James R. ("Jim") Hedges, IV was one of the early leaders in the hedge fund and alternative investments industry and is the author of Hedges on Hedge Funds.
Jack: The fast-moving innovative area of technology was always fascinating to me and the idea of taking an idea and creating value in a short period of time was extremely interesting and so after being the founder and CEO of four different early-stage technology companies I realized that I loved working with seed in early-stage companies, empowering people and taking ideas and turning them into products and products into companies. It led me to blend accounting and finance and sort of these entrepreneurial endeavors it sort of drove me straight into venture capital where you have an opportunity to build a portfolio of companies and work with entrepreneurs to help their dreams come true and create some financial value along the way.
Question: What led you into the co-founder of role at Impact Ventures?
Jack: I had an opportunity to participate in the Kauffman fellows program, two year leadership program for venture capitalists and I met Eric ball who at that time was working at Oracle reporting to Larry Ellison- working on large scale acquisitions I think on more than a hundred acquisitions. Well a few of those acquisitions were multi-billion-dollar acquisitions, Sun Microsystems, BA, PeopleSoft and Eric ended up with an orphan portfolio from the investments that Sun and PeopleSoft and BA had made prior to the acquisition by Oracle and he was looking for someone to manage out that portfolio. So I did that successfully and actually produced a significant amount of Oracle in managing out that portfolio but most importantly it gave Eric and I an opportunity to work closely together. We got to know each other personally in the Kauffman Fellows Program and then professionally working on portfolio management for Oracle and to make a long story short, started co-investing together and alongside of Dickson Doll- of course a legend in the Silicon Valley who built DCM Capital up to 3 billion under management. I think DCM is invested in more than 20 companies that have achieved a billion-dollar valuation, so we were thrilled to invest and candidly learn from Dixon through this co investment strategy and after a couple of years of doing that we just determined that we ought to formalize this and effectively we did with the with the launch of Impact Venture Capital.
Question: When you think about the venture world how do you differentiate Impact from another fund?
Jack: We do a couple of things that we think are interesting and have catalyzed unique sources of deal flow for us. First of all the three of us come from very different sort of worlds, Eric in the corporate setting, me from the sort of the entrepreneurial and corporate some corporate venture activity and Dixon of course two decades of experience in the venture capital industry. Generationally were different and so in the networks of relationships that provided us with interesting access to deal flow. So the networks are unique but from a differentiation standpoint we're actively investing alongside corporate venture groups there's been a rise of corporate venture capital where these corporates have determined that they're going to figure out new ways to access innovation outside their four walls and so they're investing, they're co-investing into companies directly, they're sponsoring innovation programs and events and another element of what we're doing is we're running large-scale innovation programs, So we've had venture funds that run demo days and have CEO forums on a large scale. Our last global venture summit included 1,100 attendees and we hosted it at an NBA basketball arena and so from that perspective what we're finding is that the ability mobilize an ecosystem and play a bit of a thought leader by by hosting these innovation programs is an element of differentiation. Lastly, I'd say, that we think some of the most interesting areas of innovation are being influenced by policy. If you look at autonomous vehicles, clearly things like citizen safety are going to be critically important. If you look at social media, privacy ends up being a pretty important thing, so the more that we understand about how policy is shaping innovation and the ability to create value we believe it’s elevating our investing IQ. So we have our headquarters here in Silicon Valley and then we have a satellite office up in Sacramento near some of the policymakers so that we can be a thought leader in that space as well.
Question: You have some thoughts on it going on a digital diet, can you share that with us?
Jack: I'm amazed that we're all trying to manage our lives through a 13-inch monitor a 5 inch screen on our on our mobile phones and I'm wondering if there's a way to sort of break out and leverage the traditional experience of strategic planning that many of us use in our day-to-day business life managing in our case a portfolio of tech companies and trying to help them with strategy and document annual goals and how we're going to get there, apply some of those skills to our life and sort of break out of in a sense the digital world for a second. Over the last 10 years I’ve tried a number of different ideas in my own house a living lab if you will for deploying a strategic planning model for life and this includes sort of a walls of dream boards and thinking about what in a sense are the goals that have been established for my personal life, how they could potentially integrate in with what I'm trying to do professionally and as opposed to thinking about it as my work life and my personal life, figuring out a tool set if you will for the one life that we have to live.
