What quality really means: my learnings from the team behind Magic Pony
June 2016 was a month we will never ever forget. The vote to leave the EU marked the beginning of a new chapter in the UK’s history. For one startup though, it marked the end of a remarkable journey. On June 20, just days before Brexit, Twitter acquired the machine learning startup Magic Pony for a reported $150m.
It was the culmination of an extraordinary startup story. I first came across Magic Pony 18 months ago when they were just two founders in their mid-20s, with a proposition that was a fair way away from resembling a product and a company name that…well…definitely caught your eye.
I was working for one of their first investors at the time and was a part of the company's journey as a member of the board. This is the first exit I have been involved in as a venture capitalist and I have been reflecting on what made Magic Pony special and why it stood out amongst the many business plans I’ve seen and the countless entrepreneurs I’ve met.
Was it the fact that they were working on truly cutting edge technology - innovating at the intersection of machine learning and computer vision in a way that no one else was known to be doing at the time?
Or maybe it was because they were targeting a really massive problem? Online video consumption had been exploding and everyone in the broad ecosystem from content delivery networks to live-streaming services and evidently social media apps like Facebook, Snapchat and Twitter were looking for ways to either manage the pressures this was placing on infrastructure and associated costs and/or the visual quality of the content that was being delivered to end users. In fact, in a former life as a consultant I spent some time helping a large mobile network operator think through one of their biggest headaches – how to allocate their CAPEX spend on wireless infrastructure to best manage the exponential demand for bandwidth that video traffic was driving. So when I first met Magic Pony, it was not hard to conclude that the pain point they were hoping to address was real and very large.
But it was more than just the technology or the market that Magic Pony had to offer. The biggest driver of the decision to invest was the quality of the team. It may have been said a million times before, but I think it bares consideration because it is the one thing that entrepreneurs pitching are rarely given feedback on.
This idea of ‘quality team’ is subjective but here are a few thoughts about what it meant to me in the context of Magic Pony. At the Seed investment round, the team was just the co-founders, CEO, Rob Bishop and CTO, Dr Zehan Wang
Rob and Zehan stood out because they had:
- Serious technical flair – the credit here really goes to Entrepreneur First who hand pick the cream of the crop when it comes to technical talent. Both co-founders had studied at Imperial College – Rob had a first class Engineering Masters and went onto work for Broadcom, while Zehan had a PhD in computer vision and machine learning and held a string of technical roles. This lent a lot of credibility to their claims of being innovators in previously uncharted territory.
- Experienced the trials and tribulations of building a startup before – Rob was the first engineering employee at Raspberry Pi and later co-founded and sold an indoor positioning company. Zehan had also co-founded a business in the past. This was particularly important in Magic Pony’s case because I was looking for evidence of commercial acumen that would complement their technical expertise.
- Soft skills (not to be underestimated) – Besides raw intelligence and genuine passion, they had an extraordinary amount of drive. What was really quite different about Rob and Zehan is that I didn’t ever feel like they had to ‘sell’ the company. I was captured by their relentless determination to shoot for the moon and they had an almost unhealthy level of belief that success was inevitable. When it comes to raising funding as a very early stage business, this self-belief might just help get you over the line.
By later founding rounds, the notion of ‘quality of the team’ had evolved. At the Series A, the team still stood out because they had proven:
- Milestones could be delivered – and in their case over-delivered. I recall writing a note to my Investment Committee describing how Magic Pony had just achieved a major technical milestone in only four months instead of the eight that was forecast. Any investor will tell you portfolio companies over-delivering on milestones on a consistent basis almost never happens. If it does, there is no better proof of the team’s ability to execute.
- Near perfection in hiring – almost all of the now-expanded team have PhDs in various fields (computer vision, machine learning, etc) and have contributed to a IP portfolio of 20+ pending patents. Eric Ries would argue there should be little room for perfection in a startup but I personally think hiring is one area where it is absolutely worth it as the consequences of anything less are not. Rob and Zehan were meticulous in their search for talent and often found themselves luring candidates away from lucrative offers with tech giants like Facebook or Google.
- Their ability to build a research-led company that had commercial viability – The most impressive part was how careful they were to strike the right balance between research and product. It is easy, especially in a deep technology, PhD-heavy business like Magic Pony, to lose focus of the practical applications of research. Magic Pony facilitated a culture of research to attract and nurture the right talent and built credibility in the academic community by authoring papers and participating in academic conferences. Yet, Rob and Zehan were equally laser-focused on linking research with commercial milestones, constantly engaging with potential customers and structuring the team and processes appropriately to facilitate the optimal research-product feedback loop.
Looking back, I am grateful to have had the opportunity to work with the incredible team at Magic Pony. Successful teams like these come in all different shapes and sizes but as Mike Moritz said in an interview in 2009: “Extraordinary, rare companies -- like Apple in those first two or three years -- have some common traits. The individuals will be different, the businesses will be different, the decade will be different, but the purpose, the drive, the sense of mission, the intelligence of the founders -- those will be common.”