Fahri Diner is one of those unique people who has enjoyed being on both sides of the table, as a startup founder and a VC investor. He sold his own company for $3.52B, started a fund with $2B in assets, and has since gone on to raise $150M for a new venture.
On the DealMakers podcast, Fahri Diner shared his journey into entrepreneurship, the advantages startups have in this environment, his fundraising strategy, and much more.
From Exchange Student To Engineer & Entrepreneur
Diner was born on the small Mediterranean island of Cyprus.
In high school, he had the opportunity of coming to Boston as a foreign exchange student. The father of his host family was an IT graduate and electrical engineer. It was an inspiring year, which set his mind on the single focus of coming back to the US to study engineering himself. This plan relied on him securing a scholarship. He received an academic scholarship and a ticket to studying in Florida.
His biological father was both a chemical engineer and an entrepreneur. He continues in the olive oil business to this day, even at 80 years old. So, through DNA and the exterior influences he was exposed to he seemed destined to end up at the apex of both of these things.
After earning his engineering degree Fahri Diner dove into product management and fiber optics. He spent time working with OZ Optics, Siemens, Pirelli and AT&T. “I Can Do That Too”
Farhi was working at Pirelli when a new startup Ciena moved in and moved faster. They built and pulled off a large IPO on the same type of work he was doing. That was his “I can do it too,” moment.
Before going it alone, a friend hooked him up with Siemens. He saw an opportunity to build a company within Siemens, and then spin it out. Of course, with all big companies, when it came to the exit they were just moving too slowly. Out of this frustration, he decided to just leave and go fast with his own company, Qtera.
Still a young guy from Cyprus, armed with an idea, a PowerPoint, and passion he raised a $5M funding round from Battery Ventures.
It was a hardware company that moved fast. Three and a half years later they scored an incredible outcome.
Nortel was among the big companies under pressure to defend their positions. So, after having raised $35M in equity Qtera sold to Nortal for $3.52B. A stock that doubled six months later. For early investors like Battery, that meant getting back around a billion dollars for a $10M investment. In just over three years.
The Startup Advantage
From his experience, Fahri says that startups can win when they execute quickly. If you can move fast and make decisions faster than the big companies, they really ultimately have to buy you. The truth is that when it is a game of a small unknown company competing for customers against a large established brand, consumers are likely to trust the incumbent more. However, if you can be first to market, you have something they don’t and can’t offer.
You will make mistakes. You will be set a step back for every two you take forward, but if you are moving faster you can still beat them.
In fact, one of his top pieces of business advice is to be impatient, have unreasonable expectations, and maintain a prejudice for action. One of the mantras at his newest companies is that they operate in the “Now Standard Time Zone.”
The One Week Retirement
Like many other founders, after his grand exit, Fahri thought he would retire. Why not move out to the country, buy a vineyard, and smoke cigars?
That lasted almost a week before he realized he needed to be doing something faster. He joined VC firm Sigma Partners. A firm that specializes in providing early-stage capital to startups. One with a team of experienced entrepreneurs and operators, who focus on how they can help optimize the companies they invest in, compared to others who just take the portfolio approach.
Once An Entrepreneur, Always An Entrepreneur
After a while, Fahri got the itch to build something of his own again. It’s impossible to get out of your system once you’ve tasted it.
He didn’t want his skills to get rusty, and he wanted to build again. He brought three other cofounders together and created Plume.
They are a smart home space startup. A cloud subscription company with customers like Virgin Media and Comcast. In essence, they curate smart home services.
They already have over 200 employees spread from Silicon Valley to Slovenia, Poland, Germany, and Taiwan.
They’ve been growing by 100% per year, and now are in more than 750M devices and 16M homes around the world.
So far the company has raised $150 million from top tier investors such as Spark Capital, Jackson Square Ventures, or Qualcomm to name a few.
Storytelling is everything which is something that Fahri was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Plume has taken an uncommon approach to fundraising. Fahri says he likes his customers and investors to have some skin in the game.
Instead of pitching for money, they seek customers first. Once those deals are done, they get the privilege of the chance to invest too. It aligns with their interests.
Listen in to the full podcast episode to find out more, including:
- The decision point for startup founders
- What makes a good product manager
- The key traits of a good CEO
- How to invest in startups