San Francisco, June 10th 2016
Reza is what we can call a determined person. Since he entered HEC and until 2 months ago, he had only worked in Tech companies of the Silicon Valley, participating to many adventures. Some of them had a happy ending, some others didn’t, but Reza never surrendered and kept learning.
He brought his commercial skills, his energy and his curiosity to all the companies he has worked for, allowing him to work closely with engineers and to learn a lot about core technology, the development of a start-up and the Silicon Valley ecosystem.
Two months ago, Reza also became a venture capitalist, leveraging his considerable experience in the Bay Area to help young entrepreneurs. This profile is extremely rare, so don’t miss it.
If you want to learn more about his story, read the extended interview below!
HU: Hi Reza, thank you for welcoming us in your home. We are going to start with our little Chinese portrait. So, if you were… a color?
HU: An animal?
R: An eagle.
HU: A meal?
R: It’s called the Chello-Kabab, it’s a Persian meal that takes me back to my Persian roots.
HU: A song?
R: That’s a complicated one…
HU: Your favorite song, the one you sing in the shower…
R: I don’t think in the shower because I sing really poorly! (laughs) Allumer le feu, the first one that comes to my mind.
HU: A movie?
R: Le Professionnel.
HU: An object?
R: A piece of artwork.
HU: A sport or a game?
HU: A book?
R: L’étranger, from Camus.
HU: A (super)hero?
“VMWare broke the tie between the computer and the OS by allowing you to run multiple operating systems at the same time on the same machine.”
HU: Now, can you try to sum your professional background in just 30 seconds?
R: Until about 2 months ago, I spent all my career in core technology, working at the lower levels of the stack, wether it was infrastructure technology or application technology. I was generally the first non engineer in the company, which means being the first one to the go-to-market. I spent the bulk of my career at a company called VMWare, which was a Stanford research project. I joined the team when there were 10 people, left at 6,500 people and the company now has about 17,000 people.
About 2 months ago I switched careers and became an investor by joining Partech Ventures as a General Partner.
HU: In all the companies you have worked with before becoming an investor, you said you usually were the first non-engineer. What were you bringing to the table?
R: One of the key lessons you learn here is that people don’t buy a technology, they buy a story or an answer to a pain point. You have to be able to transform that technology into a product that solves a real problem for someone. It is called “Product Marketing” and it’s about taking a technology and transforming it into a product that people will actually pay for because it solves a real pain for them. US companies do that pretty well.
So what I would bring is this view of the go-to-market where you don’t really talk about the core of a technology, but about what it does, who it is for and what they get out of it.
HU: What is your best memory from these years working inside Tech companies?
R: It’s hard to pick just one particular moment and it’s the journey that actually makes you. If I look back at VMWare, when I joined the company at 10 people, no one understood the technology, investors didn’t want to invest in the company and when you called someone, they thought you were crazy because they never understood what it was good for.
Then you flash-forward and say that the company was acquired for a lot of money, then went onto the public market and that it has millions of customers in the world. I feel pretty happy about having being able to evangelize that technology and transform it into something that people actually saw value in. Today, even though it’s unknown from the broader audiences, it’s one of the core building pieces of any datacenter out there. It makes me pretty happy.
“I learnt many lessons, including this one: it’s not the best technology that wins but the whole package.”
HU: Let’s try it. Can you try to explain VMWare’s technology to the stupid journalists we are?
R: OK! (laughs) If you think about a computer as a brain, you don’t use most of it and you only use certain components of it. The computer have been designed so that you can only have one Operating System on a computer (Windows, MAC, Linux) and with that Operating System go specific applications.
VMWare broke the tie between the computer and the OS by allowing you to run multiple operating systems at the same time on the same machine. You can now have Windows and Linux together on the same computer without Windows knowing that it is sharing the same computer with Linux and vice-versa. With VMWare, you can use more of your compute power and instead of running the OS on the computer, you run it in something called a virtual machine.
HU: Virtual Machine, like in VMWare… We got it! Have you coped with a difficult choice in your professional life?
