5 1/2 Questions for Gary Lauder
Managing Director of Lauder Partners LLC
Gary Lauder is the Managing Director of Lauder Partners LLC, a Silicon Valley-based venture capital firm investing in various realms of the technology field.
He has been a venture capitalist since 1985, investing in over 150 private companies, and is an observer or member of about 7 of their boards. He serves on the Advisory Council of the Aspen Institute Science & Society Program and the Board of Governors of Alzheimer’s Drug Discovery Foundation. In the 1980’s, he worked at the venture firms of Aetna, Jacobs & Ramo Technology Ventures, as well as Wolfensohn Associates. He holds a BA in International Relations from the University of Pennsylvania; a BS in Economics from the Wharton School; and an MBA from the Stanford Graduate School of Business. He is the co-creator of the Aspen Institute’s Socrates Society with Laura, his wife, and is a member of the inaugural class of the Aspen Institute’s Henry Crown Fellowship Program.
Chairman of ActiveVideo Networks, and OnLive. Other directorships: net2tv, Promptu, MediaFriends and ShotSpotter. Investments are primarily in television/IPTV technology and WWW arenas.
From time to time, he publicly advocates on subjects that are important, but misunderstood, primarily:
1) preserving and improving our patent system for the benefit of tech entrepreneurs who innovate in fields where patent protection matters, and 2) improving decision-making on transportation to alleviate traffic congestion.
He is co-inventor of 17 patents, has spoken at over 150 industry forums, and, since 1992, has published several articles about the future of telecommunications and computing…that he still stands by.
Gary Lauder's Bio
Bio of Gary Lauder Gary Lauder is the Managing Director of Lauder Partners LLC, a Silicon Valley-based venture capital…
5 1/2 Questions for Gary Lauder
1 — Tell us about the accomplishment you’re most proud of …
I would say that my having taken a company named ShotSpotter from nothingness to something. Not only has this company been very profitable for me, but it saved lots of lives.
And you know I’ve been doing impact investing since before it was called impact investing. My first was in an educational software company in 1987, but this [ShotSpotter] is a company that was nowhere at the time. They weren’t even seeking capital but I found them and I agree to invest if they took on a certain person as the CEO, who after they got to know each other for a year finally happened. His name is James Beldock and he took it to a much greater level of deployment and functionality. And then someone else took over from him, and then ultimately took the company public.
Anyway, the reason why I’m most proud is it’s about all the lives that have been saved by it, Because in the cities, in which they implement it properly they have about a 40 percent reduction in gunfire and reduction in homicides and and that’s a lot of lives. The people whose lives have been saved don’t know their lives were saved.
So when people fire guns outdoors typically the police don’t know it. 80 only 20% of gunfire gets reported. The other 80% does not. And so the police don’t really show up on for 80%. And when they do show up when people only phoned it — and it’s very delayed and imprecise, regarding the actual location. And so (with ShotSpotter) by having the rapid notification with precise location, it also saves lives by police showing up and getting medical care to somebody who’s been shot. But but the deterrent aspect of it is the main thing that has saved lives.
When they started phone the their system went over analog phone lines that were wired and just continuously connected — this is what’s called a “nailed-up” connection. But now being able to use cellular data has been like a wonderful thing, since it reduces costs and simplified installation.
2 — What was your biggest regret in business — something that you didn’t do (or passed on) …?
Well, probably every VC has examples of great companies that they they didn’t invest in.
Some of my favorites for that were in 1986 a venture capitalist, with whom I’m still friends named Alan Patrickoff. He sent me a deal named Quantum Computer Services — which was an online an online interactive service — and I sent it to another company I had invested in that field to get their opinion on it. I never heard back from them. and I kind of forgot about it. Later on that company [Quantum] changed their name to America Online aka AOL. So I “passed” on AOL because I sent the deal somebody to get their thoughts on it, and I forgot to ask, and they forgot to tell me.
And in in a similar timeframe I was sent a deal — Dell Computer — in 86. I just switched employers, and I knew this deal was would be of much greater interest to my old employer, Wolfenson, and I sent it to them suggesting that the this would this perfect for them, Anyway, that was another one. I didn’t do because my newer employer didn’t like late stage deals, and Dell was a late stage deal (though pre-IPO).
Frankly, I don’t stew over those very much — I mean obviously that would be a source of great unhappiness if I did. But I would say my biggest mistake in business that I regret was in sticking with the Cable TV industry for too long.
I first got involved in technology for the cable industry before there had been a lot of consolidation — while the operators were small and entrepreneurial, but over time many of them merged. And my involvement was in investing in vendors. I invested in 2 out of the 3 cable modem companies that went public, and in a video-on-demand server vendor — that that turned out well.
