Influencer Series: One on one with Ed Goodman, Venture Capitalist
Originally published at www.zindigodaily.com on November 11, 2014.
I may have left Bergdorfs two-and-a-half years ago, but along my journey I have found my way to another Goodman.
Zindigo’s New York offices share space with Ed Goodman, co-founder of Milestone Venture Partners. Ed is a venture capitalist with a striking and charismatic presence. Handsome and stylish with his signature bowtie, and oui (gasp!) he is also the grandson of Edwin Goodman who founded the luxury mecca that anyone who adores fashion has called home at some point.
Not only has Ed become a mentor and advisor on all things VC, but listening to his stories about Bergdorf’s history are like fashion fairy tales. But storytelling aside, on this day I wanted to discuss his road to success and what it truly means to invest.
Kareen Mallet: Larry Page of Google thinks only about 50 investors are chasing the real breakthrough technologies that have the potential to make a material difference to the lives of most people on earth (Financial Times, October 2014). What are your thoughts?
Ed Goodman: It’s interesting Larry Page says this because many observers of the tech industry would say that Google, Facebook, and Microsoft — all established companies — are more interested in protecting their turf. This, of course, is a natural process. One tell-all sign is that they are, in many cases, outsourcing their innovations by making acquisitions. So they are moving forward, even if those initiatives aren’t the next big thing.
The venture business is about financing new ideas. In that sense, I admire Peter Thiel — he won’t invest in anything unless it’s big and can change the world. Peter recommended a book that I am reading right now, The Sovereign Individual, which discusses mastering the transition to the information age. The author basically says that the Industrial Revolution spanned over 150 years, and it changed everything; now we are in the Information Revolution which is moving at a much faster pace — more like 50 years. This time of change is more disruptive, therefore more people will fight to stop it because it is threatening their businesses.
KM: In a way, venture capitalists are very much like fashion directors, looking for next big thing. What type of new ventures are you looking for? What are the determining factors that will get you to invest?
EG: We look for big markets that are experiencing tremendous change — which means there is opportunity. Where we see a huge opportunity is in the healthcare industry. We are not interested in pharmaceuticals per se, but are looking for technologies applied to the system, like software and data analysis, among others.
One of the problems with listing all of the factors you want in something new, is that one might never invest: A perfect entrepreneur, a talented team, a big idea, a big market, no direct competition, rapid growth, and the list can go on. This assumes, of course, there is a market where no one is addressing that need. Additionally, in the current environment, some of these big ideas are actually creating the market. For example, airbnb started because the founder had no where to stay.
One of the reasons I like the venture business is that there an intuitive part. If you had to check off every single factor, it would be too easy, right? So my partners and I must have 100 percent agreement, we go back and forth, we either are comfortable with it or we we’re not. It’s a little bit like dating. You don’t get married on the first date. The first date is really a time to figure out what you’re trying to do: Get a second date, or decide that it’s not going to work out.
KM: Over the years, who is the one entrepreneur that has surprised you the most?
EG: In my case, it would be the CEO of our most successful investment — Tarek Sherif of Medidata Solutions, Inc. (MDSO). We made that investment even thought hte market was small, there were seven competitors (which is bad), and on paper the CEO didn’t have the right credentials (he was out of school for only four years and had been a hedge fund executive, but had never run anything). What has surprised me most, is that the company is now over a two billion dollar market cap and he is still CEO. The lesson I learned there (and you learn a lesson with every investment you make) is that he was very secure, so he hired the most brilliant people and they all delivered, he didn’t have any ego problems or limiting insecurities.
KM: Can you give me some personal advice as an entrepreneur?
EG: You have to be passionate, committed, and enjoy your work, otherwise you won’t be able to hack the 12–14 hour work days. You also have to have a reality check and ask yourself, “I love this idea, but is it valid?” You have to keep checking with the people around you who will be supportive, but skeptical.
KM: And finally a fashion question. Bergdorf Goodman is my safe haven, a place where I walk into and get goosebumps. I am envious that you grew up there as a child. Can you share an anecdote?
EG: My grandparents lived in the penthouse on the 9th floor. My father lived with his parents until he was 35. I used to spend a lot of time at Bergdorfs. One memory, is my father telling me I had to get experience working in every department in the store. So, I did marketing, receiving, buying, credit, and even display. Display was an amazing place to work because it was a very creative team of mostly gay men. These men came from all over the country because, at the time, the fashion industry in New York was the only place where they could be creative and open. Also, most of the top merchants were women. After working there, I went on to a world beyond fashion and only then realized how amazing it was back in the ’60s and how critical diversity was to the rise of the fashion industry. The fashion industry always embraced diversity, even back then. Fortunately other industries are finally catching up; the announcement from Tim Cook, Apple’s CEO, is a perfect example.