How GV handles the unsexy part of growing startups

I first met Rick Klau and Ken Norton several years ago when they were running a program called Startup Lab — on behalf of Google Ventures (now GV) — a venture capital firm along the lines of Kleiner Perkins Caufield & Byers, Greylock, Andreessen Horowitz, and Sequoia Capital. At the time, the two worked to mentor the investment firm’s portfolio companies, offering advice on everything from design to product management, along with resources to grow the startups.

As GV has evolved over time, the need for a formalized program has faded away, but Klau and Norton both continue to have a prominent presence at the firm. Instead of a front-facing program, they operate behind the scenes, helping startups take their products to the next level, with Klau focused on partnerships and Norton on building out products — areas essential for any potential exit, be it an IPO or acquisition.

There are any number of things a startup can do to move itself forward in the pursuit of traction, revenue, and profitability., and it’s these things the two former Googler’s excel at. What Klau and Norton do at GV may not be the most glamorous parts of the company-building process, but approaching these areas correctly can have a profound impact on the bottom line.

Greasing the wheels for growth

“The biggest mistake that startups make in the partnership mode is chasing the brand name for the sake of having the brand name,” Klau told VentureBeat in an interview. He believes entrepreneurs should think about the bigger picture, rather than taking a starry-eyed view about landing a big partner like Ford, Salesforce, Adobe, or Target. Startups risk being put in a position where they’ll wind up building a product for that company, rather than building out their own ideas. “It’s a dangerous position,” he said.

As head of GV’s partnership program, Klau serves as the facilitator between portfolio startups and the companies interested in working with them. This process includes not only making introductions, but also coaching entrepreneurs through all aspects of the process, such as perfecting the pitch. “Start with the problem you want to solve, talk about the impact of solving [it],” he explained. “How will the company be better positioned to tackle a new market, save money, be better?”

Above: As one of the principals behind GV’s Startup Labs, Rick Klau held workshops for the firm’s portfolio startups, including sharing how Google sets goals.

Image Credit: GV

Although he’s been at the venture firm for nearly five years, Klau is no stranger to the startup world. He’s worked in marketing and business development roles for several tech companies, including Socialtext and FeedBurner. The latter was acquired in 2007 for $100 million by Google, which he joined and remained with for nearly three years, working as a product manager for various divisions before joining GV. A founder of a company backed by the investment firm once described Klau as the “human API,” because of his connections.

“One of the challenges we ran into was that no one answers your call, or gauges how effective you are when you’re working in a startup,” Klau remarked. He wants to grease the wheels for founders in order to open lines of communication. “One of the advantages of [GV] is that, while we’re independent of [Alphabet], I still have friends at Google. From a GV context, I’m having conversations with C-level executives at top companies all the time. I’m meeting with them to better understand the problem that they have. GV is a name large companies know — we’ve become one of the assets that they can use to find startups without having to know hundreds of startups. We’re trying to be a shortcut in the process.”

Above: GV’s Rick Klau on stage at TechCrunch Disrupt San Francisco on September 9, 2013.

Image Credit: TechCrunch

While established companies like Uber, Airbnb, Slack, DocuSign, HubSpot, and Airware are more likely to secure integration and partnership deals with other businesses on their own, early stage startups likely aren’t as fortunate and therefore turn to their investors for help. Firms like Norwest Venture Partners can provide that assistance, but with GV, the experience is a bit different, especially when established companies are already turning to Alphabet for insight into the latest technological trends.

Above: GV’s Rick Klau

Image Credit: GV

“Part of what GV does is talk to startups before we connect them with some of the companies in order to determine whether now is the time to coach them through the process,” he explained.

Klau spends much of his time curating relationships with corporate development teams, while also meeting between 6 to 8 companies in the GV portfolio every week: “I try not to be a switchboard [for startups]. It doesn’t add a lot of value, nor is it helping a startup likely succeed,” he said. An acquisition isn’t always the goal of these interactions, we’re told. In some cases, it’s about solving a problem with growth.

One portfolio company consulted with him for help in securing funds after an investor suddenly declined to participate in its seed extension. Faced with a 2 month runway, Klau said that he helped put together a meeting that may have led to a potential acquisition.

In chatting with Klau and also hearing anecdotes from others, I’m reminded of the “Six Degrees of Kevin Bacon” game, and how Klau has connected himself with not only tech companies in Silicon Valley, but also corporations, many of which are always searching for new ways to innovate and adjust to evolving consumer behavior.

Building a product is like jazz

Startups might be able to form partnerships and impress investors, but the main focus should be on getting the product right. And GV has Norton on hand as a resource to ensure its companies keep the main goal in sight.

