When Semyon Dukach’s family came to America as refugees from the Soviet Union, they had a hundred dollars to their name. Semyon is now one of Boston’s most consequential super angels. Along the way he founded a couple of startups himself and made some remarkable angel investments that put him in a position to be helping founders with money and time. He has a knack for encouraging founders during the tough times. He’s done some fascinating stuff, like being a member of MIT’s fabled blackjack team, more recently he headed up Techstars in Boston. Now he’s raised a venture fund, One Way Ventures, focused on working with immigrant founders.
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Don’t miss this inspiring interview. Topics covered include:
Sal’s Announcement of the Angel Invest Boston Syndicate
Sal’s Intro of Semyon Dukach
The Moment Semyon Dukach Figured Out What He wanted to Do in Life
Semyon Dukach’s Immigrant Story
One of Semyon Dukach’s Adventures on MIT’s Fabled Blackjack Team
The Satisfaction of Helping Out Customers in Significant Ways
Semyon Dukach’s Tremendous Pivot Story
Semyon Dukach’s First Angel Investment
Some of Semyon Dukach’s Favorite Startups – Wanderu, Quanergy & Lovepop Cards
Semyon Dukach’s Leadership at Techstars Boston
Semyon Dukach’s Advice to Startups Applying to Techstars
Why Are Immigrants So Over-Represented Among Founders
How One Way Ventures Came About
About Eveline Buchatskiv, Semyon’s Partner in One Way Ventures
Semyon Dukach’s Advice to Angels & Founders
ANGEL INVEST BOSTON IS SPONSORED BY:
Purdue University entrepreneurship
Peter Fasse, patent attorney at Fish & Richardson
Transcript of "One-Way VC"
GUEST: Semyon Dukach, Super Angel, Founder & VC
SAL DAHER: This podcast is brought to you by Purdue University entrepreneurship and by Peter Fasse, patent attorney & Fish & Richardson.
Semyon Dukach has the golden touch. He first displayed that as a member of MIT’s storied blackjack team, then as a brilliantly successful founder; as a much sought-after super angel and now as a venture capitalist at One Way VC, the venture capital firm that focuses on helping immigrant founders succeed. Semyon is an immigrant to the United State from the former Soviet Union. We discuss that among the many topics in this excellent, excellent and very popular episode which I am very happy to relaunch today. I hope you enjoy it.
Sal’s Announcement of the Angel Invest Boston Syndicate
SAL DAHER: Hi. This is Sal Daher, of the Angel Invest Boston Podcast. If you've been listening you might have noticed that I love being an angel investor in Boston. The reason for this is that there's so much going on in the startup space here in Boston. Practical founders working with leading inventors, venture capitalists, angel investors, patent attorneys. it's a really exciting scene.
Now, you can join us in syndicates, which allow people who are not part of the angel investment community to invest alongside Boston's leading angels. I invite you to leave your email address at angelinvestboston.com in the syndicate section and we'll be back in touch with you to help walk you through the qualification process as an accredited investor. Remember there is no obligation to invest when you put your email address there. I hope you really enjoy today's podcast.
Sal’s Intro of Semyon Dukach
Welcome to Angel Invest Boston. Conversations with Boston's most interesting angel investors and founders. I'm Sal Daher and my goal for this podcast is to learn more about building successful new companies. The best way I can think of doing this is by talking to people who have done it, people such as card sharp, founder, super angel and energizer of founders, Semyon Dukach.
Semyon your presence here is a realization of a long-standing ambition of mine. For a long time, I've wanted to have you on the podcast, so I'm happy as punch that you're here and it's really tremendous.
SEMYON DUKACH: Thanks for having me. Happy to be here.
Semyon Dukach Bio
SAL DAHER: Awesome. Listeners you are about to embark on a journey whose destination is unclear but whose unfolding will be exciting to the utmost degree, I can guarantee you that.
Semyon Dukach is a human inductive charging device. Proximity to him electrifies founders and angels alike. Here is a testimonial from Jason Freeman the CEO of a flagging startup. "Thankfully, Semyon's phone call came on the same night when just hours before I had given into the inevitability of the company's closure. I'll never forget his words to me after I shared feelings of acceptance that this was over. Semyon's words were, Jason, are you an entrepreneur or an operator?" Or, "Jason, Are you an entrepreneur or an operator." My imitation.
"By asking if I was an operator he was really asking me if I was going to facilitate the winding down of the company. Alternatively, did I have the courage to fight on as an entrepreneur. Many would have stopped at the pep talk, but Semyon did not. Our whole team was invited to his home so we could work through solving the problems together. I have a vivid memory of the team sitting around a pizza on Semyon's living room floor. For the first time in weeks I felt a real sense of hope and I could see that same feeling in the faces of my team." Thanks to Semyon's intervention and support the company took another swing at the bat and is still among the living under the name of instafreebie.
This remarkable individual was born in the Soviet Union but came to America as a young man. He attended a Texan high school and then studied computer science at Columbia and MIT. At MIT he led a fabled blackjack team that was feared by casinos. He worked in VR, virtual reality, at IBM and created a proto PayPal online payment protocol at MIT. Semyon made his money by founding or acquiring software companies. He also founded some duds along the way. He's been a respected and prolific angel investor and has headed up Boston's iconic Techstars Accelerator. His present focus is One Way Ventures, a venture fund run by immigrants and focused on immigrant founders. We'll get into this later on.
Semyon as a service to our younger listeners, it's a tradition of this podcast to ask our enormously successful guests about that moment when our guests figured out what they're going to do in life. Was there a moment for you that really stands out?
The Moment Semyon Dukach Figured Out What He wanted to Do in Life
SEMYON DUKACH: Yeah, it was fairly late, I'd say, in my life. I had previously thought ... Well I thought all kinds of things. I thought it might be a professor of computer science at some point, which was pretty silly given that I don't have the patience to be any kind of academic.
But, for quite a few years I thought I was an entrepreneur. I thought ... I started several companies and I had one reasonably successful exit and that's what I thought I was. But, every time I had a company, I was always thinking about my next company. I never really had this long-term view to solve some problem that I was passionate about. I didn't really care that much about particular group of customers that I was burning with a passion to fix something. It was never me. I was more opportunistic as an entrepreneur. At the same time before selling my very first company, while being an entrepreneur I was writing angel checks. I was an angel investor.
