Debu Purkayastha - Entrepreneur in Residence for Octopus Investments

Full transcript: Debu Purkayastha on London Real

0:00 In London, technology is the silicone roundabout. Introducing a new talk show dedicated to the people of the London technology startup scene. Silicon Real. Each week, interviewing entrepreneurs, venture capitalists, financial technologies, accelerators and incubators in an exciting three-person format. Learn about the people behind the innovation.

0:31 Locally filmed, locally sourced. Silicon Real. It’s about the people. This is Silicon Real, the weekly talk show dedicated to the people of the London technology startup scene. I am Brian Rose. I also host London Real.

0:48 It’s a similar setup, but it’s not just tech. We’ve had people like Tim Ferriss from The 4 Hour Everything. We had the astrophysicist Neil deGrasse Tyson. And this week we had a gentleman by the name of Ido Portal, who’s a movement specialist. He’s this fascinating guy that thinks we should be moving all hours of the day.

1:04 You actually hooked me up with him and gave me the intro to him. So check that out. It’s blowing up on YouTube this week. That’s on londonreal.tv. But today we’re here to talk tech.

1:14 My co-host is not Colin Pyle, although he’s here in spirit. It’s Mr. Patrick Vickers, who is a city trader, also a former MMA fighter. you’ve been co-host on London Real many times. It’s your first time on Silicon Real in tech.

1:29 How does it feel being here? Does it feel like a great energy or what? Absolutely. You liking it? Yeah, so far so good.

1:35 You’ve seen London Real evolve over the years. What have you been thinking when you watch Silicon Real? How does it feel different? Obviously very specific in terms of the subject matter, but you have the same line of passion just on a sort of a narrow range of subjects. But, you know, it seems that we’re in the perfect place by All Street Roundabout to take advantage of all the people who are working around the corner.

2:03 Yeah, and such cool people, such positive violence. When I started this a year ago, I used to joke, I used to go out to the drink abouts, and I would say I meet these strange people I never met before, these people that actually enjoy their jobs, and that was like the tech scene, because you had these people that were just constantly excited, you know. But anyways, that’s some of the story. Let me get to our guest today, which is Mr. Debu Porcayasta.

2:24 You are the entrepreneur in residence for Octopus Investments. Your job is to identify new investments and support portfolio companies. The Octopus portfolio has some impressive ones indeed. You guys were initial investors in Zoopla, Grey’s, Secret Escapes, Y-Plan, who we had the CEO in here reach this a few months ago. And you guys manage a big fund.

2:47 I think it’s over three and a half billion pounds with 300 staff. I had no idea how big it was. I wanna ask you more about that later. Let me just finish with your intro. You were previously a principal at Google for six years in corporate development, new business development, and you were part of the founding team at Google Campus, which is right down the street.

3:04 We had EZ-V drawn here four or five months ago. Fantastic guy, fantastic story. He gave me the royal tour before, so I’ve seen all your handiwork. Debu, welcome to Silicon Real. Real pleasure, thank you for having me.

3:15 Thanks for being here. I wanna get into the campus and hear all about that and everything with Google, but you’re known from what I’ve seen about you kind of a big picture guy and you had this statement that you said that Google was created with the Silicon Valley ecosystem because of the network effect it was a term you used and you predicted that a fintech company would come out of London that would rival a Google because of this network effect in the finance world in London and I was wondering if you could describe that and wondering if you still stand by that prediction you know it’s good that Patrick here because he’s got some finance background but if you could explain what you meant by that? So I mean this is frankly the home of FinTech or it should be the spiritual home if you will and why? Very simply you’ve got the right caliber of FinTech people out here or the financial services people out here. You have the brightest and the best who used to go to financial services who for want of a better an opportunity today are migrating out into tech but they still have a finance background and this country sort of sits in some ways in the middle of the world, right?

4:16 It works with the East, works with the West in both senses. So I really strict or stand by what I said, which is I absolutely believe there’ll be one company, at least one company coming out of here and the fintech side which will rival at Google from the fintech perspective. Whether it’ll be as broad as Google, who knows? Nobody can make those kind of predictions. But our company of substance will come out of here and then I’m fairly confident about it.

4:41 And the number one reason is exactly as you mentioned, it’s got the ecosystem. It’s just not got the people, it’s got the expertise, it’s got the banking system, and it has an ethos, which will help, so yes. It’s kind of very intangible, this network effect, right? When you talk about Google wouldn’t have emerged in New York City, in your opinion, or even in London, what is that Silicon Valley network effect? I know it’s intangible, but how would you describe how that works?

5:05 It’s, it means people, fundamentally, at its very basis, but it also means institutions that help those people get nurtured. So Stanford University is one, but also the fact that you have the network effect of the people, the money, and the institutions that surround that. So London, from a FinTech perspective, would be very similar. You have all the big banks, resident out here. You have the brightest and the best who went into financial services, as we all know.

5:36 All three of us have sort of come out of that industry. And most importantly, this is a country which has been built on financial services. So you have the ethos and the trading systems, but also the institutions that surround that, which are already there, which are resident. So you’d have each playing off the other. And it’s basically the sum of the parts are greater than the whole, if you will.

5:59 And that is exactly what I mean. So the role that, say, Stanford University has, say, played in the Silicon Valley ecosystem, and then the whole garage culture that’s come out of there, you have, in similar ways, shape or form, the same thing as possible in London. And that’s basically what I’m getting at. It’s amorphous, but it is real. They know it when you’re inside it because one feeds off the other.

6:25 There’s a new term, your job title, entrepreneur in residence. It almost sounds like somewhere between academia and business. There’s been a couple of your cohorts that have done a similar job at Index Ventures and at Excel. What does it mean to have that job title? Why go to Octopus?

6:41 Did you leave Google before you took this up? or was this kind of an opportunity you couldn’t pass up? So I’ve been trying to explain this to my daughter and to my wife, very tough. Just give us the daughter explanation. Daughter explanation is I go somewhere where I have fun because primarily what I do is every day I see new companies.

7:03 And when I say new, I mean really new and some of them are like literally brand new, some of them have already been there for two or three years and some are much more, five or six years who’ve been there. And I see them from all over the world. I don’t see them only coming out of London. So that’s, you know, you cannot have more fun than this. In terms, I literally, the day I left Google, I think a few days later or the next day I joined.

