Jun 23, 2021 | 4 min read

Conversation with Mike Dolbec

Podcast #145 The Venture Industrialist

 

Michael Dolbec - Walking the Talk in Silicon Valley 

In this week’s podcast, Ken Forster interviews Michael Dolbec, Managing Partner at Momenta Ventures, our newest member of the Momenta team. For more than 30 years, Michael has been an executive and institutional and corporate venture capital in Silicon Valley, most recently serving as executive managing director for GE Ventures. Mr. Dolbec began his investment career with Kleiner Perkins Caufield & Byers and continued with Greylock. He went on to Venture Capital leadership roles at IBM, 3Com, Orange, and LG Electronics.

Some of the discussion points during this interview were:

  • What would you consider to be your digital thread?
  • Based on your rich experience in venture investing across institutional investors - what are three lessons you have learned during that time?
  • What were the key drivers of corporate venture capital twenty years ago and how have these models morphed over time?
  • What attracted you to joining GE Digital in 2012; where you drove Digital Strategy, Venture Investments, and M&A in the then-nascent industrial internet of things.
  • What do you look for in a high-potential startup?
  • Why Momenta?
  • Where do you find your inspiration?

 

What inspires you: Michael's Reading List:

Connect with Michael via LinkedIn

 

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View Transcript

Momenta's Podcast

 

145 Michael Dolbec

 

This is Ken Forster, Executive Director at Momenta. Welcome to our Digital Thread Podcasts, produced by, for, and about digital industry leaders. In this series of conversations, we capture insights from the best and brightest minds in digital industry, they are executives, entrepreneurs, advisers, and other thought leaders. What they have in common is like our team at Momenta they are deep industry operators. We hope you find these podcasts informative, and as always, we welcome your comments and suggestions.

0:32

Good day, and welcome to episode 145 of our Momenta Digital Thread Podcast Series. Today I'm greatly pleased to host Michael Dolbec, Managing Partner at Momenta Ventures, our newest member of the Momenta team. For more than 30 years, Michael has been an executive and institutional and corporate venture capital in Silicon Valley, most recently serving as executive managing director for GE Ventures. Mr. Dolbec began his investment career with Kleiner Perkins Caufield & Byers and continued with Greylock. He went on to Venture Capital leadership roles at IBM, 3Com, Orange, and LG Electronics.

Michael, welcome to our Digital Thread Podcast.

1:15

Thanks, Ken; it's great to speak with you once again.

1:20

You know this is an interesting one. Of course, we've had you on in the past, I believe on a podcast and at least one webinar or two. But obviously, we just announced you're joining us as of June 1st, and so you and I, at the time of recording this, were still pulling through all the LinkedIn congratulation notes that we've gotten in terms of having you join us. I've often joked if there was a celebrity list for Industrial IoT investing your name would probably be the #1 slot. So, we are incredibly pleased to have you as part of Momenta to help take Momenta's investments to the next level.

So, let's start with a question I always like to have since we call this the Digital Thread Podcast; what would you consider to be your digital thread in other words of one or more thematic threads that define your own digital industry leadership journey.

 

2:17

Thanks, Ken. That's a great question. Because I've been thinking about the common understanding of digital thread for a while, it's very interesting to have that turned back against you. I would say it boils down into a few large categories, or maybe an origin story that will help you understand my journey.

Since I was young, I felt that Silicon Valley was the epicenter of innovation, and it became a place that I was drawn to from an early age. Believe it or not. I will exaggerate to make the point, but Silicon Valley is basically the “Athens” and the “Camelot” of innovation. It sounds trite, but there is an extraordinary and meaningful number of ways creative people are participating and evolving new ways to do things and monetize them here. I've spent my career in innovation. After getting a masters in Artificial Intelligence at Stanford, I had a near-miss with staying on to get a Ph.D., I've been at an R&D lab and four startups. Then I spent the last 30 years financing innovation, first in Institutional VC, and then Corporate Venture Capital.