So I made a lot of successful investments in the field, but the successes were mainly in the in the late 90s, and early 2000s. But there were some companies that were selling to the to cable operators that I stuck with, and as they consolidated they’d be the larger they got the more dysfunctional they got, and the more they believed that they that they could build products — when really they were terrible at building products.
And basically they were kind of monopolists, and monopolists don’t tend to breed the kind of dynamic smart management teams that very competitive industries have. So that that was my big mistake, not sort of understanding this behavioral difference.
And so as the cable companies got bigger they [mistakenly] rationalized, to themselves, that the buy-versus-build equation shifts towards “build”, when you’re at their scale.
Now, that could be true, but there’s another important factor which is: when you’re at that scale — the cost of not introducing a product sooner is much greater.
But they never considered that. And also that their own development timelines were way longer than if they had simply bought products from vendors. And so they they basically shot themselves in the foot and continue to do so to this day.
The essence they were delivering a service. And the the cost of of not delivering those services was greater as — a result of their of their insisting on building it themselves instead of just buying something that exists. They should have partnered more, and they should have acquired more.
3 — Tell us about the last time you built something with your hands?
So I put in solar panels on my home and with battery backup and my sub floor in our home in 2001 before it was “cool”, and while it was really expensive. When the batteries got to be a decade old they needed replacement. I had to determine the size of the replacement so I looked to see how much energy was going to keep them charged nice, and I it discovered that it was quite material if I needed reliable power.
And I realized, well, if I had some kind of a generator, then I’d only really need the backup power to just last until I can get the generator connected. Now, in 2010 I gave a TED talk of that was proposing a new kind of traffic sign — a hybrid between a stop and a yield sign. And someone else who had come up with a similar concept saw it and sent me an email showing me his concepts. He created a system that he called PriUPS — As in Prius [the hybrid car] plus an uninterruptible power supply (UPS). Yes — this was a way of adapting a Prius, since it has a built-in battery, to use the generator portion of the car to to to output power. And so, by modifying some voltage converters to DC voltage. I converted the roughly 200 volts of a Prius to 48 volts of my battery and solar system. This enables a single Prius to power my home!
And so, anyway. so I did that, and working with an electrician, installed the system in conjunction with the existing solar system. And the good news is the power has been very reliable and I’ve rarely ever needed it. But that’s that’s the last time I built anything material.
Long ago, 1990, I was renting an apartment in New York City, you know, in an old building, and the electricity went out in one of my bedrooms and and I called an electrician to try to figure out what was wrong, and they they couldn’t figure it out and so the only option they proposed was to install wires on a molding on the wall like down the hallway, which I thought would be horribly ugly. And the in the walls were plaster, so there wasn’t there wasn’t a good way to sort of get into the walls the way one might end up in a normal wood and wallboard type of home.
And so I thought, Okay, so somewhere there’s a wire that used to be connected that isn’t anymore — a short, or a broken circuit. Therefore, that particular wire is probably really close to its original connection. Thus, with enough voltage, a spark could be caused to jump across the gap. And so, if I did create such a spark, then it would create radio frequency energy that I could trace. So I just happen to have lying around because I just like to tinker with these things — a transformer that transforms from 120 to 5,000 volts.
Now, I didn’t want to jam it with 5,000 volts, or it could have generated lots of sparks, causing the paper insulation — which is what they use back then — to catch on fire and burn down the the building. So I attached a variac [a variable transformer] to the front end, and then and a capacitor to build up for electricity to a certain level — so that when the spark would have enough energy. And then I used an AM Radio — you know they’re easily interfered with. So I turned it up until I started to hear the clicking on the AM Radio. And then I trace-walked through the apartment to find where it came from, and it was in in an outlet in the dining room — and that’s where it was coming from. So I just, you know, tightened the screws on that and poof!
4 — What early job had the most profound impact on your career?
I had 2 jobs before going to business school, and I was more or less independent after that. And they were both very formative, but in different ways. The the the first one I would say — I was much more successful after I left (than while I was there). That’s because I was a young VC in a firm that was in a new venture fund, and this fund didn’t have track record. And and no individual within the fund had any prior Venture Capital experience either. It was in 1984 then there had just been sort of a boom and venture capital raising.
They didn’t know that they shouldn’t be hiring kids straight out of college, and I was fortunate that they didn’t know that! Our job was to summarize business plans and enter that into the database that they worshipped.
And I wasn’t that great at doing that, at that time. Something about my brain sort of obsessed on details, and didn’t couldn’t see big pictures which subsequently changed, which is an interesting thing of how brains change over one’s life. Anyway, they didn’t appreciate my various [activities and insights]. So, for example, there was a company that I brought in as a potential investment, and recommended, and even went to the investment committee, and they they ultimately turned it down for a bunch of silly reasons I won’t go into — but that company happened to go public on the day I left the firm — which was approximately 14 months after I had proposed it. They would have had a 10 times return just between the time that I recommended it, and that IPO. And there was another company that I also was very favorable about then, that they also passed on.
