BC Business
Michael Wee, a former investment partner with Silicon Valley venture capital giant Andreessen Horowitz, weighs in on the future of technology and the B.C. tech sector's scale-up challenges
At 28, Michael Wee has already built a thriving career in Silicon Valley.
Wee grew up in Vancouver, where he took programming courses at UBC before earning a BA in computer science at University of California, Berkeley. As an undergrad in 2011, he got his start in artificial intelligence research by working on Computer Go, a predecessor of Google’s AlphaGo, the first computer program to defeat a professional Go player. Wee went on to do more research projects in machine learning at Harvard University and the Massachusetts Institute of Technology, then worked as an engineer and data scientist for Silicon Valley startup OpenGov, which makes enterprise resource planning software for governments.
In 2016, he joined Menlo Park, California–based venture capital giant Andreessen Horowitz (a16z), where he started by focusing on investments in AI. “I looked at everything from self-driving cars to robotics to consumer chatbots to enterprise machine learning infrastructure and emerging platforms such as crypto,” he says. As an investment partner, Wee helped launch the a16z AI Playbook, a resource for corporates, entrepreneurs and technologists looking to take advantage of AI. Earlier this year, he left the firm to launch his own startup, which aims to help companies in traditional industries such as logistics and construction digitize their workflow.
We recently chatted with Wee, who is now keeping a close eye on the tech sector in his hometown.
You helped source and close several investments in the a16z portfolio. Could you tell us about one or two of them?
One deal I helped find was a16z’s investment in Anyscale, which is based on an open-source project called Ray. The founders of Anyscale, a framework for building machine learning applications of any size, are a team of distributed-computing professors and PhDs from Berkeley. The open-source traction it got helped put it on my radar. One pattern of successful startups is deep technologists building a software project to solve their own problem, whether in a research lab—as in this case—or at a larger company. When they open-source the project, it starts gaining a life of its own, creating an opportunity to turn it into a business.
Anyscale is interesting because Moore’s Law is slowing down, and one way to keep up with increases in computing demands from industry is to distribute computation. Ray and Anyscale provide a way to distribute applications across a massive cluster of nodes.
Another fascinating company we funded is San Francisco–headquartered Anchorage, which provides institutional secure custody of crypto assets. I sourced and helped close the Anchorage deal, which saw a16z invest US$17 million in the Series A round. The founders of the company, which has gone on to raise US$57 million in total, are security experts who built key parts of the security stack at Square and Docker. Crypto is a massively interesting space, and increasing safe custody and trust is key to its growth.
What technology trends and startup opportunities are you most excited about?
We’re at a point in time where a16z co-founder Marc Andreessen’s Software Is Eating the World thesis is really happening. Many workflows across consumer life and enterprise are becoming digitized, and we’re just at the start. Machine learning techniques such as computer vision are starting to work, and entrepreneurs are using them as Lego blocks in creative new applications. People are also figuring out best practices for deploying machine learning infrastructure and model serving at scale, which will result in many more improvements.
There’s a lot of nerd heat in the crypto area, where trustless applications, which allow software applications to be community-owned and -operated, can start to be built. The emerging architecture of trust is a departure from centralized governance of software by companies around policies such as data privacy; over time, hopefully it will result in a more user-friendly Internet. This convergence of software, cloud and AI has made me excited to branch off as an entrepreneur myself.
What advice do you have for tech entrepreneurs who are just starting out?
For young entrepreneurs, the most important thing is creating a great product. That’s how you get traction and gain heat around your company—and attract the experienced people you need to help you build and scale it.
Often the pop-culture view of startups is that you have a great ideas and things just fall into place. It takes off and gains steam; it’s an overnight success. In the past several years, there are very few examples of this. Facebook is probably one of them, but even there, they had to do a lot of work.
When you think of what a startup is good at, it’s really just a small firm with limited resources, and it can only do one or two things really, really well. Those things include focus, moving really fast and pivoting between changes and ideas and customer feedback. As a first-time entrepreneur, you don’t have anything figured out except for an insight into how you can do something better in a large market. Often you don’t have huge networks of sales executives and senior engineers that you can bring with you.
What will really get you excited is the story of what you’ve noticed in the world that’s changed, or what the big guys are missing or doing that you can do differently. The most concise way of expressing something like this is through a product vision: here’s how things are going today, and here’s how we change it. Here’s what people are using today, and these are the things we’re going to build for this set of users or this particular problem or pain point. Then you start telling that story, and you start bringing people along. The way you get to that is by spending the most time on some very specific pain point.
Before you even come up with the product idea or the vision, there’s something we call the idea maze. Again, the pop-culture view of startups is hey, you just come up with the idea, and either it works or it doesn’t. And when it works, it works spectacularly well. But the really good entrepreneurs will start in a particular space or notice a particular problem, whether it be music streaming or security or food delivery. That’s where you start in the idea maze, and then you have to learn about the history of that space. You also explore what different solutions would look like. Most entrepreneurs will have gone through the idea maze at a pretty deep level.