R: I have coped with many of them. My very first company failed. I arrived here in September 1995, it shut down in December and I had 30 days to leave the US, because of a visa issue. I actually learnt the resilience of Silicon Valley and I was able to find a new job within 30 days, over the Christmas period. Then I got into another company that went really well and got acquired by Microsoft within a year.
Here, you learn that failure is OK and the challenges are OK as long as you learn things from them. When I interviewed with a new company, the first question they asked is: “What did you learn?” as opposed to say: “Oh, the company was bad, you failed.” They really wanted to bring out from that experience what you could leverage as you moved on in your career.
HU: Why did you want to switch from working inside fast-growing but small companies to being an investor and an advisor?
R: I spent all that time learning from failure and from success. I was able to be part of companies that grew tremendously at a very fast pace but also of companies that did very poorly. I learnt many lessons, including this one: it’s not the best technology that wins but the whole package.
I felt like it was time for me to provide some of that back to other companies and to look at things in a different way. Joining what we call here the “dark side”, the investor side, is a new challenge for me.
HU: Why do you call it the “dark side”?
R: (laughs) It’s just a general joke that people make here. You are no longer building companies, but putting money, being on the board and taking a step back.
HU: Can you tell us more about Partech Ventures? What are you going to do there?
R: Partech Venture is probably the largest transatlantic fund with a unique team and a unique investment thesis. We are split between Berlin, Paris and San Francisco and have multiple funds: a seed fund, a venture fund and a growth fund, allowing us to invest in companies with different stages. We will always do so as one team, whether the company is based in France, in Germany or here, the investment team votes together and helps together.
It’s fairly unique model because most firms that have multiple locations actually operate as different teams and different funds, whereas we have a unique one overall.
The other thing that attracted me to the firm was that the partners all have an operational background. These are not bankers or finance guys, but people who actually built companies before and who can therefore be of assistance to the entrepreneurs. We want to be extremely entrepreneur-friendly to help people as they grow their company and be there not just by giving money, but also help and advice when needed.
“When we moved here, the neighbours nicely welcomed us, we talked to them and we spent time with them, which is not what you would do if you arrived to a brand new apartment in Paris, for example.”
HU: Can you give us an example of a successful investment Partech Ventures made in California?
R: The flagship investment for Partech was Business Objects, which came to California, got settled here, had investment from Partech and went public on NASDAQ before being acquired by SAP, that was at the time the largest business intelligence software company.
More recently, we have invested in SIGFOX, who building the largest Internet of Things network in the world. The company is located in Toulouse but it has grown fairly dramatically and now has operations all over the world.
HU: What makes you happy to go to work every morning in this new job?
R: The fact that I am learning. This is not something I had done before, so I have a lot to learn. I am challenged and I get advice from my partners, this is super interesting to me.
HU: Do you have a typical working day? What are your usual tasks at work?
R: Silicon Valley is a very active ecosystem: one part of my job is to find and source new deals, another part is to help the companies we have already invested in, another one is to network with other investors so that we can work together in a specific area…
It’s a very fluid environment. We have an office in San Francisco, I go there a few times a week but I can also have meeting anywhere around, like in a coffee shop and that’s ok. The Silicon Valley culture is super pragmatic and super flexible: you just do what you need to do.
HU: Talking about the San Francisco bay are now, but not in a professional perspective. Where do you hang out on Sunday afternoons?
R: One of things I love here is that we a re very close to nature. San Francisco is not that big of a city, there is less than a million people and a very good general quality of life with nature all around. You can go biking, hiking or running within a very short distance.
On Sunday I run with my son, that’s our time together.
HU: if you had only 24h left in the San Francisco and the Bay area, what would you do?
R: I would probably take my motorcycle and go up Highway 1, from Santa Cruz all the way to Marine County. It’s along the ocean and you go through Half Moon Bay, you get to San Francisco, you get across the Golden Gate Bridge and then you get into the forest, in Marine County. You can be around the beach when you go to pint point Reyes, which is pretty far out in the water and you can climb up Mount Tapyas, which is one of the highest points in the valley. It’s a pretty nice ride!
