Share on:

Meet Singapore’s Jonathan Teo, the Silicon Valley investor with a Midas touch

Co-founder of venture capital firm Binary Capital shares tips on how to minimise failure and pick the right bets.

It is not every day that someone buys a Boeing 747 as a gift. But that was exactly what Jonathan Teo did last year, when he gathered a group of Silicon Valley tech titans to purchase a used plane and donated it to Burning Man, an annual experimental art festival held in Black Rock Desert, Nevada.

The impetus, says the Burning Man regular who first attended the festival in 2006, was to create an inclusive project that everyone could have access to. To get the project off the ground, a group of leaders in the technology and creative industries, including Joe Gebbia, co-founder of Airbnb; Guy Laliberte, CEO of Cirque du Soleil; and board members of Tesla and SpaceX, collaborated to conceptualise and execute this vision: to turn a plane into a performance and meeting space. This is the same group who purchased Fly Ranch, a US$6.5million property and gifted it to Burning Man.

The 36-year-old co-founder and managing partner of Silicon Valley venture capital firm Binary Capital says of his generous endowment: “We thought, ‘Could we create a gift to the Burning Man community that’s so large it has to be worked on by multiple groups and can be enjoyed by everyone?”

At the 2016 festival, the group debuted their “art car”, the front fifth of the 747, which had been remodelled into a massive lounge space featuring a rooftop deck that festival attendees were invited to “board”. The remaining four-fifths of the plane is still in the Mojave Desert, awaiting the group’s next great idea for this year’s festival. What will happen to it is anyone’s guess, depending on what the collective envisions.

THE EARLY ADOPTER

Previously the managing director of General Catalyst Partners and a principal at Benchmark Capital, where he had worked on investments in Twitter, Instagram and Snapchat, Teo co-founded Binary Capital in San Francisco in 2014 because of his vision to make the world a more connected and inclusive space. He had also invested in Snapchat personally before bringing it to General Catalyst and ultimately into Benchmark Capital.

He wanted to work with start-ups with a social purpose at an early stage in their trajectory. His focus is on early-stage investments in companies creating consumer products that connect people, drive social change, and provide greater and easier access to goods and services.

“We are at the centre of the tech ecosystem, and consumer technology is the highest leverage a company has to affect global behaviour change,” he says. This is why his goal is to “make products, services and content more equally accessible regardless of geography, race, beliefs and economics”.

(RELATED: These technology trends are going to change your world, according to Silicon Valley experts.)

The firm, which has over US$300 million (S$431 million) under management, targets companies at their “post-product, pre-infl ection” point – the ones on the verge of becoming the next big thing. Start-ups in their portfolio include Assist, an artificial intelligence product company; Unkrn, an eSports gaming data company; and Dia&Co, an online personal styling service for plus-sized women aiming to foster conversation around positive body image.

  • POWERED BY COLLECTIVE IMAGINATION The Burning Man community used the front end of the gifted Boeing for the 2016 festival.

“It is at this point that you can impact the direction and vision of the entrepreneur and help keep them consistent with that,” says Teo, who was born in Singapore and has a bachelor’s in electrical engineering from the University of Sydney, and a master’s in management science from Stanford University. After graduating from Stanford, he joined Google and was its youngest engineering manager, where he worked on building the company’s data centre infrastructure and scaling the growth of its international engineering organisation from 2004 to 2008 before moving into venture capital.

“We take a lot of pride in being the folks that are the first to show confidence in their abilities to achieve their vision and, for an entrepreneur, it means so much because you are not just riding on the coat-tails of their success, but actively supporting them.”

INVESTING TIME IN ENTREPRENEURS

This interview took place at the firm’s sophisticated headquarters – designed by hotshot New York firm Ashe + Leandro to resemble a high-end residence, complete with bar and living room – in San Francisco’s chic Mission District. Teo takes a somewhat different approach to investing, compared to most other venture capitalists.

Beyond providing capital, he says it is important to provide “functional expertise” to entrepreneurs that are working with “limited resources”.

He explains: “Every start-up requires different skill sets, which could be related to infrastructure and scaling up, building a team, data analytics or marketing and content. Early-stage companies may not have the resources to invest in these areas, but, if they do, this vastly accelerates their growth.”

(RELATED: Why Singapore’s technopreneurs are flocking to Silicon Valley.)

For example, with Snapchat, Teo used data analytics to help co-founder Evan Spiegel understand why the app was initially popular in Denmark among college students – they would congregate after school and use the app, resulting in a strong word of mouth among this demographic. This social behaviour was similar to that of high-school students in the US, so the brand strategised growth there by focusing on a younger demographic than what was initially expected. This became a turning point for the now hugely popular app.

To get a better picture of companies that have the potential to make it big, Teo says he can spend between three and six months cultivating a relationship with entrepreneurs. “We spend time before we spend capital,” says Teo, who in typical Silicon Valley technopreneur style is dressed in a simple T-shirt, slacks and snazzy sneakers, but also has a blazer in his office in case of appointments like this press interview.

PUSHING THE NEXT BIG THING Binary Capital’s sophisticated headquarters in San Francisco’s Mission District.

“If you look at a company just as it is raising capital, you are getting a single snapshot of it. To understand why an entrepreneur wants to do something, you have to have a conversation and it is through metrics over time that you understand if he is right.”

CONFRONTING THE UNKNOWN

While his string of savvy investments gives him the image of an investor with a Midas touch, Teo says he has his fair share of failures. One loss which he still feels strongly about is www.couchsurfing.com, probably because he too shares a deep passion for travel, particularly visiting off – the-beaten-track destinations.

“I loved the founder’s mission to encourage global understanding through cultural exchange,” he says of the organisation, which pairs travellers with hosts offering free home stays, with the aim of allowing both parties to interact and learn more about each other’s cultures. “There was a lot of good intention there but was tough to scale up because it started as a non-profit.”

The lesson he learnt, he says, is “you cannot bolt on a business model but you have to start thinking of it early on”. This early lesson is one of the key reasons why he remains ever more committed to scouring the tech ecosystem for promising ideas that have the potential to shape the way consumers interact through technology.

“The reason this excites me is because I’ve always been interested in confronting the unknown with the best minds,” he says. “In my experience, the best way to do so is to bring people together on a project that has no defined end, but with a purpose, like gifting the Burning Man community with something that everyone can enjoy.”

4 TIPS FOR INVESTORS HEADING TO SILICON VALLEY

Jonathan Teo shares his tips on nurturing a winning start-up.

01: SPEND TIME BEFORE YOU SPEND CAPITAL

Only through multiple conversations over time can you understand the thinking of the entrepreneur and understand if he is right.

02: OFFER FUNCTIONAL EXPERTISE

With the availability of expertise, early-stage companies can accelerate their growth exponentially.

03: GET INVOLVED AT THE RIGHT TIME

The best time is post-product and pre-inflection – too much risk pre-product, while you’re just seen as capital if you wait too long to see traction.

04: BUILD A RELATIONSHIP

It means so much more to an entrepreneur that you’re actively supporting them, especially when what you do can help keep their direction and vision on track.

PHOTOGRAPHY K. M. Dale Tan