Seed Capital From Angel Investors: Saad Khan, Partner, CMEA Capital (Part 7)

By guest authors Irina Patterson and Candice Arnold

Saad: I think that the most difficult thing to find is exceptional entrepreneurs and exceptional teams.

Once you find them, everything else, as far as I’m concerned, is a commodity. Technology is a commodity, ideas are a commodity. Execution is the only thing that matters, and smart people figure out the right things to do.

Smart people pivot, and smart people build the right things and adapt to the market in the right way. So, if I have a smart team going after something, that’s the only thing that matters to me.

Irina: Most seed investors I interview would say, “We need a product. We need a certain size market. We need a product validation. We need something that proves that that’s going to work.”

Saad: Well, then what I would say to them is, “If an entrepreneur has validation and product and customers, then why do they need your money?”

Irina: They would say, to scale.

Saad: OK. Well, then that’s just a difference of opinion.

The beauty of the Web world is that you can do so much with so little, and you can do it so fast that you can build a product and have customers and have something launched and out the door in a matter of a few months or less. In some cases, people can do it over a weekend.

That’s all fine, but for me, if that’s the case, in that kind of a world, then the only thing that matters is having the right team. You’re only a few weeks away, at any given time, from launching the right product in the right market. So, why not invest in the people? That’s what matters.

Irina: What character traits are most important?

Saad: I think the biggest thing that I’ve seen over time is the ability to iterate really, really fast and to constantly be adapting to the data that you’re getting from your customers, from your potential constituents, from the way that the markets are moving.

Certainly, a team that can execute quickly is important. At the beginning of a company, it’s probably a more technically oriented team. It’s probably an engineering-driven organization. People who are both visionaries, but also individual contributors to getting the product out the door are really important.

Irina: Do you have a sector preference?

Saad: I have lots of sectors that I’m very excited about, but at the end of the day, I don’t make my decisions based on the sectors that people are going after.

It’s entirely based on the lowest common denominator here, which is where do I have a stellar team that’s really excited to do something big? And then they will drive, ultimately, where they want to innovate and go after the markets.

Having said that, I think, for the seed model to work, you’ve got to be able to do things capital efficiently.

The beauty of any Web technology is you don’t have to buy servers; you don’t have to build a data center; you don’t have to buy software. All these things that you had to do in the past and that cost millions of dollars in infrastructure you don’t have to do anymore.

Certainly, the kinds of companies that I’m looking for, from a seed perspective, tend to be very capital efficient in leveraging . . .  I’ll call it “Internet economics.” Beyond that, I think the team decides.

If you’d asked me, “Saad, what are the spaces you personally are excited about?” There’s lots of things I could talk about.

For instance, one of the areas that I’ve spent a lot of time in is this notion of crowd sourced work or next generation work. For example, we are an investor in a company called LiveOps.

LiveOps creates virtual customer service model on demand. The idea is that a LiveOps customer never has to create a call center. LiveOps will, essentially, enable you with a VoIP connection to create a call center distributed to work-at-home moms who are all around the country or the world.

A lot of times when you call into, let’s say, Round Table Pizza, the person you’re talking to is actually not somebody who’s physically in the store. It’s a mom who’s really good at selling you pizza toppings because that’s where the margin in the pizza business is.

So, LiveOps creates the technology to enable that kind of customer experience.

This segment is part 7 in the series : Seed Capital From Angel Investors: Saad Khan, Partner, CMEA Capital
1 2 3 4 5 6 7 8 9 10 11 12