For this 29th episode of Ask a VC Anything, our featured guest was Founders Space founder and CEO Steve Hoffman (Capt’n Hoff). In this discussion with Silicon Dragon’s Rebecca Fannin, we covered Hoffman’s constantly changing career path, his views on bootstrapping and giving away equity, and how the largely global business at Founders Space has adapted to Covid-19. See Silicon Dragon video of the show with Steve and Rebecca.
What Thrills Capt'n Hoff?
Hoffman has been an angel investor, an LP, serial entrepreneur, game developer, author, and a TV executive before creating Founders Space. He notes, “I’ve had more careers than cats have lives,” but of all of his experiences, he is most passionate about what he’s doing right now. Hoffman is the CEO of Founders Space, a global startup incubator and accelerator with over 50 partners in 22 countries. Before Covid-19, Hoffman was travelling 70% of the time, between countries, and he actually narrowly missed being in Wuhan for a book signing where the original outbreak of Covid-19 happened.
He is an early-stage investor, so companies that he invests in
sometimes don’t have revenue, or even users. He puts a large emphasis on the
team. Smart people that are open to ideas and exploration will make up a great
team. Hoffman is based in Silicon Valley, and Founders Space has five
incubators in China.
What’s Hot in China
Hoffman mostly invests in software because it’s easier to scale,
retain customers, and monetize. Sometimes they’ll invest in hardware with a
strong software complement. Hoffman continues
to be impressed by everything eCommerce and social related coming out of China.
Citing the growing buying power of the middle class, established companies like
Alibaba, TikTok, WeChat (Tencent), and Pinduoduo are on the cutting edge of
their respective industries with massive potential for years to come. Hoffman
also notes that cleantech is well-backed by the Chinese government. He adds
that it might be easier to be a startup in the industry under the new Biden
administration than the previous one. Hoffman remains positive on China in
almost every tech sector.
Still Bullish on Silicon Valley
Positive views about Silicon Valley remaining the gold standard of
tech hubs has been waning. But Hoffman doesn’t
see its status at the top of the food chain changing any time soon. “People
like to be in proximity to other people with ideas, and money, and with talent.
They have an abundance of that in Silicon Valley now.” He does list Austin,
Miami, New York, and Boston as up-and-coming tech hubs, each with their own
specialties. Hoffman notes, “the reason cities are big is because ambitious
people tend to gravitate towards the geographic place where they can maximize
their opportunity.”
With the rough estimate that 95% of startups will fail, Hoffman
urges entrepreneurs to think twice about taking money from friends or family. Hoffman
also warns to take the hints from the market, “if one of these educated angels
will not give you money, there’s something wrong with your business”. If you
are going to bootstrap, make sure it can be done with a small team of people,
and just their time and talent. Although it isn’t the most common, successes
like Mailchimp and Salesforce were bootstrapped startups in the beginning.
Hoffman also bootstrapped his first startup.
Equity
Hoffman acknowledges that the way equity in a company is handled
differs depending on where you are in the world. For example, in China, it is
expected that the CEO and Chairman keep most of the equity. However, in the
U.S., there is a much larger percent of equity given to investors and
employees. Hoffman feels strongly that, “whatever culture you’re in, you need
to reward people in relationship to their expectations, if you want to retain
them.” He believes that one employee can be worth, two, three or even five
times a mediocre one! If you have someone that you know is that good, pay up to
keep them. Sometimes that means giving them equity.
Bio:
Steven Hoffman, or Capt’n Hoff as
he's called in Silicon Valley, is the chairman and CEO of Founders Space
(FoundersSpace.com), one of the world's leading incubators and accelerators.
He’s also an angel investor, limited partner at August Capital, serial
entrepreneur, and author of several entrepreneurial books, including his
upcoming title, Surviving
A Startup.
A former Hollywood TV development
executive and founder of two venture-backed gaming and entertainment apps in
Silicon Valley, Hoffman went on to launch Founders Space, with the mission to
educate and accelerate entrepreneurs. Founders Space has become one of the top
startup accelerators in the world, training startup founders and corporate
executives in the art of innovation.
Hoffman has a bachelor’s degree in Electrical Computer Engineering from University of California, Santa Barbara as well as a master’s degree in Cinema Television from University of Southern California.
by Silicon Dragon contributor Mike Weiss
