“I don't think you can over-network. I think it is very much a club, and that's good and bad, but there's a lot of flow of information that happens amongst friends. And so to the extent you can build a network of people to share information, I think you're at an advantage to others.” – Ben Boyer
Ben Boyer is Co-Founder and Executive Chairman of R-Zero, which designs hospital-grade disinfection solutions utilizing UV-C light. Ben is also Managing Director at Tenaya Capital, a leading early-growth stage venture capital firm. He has served on the board of numerous companies, including Smartling, TruSignal, and PlanGrid.
Topics discussed with Ben Boyer
- 00:01:37 – Ben’s start in venture capital
- 00:08:04 – Transitioning from the public market to venture capital
- 00:16:53 – Working with Chinese companies
- 00:21:25 – Advice for new venture capitalists
- 00:22:40 – Recommended books
- 00:24:58 – Defining success
Ben Boyer Resources
- William Morris Agency
- Merrill Lynch
- Lehman Brothers
- Tenaya Capital
- Bessemer Emerging Cloud Index
Books Recommended by Ben Boyer
- Healthy Buildings: How Indoor Spaces Drive Performance and Productivity by Joseph G. Allen and John D. Macomber
- The Premonition: A Pandemic Story by Michael Lewis
- Good to Great: Why Some Companies Make the Leap...And Others Don't by Jim Colli
Daniel Scrivner (00:05):
Hello, and welcome to another episode of Outlier Academy's Playbook series, where each week we sit down with an elite performer from iconic founders to world-renowned investors and bestselling authors to dive into the ideas, frameworks, and strategies that got them to the top of their field, all in less than 20 minutes. I'm Daniel Scrivner, and on the show today, I sit down with Ben Boyer, co-founder and CEO of R-Zero, maker of the world's first continuous autonomous disinfection system, and managing director at the early to growth stage VC firm Tenaya Capital. In this episode, we cover the lessons that Ben has learned as a VC over the last 20 years, first at Layman Brothers, and then building Tenaya Capital. Ben's experience investing in the first wave of Chinese tech companies, and the lessons he learned from some of the best Chinese CEOs. How he approached building R-Zero using his experience as a venture capitalist, Ben's favorite recent re-healthy buildings, and why he thinks we're on the cusp of a revolution in building technology, and Ben's advice for new founders and investors.
Daniel Scrivner (01:06):
You can find the notes and transcript for this episode at outlieracademy.com/97, it's episode 97. And you can follow Ben Boyer on Twitter @bjamin999. That's B-J-A-M-I-N-9-9-9. With that, please enjoy my conversation with Ben Boyer.
Daniel Scrivner (01:27):
Ben, thank you so much for joining me again on Outlier Academy. I'm super excited to dig into some of your background in venture capital and try to extract some tactics.
Ben Boyer (01:35):
Happy to tell you.
Daniel Scrivner (01:37):
So you've been in venture capital for 20-plus years, and I mean, looking back at your resume, all that you've done, it's incredible. And it's staggering. And one of the questions I wanted to ask just to start is what drew you to venture capital early on, and then what kept you involved and excited for 20 years? Because you're in pretty rarefied air.
Ben Boyer (01:57):
Yeah, so I'm not someone that grew up in a family where my father or mother was an entrepreneur and a technologist, my dad actually is technically an entrepreneur. He's a physician and he has his own private practice, but really, I wasn't exposed to a lot of technology growing up, but what limited exposure I did have to it, I really enjoyed. And so I felt always sort of drawn to it. To be honest about my college existence, I didn't know what I wanted to do. So you got those kids that go to Wharton and they know day one they're going to move into finance. I had no idea. I'm not even sure I knew what finance was. I grew up in Los Angeles. I went to Vanderbilt Undergrad, and I chose the broadest major they had, which was called human and organizational development, social psychology.
