Head of Samsung NEXT: David Lee

Awesome, so we met a couple of months ago in San Francisco. We had a fantastic chat about culture, which is something I want to touch on a bit later. But why don't we start by you giving us some information. You started investing and became one of the most well-known investors in San Francisco. So how did this start for you?

It really started by serendipity. I was working at Google, and when I was there, I met somebody named Ron Conway. My dad was an entrepreneur, he invented the first fully automated fortune cookie machine. He was a real inspiration and a deterrent for me. Inspiration because he always told me to build, don't take. But it was a deterrent because I saw how hard it was to build a company. I always wanted to be the person behind the founder.

I went to law school with that in mind, never thinking I wanted to be a lawyer. But I was working at Google during the heyday, and I met Ron Conway, who was one of the first investors in Google. He became a mentor to me and helped me land a job at my first startup, StumbleUpon. After StumbleUpon, I joined his team and eventually joined him to run SV Angel. It was very serendipitous. I always knew I wanted to get to a point where I was helping and supporting builders.

But to be honest, when I first started investing, I really had to brush up on what is the liquidation preference, what is pre-money, post-money. I was a noob. It wasn't something that I set out to do, but I was very fortunate in the circumstances that created the environment for me to start investing.

What were you doing at Google, actually?

I was part of a team called New Business Development. Some of the people there were Chris Saka, Ethan Beard, Megan Smith, who eventually became the CTO of the US government. We were starting this new business group within Google that would explore different projects that were core to our business life, which was advertising and monetizing the adware and search. It was a lot of fun. Once there was an opportunity to work with somebody like Ron, I jumped.

Venture capital or investing is one of those professions where they don't hire every year. If you have the opportunity to work with somebody, you should eat when dinner is served.

And then you joined SV Angel. How early was it? What role did you have?

I joined around 2008. We started running it, Ron and I, in the 2008-2009 period. We did that for about six or seven years.

What are the first mistakes you've done when it comes to investing?

So many. One of the biggest mistakes for me is when you don't invest in somebody. When I evaluate a founder or a company, you think about the what-ifs and the person. Some mistakes I regret are those where I loved the founder, liked their vision, but wasn't crazy about their idea. Passing on somebody like that and seeing it become successful is much harder for me than not investing in something where I wasn't crazy about the founder, but I liked the idea and it became successful.

At the earliest stage, you can overthink it. You can look for data when the data doesn't really exist. It's about evaluating the founder and their potential energy that they'll eventually turn into kinetic energy. If the signals are there that this is someone who feels high potential, who's a clear thinker, and you don't invest, those are the mistakes I regret.

Was it mainly about the idea back in the days, and then you changed your mind with the learnings and mistakes?

This was a unique time to invest because in the US, this was the greatest acceleration of tech adoption in history. People were getting a smartphone for the first time. If somebody is really good and they are investing with that type of tailwind at that early stage, the bet is if their first idea doesn't work, the momentum is so strong, the space is so big that they will evolve the idea into something that will work if you're betting on the person.

The best example is Kevin Systrom of Instagram. What he started was very different from what Instagram became. He had more degrees of freedom because he had this wind at his back of people getting a phone for the first time. By 2015, my mom had an iPhone 6. People are online 24 hours a day, seven days a week. That created a market opportunity where betting on the founder with this space was a good investment thesis.

Now, everybody has a mobile phone and is connected to the Internet more or less in the US. Having that investment thesis today is not smart. I wouldn't do it.

We started Terra, and we went to investors from Cyprus to Greece to the UK. Everybody was rejecting us. Then we came to San Francisco and saw a very different way of looking at things. The question most investors were asking was, what if this succeeds? What is it going to unlock? Whereas earlier in Europe, it was let's poke holes in this idea and see why it doesn't work. The mentality of people in different countries is very significant. What are your views when it comes to Miami, New York, and people leaving San Francisco?

I think it's underrated and overrated at the same time. It's underrated in that the world and innovation and technology are becoming more distributed. Startups are more distributed, and people have interviewed their co-founders without meeting them in person. The long-term trend is you're going to see more startups and communities emerge in different ways. The overrated piece is that communities don't matter.

The Bay Area still matters a lot, and that's not going to change for a while. To say that its power relative to other communities is somehow dramatically diminished, I don't think is accurate. It's still an important place to be, same with the US.

You leave SV Angel and end up in Samsung Next. How did this transition happen and what did you do once you went there?

After SV Angel, I worked at another fund, Refactor Capital, focusing on health and biology. I was doing executive coaching and angel investing. This opportunity at Samsung came up. I believe the world is becoming more multipolar. For me to understand a different part of the world, particularly as I'm Korean American, was important. Samsung has a unique opportunity in this next wave of technology.

