For Silicon Valley VC, a Leap from great advice to big rewards
For Andy Miller, a general partner with the venture capital firm of Highland Capital Partners, helping his portfolio companies may be just as rewarding as making money from them.
SAN FRANCISCO--Sitting in the windowless basement level of a nondescript building in the shadow of the Bay Bridge, Andy Miller is doing one of his most essential -- and rewarding -- jobs: helping smart and talented, but young and inexperienced, entrepreneurs navigate the crucial steps needed to move their new company forward. After all, great technology can only get you so far. It takes great business strategy and decisions to build a truly successful company.
Miller, a general partner at Highland Capital Partners who once reported directly to Steve Jobs as Apple's vice president of mobile advertising, is seated across from David Holz and Michael Buckwald, the co-founders of Leap Motion. Earlier in the morning, the company announced it had closed a $12.75 million Series A round, led by Highland, and that it was leaving behind its original moniker, OccuSpec.
Leap Motion, which today pulled back the wraps on Leap, its revolutionary hands-free 3D motion control system, has a chance to change the way everyone from game players to surgeons to architects, engineers, and designers interact with their computers.
As a hands-free motion control system, it's somewhat like Microsoft's runaway hit Kinect motion control system, if Kinect was responsive to movement down to a hundredth of a millimeter and could recognize all of a user's fingers, or even the point of a pencil or chopstick. In reality, the Leap appears poised to significantly advance the state of the art, and if that happens, Leap Motion -- and Miller and his partners -- could make a lot of money.
But sometimes, even a VC isn't motivated solely by money. Sometimes, being part of a very hot technological innovation is the goal, and that seems to be the case for the enthusiastic Miller, who co-founded and ran Quattro Wireless, a mobile advertising company that Apple bought in 2009, and who took some of his haul from that sale to buy the Modesto Nuts, a Colorado Rockies class A minor league baseball team. Of course, he still lived in Boston when he bought the team, and didn't quite grok that it would take two full hours to drive from his new Silicon Valley address to games.
Watching him, it's easy to tell how excited Miller is about Holz and Buckwald. Walking out of the morning's Leap Motion meeting before heading down to his Sand Hill Road office in Menlo Park, Calif., he's like the proudest parent in town and recalled the words of a scientist he knows who told him that Holz, a former NASA engineer, and Buckwald were easily the smartest young scientists he'd yet encountered.
Strategy
As Miller's meeting with Holz and Buckwald ended, there were only 12 days left until Leap Motion planned to pull back the curtains on its technology. The company had dropped a few hints at various points about its work, prompting a 2011 TechCrunch article that guessed that its technology was "a poor-man's Kinect."
But seeing the current iteration in action, I can't help think that the Kinect is really a poor-man's Leap.
Still, the Kinect didn't get to more than 10 million units sold by accident. It got there with smart marketing and strategy on Microsoft's part and a well-thought out campaign of integrating the device into the Xbox, and later the Windows, ecosystems. Even a rebellion by Kinect hackers didn't slow it down.
So for Miller, having a company like Leap Motion in his portfolio isn't enough, no matter how advanced is its technology. To make HCP's seven-figure investment pay off, he has to help Holz and Buckwald -- and their 12 employees -- turn that tech into a real product, and get their new company off the ground.
It's been three months since Miller invested in Leap Motion, but now his advice is more important than ever. Holz and Buckwald are traveling in a few days to New York to give the first Leap press demos, and there's little time left to decide how to implement several vital systems.
Perhaps the most urgent is Leap Motion's app store. The company is depending on third-party developers to build applications for the Leap, and users will buy them through an online store. But they haven't yet settled on a name for this essential marketplace. Miller thinks a key will be stressing that it's about discovery for users, and that developers can reap rewards for their hard work. "We want people to know they can make money," Miller said, and "that they can make money on it whatever their purposes."
What's crucial here, he continued, is that developers are confident their apps can find users, and that means they need to trust that Leap Motion knows what it's doing.
Another key piece of the puzzle is choosing the developers Leap Motion will work with initially. The company plans an open development system, but it will launch next year with a group of hand-picked apps, and Miller is here to help Holz and Buckwald figure out how to choose.
For starters, Miller urged, Leap Motion should skip anyone they're not 100 percent sure can't pull off their proposed project, no matter how cool it sounds. He also thinks that it would be best to focus on developers who have impressive track records making "beautiful iPhone or Android apps," rather than those who designed cool Kinect hacks.
"I like holding to the Steve Jobs bar of look and feel," Miller said. "There's look and feel, and usability. And does [the app] show off the [technology's] features?"
Holz seemed concerned by the reality that for thousands of developers who have built more than half a million iOS apps, Apple hasn't always been easy to work with. "Does some of that polish come at the cost of not being nice to developers?" he asked.
"It doesn't have to," Miller responded.
But Miller was blunt. Though smitten with these kids, he worries they may be too nice and may get pushed around, something that could easily damage the company's edge. "I think there's a fine line," he said. "I think you are fighting for your life right now, so you want to push people as much as you can without being a dick. But I don't think that's in your nature. I hope you can be more of a dick than you appear."
Ultimately, though, Miller counseled that it's incumbent upon Holz and Buckwald to make smart choices, and that means trusting their guts. "I think you just have to fall in love with certain guys....The point is, you want to [make sure] the first ten things are beautiful."
'The center of the wheel'
As much as he loves their technology, Miller wasn't humoring Holz and Buckwald: The Leap will succeed or fail based on how good their app store is.
That meant, he said, returning to the subject, it's essential they answer some of the remaining unknowns, and right now. For one, Leap Motion needs to decide which currencies users will be able to pay with, what kind of analytics it will provide developers, how to handle user sign-ups, and other payment policies. "We want in-app payments as soon as possible," Miller said, "because that's the only way people are going to make money."
But will developers be paid through PayPal? How will Leap Motion handle currency exchange rates? Or should the company restrict payments initially to U.S. users?
What it boiled down to, Miller stressed, is getting the app store right immediately. Because if it doesn't work, "it's hard to change tires at 100 miles an hour."
For Leap Motion, he said, "the app store is the center of the wheel."
Retailers
Besides providing capital and smart mentoring, the best VCs often also offer their portfolio companies great connections. And Buckwald wanted to know how HCP could leverage its network to help with the Leap's retail distribution.
Leap Motion will sell the Leap on its Web site, but Buckwald also wants people to be able to see it in person.
"What's your dream," Miller asked. "Highland has a huge retail fund. [We] can get into any CEO."
Buckwald said he was thinking about Best Buy or other big box stores. Or maybe Staples.
"We could get you into Staples tomorrow," Miller said. "I'll set you up with [Staples' CEO]. We'll get it done."
Miller got up to leave for his next meeting. But before saying good-bye, he had one last bit of counsel for Holz and Buckwald.
"Good luck next week," Miller said of the press trip to New York. "Definitely write down the dumbest question you get."