Henry Wong, Founder of Diamond Tech Ventures

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Transcript

Alan Olsen: Welcome back I’m visiting here today with Henry Wong. He’s a venture capitalist here in Silicon Valley and the founder of Diamond TechVentures. Welcome to today’s show.

Henry Wong: Thank you.

Alan Olsen: Now you’ve done a lot in your career, but so for the listeners, can you bring us through, you know, the companies that you started, the venture funds, and bring us up to today, the inspiration for that?

Henry Wong: Okay. Let me summarize that in less than 60 seconds. I would say, I worked for four Fortune 100 companies before, after I graduated from University of Utah in salt Lake city – go Utes!.  And then I got the inspiration that I need to start a company. And one after the other, I started five different companies, all successful. Some are funded by Kleiner, Perkins, Sequoia, and so on.

And some are funded by Citibank venture and quite famous. They all exited well, some went IPO got acquired. Then, I was invited to join a venture fund. There was the family fortune of President Lee of Taiwan, and that was Krystal venture. And then at the same time after that, I started my own Diamond TechVentures.

And also I moved into the compound of Garage Technology Ventures, which was started by Guy Kawasaki, the Apple evangelists for Steve Jobs. And garage was seriously the garage, you know, from garage to IPO. And I have a really good time there. I learn a lot, work with them and got some interesting investments that I can elaborate later on.

And then now here I am, starting more and more companies. I have a big dream working with a land developer in a known city in Silicon Valley. Getting the legals done right now and hopefully our location can house 1600 new entrepreneurs who will be taking daily dosage from me, and being healthy and come out, and tends to turn out well, let’s say.

Alan Olsen: Well, it’s amazing Henry, that the career you have. Now, if I recall you have a degree, it’s a PhD?

Henry Wong: No, MBA.

Alan Olsen: MBA?

Henry Wong: Didn’t finish my PhD.

Alan Olsen: Oh, okay. But obviously you hit the ground running, starting multiple companies, and then helping to create new companies. And so when you look at the landscape, the tenure of your career, how has Silicon Valley changed since you first started versus where it is today.

Henry Wong: Changed quite a bit. I’ll comment on the latest greatest. When people start honking me, I don’t feel like they are Californians, they’re foreigners. It’s coming from every different city. So Silicon Valley used to be the pruny out, you know, the apple, the apricot, and things are very mellow. And, they people work hard and they’re pretty courteous.

And nowadays, a lot of people are brand new coming in town, pushing the horn and trying to hurry from one place to the other. Traffic is becoming horrendous. It’s like the .com traffic. If you remember .com. From one end of the city to the other it takes over an hour. From San Jose to San Francisco, including parking, is two and a half hours now.

Alan Olsen: I remember when I first came into the Valley in 1984, that 237 was the parking lot going from Lockheed all the way up to a 880. And we’re getting close back to that stage.

Henry Wong: Back to traffic jam time.

Alan Olsen: So moving into inspiration for Diamond TechVentures,  what drove you to create a new fund?

It’s obviously, you know, you’re not afraid of new frontiers, but were you focusing on a specific type of investment?

Henry Wong:  In the year after 2002, after SARS, which is the deadly virus disease and, China is growing like 15-18% a year. The published numbers was a lot lower. But certainly if you know what you’re looking at you can edit out.

There’s a saying that the water rise, boat rise. So if you are investing into a economy that is going like crazy, you will benefit from it, if you at least choose the right angle to invest. So I found something that I really liked, and I believed in my judgment, and I benefited from it.

Alan Olsen: Okay. I’m visiting here today with Henry Wong. He’s the founder of Diamond TechVentures and Henry, I need to take a quick break. And when we get back, I’m going to run through a series of questions to talk about the aspiring entrepreneur who’s looking to get funded, what works, what doesn’t. We’ll be right back after these messages.

Welcome back. I’m visiting here today with Henry Wong. He is the founder of Diamond TechVentures and Henry, in the first segment we talked about the history and you did multiple company’s IPOs underneath other venture capitalists. Then you worked for the venture capital arm of the President of Taiwan. And then you started out to do your own venture in Diamond Tech, which had a lot of influence in companies that coming out of China. Over the years, you’ve seen a lot entrepreneurs, things that work things that don’t. Person coming to you saying, Henry, I need some money. What works and what doesn’t work. What’s the first criteria you look at to decide, do I really want to work with this person?

Henry Wong: Well, the front desk will stop them right there and say, could you email in your PowerPoint, your pitch stack, that will be the gate number one. If you don’t have anything to present or you couldn’t document your ideas on paper, or you couldn’t summarize your mission in 25 words, you’re out of the ball game.

A lot of people say they have an idea they want to do, they want to come in and shoot the breeze. Excuse me. I don’t have time to shoot the breeze. Unless you’re my old buddy, you want to have lunch with me, that’s fine. Sometimes it’s not fair, but if they don’t build a friendship ahead of time and they are in the very last minute looking for money, it’s just won’t work. You mean you can come into my office and I write you a million dollar check and then you disappear? And then you fly out of town, where am I going to catch you or call you? So it’s kind of a, you have to build a relationship first. Yeah.

