Michael Jackson Q&A Part 2: ‘I Want to Have Billion-Dollar Dreams’

Michael Jackson Q&A Part 2: ‘I Want to Have Billion-Dollar Dreams’

A warm jumper, some socks and a box of chocolates – it’s fair to say that most founders out there probably didn’t receive what they really wanted for Christmas; namely, a cheque from a VC. But fear not, because in the second part of our interview with Mangrove Capital‘s Michael Jackson, he reveals what he looks for in prospective investments. Above all, that means having billion-dollar ambitions.

He also explains what he learnt from his time at Skype, including the importance of long-term recruiting and having an extremely accommodating family. You can read the part one of the interview here.

SILICON ALLEE: The big question, at least for any entrepreneurs reading this, is how do founders go about securing investment from Mangrove?

MICHAEL JACKSON: Most companies don’t get through our filter because their ambition level is not large enough for us. It’s perhaps stating the obvious, but for a venture capital company like us, as opposed to say angel investors, what we are going to live on is some big successes. So we need to believe when [a founder] leaves the meeting where he has presented to us, that he and his team will be able to achieve the task of creating a sizable business. And by sizable, I mean we want to be able to dream that it could be turning over a billion euros at some point. Maybe I’m drunk when I think about it, because these things don’t happen every time, but at least I can defend the possibility that it could happen. We get a lot of companies that come in and say, yeah, I can build a great business, I can sell chairs online or something, and earn 10 million, 20 million, 50 million. OK, whatever; that’s great, good luck, fantastic. It just doesn’t turn me on.

SA: What else turns you off as an investor?

MJ: Personally I don’t like people who have come to an idea because they have done some form of analysis or found some hole in the market. I much prefer a guy who has the problem himself. I am somewhat fortunate that my daughter is an artist; she loves art, and has been doing it since she was born. And I know she is never going to make any money because artists don’t make money. I feel some sympathy for her because I have been doing electronics and building phones exchanges and walkie talkies and things since I was seven or eight years old, and I’ve been lucky because that sector has turned out to be reasonably lucrative. But I would still be doing it, even if I earned nothing. And I think that entrepreneurs that come in should be doing it because they really believe in it. That’s the real driver that gets you out of bed. That’s what I like; some consistency. I don’t like the MBA guys who showed up having done some massive analysis to find something that they are now going to do. It feels a bit false.

SA: How important is it for a founder to have a deep knowledge of the sector they will be working in?

MJ: You have these famous stories like the 10,000 hours – you need to spend 10,000 hours doing something before you are good at it. There is an element of truth in that. If you are going to be changing the world in photography, then it would probably be a good idea if you have been taking photographs for half your life, if you have really had it in your blood and understood how it is going to work. I think a lot of the guys you see on Kickstarter, for example, have exactly that. They are doing it because they believe in the project. They would do it whether they made money or not. That was a good prerequisite in Skype. I won’t say it was never done as a commercial project, that’s not true, but everybody involved with it had been involved with telecommunications, and had been affected by the problem we were trying to solve.

SA: What else did you learn from your time at Skype?

MJ: The dedication of the team is the most important thing; the willingness and the desire. You don’t have to be a genius to build a worldwide company. You could argue that we were all super smart, but the reality is that most of us were pretty normal people doing pretty normal sorts of things. With the right spirit and drive and all the other stuff behind it, you can do it. And I think it’s important that people from these [highly successful] companies get out in the community and just talk to people and meet people who can then say, I met him and he was just a normal guy.

SA: What was behind Skype’s success?

MJ: Hard work was part of it. A lot of people do say, well it was easy, it just came on its own. I can tell you, it doesn’t come on its own. If I look at founders of these [successful] companies, they either have extremely accommodating families or no families at all. If they’ve got the wife on the phone saying you have to come over at five o’clock to pick the kids up from kindergarten or something, then unfortunately they are probably not the right guys to be doing this kind of job. It’s slightly politically incorrect to say that, but it’s a fact that all of us in that company were working from when we got up to when we went to bed.

SA: So finding the right people was crucial at Skype…

MJ: How important recruiting was – that’s another thing that was reinforced to me more that at any time before. I probably spent half my time – as did everybody else – looking for good people. And it is just super hard. You have to tackle that the same way you tackle customers; you have to have a pipeline of people. You know the company is going to be a certain size in the future, or that next year you will have a certain logistics challenge for example, so in a year I’m going to have to find a good logistics guy and I’m not going to do that with a headhunter three weeks after I need it. I’m going to have to start to warm him up now. If I wanted you to be a journalist for my newspaper in a year’s time I would be talking to you now, get you bit by bit reeled into the process. Invite the guy for a coffee to explain how the company is going. Invite him to the Christmas party. It’s planning ahead. Then first of all you will get to know the person a lot better, and secondly, the final sale is going to be a lot easier. It’s less of a shock to him. It takes a lot of people a lot of time to change jobs, and the people who are good and thus the people you want probably have a good job; they’re not unemployed.

SA: Many startups seem to take a different approach to taking on staff…

MJ: I’m not a believer in this hire fast, fire fast mentality. I think you should hire slowly. Of course, if somebody is not working out you need to address it really quickly. But I don’t take pride in getting people in fast; getting 100 people to start then firing half of them after a month. I don’t think that’s fair. I think you have a social responsibility to people when you employ them.

SA: Your most recent investment in Berlin was Ezeep. You didn’t reveal how large your investment was – will you be?

MJ: We don’t do that. When we invest in a company we want to give the guys enough money to prove something. You want to be proving that the business model works or that people give a sh*t about your product. Anybody can buy customers through SEM but do they care? Do they come back to you, do they buy a second time, do they talk about on the blogs, do they recommend to friends, do you get positive references on Facebook? It’s easy to spend all your money on Google and get customers you never see again.

SA: What startup trends should we be keeping an eye on in 2013?

MJ: I think the financial sector is going to throw a lot of stuff up in the near future. Everybody is talking about big data, and sure we have to analyse it, that’s great, but we also have to drive business decisions out of it and this is the problem. My hotel has all the data about what I bought, what I ate, when I stood up, it has everything. But how do they convert that into simple usable information? Anybody who can track that I think will be interesting and it’s going to be in a micro segment. I think you will see solutions for coffee shops or hotels or car dealers; very specific things.

About David Knight

David is co-founder and Editor-in-Chief of Silicon Allee. Originally from London, he has lived in Berlin for over seven years, having previously worked for news portals including Bild.de and Spiegel Online before helping to found Silicon Allee in 2011.

3 comments

  1. Greed is never sustainable. I think particularly for Berlin startups/businesses earning millions is already a huge success.

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