Yesterday, at the Web Summit conference in Lisbon, we caught up with Jim Breyer, renowned in Silicon Valley thanks to a decades-long track record of smart bets, most notably in Facebook. Breyer was the managing partner at Accel Partners, which invested $12.7 million in Facebook in 2005 when the company was priced around $100 million; that bet proved to be among the most lucrative in the history of the venture business, returning many billions of dollars to Accel’s investors after the company went public in 2012.
In 2013, Breyer segued out of the firm, opening up his own family office, called Breyer Capital, where he has continued to make bold bets. Breyer has also partnered over the years with the Chinese firm IDG Capital Partners, which formerly collaborated with Accel Partners and where Breyer Capital has since become an anchor investor in a series of funds that now manage more than $4 billion.
Breyer will be taking the stage today in Portugal, but he also sat down with us behind the scenes yesterday to talk about Facebook, Softbank, and ICOs, among other factors playing an outsize role in the startup ecosystem. You can find much of that conversation below, edited for length.
TC: You’ve just come to Lisbon from China. How much time do you spend there?
JB: I’m there four times a year. I probably have 100 partners who are part of IDG China, where Breyer Capital is a sponsor and I’m a general partner on the investment committee and we cover 10 cities in China.
TC: Meanwhile, you’re also overseeing Breyer Capital, your family office. How active is that, and is its focus exclusively on U.S. companies?
JB: We make six to 10 new investments a year, investing in artificial intelligence and deep learning mostly, and how it applies to finance, healthcare, publishing, and other large verticals, and yes, [the investments are stateside].
TC: Before sitting down today, I’d seen a CNBC interview you’d given, where you said you expect to see a number of big companies focused around artificial intelligence that are even bigger, much bigger, than Facebook and its ilk today. I think of Google and Facebook and Amazon and Apple as having an insurmountable lead, given the monopoly they have on these huge data sets. Why are you so sure that’s not the case?
JB: Mark Zuckerberg, Tim Cook, [Alibaba founder] Jack Ma, [Tencent founder] Pony Ma, [Baidu founder] Robin Li — these are phenomenal founder-driven companies and I expect the Apples, Facebooks, Amazons, Alphabets, and Baidus will only get stronger in many ways. But the [opportunity] to apply deep learning and true artificial intelligence to large verticals [is immense].
For example, doctor recommendations around cancer research — both in the U.S. and China, where we can pull together data from hospitals, analyze that data in ways that have never been possible before, and provide better potential advice to doctors and nurses — those are just great opportunities for startups.
TC: I’m still confused as to how nascent AI teams get very far. It seems that most are either getting pulled into these bigger companies before their companies can really prove themselves, or else they’re having to focus on very small verticals — like assessing the health of cabbages — and building a data set around them. Can AI teams still build big defensible businesses?
JB: I’m no longer on the board of Facebook, but I have these conversations with Mark Zuckerberg and Sheryl Sandberg all the time, and it’s interesting. Facebook continues to grow dramatically but they’re also optimistic about startups and building new companies than ever before. Yes, there are strong founder-driven companies, but I don’t think it’s about fringe opportunities.
TC: You mentioned AI in healthcare. Where else do you see these bigger opportunities?
JB: I’m an investor in [the publicly traded video distribution platform] Brightcove, and out of Brightcove came Circle Internet, which is a four-year-old blockchain company that’s applying AI to financial services to address how to deliver better payment services around the world, who should receive some lending, and should whether they should receive it it in euros, pounds, dollars, or different coins. A lot of that is AI applied to the blockchain and to digital currencies.
TC: You think we’ll see giant AI companies. Do you think you’ve met the next Mark Zuckerberg yet?
JB: I don’t think I’ll ever find a Mark Zuckerberg. And the combination of Mark Zuckerberg and Sheryl Sandberg, who I helped Mark hire in 2008 – I don’t think I’ll ever find a team like that again. Sheryl’s opportunities to make Mark better, Mark’s opportunities to make Sheryl better – that combination is the best single leadership combination in the world. In fact, they’re two of the key references on so many of the new deals that I do.
TC: You’re getting their advice on potential investments?
JB: Absolutely — and reference checks on people who might be from Google or Apple or Amazon. Not a day goes by when I’m not in contact with Facebook executives about a potential new deal or recruiting. They’ve been a wonderful source of both references on new deals in AI, specifically, or in talent management and referrals of executives who I meet who are potentially future founders or future executives of these AI companies.
TC: Does that put the company or executive or founder on the watch list of Facebook and — for good or bad — does it increase the likelihood that Facebook will try and gobble them up at an early stage?
JB: The experience I have is that when I’m meeting with the top talent, the ability at some point – say 12 or 24 months from now – to speak with Sheryl Sandberg or Mark Zuckerberg or some of the senior people at Facebook, they view it as a big positive.
TC: Are Sheryl Sandberg and Mark Zuckerberg de facto venture partners of yours, or is that overstating things?
JB: That would be too much. But they are very much part of almost every due diligence process that I’ve done.