The realization came to me one day that I was actually an investor. It's okay to be involved in many different things, just a little bit in each and it's actually wonderful to have a group of people who you really care about which are the founders. My customers are founders. They're the ones for whom I do what I do. The skills that I try to develop in myself and as an ongoing struggle is to be a better mentor, to be a better supporter of these founders.
SAL DAHER: Interesting. Your customers are your founders.
SEMYON DUKACH: Of course, yes. I think of myself as an angel. I think angel investors, they get that name and I guess the name just implies that like an angel they come in and throw some money away but I think ...
SAL DAHER: They also protect you, they help you.
SEMYON DUKACH: They help you, they protect you. You know, not all of them do. I mean, literally just means individual investor who does whatever he or she wants. He isn't part of some fund, isn't responsible to anyone else. That means, you have the ability to be very angelic but there are you know, a lot of devil investors too. You don't have to be wonderful you can be very short-term minded. You can try to squeeze out quick profits and represent the interests of your founders.
I wanted to be a true angel. I really, over the years, I realized that, the thing that gave me the most joy professionally in life was when I could make a big difference. When a founder like Jason in your quote, was actually very grateful, genuinely grateful afterwards. That felt great and it was a rare thing. I couldn't often achieve that result. Usually, the attempts to be helpful are superficial in nature.
SAL DAHER: Right.
SEMYON DUKACH: I've made a decision at some point that I'm actually going to focus on being better at it and that in fact my top priority in investing will be to be a better mentor that the choice of ... Choosing a startup based on who I can help and who I want to help is more important to me than, what kind of return I'll get from that particular investment.
SAL DAHER: I understand.
SEMYON DUKACH: That was my first realization was that I am an angel and I felt ... Like, I was completely certain of who I am ever since. It's been at least 18 or 20 years.
SAL DAHER: That's your calling.
SEMYON DUKACH: Then, the second step function was when I realized as an angel, I'm able to put the impact first. I can afford to not focus first on returns. Well, I didn't realize at the time that, that's actually the best possibly strategy to optimize returns. Had I wanted to only optimize return, the best way to do it is just to try to be as impactful as you can be. There is no better way. Because it's when you can make the huge difference to people not only do you get the gratitude but you get the reputation and then stronger and stronger founders come to you, your network expands.
SAL DAHER: Oh yes.
SEMYON DUKACH: You're much more well known.
SAL DAHER: Yeah.
SEMYON DUKACH: Until I was able to fairly regularly make the big impact, I think I had a very small world. I was here in Boston, but I didn't know everyone else here.
SAL DAHER: Right.
SEMYON DUKACH: I did my own thing and I didn't touch that many people. But, once I was able to make that bigger impact more regularly, I got opportunities like the Techstars Accelerator, which I never would have had a chance to run that had I not already had founders who were very grateful for real help.
Semyon Dukach’s Immigrant Story
SAL DAHER: Excellent. Please tell us your immigrant story. How did your family come here? How old were you? How did you feel about it? Later on, when we discuss One Way Ventures, I'll come back to immigration. I want to hear about young Semyon and how he reacted to leaving the Soviet Union and coming to America.
SEMYON DUKACH: Yeah. We came in 1979. We were in fact refugees in the sense that we didn't have any documents. When we left the Soviet Union, we had to give up the documents there.
SAL DAHER: What did your father do, your parents?
SEMYON DUKACH: My father was as geophysicist and my mother was a professor of the Russian language in Russia.
SAL DAHER: Okay.
SEMYON DUKACH: Not a very marketable skill. But, my father's ended up being somewhat marketable, interestingly enough. But, we came first to Austria, then to Italy for two months and eventually we got refugee status and the right to enter the US. We got new papers. I think we only had like $100, $200, something like that. That's literally what you could have.
I remember the day we landed, we took some minibus to the projects where they were going to put us up. The very first stop, we were hungry. My father went out and bought some burgers. I think it was a Burger King. The four burgers cost $9.85 or something like that. They were right around 10 bucks. He came out pale faced because he had $100 and change.
SAL DAHER: That's 10% of his ...
SEMYON DUKACH: He just spent 10% on these burgers.
SAL DAHER: It could be, yeah.
SEMYON DUKACH: He had no idea. He thought they would be like 4 cents. He just didn't know. There was no detailed knowledge at all. You leave the Soviet Union back then, it was like leaving North Korea now.
SAL DAHER: Right, right.
SEMYON DUKACH: You know the propaganda is not true. You don't believe anything you hear about the west. The actual underlying reality is a mystery to you. You have no information.
SAL DAHER: You know what they're telling you is lies but you don't know what the truth is, because you have no experience with it.
SEMYON DUKACH: It's really quite an adventure. My parents, to me they are my heroes, for stepping into that. My father was 50 already. It's unbelievable.
SAL DAHER: My dad was 30 something when he came here. Yeah, 31. At the peak of his career in Brazil. He was an extremely important guy. My mom talked him into coming here because she wanted a better life for us. He gave up a lot, and she did too, friends and so forth. It's an enormous sacrifice that the immigrant makes in terms of the entire social network is just cut off and you go to a place where you don't know anybody.
Do you remember the first place you stayed at?
SEMYON DUKACH: Yeah, I mean, it was the projects, in New Jersey.
SAL DAHER: Yeah, The projects.
SEMYON DUKACH: Yeah, these big buildings. Half the windows are broken. It wasn't a very nice place. There was an orthodox Jewish community nearby. Not in the same town, that actually, I guess financially supported us. The government paid for some of it and then they paid for some of it, which was great but we didn't have much in common with them. We weren't particularly religious or anything at all. In fact, quite the opposite.
SAL DAHER: Right.
SEMYON DUKACH: We were totally secular.
SAL DAHER: Right.
SEMYON DUKACH: That was a little bit strange. I went to their school for a while which was a very, very religious school.
SAL DAHER: That's interesting.
