Neil Patel

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Amin Shokrollahi has raised some serious startup capital for his tech company, Kandou Bus. Amin has raised $130M in funding from top-tier investors like Raging Capital, Digital Transformation Fund, Bessemer Venture Partners, and Kreos Capital.

In this episode, you will learn:

  • Starting up companies in Switzerland
  • His top advice before starting a business
  • Amin’s book recommendation

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    About Amin Shokrollahi:

    Amin Shokrollahi is an Iranian mathematician who has worked on a variety of topics including coding theory and algebraic complexity theory. He is best known for his work on the iterative decoding of graph-based codes, an area in which he holds a number of granted and pending patents. He is the co-inventor of Tornado codes and the inventor of Raptor codes. His codes have been standardized and successfully deployed in practical areas dealing with data transmission over lossy networks.

    Prior to joining EPFL, Amin Shokrollahi has held positions as the chief scientist of Digital Fountain, a member of the technical staff at Bell Laboratories, a senior researcher at the International Computer Science Insitute in Berkeley, and an assistant professor at the department of computer science of the University of Bonn. He is a Fellow of the IEEE, and he was awarded the Best Paper Award of the IEEE IT Society in 2002 for his work on iterative decoding of LDPC code, the IEEE Eric Sumner Award in 2007 for the development of Fountain Codes, and the joint Communication Society/Information Theory Society best paper award of 2007 for his paper on Raptor Codes.

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    Connect with Amin Shokrollahi:

    * * *

    FULL TRANSCRIPTION OF THE INTERVIEW:

    Alejandro: Hello everyone, and welcome to the DealMakers show. Today we have a really amazing guest; a guest that has done it, has been there, and he’s now building his own baby; building, scaling, financing, and you name it. I think that we’re going to be learning quite a bit, so without further ado, let’s welcome our guest today. Amin Shokrollahi, welcome to the show.

    Amin Shokrollahi: Thank you very much, Alejandro. I’m happy to be here.

    Alejandro: Originally born there in Tehran. Obviously, the environment there has been very shaky, and we’re going to be talking about it now as to how that impacted your own journey. Since the very early beginnings, you were thought to be a gifted child, so tell us about your upbringing there in Iran.

    Amin Shokrollahi: Yeah, this is true. I went to school at the age of five. This was a school for gifted students. I had to take a test and everything. My mom was very much behind it, and so were my brothers, who were mathematics professors, so they were pushing me. They started teaching me abstract math at the age of five. One of my uncles hasn’t stopped since, so he’s still teaching me math. This was before the revolution of Iran, so Iran was a different country. There were many different foreign schools in Tehran as well. One of them was the German school. After finishing the fourth grade, I took another set of exams and was accepted into the German school. They had a special program for Iranian students to go through the entire German curriculum. We didn’t know a word of German, but they taught us the language. At this point, I speak the language probably better than my mother tongue, Farsi. We went to that school, but before I finished, the Iranian Revolution came, and school was closed. I left the country in a super dramatic way. I was literally on the last flight before the war between Iran and Iraq broke out. I left for Germany to finish high school, and I got stuck there.

    Alejandro: How old were you when you were getting in that airplane?

    Amin Shokrollahi: I was 16 at that point.

    Alejandro: Wow.

    Amin Shokrollahi: My friends were 18. They were two years older than I was. We went to a boarding school in Germany. It was fun because then I was going with my friends on a really nice adventure. But at the same time, I was worried about my family back home and the war going on and all those things. But it was a fantastic experience, and the experience is still ongoing after almost 40 years now.

    Alejandro: How do you think it changes perspective in life? At 16, you are aware of what’s happening around you, and here you are going into a plane, and you are one of the last ones to leave because right after that, they were bombing the airport there. So, for you, you were packing everything, getting into an airplane, and leaving all of this behind; the war was really happening, and now, a new culture and a new place. How did that change the perspective for you?

    Amin Shokrollahi: First of all, I thought we would be going there to Germany for nine months only. I didn’t even know that a war would break out. When I got on the plane, it was kind of all fun. It was when I got off the plane when it wasn’t fun anymore because I realized what was happening. But I was with my friends, and we have a very, very strong relationship. After 40 years, every two weeks, we have a Zoom call where we join from all over the world and talk to one another because, obviously, going through an experience like this is life-changing. Everything was new; you’re right. For me, everything was new, and this newness was what I liked a lot. I was looking forward to a new future, so it was nice. For the most part, it was nice, but, of course, not everything was nice.