Ben Boyer (02:47):
And the goal was basically to not pigeonhole myself in any one track and give myself the ability to end up in law or business or maybe go to grad school and do something entirely different. And during my summers, I was given really good advice to do internships, that it's a great way to get exposure to different industries. It looks good when you're applying for jobs. And so my first job in the summer after my freshman year was working at the William Morris agency in Los Angeles. So I was working in a talent agency. That was the worst job I've ever had. I've never been yelled at more than I was that summer. And all I did was deliver mail, but apparently not very well.
Ben Boyer (03:28):
My second summer after sophomore year, I worked at Merrill Lynch, and that was interesting. As I said, I was not coming from the experience with a finance background, but they would take flyers on interns. And I worked in asset management and I started to really learn about the stock market. I wouldn't say I understood it, but I was learning about it. I was really drawn to it. I decided in the next summer to work at Prudential Securities, in another capacity within finance. And that was a great experience. And so I felt like after those two summers, I knew I wanted to get involved with finance in some capacity. I had an excellent college counselor at Vanderbilt who said, "You should apply for jobs in investment banking." And I said, "Okay. Why is that?" And her comment was, "They will take poets like you." And I didn't know what that meant, but the investment banking programs by and large will hire people from top schools, but they love the kids from Wharton who have studied finance for four years.
Ben Boyer (04:33):
But they'll take call it a quarter of the class from more either liberal arts schools or majors that are not finance or accounting or economics. And they have very rich training programs. And so when I was applying for different investment banking jobs, I got a couple of offers, but Lehman Brothers made me an offer where I could move back to Los Angeles, which was a goal of mine. And the group I was put in, as it turns out was the technology practice. And so I started working in the tech group, working around tech companies. This was in late '98, '99, 2000. So the bubble, the original dot-com bubble, and it was incredibly fascinating. There was a ton of work to be done. I learned a tremendous amount, and it felt like a very good fit for my interest. The projects themselves though, after working on a couple of different IPOs or M and A events, it was very repetitive, and it felt like I was doing the same thing over and over again.
Ben Boyer (05:37):
As I started working on some of these IPOs, I would read about the venture back for the companies. And I thought that was incredibly fascinating that these are organizations that would make investments in the businesses oftentimes before they even had a product. And I could see what they paid on a per share basis for their shares back a few years earlier, and now what they were worth as the company went public. And I said, "This is really interesting." Roughly sort of at that time, it was the middle of my second year at Lehman. Lehman Brothers raised a venture capital fund. And so Lehman got in the venture business back in '95, and it was strictly a balance sheet effort, and it was very successful. It was a great time to invest.
Ben Boyer (06:21):
And based on the success of those investments, they raised a venture capital fund with outside limited partners. So it wasn't just their money. It was other people's. And I was fortunate that they were looking for people my year to apply and work in the fund. And I was very lucky to get the job. And so I moved from Los Angeles to the Bay area in January of 2000. So, wow. Very close to the peak if March was, the absolute peak, but spent a couple years working in venture capital in that capacity. And it was basically a wonderful map of lessons not to do. I mean, a good portion of those business failed, the NASDAQ from peak to trough lost 80% of its value. And so I really learned what it means to triage your portfolio and try to figure out which of the companies can be saved and how do you help to save them, which typically means some very painful cuts.
Ben Boyer (07:14):
And I came also to realize that my network at Vanderbilt in Los Angeles was not as powerful as the more Bay Area centric one that one of my colleagues had, and he had gone to Stanford for business school. And so I decided to apply for business school in my second year of working in the venture fund and was lucky enough to get into Stanford and left in 2002. My group offered to pay for business school if I came back. And so it was a pretty easy decision. And eventually I was promoted to partner in that fund. And later we spun the business out and rebranded it, Tenaya Capital. And so to Tenaya's managing about a billion and a half dollars. And my four other partners, there's five of us who are on the founding team at Tenaya, we've worked together for over 20 years. So it's been a great experience to effectively grow up with these people.
Daniel Scrivner (08:04):
Yeah. I mean, it's incredible, and it's incredible you were able to take that initial experience and turn it in and basically spin it out and turn it into Tenaya Capital. So I know a lot of people who started out their careers more in public markets, who then at some point, make the decision or make the switch into being in venture capital. And I feel like for them, depending on how long you've spent studying public markets, you basically have to rewire your entire brain, because you have to pay attention to very different signals and think very differently. Did you have that experience, and what was it like for you when you were making that transition in the early years?