HU: What is it for a motorcycle you have?
R: I have a Suzuki 650. Nothing very fancy!
“It became a virtuous circle where people could go to Stanford, get a good job, find investments and closing that circle by donating back to the university, going back to the university or becoming investors themselves.”
HU: What are your favorite places in the city of San Francisco?
R: I like South Park a lot. It’s a mall park by the train station. You are in the middle of the traditional San Francisco and you have this little park that looks European, with little restaurants and cafés around it. It’s a pretty unique place it feels like an oasis of calm in the middle of the whole South of Market area, which is usually pretty noisy.
HU: What do you like about people from the Bay area and from San Francisco?
R: People here are open-minded and welcoming because they all come from very different places and backgrounds. People her might speak multiple languages and they would welcome people who are not from their culture, there is no segregation here.
When we moved here, the neighbours nicely welcomed us, we talked to them and we spent time with them, which is not what you would do if you arrived to a brand new apartment in Paris, for example.
People you meet in a work context are often pretty smart people with rich experiences they are willing to share.
HU: You talked about a “fluid ecosystem” to describe what’s happening in the Silicon Valley. How did it all start?
R: I would put a lot of it on Stanford. When the university was created here, there was nothing around it and all the good universities were on the East Coast. Stanford started by attracting good professors and good students but they still had one problem: people would leave immediately after to go back to the East Coast to find a good job. Stanford decided to buy a lot of land around the university; they built offices and offered people very low rents if they created their companies around here.
The first iconic people who did that were HP. Hewlett & Packard got their first offices on a land that was property of Stanford. Page Mill Road, where their headquarters are located, still belongs to Stanford.
Now you have people coming out of the university, creating companies here, creating jobs here and it started attracting people and then little by little it attracted investors. Intel was one of the first successes. Fairchild Semiconductors was there before but people left, created Intel and then had a pretty large success.
From this point it became a virtuous circle where people could go to the university, get a good job, find investments and closing that circle by donating back to the university, going back to the university or becoming investors themselves. As a result, the majority of venture capitalists and investors here have an entrepreneurial or an executive background. They are not just bankers. They have a better understanding of what it means to build a company, they want to make longer term bets and try to do things that are very disruptive.
“If you want to do something in infrastructure software, most of the research is done here and most of the Labs are here so it makes more sense to be here.”
HU: Is this a paradise for entrepreneurs or are there some risks that need to be taken into account?
R: It’s not a paradise. The nice ecosystem now attracts everyone and entrepreneurs now have a far larger number of competitors. Moreover, this ecosystem is very expensive: finding office space and good people is expensive. It’s a hard place to work in. One of the entrepreneurs I know told me recently: “I am not in the second division anymore, I feel like playing in the Major League.”
It brings the best out of you but at the same time the risk is much higher and you don’t have the safety you can have elsewhere. There is no minimum wage that the government pays you here, or free healthcare; you are on your own. If you start a company and you don’t make money… you don’t make money!
HU: Is the Bay Area facing issues in your opinion?
R: Things have gotten really crazy expensive and it has become very difficult to operate here. The price of real estate is completely out of proportion, the cost of living is very expensive; it seems that San Francisco became more expensive than New York. People may start leaving because they cannot afford to live here anymore.
HU: Would you still advise to young entrepreneurs to come directly to the Silicon Valley or should they wait to get a little bit proven before contemplating coming here?
R: That’s a tricky question and I don’t have a perfect answer because it depends what you do. If you are going to build an e-commerce website, you don’t need to be here. The typical example is BlablaCar, which doesn’t need to come here.
But if you want to do something in infrastructure software, most of the research is done here and most of the Labs are here so it makes more sense to be here.
The important thing for an entrepreneur is to understand what would justify coming here. Is it because of the business development opportunity? Is it the market they are looking for? The engineering talents?