That brings to mind one thing about immigrants that I've noticed, in Avalon, the Barry Levinson movie, Avalon is the first place they stayed in. I happened to be at the Harbor Club yesterday looking at some investments, right next door to it is The Colonial, is the building that my family, the first place they lived when they come to America. In the mind of the immigrant it is iconic. It has enormous significance because that's, everything starts.
SEMYON DUKACH: Yeah. That's why, like, we're going to jump to the fund later but my fund is called One Way Ventures.
SAL DAHER: Right.
SEMYON DUKACH: Which is the name that may be fairly neutral to someone who's born here but every immigrant, they know precisely,
SAL DAHER: You get it right away.
SEMYON DUKACH: Exactly what it meant. It's that moment. You remember.
SAL DAHER: One-way ticket, yeah.
SEMYON DUKACH: It's when you buy that one-way ticket and you realize, "I'm not going back and I can't go back. Not only am I cutting the ties to my entire community, but some of them will actually judge me negatively for leaving, for abandoning them, for betraying them."
SAL DAHER: Absolutely, yeah.
SEMYON DUKACH: That's where it makes it so hard and also, I think what ultimately makes people so resilient because you can't go back. It's an absolutely permanent commitment. You can physically maybe go back but then you've lost.
SAL DAHER: That's right. You cross the Rubicon. You've burned the bridges. Tremendous.
One of Semyon Dukach’s Adventures on MIT’s Fabled Blackjack Team
Now, we can see a little levity here. I can't resist the temptation of asking you to tell just one brief story from your days in MIT's blackjack team.
SEMYON DUKACH: Well, we had a lot of adventures, right. Lots of money. Sometimes we lost money. There's been some books and movies that cover those stories pretty well.
The opening scene in the book actually was a pretty terrifying story because I was in a small plane crash. One of the other guys who ran the group, who wanted to save some money and not fly commercial so he had this $15,000 ancient Cessna and he learned to fly it in order to go on this trip but, he hadn't quite finished learning. Yeah, it was pretty harrowing. Ended up crashing the plane in Princeton, New Jersey.
SAL DAHER: Oh my.
SEMYON DUKACH: After we came back from Atlantic City, on the way back. It ran up to a small wall and immediately caught fire. I broke my foot and I got some burns and I ran out of there. The guy, the pilot also escaped unscathed but then he went back into it to grab this bag of money and as he was doing this, the wings had already curled up like aluminum foil and it was all exploding. But, he was fine. He got the money bag.
SAL DAHER: Oh my gosh.
SEMYON DUKACH: Yeah. The book opens with that story.
SAL DAHER: Oh yeah. No, I've seen the movie. That's like my business partner in El Salvador having a hotel blown out from under him and his first concern was, looking under the bed for the $700,000 in bonds that he had, bearer bonds that he had brought in to trade. That is just amazing.
How did you come to found your first company? You were a software engineer and what motivated you to make that first step?
SEMYON DUKACH: I was actually playing blackjack at the time.
SAL DAHER: You were a gambler from the start.
SEMYON DUKACH: No, it wasn't exactly gambling.
SAL DAHER: No, no, that's right. Putting your brain to work.
SEMYON DUKACH: Yeah. I found MIT Blackjack Team to be exciting but, ultimately, not very fulfilling. We made some money and we got some satisfaction out of the fact that it was us against them. We were the good guys, they were the bad guys, we outsmarted them. It was supposed to be impossible to beat the casinos and we knew we were beating them. That felt good, to be smarter than these other people but kind of shallow, right. We were just bragging. We were. We were in fact smarter than them but, so what? They weren't necessarily the best group of people to be measuring ourselves against.
SAL DAHER: So what, you can beat casino owners?
SEMYON DUKACH: The industry doesn't actually attract the best and the brightest, generally speaking, it turns out ...
SAL DAHER: No, no, no.
SEMYON DUKACH: Also, while the team work was fun, and I did learn some very great lessons about entrepreneurship, we didn't have any customers. We didn't create any value for anybody. We just moved money from point A to point B. Kind of like you hear traders sometimes complain about the same thing, hedge fund guys. It's arbitrage and so fundamentally there's no value creation. At least no direct value creation.
SAL DAHER: No. There is value creation but it's not tangible.
The Satisfaction of Helping Out Customers in Significant Ways
SEMYON DUKACH: It's not tangible. You don't directly get satisfied customers and their gratitude.
SAL DAHER: That's right.
SEMYON DUKACH: With my software company, I actually remember that first moment when not only did we get a check, but we got a phone call from somebody. It was the New York Times.
SAL DAHER: Wow.
SEMYON DUKACH: Their vice president called me just to thank me for giving him the software because our software helped them scale the performance to their website and on big news days their website used to crash. This was a real problem for this particular vice president. Right? It was all new. Web was new.
SAL DAHER: Yeah.
SEMYON DUKACH: That was a very meaningful phone call for me to get because it was the first time I felt ...
SAL DAHER: You were really doing something valuable for another human being.
SEMYON DUKACH: I felt, "Wow, I'm on the right track here".
SAL DAHER: Or, in this case, millions of human beings who can get the news.
SEMYON DUKACH: I mean, it was a individual person, the customer who I was able to help. The combination, the idea that a customer can pay you lots of money and also thank you is kind of cool. But then, ultimately, it still was a fairly opportunistic solution. It solved their problem, their immediate problem. It didn't really have a lot of vision.
The founders that I'm backing now have more vision and more commitment than I had as an entrepreneur.
SAL DAHER: Okay. Which other companies you founded or refashioned are you most proud of.
SEMYON DUKACH: Well, I think Fast Engines, that company I mentioned that had ...
SAL DAHER: That speeded up the websites.
SEMYON DUKACH: Yeah, I'm proud of that. It didn't change the world or anything but, at the time it was needed and it made a difference. It enabled enterprises to get their backend applications online quicker without having to rewrite them all. That had value. I'm perfectly proud of it. I'm far more proud with my work with founders as an investor.
SAL DAHER: Coming up next, I will ask founder and super angel, Semyon Dukach about his favorite pivot stories.