So, technically I joined Silicon Valley 44 years ago, and I never looked back. I've seen the Valley, the concept of “Silicon Valley”, grow, and I've seen the innovation economy blossom and evolve in interesting ways. I'd say the last part of my digital thread that's influenced me is… well, I joke with my former partners at GE Ventures that I got a postdoc in Digital Industry and Digital Transformation at General Electric. I spent the last nine years there, and I got first-hand exposure to the concept of “Digital” rolling over more traditional companies in traditional industries (interestingly they represent about half of the global economy). These aren't the digital-first companies necessarily, but they're major industrial and healthcare organizations.

Also, it's an interesting time to be in Silicon Valley because I got that postdoc together with my peers from other competitor industrial companies that are also experiencing this digital transformation. So, I'd say the people in my postdoc cohort work for Siemens, and ABB and Schneider, Honeywell, Bosch, Dell, I've left many people out – Rockwell, Microsoft, Amazon, IBM, Cisco – you name it. So, everybody was “feeling their part of the elephant” (a reference to blind men feeling an elephant and not quite understanding the big picture) and trying to make sense of it and move things forward with the industry and their own company.

Sorry, that's a long answer, but that's the way I think about it.

5:25

It's a tremendous defining answer in the sense of at the epicenter of innovation. More recently, these digital industry phenomena, which GE was one of the earliest progenitors. So, what a great story. I also could say I joined Silicon Valley 58 years ago! But in a slightly different way in Mountain View Hospital. So, it's certainly a great place to be from in that regard! Somebody told me recently it makes me a unicorn, a Silicon Valley Unicorn because I was born there!

 

So, I think what's so fascinating about you that beyond everything is you've just laid out, the right experience base you have across Kleiner Perkins, Greylock, and of course on the corporate venture side, IBM, 3COM, Orange, LG, and of course as you said your postdoc at GE Ventures. If you could boil down this experience base into really three lessons learned, what would they be?

6:32

No, I can't do that. Too hard. Next question, please!

6:36

How about two and a half!

6:41

Again, great question. I don't think I can boil it down to just three. There are lots of lessons and a number of 'laws' in air quotes that I think I keep in mind.

I learned many of those in my early career at Kleiner Perkins and Greylock. So, I could share a few, but I can't summarize them into the three I live by because it turns out it's more complicated than that. Life is messy. Also, some are jokes, because my personality keeps me from taking anything too seriously, so I can lighten it up.

Let's see, in no particular order – John Doer at Kleiner Perkins taught me …when I was a young associate at KP… I remember this well, his phrase was, 'Mike there are no rich pessimists,' and what he meant by that is that at some point in venture capital you get good at finding the flaws in everyone's plans, because you're trained to evaluate risk and good at finding (the flaws) because life is messy and company building is difficult.

So, you can talk yourself out of any particular investment, but at some point, you've got to flip and become an advocate and understand why a reasonable amount of risk is worth taking. It's a transition that most people in venture capital hit, it's like they get really good criticizing things, and you have to get over that at to mature into a better investor.

Let's see … in this long list I wrote …, a joke saying I'm very fond of is: “If you assemble enough people that wear Patagonia vests, a venture fund spontaneously forms around them”. Which is an inside joke but basically in venture there is a kind of a group think that can happen, and the joke is that many of us think the same way, and even dress the same way, are fond of the same accoutrements. I think you have to fight against that, because we all start thinking we understand how the world is going to work tomorrow, and that's really not true. So, I think of that joke to remind myself that I shouldn't always think the way everybody else does. Think different, which I think is a French phrase, “The French, a people that prefer to think different”. (see: “How the French Think: An Affectionate Portrait of an Intellectual People”)

I guess a personal one is… which I'm violating right now is, “Listen more, talk less, but don't be afraid to ask stupid questions”. I've found that's worked well throughout my career. I'm really good at asking stupid questions of CEOs that are trying to build companies, because I'm not afraid to say, 'I don't quite understand what you just said. I don't get it, and maybe it's me – probably is me, but maybe there's something I missed here.'

