David Cheng and Elim Kay sharing their entrepreneur innovation success
This week, Stephen Ibaraki has an exclusive interview with David Cheng and Elim Kay.
David Cheng can be described as a chronic entrepreneur and an angel investor passionate about helping technology startups. He is currently the CEO of Zaka, a mobile and social CRM for SME. David is an angel investor in several startups and an active board member for Social Rewards and Jio Health. David is also a venture partner with K5 Venture, which runs K5Launch, OC's own startup accelerator that David helped found.
David was formerly the CEO of Accenx Technologies, a healthcare software company which he founded in 1997. At Accenx, David grew the company organically for several years and then raised a Series A investment along with two follow-up bridge rounds. He was the CEO and Chairman until 2009 when the company was merged into Initiate Systems and then together, they were immediately sold to IBM in an all cash transaction for an undisclosed amount. As part of the IBM acquisition, David committed to and completed a "tour of duty" at IBM where he was an industry executive for their Smarter Healthcare Initiative with a focus on Big Data. Prior to Accenx, David was with another startup for four years called Seebeyond, where he held several positions ranging from software developer to Director of Marketing.
David also has a passion for helping the community. He is currently on the leadership council for the Dean at UC Irvine's Brent School of Computer Science. He was also on the executive committee for the board of the Irvine Chamber of Commerce for several years. David holds a B.S. in Computer Science from UC Irvine.
Elim Kay is Co-Founder and COO of Zaka Inc., a consumer/business technology and analytics company. He has been involved with technology startup ventures since 2002. Through a private partnership, he acquired the then-small online community, ClubLexus.com in 2002 and served as Managing Director until its acquisition by Internet Brands, Inc. in 2007. In addition, he is president of the Kay Family Foundation, Board Director of a private consortium of operating and holding companies, Venture Partner of K5 Ventures, and Managing Partner of a number of private opportunistic investment funds.
Elim serves on the Board of Governors of Chapman University and on the Board of Trustees of the Academy Charter High School. He is a strong proponent of information age innovation, especially in education and healthcare. He enjoys partnering with leaders of all generations on meaningful collaborations that yield positive impacts for the world.
To listen to the interview, click on this MP3 file link
The latest blog on the interview can be found in the Canadian IT Pro Connection where you can provide your comments in an interactive dialogue.
PARTIAL EXTRACTS AND QUOTES FROM THE EXTENSIVE DISCUSSION:
Interview Time Index (MM:SS) and Topic
|:00:38:|| ||Both of you have amazing backgrounds and are based out of California but operate globally. What are some things that continue to excite each of you?
:00:57: David: "....The world is getting smaller and smaller so it's really exciting to be a part of this period and time where we are able to work and develop technologies that can affect lives on the other side of the globe...."
:01:24: Elim: "....If we look at the past at the agriculture age which occurred over thousands of years and then the industrial age which occurred over hundreds of years and now we are in the information age which is now in the decades, the question that I think about is: What is the next age? Is it going to be a spiritual age or something and then how will that transition look like? Will it be a peaceful one or will it be a turbulent one? Those are some of the things which are exciting to me living in the current age that we are living in right now...."
|:02:30:|| ||You are both successful entrepreneurs. What makes an entrepreneur?
:02:35: David: "....Being an entrepreneur is who you are and not what you do. Entrepreneurs are the ones who see the entrepreneurship as a journey. It's not, 'here are the things I need to do become an entrepreneur'....it's, 'I'm an entrepreneur and these are the things that I want to do and these are the changes I want to make'. They do this with a lot of passion and they don't give up...."
:03:48: Elim: "....Being focused, being very dedicated, having a lot of tenacity, being relentless on a mission - being an entrepreneur is not a job, it's really a lifestyle...."
|:05:21:|| ||You are both also very, very successful investors. What do you each look for when making investments?