First I wish to thank listener Rcoco1224 for this great review in iTunes. "Listening to this has been so helpful in navigating the startup world. Not only is it informative for investors looking to get involved, but for those of us working for early stage companies, it is an amazing perspective to add." Thanks, Rcoco1224, you've done your bit to help this podcast get found by more people.
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Semyon, I like pivot so much, I wish there was a pivot channel, which I would just binge watch.
SEMYON DUKACH: What is it that you like about pivots? Is it the surprise that the new thing is even better than the old thing?
SAL DAHER: Well, the reality. The reality that we don't have a clue when we invest in a company what the company is going to make money at. In the process of entrepreneurs, most angels all agree that they don't invest in an idea, they invest in the team. The process of that team actually figuring out how they're going to make money, to me is dashed-ly exciting.
SEMYON DUKACH: It is. It is.
SAL DAHER: What comes to mind for you?
Semyon Dukach’s Tremendous Pivot Story
SEMYON DUKACH: The pivot story I'm going to share does not involve ultimately a lot of money making or tremendous financial success. It is a startup that I was involved with from the very beginning. They were called Global Cycle Solutions and it was at first a team of undergraduates at MIT that went to Tanzania as part of the DealUP class and tried to build appropriate technology for that part of the world.
Specifically, the CEO Jody Wu, she designed a device that you can connect to a bicycle to shell dried corn. You would put the bike up on the stand and spin the wheels and put the corn in right. One person will be shelling the corn, the other one will be riding the bike. Then you could use the bike as essentially the machine of a micro entrepreneur because the person can go from place to place, shell people's corn for them in a place where there's no power.
That was the idea and I actually really encouraged the team to make it a business. They won the development track at the MIT 100K competition and instead of going to grad school where this girl got into, she was a mechanical engineer, she was going to go to Berkeley, her parents were very disappointed to learn that, I talked her into moving to Tanzania. This was like eight years ago now. She's still in Tanzania. She had malaria five times. She had all kinds of struggles.
Their original business involved manufacturing devices, the difficulties of manufacturing components they're unbelievable.
SAL DAHER: I've done business in Africa, the bond business. I know how tough it is, yeah.
SEMYON DUKACH: Yeah, I went there twice and, tried to help her personally and both times I thought we were able to do a little bit but it was extremely challenging. I mean, just registering a company over there is as hard as getting a funding round done here, let's just say.
SAL DAHER: Yeah. It really is. Yeah.
SEMYON DUKACH: When it came to focus, she realized that there were so many parallel problems that once solved, such as, the manufacturing, the inventing the next generation of the stuff, really, all aspects referring to business but, the hardest ones actually had to do with distribution. Getting the devices into villages. Building a sales force that could scalably move lots of them with even harder than the manufacturing challenges. At some point, it made sense to just buy the stuff somewhere else. She didn't want to make it in China. She wanted to employ local labor and build it locally. But, it didn't really work.
Ultimately what happened was, the device itself didn't really work. I mean, it kind of worked but, it was too tough a market, it depended on the season. The farmers didn't really have the money to pay for it. There were many, many, many problems with it. At some point ... She had no particular liking of distributed sales organizations. Lots of motor bikes and commission structures. Managing lots and lots and lot of people to deliver stuff to the villages, it wasn't her professional interest. That was the bigger problem.
The organization basically became a distribution system for other people's stuff. It made sense when you realize that the hardest thing was building the distribution, then you just want to find the most successful product out there and sell that first and later sell other things. The most successful product in that part of the world were the solar lights that were made in India, from Greenlight Planet, I think was the company that she went with. She looked all over and she found the one that was the most reliable. She just started selling other people's stuff. Buying it in bulk and selling it in retail, which doesn't sound like such an exciting business but, her ultimate goal was to impact the region.
SAL DAHER: And that was the biggest.
SEMYON DUKACH: That was the way. That had the impact. That's what the region needed. The region didn't need an MIT inventor inventing a bicycle thing. It's just not what the region needed more.
SAL DAHER: It needed solar light and an efficient way to get it to the villages.
SEMYON DUKACH: It needed someone to build out a distribution company. She worked on it for years and years and years and just recently she ended up selling it to the people who actually make the devices. She made a little money. The debt she borrowed got repaid. There was a little bit remaining equity in that company but nobody got wealthy. It wasn't a huge exit.
SAL DAHER: Right.
SEMYON DUKACH: But, I'm just really proud of her for making that pivot and sticking true to her original intent. I mean, that's why she was in Africa. She wanted to help Africans. She wasn't in Africa in order to make money. Right?
She also wanted to have a business. She had no desire to be part of a non-profit. She had this ethic. She actually grew up working in her parent’s Chinese restaurant and she had this work ethic that you have to build a real business, you have to have customers, you have to have revenues.
SAL DAHER: Absolutely.
SEMYON DUKACH: She did exactly that. That's my pivot story.
SAL DAHER: That is a tremendous pivot story, thank you.
Semyon Dukach’s First Angel Investment
You mentioned that you were investing as an angel even when you were working. Tell me how that got started. How did you come to the point of putting money into something that wasn't up and running yet?
SEMYON DUKACH: I think it was just people I knew. One of my first angel checks was this guy Matt Mankins. He was a customer of Fast Engines in Florida. He emailed me one day saying, "I want to come to Boston. Do you have any extra space in your office." I had extra space in my office as a matter of fact. I'm just like, "Yeah, desk, whatever. Hang out. You don't have to pay me." We just became friends and he was awesome. He had this company, I didn't really understand what they did but I invested in it. I made a few other investments in the '90s. It was just people I ran into.
Then there was a CEO Group actually come to think of it. There was a mentored CEO group at a non-profit called the Cambridge Business Development Center, in Central Square. Just a bunch of CEOs gathered every couple of weeks and some old guys who came in and tried to mentor them.
SAL DAHER: Right.
SEMYON DUKACH: I got a lot out of that. It was, really cool to talk to peers to open up. I saw how powerful it was. I didn't really have a lot of mentors in general. I was probably too arrogant to listen to any mentor, but the group was wonderful. I think I made some investments through that as well. That was kind of my initial angel activity and almost all of those companies went bankrupt in the dotcom bubble but one of them actually became quite successful. It merged with another company and ultimately went public and paid me a significant dividend which actually drove my ability to write a lot of angel checks later, significantly more than the exit that I had. I actually made more money from one of my early investments.