7:29 So it was obviously all there. Why is it interesting, while I spend, you know, six years at Google, it’s an absolutely fantastic place to work in. That’s a long time for Google. That’s like dog years, because most people spend two or three years at Google, right? Google’s retention is higher than the average in a tech firm in many ways.

7:48 But yeah, I still spend a fairly long time. Terrific place. I mean, I can’t speak highly enough of my time at Google. Just not the founders, but the ethos, the culture and ambition, especially the ambition. So, but from my perspective, I also knew I wanted to do other stuff, but I wanted to do it in a slightly experimental way.

8:08 So this year in some ways is fundamentally what I’m doing. I’m just experimenting a bit. And Octopus has been a phenomenal place that I’ve been working in. I mean, as you know, ironically, they came out of a startup. And what does that mean?

8:22 So about 10 or 12 years back, three kids in their mid-20s set up Octopus. And at that time, it was nothing. Today, it manages Octopus investments, which is a broader arm, just not the venture spot, is, as I mentioned, about $6 billion under management. Yeah, I had no idea. I thought they were kind of a VC, but they’re not.

8:43 They’re like, they start out to be like a financial services company. So they do all kinds of stuff, there’s a massive renewable energy business, huge, in fact, UK’s biggest, but they also have other stuff in it. So they’ve got specialist finance businesses that are within it. And I’m very careful when I describe it because keep in mind, this is FCA regulated. So I need to be really careful that I’m doing no financial promotion out here.

9:07 I’m just sort of answering the question that you’re asking. And fundamentally, it’s a startup. It’s a financial services startup, which very few people realize because it’s very young. Yeah, and it’s grown to be relatively large. And the venture steam within Octopus has absolutely been a crack team, as you explained, you know, these are the companies they’ve been invested in and they have about half a billion under management today.

9:34 And what is interesting is they tend to come very early and then go all the way. That’s basically been the reason where Octopus Ventures has been so successful is that they typically go all the way to Zoopla for example they came in the first round and they followed it all the way up right and that requires a lot of conviction. So just as metric in the year ended April end this year Octopus did 43 investments that’s a that’s a a pretty decent number, right?

10:05 So that’s not all new companies, that’s both new and existing portfolio companies, but when he pars it down, that’s a fair number of investments that it’s done. Keep in mind, as a result of it, you know, over time, it has grown, it has built itself, and today, it’s an absolute magnet when you look at the kind of deal flow it sees. So it’s pretty phenomenal to work with a team which is absolutely cutting edge, leading edge, call it what you will, And also, you get to see a phenomenal amount of really smart, cool companies come in through the door.

10:38 And it’s an interesting perspective. I mean, I seriously consider going back to the Valley a couple of years back, you know, originally I should work there. And I’m a big believer that I see certain things happening here that I hadn’t seen before. And that’s what makes me really excited to be here. And I changed my mind and I decided to stay back.

10:58 Right, how long have you been here? A long time. I started out here. I actually started out here before I went to LBS and then I went to the US and I came back. So I’ve been here now a little over 10 years since I came back.

11:12 So you graduated LBS 10 years ago? No. Two times. Okay. So Google, you spent your entire time in London?

11:18 No. No, you were in the Valley. I want to work for other companies, one. So before Google, I should work for Sabre. So the guys who own Travelocity last minute, all that, so as to work for them before that, as to around the M&A side out there.

11:31 And so for my sins, I did the acquisition of Last Minute, which is an iconic brand, and then worked on, you know, selling Sabre to private equity. So it’s been terrific. I love the city. Can you describe how London feels? Because for me, it feels like this is a really special time that we’re having now when it comes to tech.

11:48 And in five years, there’s going to be the new PayPal mafia. There’s going to be rich people. There’s going to be a jaded kind of feeling. there’s going to be a tiered structure of who’s made it and who hasn’t, because right now, correct me if I’m wrong, London feels like this community, and they want to see everyone succeed, and they want to help, and the introductions happen, the lightning speed, and do you feel that vibe, and is that what San Francisco was like 10 years ago, or is that what Silicon Alley was like seven years ago?

12:14 You have perspective. Yeah, so it’s a really good question, to be honest. I sense out here, the fundamental shift I feel now in London is I sense a looming ambition that I haven’t seen before. It’s a different scale of ambition that I see when I see people talk. And that is really important, because without ambition, that’s the one thing which it cannot change.

12:38 It has to be there. And I can sense that coming in. And to me, this is super exciting right now, the world that I live in, because I can actually see people believing in their own ambitions, and those ambitions are massive. I mean, I’ve been talking for the last few days to a startup, and the problems that they’re going after, and I’m deliberately being vague out here because they’re still in stealth mode, is massive. We’re not talking about incremental changes.

13:07 We’re not talking about major changes. We’re talking about massive changes. Just the fact that startups in London are thinking that big and saying, I want to have London as my base. I don’t want to move to the valley. That’s very, very big.

13:21 So it is, from a zeitgeist field, this feels something different. And that’s what excites me, and that’s exactly what you’re referring to. Is it the valley I saw when I was there? I don’t like making these comparisons because who knows? And it’s just not applicable at the end of the day.

13:38 It’s not applicable at the end of the day. What really matters is the output, what comes out of it. I’m really hopeful. Do you think that the reason that you’re seeing this is because tech is moving exponentially quickly, or do you think it’s peculiar to London? Do you think this is happening everywhere, that people are taking on bigger and bigger problems, or is this something that’s very, very London-specific?

14:03 It is broader and bigger than just being London-specific, but then London obviously has a role to play in. So the broader part is exactly as you said, there’s a real feel that a lot of things will change. Now that has been frankly there for the last 15 years from the use of technology. I think what’s happening in London was a lot of talent was getting sucked into the financial services and the management consulting businesses. Those jobs are going and they’re not coming back, right?

14:29 That’s just the reality of the life we live in. And the rewards even in those jobs are not as high as they were, so there’s an asset allocation change. Exactly. Yeah. So, as a result, what’s happening is the brightest and the best, some of them, who used to go there, suddenly they are willing to look out because what they work in today are no longer either paying the best or they’re no longer interesting enough.