Ben Boyer (08:36):
Yeah. Back in 2000 to '02, I remember nothing made sense. I mean, you were seeing pre-revenue companies raise astronomical rounds and you were seeing pre-revenue companies go public. And this was not the SPAC craze that we have now with all Rivian and all these auto companies that are getting public without any revenue. And I am a huge Rivian believer. I don't believe they're worth their current market cap, but I think they're going to be an incredibly successful company and I am a big fan of the company. But ultimately I did not spend a lot of time sort of thinking about the world from a public versus private perspective, largely because of my role, I was supporting. My job was to do due diligence, ensure that we were getting all the documents that we needed as part of the process, I would do valuation work.
Ben Boyer (09:24):
But as I said, it didn't make any sense. I mean, you had public companies with no revenue and so revenue multiples don't work. But when it came back in 2004, really the world had gotten much more to basics and fundamentals. The, the.com implosion had already transpired huge deflation, I think the vintage years and oh 1 0 2, like none of them were very good. So any venture fund that deployed capital in that time period did not do well 2000 probably as well, but ultimately by oh 4 0 5 0 0 6. We started to get back to actually backing companies that had real business models where, well, you're going to value the business on revenue today. There was an extrapolation that could be made about future profits. It might be a decade away, but at the same time you could understand how the unit economics at this particular business would eventually support something that's that's profitable.
Daniel Scrivner (10:17):
Yeah. On that note, around vintage cycles. I remember talking with someone recently, who's talking about being at a fund that had a vintage 2000, and that basically they were in the top decile, but it was just because they broke even when the fund netted out. And just what a staggering fact that is.
Ben Boyer (10:33):
Yeah. We have a fund. It's a bad vintage year that's top quartile and it's like a 7% fund. And so what we always tell our LPs is if you're trying to time the market, don't do venture, because it's impossible. But if you're willing to invest across market cycles, you're going to do great. And so our most recent fund is like 37% net IRR. And so it all depends on when you get involved, and obviously things can change quickly.
Daniel Scrivner (11:00):
Yeah. And I think to your point, your ability to just in a consistent, disciplined way, continue to allocate capital again and again and again, regardless of market cycles and to try to make wise decisions when you're in a period where you're like, I don't know what is going on, which is what a little bit of the last couple of it felt like. You talked about obviously going through that bubble experience. One of the questions I wanted to ask was just, there are very few venture investors I know that have been a venture investor across multiple cycles. And so the question I wanted to ask there is more than anything, how that's influenced and changed the way you invest. Does that show up anyway, in terms of how you make investment decisions? Are you more value sensitive? Any of those things?
Ben Boyer (11:40):
Yeah, no, I think we're in the third cycle right now. So if you look at the Bessemer Emerging Cloud Index, I think it's off like 35% the past 90 days. So I think this is the third of the cycles I've lived through. So dot-com, the financial crisis, and now this. They're all different. They have different causes. This one is being driven by inflation, and the prospect of rising interest rates with the backdrop of the Ukraine and all that's going on from a geopolitical perspective. The financial crisis was massive over leveraging of assets that were not worth nearly what people thought. And so each time it's different. But what I would say from an investment perspective that we've learned is we've learned how to really help protect the portfolios. So we always encourage our companies to raise money when they don't need to. And really, money is oxygen. And to the extent you have it, you typically can ride out market cycles.
Ben Boyer (12:37):
The other thing that I've learned is don't get too down about the cycle itself, simply because it won't stay down. I mean it might feel like the world is ending, but it is yet to actually happen. And maybe it will happen at some point, but at least in my professional investing career, we've always seen things come out the backside. The other thing I tell entrepreneurs is it is a wonderful time to build a company is when things get harder. And it's a bit counterintuitive. But think about the past couple years, how difficult it has been to hire, how expensive it is, inflation is obviously not helping. And is you go through a tighter sort of capital environment for private companies, there will be more losses. There will be companies that don't make it.
