INVESTOR IN CHIEF

“He’s kind of perfect for the job”: Obama hints at a future in VC, and Silicon Valley is salivating

In seven months, Barack Obama will leave the White House as president of the United States. He’s going to need a job. In an interview with Bloomberg on June 13, he hinted at the possibility of joining entrepreneurs and venture capitalists in Silicon Valley.

Obama said “had I not gone into politics, I’d probably be starting some kind of business,” said Obama. “The skill set of starting my presidential campaigns—and building the kinds of teams that we did and marketing ideas—I think would be the same kinds of skills that I would enjoy exercising in the private sector. … The conversations I have with Silicon Valley and with venture capital pull together my interests in science and organization in a way I find really satisfying.”

On hearing the news, Valley investors were quick to save the president a spot on Sand Hill Road. Obama, of course, wouldn’t be the first Washington power player to make such a move. Former secretary of defense Colin Powell joined Kleiner Perkins Caufield Byers in 2005, followed by former vice president Al Gore in 2007. Condoleezza Rice, the secretary of state under George W. Bush, teamed up with Khosla Ventures in 2012. Numerous Congressional representatives and government officials have found homes at venture firms in the Bay Area.

Obama has practiced for the job before. In August 2015, Obama launched the White House’s first annual Demo Day, inviting more than 32 top entrepreneurs to the grounds. When the founders of PartPic, a visual search app for replacement parts, pitched the president, he wasted no time ripping into the entrepreneurs like a real VC. He grilled the pair about their market, technology, funding sources and how the team met. Billionaire investor and AOL-founder Steve Case, who works with Obama on entrepreneurial initiatives, said in an interview that the president asks the same questions of any great investor.

With Obama as investor-in-chief a possibility, we asked prominent venture capitalists if the president had what it takes to do well in the hyper-competitive venture world. Without exception, every firm said Obama would be a natural fit (several extended job offers and invites to “grab coffee”). A few gave some good-natured pointers on what Obama could to do to up his game before his first day. Here’s how Silicon Valley sizes up Obama:

Obama has the world’s best network—but he’ll still have to hustle.
In startup investing, the quality of your contacts is everything. You can only invest in the deals you know about. Building relationships consumes a huge portion of investors’ time. Obama, of course, has few peers in this respect. He has shaken an estimated 65,000 hands per year while in office. “He has a massive rolodex and ridiculous access,”says Jeff Bussgang of Flybridge Partners. That’s a huge advantage, says Obvious Ventures managing director Andrew Beebe: “I think he’ll be a great investor. A lot of what we do is based on networks and there he could be a great help.” But the president will still have to work hard to win deals, warns Shahin Farshchi of Lux Capital. “Don’t expect just because you’re Obama, you don’t have to hustle,” he told Quartz. “You’ve got to get out there and network and shake hands. Don’t rest on your laurels.”

Few can motivate and mobilize people better than Obama.
The Republic has rarely seen an orator like Obama. Obama’s first campaign raised an unprecedented coalition that powers the Democratic party to this day. Startups demand those same skills to rally founders and employees. Obama’s presidential experience building alliances and inspiring entrepreneurs could be invaluable, says Beebe at Obvious Ventures. But it wouldn’t be like the White House where the commander-in-chief authority gave him far more sway over his subordinates than he will have over his founders. “He has to coach and guide them, not just tell them what to do,” says Beebe.

Obama has a track record of big wins and spectacular flameouts. Perfect.
Silicon Valley fetishizes failure, but it loves big wins even more. Obama has both. He notched two presidential election wins in the face of steep odds, and passed health-care reform and other signature policy achievements despite fierce political resistance. Of course, he’s no stranger to big losses. Obama admitted the party was “shellacked” during the 2010 mid-term elections, and policy missteps have cost him dearly with Congress and overseas. But that should serve him well in an industry where 95% of start-ups fail to deliver their projected return on investment, and just a few big wins are the difference between wild success and total failure.

Obama will invest in people who don’t fit Silicon Valley stereotypes.
Here’s where Obama may really shine. Obama’s global sensibility and solid history of picking world-class people regardless of race or gender translates into great investments, says Dave McClure, founder of 500 Startups, which pursues a similar strategy. Obama himself brings something rare to the table: he would be among the 2% non-white or Asian senior venture capitalists in the Valley, according to survey by investment firm SocialCapital. That gives him an outsider perspective on the “pattern recognition” rationale investors sometimes use to justify investing almost entirely in white, male grads from elite schools. But McClure says a steep learning curve is inevitable: “He’s going to make a lot of mistakes and screw ups so he should diversify and make a large number of investments,” McClure said in an interview.

Yes, he led the free world. No, he doesn’t understand startups.
Obama has spent so long at the highest reaches of power that his grasp on the mechanics of startups is probably shaky at best. “He has no direct, specific knowledge of industries or sectors,” says Bussgang at Flybridge. “All his information from the last eight years has been high level and/or second hand.” Josh Wolfe, founding partner at Lux Capital, thinks Obama’s deliberative style and open mindedness will give him an advantage if he’s willing to work his way up. “Venture capital is an apprenticeship business,” wrote Wolfe by email. “Obama has a spot at Lux, but he’s got to intern first.” He suggested trading his masterful oratory for speaking in bullet points more suited to the Valley’s short-attention spans. Obvious Ventures’ Beebe also thought a ramp-up period would be needed: “In his first 100 days in his new office, I would say, ‘Don’t do any deals. Just sit there and engage with entrepreneurs. Listen to as many pitches as possible and you’ll learn a tremendous amount about the dynamics of decision-making.”

Silicon Valley culture should feel very familiar.
“He’s kind of perfect for the job,” says Ari Bloom, an investor and CEO of the fashion technology firm Avametric. “He’s got experience sitting through presentations that require a translator, he meets with people every day that nobody expects him to remember, and he’s kissed a lot of crying babies, so he can definitely work well with founders.” Pascal Finette at Singularity University also said Obama’s decision to finally ditch the Blackberry in favor of a new smartphone was also a sign that he’s ready for the Valley.

Obama should have bigger aspirations than pleasing investors.
Rob Nail, who leads Singularity University, argued Obama could do better than joining one of the big firms that would likely have him investing in apps and software. “I hope President Obama will avoid joining a VC firm,” Nail wrote by email. “VCs have a very traditional, conservative way of operating and a mentality that is more about money and making investors happy than it is about changing the world.” He suggested Obama lead a new “Impact Fund” addressing the world’s biggest problems and measuring returns on investment in terms of global impact. “Anything less than this will be a waste of his potential to continue to transform the world,” wrote Nail.

It’s too early to tell what Obama will do after January 20, 2017 when his successor arrives. Chatter about his post-presidency plans reveal little, but he’s clearly shown commitment to America’s entrepreneurial culture. Speaking to attendees at his 2015 Demo Day, he said he spent his years in the White House fighting for policies that would make it easier for entrepreneurs to strike out on their own through affordable health care, student debt relief, and crowdfunded financing through the JOBS Act.

“We’ve got to unleash the full potential of every American, not leave half of the team on the bench. You never know who’s going to have the next big idea, or what path will lead them there,” he said. “The next Steve Jobs might be named Stephanie or Estevan. They might never set foot in Silicon Valley.”

 

Correction: An earlier version of this story misspelled the name of Josh Wolfe of Lux capital. The error has been corrected.

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