    Alejandro: In mathematics and computer science has been something that you’ve been going after since very early on, and as you were saying, with mathematics, since you were five. What do you think is that part in you that is so excited about problem-solving?

    Amin Shokrollahi: I’m just a very curious person. That is what I have. When my uncles started teaching me math, I think they started something in me; that was curiosity and to be curious about, say, pose a problem or a question, and you burn inside of curiosity to find the solution of that. It’s just part of something that I am. It’s not just about solving mathematical problems. If I didn’t have it, then my entrepreneurial experience would have been a disaster. But I’m just curious to see, where’s the end of it? What can I do? Where can I land, etc.? Without that, you cannot be a scientist, for sure. I think without that, you cannot be an entrepreneur either.

    Alejandro: In your case, after getting your computer science degree, you got your Ph.D., too. But you decide that it’s time to pack up the bags again, and you find yourself in the U.S., in Berkeley. Why the U.S.?

    Amin Shokrollahi: The U.S. has a large number of extremely good universities. If you want to have a research career, it’s a fantastic thing to spend time in those universities with the top people in the field. I love Berkeley because right after my high school diploma, I went and visited my uncle there for two months in 1981. It was the most amazing experience. I told myself, “I’m going to come back here. I don’t know when, but I’m going to come back here.” It took a while until I went there; it was more than 26 years, but then I was there. The University of Berkeley has one of the best mathematics programs in the world, and it also has one of the best computer science programs in the world. So being there, talking to all these researchers and the openness that they have toward me—I wasn’t a big deal at that time, but they were open to me and to my ideas. That’s what helped me a lot.

    Alejandro: Was there a point for you where you decided that perhaps research was not your thing, then you maybe wanted to venture out and take a look at more of the corporate side of things?

    Amin Shokrollahi: That point never came. Research is still my flame. But applying that research has also been something that I like. Back when I was a student, even in my Bachelor’s program, I used to sell prime numbers. It’s a very funny thing to say, but the crypto scheme, this cryptosystem outcome when people wanted to have prime numbers of certain shapes and sizes, I used to sell it to them. I found it really fascinating. Not the money, but when somebody asks you, “What do you do?” You say, “I sell prime numbers.” Who can say that? I was always interested in applying things. Eventually, I joined Bell Labs later after a few years of post-grad at Berkeley. Bell Labs was still this big research lab that was doing applied [8:56] research, and I wanted to learn that. I went there. But after two years, I got fed up with the way research was run there. I joined a startup in California called Digital Fountain, and I became their Chief Scientist.

    Alejandro: How big was the company when you joined?

    Amin Shokrollahi: There were 30 people, if I’m not mistaken. The company grew a lot. Then we came through the dot-com bust of 2002, but the company survived it. We had to downsize massively, but the company survived. Later, the company grew again, and eventually, Qualcomm acquired the company in 2009.

    Alejandro: Probably one of the lessons there that is interesting that maybe you were exposed to was going through corrections, and every time whether you’re building a business or you’re operating in a certain market, there are going to be ups; there are going to be downs. But the way that you manage those downs is going to impact the culture and going to allow the operation to continue thriving in the event it’s able to survive. With your experience with Digital Fountain, during that time when the correction happened, I’m sure that the way it was handled and the way that it was embraced at a culture level, I’m sure that made a really big impact in order to turn it around and get that acquisition from Qualcomm later on. So what did you learn from that experience?

    Amin Shokrollahi: One of the things I learned is that you have to be really careful how you scale a company. Back in the dot-com days, you had to scale the company, no matter what, because that’s what investors wanted, but you have to be really careful about that and scaling at the right time. The value of personal relationships with your colleagues is super important. You have to let go of colleagues that you have, and how do you do that? How do you fire people in that? You have to do it in a socially very competent way because you run into these guys a few years later, and if you have done wrong to them, they will not forget. That was a very important thing. Even today in my company today, obviously, every once in a while, I have to fire someone. But I’m friends with all the people that I fire. I have coffee with them every once in a while. It is that you have to have respect for the person.

