He Created A $225 Million AUM Venture Firm To Support Startups Developing Technologies That Enhance Planetary And Human Health

In the dynamic world of tech entrepreneurship and venture capital, few stories capture the essence of resilience, innovation, and determination quite like that of Zal Bilimoria. From his humble beginnings in Indiana to his pivotal roles at tech giants and eventually carving his path as a solo venture capitalist, Zal’s journey is as inspiring as it is instructive.

In this exclusive interview, he talks about his experiences working at Netflix, Microsoft, Google, and LinkedIn and becoming a partner at Andreessen Horowitz. Eventually, Zal started Refactor Capital, which has an AUM of $225M.

Listen to the full podcast episode and review the transcript here.

Early Beginnings and Entrepreneurial Spirit

Born and raised in Northwest Indiana, one hour from Chicago, to immigrant parents from India, Zal’s childhood was steeped in technology and entrepreneurship. His father’s background as a metallurgical engineer at a steel company provided a stable backdrop.

The family’s side computer business ignited Zal’s passion for technology from a tender age. Building and selling computers from their basement, servicing doctor’s offices, local libraries, and the entire school system in their area,

Zal was immersed in hardware, software, and coding—a foundation that would shape his future career.

Zal’s father’s entrepreneurial spirit had a huge impact on him. He recalls how his father started three companies, two of which were small storefronts. After his “retirement,” he started two more, bringing the total up to five.

From Corporate Employee to Product Visionary

Zal’s academic journey led him to the Wharton School at the University of Pennsylvania, where he was driven by his aspirations to follow in his father’s entrepreneurial footsteps.

However, his path diverged from traditional entrepreneurial ventures initially when internships in banking and consulting left him dissatisfied.

Fortune smiled upon him when Microsoft recruited him as a product manager, launching a decade-long career that included pivotal roles at Google, Netflix, and LinkedIn.

Product Management and Innovation at Tech Giants

At each company—Microsoft, Google, and Netflix—Zal honed his skills in product management, a role he describes as akin to being a “mini CEO” within the product development ecosystem. PMs help sort of steer the ship and set the strategy, prioritization, and execution for a particular product.

As Zal explains, product managers are responsible for working with engineers, designers, and both internal and external parties, like the sales team, user research groups, and marketing teams.

Their objective is to build and launch new products and iterate upon them to improve efficiency and core metrics.

Zal also recalls working at Google and YouTube, where his role was relatively balanced with that of engineers. He got to see how different organizations thought about product development and execution and their specific strategies for launching successful products.

Zal’s tenure at Netflix, in particular, was marked by the successful overhaul of their iPad app—a project that significantly boosted user engagement and retention, highlighting his knack for combining technical expertise with commercial acumen.

Back in 2011, Netflix was only available in the US, so Zal and his team did a focus group in Mexico, where they showed users three very different iterations of mockups of what the iPad app could look like. That’s how they picked the most mobile-responsive version.

Users could flick through the various rows and the titles and get an immersive experience. As the PM, Zal’s job was to ensure retention and streaming hours so customers would continue to pay the $10 monthly subscription.

Building Sniply

Zal reveals how he spent 2007 to 2010 at Google surrounded by entities like Kevin Systrom from Instagram, Dan Siroker and Pete Kooman from Optimizely, and Ben Silberman from Pinterest. Building his company, Sniply seemed like the obvious next step.

Zal brought in his friend from Microsoft and his lead engineer from YouTube to rebuild the Google RSS reader, which had been shut down. Around that time, Twitter was gaining traction, and Zal and his co-founders thought of using Twitter as a distribution engine to get news out there in snippets.

They called it Sniply because the objective was to distribute snippets of news to an audience that didn’t read long-form articles. Sniply would snip certain quotes and content within a piece of an article or a piece of content. so that people can actually see what’s going on in those write-ups.

Getting distribution was extremely challenging since Twitter was already using the concept. The platform was built to allow users to write 140 words, create their own snippets, and post them. Zal and his co-founders were able to build a mobile-friendly version and even had a $2M funding offer.

However, recognizing the hurdles as unsurmountable, they turned down the offer and shut down the company to return to their corporate jobs.

Transition to Venture Capital at a16z

Zal’s transition to venture capital was catalyzed by an unexpected cold email from Andreessen Horowitz, a testament to his reputation as a seasoned product manager and founder.

After joining a16z’s investment team, Zal realized that they had been recruiting top professionals, most of whom had a product management background.

a16z was growing quickly and, at the time, had around 50 people. Today, the team is 500-strong. Zal quickly delved into startup evaluations and investments, leveraging his deep understanding of product development and market dynamics.

Lessons from a16z and Beyond

At a16z, Zal learned firsthand the intricacies of venture capital, from conducting rigorous due diligence to nurturing relationships with founders. They would spend mornings listening to founder pitches and then work out which proposals to accept after lunch.

Zal remembers marathon days because the investment team was just going through teams, technologies, ideas, and markets. At the same time, it was intellectually stimulating, and during those years, Zal realized he wanted to be an investor for the rest of his career.

The firm’s structured approach, including unique practices like Net Promoter Scores for founders, shaped Zal’s philosophy on investing and founder relationships. All founders who pitched a16z, regardless of whether they received investment from the firm or not, would receive an email from them.