Ben Boyer (13:19):
And while that is, I feel horrible for the team and the investors, but much more so for the team, the reality is, that's healthy. That is a good thing. And those people can go and join other businesses. And if those other businesses can pay more market wages, they're able to raise less money and do more with less. And that's how everyone involved with the investment, the employees, the investors make more money. And ultimately, look, we're all wanting to create stuff. Some of us are mission-oriented. You don't have to be to be successful, but ultimately if you're going to ask people to work this hard, you would hope at the end of the rainbow, there is some sort of payoff.
Daniel Scrivner (13:58):
I want to ask as well about your experience as a board member, because when I go and look at your background, you've had quite a history as a board observer, then a board member, from everything from Eventbrite to multiple interesting Chinese internet companies. And so one of the questions I kind of want to ask, two questions there. One was, what have you learned about being a great board member, and the difference between a good member and a great board member?
Ben Boyer (14:19):
Yeah. I hope I'm a decent board member. So what I would say is, similar to the fact that there's no right way to build a company, I don't think there is a singular role for a board member to play in a business. I think it depends on what the business needs. I've worked with entrepreneurs that are young and not very experienced. And my role is very different in working with those people than it is with someone who's been around the block. This is their third startup. There is a role in that environment for a board member, but you might be spending less cycles late at night, trying to calm down someone than you are just looking to help them with recruiting and the like. I think the most important thing a board member can do is to care. I've had board meetings, not at R-Zero. I have wonderful board at R-Zero, but I've been involved with startups where things don't go well. And the board members from some of the other investors just leave, they stop attending.
Ben Boyer (15:19):
And I understand there is some concept of, look, my time is valuable, and I'm going to allocate it where I can have the best return. The reason why I don't subscribe to that line thinking is the commitment that the entrepreneur is making to us to try to build something is real. And it is hard. And for every company that fails, there are countless sleepless nights by that team, not just the CEO, but the broader organization trying to make it work. I have yet to come across a business where everyone just gives up. Usually you see the greatest output in terms of people's energy and emotion in the last six months.
Ben Boyer (15:58):
And so I feel I have an obligation to be there until the end, even if it doesn't work, and to do everything in my power to hopefully try to land the plane, to find a home for the team and potentially a reasonable exit. But ultimately I think being cognizant of the company, the situation with the executives is probably the table stakes to figure out what is required of you. You got to be direct. That's one thing, direct, but you also have to have compassion just because everything is hard.
Daniel Scrivner (16:30):
Yeah. You made that point really well. I think even, yeah, that at the end of the day, it's about caring and at the end of the day, I think you've said this multiple times in different ways, but the job as an investor or board member is very different than the job as a founder. And you need to have much more respect for what the founder of the team's going through.
Ben Boyer (16:46):
I have a portfolio of 60 right now. And the entrepreneur is a portfolio of one, so this is everything.
Daniel Scrivner (16:53):
Yeah. Just very different. I want to ask as well because you've been involved in multiple really interesting Chinese internet companies. What has that experience been like? What have you learned by being around those founders and teams and are there any particular lessons or stories that you could share that are interesting?
Ben Boyer (17:09):
Yeah. So I had a thesis back in sort of '05, '06 around China. And I understood how large the consumer market was there. I also knew where they were in terms of broadband penetration and mobile. And it felt like this was going to be a massive, massive market. Historically speaking, our funds did not have the ability to invest outside the US. And I put together effectively a business plan for going after some of the emerging Chinese internet stories, and our investors in the subsequent fund we raised said sure. We had the ability to put 20% of our fund outside the US. Back then the businesses tended to be analogs at the US companies. So Buydo for search, Alibaba for retail and things like that. And they tended to be managed and built by Western or Western-educated teams.