TC: Do you help them with their diligence? Do either of them make private investments?
JB: They don’t make too many private investments, but I certainly offer them advice and sometimes they listen on either people or opportunities or . . . different elements of Facebook and its global opportunities.
TC: Speaking of Facebook, can you comment on these newly revealed ties between early Facebook investor Yuri Milner and the Kremlin? He’s very well-regarded in Silicon Valley circles. Does this development change anything?
JB: I’m a fan of Yuri. I’ve known him since 2010. I just don’t know more than that. He’s a very good investor.
Would it affect your dealing with Milner right now?
[Shrugs.] I just don’t know [what’s going to happen].
TC: I’ve heard you say that according to experts you’ve talked with, AI will have the same self-learning ability as humans by 2050. How does that impact how you proceed as an investor?
JB: I take a 20-year view on investing. With AI, I’m firmly in the camp that the benefits for the next couple decades far outweigh the negatives. Based on the very best computer scientists who I routinely meet with, at Stanford, MIT, Berkeley, Tsinghua, Oxford and Cambridge – there is a belief that the pace is extraordinary. But it’s likely not before 2050 where we reach a point of singularity and the robots and the machine learning is potentially more intelligent than what is today human intelligence.
TC: And then? Are you worried about the world your grandchildren will be navigating?
JB: I absolutely believe that philosophically, we should be thinking about the ethical implications long term of artificial intelligence and how it’s applied, and that should be part of what we do as investors and entrepreneurs and academics. Those are discussions that I love being a part of. I don’t think that we can just push that aside and not have those discussions.
TC: Do you think there will be a limited number of companies and jobs? Will people be relying on a basic income? What do you see beyond 2050? What about 100 years from now?
JB: I love that, that’s real long term! [Laughs.] I think the pie will get bigger for almost everyone, [with] the right implementation of technologies. I’m on the board of Harvard University and I’m part of the president’s search, and I’ve been spending a lot of time with presidential candidates. And these are questions I ask many of the academics I’m talking with, and I think we’ll see universities, colleges and education very positively affected by these technologies, because I think we can educate students around the world. Teaching will improve. Most importantly, learning will improve if we all take a long-term view, and I believe many jobs will be created that we can’t predict right now.
TC: Do you think we’ll need to regulate artificial intelligence, as Elon Musk has suggested time and again needs to happen?
JB: I think it would be a huge mistake to actively regulate artificial intelligence and artificial intelligence technologies. I do think there’s a role for government officials to be thinking about jobs as they related to artificial intelligence. But in terms of regulation, it would be a mistake because we’re just at the beginning of innovation [and because] it’s global. In many ways, we’re in a race with other economies – whether China or some of the European centers that are trying to recreate Silicon Valley-like hubs – so I think it would be a mistake to regulate research at this point.
TC: Where are we going to see the most growth in coming decades? In the states? In Europe? In China? Do you think Silicon Valley will lose its place as the power center of tech?
JB: I would never bet against Silicon Valley, having done this for a couple of decades. Silicon Valley and China will remain so much at the center.
TC: And on a par with one another?
JB: I think so. China has five million graduating engineers every year. That’s 10x [the number of engineers graduating each year from U.S. schools]. We have the very best universities in the world. At the same time, China is developing a phenomenal group of technologists, engineers, and mathematicians.
TC: We haven’t talked about Japan, but how does Softbank change the landscape, in your opinion? Does the capital at its disposal change everything?
JB: It does. I know the SoftBank leadership. We’ve co-invested together. We compete at times. The late-stage venture capital business is forever changed by what Softbank is doing.
For the earliest-stage companies, where there might be a group of brilliant scientists and engineers, 20 to 30 people, and they aren’t looking to raise $50 million; they’re looking to raise $10 million. It’s very competitive still and it’s where I love to partner and compete. The opportunity to scale and build a global business is still very high.
TC: Do you think SoftBank is a kingmaker? I suppose there’s a chance they’ll actually drown some companies in capital, but I’d be worried if they funded a competitor of mine.
JB: In certain segments where capital and scale make such a difference, Softbank is going to change the nature of the game. For a lot of industries in a lot of segments, such as AI, you’re trying to find 10 or 20 of the very best medical AI researchers in the world, and that’s where it’s the talent scarcity more than a capital scarcity that plays a central role. But for certain other businesses, SoftBank is making a very big difference.
TC: Before you go, ICOs. Here to say? Short-term phenomenon?
JB: I think they’ll be a part of the overall financing landscape over the next five to 10 years, and that we’ll see ICOs and different coins. It’s very hard to predict: Does Ethereum win? Which other coin might it be? But for sure, the nature of fintech and digital finance will result in more fundraising options for entrepreneurs at all stages. I just don’t think it will change overnight.
TC: You own bitcoin. Have you participated in any pre-sales of ICOs?
JB: Not yet, but I’m looking closely and globally. There are a lot of opportunities that I’m evaluating but I haven’t decided are compelling at this point.