Alan Olsen: And then when the relationship is established, obviously there’s a lot of choices and these entrepreneurs are, a lot of them, are like trying to solve a problem to blaze a new frontier. What peaks your interest?

Henry Wong: I like the word solve the problem. The problem is the meat, the requirement, what the company others out there would buy. And I would look at it in this clear logical view: is the product air? Without air, you’re going to suffocate within minutes. Is the product water? Without water you die in seven days. Or would it be caviar, the fish eggs, from beluga, right? So you are looking at air, water and caviar. If it’s this air, you must buy the product or you’re going to go kaput. It could be a cancer drug. It could be the backbone of a network. It could be 5G wireless; if I unblock this building block, your phone’s gonna go dead. Things like that. So if you look at this clearly in this fashion of air, water, and caviar, which is so simple, no brainer, you will be able to define whether the deal is, say messy or yet to be seen or later or whatever.

Alan Olsen: And once a decision is made to move forward with an entrepreneur and a company, is there a process you put in place requiring to hit certain benchmarks to earn the next phase of funding? In other words, what level, first of all, what level does Diamond Tech come in at?

Henry Wong: We have pre-seed, seed, and prefer A, and lately, I have grown into a multistage. I have other new capital coming in that wants access to more mature deals too. So we are stage agnostic; we are open.

Alan Olsen: And then the entrepreneurs coming in then, how do you know if that entrepreneur is really going to succeed, and is there a way that you can tell within the first month or so if this entrepreneur has the drive to really make this happen?

Henry Wong: That’s the key word – drive. He will be going through lots of hurdles. We will be requesting different documents and if he couldn’t hold his temper or, and that kind of situation, then you know, that is, would be somebody that you cannot deal with.

Remember, there’ll be hardship ahead of time, in front of us. And, we will go through stormy weather. If you cannot, with hope, you know, stay away and be on track, then it will be difficult. And in the board meeting, you wouldn’t be able to hold up and you wouldn’t be able to perform and deliver, and so on.

Alan Olsen: The future. So, you know, bringing up to date, companies have brought us a lot of these technologies brought us into the cloud. We hear things and theory about quantum computing and these other things, but what do you, first of all, what do you think about quantum computing?

Henry Wong: The future is coming in a big cycle. Remember when we first started, my older brother was the chief architect of IBM centers, the research lab, and in charge of a mainframe and all the architecture of it. Now we went into distributed data processing. We went into mini computers and so on. And then we finally landed in micro and now everything goes cloud up, centralize again. And then they need more computing, power, parallel processing, tandem computing; we’re going in a cycle again – back to mainframe. The middle is the quantum supremacy, where looks like IBM’s going to dominate it once again.

Alan Olsen: Yeah, it’s interesting. I think there’s one company with a quantum computer out there, D-Wave?

Henry Wong: Yeah D-Wave is a very interesting example. I do not have access to the pitch deck, so, I could not comment on that.

Alan Olsen: Understood. But it’s pioneer, is it’s a new industry, I guess. You know, quantum computing I hear, and I’ve heard this presentation given by Steve Jurvetson and talk about, that it deals with quantum physics in parallel universes. Now that’s kind of a deep subject, isn’t it?

Henry Wong: You know, layman language Alan, “it’s far out”.

Alan Olsen: Yeah.

Henry Wong: It’s beyond us right now. I don’t believe that businessmen have the vision on quantum physics. But on the other hand, as we continue to explore, you should be looking at it from a different opposite angle. It’s the buyer, not the inventor. What does the buyer want to buy? I think that’s the key. That’s where business commerce is conducted. And then you look further, who are the buyers? Millennials? No. Things are moving away. I’m looking at working with generation Z now. You say what’s the generation Z you know, 14 to 26, right? So I’m formulating a study group in my office for younger users who would define a future who would say how they want it, how they want to use it. I think that is the other angle when you’re looking at future technologies.

Alan Olsen: Now Google did something very earth-shattering; they announced that they’re not going to require college degrees coming on board with Google. What do you think about that?

Henry Wong:  Controversial. Degree is created by humans. It’s only a piece of paper. Oh yes, we go through four years of hardship and, you know, studying, and so on. But if you have guidance from a master and you put a Japanese banner on top of your head saying WIN, W I N in Kanji. Okay. So it’s a matter of thinking and out-thinking the norm. So degree or no degree, it’s not a good subject to get into.

Alan Olsen: Okay, well, let’s go a step further. And then there’s the 1600 entrepreneurs coming into your campus. You know, how would they go about, is there going to be a process for applying, and what type of individual or candidate is most likely to succeed at being part of that program?

Henry Wong: End results deliver. If they can deliver a good end result, a product or services that can convince the world that they will be needed or quite needed, that will be the perfect product and services to fund.

Alan Olsen: Now you’re also a managing partner or director of Garage Technology Ventures?

Henry Wong: Yes. Garage Technology Ventures was started by Guy Kawasaki, the Steve Jobs number one evangelists. And Garage Fund #1 and #2, CalPERS fund, Californian state pension fund. So we manage a small portion of that billion dollar fund. Garage Fund #3 is, say, a family office fund. We manage that particular fund; we’re focused in software only.