On another tack there's this list that KP (Kleiner Perkins) is very fond of. The list is called Kleiner's Laws. Eugene Kleiner was the co-founder of Kleiner Perkins, and he's got a number of pithy laws which I have to translate, because they are from the 70s. One law\ is, “Venture capitalists will stop at nothing to copy success”. What that often means is that there won't be just one company financed in a particular area that's considered promising, and there may be too many and the field may become crowded. So just because it's a great area it doesn't mean there needs to be a 7th company in the space. There's a law that translates to, 'Raise money when you can and its being offered, not necessarily when you need it,' because there are times in the funding cycle where money is available and people approach you and want to invest in your company, but you may not be officially raising money. And if you always wait until the time is right for you, sometimes fundraising is very awkward.

Another one has been said in many different ways, 'Execution pays your salary, but innovation pays your pension’. What I mean by that is, execution is priceless, you can have a great idea, but unless somebody can figure out how to commercialize it and make money from it, it doesn't matter that you'll eventually change the world. But you also have to keep an eye on the long-term, which I think is important.

I've got more, I could just keep rambling if you want, … one last one?

11:23

Please, go ahead.

11:25

From the corporate venture side – this may sound – I don't know how it's going to sound, but of several laws I have, for example: “If there's a stupid option that your parent company can choose – remember I'm putting myself in that corporate venture situation – 'Your company will often default to that one,” and I'm not saying the companies are stupid, what I am saying is that if you don't anticipate that they might do something in their own self-interest, or at least sub-optimal to what you think the perfect strategy is, you're going to be frustrated constantly. So, if you prepare yourself and understand that companies have a very complicated, fluid, agenda, which doesn't always do what you think it ought to do, you won't be surprised and you'll be able to at least have patience and anticipate how to help your investment navigate that world, because it will seem quite confusing and bureaucratic to them. But they have their own good reasons.

12:24

You know, that last one really rings a note. I like your background, because you've worked across traditional VC and corporate venture capital, of course you bias heavily on the latter over the last ten years, but '96 I think you owned 3Com's venture arm, you later founded Orange Ventures, the corporate venture arm of the European wireless carrier Orange in 2002. So, give me a sense, what were the key drivers of corporate venture capital back then, and really how has this model morphed over the last 10 years particularly?

13:04

Wow, okay. I feel like the old guy being consulted about history. What comes to mind is this comedy bit, which is a very obscure reference, you might have to look it up on YouTube, there are two famous comedians, Carl Reiner, and Mel Brooks. Mel Brooks, kids, is the guy who wrote “Blazing Saddles”. There was a comedy routine in the 70s that you can find on YouTube called “The 2000-year-old man”, Carl Reiner interviews this old Jewish guy who's been around forever, and I can't quite do the accent right, but things happen. Early in the interview they ask him pretty much the same question you asked me, Mel Brooks says, 'Yeah, yeah, I knew the original writer for the Bible, he lived two caves away from me,' and anyway I'm not the world's expert on the history here but I have been around, so this may sound like the two caves away version of this story.

I would tell this story this way. Once upon a time venture capital was a niche industry helping entrepreneurs carefully grow with capital and precise advice. And corporations at that time they tried to be like VCs, but mostly failed because their cultures are so different, and it wasn't well understood how different they were. Every day corporations would often look at deals brought to them by VCs and be asked to pay a premium to invest in them, or usually asked to acquire them. But that was extent of the dialogue.

And then – I'm skipping forward. Gradually open innovation and disruptive innovation theory became more than a theory to every corporation. They internalized it and they realized it became strategic for their survival, that if they didn't figure out how to tap into innovation outside their walls, that they were at great risk of becoming extinct. So, to respond, corporate venture capital gradually and thoughtfully adapted to entrepreneurs and VCs, they were influenced by the financial gains, strategy, the M&A optionality and even from their own R&D labs, how to tap into what startups offered them, and how to avoid killing them in the process. Also, corporate venture capital began to develop its own professional requirements, and its own best practices. Before that, practices had been adhoc based on who you hired and their background.

