is make sure you’re focused on a big market, right, because that’s what you need to. There was a question earlier about how do you keep innovating. Well, people are gonna wanna
fund things that are addressing a large, growing market. – Or what’s going to be a big market. So you’re gonna have to
make some bets, right. – [Woman In Audience] I think we have time for one more question. – Okay. – [Man In Audience] Okay, this
is for the, all the audience. So what’s the difference
between the startup industry now and then when you started? What are some of the key
differences and similarities? – Can I?
– Yeah. – So in my current
company, I have a number of I’ll call them millennials. It’s different for me. As my wife teases me that
now I’m the old guy, right. And so, the work culture’s different. As I alluded to earlier, they’ve never been through a downturn. There’s, the job market
is very fierce right now. So it’s harder to build
the team and control costs. But these things also
go in cycles, so, yeah. – The only thing I would add to that, that’s a great
question, there were a lot more series a and seed fund,
seed funds that you can go to to raise initial seed
capital based on a wild idea. And I, a lot of those funds disappeared around the 2008, 2009, 2010. So it’s almost like I see
a lot of business plans now where you, they’re relying on angels, the people
that are willing to put in between 50,000 and $100,000,
sometimes even down to 25. And they collect five or six of these. And then, do you have a
$1/2 million to start just to prove a concept? So I would say it’s almost though the venture capitalists
have become a little spoiled because of the many
successes now that you see in Silicon Valley and San Francisco. So I would say I see, it sounds crazy, but I almost see less access to capital for truly seed level ideas, where you have to go friends and family
or angel investors. – As is, so it’s almost like you need to get further in terms of product and customer validation before
you go raise the VC money, at least from the big funds. – Alright, well thank
you so much John and Dave for sharing your lessons with us. – Thank you. (audience applauds)

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