VC Clint Chao on surviving the turmoil

Be conscious about capital; go further on less; and why the best technology doesn't always win

At the recent, AlwaysOn Venture Summit, held at the Ritz-Carlton Hotel in Half Moon Bay, I caught the last panel of the event, titled, "How To Beat Kleiner and Sequoia after the Apocalypse." I had a chance to interview one of the panelists, Clint Chao, a founding partner at Menlo Park, Calif.-based Formative Ventures, an early-stage venture firm investing in Web services and Internet infrastructure.

Chao is an experienced technology executive who brings more than 20 years of startup operating experience, including marketing, sales, and business development, to Formative ventures.

Solan: How do you think companies are currently surviving in the global crisis?

Chao: I think companies obviously have to be much more conscious of their capital spend because of the market and the way it is, It's going to be increasingly difficult for them to attract new kinds of investors to invest in their company. So they have to be able to go further on less, with the existing syndicate of investor. And hopefully, they'll be able to last long enough so when the market improves, that they'll be in a much better position to continue their progress. 

Solan: What are you currently investing in?

Chao: We are currently looking quite a bit in Web infrastructure. We're investing in companies that we call sort of lateral Internet companies that are capable of enabling companies laterally. Companies that are trying to establish a large presence on the Internet. But we are looking for the companies that can solve the picks and shovels, if you will, to those companies.  Examples of those kinds of companies are two recent investments we made in SOASTA, which does a reliability as a service testing, as well as Mashery, which does a hosted API in management platform.

Solan: Please share a lesson learned as an investor.

Chao: Well, I'll tell you the biggest lesson that I've learned, over the course of the years, is that the best technology in any industry doesn't necessarily guarantee you to become the winner. In fact, in most cases, the best technology doesn't win. It's the technology that has the most customers always wins - 100%. We try to focus our energies on finding those kinds of companies that can get the most customers.