A former Googler (pre-Alphabet), he worked on Google+, Google Mobile Maps, Google Calendar, and Google Docs (as a product manager) before joining GV in 2013. He’s been described by LinkedIn CEO Jeff Weiner, with whom Norton worked with while at Yahoo, as “one of those rare [product managers] who combines both product vision and a strong technical background. He and [GV partner and former JotSpot CEO] Joe Kraus are both passionate about entrepreneurship and sharing their insights with others…”

Above: Ken Norton speaks at Mind the Product conference 2016

Image Credit: Vimeo

Like Klau, Norton found himself “displaced” after GV shut down its Startup Lab program, but the firm quickly realized that his talent lay in one-on-one interactions with startups. He holds open office hours where anyone, be it product manager, CEO, marketing director, designer, or engineer, can stop by and chat. Because Norton specializes in shipping products, he says it’s important to have working relationships with everyone in the company.

It goes without saying that product managers hold a lot of responsibility for the success of a startup. In fact, they could be considered “mini-CEOs,” as its their job to execute the company’s vision. As he’s someone well-regarded in the PM space, Norton’s critiques can be particularly helpful in getting the company over its next hump.

Norton shares insights into how a product should work, how to organize a project, the role of product management, the difference between design and engineering, as well as advising on questions such as whether companies should hire a vice president of engineering, how far companies should go on their roadmap, and more. “It’s about the process and craft of product,” Norton explained.

“Startups are very self-aware,” Norton said, but noted, “The things that bother them aren’t always the problem. The answers are different when they come in. The vast majority are worried about problems they may have later: ‘I want to prepare for the future because the team size or product is changing, and I want to get ahead of it.’ It’s the notion of leveling up versus fixing things that are broken.”

Above: Ken Norton speaks at Mind the Product conference 2016

Image Credit: Vimeo

Fond of analogies, he compared building products and startups to making music. On the one hand, you have classical music, which is composed of a score. You practice and memorize it. “There’s an opportunity to make it your own, but the best way is how Beethoven made it,” Norton said. Instead, he thinks of building a product like playing jazz, where the music is never the same twice. “At the end, you have an incredible composition, but it was made up as you went,” he said. “Product management is how you react and respond as you go. It’s different than building a specification and building as you go.”

Norton considers product more than just something tangible or a service people use. He defines a product as “the entirety of what is being consumed by the end-user.” He thinks companies should view their “product” as the entirety of the user experience, the sounds, the shape, what’ll happen if it breaks, how someone calls for customer support, and more.

He also believes that startups shouldn’t worry so much about what a finding a “winning direction.” “Where you end up, you’re going to figure out on the way,” Norton opined, citing Slack (a GV investment), which started out as an online gaming company before pivoting to become a productivity app, which has seen good success. “Be willing to go with the flow, and your success or failure will be dictated by how you react based on what you’ve learned,” he said. “For the first time for product leaders, founders, and CEOs, it’s hard because you think you know where you’re going to end up, but you don’t. That’s not a failure — that’s you, finding a great product that’s going to solve a certain need.”

The strength to scale

Companies sprout up practically daily, and there are hardly any entrepreneurs who have the knowledge to handle every aspect of growth on their own. This is where Klau and Norton can contribute and perhaps elevate a startup as it moves from one stage of its life to another.

Data analytics provider Tamr has enlisted the help of GV’s scaling duo multiple times over the past three years. GV has backed the company in both its Series A and Series B rounds. Company CEO Andy Palmer recalled that Norton connected him with Google’s alpha designer to touch up the platform’s original designs, which led to recruiting in-house designers at the startup — “Not an easy thing for a bunch of system software engineers,” he told VentureBeat in an email interview.

Palmer also worked with Klau, who introduced Tamr to General Electric’s (GE) executive team:

GE is our biggest customer…and we’ve done some fantastic work at GE over the past 18 months helping them accelerate their ‘digital transformation’. We used state-of-the art machine learning techniques to clean and analyze GE procurement data — the result of which was tens of millions of dollars of spend optimization.

Rick mentioned our work at Tamr to the GE executive team and a number of them had heard about the success of the project….Within weeks, we had a number of other orders from divisions at GE that were looking to replicate the success of the original Tamr project, as they were all driving digital transformation in their respective divisions of GE…Rick’s work with the GE executive team radically accelerated our expansion of work at GE.

GV is different from traditional investment firms in that it has only one limited partner: Alphabet. While it receives its funding from a central source, it also has the brand reputation to trade on. Startups and corporations are interested in the latest gadgets, software, and technological innovations taking place, and one of the leaders pursuing these inventions, including moonshots, is Google. So it’s logical that incumbent businesses want to chat with Google executives to understand what the next leap will be and to see if they know of any startups in the space — Google won’t acquire them all, although perhaps it could.

The roles Klau and Norton play bolster GV’s ability to prepare its portfolio companies for these situations, which could “make or break” the startups. As Klau summed it up: “I joined GV not to live vicariously through hundreds of startups, but to bring to bear the collective effort of [Alphabet] and my expertise to help startups to succeed.”