Bottling Lightning

Key Takeaways

• Plug and Play's accelerator empire inlcudes nearly 10,000 startups, over 300 corporate partnerships, and 280 VC partners.
• Some of Amidi's first investments include PayPal, Dropbox, Google, and Android.
• 8 of Plug and Play's 23 global offices are in China, including Beijing, Shanghai, Shenzhen, Wuxi, Chongqing, and Zhengzhou.

 

The world’s flourishing startup ecosystem is one marked by innovation, business acumen, and hundreds of billions of investment dollars. But, in a landscape embodied by such high investment and even higher hopes, what stands out most notably is one defining feature: failure. A 67-page analysis produced by UC Berkley and Stanford, The Startup Genome Report Extra on Premature Scaling, shows that more than 90% of startups end in failure. But despite these odds, the ecosystem continues to grow. Through mid-October 2018, American startups raised an astounding $91.6 billion in venture capital funding, with Chinese startups raising $93.8 billion – year-on-year increases of 14% and 76%, respectively.

With such exorbitant amounts of money on the line and the terrifying potential for loss of investment, venture capitalists (VCs) investing in today’s entrepreneurs are doing much more than simply rolling the dice on high potential individuals with good ideas; they cultivate, nurture, and guide the tech leaders of tomorrow through carefully planned, stage-gated processes designed for success. These VCs don’t wait for lightning to strike, they actively seek to manufacture it, incubating once-in-a-lifetime ideas by employing their years of experience and expertise accrued in the trenches of the tech industry.

Entering the Play

Armed with experience and ambition, today’s VCs are pumping money into technology startups at record-setting rates, and they do so with the primary goal of finding and developing the world’s next unicorn – a privately held startup company valued at more than $1 billion. In 2018, China spawned 97 unicorns with a combined valuation of $178 billion, while the US birthed 53. Some visionaries, however, can’t be satisfied by just a single unicorn. These investment elites look to create unicorns on a grand scale, and with replicable processes that allow for long-term success and a growing portfolio of innovative businesses. These enterprising few go far beyond waiting for the right opportunities, meticulously vetting and manufacturing the proper environment, circumstances, and liquidity necessary for a shot at leading an entrepreneur’s idea to unicorn status.

One industrial investor who has found great success with his incisive investments is Saeed Amidi, CEO of Plug and Play, the largest network  startup accelerator and corporate innovation platform in the world. With an unlikely entry to Silicon Valley’s tech scene in the early ‘90s, Amidi has since grown his accelerator empire into one that has accelerated nearly 10,000 startups, has over 300 corporate partnerships and 280 VC partners, and portfolio companies that raise $2 billion per year.

Formerly the HQ of Phillips Electronics, this massive 17,000 square meter complex is now home to Plug and Play.

A serial entrepreneur, Amidi got his start in Silicon Valley with his first venture, American Liquid Packaging Systems (ALPS), a world leader in the five-gallon bottled water direct delivery business. ALPS was originally based out of the now-historic location of 165 University Ave – just down the road from Stanford University and perfectly situated at the heart of Silicon Valley. Despite the location, says Amidi, living in Silicon Valley and not working in the technology sector in those days was a difficult path. “Especially during the first dot-com boom, when people used to ask me what I did, I would say I do packaging and bottled water. And quite frankly, they laughed. They thought I was joking,” says Amidi. “After many laughs, I decided to get involved in technology a little bit.”

“A little bit” was an understatement. With Amidi’s first forays into angel investment in Silicon Valley’s burgeoning tech startup ecosystem, he was a pivotal influencer in the development and success of some of today’s biggest names in technology. “We started investing in startups, mostly as an angel investor,” Amidi explains. “One of our first ever investments was in PayPal with Peter Thiel.” Not a bad first investment: today, PayPal’s market cap is nearing the $100 billion mark, and is set to surpass that of Goldman Sachs. Though some could claim this was beginner’s luck, Amidi’s reputation in Silicon Valley would only grow from this point.