SAL DAHER: Is that the one that ultimately became SMTP?
SEMYON DUKACH: Yes, it did. Exactly.
Some of Semyon Dukach’s Favorite Startups – Wanderu & Quanergy
SAL DAHER: Would you mind talking a bit about your favorite startups and what they do and why you're so excited about them?
SEMYON DUKACH: Well, that's always tough right, there're so many.
SAL DAHER: I know, I know. The ones that ... Let me make it easy for ... The ones that come to mind.
SEMYON DUKACH: Yeah. What they do doesn't matter. It's who they are, really. It's always, like you said, most people ...
SAL DAHER: No, no, but what they're trying to do and why you like them.
SEMYON DUKACH: Yeah. I usually like them because of how they do it. I like them when I see them burning with a passion for their customers. I like it when they're facing their team building challenges. I like it when they're transparent with me and allowing me to help them.
SAL DAHER: Right.
SEMYON DUKACH: I don't know. I can talk about some, kind of the ones that are doing the best.
SAL DAHER: Yeah, let's talk about that. Or ... Yeah.
SEMYON DUKACH: There's a company that comes to mind because there was an article about them this morning called Wanderu. It's like an app in the website for buying bus and train tickets. The young lady who founded it, it was actually her second company even though she was fairly fresh out of college, but in college she started modeling. I guess she was briefly a model and then she started a modeling PR agency and hired a bunch of people and was actually operating and making money.
But, she really had the weird passion for taking the bus out of environmental concerns, saving greenhouse emissions. But, it was a true passion and it was a generational thing. Millennials I guess, take buses in a different way than lower income older people take buses. Those are the two demographics that take them. She created a place to serve those millennials and made deals with all the bus companies, which was supposed to be impossible to work with because they didn't have the backend technology. She hired the engineers. Really, built the whole thing from scratch. I was one of the first two investors, I think before there was even the real round done.
Now, this article said that she's doing over $100 million a year already in sales, which is an impressive number for someone who didn't ultimately ... I mean, she raised a little bit of venture capital but it wasn't a lot. The company is now profitable.
SAL DAHER: Wow.
SEMYON DUKACH: That's a really cool story.
SAL DAHER: That's impressive. She found a need through the passion that she had for taking buses. Any others come to mind?
SEMYON DUKACH: Yeah, another very successful company that I actually didn't mentor very much because it was a West Coast company is called Quanergy but what was cool about it is that, they had a very credible CEO, much older gentleman at the time. He was probably 40 already or more. He had been working on this hard physics problem for all his life ever since he was a grad student which was to do LiDAR which is like a laser radar, do LiDAR on a solid-state chip instead of on a spinning device.
What was cool is that he came to me because he read about the reviews. Like the review you mentioned. I think he read a couple of reviews like that online and he wanted to fill out his first round. He was just trying to raise one million, eight million pre-money and wanted to add a few angels. Was a little bit short and so he read reviews and he only reached out to the people who had really good reputations.
I wasn't able to be a lot of help to him but the help I gave all these other people translated into this access. His company nine months later raised around 80 million pre-money and then in another nine or ten months after that 1.5 billion. It's a unicorn, it's probably going to go public in the not too distant future. It's a great outcome because he put together an amazing team. He brought back all the people who were working on this thing from everywhere, brought them into one place and they actually are solving the problem in a wonderful way, incrementally.
First, they had an intermediate product that just lowered the cost of the current approach while working on the one they really wanted to do. Now they're fully rolling out the ultimate one and have these automotive customers and it's a success story. But, the thing that I'm proud of is actually, the other founders who maybe aren't as successful whom I was able to help a lot got me the access to that founder.
SAL DAHER: Interesting. Networking. Anybody else comes to mind?
SEMYON DUKACH: I mean, there are so many. I'll give a TechStars company or two.
SAL DAHER: Sure.
SEMYON DUKACH: Because we've had 50 companies, almost 50 that we helped as part of running a TechStars program for three and half years. One really cool one is Lovepop Cards. It's cool because ...
SAL DAHER: Argh!!
SEMYON DUKACH: What?
SAL DAHER: Because, that one is a ... I didn't organize my schedule enough to meet the founders. Apparently, I missed out on the most amazing founders, so please ...
SEMYON DUKACH: Wonderful, wonderful founders. Yeah, they're ship builders. These two guys who went to shipbuilding school but they ended up as consultants and later at Harvard Business School. But, they were really, their passion was shipbuilding. They were on a trip to Vietnam in the middle of business school. There's another year of school left. In the summer they went to Vietnam and they saw these beautiful three-dimensional works or art where you open it up and the sculpture pops open.
SAL DAHER: Right.
SEMYON DUKACH: They bought a few of them and sold them around their school and saw that there was demand and so they went back and setup some kind of manufacturing and by the time they were applying to Techstars they were still in business school. They hadn't graduated yet. I think the program started in February that year if I remember correctly, or maybe in April. I forget. But, they already had meaningful sale. Couple of hundred thousand dollars in card sales while in school. That was so impressive. They had this amazing passion for building beautiful custom things for gifting.
We gladly took them even though there was a little bit less technology than Techstars normally is associated with because of their drive and passion and meticulous love of beautiful engineering detail, which those things actually require. They went on Shark Tank. They ended up becoming quite popular. They're a significant company now. They're really disrupting the whole greeting card space.
SAL DAHER: Yeah. Where are they from?
SEMYON DUKACH: They are local I think?
SAL DAHER: They're local.
SEMYON DUKACH: From this area. I don't remember exactly where they're from.
SAL DAHER: Fascinating.
SEMYON DUKACH: They aren't immigrants, though in general ...
SAL DAHER: One of the few who aren't.
SEMYON DUKACH: They're one of the few. One of the few. In my angel portfolio I actually checked, eight out of my top eight paper gains, biggest performing companies are immigrants, in fact. Although, I never targeted them.
SAL DAHER: I'm not far off on that. I did some statistics on my portfolio as well, it's over representation of immigrants is really astonishing and apparently, when people look at bigger numbers like S&P 500, they're highly over represented.