The email had just one question–How likely are you to recommend a16z based on your interaction with Zal one to 10? The investment team was scored, and all their numbers were published internally.

Zal recalls how they had to make sure that the founders really liked their meetings with the partners, even though they passed on most founders. However, the fact remains that Andreessen Horowitz has successfully built an infrastructure and attained the top position in the VC world.

These companies are now at the same tier that Sequoia Capital and Kleiner Perkins were for decades before they were even in the picture. When Zal joined them, it was one monolithic, $1.5B-dollar fund, supporting seed to growth in niches like crypto, health care, SaaS, and consumer.

The entire team managed all the different sectors and stages, from seed to growth round series D, etc. At a time when funds did not have operating teams, a16z had an executive talent team, technical talent team, marketing team, corporate development team, and market development team.

Zal talks about how a16z had an EBC, the Executive Briefing Center, where Fortune 500 companies would come into its offices and want to meet five or ten different startups during a day.

Essentially, it was a matchmaking service for enterprises and startups to come together so that the startups had an opportunity to sell their products to these Fortune 500 companies. That still has been one of the firm’s most significant assets.

Unlike Sequoia, Benchmark, and other VCs, a16z had this entire operating apparatus that could help companies succeed.

The Journey as a Solo Capitalist–Starting Refactor Capital

As Zal explains, the average tenure at the firm for an investment partner is a few years. a16z is open to assisting people in starting their own investor firms.

After a successful stint at a16z, Zal embarked on a solo venture capitalist journey, founding his firm focused on the intersection of biology, healthcare, and technology.

Zal connected with an old friend, David Lee, from SV Angel, and started a $50M fund to support startups.

He wanted to create a concentrated portfolio of 20 to 25 companies in every fund and put all his effort into making those companies successful. He was also able to successfully fundraise a total of four funds within a short time.

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With over $225M AUM across multiple funds, Zal’s approach emphasizes deep engagement with early-stage founders. It eschews the traditional large team structure in favor of a more personal, hands-on approach.

Although Zal had the option to hire a management team, he also realized that it would involve raising a larger fund to cover the salaries and fees. In turn, it would become harder to create fund returners and get a multiple from that.

Zal explains that his current fund size is $50M after launching his firm eight and a half years ago. He has invested via four funds in over 100 companies now. As with the new trend of solo capitalists, there is no need for extensive infrastructure and significant upfront costs.

Zal believes that barring a few exceptions, the smaller the fund, the faster you can carry it to profits. He prefers to spend time at the seed stage instead of Series A and Series B investments.

He likes to be involved in the initial stage of a couple of founders and a couple of employees getting a product off the ground and making their first sales.

If Zal invests in the Series A and Series B rounds, it will be from his reserve checks. He focuses on startups that attract customers, talent, and investors. Having met thousands of founders over the last 10 years, he can make that decision and make that leap on his own.

Zal prefers to rely on his gut instead of getting overburdened with technical and market diligence. However, he does make sure that the product has a chance to be real and scalable. He also ensures that the founder is not misreporting a particular metric or opportunity.

Navigating Market Shifts and Future Trends

Reflecting on market dynamics post-COVID-19, Zal discusses the challenges and opportunities in venture capital, noting the shift in fundraising and investment strategies amidst economic uncertainties.

As Zal noted, 2022 and most of 2023 saw a lot of downward pressure, and funds weren’t feeling as flush and as liquid as in 2021 when Jerome Powell was flooding the market with QE, quantitative easing capital.

QE created obviously not only inflation but also a lot of jobs and opportunities post-COVID.

At the time, people were looking for liquidity from any source they could, including public investment or public stock. Private companies and VC-funded companies suffered a setback but have started to recover in the last six months.

Vision for the Future

Zal foresees a focus on areas like biotech, climate tech, anything deep tech, and IP-centric. When evaluating startups, he makes sure the founders understand their company’s commercialization and distribution models.

Zal is excited to work with smart entrepreneurs fresh out of university or spun out from other companies. If they find a really new and novel way to leverage an old technology in a new and different application, they’ll get support from Refactor.

Conclusion: A Visionary in Tech and VC

Zal Bilimoria’s journey from a small-town entrepreneur to a respected solo capitalist mirrors the rapid evolution of the tech industry itself. His story is a testament to the power of perseverance, innovation, and strategic vision in navigating the complex and competitive world of technology and venture capital.

Listen to the full podcast episode to know more, including:

• Zal’s upbringing in Indiana, immersed in his father’s multiple ventures, laid the foundation for his entrepreneurial journey from a young age.
• His tenure at tech giants like Microsoft, Google, and Netflix provided deep insights into product management, influencing his approach as an investor.
• Leading the redesign of Netflix’s iPad app underscored the impact of user-centric design and metrics-driven decision-making in product development.
• Transitioning from Netflix to becoming a partner at Andreessen Horowitz highlighted his pivot into venture capital, where his product background became invaluable.
• Zal’s approach at a16z emphasized treating founders with respect and professionalism, which is evident in their Net Promoter Score system for interactions.
• Embracing the solo capitalist model allowed Zal to focus on early-stage investments, leveraging his expertise in identifying visionary founders and nurturing startups.
• Reflecting on recent market shifts, Zal highlighted challenges in fundraising post-COVID, emphasizing the importance of adaptability in venture capital.

 

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