AME Cloud Ventures | Nick Adams | Managing Director

AI and Data can Change the World] An interview with AME Cloud Ventures’ Managing Director – Nick Adams

Until now we have been covering a number of founders, however amongst those people, I’ve felt that this person has been one of those with the most clarity of ideas that give a lot of foresight.This time, we are interviewing Silicon Valley’s AME Cloud Ventures’ Managing Director Nick Adams. This has become quite a lengthy read but we highly suggest that you read until the very end.

Q: I’ve heard that your position right now is as the “Managing Director” but what do you do in reality?

Right now, with Jerry and I included, we are four people joined by Cathy who is the Operations Manager which makes 5 people who are running AME Cloud Ventures. We have a relatively flat team and actually we don’t really divide our roles. We more or less know what everyone else is doing at the moment.

With Jerry and I included, the four of us, our job is as VCs to look for new technology and startups in Silicon Valley.

We each had teams that were really interesting and we had a big discussion of how we should create AME. Within that time, soon after Jerry and I put up AME, it was roughly two years that had passed since I had joined. I carry the official position of Managing Director, but already when I see other incubators, above your official duties, you have to think about making easier connections. Fundamentally, my role is not different from my coworkers. As VCs we look for new technologies and innovations every day.

Q: I heard that in the beginning, Nick was one of the founders. Why did you guys think of going into area of investment?

To put it simply, it was unexpected. (laughs)

In the beginning, coming to Silicon Valley to start investing activities was not the plan. I worked before in China and Jerry was my acquaintance. Working with Jerry became really interesting and there was good timing. We thought the environment was right, and then we discussed that we should work together. Jerry was the founder and I wouldn’t have imagined working with him as a VC. I thought that it was really interesting for incubation to be a part of the effort to increase innovation and so I decided to be a VC. In any case, having a flexible life is something very important for me. Especially now that there are interesting things happening right in front of me.

Q: So in the area of investment, what are you most proud of?

As you may know, AME was created by Jerry as an incubation fund. In 2012, when Jerry left a management position at Yahoo!, companies like Google, Gacebook, Yahoo and many other companies started using data. From the time of its creation until now, what doesn’t change about AME is that our company is founded on our extreme interest in the idea that “Any complicated or big challenge can be overcome with data”.

For example, we are really interested in things like data infrastructure, database, middleware, Saas application. We’re really interested in the value of combining high capacity, high speed, and high performance with new data that brings forth new products.

To put it concretely, we’re a company that offers services related to storage, networking, or data center preservation. We’re an enterprise that’s concerned as well in the development of deep learning, mechanical studies and the application of new skills that can be applied to products.

Investments of corporations until today have been in the areas of hardware, healthcare, and wearable technology. All of these until now were services created not using data.

In addition to these, there has been a recent cross over into the area of data. The investment in generally new technologies, complicated technology, or magnificent ideas is beginning. For example, 3D or VR or Bitcoin which are new trends in services that are being invested in. The investments in the area of data that I just mentioned earlier are relatively small however, at any rate, we want investment in complex technologies are being used for extravagant ideas.

We are also looking for excellent entrepreneurs. Things like what kind of motivations do they have, how hungry are they to make their business bigger are things that we require.

Q: At this time, it looks like you have found really good investments. How do you get those investments?

Jerry is a charming person and our company is a really open one and that’s why we get introduced to so many promising subjects. Jerry is like that and also with everyone on the team (including me) having good connections, we get great introductions.

Q: AME has already invested in TreasureData. How did you come to know about TreasureData and why did you decide to

invest in them?

They had a lot of connections within the community and from those connections they got introduced to Jerry. What got us interested was their background story since they had started in Japan.  In Japan, they had a lot of clients and decided to look for more investment in the US. Their ongoing development was something really interesting.

Q: Aside from Treasure Data, would there be a possibility for you guys to invest in other startups from Japan?

Quite honestly, I would say it would be very difficult.

