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1Mby1M Virtual Accelerator Investor Forum: With Stewart Alsop of Alsop Louie Partners (Part 2)

Posted on Tuesday, Feb 27th 2018

Sramana Mitra: In the domain of self-driving cars, are there things that you have identified as opportunities where startups can play and perhaps venture-scale opportunities within that realm?

Stewart Alsop: We’re the lead investor of Twitch, which was purchased by Amazon about a year and a half ago. I’ve written checks to two of the founders who then started new companies. One of them started a company called Cruise Automation. Cruise Automation went down its path as a venture-backed startup developing autonomous driving capabilities originally as an add-on to existing cars.

I brought them in because I thought that what they were doing is pretty interesting. My partner thought I was crazy for investing in this company. Apple, Google, Uber, and all the other companies are doing this. How can a startup company do anything that can be significant? They’re in the process of being acquired by General Motors for more than a billion dollars. There are always opportunities for startups no matter how many big companies.

In fact, if there are big companies trampling around, that’s more of an opportunity. Cruise was doing something that General Motors had tried to do. General Motors knew they were falling behind and they felt that they had to purchase this company.

Sramana Mitra: There’s also the security opportunity that would probably be a reasonable one for startups to follow. Cars are going to become major hacking points. You don’t want your cars to be hijacked by some hacker.

Stewart Alsop: That has not been solved yet. As a firm, we specialize in cyber security. My partner used to work with the CIA with the founding CEO of In-Q-Tel, which is the so-called CIA’s venture capital fund. About a third of our portfolio is security related. I had to learn. Now, I can talk the game. The thing you’re referring to is now generally known as IoT security. Your car is a device. Your phone is a device. Your toothbrush is a device. You have all these devices that are connected to the Internet which I have no fundamental way of protecting.

Sramana Mitra: While your phone being a device and being hacked has huge consequences, but the car is an even more dangerous touchpoint.

Stewart Alsop: Yes. The whole thing about nuclear processing plant can get hacked because these were embedded devices before there’s some network attachment. Everything that was previously not connected to the network but is now being connected to the network is vulnerable.

Phones are actually pretty well-protected. It’s not the phones or computers. The real opportunity now is protecting those devices which were not previously connected but are now being connected. The real issue is how do you deliver a thing that will make those devices secure without requiring them to become experts.

Sramana Mitra: You take pride in investing early in disruptive tech. What are other disruptive areas?

Stewart Alsop: On my Twitter page, I say, “Send me the deals the other VCs think are too hard or too early.” That’s how we do business. We’re old guys. My partner is younger than I am, but he’s also been in the business for 40 years. We’ve been around and we know a lot of about technology. We have confidence in our ability to forecast.

Our job, as investors, is to go find technologies that are not proven, are hard to do, and that have tremendous potential. We lose most of our companies along the way, but this is traditional venture capital where you make it up in the one or two that are successful. To be honest, we have a blast. We’re working on stuff that you don’t know about.

Sramana Mitra: I’m sure. The pace at which things are happening right now, it’s harder to keep up with things.

Stewart Alsop: We’re out there on the bleeding edge. The reason I’m going to the airport is because I’m flying down to Los Angels to check out humanoid robots. The humanoid robots don’t travel as easily as I do, so I have to go there to see them. These are robots that have facial features. You can see the subtle changes on their faces. They have AI systems internally so they can be sensitive to your feelings. This is obviously something that will be developed over time.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Stewart Alsop of Alsop Louie Partners
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