    Alejandro: How do you do that because I’m sure that there are a lot of people now listening that maybe they’re dealing with whatever internally or with someone that is not performing. So how do you fire someone with honesty and with respect so that you are leaving that door open in order to have a relationship outside of that working environment?

    Amin Shokrollahi: The very first thing is, be genuine. It’s very important. Of course, if you’re genuinely mad, you shouldn’t do that. [Laughter] It shouldn’t be about the person. It should not be about the person; it should be about the job that they have done that wasn’t that great, maybe it’s not a good match. But it’s not about the person. Some people, I guess, when they fire others, they make it about the person. And that is never going to be it. Never, ever. You can never get out of that hole ever. I think this is what I do really well. I am very diplomatic and all sorts of things. You were asking about things going wrong in a company. Something that you really need is tolerance to frustration. This is something that I built up as a scientist because you start working on a topic, especially in math. You try to prove something, and your proof doesn’t always work out, and you’re frustrated, but you have to pick up that frustration and go for the next trial run.

    Alejandro: Yeah.

    Amin Shokrollahi: This is something you need to do in a company as well. There’s so much frustration coming to you—unbelievable.

    Alejandro: In your case, while you were at Digital Fountain, the company got acquired by Qualcomm, which is nice for you to see the full cycle of a company that you had joined when there were just 30 employees. But you were able to start to incubate the idea of Kandou, what would eventually become your baby. Can you tell us about that process of coming up across the idea and bringing it to life?

    Amin Shokrollahi: Yeah. My background is not electronics at all. I’m a mathematician and a computer scientist. I was having a coffee with a post-Doc on some other problem. It was a problem we were working on. This post-Doc told me about a method of transmitting signals between two chips. It’s called differential signaling. I remember him explaining to me, and I realized it is not a very efficient solution. I very quickly came up with a different solution. I thought, “This is something known in the industry,” but it wasn’t. So my curiosity was peaked. Why isn’t it known? What is happening here? Especially given that state of transmission in two chips is such an important problem. What do I do with it? Are we going to write a paper about it and be done with it? I quickly realized, “No. This is not what I want to do. We’re going to patent this solution first. Then we’re going to look into starting a company that markets this.” If I had known how the semiconductor industry works, I probably would not have started the company because this is not how you start a company in this field. But I was convinced, and I’m still convinced that this is the right way. No matter how many times I got slapped in the face, no matter how many times somebody hit me on my head, I’m still convinced it is the right thing. So, I’m continuing on that path.

    Alejandro: Tell us what the early days were like. I’m sure the early days were quite remarkable because, especially like you were saying, for someone like you that comes without any idea of electronics, you’re venturing yourself into the unknown. So what were some of those early days like?

    Amin Shokrollahi: This was really my honeymoon with the field. It was just fantastic. Everything was possible. I was looking at the problems that the field had, and I would come up with solutions. We would patent those solutions. We had a small team but very dedicated. We had our first chip out within three months. It was one of those periods where everything seemed possible. Really, everything, everything seemed possible. I think this is the reason why I probably, again, start a company at some point. It’s just the feeling that you can do anything you want.

    Alejandro: That is a great feeling, but for the people that are listening to get a better idea, what ended up becoming possible because, obviously, here you are with Kandou and making it happen. What ended up being the business model of Kandou?

    Amin Shokrollahi: I started the company without having any business model in mind. A business model was, actually, there. We moved to IP license. This seemed to be clear to me because that’s the easiest thing to do. It’s not very capital intensive. We are an IP provider today, but we changed our business model. We expanded it, and we are also designing and selling chips to our customers. I started taking notes back then, which is really funny. I thought, “I have this idea. What are the various stages of the company? I wrote and designed a Proof of Concept inside the lab because I was a professor at EPFL. This will take six months. Then I start the company and create an advanced prototype of the product. That will take about a year. Then I’m going to raise a good amount of money and make that advanced prototype into a real product that will maybe take another two to three years. Then I’m going to scale out. That’s what I thought. The first estimate of six months was correct. Everything else was totally wrong. Of course, it took a much longer time than I thought it would take. Once I started the company, I thought I would be, at this point, four years into the life of the company, and now, it’s ten years into the life of the company.