Question: When a person's looking at strategy, how do we make the most out of life?
Jack: One concept that I'm testing and again I'm sharing some of my research and some of my ideas and I actually formalized them in a thesis project as part of my Kaufman fellows a project that I mentioned earlier, but I am I'm working through some of these ideas to effectively crowd source ideas from others so that I can understand in a sense what they're doing. Some of the things that I've tried is utilizing strategic planning skills in my personal life by literally documenting some of the things that that I'm trying to achieve in the next year and what is my family trying to achieve in the next year and one element of this taking place in the form of a dream board. Up on my wall in my home office or our places I'd like to go and things I'd like to be and people I'd like to meet and things I'd like to have and in addition to that my family has documented their goals and things that they'd like to see happen and I view this dream board as a way to understand what's really important in life and ways to your point to get leverage. How could I execute on one initiative and get multiple positive outcomes from this and so quickly I'll mention one idea. Sure we can drive our car from work to home and listen to an audio book right and sort of not only get the transportation home but also listen to something interesting. Sure we can go biking with a friend if we're trying to get in shape ourselves and spend some time with friends, but when I think about leverage in life I'll give you an example my son and I started in an entrepreneurs club at his school. This was an opportunity for me to spend more time with my son, contribute to the school that I that I care about, learn about how kids are using technology, teach something that I'm passionate about... I was getting sort of four elements of value by allocating a little bit of time that aligned with my dream board. I think this concept of leverage can only happen if we're proactively living, really thinking through how we're managing our lives in a proactive way.
Question: How do you suggest we go about setting patterns for living and making the most out of life?
Jack: One thought is I find that most people are either looking to optimize their life with a new set of routines or pivot, they're just not happy with how things are going and they want to go in a different direction. In an effort to optimize or to pivot oftentimes you need to understand where you're headed, what's the target what's the destination and then establish a routine a set of routines for getting there. I don't know if you've heard the Japanese term ikigai, but it’s a term that basically speaks to your purpose in life. I think as people do some self-awareness exercises they start to think about four quadrants. What do they really like doing, what are they good at, how can they positively impact the world and how can they make money. If you look at those sort of four quadrants of areas and start to assess sort of where are you actually interested where your dreams leading you, you might find that your purpose is right at the center of those things and as you start to think about your own life's purpose then you can start to think through the patterns or routines or tiny habits that you might adopt that will allow you to get traction in those areas. For me candidly it was starting with that exercise some strength finders exercise reading through focus books like the Essentialism from Greg McKeown and some of these other great books that that that are out there and then zeroing in on a set of core values that I wanted to focus on from my own life. What I've been doing is as part of a strategy that is outlined in miracle morning which talks about systematizing your morning routine, I've been waking up and looking at the core values that I want to live my life by, I've been looking at this dream board which is a visual on my wall which shows my own dreams with colored stickies and in one color and my family's dreams and other colors up on the visual wall and then I've been going through sort of this year's objectives to determine ultimately what's important now and how can I make literally today a great day. Just briefly people talk a lot about optimizing your body in the morning, getting a workout getting some fuel coffee good breakfast, maybe having an attitude of gratitude, once you're in that physical and mental positive state of appreciation and enthusiasm about where your life is headed, once you've gotten to that point, I like the idea of pointing it toward the things that I'm trying to achieve that day- personally, professionally, how can I make today a great day? I think systematizing your morning routine is a big part of achieving maybe some progress toward your goals but you have to understand in a sense what your goals are what your purpose is what's going to lead you to fulfillment in life and so that self-awareness exercise followed by a set of morning routines I think aligns everything at least for me.