SEMYON DUKACH: Yeah, it's 40% of the S&P 500.
SAL DAHER: Versus 12% or something in the ...
SEMYON DUKACH: 51% of the unicorns.
SAL DAHER: Yeah.
SEMYON DUKACH: If you look at this year’s unicorns, my partner just dug this up for 2017 unicorns, it's 65%.
SAL DAHER: Amazing, amazing.
SEMYON DUKACH: Have immigrants. Yeah.
Semyon Dukach’s Leadership at Techstars Boston
SAL DAHER: What lead you to take the leadership at Techstars? What did you learn from that experience?
SEMYON DUKACH: Well, to my great surprise Techstars approached me. I mean, I never looked for ...
SAL DAHER: It's a great honor.
SEMYON DUKACH: It was an honor because they were a wonderful ecosystem. I loved participating in it as an investor, as a mentor. I was involved in the program. I wanted to be a meaningful investor in a local fund, but I was very surprised that they asked me to actually run it.
The people who ran it before me had moved on and started a venture fund. I guess a lot of founders have said that, I'm genuine, I'm really on the side of the founder and they entrusted me with the brand, which is important to Techstars. It was one of the very strong programs that had a real community around it. There's a lot of responsibility to maintain that reputation, to keep everyone focused on the best founders.
SAL DAHER: What did the experience teach you?
SEMYON DUKACH: Well, I think I certainly learned lot about selecting companies. I learned a lot about working with a whole bunch of mentors. It wasn't the question of my mentoring anymore, it was coordinating lots and lots of people who wanted to help and trying to figure out who is helpful or how to make people be more helpful, how to teach them to be more helpful, how to help the companies raise money.
I think I learned a lot about group dynamics. I learned about putting together the CEO groups and really teaching them how to be more open with each other, more trusting with each other and giving first to each other so that all can benefit. That was a big part of it.
I think also, in the selection, I think a learned a lot. I think my experience investing as an angel probably wasn't as good for having a quick learning curve to see what works better and what works less well. I probably, by the end of TechStars was paying a little less attention to revenue traction and product and a little more attention to the team and to my own, my partner's, especially my partner's intuition on what makes a great CEO.
I think you just spoke to one of my partners of TechStars actually. A part of the lesson was actually listening to others more.
SAL DAHER: Taking input. People like Ty Danco.
SEMYON DUKACH: Yeah. Exactly. My current partner, Eveline. There are the three of us in the program together, me Ty and Eveline. I think as I listened more to them I actually got better at selecting. We got bolder I'd say. We were more willing to turn down people who were kind of pretty good and had obvious credentials and picking the ones that we thought were the most awesome individuals.
Semyon Dukach’s Advice to Startups Applying to Techstars
SAL DAHER: While we're on that topic, what advice would you give a startup aspiring to get into Techstars?
SEMYON DUKACH: It'd be the same advice to a startup that's building any kind of business. You just want to focus on your customers, know why you're doing it, work incredibly hard, listen to others, but don't do what they tell you, form your own convictions, but, hear everyone's feedback and try to understand it and then make your decisions and execute on them and build, build a great team. Who you do it with is as important as who you do it for. Those are the two most important questions and how you do it is less important.
SAL DAHER: Yeah.
SEMYON DUKACH: Because you can figure that out along the way and you'll change it, it'll evolve, but starting a company is not very ... That's a long-term commitment. You better want to spend a lot of time with that person.
SAL DAHER: No doubt.
SEMYON DUKACH: Yeah.
Why Are Immigrants So Over-Represented Among Founders
SAL DAHER: No doubt. Look, I'm an immigrant, you're an immigrant let's talk about the causes of immigrants being so overrepresented among founders. What's your theory?
SEMYON DUKACH: Oh, Professor Roberts pointed out at some point that immigration is itself and entrepreneurial experience. It's almost as if they have half a startup under their belt, especially if they came themselves as an adults. Right?
SAL DAHER: Yes.
SEMYON DUKACH: Because, you end up in a place. You don't know the rules you don't know the standard culture, and yet to emerge from that in a position to start your own business, you've already achieved something.
We spoke already about this notion that there's no going back. There's also this identity idea that's really important to me in my fund in that, as an immigrant you get to pick who you are. Most people just inherit the identity. You grow up, in somewhere and you root for the home team and you're told who you have to be and you're told that you have to be patriotic and nationalistic and that's just how it is. It's great that there's a nation, it's better than if people just have tribes. Expansion of identity. But ultimately, it's still one that you're born into.
Whereas as an immigrant, you actually get to choose who you are because you can say, "Okay, I'm really going to be an American." Or, "I'm going to be true to my roots." Or, you can say something else. I'm encouraging founders to broaden their ethnic and national immigrant identity and to think of themselves as members of this immigrant nation. I think that expansion is very positive. It broadens their network, they attain a critical mass and it helps them all.
But, what really excites me is this idea that a person chooses, it's like a fundamental human freedom to choose your own identity. I think founders do this. Any entrepreneur in a sense does that right by leaving a big company where there's an identity and creating your own, you get to choose it. Immigrants do it. The intersection of those two groups are very exciting to me.
SAL DAHER: Yeah. In a way, America is a particularly attractive place. I'm trying to think through your model here. You see, if you're in Europe or almost anywhere else in the world, when you start a conversation with somebody you ask them where you're from. In America, you ask people what they do. Americans define themselves by their work and the founder is someone who chooses what work they're going to do, chooses their identity.
I guess in your model, is, they're choosing their identity to be that of a founder and a founder in a particular area that interests them. They're not just going to be carrying on the family business but they're choosing their identity by being a founder. I can see how that works and particularly in the American context where people identify themselves so much by what they do, rather than where they're from. What you do can change. Where you're from can never change. It's a distinctly American thing to have immigrants as founders. I think that's the observation that I would make here.
I think also that networking is an important part of fundraising. It's everything in fundraising. People who are new immigrants as you mentioned, your parents coming to America, they don't know anybody. My parents didn't know anybody. You're accustomed to making connections where they don't exist.
SEMYON DUKACH: That's right.