There are many successful examples of companies who never came here, or only partially. Moreover, there are other ecosystems. Israel is well-known for having great start-ups that have kept their R&D there but brought their Sales and Marketing here and many French companies are doing the same, like Criteo: the bulk of the R&D is still in France but they have their headquarters here and they have been able to build a business leader.
“Very little people from my promotion took an entrepreneurial path. I am super excited to see that it is changing and that young HEC are doing it more and more.”
HU: Let’s talk about HEC now. When did you graduate from HEC?
HU: So you arrived on the campus in 1992. What was you favorite place at the time?
R: The K-fet. We just had a brand new K-fet that was built by one of the previous sponsors of the class and it was really nice, with a bar and a huge open space. You could spend a lot of time socializing there.
HU: What is your best memory from HEC?
R: Basically the group work. We completely transformed from being students sitting at a table and listening all the time to a teacher to students working in groups, either it was in school projects or in associations. I did both and it teaches you a lot of good lessons because you have to go and find sponsors, build a budget, organize something at a fairly large scale. This teaches you a lot of lessons you don’t teach in classrooms. Being part of groups and being involved in extra-curricular activities was awesome!
HU: Which associations were you involved in?
R: There was one called “La Nuit de la Pub”, which organized a big event around advertising as a theme once a year. It was very interesting and we were quite proud of our work. And I also participated in the making of the first website of HEC.
HU: Tell us more about it!
R: I did an internship in Silicon Valley. Website were starting here at the time and the school didn’t have a website. We were using emails at all on the campus and one of the things I did with a small group of people interested in computers, called Puscorp, is to work on developing the first HEC website. It was a long time ago…
HU: What would you advise to a young graduate from HEC?
R: To do what they want to do. When I was at HEC, there were many pre-conceived paths you had to follow: big banks, big consulting firms, and big companies. Very little people from my promotion took an entrepreneurial path. I am super excited to see that it is changing and that young HECstranfo are doing it more and more. To them I would say: “You have nothing to lose. Give it a shot. Do what you want.” The options you guys have are not limited to big companies and they are limited to one job, because you can go everywhere you want.
HU: You talked about Stanford, what do you think HEC could learn from Stanford?
R: I think one of the things Stanford developed well is its relationship with the corporate world. It is very easy for students and professors to interact with the corporate world. It starts at a research level: professors at Stanford who do PhD research have to find funding from private sources. That forces them to communicate with the corporates and to think about the real-life applications of the technology they are working on.
Stanford also encourages them to start a company while keeping them. Once the company succeeded or failed, professors and students can come back and finish their studies or research if they want to.
Stanford managed to create those nice virtuous circles thanks to transitions between these two worlds. As a result, some of the largest companies of the Silicon Valley were created that way: a Stanford professor and some students created Sun Microsystems, which used to be a very large computer company. Yahoo! was created by 2 Stanford students. Google was created by 2 Stanford students. VMWare was created by a professor and a couple of students.
All these examples show that HEC could copy Stanford’s flexibility and fluidity.
HU: What is HEC’s reputation here in the Silicon Valley?
R: When I arrived here some 20 years ago, the brand was completely unknown and it is still fairly unknown today but I think it has improved. A) Because HEC has been ranked by a number of well-read international studies. B) Because there are more and more HEC alumni coming here. They have come over time, they have spread their wings and they do well in a lot of companies. It helps promoting the HEC brand.
It’s not as well known as the American institutions, but I think it’s on the right path. I am pleased to see that.
HU: As president of the HEC Alumni USA West Coast chapter, how has the HEC community evolved over the past 20 years here?
R: Until a few years ago, people were usually expatriates that had come to work for larger companies and organizations. But recently, the average age has gone down pretty dramatically, as there are more and more young people coming for an internship and staying.
They are well-spread, like the region, so you can find pockets in this neighbourhood (Palo-Alto), in San Francisco, or on the East Bay! It’s cool to see this variety of profiles, it’s exciting!
HU: Final question. HEC’s motto is “The more you know, the more you dare.” What would be your own motto?
R: Don’t be afraid of failure and learn from it.