14:50 And typically it’s a mixture of both. So you suddenly have a flood of real talent moving into in our tech startups and that’s super exciting because this is really, because London is a magnet, right? Everybody comes in from all over the world and suddenly those people are biasing to its deck. So yeah, and that once it happens, once the floodgates open, you know, you don’t, you know, you just don’t pull down the mortar and it shuts down. It’s not going to, we’re also very lucky that, you know, as we saw the recent GDP numbers Today’s GDP numbers, where UK is going, hopefully, we all live in hope, ultimately, is in a very positive area, with GDP numbers where they are being projected. So hopefully the next three to five years, or at least three years, look very good from an economic forecast perspective.

15:36 That’s going to help. Because right now, if tomorrow morning there were to be a recession, that’s a problem. But that doesn’t anywhere look like it’s going to happen. So, I also feel there’s going to be a massive fill-in as a result into the tech ecosystem. Yeah.

15:51 So, it’s all good. Do you have to nudge companies? Because we had Simon Cook from DFJ in here, and he was just saying that a lot of the UK companies come pitching him with the $100 million revenue plan, and he’s just like sticking extra zero on there. And you know, you’ve had a bunch of people that have come here and said that just a lot of times the ambitions are smaller than the typical American ambition, which is just everything or big. Do you have to kind of nudge startups along or do you find that now they are coming with that?

16:16 I don’t know, is that ambition or projection? So that evolution is, and that is exactly what I was referring to. When I’m talking of the ambition, I can see there’s a change in the ambition. You know, just not in the terms of the valuations, but also in just the startup founders, their mindsets, what they’re going after. And that is definitely happening.

16:38 You’re right that, you know, sometimes, you know, a lot of the startups have been accused of being ill-called, you know, they could have been more ambitious than what they are. Partially that was true. And I’d be lying to you if I said that, you know, that is a problem which is not there. But I see increasingly that is getting addressed. I mean, you break it down in pure human resource terms, right?

17:00 You break the world of technology into engineers, product managers, and commercial people, just for the sake of argument. So my personal experience is when I look at European engineers and I compare them to what I see in the West Coast, back-end engineers, you know, what do you get in Europe and what do you get in the West Coast, I frankly don’t find a huge difference. Front-end, I would still say that there is a bias out there. On the product management side in Europe, and what I’m going to say sounds controversial a little bit, is the ambition of the product managers that you get in Europe, when I and I compare that to the West Coast, there is a difference.

17:37 And I’m verbally using West Coast as opposed to US. I’m being very specific out here. OK. I would say, on an average again, speaking on an average, the West Coast engineer, the velocity is higher, and there’s a slightly higher ambition. I’d be lying if I said no to that, or if I didn’t acknowledge that.

17:56 The gap is still sort of where you’re talking about. It’s on the commercial side. There is a gap in the commercial sort of maturity, if you will. And this is the ambition? That’s the ambition, the understanding of how to work, the numbers, thinking of the big vision, going after it, that kind of still, there is a little bit of it, which is there is a gap between here and the West Coast, which is, I would say, non-trivial.

18:23 If we take Uber as an example, I mean, they just raised a big chunk of money, a billion plus at a 17 billion valuation, you look at the company and it seems to all come down to this CEO mentality of ambition and I’m gonna win and the vision that he’s selling. I mean, is it as simple as that sometimes that he just has this vision of where he wants to go and he’s not gonna be in second place? Is that what separates that company from the rest? Partially, definitely partially.

18:48 I mean, what Travis has done is extraordinary, right? I mean, a lot of it is his vision, his drive, if you will. But I’d also say it’s naive to think that it’s one person somehow fueling that. It really isn’t. It’s much broader than that.

19:02 It’s a quality of the team. It’s a mission. Keep in mind, the business he is in is tech enabled. It is not at its base, not just a pure technology business. It’s an execution business, which is technology enabled, and that means hard work in moving things, getting things happening.

19:20 So I would say there is a partial amount of that, But it’s only so much of that, that you could just factor it. What’s your typical week? Because you always think that the VCs are kind of the guys up on the mountain with all the cash and they’re just choosing who is going to be bequeathed to the throne. But it’s not that simple, is it? Are you out beating the Bushes?

19:43 Was it important to join Octopus because of their name? Because it’s not about the money, it is about the name. And what is your typical five days? How much is out there finding people, giving talks like this to get your name out there? So keep in mind, I am not a fully paid-up VC at this moment, right?

20:00 I’m a EIR, so I do a bunch of other things. So my typical five days is slightly different from what a VC’s, a typical VC’s five days are. But I would say a very large chunk of it is seeing new pitches coming in. that’s the best part and just meeting brand new teams. You know, debating, talking, probing, but also receiving and being pushed.

20:28 I enjoy that part. I really do because you learn so much and you work with people just not who are bright and all that, but also who are thinking of changing the world in different ways. Being pushed. And being pushed. How do they push you?

20:42 Oh, I mean, these are bright guys, right? You know, they’re not sitting out, passively listening to somebody. You know you say something which doesn’t you know they will push back and they will challenge your assumption which is exactly the way it should be right and that’s the part. So that’s just that’s one part of it. The other part is obviously analyzing that in a way that you are sort of doing it in your own space and time. You’re thinking through you know what happens in the bigger space and I’m not talking about you know will they make money or will they They’re not, that’s just one part of it, the bigger picture of it, right?

21:15 Where is that particular ecosystem going? What are the looming opportunities, the looming threats, if you will, who are the big players in that space? I am, for example, never a big believer in the winner takes all, it’s very rare in any industry that you see a winner take all. Having said it, it’s not that, it hasn’t happened, but it’s a Six Sigma event in my book. So I never worry so much about a Google coming in and killing that space or a Facebook coming in killing that space, having worked in big companies. I know that it’s not that easy.

21:44 Will the top three win in some way, in your experience? They will influence it in some way, but win is a very different kind of thing. So I’m always less worried than others about somebody big coming in and just killing that market. I don’t tend to work like that. Obviously sitting on the other side, I took advantage of that sentiment because it helps you. It’s like the Bush Telegraph, You know, beating out the message way before you’ve reached.

22:14 So that’s the second part of it. The third part, which I tend to enjoy very, very much, is spending time with the portfolio companies and just trying to do problem solving. I enjoy that. I absolutely, totally love that. And it is fundamentally thinking through, broadly, how do you scale?