And so fast-forwarding, finally today I would say, and I'm over-generalizing, corporate venture is a recognized service-oriented profession, there are best practices, there's a playbook that is applicable to where you are in the maturity curve; if you're a brand new corporate venture activity there's one set of plays, if you've been around for a couple of years there's a different set of plays, and if you've survived the inevitable transitions that happen in a big company when there's a leadership transition, then there's a different set of plays. And there's also a full pallet of value creation possible via corporate venture capital that the parent corporation recognizes as one of the tools that ought to be… or one of the clubs in your golf bag, that you ought to have as a corporation to make sure that you don't get disrupted, and maybe disrupt your own competitors and smaller companies. It’s the Goliath's Revenge – is the title of the book that a friend of mine wrote. It's basically if a big company figures out how not to get hoodwinked and uses some of the tools against its innovative competitors, it can turn the tables around.

17:11

You know, thinking about GE Digital, so you joined GE Digital in 2012, I guess driving at the time digital strategy, venture investments, MNA, in what at least the industry was thinking of the very nascent industrial internet of things; what attracted you to the company and role at the time, and perhaps given your last question, how did you apply your corporate venture capital expertise into GE?

17:36

Yeah, that's a good point to tie together my point of view. So the reason that I was attracted, and I think Silicon Valley people will get this, is that it was the ambition of GE Digital to become more digital first company with respect to itself, and its interaction with its customers, to dream up new services that were based on the data that was coming from its machines that it was creating, as opposed to just making big hot spinning things, and selling them to asset operators. That transition that they were proposing was the most ambitious, audacious, challenging goal that I had seen in quite some time. Literally it changed the world mission I thought, very difficult, very risky, a lot of people didn't think it could be done. And like a moth to a flame again, that attracts me as it does many of the personalities in Silicon Valley.

To tie it back to my previous answer, what I also saw was that at the time they were going to try and do everything themselves, hire an army of software people and make the risk even higher, because they weren't going to tap into all of the innovation that was happening outside of their walls. So literally I convinced them that we could reduce risk and decrease time to market, and maybe create some optionality, I'm hedging against risk, by standing on the shoulders of the people that were driving innovation in big data, AI machine learning, IoT and cyber security, to name just a few areas.

At the time I didn't quite understand the plans for edge computing, but that also soon became tied into all the other categories that I just mentioned. So, standing on the shoulders of people who were evolving that concept also became very important. 

19:51

I at least attribute to the fact that you coined the term 'venture industrialist' at the time, a term of course that Momenta has adopted it as its own as well. What does the term mean to you?

20:05

Yeah, I'm not sure that I coined it, but I'll take credit for it if you want to tell a lot of people I did, that's fine.

20:10

I've been pretty consistent about that so…! It's the Mike Dolbec term!

20:16

I coined a lot of terms, so I might have, I'm not sure but let's go with that. Okay, to boil it down, venture industrialist to me means, venture capital adapted to the fourth industrial revolution, and the transformation that I think we're all living through whether we realize it or not, the people who run industrial corporations are certainly living through it. But the people who consume services and products and such from those companies are also living through it, although they may not entirely see the effects first-hand.

Venture industrialists, this concept it requires… it's also a modified playbook in the sense that venture capitalists have a playbook that they use, it is more in tune with the opportunities and challenges of the industrial, and I'd also include healthcare digital transformation, because the traditional venture playbook that you learn as you apprentice in venture capital, comes from how the enterprise world has adopted and embraces innovation, software, business models, user interface, and user experience, that is mostly applicable but sometimes it’s the wrong play and you could get yourself in trouble. So, you have to know when to go off the playbook that you learned if you apprenticed in traditional venture capital and know when you need a new play.

It's like, I don't know, if you're an NFL football team that plays every game in a nice stadium and pleasant climate, then all of a sudden you've got to play the Green Bay Packers during a snowstorm, and you can't even see the field, or you can't see the pitch for the European viewers, and you can't see the goal line or any other lines on the field; maybe you need different plays, the ball is slippery, it’s terrible conditions and you just need to adapt to a new situation in order to play roughly the same game but by different rules to get there.

22:28

Given the response to one of my earlier questions around boiling things down into the top three, I'm going to try this again in a different way. So, 30 years of investing, what are your three favorite companies. It's like asking which child is your favorite child, right! But which ones were your favorites and why?