    Alejandro: Wow.

    Amin Shokrollahi: When you start a company, there are two things: 1) everything takes longer than you think, and 2) you always need more money than you think.

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    Alejandro: Now that you know that, it’s really interesting that, especially after having had that exposure in the U.S. through all the contacts to the companies there to being in startup life, why did you stay in the Lausanne Area in Switzerland instead of coming to the Bay Area or areas where you’re going to be much better in terms of access to money or talent because, I’m sure that in Switzerland it was probably crazy how green and unsophisticated people were at that point compared to what you were used to in the U.S., so why did you stay there?

    Amin Shokrollahi: Because I like living here. There is a reason I left the U.S. I like living where I like. What I did was I brought the U.S. investors over to Switzerland.

    Alejandro: I’m not going there; you’re coming here to me. I love it! But in your case, what was some of the crazy stuff that you were present to and exposed to? The startup environment has really scaled a lot in the past ten years, but I’m sure that when you were starting out, it was completely unheard of—the startup world there.

    Amin Shokrollahi: Well, our university has always been at the forefront of creating startups. One thing that a lot of people don’t know is that Logitech came out of our university.

    Alejandro: Nice.

    Amin Shokrollahi: At the beginning, I think there are too many vultures around. We have this innovation park, and there are a lot of startups. There are these people going around saying, “This is a great idea. I’m going to put in $100,000 for half the company.” If you’re a young person coming out of college, $100,000 may seem a lot, and you may say, “That’s a great deal. Let’s do that.” I wasn’t a young person at that point, so I had my experience. Somebody comes to me and says, “I’m going to get you this company, that company, that company to buy your technology, but what I want in return is a non-executive board position.” What? First, if I want to buy something, I need to see whether the thing that I’m buying is actually worth something. So why would you start with something if I see that it works, and we can talk about it.” Of course not. There’s a lot of this stuff. The other thing that is really interesting is that you start a company, and then you get bombarded by letters from reputable companies that say, “We have this competition. Why don’t you apply, and then if you win, you can win 100,000 francs or $100,000? The whole thing is a ruse to get your information. They want to know: how did this company start? What’s its capital? What’s its business model? Etc. This whole thing is a scam. The whole thing is a scam. Another type of scam I saw was—we’re a big patent house. We have about 400 patents. We apply to the European Patent Office, for example, and then I get a letter that looks like it’s from the European Patent Office. It says, “You applied for this patent application. You have to pay us €4,000. I know that they would never send this to me. They would send it to my lawyer. So, I knew it. I looked closely at it, and then it says, “The money is for the inclusion of your name and a booklet that we have.”

    Alejandro: That’s unbelievable! One thing that you did well is, you surrounded yourself by the right people. You were able to come across Steve Papa, and Steve Papa is a very successful entrepreneur that sold his own company to Oracle for $1.1 billion. How did you connect with Steve, and how do you think relationships like that have helped you in the journey?

    Amin Shokrollahi: I got to know Steve when I was in the U.S., so we have known each other since around 1996. He struck me right there when I saw him that he was a super, super, super smart guy who knows everything about everything. He’s really an amazing guy! When I had this idea on the chip-to-chip communication, it just so happened that I had to go to Boston for something. I met with him for lunch, and I told him about the ideas, and he said, “You have to start a company. I’m going to help you with that.” I tell him, to this day, that I don’t know if I should thank him or curse him for having done that. He really encouraged me to do it. He started helping me. He would come to Lausanne even though he was running his own company and help me out with details. Anytime I had any issues, any problems, any doubts, I would call him, and he would help me. He’s still like that. He’s on my board. He put in money, the first $10 million, and then over the years more, and he’s a big believer in the company. Without him, there would not be a company, for sure. That is for sure.

    Alejandro: That is amazing. And that contributed, as well, to some of those super sophisticated U.S. investors like Bessemer. Definitely, the way that you raise money today, as they say, is going to impact the way that you can raise money tomorrow. How did Bessemer and others help you out in this process of building the business?