Jerry has worked in China for two and a half years and he has a lot of connections there. Even then, we don’t invest in many Chinese businesses.

The reason behind that is, even if you do invest, creating a good relationship with a startup that is located in a far off location is really difficult in my opinion. Jerry focuses his investments in local areas. It’s not just places like China, we don’t invest in businesses in places like New York or even Alabama.

If there are companies from Japan that decide that they want to fundraise in the Bay Area, they might want to follow the model of TreasureData wherein they switched their headquarters to the Bay Area. In the beginning we focused on world-class technologies that can be brought to the world and sold. We don’t invest in Media, SNS, or gaming. If the service has no focus on technology then we don’t invest. If there is a really great startup from Japan that brings excellent technologies and aims to become a global company by coming to Silicon Valley, I’m sure that somehow we can help them.

Q: Does that mean that if there is a Japanese company with great tech that relocates to the US, there’s a possibility that they get funding?

Simply speaking, Yes I believe so. If you are here, there are a lot of fascinating investments, excellent advisers, lots of clients, and more importantly, you get increasing chances of getting world-class employees and customers.

Of course there are positive and negative aspects. For example, Silicon Valley right now has a bubble wherein everybody is saying the same things. However, this place is a good place to start to expand to a global market and there are indeed a lot of talented people here. It’s possible for you to have an office in Japan but the main headquarters can be based in Silicon Valley. The salaries of engineers are higher here and for the expansion to take place in Japan is a good thing I think.

Q: Although you’re already investing as of now, what other resources does AME offer aside from resource funding.

Basically speaking, our view is that we exist to help entrepreneurs. It is said that the investors from Silicon Valley (aside from fund investment) are able to give value to businesses and on the other negative side also take value away. For us, we think about how we can create good relationships with entrepreneurs.

We can help out by figuring out what kind of added value we could give, what kind of advice could be given on your product, creating partnerships or connections. For example, how can the product be easier to produce or how can the consumer easily use and receive the product.

Also, Jerry himself is one of the people who built up Yahoo! so in terms of building up a business he can definitely give valuable input. When it comes to connections, one big thing that sets us apart from other VCs is the fact that we can introduce them to connections in China. If there are businesses that have just good timing, it is possible to connect them to big corporations like China’s Baidu, Alibaba, or Tencent.

When it comes to the financial advice that we give, I think that it’s quite important.  If you are serious about running your startup, it’s important to have healthy financial situation. We focus our investment on the Seed Round to Round A however for other stages like B,C, and just before the IPO stage; there are other investments that happen. During that time, it’s important for the business to strategically fundraise. How to reach those milestones during Series A or Series B is something that’s important as well.

For the business, one very important point for investors is for them to grasp the financial aspect of adding valuation or how to treat shares. We make sure that we create good relationships with entrepreneurs and for the source of funds is solely from Jerry which is why before we invest, we make sure to evaluate fairly and give open advice.

Q: When speaking about Seed Round or Stage A of investing, if startups were looking for funding at the seed stage, what

kind of standards are you looking for when deciding which startups to invest in?

For enterprises in the seed stag, we concentrate on the creation of manufactured goods. Of course, if that area is not your forte, it would be difficult to get investment.

Recently, there are a lot of things that can be easily created however even during those times, we choose to invest in things that can be technologically difficult to deal with or businesses that are trying to accomplish bigger things. So already, for the entrepreneurs we have the image of work where in even though things are rough, you are able to put a shape to things and create a prototype. Whatever they have done and what they have to do, they do with much precision. We have to be able to understand why they would need to raise $1M or $1.5M very clearly.

It’s easier said than done. However, within those who try, we look for those people who are part of magnificent teams with noble goals that they plan and execute.

However, giving a precise evaluation of a team is actually difficult. How they deal with investors during meetings, how they talk about their ideas, and how they turn trivial information into accurate ones are qualities that we look into carefully.