22:50

I get asked this question a lot and I'm sorry, I'm going to continue to not answer it. One thing I learned in media training is that you can always say, 'You know, that's not the right question. The right question is this one…' Economically, if you wanted to know what my most financially successful investment was, it was Juniper Networks which is many people's gigantic financial success, and there's a story behind that. I'm not particularly smarter than anybody else but I leveraged the relationships I had at the time into the small, early position that we had in Juniper, and had a double-digit multiple of our investment, it's the high 98x or something spectacular.

So, in terms of actually answering your question [about favorite investments], I love all of my children and I don't have favorites. If you've ever listened to National Public Radio there used to be a spot where the radio personality would talk about this imaginary place called Lake Woebegone, “where all the women are strong, all the men are good-looking, and all the children are above average”. I share this feeling about my investments.

Garrison Keillor was the personality. I think he's retired now. We both talked about this, I don't get a chance to listen to Public Radio much anymore but back in the day.

When I think about the categories of innovation that my investments slot into, and which ones are most successful right now, without calling out particular names, I'd say edge computing is an idea whose time has come and is off to the races, so there are really exciting developments happening across that space, across the entire stack and even out of the top of the stack, or you could say a full stack solution where entire solutions for business problems, which happen to work best in an edge computing environment, are being more than validated by the market, they're being sought after and competitively sourced and purchased, so that was my heart.

I think I told you the story once, but a group of my GE Ventures edge computing investments pulled a trick on me once; we had a private dinner at Hannover during the Hannover Messe Fair. As we went around the room everybody introduced themselves. One guy jokingly said, 'Hi, I'm so-and-so from so and so, I’m the CEO of this company, and I'm a member of the “Mike Dolbec Evil Empire of Edge Computing”. The next guy caught on, and after about six guys saying they were members of the evil empire of edge computing I cracked up. So, later I made them all t-shirts, and I think I showed you one of the t-shirts. So, there’s now a club of early edge computing guys. So that's one area: edge computing.  

To skip forward, machine intelligence broadly defined the use of AI to do something valuable, essentially make predictions, and then do something about that prediction based on data that's coming from industrial equipment, or industrial process, or some industrial situation like logistics or supply chain, where an executive of a group of executives has to make a decision based on all the information they have available, but they don't have infinite time to decide what to do, and I think there's been great progress there.

The evolution of IoT in many ways is taking off in different markets at different times. These categories aren't always distinct because the Venn diagrams overlap, but I think I'm very pleased with how that's evolving.

And then there's a whole other great story about what I call data infrastructure, but it's the plumbing of associated with, acquiring industrial data, storing it, contextualizing it, cleaning it up because in the real world its quite messy, much messier than say those click streams that Google and Facebook have to deal with. There're enormous amounts of it so just storing it or bulldozing it around so you have it in useful places when you need it, that whole area of innovation is quite active.

And so those investments I have in those categories are doing quite well. They're not all doing well simultaneously, it tends to… it's like having a big orchard and one side of the orchard starts to bloom, or a vineyard maybe with grapes on one side for some reason take off because the soil and sun is just right, and then your other ones you have to wait until later in the year before they take off and become right. That's what it feels like. So, we have a big vineyard and things are doing pretty well in certain acres.

28:04

So perhaps I can think about this as the moth to a flame question. I'm sure many listeners are asking, why Momenta?

28:16

Okay, why Momenta? I guess we've known each other for – how long Ken, eight years?

 

28:26

Yes, it's been almost a decade I'm afraid!

28:29

So, we've had a long time to get to know each other and wrestle with how we see issues, and companies, and markets, and ecosystems, and what's going to happen next, and why this will/or will not happen next. I feel a great deal of sympatico with you and the way you think about things, and the organization that you've built. I think Momenta is a great example of what the modern venture activity needs to be, and its focused-on ecosystem investing, at least it has that in mind when it makes an investment in a particular company. It has value creation in mind, and the muscle to bring that about, the search capability, the strategy, the advisory is not insignificant. I just think the same way about… everybody's got money so if the startup is just interested in capital, I don't have much differentiation there.