    Amin Shokrollahi: What I tell people who ask about investment is, “You need to raise only once, your first investor.” If your first investor is your right investor, that investor will almost raise the money for you in the next rounds because they have, of course, a lot of friends that are investors. They have a lot of say in this space. So, Steve Rodden Bessemer and Bessemer brought in a lot of my other later investors. Especially here, an investor looks at it. “Who is backing you?” They hear Bessemer, that’s basically that’s it because these guys have done due diligence, and they do really good stuff.

    Alejandro: How much capital have you guys raised to date?

    Amin Shokrollahi: We have raised a little over $130 million altogether in various rounds.

    Alejandro: For the people that are listening to also get an understanding of how big Kandou is today, anything that you can share around employee numbers or anything else?

    Amin Shokrollahi: I think we have between 134 and 140 employees right now. It’s changing, so I can’t tell the exact number. We have about 400 patents, which I’m really proud of. This is a very patent-heavy company, and that patent portfolio has been vetted multiple times across and during my investment rounds by our investors. We have many customers. I’m not going to put a number on it; obviously, I can’t. There’s one customer I can talk about that’s Marvel, but all the other customers I cannot talk about. That’s where we are. Oh, then, we are active in many different countries. We have headquarters in Switzerland; we have offices in the UK, in Germany, Denmark, Taiwan, Japan, and in the U.S.

    Alejandro: Why Taiwan, out of all places?

    Amin Shokrollahi: Well, this is the center for the semiconductor industry.

    Alejandro: Got it.

    Amin Shokrollahi: We are building, for example, the new chip that we have is for USB protocol. The center of USB is Taiwan. So all the companies—probably the devices that you have, unless it’s an Apple, then it’s not. But if you have other devices, they have been in part manufactured there and designed there. That’s the right place to be.

    Alejandro: Imagine that you go to sleep tonight, and you wake up in a world five years later where the vision of Kandou is fully realized. What does that world look like?

    Amin Shokrollahi: For sure, it will look like a lot more work for me. [Laughter] In five years’ time, the vision of Kandou is fully realized. We are a public company with a market cap of probably over $10 billion with sales accordingly to that market cap. We are in a very large number of devices worldwide. My days will have to start at 4:00 am and end at 2:00 am. [Laughter]

    Alejandro: That’s a good way to quantify it in terms of timing. Here, in this case, one thing that I always like to ask the guests that come on the show is, imagine that I have the opportunity of transporting you back in time, and here you are in 2011. You have your younger self right in front of you, that younger self that has come up with the idea of Kandou, and you’re able to give that younger self, that younger Amin, one piece of advice before launching the business, what would that be and why based on what you know now, Amin?

    Amin Shokrollahi: I would say, “Don’t do it.” [Laughter] It’s just much tougher than you think. I think I would tell him that he needs to have much more focus on the first product. I would tell him that you have to invest money into a lot of the things that you want to do in order to get there. You cannot run a company on a shoestring budget.

    Alejandro: Right.

    Amin Shokrollahi: Especially in these times. You have to build prototypes to convince your customers.

    Alejandro: So as you’re thinking about the prototype and the customers, what would you tell your younger self as to steps to take to make it as effective and efficient as possible to really get it right?

    Amin Shokrollahi: Again, I would tell that younger self what product to build with the tools that he had at that point or what prototype to build. I would tell him who to approach with that prototype, which companies, and with what message. It would be great if I could go back. I would save so much. And, you know, you’re saving because you are the sum of all your experiences, good and bad. You cannot just leave the bad experiences off and think that you are the same person now.

    Alejandro: In your case, what would you say has been a book that has made a big impact for you that you wish you would have found earlier?

    Amin Shokrollahi: There is a book called The Hard Thing About Hard Things.

    Alejandro: Ben Horowitz.

    Amin Shokrollahi: That’s really an eye-opener. You have to read that book when you have gone through a lot of problems because you see that somebody like him has exactly the same problems. That is a really good book to read.

    Alejandro: Yeah. That is definitely a good one. For the folks that are listening, Amin, what is the best way for them to reach out and say hi?

    Amin Shokrollahi: They can send me an email. Amin@Kandou.com.

    Alejandro: Fantastic. Amin, thank you so much for being on the DealMakers show today.

    Amin Shokrollahi: Thank you so much for having me here. It was a pleasure and an honor.

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