22:32 And then specific business problems that you’re looking to solve. could be funding related, it could be pure product related, it could be pure strategy related, it could be purely geographic, right? So these I would say these three I would say it’s the three largest chunks of my time on a daily basis. I enjoy that. I enjoy that. Once in a while and it’s rare but I’ll do it I’ll work with them on something much more specific, say with a portfolio where they’re trying to do a big deal, say, and I have some experience in that, so I’ll work with them on how do you pitch, how you’re gonna do that, how you’re gonna place this, how you’re gonna talk about your product. I enjoy that kind of stuff. It sort of comes back to it. Your time is ultimately your greatest asset.

23:20 So how do you say no, because I mean there’s a famous book called The Power of No, and I think it’s a very important concept. How do you decide whether you’re gonna meet with someone, you’re gonna have that coffee, because Because I’m guessing there’s 500 people that want to have a coffee with you in London, and you don’t have that bandwidth. So is there a few basic pieces that get someone to actually have your time? So I’ve been very lucky in my career that I’ve had a lot of people who have helped me throughout my life.

23:48 I’ve never ever forgotten that. A lot of people who have helped me where they had no particular reason to spend even five minutes with me, but they did. So I tend to be much more open about who I’m willing to meet. I’m not a huge, I know everybody says we need a warm intro. It’s the famous mantra in the VC world, you know, like come to me through somebody I know.

24:08 I am much more open. I will go by my judgment, by this thing, and sometimes, frankly, I end up wasting my time. I think from my particular perspective, you know what, it’s a way for me to repay this, you know, to the community what others have done for me. Fundamentally, I only look at one thing, and then from there, two more derivatives, your ambition. That’s all I, at the top level, I care about.

24:35 Once I’ve sensed that, then I’m fundamentally looking at the quality of your team. A lot of people do the other way around, they look at the quality of the team and then look at the ambition. I fundamentally try to get a sense of your ambition. How do you get a sense of ambition of someone? This is the thing which is, again, very nebulous.

24:54 I haven’t done this for so many years. I have a sense when I go into an office, when I see, I, for example, I never invest in somebody, I never buy somebody until I spend a whole bunch of time with them. I don’t do this whole phone call thing, a VC thing, you know, where I’m doing video conference and I’m shaking a hand virtually, I don’t do that. Is that typical in the VC world? No, it’s not, but I’m deliberately making, I’m deliberately trying to trivialize it a little bit.

25:17 I will go, I will sit, I’ll go to your office, I’ll talk to your guys, Because I trust my own judgment. And this is not nebulous judgment. This is judgment where I actually sit down and I think through what I’ve seen, the quality of people. I look at their backgrounds pretty extensively. We’re not talking about what do you do for five minutes.

25:41 I do much more, much broader, much deeper checks on people than that. Can you get a first look at ambition without even meeting them? Can you look at their background and they’re just like, no, you got to meet them. I have to see them. I have to talk to them.

25:54 I have to see their energy, their nervous energy. There are certain telltale signs I’m looking for. Doesn’t mean that if it’s not there, it’s a no, no. But I know that overall, there are certain qualities that will come out. You know, and that’s what I’m fundamentally looking for.

26:10 And ambition to me is very, very important because that’s the one thing you cannot change. You can’t engineer that. You have it or you don’t. Sounds like fighting, is this a fighter or not a fighter? So it’s almost like you’re investing in the person, which is a bit of an old, almost a cliche, but you’re investing in the person, and then the idea, or the, how do you?

26:29 You invest in people. I’m a big believer, you invest in the people because ideas can pivot. You can’t pivot the people that easily. Yeah. The second part of that you said was the team.

26:39 We had a Hussein Kanjir from Hoxton Ventures, and he said he always looks at the team because based on the quality of the person they’re able to get on board, It shows by association if they’re buying onto the idea. So if you have a guy that’s an ex-principal at Google on your team, it shows you a lot. Is that how you look at a team? One, I actually also look at something else. I look at, how do I put it, the linearity of your hires.

27:05 So here’s what I mean by that. The first five people that you’ve hired, six to 10, and then 11 to 40, for example. So here’s what I really mean by that. I’ve generally found that the first three people, that means the co-founders, just the quality of those means you’ll survive the first two years. The first 10 people that you have means that you will own even a dollar of revenues.

27:36 And frankly, the first 30 to 40 people means have a huge impact on your liquidity event, if any. So let me pass that back again. Hiring the first 10 people is tough. But then raising the bar from employee number 11 to employee number 40 is one of the most difficult things to do. So what do I mean by that?

28:01 That means number 11 to number 40 is an order of magnitude higher bar-wise than the first 10. It’s very tough, it’s very, very tough. Because you think the potential to dilute is at its greatest at that point. Because what happens is you’re trying to really grow your company, right? You’re under immense pressure to do product, to do, if you are into the sales mode, to do sales.

28:28 And often all of us, what we tend to do is, we’ve got to deliver this, we’ve got to ship this product. We need bodies. We need to, you know, get them in. pretty short-term is you’re getting the teams in and sometimes you delude yourself by saying oh I’ll get him in or get her in as a contractor but in reality what happens is the person comes in and then over time beds in and stays right and that’s the part I and I just know from muscle memory that you know growing the team after a particular level is not that easy it’s pretty tough actually so that’s just one part of it but it is keeping that bar high that stuff. So Google is a great example. You know, as you know, Larry for a very long time until fairly recently every hire went through Larry. There was a reason because he could take a much more dispassionate view about the quality of people because he was seeing it across the company, right? So if you’re cynical, you could say that’s a choke point. I think of it and I say that’s That’s a massive stroke because there’s somebody who’s completely dispassionate, who’s not aware of, at the ground reality level, how much of a pressure there is on hiring people.

29:41 He’s just saying, is employee number 32,210 as good, if not better, than employee number 11? That’s massive when somebody thinks like that. And you get a sense. The genuinely good teams hire better and better and better people. And the reason is very simply the following, because employee number 26 coming in, sees employee number one to 25, and he says, you know what?

30:12 These are the kind of people I wanna work with. And he sees the, I guess, and it validates the idea to a certain extent as well, right? Exactly. He believes in the people he’s around and what he’s striving to achieve and what they’re all trying to strive to achieve. Exactly, I mean, he or she, as they come in, That’s what they’re fundamentally getting because they realize, you know what, I’m gonna work with 25 solid people.

30:33 People I actually not only just respect, I’m even willing to listen to crap from them. And does this get back to the networking effect that you talked about before? Some of it, yes. It’s ultimately a networking effect that’s coming in, right? It’s, everybody, the first 25 hires are getting your number 26 in.