:05:31: David: "....Every investor or technology investor looks for three things. We look at the market, the product, and the people and the team. What I've learned is every investor puts different weights on each of those categories and I'm not much different, but I put a lot of weight on the team....The product is probably the last thing on my list; it's got the smallest percentage point. Why? Because product can change. If you have a team that can persevere, can execute and you have a target and vision to go after, that team will create the right product or pivot to the right product to get to the vision...."
:07:14: Elim: "....To supplement the emphasis on the team, in addition to having the experience and having a track record, another element that I look at are the dynamics of the team, especially the founding team (the management team), having that good working relationship and most importantly that fundamental trust. What Dave said about the product, the market potential - that's another large area that I always look at and like David said, product is always iterating, especially now in the field of technology, the product is going to constantly keep changing. So if I were to sequence it out, it would be the team, the market and then the product...."
|:08:34:|| ||You are both successful executives. What makes a great executive?
:08:57: Elim "....I'm still relatively early in my journey in running companies and being an executive, but I think the things I've picked up along the way are having a sense of confidence, but also a sense of humility....One additional thing is always wanting to work with smarter people. There are many people much smarter than I am and the one thing that I try to do as an executive is try to corral them together, motivate them and empower them to do what they've got to do...."
:10:03: David: "....In addition to what Elim mentioned, the trait you must have is to be a leader, but not necessarily a manager. You want to create the vision, share that vision, get your team on that vision and be able to lead them to achieve that vision. You are not supposed to be the smartest guy in the room, but if you have that leadership where you can form a team of very smart people that can execute, and you have the ability to lead them through that and let them do their thing....Create the vision, build the team, empower the team and allow the team to execute...."
|:11:46:|| ||Agility is key today whether with a start-up or launching a new product or service within a larger enterprise. The start-up mentality is required. What are the key steps for successful start-ups or for enterprises when producing innovations to keep them competitive?
:12:13: David: "....What we do here in California has an immediate effect on people on the other side of the world so I think agility is definitely the key and that applies to the team that we create, the company that we create....At iHeartLocal we keep the team small, yet very motivated. Motivating the team is something that we do on a regular basis. We keep them nimble, flexible and encourage them to think outside the box, but at the same time keep them focused on the vision...."
|:14:15:|| ||What are the key attributes in individual and teams that produce winning products and services?
:14:20: Elim: "....I think the team truly understanding the vision and direction of the company and where the company needs to go. Obviously the team dynamics, having that fundamental trust and perseverance to constantly staying agile. The major attribute is the culture of the team (that they have that iterative mindset), and are willing to put the product out there early, constantly getting user feedback and listening to the user, as well getting customer validation and then willing to make those quick pivots in a timely manner...."
|:15:17:|| ||You mentioned pivots and some of the audience may not be familiar with that term. Can you describe what is a pivot?
:15:25: Elim: "....A pivot is really iteration in the product so for example our company, iHeartLocal is building a software solution. We have a Minimum Viable Product (MVP) and we put it out there where we 'hit the streets', so to speak, at lots of different venues and events to get user feedback. We watch them go through the product, install it on their phone and ask them if they find it useful, would they pay for it, etc. It's gathering a lot of intelligence and then coming back and realizing as a team what we've got to look at, what works and what doesn't work. Based on what works and what doesn't work, we make certain changes and the process of that change is really the pivot and that, at least for us, has occurred multiple times. We come out with a new version, then we go out again and get the feedback, come back then put it out another version. That's what a pivot is, especially for a tech company creating mobile apps and whatnot, there's going to be a lot of pivots along the way...."
|:17:23:|| ||How do you know you have a winning product or service?
:17:26: David: "....Honestly, time is going to be the biggest indicator. I don't think we will ever be satisfied that we have a winning product. You can kind of figure it out that things are moving and you're making progress but the market today changes so quickly. It's so dynamic that we have to be constantly looking at how our product is doing out there....I don't think we know or we want to be satisfied that we have a winning product, but constantly strive for the winning product...."
|:20:05:|| ||You are involved operationally in new start-ups where you are founders. Can you pick one and talk about what prompted you to start the company?
