Jenny Fielding left her career in finance to do what at the time was the unthinkable: start a startup. After selling Switch Mobile, she later became a managing director at Techstars, where she runs accelerator programs across verticals such as FinTech and Internet of Things.
Elliott Adams: You’ve been a Managing Director for different Techstars accelerator programs, is that right?
Jenny Fielding: Yes, I’m focused on IoT (Internet of Things) right now, but I’m more generally focused on creating ecosystems. The truth is, I'll probably be running a different program next year because I just like doing different things.
EA: IoT and hardware products have such a different timeline of developing and testing than software products. When someone is working on an IoT product, what's the right sequence of events where you say they're ready to come into Techstars?
JF: I think it's one of the reasons that we restarted the program this year with a number of corporate partners who could fill in the gaps. Our program is associated with six corporate partners—people like GE and Siemens, Bosch,and Verizon—all these corporates who have deep expertise in the various components around IoT. It isn't just software, though; it's hard for two people in their garage to start a hardware company. You usually need more people and capital, and you need more industry expertise. So, that's why we've partnered with the corporates. I think in terms of what we look for, it's even more fundamental that the team is technical. You can kind of get away with a CEO who isn't technical for a software company because you can get a good CTO, but that doesn’t work for a hardware company.
EA: Say you've got something more ideal: three or four people, and they've got an idea. They've been building some kind of prototype. With software, you're measured by traction. For IoT, how far along should they be for your program?
JF: No product, no traction, no problem.
I mean, I really do revert to great teams. My last class had a mix. We had a few companies that had products in market and were working on a second version, but we also had a few companies that were pretty far from it. I do like to take a mix because I think the dynamic of the cohort is that the ones who are further along can help the ones that are earlier. There's a nice interaction there. We don't change our fundamental thesis, which is the team, team, team, market, traction, idea.
That said, if you have never built a prototype in hardware and you don't have a prototype to show us, then I think that starts to get hard. So, if you've done this before, if you’ve been working on hardware products for the last five years and now you're telling me that you're going to build something, I have greater confidence that that's going to happen.
EA: With IoT and hardware, it's obviously tough because it’s the infrastructure of a supply chain. How do you empower startups to not only design something, prototype it, and start to fabricate some early models but also really scale? Is that what the corporate partners are about?
JF: I think for some of them, it's expertise around the development. But if you take Verizon or SAP, it's around distribution. One of our corporate partners is PWC. With all their corporate clients and all their know-how around going to market, they worked some joint white papers with some of our companies, and that gave them a lot of validity when they went to market. That’s where the corporate partners come in quite a bit.
EA: That’s obviously easier for a company that's been doing it for twenty years than a team of four founders who are just getting going, right?
JF: I think there are a few things that contribute. One is that we've now invested in about sixty to seventy hardware companies at Techstars, so we have the legacy of alumni helping the younger startups by giving them access to facilities, best practices, and kind of holding their hands through the process. Now that Techstars has been around for ten years, there's a lot of knowledge transfer, which is pretty awesome.
The second thing is, we have mentors who have built hardware and who are literally in the office every day working with the companies. Even if you don't have that person with certain particular skills on your team, having a mentor who's going to be in twice a week and who's going to guide you is helpful. We had a 3D-printing company, and we had half the executive team at MakerBot helping those guys.
EA: That’s a huge advantage.
JF: Yeah, and then there are companies out there, whether it's PCH or others, that are willing to work with startups on very favorable terms. So, everyone now—whether it's supply chain organizations or whatnot—realizes that if they want a long-term relationship with this company, they need to start earlier. They need to roll up their sleeves, help the companies, and not milk them for all their cash. So, we're seeing far more favorable arrangements, and that extends to the manufacturing as well. If you look at the Foxconns and Flextronics of the world, they're also involved with startup-friendly programs.
EA: You mentioned companies working with PWC and other corporates. Are those startups selling into enterprise? Is that the reason for that?