30:51 And number 26 is getting number 27 in, or one to 26, it’s that. So there’s a network there. You mentioned Google, let’s go down memory lane a little bit, you spent six years there. What are the, what would you remember about your time at Google? Ambition.

31:05 I’ve never seen a company have such long-term ambition. I’ve never ever seen it. And you know, it is something worth seeing. Just the fact that a company can have that long-term a view on something, I’ve only seen Amazon have that kind of a long-term view. That will always stick in my mind.

31:26 And the other thing is, in a second-order, secondary derivative, call it what you will, a focus on culture. Because that’s truly today what the part of that company is. It’s that culture. The day Google loses its unique culture is the day where I worry about the company in a very, very big way. That’s today what the strength is.

31:45 It’s quite interesting you say that, because one of my previous employees was known for having an amazing culture. It was what they prided themselves on. And then that culture subsequently seemed to be eroded and now the company is viewed significantly more negatively than it was previously. Because, and you know, somebody wrote in, I think it was the New York Times in their resignation letter about how the culture had changed. So it’s, I think it’s quite telling and it also goes back to your point regarding whether a company is going to succeed or not is the culture behind their employees and how they feel at work.

32:26 That’s true. I mean, the truly famous companies over time have built an alumni network, right? Goldman is a good example, and McKinsey in its old days definitely was able to build, and Google truly has an outstanding alumni network. The thing I was most impressed by Google, and maybe it’s a function of other places that I worked in, I’d never seen people actually help each other in the way that I’d seen people at Google do. I could reach out to anybody in Google and say, you know what, I need a little bit of help.

32:58 Yes, yes was the first answer. Yeah, they would never think of what’s in it for me. That is culture. That is something which is very difficult to quantify, but you know the power of it when you’re in the middle of it. Does that come from Larry and Sergi?

33:13 Or is it, it can’t anymore, because two guys- It’s much broader than that. It is literally the company culture. Yeah, it’s a DNA. Right, and it has to be maintained and it’s probably every additional employee it gets more difficult. It’s a tightrope.

33:25 Yeah, it is. It becomes much more difficult for every employee that you’re getting in. And Google is now massive. And that’s why I say Google’s strength and weakness is its culture. Its strength is in keeping that culture’s weaknesses or perceived would be any day that culture starts eroding.

33:44 But at a corporate level, it’s something to watch from that particular perspective. Talk about campus. They just did their second year anniversary a few months ago. we had easy on the day of the second anniversary. Campus London, it’s always weird for me to describe it to people sometimes because it’s hard for people to understand.

34:01 So it’s Google, but Google did this, but why did they do this? Because it’s like part philanthropy part. What is campus? How did it started? How did you get to be a part of creating that?

34:10 So campus is one of the things I’m really proud of and easy has done a sensational job. He’s like, he came in on day one when it launched and he’s taken it to a different level. It seems like part of him, when he walks around there, he says hi to everybody, and it’s like he seems to be part of the building. It is, I mean, he’s done a true mission. It’s a mission, you know, he’s also brought in in a very relaxed approach to it, right?

34:35 And a positive culture. Really good energy there, it’s like, let’s just help, let’s help, let’s help. And then even when you’ve done all the help you think, let’s think of even more ways of getting Google people to come in and volunteer their time and just meet with anybody who wants to sign up and talk about their startup, I mean, it’s. It is. It really is. And you know, so from a large, as you know, campus was the first office initiative by Google anywhere in the world, right? And campus itself, that is there today, probably a few blocks away. From Google’s perspective, it was a way of giving back to the ecosystem. But it was also a way of seeing the first signs of something big happening and then literally lighting a fire under it in a lot of ways and it was just prescient it was timely as you can make out and it was a lot of fun I mean four of us worked on it initially and it’s grown to be something you know and it’s its impact on the London tech scene has been you know and it’s been written about it so I don’t need to add anything more but it comes back again to you just ambition again, because Google thought of this particular building, if you will, which is nothing but a one static building of six and a half floors, 25,000 square feet.

35:57 And it said, what could we do to really push the ecosystem and give back? And that’s fundamentally what it’s done. And I’m old enough to not be de-re-eyed about these things. I look at it much more commercially. And I still think from that perspective that what campus has done is pretty amazing in every possible sense.

36:20 It’s sort of like in one way it’s a pop that everybody, all the people from the tech ecosystem hang out. But in another way it’s a university, another way it’s a school, another way it’s a place to go and raise funding, it’s a place to also go and meet fellow founders, it’s a place to go and find potential fellow employees, it’s everything. But it’s not, Google will take some of your equity to do this. It’s not a business transaction. Was that something you wanted to do from the very beginning?

36:48 Because it was not an obvious move to do that. Yeah. So one of the things we did and it’s one of the things I’m fairly proud of is the fact that there is no written or unwritten rule out there which says that by virtue of you you coming into campus, you know, Google takes equity stake or even Google has a right of first refusal. That’s pretty big, right? That’s pretty big. Very few people do something like that. So no one does that. Yeah and that’s the beauty of it in a lot of ways. And not that I’m outside Google, I’m very happy to talk about that because, you know, it shows that you don’t have to necessarily think in a very narrow commercial framework to be successful. You can make it successful otherwise.

37:32 That’s fundamentally what it’s done. It’s almost a reflection of the Google ethos, that campus maybe. Yeah, in a lot of ways it is, right? I mean, it’s sort of the openness to ideas. It’s a way of experimenting, fail fast, if you will, all that put together, but still making it fun.

37:51 From a commercial perspective though, Google still has an insight into whatever’s going on at the cutting edge, right? that is a byproduct of the altruism? It is a byproduct of it. If I’m absolutely honest, Google anyway has that. Google anyway has that access.

38:07 They don’t need to put up such an expensive building to get that access. In fact, what Google is in effect doing out here by putting that building up is letting the whole ecosystem have access to the latest ideas, if you will, and then cross-pollinate. I mean, Octopus, you know, we do office hours at Google, right, in Google Campus, and it’s been really good for us. And I can see the byproduct of this, now that I said it, Octopus, and I see really the quality of startups that are coming in.