I met the educational software company I mentioned earlier — and I did invest in them but it was at the following firm.
But at this firm, they weren’t generally happy with me while I was there. And I had this crisis of confidence, and you know it’s like: “Am I? crazy? Are they crazy? Am I? crazy? Are they crazy?” — until I finally I realized … it wasn’t me! And so that was really important for my confidence too. because my judgments about what companies were good and not so good were proved by that. Through the passage of time my judgments seem to have been vindicated.
There was another summer intern there that who I won’t name — who, they said, ‘you ought to be a lot like more like him.’ I mean 2 different people on the same day! Both said that — which was really like annoying — anyway, and he made 2 recommendations while he was there, and they did not invest in them. But within a year they both happened to go bankrupt. So, anyway, I didn’t feel so bad.
But you know very early in one’s career, before one has built confidence, these kinds of things happen, and so they can be very formative. And my subsequent employer developed me a great deal more — so I was very fortunate to have. I joined a guy named Eli Jacobs in his firm named at Atena Jacobs and Ramo Technology Ventures, and it was a a joint venture between Aetna Life and Casualty — Simon “Si” Ramo, who is the R in TRW. A brilliant, wonderful, very elderly guy who then went on to live past a 100, anyway.
In that situation. I worked with a guy from Aetna, named Alan Mendelssohn, who was maybe about 20 years my senior, and he was very experienced. Yet because I was representing the other active entity, I was his peer, and so he was a great mentor to me. And I still have a great relationship with both him and yeah, and Eli Jacobs.
5 — When was the last time you had to “sell someone” or convince them to help you with something important to you?
I haven’t done that since about an hour ago!
Well, I mean I’m always doing that kind of thing.
You know it’s the kind of thing that’s an important part of almost anyone’s job. One is always having to be selling and whether it’s an idea, or one’s equity, or one’s products or services, or, you know, selling oneself to make sure that one’s boss properly appreciates the job that you’re doing. I mean [selling — convincing and persuading] plays a role throughout one’s life.
So right now I’m very actively involved in in trying to help our government stop destroying our patent system — which has happened with the American Invents Act and and other things like that.
And so you know, when I talk to people in government, I’m trying to persuade them about how they’re being misled frequently by the big tech companies — let me plug a speech that summarizes all this, that I gave just before Covid in March of 2020 — the title is The Roll of Patent rights in America:
The Roll [sic] of Patents In Corporate America: I called it that because I believe the techlash is misdirected at the other things that big tech has done, because I allege that this is the worst thing that big tech has done.
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and … the BONUS “Color” Question
You’re transported to Silicon Salley around 1995 with $5,000 in your pocket — ready to change history. What steps do you take to jumpstart the modern tech era? Maybe even putting us on a better path.
Well with $5,000 there aren’t many private companies that would take your money because the size is too small. Is that, do you mean what company would I start, or what company would I invest?
[Like a time machine — or like a “Connecticut Yankee in King Arthur’s Court” ]
I know, and I love time travel movies. Well, I would say that probably at that ne of the best things one could invest in is Nokia, which, I think they were transitioning from making rubber boots to, uh, cell phones.
And if it, if it was $500,000, then that would have that, then that could open up the possibility of investing in private companies. But, you know, but no one would take your money if it’s only $5,000.
For more 5–1/2 Questions Interviews, see:
5–1/2 Questions with CJ Cornell
5 1/2 Questions from The Metapreneurs “5–1/2 Questions” from CJ Cornell is a new series of mini-interviews with leaders…
“5–1/2 Questions” from CJ Cornell is a new series of mini-interviews with leaders in the entrepreneurship and innovation ecosystem around the world. In less than a half-dozen short questions, we’ll try to learn more about each leader, and what makes them successful and unique.
The questions are designed a little like a “Magic Eight Ball” (my GenX colleagues know what this is): A set of questions, posed at random. Plus, at least one question, or half-question, is designed to find out something about their personality that most people might never suspect (I mean expect).
CJ Cornell is a serial entrepreneur, investor, advisor, mentor, author, speaker, and educator. As an entrepreneur, CJ Cornell was a founder of more than a dozen successful startup ventures that collectively attracted over $250 million in private funding; created nearly a thousand new jobs; and launched dozens of innovative consumer, media, and communications products — that have exceeded $3 billion in revenues.
He is the author of the bestselling “The Age of Metapreneurship — A Journey into the Future of Entrepreneurship.”
And the upcoming “The Startup Brain Trust — A Guidebook for Startups, Entrepreneurs, and the Mentors that Help them Become Great.”