SAL DAHER: That's what you got to do to fund raise. If you're only going to people you know, you're not going to be able to raise money. You have to be able to go beyond that circle, to endure the discomfort of stretching your connections beyond that immediate circle to get to people who know people you know and so forth in order to raise your round. I guess they are pre-programmed to be good fundraisers.
SEMYON DUKACH: It is also harder for them right. Because they don't have those networks so ...
SAL DAHER: They don't, but the thing is, you learn, you learn to overcome the accent. I'm lucky I came at 11, just before puberty so I don't have an accent. If you came a little later ... How old were you, was it 14?
SEMYON DUKACH: 10 and a half.
SAL DAHER: 10 and a half? Interesting.
SEMYON DUKACH: I just kept the accent.
SAL DAHER: You did?
SEMYON DUKACH: Yeah. My sister has no accent. She was really younger.
SAL DAHER: Yeah, yeah. My sister was absolutely perfectly fluent in English. You could not tell she was not an immigrant in two months. It was amazing. Just amazing. Took me longer. But, that's interesting.
How One Way Ventures Came About
Now, please tell the story how One Way Ventures came about. I understand Joe Caruso had a speaking part, so that's got to be fun.
SEMYON DUKACH: Well, Joe made the obvious observation from the outside which is that I have always been incredibly passionate about immigrants and immigration. Eveline and I wanted to start a venture fund with some kind of mission. We believe that, like a company a venture fund should have a mission beyond just high returns.
SAL DAHER: Let's do ... Eveline Buchatskiv your colleague at Techstars.
SEMYON DUKACH: That's right.
SAL DAHER: Now, joining you in One Way Ventures.
SEMYON DUKACH: My equal partner in One Way Ventures.
SAL DAHER: In One Way Ventures. Okay.
SEMYON DUKACH: Yeah. We wanted to start some kind of mission-driven fund and Joe stated the absolutely obvious thing that the most personal mission to the two of us was the mission of immigrant founders. It also so happens that it's a very lucrative mission for us to center a venture fund around because immigrant founders actually do better.
SAL DAHER: Right.
SEMYON DUKACH: That is important. Even though we are not motivated so much by personal returns, we're motivated by this idea of creating a big global fund for immigrants from anywhere, to anywhere to help get beyond nationals and to get people to expand their identity. That's what motivates us. But, in order to do that, the only way to do that is to show very large returns on your first fund so that you can raise a much larger fund from the kind of institutions we want to raise from down the road.
It is in fact, important to do very well, but by focusing on immigrants, we'll just do better. We'll do better than we can do otherwise because we are more passionate, we're going to work harder, and it's easier for us to get a lot of support from a lot of people because it's a very clear and well understood marketing message. Also, because a significant part of running a venture fund is actually trying to get your portfolio companies to help each other, to have a relationship among themselves. It's a difficult thing to do for most funds. It's easier for an accelerator like Techstars, or Y Combinator because people spend three months together and so there's a chance to get them to bond. Right. That's part of the power of those networks.
But, in a venture context, it's more scalable, it's harder. So, in our case, because all of our founders are immigrants and because there is a very real backlash against immigrants in America today and in Europe as well. But especially in America right now, there are some real negative feelings. There's people who're blaming immigrants for their problems and sometimes very unfairly. In that environment it's actually an opportunity for us to do a little nation building, to expand the immigrant identity, right from an ethnic identity like I mentioned to the immigrant identity, to get the founders to feel that the other people in the fund are special and to want to help them more.
If they help each other just a little bit more, there's a powerful network effect because as we fund more companies they recognize that they're joining not only a network with some success in it, but a network with extra motivation for people to help each other in. It's a reason they might actually pick our fund versus another fund.
SAL DAHER: Yeah, interesting. In addition to the focus on immigrants, are there any other general criteria that you hope to employ? Looking at your website, I was seeing that it has to be a company in the US, that's established in the US, that, the founders have to be here but it doesn't matter where they're from.
SEMYON DUKACH: Longer term we actually want to invest globally.
SAL DAHER: Globally.
SEMYON DUKACH: We plan to add partners first in Europe, then in Asia. Ultimately in northern America as well.
SAL DAHER: But, in this instance, you're starting out just in the US.
SEMYON DUKACH: Yeah, this is our first fund. The one that's been announced is just fund one and there's only two of us for now. We're both here so we're naturally going to invest in companies that have come here, not because it's a limitation of our fund structure but because that's where we physically are so just don't have time to get to know the company.
SAL DAHER: Sure.
SEMYON DUKACH: We can't travel enough. I think once we have partners elsewhere we'll both back companies that move maybe from here to there and by having those partners get to know them and then maybe having us take their board seats once we invest in them, we could actually be in a better position to facilitate more mature companies moving, moving here to access the most interesting market, which is the US market. Right.
SAL DAHER: Right, right.
SEMYON DUKACH: With a lot of European startups.
But, I'm sorry, you're asking me about other ... What else we look ...
SAL DAHER: You have the immigrant focus but what are the other requirements and so forth. I'm just trying to help a potential applicant to know whether they should be applying for you.
SEMYON DUKACH: It is like other venture funds. They do have to build something large and impactful. They have to actually change the world. We like people who're solving hard problems so it can't be a small lifestyle business. It has to be something that makes sense in a venture context that could generate the large returns.
We want the best teams. Ultimately we want really, really, really great teams. It doesn't matter so much exactly what they're in. I mean, there's things we just don't understand like biotech, which is awesome and fascinating and neither me nor my partner has enough depth of understanding, it's very unlikely that we will invest in a pharma company. We do certainly have a technology bias. Most of our portfolio is quite technical.
Beyond that we're not a very narrowly defined vertical fund. We're a pretty broad technology fund. Our filter are immigrants and physical location, where we actually are and then, it's just team, team, team.
SAL DAHER: You have an idea of what kind of check size you're going to be writing?
SEMYON DUKACH: They'll probably vary between half a million to a couple of million dollars in initial and follow on investing.
SAL DAHER: Okay. Do you think it's going to be mostly Seed or it's going to be series A, are you going to be ...?