38:35 I know from personal experience, because, you know, I obviously used to work not only in the UK or in Europe, but also in the US, right, you know, sitting in London. And I can just see the quality of startups, ideas that are coming through now at a different level. I’m not saying that all of us leave the campus. Not at all. It’s the reason, it’s from the ecosystem itself.

38:56 It’s the quality of startups, the quality of people, but also the quality of ambition that’s coming through. But campus has had some role to play in that. And I can see that setting an octopus as I see the quality of startups that we see and the number of investments we are making. Right, it’s very difficult to quantify, isn’t it? So, and it probably always will be, because yeah, you get a feel, you can kind of see what’s happened, but since there’s no equity stakes, you won’t know, which is the beauty of it.

39:19 And the beauty of it is, I mean, I do some bunch of other stuff in other countries and contract regions. I still am amazed sometimes when I get asked about campus, I don’t know, in Palestine. How is it? And people want to know how it is, and I’ve given them video tours and all that. It’s amazing when a kid in Ramallah asks me about Google campus.

39:43 Or a couple of startups in Herzliya, in Israel, ask me, and we talk about it. And now Google has a campus in Tel Aviv, right? So it’s different, but in the days when it didn’t have, people would say, hey, what’s out there? And it was fun talking about it. And that’s how the idea for more campuses came out.

40:01 Google has been setting up more campuses outside London now. But this is the first one. And this is by far the biggest. I still think it’s probably the biggest. I don’t know what the latest sizes are.

40:12 They recently announced a venture fund for Europe, Google, I think it’s $100 million. I could be wrong on that amount. And now they’re coming to coming into a VC space. Does that, when you see that, does that help you as your job at Octopus? Is that a good thing or a bad thing when you see that?

40:27 I think it’s a really good thing. I mean, I obviously know the team in the US very well. I think it’s a really good thing for three reasons. One is the money itself that’s gonna come in, right? It’s gonna do in London for a very long time or Europe for a fairly long time was relatively underfunded compared to what you’d get in the West Coast.

40:52 Still is. Still is. That’s changing. So it’s just first the amount of money. The second, which is really, really important, is the smarts behind the money.

41:06 When Google does something, it does it well. And because it is able to build network effect without almost seemingly trying, you get a much bigger bank re-embark. So for example, if product managers at Google, so we talked about, in some senses, how the product management scale shortage, which is there in Europe and London, Google could really change some of that. If Google ventures in its investments, it starts using some of its product managers. And I know they don’t necessarily always tend to do that.

41:42 But in one shot, you suddenly have very high quality product managers looking at these and giving pointers and tips, which really, the startups can, but it’s not that easy. You have to have an insight into the right product manager into Google. This is not necessarily easy if you’re sitting outside. And the third, and which I think very important, what it’s going to do is it’s going to back up a little bit. Sometimes some of the more outrageous ideas haven’t been so well funded because of the focus on commercial logic.

42:15 Commercial logic by itself, I’m never ever going to say that’s a bad thing. I’m simply not one of those. But sometimes too early a focus on revenues could have a crimping effect on the idea itself. And that’s one of the things I’m really hopeful. So what I’m basically fundamentally talking about is much more HKs product startups coming out.

42:36 Like Google X, you mean, where there’s not even a revenue model? I mean, that’s fairly edge case. The extreme side. But, you know, a little less edge case in some ways, but where it’s still a fundamentally a very high product-led company. So Twitter is a good example of very product-led, right, as a company, whereas I would probably say somebody like an Amazon was both a product and an execution company.

43:04 Yeah. Uber. much more of an execution company but with a very strong tech base. Yeah. Right.

43:13 Okay. So it depends on what you’re looking for. Let me get your thought on incubators, specifically FinTech incubators, because there’s a lot of them out there. I know Startup Bootcamp has just announced 10 companies. You’ve got the Escalator Project, which is Barclays and Techstars over at Central Working.

43:28 You’ve got the FinTech Innovation Lab, which is Accenture’s kind of piece. And there are so many of these happening and so many corporates seem to kind of getting into this recently. I was wondering what you think of that and do you sometimes say not another incubator or there’s not another one of these things. Can the space get over incubated? It’s a good question and that’s a quote for me thinking fast as I answer.

43:53 Here’s my personal view of incubators. At the very least, what they’re doing is they are bringing more focus into a particular portion of the tech ecosystem. So we’re talking FinTech, but it’s actually broader than that. I think the criticism that has been levied against incubators and accelerators is sometimes if you take money out of them, you almost are starting off on a back foot. So if you get 15,000 pounds or 25,000 pounds at 10%, that means you’ve given away 10%, that’s actually help you, is often the question that gets asked.

44:34 I tend to think of it this way, net net, if somebody’s teaching you how to get smarter and literally giving you a crash course in three to six months and bringing you up to speed, which would have typically taken you three or four years, you’re still cutting through a whole bunch of stuff. commercial part of it is something some parts of the debate have reason or logic behind it you know and I understand the commercial logic is that am I really helping you by giving you 15,000 at 8% or 10% or whatever it is taking that debate aside there are other advantages which are there I think my personal bias on this matter is that if I’m a startup, I should have a very rational, data-driven way of approaching incubators and accelerators. What am I looking for?

45:32 And then what am I expecting to get out of it? It comes back to the commercial mouse that we talked about. It all comes back to that. Your broader question, are we over-incubated today? I’m not entirely sure yet on that particular one.

45:47 I’m still okay with the amount that is there. I definitely do feel there’s a lot of variability. Between the incubators. Between the incubators. And that I have to say is not a cause for concern, but definitely something to be, if from a startup perspective, be very aware about.

46:05 Choose wisely. Choose wisely. If I was a bank at the moment and I could find a tech guy, I would set up my own incubator because they’re the end consumer of FinTech in general. And they have probably the most insight in terms of what they need and what works and what doesn’t work. And I think it was, I saw Mark IT just floated recently a billion, I think it was a billion dollar.

46:31 Yeah, market partners. Yeah, market partners. So, you know, there is still obviously, given the amount of sort of FinTech that is startups that are occurring, I think the banks are in a perfect position to sort of get in at a sort of groundish level and guide them quite accurately, but it doesn’t seem like this is an area where they’ve thought about. They haven’t and have, so in some ways. So what do I mean by that?