What can the Vancouver startup and tech ecosystem learn from Silicon Valley?
There’s something unique in the water in Silicon Valley that allows such a proliferation of startup activity. People there are very open to new ideas and to meeting new people. A bright young person can arrive full of ambition, and within a few months, they can connect with many entrepreneurs, mentors and investors. There’s a pay-it-forward mindset that lets you reach seasoned professionals for advice. Silicon Valley is a place where people can rise to prominence very quickly on the merit of their ideas and execution; folks there don’t want to miss out on that, so they’re very accepting of new arrivals.
Does Vancouver’s tech sector have anything that sets it apart from the competition?
Vancouver has many of the right ingredients. One ingredient correlated with tech success is having strong local research universities, particularly in technology disciplines like computer science and biotech. Stanford and Berkeley were the analogous progenitors in Silicon Valley, spinning out Hewlett-Packard in 1939 and a wave of semiconductor startups in the following decades. SFU and UBC are strong research universities with a strong talent pool of students, and hopefully they’ll continue to increase in strength and draw talent. Being a nice place to live also doesn’t hurt.
With rising costs in Silicon Valley, a hot trend in San Francisco is the rise of remote and startups addressing remote work. Many startups are considering going remote-first now, either with a globally distributed team or with remote offices. Almost all companies in the forward-thinking software sector in California are working remotely right now. Google just announced that most of its employees can work from home for the rest of 2020, and Twitter told staff they can work from home permanently. Among startups, COVID-19 has accelerated the interest in remote work, allowing Silicon Valley companies to expand their talent base internationally. Founders and investors are buzzing about remote work best practices, and remote work tools like Zoom, Slack and Tandem are seeing accelerated growth.
Vancouver is increasingly becoming an attractive city to open a second or third office by virtue of being on the same time zone as California and only a two-hour flight away. Canada has much friendlier immigration policies for skilled work, so companies can recruit globally and still have the advantage of face time in a small number of offices. Successful startups such as Asana and Segment have already opened Vancouver offices.
How much attention should Vancouver be paying to the various tech ecosystem rankings?
I wouldn’t worry too much about tech ecosystem rankings. The reality is that today, there’s Silicon Valley and the San Francisco Bay Area and everyone else, and that’s OK. There are several rising ecosystems, such as New York and Tel Aviv. Beijing and Shenzhen also have something special going on. All of these have a burgeoning talent pool and have seen some successful exits. But the Bay Area is still the centre of gravity, and everyone else should just play to their strengths, Vancouver included. And Vancouver has much to be happy about.
It’s been said that B.C. has a scale-up problem, not a startup problem. How can we attract and build more anchor companies?
Many startup destinies are determined in right at inception, sometimes due to factors such as quality of the founding team, size of the market, early product decisions and the company’s ambition. A healthy startup ecosystem will have a thousand experiments being run at any one time. Most will fail. However, in Silicon Valley the ones that do start working instantly can tap into capital, advice from seasoned investors and entrepreneurs and operators, and a deep talent bench.
Attracting more anchor companies means attracting the right set of entrepreneurs, first by putting B.C. on the map for would-be entrepreneurs as a great place to establish and build their businesses. It also means growing the right type of entrepreneurs locally, through education and industry.
Building more anchor companies is a bit of a chicken-and-egg problem. In a thriving startup ecosystem, there’s a couple of things that need to happen. Looking at Silicon Valley, probably the most important thing is that it’s the No. 1 concentration of talent, and not just technical talent. It’s experienced executives who know how to manage technical talent and do product planning, but it’s also sales talent. In San Francisco, you’ll bump into people on the street who helped take two companies public as their first VP of sales. That’s its own skill set and set of experiences. Same thing with marketing and product execution and talent recruiting executive recruiting. So it’s along all of these axes, not just ingenuity and technology, because all of these things are required to build successful scaling companies.
You can grow talent in-house and you can attract talent, and I think for Vancouver, it’s going to be both. The other thing is, if you look at the history of the Bay Area, it started with early successes that came out of world-class research universities, like Hewlett-Packard in ’39, and then they kept compounding over the last 60, 70 years. So it does take time, but the good thing is that Silicon Valley set a certain culture, and then once it had those early successes, the culture allowed a lot of things to start happening. Once a bunch of these early companies went public, people stuck around and started building new companies and helping other companies. It also made a lot of capital available. Early employees of companies that went public wanted to get involved with other young entrepreneurs and young companies, and they started angel investing and advising. So there’s this virtuous cycle.
For Vancouver, if you look at the parallels with Silicon Valley and Boston in the ’80s, you have world-class universities that draw great students from everywhere but also great researchers and professors. UBC and SFU are super strong, and Step 1 could be doubling down on that—attracting great researchers, particularly in the technical areas.