But what I do have, and this is again why I'd rather stay with Momenta; what Momenta has, what we have at Momenta is the big picture and how they [the startup] fits into it, and the ability to help a smaller company get noticed and form a relationship that will be productive and mean something to them, generate revenue sooner than they might figure it out themselves. I used to say to startups, 'What's it worth to avoid having to pivot because you miss-guessed the market or requirements, and you had to back up and basically restart everything you've done?” If I can help you avoid that, and I think together with Momenta we have an awesome ability to help companies get purchase and avoid that, get started on the right foot and keep going. So that's why.

30:26

Perfect. Well, we are very pleased to have you, the complementary aspect of this is quite obvious in terms of what the value you bring in momenta hopefully brings to your capability. So, just maybe a more personal question I always like to close on, where do you find your personal inspiration if you will.

30:46

Yeah, hmm good question. Well, remember back when I explained that personally I think I live in the “Athens and Camelot of innovation”, bear with me here. For me, inspiration is everywhere I live. It is everywhere all the time. I find inspiration in people, which is one of the great aspects about venture capital is you get to meet lots of smart people who are doing interesting things. So, people, books, and online. I'm the guy that never met a new idea that I didn't like, and I constantly have to fight myself against going down some rat-hole learning about obscure things that are interesting to me.

My mother, I used to joke and say she has the trivia gene, she used to know the obscure answer to crazy stuff, and for some reason, I think I have that same genetic trait. I'm a lot of fun at trivia night at the local pub. So, I just love engaging with smart people, I engage with authors, creators, thinkers, researchers.

I just looked at my Kindle reading list, and without telling you which actual books I'm reading, here are the topics of the most recent books I've been reading:

The history of the scientific method –why did it take so long to get to this knowledge machine that we now have for creating? Why didn't it happen back in the original Athens, why did it only happen say 200 years ago? “The Knowledge Machine - How Irrationality Created Modern Science”

The next topic was, managing virtual teams - very relevant here in this situation. Momenta is basically a remote-first company. “Leading at a Distance – Practical Lessons for Virtual Success

Asteroid mining, okay, that's a big segue from virtual teams. “Delta-V

Project Hail Mary

32:30

I like that!

32:31

Legal issues. The near-term future issues, legal issues with AI persons. I won't go into it but, if an AI was a legal person, how much culpability, responsibility, liability and whatever, might they have on certain decisions?

The transformation of mobility – a big topic these days, as you know. “Transportation Transformation – How Autonomous Mobility Will Fuel New Value Chains

The history of the electric grid – As a Californian we're looking forward to lots of creative news about which part of the state won't have power for a couple of days. So, I have to change my outdoor dining plans. “The Grid – Fraying Wires between Americans and Our Energy Future

The history of DARPA, The Defence Advance Research Project Agency – I've known a lot of people who have worked there, and it's a very interesting entity, that I understand now several European countries are trying to duplicate in some way to get some of the benefits. It will be challenging and interesting to see if they pull that off. “The Pentagon’s Brain – An Uncensored History of DARPA, America’s Top-Secret Military Research Agency

And then many different books that dive into basically corporate innovation – but how to best tap into external innovations and help companies incorporate them and made good use of them.

So that's a random walk through Dolbec's reading list,

33:53

Light reading list! I don't know how much heavier you can get unless you just go for scientific published papers! Very good.

34:04

I have favorites there too, but usually, they're….

 

Machine Learning is the High-Interest Credit Card of Technical Debt

 

34:07

I'm sure you do! I think there's another whole podcast episode that we should dedicate to that!

Well, Michael, thank you so much for spending this time with us today.

34:17

Thanks, Ken; obviously, I'm very excited to come on board. I'm looking forward to working with you and the rest of the team on the portfolio, somehow leveraging the postdoc that I have in digital transformation. So, tallyho! Let's go.

34:34

Amen brother.

So, this has been Michael Dolbec, Managing Partner of Momenta, and venture industrialist, because now we can actually claim the term since we have the person who coined it! Thank you for listening, and please join us next week for our next episode of the Momenta Digital Thread Podcast. Thank you and have a great day.

You've been listening to the Momenta Digital Thread Podcast Series. We hope you've enjoyed the discussion, and as always, we welcome your comments and suggestions. Please check our website at Momenta for archived podcasts, webinars, as well as other resources to help with your digital industry journey.

Thank you for listening.