The Future Of Venture Capital: Trinity Ventures Partner Gus Tai (Part 1)

Gus Tai is a General Partner at Trinity Ventures and joined the firm in 1996. He focuses on consumer-enabling technologies and services and enterprise software. His past investments include Blue Nile, eSurance, Photobucket and Sygate. He has an undergraduate degree in mathematics from Harvard and an MS in engineering and an MBA from MIT.

SM: Gus, as far as I remember you entered the venture business in 1996. What was it like, and what were the rules of the game? Why did you enter the venture business?

GT: I entered the venture business in 1996 after several years of observing it. I probably knew more about the business than most people outside of the industry. My brother had been in the venture business since the late 1980s. My impression of the industry at first, in the early ’90s, was that it was very transactional and very financing-oriented. That did not appeal to me at all. I was much more interested in working with close teams trying to meet strategic objectives.

As I got to know people in the industry better, from 1994 to 1996, I thought it made a lot of sense for me to explore a career in venture capital. In 1994 a lot of venture firms interviewed me as a potential associate, and I told them all no. They were all surprised, because most people did not turn down interviews.

When I joined in 1996 the industry was coming out of a bear market. It was not yet viewed as being an explosive marketplace. The early ’90s was a really tough time for venture capital, which is a cyclical business. Netscape had gone public, and there was some degree of optimism and a great deal of innovation around the Internet. In 1996 it was accelerating, but it was not yet explosive.

A lot of entrepreneurs were working on things like e-commerce and enterprise-oriented software. I thought the novelty was amazing, and the passion of entrepreneurship to seek and pursue things that were unknown was fantastic. The major difference from that period, from 1996 through 1999 and anytime afterwards, is that there have not been as many aligned discontinuities. In 1996 you had the Internet disrupting consumerism and enterprise infrastructure. You also had the telco de-regulation act that allowed a revolution in telecommunications. There were a lot of changes in communications equipment moving from 100 megabit to gigabit, which allowed broadband.

SM: There was a big bubble for networking.

GT: Advertising was taking off for Yahoo! then as well. There were a lot of burgeoning industries at the same time. These days, there are micro-segments that have innovations but not the same type of alignment.

SM: Was that era, 1994 to 1999, a completely abnormal time in the history of venture capital?

GT: That time is atypical when you look at venture capital and its history.

SM: There was no other period like that in the history of the industry?

GT: That is correct, there was no other period. I do pay a lot of attention to venture history. The industry has grown significantly in terms of capital under management. I always like to ask the question, for calibration, ‘What do you think was the size of Sequoia Capital’s fund was in 1990? What was the size of the fund in 2000?’

In 1990 their fund was $31 million in size. There might have been one or two new hires at the associate level across firms on Sandhill Road. There were very few hires and very few dollars put to work. That discontinuity and alignment of innovation allowed funds to make an enormous amount of money.

This segment is part 1 in the series : The Future Of Venture Capital: Trinity Ventures Partner Gus Tai
1 2 3 4 5 6 7