Entrepreneurs try to persuade the many people who don’t agree every single day. Those who you should aim to convince are of course the investors, customers, or users however the most important people that you have to convince. If the vision becomes uninteresting, when the founder tries to share to members the value of working there or convincing them, they won’t join. For example, when you think about tech services that have a high possibility of scaling up bigger, serving how many thousands of people per day, the importance of reaching tens of thousands of people-- it’s vital that your members what they want to do, what their mission is, and why you want them to work with you. For example, take a look at the pitch contests. Are you able to communicate your vision well to the audience? The first signal we see is whether or not the entrepreneur is able to give value.

We often hear people say “I can’t judge people’s abilities”. What we mean is that you must be able to see what kind of things that person can do properly and those are the ingredients of sound judgment.

Also, when I mentioned earlier about the tech startups that were challenging tech such as drones, bitcoin, or dealing with stuff like mechanical engineering – when trying to focus on solving those kinds of problems, we also give advice on trying to restrain or check the things that they are doing or plan to do. This is to see the personality of the entrepreneur. With that kind of question, we look at whether or not they would they just blow up, respond to it with a conservative thinking, or be flexible and adjust to that situation. For example, even If you have entrepreneurs with persuasive power, who may be even geniuses, above and beyond coming in contact with their users and members; what is most important is how flexible they can be.

Q: You mentioned earlier that there are many instances of shared investments however, within that space how do you (as AME Cloud Ventures) build up relationships between the entrepreneurs?

For example, for businesses in Series A, at the beginning we don’t discuss investment. Entrepreneurs who do discuss that are quite conservative. Like I mentioned before, a lot of investors make an investment during Series A however at that point we are already talking with famous VCs about investment. We consciously plan ways that those entrepreneurs can communicate with the investors.

Also, for Series A,B,C and others we make a format of inviting investors to proceed to talk about anything related to investment. To sum it up, I think that through this process, getting Jerry’s investment or shared investment with other VCs becomes easier.

Q: So what is good for an entrepreneur to do to get an investment agreement from you?

Persuading an investor that you can create a “good business” is connected right? Just like I mentioned a while ago, communication skills are really important. Ideas of course, communication style, natural charisma, an understanding of what needs to be done, and having a plan are all very important.

Why do we think this way? Already we’re starting to see people start businesses even though they are people who won’t do what needs to be done to start a business.

There are already many investors who go to universities or events and say, “More people need to start businesses! There are more people with an entrepreneurial spirit!”. However, in reality I see a lot of people who have that entrepreneurial spirit, who are looking for jobs, and are able to grow in the way they creatively work. However, when it comes to starting a new company, I don’t think that starting a business is something a lot of people have to do. That’s because, in reality, creating a good company or business is truly difficult.

Q: Nick, you’ve met a lot of entrepreneurs however, amongst them, who do you think was one that made a real impression on you?

There were actually quite a lot. All of the entrepreneurs that I’ve met have different parts that impressed me. Usually, all of these people share this factor of community. That’s why they can understand the product really well. As a result, they are able to think about what the users and customers really need.

In the beginning, the CEO finds a sale very difficult which is why a good entrepreneur will be able to triumph by selling a fundamental item or service. It’s easy to like these people because they are friendly.

Even for people who are easy to like, these are people who are wise, mature and you feel like you can really work with them for the long run. Studying their disposition is of course difficult but the successful entrepreneurs are all smart. They are charismatic and really encourage excellent workers. You cannot create a good business without working alongside excellent people. Whatever you do, attracting excellent people and having them become your colleagues is very important. Around the world there are a number of top engineers who can create great technology and attracting them and other people with your good idea is really difficult. People who have that quality about them is what really impressed me from the entrepreneurs that I’ve met.

Q: Nick, from your experience of being an entrepreneur yourself, what is a mistake that you’ve noticed a lot of entrepreneurs would commit? And how do you think they can surpass that?