I think sometimes you need what many books have referred to as activation energy if you're if you're trying to improve your health then maybe you're setting gym clothes and sneak right next to your bed that that's the tiny routine that you adopt if you're trying to figure out ways to maximize the amount of time with your family then maybe you start looking for professional opportunities or other ways to integrate your family into your professional life. Alan you've done it with your radio show you have family members that are there involved and contributing great value to what you do with this radio show, I feel like I'm doing and learning about how digital natives like my my teenage son are thinking about entrepreneurship and technology through this effort with the entrepreneurs club. I think that in each of these areas you can look for ways to accomplish your goals with new routines new tiny habits new initiatives if you're thoughtful and proactive about it.
I'm involved in a group called the entrepreneurs organization and it's a man ten other CEOs that sit around a table for four hours once a month, actually pretty significant amount of time for busy people and we share what's going on in our lives personally with our families and professionally. I think there's something about including other people in an authentic way- experience sharing. I view this group is kind of an advisory board for life because I see how they're managing their lives and I share with them how I'm managing mine. I think the deeper you go the more authentic you can be about some of these types of topics, the more you learn candidly and so the idea of crowd sourcing best practices on how people are living their lives doesn't come easy but once you start to share this type of information you see the other morning routines that other CEOs are using or people who seem to have a really deep relationship with their family, how are they making the time and paying their bills and sort of executing professionally but still allocating time to coach their kids or make time for their kids, I think there's a lot to be learned by by experience sharing.
Question: How does a person really find their core values in life?
Jack: I think Benjamin Franklin had 13 principles that he was going to deliver his life by, I think he developed it when he was 19 years old and they never changed. For me, when I when I think about what's important to me, fitness has been really important to me, just staying healthy, family, there's a lot of things in the finance area that that I'm focused on, from the standpoint of fun just making sure to establish time for adventure and those things and then faith. Those are the five F's if you will for me. I literally reviewed a list of 300 core values and I pulled those off that that resonated with me and I looked at my set of activities, how was i spending my time and my money and where was my brain sort of gravitating toward and those five areas were or things that resonated with me, those are likely to be different for everybody on the planet, but I found that my life seemed to tuck neatly into those five areas so I started to look at bold moves that I could make in some of those areas and a bold move fitness-wise was signing up for an Iron man event I didn't know if I'd be able to train and complete it or be able to avoid injury candidly but it was one of those things where if this really important to me, why don't I make the bold move of signing up for something that seems impossible and then go prove that it's that it's possible. On the finance side, it's not easy to create a venture capital firm from an idea and so in each of these areas what I've tried to do whether it was family or finance or fitness or fun or even faith- where I've done things like joining Bible studies and other things were you sort of take a step forward and what you find is that it cements in a sense your alignment with that core value so I like this idea of selecting five core values and there's lists all over the internet of core values that you can select and see which ones resonate with you and then establishing a bold move that you can make in that category and then looking for a set of tiny habits or new routines that you're going to adopt that allows you to live that life. It doesn't mean that you're that person on day one but you're certainly trending toward that person. To me, I think that gets you closer to what life's purpose is all about- living and making decisions by those core values
Question: How can a person contact you?
Jack: They can find me on LinkedIn, they can find me on social media, they're also welcome to write me with my first name Jack@impactvc.com, happy to receive emails.
Question: How do you decide which companies you work with?
Jack: From an investment standpoint we're looking at kind of market technology team and finances, the areas of due diligence that that we think are most important. As we qualify entrepreneurs to collaborate with and to partner with and candidly to invest in, we'll look at the overall size of the market, we'll look at the technology itself and does this company have the ability to create a sustainable technology advantage, the caliber of the team have you been involved in venture backed deals before, if you've been involved in exits before and then the financial model, how capital efficient is the company. If you look at our website look at the existing portfolio companies we set the bar pretty high and we're excited about the companies that that we work with, we try and do a lot to add value beyond capital, we don't want to just be in an investor and someone who sits on the board and plays kind of a compliance role, we're trying to add value by connecting to corporates, by connecting to potentially policymakers, by showcasing your company at some of our innovation programs, so we're trying to add significant value beyond capital and as Kauffman often talks about, try to be smart connected capital and that's the way we add valued entrepreneurs and that's the filtering system that we go through to find the best entrepreneurs.
Edited for Concision
Bio courtesy of Jack Crawford