Location, Location, Location

PayPal was just the first of the big names that Amidi partnered with in the early days at 165 University Ave. He was also instrumental in the funding of some of the globe’s most recognizable and profitable companies, his office housing the likes of Google, PayPal, and Andy Rubin, who later developed Android. Rubin, while working in Amidi’s office, was even responsible for creating the first smartphone – the SideKick.

Amidi, a very humble man, chalks up much of this early success in Silicon Valley to the location of his first office. He notes that in cases like this, it is better to be lucky than good, underscoring that, “When opportunity knocks, you have to ask yourself if you’re ready and capable of taking advantage of opening the door. At that time, I was smart enough to open the door and let opportunity walk right in.”

Amidi claims his greatest stroke of luck was to be in the epicenter of innovation where opportunities like PayPal and Dropbox came across his radar. Dropbox, one of the world’s first and leading file hosting services, now valued at over $12 billion – and yet another of Amidi’s first investments – illustrates key aspects of his “luck”, his strengths, and the high level of startups he has invested in.

“We met DropBox at Y Combinator, an acceleration program invented to help great entrepreneurs realize their dreams in a batch system,” explains Amidi. “We met a number of our other investments at Y Combinator. And, because we are business people and not technologists, we usually depended on our VC friends to help us do due diligence on the startups, and then we would co-invest with these friends.”

Through these early days of angel investments, Amidi would lay the foundation for what would become the fundamental business principles of Plug and Play – tapping into his own network to leverage the core competencies of his friends and colleagues for mutual benefit. Amidi describes that, “Whenever we looked at a startup, I used to call my friend, the CTO of AT&T, or friends at Cisco and ask them to look into a technology startup in which I wanted to do an angel investment.”

A VR-AR startup exhibits their developing technology and industry applications.

Despite geographical advantages, Amidi’s ability to translate his initial success into continued business growth is undeniable – his next venture, Plug and Play, being a testament to his ability to identify great ideas and leverage his own talent for nurturing business growth using the strength of his team and his network. After several successful angel investments, in 2006, Amidi officially opened Plug and Play.

The Playhouse

In order to see his new vision through and accommodate an accelerator and innovation platform of such magnitude, Amidi needed to leave 165 University Ave behind and find a bigger boat. “The building where we started Plug and Play is 17,000 square meters and it’s the old headquarters of Phillips electronics,” says Amidi. “When we wanted to start Plug and Play and we purchased the building, it was a little bit bigger than I had anticipated. But quite frankly, it has been fantastic to be able to have investors in the building. We house, at any given time, 400+ startups, and nowadays we have 40 of what we call innovation offices.” Having experienced Silicon Valley and internalized what such an environment brings to technology innovation, Amidi has demonstrated that more than just recreating these conditions, you can institutionalize them.

Today, Plug and Play’s network continues to strengthen and grow around the world, with offices in the US, Mexico, France, the Netherlands, Germany, the UAE, Japan, China, Indonesia, and Singapore. Throughout the global offices, Plug and Play hosts a litany of startups from a variety of sectors such as fintech, insurtech, Internet of Things, brand & retail, mobility, health, supply chain & logistics, and much more. Their global innovation program runs 50+ accelerator programs, including more than 600 events a year designed to showcase their startups to their VC and corporate partner network.

The Plug and Play events and programs are geared towards identifying and developing batches of promising startups and bringing them onto the global stage. “Today, we have an Internet of Things, real estate, and insurance tech event. We usually show a technology or startup to 10 VCs and 20 corporations and jointly evaluate the technology.” Going back to Plug and Play’s roots, Amidi describes their innovation platform as being “like judo.” He explains that the idea is to “take advantage of your opponent’s weight to accomplish something. We have turned a weakness – that we are not engineers or technologists – into a competitive advantage by doing our due diligence together with venture capitalists and corporations.”