47:02 So banks are increasingly adopting the pharmaceutical industry’s model of frankly outsourcing innovation, right? As you know, pharma companies, in effect, today buy innovation. And as they release their R&D spend, or in whichever way you want to call it, they’re buying more and more innovation through their VC arms and through their research units. Banks are sort of tending to do that because by itself, they today, they’ve become too big in some ways to necessarily innovate at the velocity that they need to.

47:33 So if I were a bank, I would absolutely want to look at this because of exactly the point that you mentioned, because it’s the fastest way for me to get ideas through the door. And then I need to be smart enough to understand which ones are the really good ones that I figure out a way of staying close to. Having said that, not enough banks do that. As you know, there is, I think, Telefonica, sorry, not Telefonica, but Sainte-Anne there are about to do one. And then a bunch of others are doing that.

48:00 I actually think of that as a good thing with more banks coming in because they know what they, They at least can tell you the big banks portion, what is it that we need, right? And if they were to put smart money behind it, it would be useful, it really would be useful. If you were to be cynical, you could turn around and say, what does smart money mean in this context? Is it money just to buy off something so that they don’t compete with what they already have?

48:33 That necessarily won’t be a good thing if that is the outcome. I doubt that would be the outcome, frankly. So I’m all for more coming in. Right, watch this space. In two years, it might be overdone.

48:44 We’ll see. Just a couple more questions. What’s going to be the next Google, if you look out there on the horizon right now? Is it going to be, what impresses you? Is it the Wongas of the world, or the TransferWise?

48:54 We had Doodil in here last week, Market Invoice. What do you think is the play that’s going to be big? Or who excites you right now in London, in Fintech? So you’re asking specifically FinTech. So all of them are excellent companies, you know, terrific in every possible sense.

49:14 Do I think any of them would be a Google? That’s a tough one. That’s a pretty unfair comparison. It’s like, I know you’re American and you must love cricket, but any new cricketer that comes up in England today, you know, the first comparison said is Ian Botham, right? That’s like immediately killing that guy.

49:34 It’s like any new basketball player coming out, you just compare him to Jordan immediately. That’s like the kiss of death. So I would be a little bit more careful about who you’re comparing to out here, but all of them are really, really, really good. I personally feel, if you talk from a fintech perspective, that one thing to keep in mind about the fintech business is it’s this kind of a business. So whenever I look at any company, I do this or this.

50:02 So here’s what it means. This means geographically scalable. This means vertically scalable. So geographically scalable would be like an Expedia, right? You can set it up in any country and you can sell products anywhere in the world.

50:18 Financial services by their very nature, not all of it, but large chunks of the financial services businesses or FinTech businesses are regulated by country. So you build something which is specific for a country, build something which is specific for a country, right? So that’s why it’s vertically scalable. So whenever you’re doing vertically scalable startups. Right, do deals are a perfect example because it’s all about companies house here in the UK and moving to another country.

50:42 Yeah, but they are in some ways also geographically scalable, right? Because they can run that parallel processing in Germany and all that. But generally, the hallmark of vertically scalable businesses is they tend to be also invested in within those geographies, generally. I’m not saying, again, that’s the way it is, but in general. So you need to be careful about, so they need more depth, they need more market share by their very definition, because they need to be more deep within the geography they are in.

51:13 Whereas if you’re geographically scalable, you could have a less of a share of market because your market is so much bigger. Yeah. Understood. And because of the very nature of being geographically scalable means it doesn’t matter where you truly are. And it’s sort of like one size fits all, because you’re less dependent on country by country regulations.

51:34 You are, but to a much lesser extent. So the parameters are different, if you will. That’s why the comparison set is also very different. So I always, you know, when you compare geographically scalable businesses with vertically scalable businesses, you know, you are not necessarily comparing apples to oranges. Or you are, in some ways.

51:54 In the non-Fintech space, what’s one area you think we should watch or one where you think some big things are gonna happen in London? You can be general, I don’t wanna give away your hand, but is there something out there that you think is gonna be very promising? It’s on the AI simulation space. I absolutely believe that because it is one of the ones where frankly your ambition, the talent, and your ability to think differently is the differentiator. You’re not necessarily reliant on huge marketing budgets.

52:28 In fact, there are no marketing budgets. Your basic cost structure is fundamentally your people. What’s an example of AI simulation? DeepMind. DeepMind is a great example of what Google bought, right?

52:36 I mean, so that’s classic. You know, it’s fundamentally an AI-driven company, or it’s an AI company in a lot of ways. And they’re not the only one. There are others who are out there. And most of them are stealth.

52:47 They don’t like being named, you know, as you know. That definitely is an area, I think, you’re gonna see some really exciting companies. Whether they’re gonna be a Google or a Facebook, who knows, Google didn’t know in 99 that they were gonna be a Google of 2014, not at Zuckerberg in 2006, right? So it’s difficult to make that because a lot of those companies that have grown, there’s Locke and there’s a whole bunch of other stuff, and we all know the history.

53:14 But I can only talk about how big they potentially could be sitting where we sit right now and where they could be going. So that’s one, definitely. one area which I’m very, very confident something’s gonna happen. Fintech is an obvious one. We’ve talked about Fintech.

53:30 Fintech’s only limiting factor is that whole verticalized scale, scaling issue that is always there. So to the extent that any Fintech company is geographically scalable, it’s big. It’ll be massive in a lot of ways. These would be my top two picks from that particular category. Because it is that the other one, which I think about and, you know, and this comes down to a quality of engineering issue.

53:59 So you think about, see, let me rewind a little bit. You had desktop OS, you had mobile OS, right? And you are seeing the early signs of a wearable OS coming through now. It is function of time before our mind becomes an UI and you use the interface. So first we used to touch, then we speak, and then it’s just a function of time.

54:27 And as you know, some of the fighter jets are already experimenting with that. There’s a few devices out there that are even doing that right now. Exactly, and for obvious reasons, the military industry, especially fighter jets, makes a lot more sense when you’re on a dive. It’s very difficult to pull whatever button you need to. But it’s just a function of time.

54:47 That opens up multiple possibilities. Yeah, that’s being a conservative, multiple, that word, yeah. Exactly. Financial, right? Exponential.

54:55 And I think a lot of that will come out of here because you get the quality of abstract engineering, engineers here who are very suited to that kind of stuff, which is broad, and you’re going into a completely different field. The part that comes back is my old thing which I talked about in mission. That is the part I can never give you a real answer on because ambition by the way in nature is specific. To the individual? To the individual.