Ben Boyer (18:06):
And so board meetings were often in English. I was very comfortable understanding businesses themselves and also I could provide a perspective around how some of the organizations outside of China built their businesses. So there was an obvious sort of place for someone like myself who doesn't speak Mandarin, and is not living in China. It was incredibly successful. I'm incredibly fortunate, we did that in that there were entrepreneurs in China that would work with someone that had to get on a plane to work with them. I was making a lot of trips there. I was there roughly eight times a year. And so it was very hard on my wife and daughter, and I had portfolio companies in the US. Those years were hard, but it worked incredibly well. What's interesting though, is that opportunity really closed. Right now, I have one investment in China. It's a wonderful company. It's actually led by the CEO of a company I backed. It was a 30X for our fund, and it's a great business and it will eventually go public when the public markets calm down a little bit.
Ben Boyer (19:15):
But ultimately what I saw with China is that opportunity for the Western or Western-educated analog business, it went away. The reason being is the companies that started to be built were built by the people that never went to the US. They were someone that was a manager or a director at Alibaba or Tencent and had an idea, and they may or may not have spoken English. The other thing is, the businesses themselves became very Chinese. And so they were very different. And we were seeing innovation, particularly with mobile that was in my opinion, far outpacing what we were seeing in the US. I think the US should start looking for analogs in the Chinese companies. But ultimately it was a moment in time we participated in, it was a wonderful thing that we did. But what I learned in that experience was how hardworking the entrepreneurs were there in the teams. There is an expectation that you're working at least six days a week. It is an incredibly high-paced, very intense environment. And I think that's the reason why you've seen so many incredible companies come out of it.
Daniel Scrivner (20:17):
Yeah. As someone that I haven't observed that myself, I've heard that obviously anecdotally a lot, is that because people are, they feel like this is truly an incredible opportunity and so they're willing to do anything and everything to get it? Where does that come from?
Ben Boyer (20:31):
Yeah. I mean, I think despite the fact this is technically a communist country, it's capitalism. I think people have seen the extreme wealth creation that's happened there. I feel like it can happen on a much bigger scale there just because of how large the consumer market is. So think about the consumer-facing businesses, they can become bigger. And so I think that's what's driving it, I think by and large culturally, again, and I'm not trying to extrapolate. It was just based on my experience with a handful of companies. The people I worked with were hardworking. I imagine you learn that from home. I imagine there's an importance placed on academics and education reinforced by hard work. And so again, I can't speak to China. I can speak about my experiences in China, but the entrepreneurs themselves and the teams that they built really were willing to lay it on the line to go build something.
Daniel Scrivner (21:25):
Yeah. Okay. I want to ask just a couple closing questions. And one is, as someone that's been doing this 22 years, what is your advice or what would be your advice to someone just getting started as a venture capitalist today? And so maybe they're an associate, maybe they're a partner, maybe they're an angel just starting to write their own checks. What would you tell them? Or what do you think would be helpful for them to hear?
Ben Boyer (21:44):
Yeah, I don't think you can over-network. I think it is a very much a club, and that's good and bad, but there's a lot of flow of information that happens amongst friends. And so to the extent you can build a network of people to share information, I think you're at an advantage to others. The other, is make yourself useful. This is, I'd say probably the thing that had been most effective for me in trying to win competitive deals is understand what the entrepreneur or the CEO is spending cycles on, and try to help them with it. If they're looking for a VP of engineering, go look for their VP of engineering. Even if you don't find the exact fit, if you can come to the table with two or three ideas and explain to that individual why you think they'd be a fit, you're improving that as a board member, you're not just going to sit there and listen. And so I'd say those are the two things.
Daniel Scrivner (22:40):
Yeah. I want to ask quickly about favorite books. Well, I feel like there's no VC I know that doesn't have the top couple of business that they either have read themselves or that they give out to founders. What has resonated with you, and do you have any books that you commonly give out to founders, give out to teams?