Alan Olsen: And is it, a lot of new VC funds are going to like that boutique level versus what it was in the past, they’d have 500 or a billion dollars, but at what level is Garage Technology Fund #3?

Henry Wong: A Fund #3 is a smaller fund, basically family office, attending to the needs of the current generations.

Alan Olsen: Why is the VC industry trending to smaller funds?

Henry Wong:  The graduates of deals, which means the founders who exited their own creation, tend to take the proceeds to form a new venture fund addressing the subject that they know best. And if they are in the cloud and want to explore more about the cloud or quantum computing, they must have learned or come from a mainframe background in the past of quantum physics, they’d like to address, they called himself their own boss so they can address on subject that they need. In a bigger venture firm, there’s so much paperwork you won’t believe. Even I sometimes go crazy. I’m just handling the details, the K1 and the auto-calculation. It’s just, you have to outsource everything out. By the time you finish outsourcing out, there’s not much profit left.

Alan Olsen: It’s pretty amazing what the compliance has grown to be over the years.

Henry Wong: The paperwork is choking up the process.

Alan Olsen: Well hopefully that AI solution’s coming to just streamline everything and not make it so much paper in the future.

Henry Wong: I hope so.

Alan Olsen: What other types of technologies you feel have a lot of interest going into today for solving problems of the future?

Henry Wong: We continue to research on the future and also the product and services that entrepreneur bring forth to our table. We look at quantum computing as an area of investment, but it might require a very deep pocket because it’s not a small subject to attend. Along with it, the immediate areas that we look at is the security part of the computing at the edge of the cloud and all those are required.

And then you take a look at behavioral science, which is a subject that I teach in a university right now, every Monday night. How people make the decision, how can you change their mind or deviate that attention to push the finger over to the buy button? I think those are interesting deal flows that we encounter lately. Don’t just look at hardware, but you know, more so in software, I think that’s where the future is supposed to be.

Alan Olsen: I’m going to ask you a wild question, but you don’t have to answer it if you don’t feel like it. So Gene Roddenberry, the Star Trek creator, years ago he wrote several things into the scripts. He had the little communicator, and you know, now today we have cell phones that’ll essentially do the same thing.

Henry Wong: Dick Tracy.

Alan Olsen: Yeah, Dick Tracy, but the other thing that he wrote in there was this thing about the transponder where you can move from one location to another location. Thoughts? It deals with quantum physics.

Henry Wong: I’m glad you asked that question. I actually study that. Now here’s the wild answer, but don’t think that, please I’m not crazy! To transmit point A to point B, you can break down the molecules and transmit, in many sense, carbon-based product over from A to B. It has been proven that it can be disassembled and  reassembled, which is like modulator demodulator, change over.

But the argument I have with my friends is how do you transmit the soul, which you can’t even touch, or break down, or calculate; it’s electron, it’s a wave, it’s electricity. And how do you do that? I remember my father telling me that we are electrons and electricity. He’s going to communicate with me one day through electricity.

He hasn’t done so yet. If he did, maybe it was him, maybe it was somebody else, I don’t know.

Alan Olsen: Henry we’re out of time today though. It is ironic that you did do a little bit of research on that. I think what it says is that we still have new frontiers to uncover.

Henry Wong: Oh yeah.

Alan Olsen: So well thanks for being with us today on the show, American Dreams. And thanks for joining us here on American Dreams and, Henry, we appreciate your giving us insight to the future and the companies and the marvelous career that you’ve had.

Henry Wong: Thank you for inviting me.

Alan Olsen: Thank you. Have a great week. And join us here on this station next week.

About Henry Wong

Henry H. Wong has been a prolific and successful entrepreneur, executive mentor and venture investor in Silicon Valley for dozen of years. Henry applies his operational experience, investment talent, and his international expertise to advise, invest in, and build high technology companies with a global vision.

To cope with the fast growing high tech industry, Henry mentors companies and executives to be prepared and plan ahead to deal with the ever-changing dynamic future.

Currently he is the Managing Director in Garage Capital Fund #3, and also the founder of Diamond TechVentures (a family office). Prior to that, Henry was a venture partner at Crystal Ventures where he was actively involved with companies including SMIC, LGC Wireless & Infinera. As an entrepreneur, Henry has had several significant successes, including SS8 Networks Inc., where he was the founder, CEO and Chairman, as well as IP Communications, XaQti Semiconductor, CNet Technology Inc., and Combinet (ISDN Systems), all of which he co-founded, funded and led.

In 2002, Henry was a finalist for the Ernst & Young “Entrepreneur of the Year Award.” Henry is the chairman of CSPA.com, a 501(c)3 non-profit. He volunteers as an advisor to several non-profit organizations & is active in the community. Henry holds a BSc degree in Business from the University of Utah & a MBA in Telecom Management from Golden Gate University. He is also a Mentor in the Stanford Graduate School of Business GSB MBA Program, and a Team Mentor in the Technology Venture Formation course MS&E 273 & E145 at Stanford’s School of Engineering.

 

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