55:26 Okay, those are industries to watch. Debu, we always ask everyone a few questions at the end. I’m gonna hit you with them. If you could make a phone call to the 20-year-old, Debu, and give that young man a bit of advice, what would you tell him to do or not to do? By Google, by Google Store.

55:40 I would prefer to call them when they’re about 15 or 16. Okay. And I would very strongly say the following. One is, whether you like it or not, don’t give up on the hard subjects, the quant subjects. Don’t give up on them.

55:56 They matter throughout your life. One, the second thing is, if nothing else, cry your hand at something small which is entrepreneurial. Sell, I don’t know, sell burgers in your local fair. Just kind of feel for how it feels when you do something on your own, number two. And the number three is, and this has been a big factor in my own personal life, if nothing else, take a couple of months out and travel.

56:30 When I was 15, my father sent me out traveling for three and a half months in India. This was a very different India those days. And my mother, to a certain extent, still holds it against him, you know. You’re 15. It’s 15 and a half, three and a half months.

56:44 I went in India. Alone. Alone. This is pre-mobile phones, pre-anything, shows my age. I grew up, I really grew up.

56:57 And I’ve, even today, I’m a big believer. You travel even for a month in those years, it changes your life. So I’m a big believer, do these three things. That’s why I say 15, 16, not. Okay, not older.

57:12 Great advice, best advice you’ve ever received? So, I’m not going to name this VC because he’s very, very famous. I asked him, why did he invest in Google? And I’m cutting short some of the expletives, and he basically said, I didn’t particularly like the founders, but by God, they were smart, and I went in the business of not investing in friends or people I love, but people who, you know, who will do something different, who make something big. Never quite, it’s not advice, but I’ve never forgotten that, you know, he was very clear about what he did. He understood, and you know, you could criticize this heavily, right, that he wasn’t thinking big or whatever it was, but he had a cute sense that he saw two people who were different and he saw something in them and decided to invest. I’ve never ever forgotten that because you may have your personal biases but think a little bigger and broader than that is important and nothing encapsulates it better than this one statement of this guy. He actually said it much more colorfully but that’s not for public consumption. It’s probably it’s good advice for a trader would have you know a trader would be like you know don’t get personal with the markets you just have a fixed idea of what’s value and what’s not.

58:44 And it’s tricky, right? In a world where we are told, do you love him? Do you only then invest in him kind of stuff? What this guy essentially was saying was, I didn’t care how they were. I just thought they were geniuses.

59:01 And I felt they could do something different. And I invested. But if I hid the familiar thing and I said, do I love them? Do they press this button for me or that emotional button for me? Maybe I wouldn’t have.

59:14 Last part of that question, to the 20-year-old that’s out there listening or a 16-year-old who wants to, I don’t know, wants to explore the tech world, what advice do you give them? What do they need to do? Number one thing, experiment with, you know, whatever you see out there in the online world within reason. You know, there has been, obviously, as you know, some issues around. No hacking. Some high, some sites.

59:37 I’m not even talking about hacking, but you know, it’s a vulnerable age, right? You know, you can get sucked into wrong stuff. But all I say is, so think about, if nothing else, doing a little bit of coding on the side. That’s just one part of it. The other thing is, just be open to the possibilities, you know, which are there.

59:57 So especially in our talking about the UK, the UK is one of the most sophisticated e-commerce environments in the world, right? It is also the most deeply penetrated. I mean, look at Google’s revenue numbers in the UK. For a country of 65 million, it is huge. I was surprised to hear that.

1:00:13 It is massive when you see Google’s numbers in the UK. And it’s not for any reason. It is heavily penetrated. It’s also fairly sophisticated on the purpose of using technology in a transactional way. I don’t mean in other ways.

1:00:27 So if I were to say, I would say, figure out ways of doing something fun that excite you from a product perspective, working with some of your friends. If it’s a way of booking tennis lessons in your local club or small things like arranging the local community center, anything that excites you, that may not be exciting to a 15-year-old, but anything that excites you, think of a possibility and do something small with it. Just see what it means. Problem solving, yeah.

1:01:03 Just problem solve. And get involved. Just get involved. Right, and sell some burgers as well. Get that entrepreneurial piece as well.

1:01:10 How do people get in touch with you if they want to try to get that meeting with you? I know you’re not on Twitter, right? You quit Twitter a couple years ago. You’re not on Twitter. Not me, somebody else.

1:01:18 Oh, okay. Mine is debut Sultan at debut Sultan, Which itself, you know, I get a lot of people teasing me about that handle. No, I’m there. You’re at Ad des Boussoutons. Ad des Boussoutons.

1:01:29 Email. Actually, my email is on the Octopus site. It’s actually a really simple one. It’s b-e-b-u, my first name, at octopusinvestments.com. So and I always get back.

1:01:43 You do. I’m guessing that someone has to qualify a little bit over the email. If you ask a couple questions, I got to come back with some pretty good answers before they’ll get a meeting. So I’m very particular about just not ignoring. I’m slow often because I travel a fair bit and I try and respond or I’ll make sure somebody responds.

1:02:04 So Octopus, one of the things we always do at Octopus is we make sure that you get responded to, no matter what. So from all the VCs that I know, we are the only VC I know who take cold intros. Because you started with cold calls, right? And the yellow pages, yep? So a simple example is, and two really good examples is, both Wipeline and SwiftKey, both of which are pretty large startups today, they came cold through our website.

1:02:37 That’s pretty awesome. That’s pretty cool. Most VCs will not take a call like that. They will want somebody to intro them. I’m not debating the merits of warm or cold out here.

1:02:49 All I’m saying is that we will look at it. So go for it. Excellent. Debu, thanks so much for the time. I could probably spend another two hours and pick your brain, but we’re going to wrap this up.

1:03:01 If you’re listening to us on iTunes, come see us on YouTube. You can see our glowing faces, because it’s a little warm in here. Patrick, thanks so much for being here. Thank you for having me. I hope you enjoyed your first still-com meal.

1:03:10 Yeah, absolutely. It’s good stuff, right? Interesting man. Yeah, fascinating. To say the least, get in touch with Debu.

1:03:16 Our slogan here is, it’s about the people, which is basically what you just said for the last hour. You invest in the people, you invest in the ambition, great insights, and all the best for you at Octopus. Thank you, real pleasure to be here. All right guys, take care, chicken.