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  • Writer's pictureMark Valdez

Q&A with Semil Shah, Founder and General Partner of Haystack and Venture Partner at Lightspeed

Updated: Jul 19, 2021

[Editor’s Note: We are delighted to have our friend Semil Shah kick off our inaugural newsletter. Semil has built an extraordinary track record investing in a number of consequential companies including Instacart, Doordash, Hashicorp, Figma and many many more.]

The pandemic exposed the digital divide between the haves and have nots. How can technology help create a more resilient economy? What steps can business owners be taking to better leverage technology tools?

First, I think we need to make broadband ubiquitous. I don't understand why that isn't already the case. The giant technology companies should be donating computers and internet connections to kids to get online and learn. For me, it all starts with education and technology plays a critical role in education in normal times and even more so during a pandemic. There should be a free repository like Khan Academy broadcast on television during the pandemic. Sadly, so much depends on local government, and most of these local governments are under stress.

As a business owner, I would absolutely put someone in charge of creating and implementing a digital transformation plan. And, I'd make sure those people were smart, technical, and to be frank, young -- digitally native. That may mean acquiring a company and paying them a lot of money. It's worth it. Second, I'd think about how I could use cash and/or stock to acquire other lines of business and integrate them, ideally with a technological component. Finally, third, I'd try to figure out a way to accumulate and leverage unique data in the business to help glean insights for new products and services in the future.

How can the tech community build effective bridges to traditional, non-tech industries to better serve what is such a significant part of our economy?

As a venture capitalist, I'm always looking for industries that can be disrupted by better technology to create a breakthrough product or leverage the distribution advantages of software. Yet, I also recognize the opportunity for software to be an enabling force for good within traditional industries. For instance, our investment in nTopology provides advanced design engineering capabilities for manufacturing in aerospace, medical, and automotive applications. This creates new capabilities their customers otherwise wouldn't have for designing breakthrough products.

That being said, I think it starts with empathy. Taking the time to understand the pain points of users, the challenges they face within their businesses, and focusing on building solutions rather than buzzwords. Most of our effort in venture investing is identifying entrepreneurs who understand the needs of their customers at a visceral level, ideally having been in their shoes.

With great challenge comes great opportunity. What opportunities do you see on the horizon in Tech to improve the growth and performance of SMBs?

There are so many software tools that truly empower SMBs. For instance, what Shopify and Square provide retailers is incredible, and they are the poster-children for this broader trend. One of the things that excites me most is how today businesses can communicate directly with their audience through their digital presence. You see this in the new direct-to-audience creator-focused tools, networks, and even financing mechanisms. Traditional barriers are being broken down such that businesses don't have to navigate gatekeepers but instead can communicate with their audience directly.

Over the course of your career, what is something you got wrong about technology?

I thought the economy moves in cycles, and that technology does the same -- but lately, it feels that even if the economy moves in cycles, the network effects, lock-in properties, and economics of software technologies are perhaps the greatest force, at times defying gravity. Understanding these dynamics and the advantages of software properties and business models is critical for every business to understand.

What resource or book should every CEO be reading when it comes to technology?

I wish I had a clever suggestion here. I'm a huge fan of Albert Wenger's blog (Parter at Union Square Ventures) as he provides readers a wide ranging exploration of technology and its impact on society and institutions. Keith Rabois' (Partner at Founders Fund) list of must-read books for entrepreneurial executives is also fantastic.

What are you reading / watching these days?

Reading? Haha! As for watching, I'm late to the party, but I was enthralled with The Mandalorian. During the pandemic, I introduced my kids to the entire Star Wars trilogy, and then the first three episodes, and then the final three episodes. We also watched Season 1 & 2 of The Mandalorian. My kids immediately connected with Mando and Baby Yoda. The music, scenery, editing, art work -- everything about it is incredible to me. I would go so far as to say the person who hatched the idea for Baby Yoda should at least be considered for a Nobel.

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