VC partners take a look at a new facial recognition startup at a recent Plug and Play summit.

Herein lies the genius of Plug and Play and of Amidi’s vision: the transformation of a weakness into a truly formidable advantage, leveraging the would-be opponents – namely other investors – into allies in the pursuit of intelligent and collaborative investment. Through this strategy, Plug and Play has been able to grow at scale. And by creating and utilizing this advantage, Amidi has created a powerhouse that quickly surpassed its humble beginnings at 165 University Ave.  

Innovation vs. Regulation

Across the world, innovators are in a constant battle with the regulatory environments within which they work. For Amidi and Plug and Play, this reality takes a variety of forms as the regulatory challenges he faces in China, the US, or Germany can be wholly different, if not in total opposition.

“Quite frankly the technology is moving so fast around the world that regulation is following. And this has happened to us twice,” says Amidi. “PayPal did money transfers and took deposits first, and then went back and got their licenses. This also happened to us with Lending Club. Lending Club did peer-to-peer lending, and then the regulators said they need a banking license to do peer-to-peer or any type of lending.”

Innovation in China presents an entirely different landscape, making investment an even more slippery proposition when it comes to valuable and emerging intellectual property. “In China, talking about protecting IP, I can recall 50 years ago, the Japanese economy used to do copy-cat stuff. Then, they mastered the processes and manufacturing, and now they are the leader of building incredible cars, equipment, and electronics,” says Amidi. “I would say the Chinese had copy-cat mindsets. But today, I predict that China is going to lead in innovation. The quality of the startups I have seen in the last five days in artificial intelligence and machine learning, if it is not better than Silicon Valley, it’s at the same standard. I believe the Chinese government will embrace intellectual property protection because it will be good for the entrepreneurs and corporations in China.”

China at Play

With 23 offices worldwide, eight of which are in mainland China, Plug and Play is a global force. And with such an emphasis on China, Amidi has identified the Middle Kingdom as a paragon of innovation that will undoubtedly define our world in the coming years. “We felt China is incredibly innovative. I could borrow the slogan from Nike: the Chinese ‘just do it’,” Amidi says with a chuckle. “We talk about electric cars, autonomous cars in the US, specifically in Detroit. Silicon Valley is a little faster, but the Chinese just implement.” Amidi explains. “Quite frankly, we feel in a lot of areas like electrification of cars, connected cars, autonomous cars, China will leapfrog the US and the rest of the world.”

“When we decided to come to China, we realized Beijing is important, Shanghai is important, but there are so many other exciting cities that we knew we had to go to China in a big way. Right now we have eight offices, and we are expanding each office to a greater physical unit, but also multiple verticals like insurtech, real estate, and so on,” says Amidi.

The World as a Playground

While China has proven itself in innovation globally, Plug and Play hasn’t discounted the historical or potential strengths of other parts of the world.  Amidi notes that, “We also felt Germany has incredible potential with education, money, and technology. So in Germany, we are active in four cities: Berlin, Frankfurt, Stuttgart, and Munich.”

When asked in regards to the growth and global footprint of Plug and Play whether bigger is better, Amidi responds that, “We help close to 1,000 entrepreneurs around the world per year. 600 in the US, 200 in China, and 200 in the rest of the world. It has been challenging to transfer the culture, transfer the knowledge to Beijing, Shanghai, and Munich. But now that it is developed, we really can take a startup in insurtech and implement their technology in China, in Munich with Allianz and Munich Re, and in Silicon Valley with the American insurance companies.”

At its heart, Plug and Play’s global offices represent exactly what Amidi set out to accomplish – exporting the magic, the potential, and the opportunity he found himself surrounded by at 165 University Ave. “We have a new slogan,” says Amidi. “We say innovation should be open anywhere to anybody. We really feel that entrepreneurs, be they in China or Germany, if they dream big and dream global, we can be a positive part of their journey to make it happen.”