SEMYON DUKACH: It'll be mostly Seed. There will be some A as well. We'll sometimes participate without the investors in A and B rounds. We're not going to lead those A and B rounds. We're going to lead in the pre-Seed stage and in the Seed stage.
SAL DAHER: Oh, that's interesting. So, helping an active leader in Seed stage, that's much welcome than the ...
SEMYON DUKACH: Especially, I think first time immigrant founders, they have a little bit of a harder time raising money than others. Easy for most [inaudible 00:44:47] recognize and identify so I think we'll have something of an advantage. First is, at least some of the other investors in that we are immigrants and we have enough work with immigrants I think we can handle the accents a little better. They're more likely to discover those very early stage first time founders that aren't yet known.
Then, when an immigrant founder is known as successful, in their next startup I don't think they have any difficulty raising money, necessarily. But, in some cases, we'll hope to participate because we can provide some of their extra value and really a very positive story.
SAL DAHER: Yeah, from a hard-headed investment point of view, I can see the value of investing in a group of people who have a harder time coming up with funding and getting the companies going. That can be very profitable for you and basically creating an arbitrage in the market. You're arbitraging away an imperfection by being more attentive to the value that these companies offered, where other people are passing them up.
SEMYON DUKACH: Well, at the end of the day, we still have to be good at identifying the great founders from very limited information.
SAL DAHER: But, the point is, I think you're probably going to find a lot of value. I've had some experience with some foreign founders and someone who in Minsk manages to get a startup off the ground and manages to get revenue, that person has jumped through so many hoops. As you mentioned about the founder in Africa who just incorporating a company is like raising a round here. That person, when they come to this environment, they're like Superman. With the gravity of Earth, of America is so little for them. They can just jump over buildings.
SEMYON DUKACH: When they really get powerful results is when they can actually join forces with an American co-founder.
SAL DAHER: Co-founder, yeah.
SEMYON DUKACH: Maybe someone in the sales and marketing side that does have the deep networks here, joining a technical immigrant founder, that could be very, very powerful.
SAL DAHER: Rocket ship.
SEMYON DUKACH: They hope to make some of those connections as well.
SAL DAHER: Excellent, excellent.
About Eveline Buchatskiv, Semyon’s Partner in One Way Ventures
Tell us a little bit about your partner Eveline and how you expect a division of labor to be, to go there.
SEMYON DUKACH: Eveline is an unbelievable lady. She's also an immigrant. She came from Brazil. Went to school at Berkeley. Became a chemical engineer. Built chemical engineering projects for a large company all over the world. Eventually transitioned to the business side. Went to INSEAD business school in France and Singapore and then she actually ended up in Ukraine, of all places.
SAL DAHER: Having originally been from the Ukraine.
SEMYON DUKACH: No, not at all. She's from Brazil.
SAL DAHER: No, but she was born in Brazil but ...
SEMYON DUKACH: She is in no way anything other than Brazilian.
SAL DAHER: Yeah, yeah, like ...
SEMYON DUKACH: Anyone who knows her thinks that she's Ukrainian because she is in fact probably the most well respected and successful person in the Ukrainian startup ecosystem.
SAL DAHER: Awesome.
SEMYON DUKACH: She's absolutely Brazilian. She learnt the language there from scratch. She found her identity. She thinks of herself as an Ukrainian. She loves the country. She loves ...
SAL DAHER: I want to ask you a favor. I'd like to interview her.
SEMYON DUKACH: Oh absolutely. We'll make it happen.
SAL DAHER: Excellent.
SEMYON DUKACH: She's an amazing lady. What she did in Kiev is unbelievable.
SAL DAHER: We'll do part of the interview in Portuguese too.
SEMYON DUKACH: Sure.
SAL DAHER: Small part.
SEMYON DUKACH: She'll be happy to do in Portuguese or Russian. Anyway, she ended up running some companies there doing a turnaround in a large media holding and then, building the best accelerator in that part of the world called Eastlabs. Really, when I say building, I mean building all aspects of it.
SAL DAHER: Yes, I can imagine.
SEMYON DUKACH: It's not like ... Techstars is hard enough to get going but, in that case there is no angels, there's no knowledge of the startup world.
SAL DAHER: You have to do everything.
SEMYON DUKACH: She built everything and it was the best program. By far the best program anywhere there. I knew about it as an angel investor. I'd invested in several of her startups and when I got the Techstars role I actually was able to recruit her to move to Boston. There was also a war starting there so she had some reasons. She had kids in school.
SAL DAHER: I can imagine.
SEMYON DUKACH: Anyway, she ended up coming here and joining Ty and I and we ran the TechStars program together.
SAL DAHER: Fantastic, fantastic.
Semyon Dukach’s Advice to Angels & Founders
As we sum up the interview, I'd like to invite you to address our audience about something that you believe is important for founders and investors to have in mind.
SEMYON DUKACH: I think for investors, you have to be angels. Care about your founders. Don't be scared. Don't do diligence. If you really like the team just back them. What's the worst that'll happen, you'll lose some money, but there's actually no better way to spend it. There's nothing more satisfying than backing awesome entrepreneurs.
For founders, well they're founders they don't need advice. They're going to go do it no matter what you tell them. The standard advice is if someone asks you whether they should quit their job and start the company, the only responsible answer is always, "No, of course not. Keep the damn job." If you have to ask me whether you should start a company, you shouldn't be starting anything. You can ask me but you should ignore my advice. You'll start it no matter I tell you.
SAL DAHER: That's right. That's excellent.
Semyon Dukach, thanks for your generosity in making time to be on the Angel Invest Boston Podcast. I hope our listeners have found this interview as rewarding as I have.
SEMYON DUKACH: Thanks for having me, Sal.
SAL DAHER: Listeners if you enjoyed this podcast, please review it on iTunes. Write me at sal@angelinvestboston.com with critiques or suggestions. You will find transcripts of the podcasts annotated at angelinvestboston.com. Do sign up for future in person events.
This is Angel Invest Boston, conversations with Boston's most interesting angels and founders. I'm Sal Daher.
I'm glad you were able to join us. Our engineer is Raul Rosa, our theme was composed by John McKusick, our graphic design is by Katharine Woodman-Maynard, our host is coached by Grace Daher.