:20:15: Elim "....One company that we founded and are actively involved in is iHeartLocal...."
:20:28: David: "....Elim and I met a couple of years ago and talked about the opportunity that we really wanted to go after was for the small business. There are about 28 million small businesses in the US alone, the number is much greater globally and since 1982 the number has increased consistently. The problem is even where the numbers are rising, the failure rate remains the same. Eight out of ten fail within 18 months and the number one cited reason is customer relationship – knowing the customer, staying connected with the customers. Small businesses don't have the tools or the resources to support a customer relations management system so what we set out to do was try to figure out the problem. Could we create something to help the small business build relationships with their customers? For a small business, (in a study by the Wharton School of Business), 83% of all satisfied customers are willing to refer that business but in actuality only 29% do it and the primary reason is 'not top of mind and not easy to do'. Coincidentally the largest source of new customers for small businesses is through that referral channel. Could we develop something that would make the referral a lot easier, that allows the small business to manage those referrals and customers so that those interactions and relationships can translate to more business, more engagement for those small businesses and make those tools very easy to use? So we set out to do that and over the past few years we've had many iterations to try to address that. We are pretty excited that we launched this past September and making some pretty good progress...."
|:24:34:|| ||How have you adapted your company over time and why?
:24:49: David: "....Our product was iterated multiple times and that really gives you market feedback....At the company we had to build and train the team to learn how to adapt and change and do these iterations...."
|:27:22:|| ||What lessons did you learn and how will you apply those lessons in the future and even today?
:27:28: David: "....Things are moving so quick and as a technologist we have this tendency to gravitate towards the coolest and the shiniest toy in the world and try to use that and I have to tell you we did the same thing. When we first started building this product we tried to look for the latest and greatest technology to help us to get there quicker and with that promise of getting there quicker and using the coolest toy to get there. We had to dial back to using proven tools, but at the same time get a good combination going where you have proven tools, some kind of cutting edge technologies so that you can use these tools to develop your innovative product. That's been a lesson that we learned and hopefully going forward we can apply that to future products...."
|:29:18:|| ||What do you see as the top new innovations that businesses and enterprises need to plan for and why?
:29:25: Elim: "....If I were to put my finger on the pulse and isolate some of the top ones that kind of come to mind it would be machine learning....Now larger companies are trying to embrace machine learning and artificial intelligence to process large and small datasets to basically gather actionable intelligence. I think small businesses can truly become more effective and more efficient by implementing similar technologies...."
:30:36: David: "....If you can imagine small businesses using that type of technology, being able to predict the probability of a customer buying certain products based on conditions that they may not think affect the buying habits (like the weather across the globe or the stock markets here in the US or in China). Having that ability to predict buying patterns, right off the bat small business would be able to do that in real time and be able to put things on the shelf today or market certain things today because of certain market conditions that are happening across the globe....."
|:35:39:|| ||You both sit on many boards. Can you overview some of them and what lessons you can provide from this work?
:35:56: David: "....One is, Jio Health (in the healthcare industry) is looking to disrupt how people manage their health....The second, Social Rewards, which has been around a little longer....I think the lessons learned from these successful companies is having a team that shows great leadership, resilience and being able to recognize opportunities and never give up. I've also learned a few lessons from the companies that I've invested in that were not successful and coincidentally the lesson is the same. The successful company it was the team that made it happen and the unsuccessful one it was also the team where the problems originated from...."
:38:56: Elim: "....One is for a Charter school located in Santa Ana which is in Orange County in Southern California. It's called the Samueli Academy which is a STEM project based Charter school; the mission is to serve at-risk youth and foster youth....The lesson I've learned is to be very active and very intentional if one decides to be involved with a board. Be intentional and be really engaged and just work...."
|:41:32:|| ||I'm fascinated on the team aspect. David you mentioned you invested in companies where the team created some issues. Can you go into more detail as what you see as problems when the team creates issues with the company which can actually lead to their failure?