Small failures happen everyday. Big failures are mainly related to recruiting. One case could be your co-founders resigning, or quarrels happening. A lot of quarrels happen when entering areas that are unforeseen or when unexpected problems happen to your technology. Not being able to fund raise is also one possibility.

A good business is a fragile thing. That’s because the market, your product, team, and funds – all of that is thrown violently against the storm and you have to make sure that they are able to survive and continue which is very difficult.

In order to overcome these things of course you have to do whatever you can. This means that a stricken but strong entrepreneur fights to continue on. Even with all those problems, those entrepreneurs have to continue holding on to their fighting spirit. Each problem is different and I could probably have a more specific discussion however the prevailing opinion is just like I mentioned.

Q: From now on, what industries are you planning to enter into? How are you planning to penetrate those industries?

AI, unstructured data, hardware, and hardware using services are all things we admire. At the present, it’s the early days of the mobile shift, this will become a big trend. Everyone has a smartphone right? This will create a very big influence. Within that, we have two very important points that we raise.

Firstly, the first point. It’s an obvious one but, a smartphone is something that you bring and put in your pocket that has a computer, where you can call an Uber, watch TV and using this as a mobile and this is creating big changes in the lifestyles of those who use it.

The second point is the commodification of hardware. Right now, electronic goods are becoming cheaper and faster to make. In the past, taking it from design to manufacturing took a lot of time and a lot of money to make. This and the internet have created an unprecedented variety in the types of data that are being created.

Therefore, the next era will have a reality that is based on “interesting data”. These data will be from consumers of from industries that can be received through smartphones or other devices. New areas will include hardware and hardware using services will be created with the practical application of data.

For example, one investment was in “Savioke” which is a hotel business that uses robots. In reality, this company where robots were being used for operations was an idea created by a Japanese woman. Thus, this woman was titled, “Chief Robot Whisperer”. That’s new right. (laughs)

This robot looks like R2D2 from Star Wars. High level hotels think about the quality of their champagne, the quality of water that they drink, or other minute things such as the quality of their toothbrushes or other amenities which are all geared towards raising the quality. Please use your imagination. The salaries of workers are continually rising and in that place, we have robots. Please use your imagination. For your hotel concierge you have one robot. You can pass all of your belongings for your stay in a box to the robot so that they can carry it until your room. Actually, there are already a few hotels that are carrying this out. This is not a dream but already a reality.

In this business case, what kind of model do you think is important? The first important thing to attain is your hardware (robot) which is not too expensive. Of course before, to make a robot a reality it took almost $500K in costs. However, nowadays, it’s only $5,000. The price is now 1/100ths and the spread of this technology will be big.

The next important thing that Savioke took ahold of was not selling the robot but selling the services that the robot does. Companies outside of Savioke that don’t sell hardware but rather services are actually slowly increasing. Understanding that they are selling it not as a thing but connecting it to business as a service.

Lastly is about data. Today, we are using human brains to give meaning to data that is being read. First of all, you create a database wherein you can have the access details of how many thousand users. You can then analyze who logged-in when or what did they do. From this information, a lot of industries can make better decisions through the analysis that happens. However, for the future generation of data, more and more the analysis of data will become difficult. This will lead to data

analysis becoming a lot more important in my opinion.

For example, right now everyone is taking pictures. In the near future, from the photos that we took, we can understand everything about this room. What kind of water did you drink? What kind of things do these people like? And other details will be information that we will be able to understand. I think that within 5 or 10 years, that is possible with AI.

Right now it’s still at 0.8% accuracy and there are a lot of errors however slowly that precision will increase. Also, all industry areas will use the specialized invention of AI and a lot more things will become automated. To help people, not to replace people, but rather to deploy AI.

As Steve Jobs mentioned, the computer is human-kinds best tool. However, until now for the past 20 years it has been a machine where I input data and the result returns. In the next era, computers will be more than just those ideas and humans we’re definitely heading in that direction right?

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This article and picture is provided by TechWatch. Article is translated in English by TechShake with approval from TechWatch.

You can refer to the original here.