We have the largest mobile footprint in the world. We sell a TV every second. We can build right down to the chip. To work with a team that focuses on investments, M&A, and helping the startup ecosystem was a great challenge and something we're having a lot of fun with.

What's your investment philosophy now that you're with Samsung Next Ventures? Did it change from what you have been doing in the past?

It stayed the same except for one tweak. I've been here for about a year. Thank you for letting us invest in your company. We've learned a lot from you. My investing career has been about investing in companies, helping them, and supporting them along the way. At Samsung Next, the philosophy is to create a lot of value and support for the companies we invest in. The benefits will come. The difference is that our returns are about growing the community and understanding where the world is going in areas we care about.

For example, fitness and health is an area we care about. We think about where the world is going, how people are using technology, and what trends are emerging. The best way to think about these questions is to work with and support the people who are building the future.

You are the culture setters. What you do, what you say every single day, you may not think that people are watching you, but they're watching you. In the same way that you as an individual make trade-offs as to what you value in your life, the company is going to make those trade-offs as well. The most important thing is defining what you're not. You have to be able to look at an all-star candidate for a particular job and just say, they are not a culture fit.

That doesn't mean they're bad at what they do, but you have to specify what is your immune system. Setting your immune system is very important because you're explicitly saying what we aren't. Everybody can say what they want to be, but nobody is all these things. You have to make trade-offs and explicitly say, what are we looking for?

In your example of special forces, this is one of the decisions we made when it comes to remote work versus in-person work. One of the questions I'm asking myself all the time is, would you be able to build a special forces team if you are remote? The answer is no. In the special forces, you really became a team once everybody was struggling together on a mountain for a very long period of time. It's through the struggle that you realize that this unit became a team.

We decided to do everything in person because a client might be calling at 11 or 12 at night, and we just grab our stuff, meet, and fix the issue because that's the way you create teams.

That's an incredible example because you hear and read all of these discussions around remote work. As an executive coach, I would tell founders not to read how-to stuff or take it with a grain of salt. What you just articulated is a very different mindset from another founder by definition. That's what gets you going and where you're most effective. That's a certain culture that will attract certain people and repel others. That's okay. Making that trade-off of being very clear is the first step in building a culture.

When you see what we mentioned, sitting together, it's difficult to appreciate what's going on when you are remote. Maybe some companies are succeeding in doing this in a fantastic way, but it's difficult for us to see how we can appreciate that this is a problem we need to sit together and solve. We have that spirit in the team, which we find super valuable. We interviewed a lot of great candidates from a technical perspective, but that's the last key point we focus on.

Before that, we look at principles and values. Are these people who will fight with us? Are they transparent enough? Are they going to tell us when something is wrong?

You hit on something really interesting in terms of every company, every group of people has their own communication protocol. It's how we communicate. What you described is very direct, candid feedback. Every team has a unique way of communicating, and that is a function of the culture that you're setting. That's why I never understood companies acquiring teams and breaking them up. The whole reason you're acquiring this team is they communicate with each other and work together in a way that makes one plus one equal three. When I say something to you, you know exactly what I mean. That's when culture starts breaking down, and the communication is off.

At Samsung Next, we have three offices: US, Korea, and Israel. The communication protocol among the three different cultures is very different. You have to respect that, understand that, and be aware of that. At a startup, when you're trying to do something really hard, you develop your own protocol, and that is a function of the culture you're setting. Terms like we fight, we're transparent, we're on the spot feedback, may not resonate with some people who are really good, and their style of working is different. That's okay.

David, just the last question before we close. What do you think is the future of the wearable and fitness space from your perspective?

I think the fitness and wearable space will really hit an inflection point. You're already starting to see it. It's a very different market today compared to 2016. Different user behaviors are appearing. Once you start tying it to outcomes, like if you have type two diabetes, really understanding what you eat, you'll start seeing more mainstream usage and more devices. Many companies do clinical trials, and the more data they have, the more effective these trials can become.

Once you see more outcomes tied to this data, and as it becomes more structured and usable, you'll see more people incentivized to wear the wearables.

David, it seems like we just took too much of your time.

No, not at all. I think we need to take another slot of three hours and speak about culture. It's probably the hardest part of your job because when things are going well, it's easy to ignore it, and if you ignore it, it doesn't scale. When things are going poorly, it's hard to maintain it. You want to create the company where your children would want to work. That doesn't mean making it into some kumbaya where everybody gets what they want. It's about setting an environment for them to flourish.

Awesome. David, what a fascinating discussion with you as always. We learned a lot from you and have a lot to learn from you. We keep it for the next discussions. Hopefully, the next ones are going to be longer. We will try to get as much time as possible to learn as much as we can from you.

Thank you so much. We learned so much from you, our whole team, and it's been a joy. Come to the office more, and we'll hang out. Hopefully, we can see you in real life.

Thank you.