:41:53: David: "....I'll pick one specific issue and it was the same issue across two companies that I invested in and then they both failed. The issue was that we had founders that did not share the same vision of where the company was going. You've got one founder that believed the company should go in one direction and another founder that believed the company should go in another direction and the constant fighting escalated into other types of problems....You've got to have your leadership believe in that one vision and all execute on that vision...."
|:44:01:|| ||For startups, do you have recommended resources (like books, people or websites, etc.) that they can study?
:44:08: Elim: "....There's a lot of books and different resources from well-known entrepreneurs living. We are very fortunate to be in this period of time where going onto the internet with YouTube there are a variety of interviews with successful entrepreneurs and Q & A's. But from my personal experience, the top resource that I've tapped into trying to launch different companies and being involved in different start-ups has really been the people around me. Proactively engaging and connecting with folks who are subject matter experts (they have a lot of knowledge and experience in the various aspects surrounding start-ups). They've been a great resource, a great network for me to tap into and just draw upon their strength and knowledge...."
|:46:16:|| ||As a successful senior technology executive, what are your best leadership lessons that can be used by executives?
:46:24: David: "....As a leader you can come up with a vision, but also you need the ability to build a strong team to execute on that vision. So as a technology executive, the same thing, you create that vision and you have to have the ability to go out and look for it and (once you have built the team), empower them and give them the tools to do it. Give them the tools and the strength that they need and help them with the mindset that they need to get there. Always help them to think outside the box and encourage them to do that. Encourage them to make mistakes. One of the things that I like to say a lot is: 'I'm not afraid of people making mistakes, I'm just afraid of people not trying'...."
|:48:48:|| ||I interviewed a gentleman named Adrian Cho and he created a process called the Jazz Process and he is a famous jazz musician as well. This process is about having diversity on your team, even to the point where's there tension, but managing that could lead to more innovation and more productivity or ultimately more success. What are your views on having diversity on your team to a point where it might cause tension on that team?
:49:42: David: "....That's very interesting. I've got to look at it some more, but I think I'm in agreement with that, creating that type of environment maybe to drive more activities. I must say I've got to look at it more before I can really respond to that...."
|:50:42:|| ||Both of you have traveled extensively, spoken worldwide, your work takes you around the world, do you have any stories that you can share (perhaps amusing, surprising, unexpected, amazing)?
:50:58: David: "....I was in Asia not too long ago and when I was shopping I bought some products at a local shop in one of the Asian countries and used my credit card. Being the cautious person that I am, on the back of my credit card I had printed in block letters SEE ID. So I purchased the product, they gave me the credit card slip, I signed my signature and the merchant looked at it and compared it to my ID and said that it's not the same. They wanted me to sign it exactly as it looks on the back of my credit card and they refused to take my signature. I probably spent five minutes trying to explain to them that is not my signature, to look at my driver's license and that is my signature but they said no, no, no, sign the words SEE ID. I ended up signing the block letters SEE ID on my credit card slip. I thought it was kind of funny how people think...."
:54:08: Elim: "....In 2010 I lived in Beijing for about half a year and for the first part of my time there the place that I was staying had very, very basic accommodation, especially for the local context. Having grown up mostly in Southern California all my life and then living in China, especially that part of Beijing at the time was a big contrast for sure....The first day I got there I was trying to assimilate and I was trying to get a feel for the environment. Just roaming the halls, going through the area, people at the time (I was in my mid-twenties and I was seeing other mid-twenties individuals), and they were happy and that was what they knew. And just seeing how they utilized their environment (even their very simple environment), they were very creative of how they curated their own living environment and their own rooms. It taught me a very important lesson, it starts with being mentally adaptive. I told myself I had to make a change. It's a story that, coming back from China I carry that same mindset onward and it's been very helpful socially but also professionally - being involved in different companies, to be very mentally adaptive and understanding...."
|:58:06:|| ||David, Elim with your demanding schedule, we are indeed fortunate to have you come in to do this interview. Thank you for sharing your deep experiences with our audience.