JF: Our first program around IoT was mostly consumer. The second one was half consumer b2b, and this last one and the one that's coming up are all b2b industrial and enterprise. With that focus on selling into businesses, it’s exactly why we've partnered with consulting companies, as well as large industry players.
EA: There seems to be a danger of commoditization with hardware products. I'm wondering how focused a startup is on a given industry coming into your program and how big does that have to be? Do they need adjacent, follow-on opportunities that you want to see as well?
JF: What I've learned after investing in all these hardware companies is that the hardware is much less important. It really is the software that is scalable and that can go into all these adjacent areas. So, I think that's exactly right. The hardware is becoming commoditized for the most part. I mean, there are still some really amazing bespoke hardware products that are coming out, but they’re definitely on the b2b side. If you're measuring the environment in a construction site, that device you create can probably measure a lot of things in different industrial settings. Maybe construction is the first area you go into, but then you're able to go into lots of others. We're less focused now on what the hardware does and more focused on the software and what the network effect of that software can be.
EA: How long have you been in New York with the program?
JF: Well, I live between New York and San Francisco. I’m born and raised a New Yorker, so I've always lived here, but about ten years ago, I bought a place out in San Francisco because I was doing more venture investing and I just really liked the lifestyle out there.
EA: How have you seen things change in New York? I know New York's a pretty well-developed market relative to some places, but what are some of the things you've seen—like accelerator programs, more investors, and other things—that have been a positive force in developing that New York startup community?
JF: I started a startup here in 2006, and you can imagine the landscape was pretty bleak, right? There was just nothing here, and I founded my startup in my apartment. There were no co-working spaces. It was a different world. One of the reasons that I run my programs in New York is because it's near and dear to me. When I see all the resources and when I see the ecosystem that's come together, it's just so awesome.
So yeah, we've seen an incredible change. People thought I was crazy when I left my finance job in 2006 to found a startup. And now, no one bats an eye, right? So, there's just been a general attitude shift. I think a lot of it has been fostered in by a few groups, one being the universities. When I went to Columbia, there was nothing that even approached entrepreneurship. Now, if you look at just Columbia and NYU with the number of entrepreneurs they're pumping out, the investment that they're putting into it, and the classes that are supporting entrepreneurs, it's just incredible.
Coming from that, because New York's such an academic-type city with so many universities and whatnot, I think that's really changed things, as well as the ups and downs in the economy. Around 2008 or 2009, in the sudden crisis, all those bankers and other workers were laid off. Even all the engineers were laid off at places like Lehman Brothers, and so they had to get creative—hence this shift in mentality that came from necessity. All of a sudden, they didn't have a job. Some of them had money and they could wait it out, but a lot of them got into the startup world, so a lot of money and talent flowed into it just from that. I think that's an interesting inflection point from New York.
EA: It’s interesting to think about those knock-on effects of the financial crisis. Is there anything else that’s been a catalyst for New York?
JF: We're definitely behind Silicon Valley, but just having some companies that have been relatively successful and having those people invest in startups has made a huge difference. My company was really small, but when I exited, I made a little bit of money and I started angel investing. If you were a bigger company, like Tumblr or any of the success stories of New York, way more money was flowing in. That happened a good generation after it happened in Silicon Valley, so that definitely took until the 2000s for us to see. But I think it was those three things coming together that really changed New York.
EA: What were the effects of the Tumblr acquisition? Did people spin out, leave, and start new companies and start investing?
JF: There were definitely a lot of people that were let go who started other companies and could bootstrap. The ZocDoc guys are another example. They’re big investors that started a fund and are really an example of somewhere you’ve more recently seen the overflow.
Also, FourSquare hasn’t necessarily made a lot of money, but you have a lot of successful people who've come out of FourSquare and started other things, right? They're not doing very well now, but there was a heyday when they had raised a lot of money and there was a lot of excitement around it. People spent a lot of time there and started other companies. It’s all been really helpful for helping New York evolve.