Rich Miner Of Google Ventures On What Alphabet Means To The Venture Arm

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Earlier today at a conference in San Francisco, we sat down with Rich Miner, a serial entrepreneur who may be best-known for cofounding a company called Android, which was acquired by Google a decade ago and then relegated to the dustbin of history. (Kidding!)

Four-and-a half years later, Miner joined Google Ventures and he continues to work from Cambridge, Ma., making investments on behalf of his new parent company, Alphabet.

We talked with Miner about how that reorganization is impacting Google Ventures, the team’s lack of gender diversity, and why Miner is expecting the stylus to become a bigger part of our lives. More from our chat, edited for length, follows:

TC: To some, Google Ventures, remains a bit of an enigma. For example, with offices in Cambridge, the Bay Area and London, do partners invest pretty exclusively in their own backyards?

RM: I live in Boston, so I like to see all the Boston deal flow. But I also sit on the board of several companies in the Bay Area and if it’s something domain specific to mobile and doesn’t happen to be in Boston, I’m certainly going to look at that deal.

TC: What’s happening with the London team? There was a lot of press about it being slow to make investments at first.

RM: Google Ventures is very much not a strategic venture fund. We’re focused on returns. To that point, there was a time where there were investment dollars in Europe but [European startups] trailed behind the U.S. in terms of returns, and we’ve clearly started to see a shift. You now have enough of a history of successful startups, enough capital, and great hotbeds of innovation, including around Berlin, and London and Stockholm, that we think all the right components are in place.

TC: They have separate capital, too, right? The U.S.-based team has $300 million to invest annually and Europe gets its own $125 million annually?

RM: Correct, the European team has the same sort of structure with annual funds and right now, the European fund is a separate fund.

TC: With Alphabet becoming this giant parent above Google, do those budgets change?

RM: It has very little impact on Google Ventures. We’ve been a separate legal entity since we started the fund, so we’ve been operating in an Alphabet-like mode [since the outset]. So from our standpoint, if anything, we have more support for the type of operation we’ve been doing.

TC: The makeup of the Google Ventures is almost entirely male. You have just one female investment partner in Europe now that Jessica Verrilli — who’d joined your team from Twitter last spring — has returned to Twitter in a more senior role. Is that a concern?

RM: We’ve been very committed to [creating a more diverse team]. Jess was a great chemistry fit. I’d started to work with her on a couple of deals. But I also get it. She got a call from Jack [Dorsey]. A lot has changed at Twitter. The old band is coming together again. I think it’s a huge endorsement for the leadership there. I had to go through the same thing myself, having been a cofounder of Android and after four-and-a-half years deciding to help start Google Ventures but always having that calling, as Android was still early in its trajectory.

But if you look at our recent hires and track records, we’re both very supportive on our team and also in our portfolio mix in terms of investing in and building teams around diverse teams. The data shows that the more diverse the teams and [the more difference] in backgrounds and diversity, the better performing the teams.

TC: You’ve been talking a while about enterprise mobile applications, a theme that seems to be capturing more mindshare.

RM: The reason you’re seeing all these SaaS people getting involved now is, historically, there’s been a huge amount of value created by SaaS. [But] in all those instances, it really didn’t change the workflow for the end user. We now have these mobile devices that know where you are, how late you are to a meeting, and that can quickly help you do follow-up about that meeting afterward . . but the apps haven’t changed to accommodate that [except in a] tiny [percentage of cases], including with sales and blueprints on tablets.

TC: What’s the holdup?

RM: There are couple of issues. I think content creation hasn’t been as easy on mobile devices, and I think for mobile devices to be better for enterprise work it means quickly being able to use a [stylus]; Apple this week will be launching its first tablet that has pen-based support. Then [you can be] scribbling notes and capturing information quickly into a repository.

You’re also starting to see tablets and laptops merge to some extent, where you’re seeing the first device coming from Apple with a competent, almost laptop-equivalent keyboard. [There’s also a] Dell Android tablet that also has a beautiful keyboard, and now that I can run Microsoft products on it I can start to be as productive with that device as with a laptop. So I think all these trends will result in more enterprise workers wanting to use their mobile devices.

TC: What about the construction worker or hair dresser or health care worker who isn’t a traditional “enterprise worker”? There seems to be an endless number of new customers to reach.

RM: You mention a litany of verticals and my answer is yes, yes, yes. We believe there will be a handful of multibillion-dollar enterprise companies that start mobile first. But we also think there will be [smaller but also highly successful] companies that are built attacking verticals.

TC: What are you seeing being made by cheap phone components, beyond new satellite companies, virtual reality gear and so forth?

RM: [I’m very excited about] mobile phone hardware becoming inexpensive [because it’s enabling] innovation around distribution, which is why you’re seeing a company like Xiaomi go from zero to tens of billions of dollars in valuation . . . Just like with software, when you’re able to launch an app store and take the control of innovating software away from the large behemoths, individuals start iterating at fast rates – to the point that we have millions of applications in app stores. If you can start doing that around hardware, you can see very fast innovation cycles as opposed to the Samsung or Apple or LG, which produce one or two new phones a year.

TC: Do you imagine we’ll eventually have numerous players with similar-size market share or will Apple and Samsung merely be replaced by two other names?

RM: I think these disruptive cycles will continue for a bit. Xiaomi isn’t going anywhere. I think you’ll see other, similar companies – maybe the Xiaomi of the U.S., which we haven’t seen pop up. I think you’ll companies like HTC struggle with how to play in that world. I don’t think the dust will settle anytime soon.

TC: Uber was Google Ventures’ biggest investment when you led its Series C in 2013. Is that still your biggest investment to date?

RM: It’s still the largest investment we’ve made, but we have others on a similarly large scale.

TC: Acknowledging that Google Ventures is six years old and you invested in Uber at a sub-$4 billion valuation: Has Google Ventures made money yet for Google?

RM: Sure. We have annual funds, several of which have already paid back the committed capital, so I think in terms of measuring Google Ventures against other funds, we’re very happy with our performance. And Google is quite happy with our returns, [which are] both realized and on paper.

[Editor’s note: Some of GV’s exits to date include the sale of Nest Labs to Google, the sale of Parse to Facebook, and Twitter’s acquisition of Periscope. The unit has also seen some of its portfolio companies go public, including RetailMeNot, which went public in 2013; Hubspot, which went public last year; and OnDeck Capital, which also IPO’d last year.]

Featured Image: Google Ventures