Ben Boyer (22:58):
Yeah. What we're giving out, this is again, an R-Zero hat, not Tenaya. We're giving out a book called Healthy Buildings right now, which is incredible. And there's a book I read by Michael Lewis called The Premonition. And again, these are both R-Zero specific, but it really profiles a woman named Dr. Charity Dean who's truly a hero of mine. I won't give it away. It's worth reading, if anyone cares about the pandemic and some of the signals that we saw and really how policy works at the state and even at the federal level, it's an incredible read. Anything Michael Lewis does, it's a fun read. There's obviously good to great and there's tons of books I've read that are business books, but really where my head is at right now is so R-Zero, that I'm focused on everything related to the human immune response, how to make buildings healthy, the importance of doing so, and really trying to understand the pandemic, both what happened, and also on a historical perspective, really, how could we have done better? Because that is really what I'm spending my time and energy on.
Daniel Scrivner (24:07):
Well, and I think there's almost no one that's not thinking about that because one we've had pandemics before, it clearly didn't change a trajectory of this one. So we need to get better in the future.
Ben Boyer (24:16):
We do. And other than in terms of the vaccines, which are amazing. And I think one of the great scientific events that have ever happened in human history was how quickly we could create something that works so well. But aside from that, we are managing COVID the same way we did the Spanish flu. It's hand washing, it's masks, it's chemical disinfectants, and it's more ventilation. And that to me is amazing. Think about what has happened in every other industry. I mean, at that time, Americans were driving Model Ts.
Daniel Scrivner (24:55):
It's brutal to think.
Ben Boyer (24:56):
Exactly. It's just shocking.
Daniel Scrivner (24:58):
Yeah, yeah. It's brutal. Okay. Last question. What is your definition of success today? And this is kind of super meta level and you can weave R-Zero into that. And how has that definition changed over time?
Ben Boyer (25:10):
It's hard. I think a lot of my emotion and time and energy is being spent on R-Zero. Success here is ultimately helping to reduce sick days. And for us to be able to do that, we need a lot of devices. We need clinical work that shows in this environment, we were actually able to do it, and we're doing that. And if I can create that body of evidence and prove that our systems do exactly what I'm confident they do, but we need to go through the process. I will be incredibly proud, because at the end of the day, a for a fraction of the cost of giving employees standup desks, we can make it so that when you go to the office, you're, you're, you're not getting sick as often, common co cold and influenza.
Ben Boyer (25:58):
And if I can do so while improving the sustainability of my customers, I feel like I've really pushed the wall forward against two dimensions, human health and the environment. They both matter tremendously to me. And we know that's the mission and the path we're on. And so if our zero is successful in five or 10 years, people consume a lot less chemicals. And instead of just trying to solve ventilation with central HVAC, we're using some proven technologies like upper room UVGI and Far-UV. I'll feel like these years of strain and the sacrifice I'm asking my wife and daughter to make were hopefully worth it. I hope they view the view it the same way.
Daniel Scrivner (26:42):
Yeah. Well, I think you're clearly on the path to doing that. I think that's a perfect note to end on. So for anyone listening, you can learn more about R-Zero, which is what Ben is working on now, he's been working on the last two years at Rzero.com and you can also find Ben on Twitter at bjamin999. And again, we'll link to all this in the show notes, but Ben's written a bunch of really great stuff on Medium that will link to us as well too. Thank you so much for the time, Ben, really appreciate it.
Ben Boyer (27:05):
Have a good day.
Daniel Scrivner (27:06):
Thank you so much for listening. You can find links to everything we discussed, as well as the notes and transcript for this episode at outlieracademy.com/97. For more from Ben Boyer, listen to episode 94, where he joins me on our founder spotlight series to go deep on how he built and scaled the world's first autonomous continuous disinfection system, also called R-Zero to more than 40 million in revenue in its first year of operation. As well as the fascinating history of UVC light for disinfection and why 120 years after its discovery, it's still underutilized for cleaning and disinfection.
Daniel Scrivner (27:43):
You can also find more incredible interviews with the founders of Level, Superhuman, Eight Sleep, Rally, Common Stock, and so many others, as well as bestselling authors and the world's smartest investors at outlieracademy.com. You can also now find us on YouTube at youtube.com/outlieracademy. On our channel, you'll find all of our full length episodes as well is our favorite clips from every episode, including this one. So please go to YouTube and subscribe. And thank you so much for listening, we'll see you right here next week on Outlier Academy.
On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today.
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