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“Going to the Dark Side” – from Entrepreneur to Investor with Brad Kayton

Daniel Faggella

Daniel Faggella is the founder and CEO at Emerj. Called upon by the United Nations, World Bank, INTERPOL, and many global enterprises, Daniel is a sought-after expert on the competitive strategy implications of AI for business and government leaders.

Going to the Dark Side - from Entrepreneur to Investor with Brad Kayton

Most of the time I get to sit down to interview investors, I’m hopping on Skype. In this case, through luck and coincidence, I got to catch up with entrepreneur and investor Brad Kayton in a 99 Restaurant right here in central Massachusetts. Brad and I were connected through a friend on Linkedin who’d mentioned our podcast and the interviews we’re conducting on startup success and investor advice.

Brad’s got more than ample experience in both the entrepreneurship and investor worlds, and I decided to hone our talk into his journey in business, the transition to becoming an investor, and how his perspective from this journey might help other entrepreneurs who might want to make the same transition. Brad’s business story began right out of undergrad, when he dove headlong into a number of business projects – and failed with all of them.

This sent him packing – not for a life of employee-ship – but for business school, where hopefully he could pick up the skills he’d need to build something profitable.

While attending the University of Texas at Austin, Brad got connected to ViaVideo Communications, a company involved in teleconferencing technologies. That business (now called PolyCom) quickly gained over 50% market share in the industry for it’s great performance and drastically lower cost than the bigger, “clunkier” teleconferencing solutions of the era (the late 1990’s). This initial success kicked off an apparent chain-reaction of co-founder, marketing, and CEO positions in a series of businesses, including a next big move to “2Wire,” a residential gateway and home networking company, which took off quickly again. Brad had a little bit of fun with me as he harkened back to the late 90’s and early 2000’s. “Two and a half years in, we were raising a series E round. Back then (before the crash of 2001), it was easy like that… I’d get annoyed with all the VC meetings because I had real work to do!”

Needless to say, the investment scene is in a much more conservative position today, and it was the crash of 2001 that let Brad know that he wanted to be a CEO himself. “People don’t think about it like this… but the best time to start a business is when everything’s gone downhill. Good people need work and there’s a lot of opportunity – and that’s what I did in starting Paros Software” (which eventually sold to PRISMIQ). He then went on – in quick succession – to become CEO of Nearmedia, COO of 4Home, and CEO of VGo Communications before technically “unplugging” from his CEO-ship in 2011. When you look at his track record on LinkedIn, it’s a lot of companies.

When it comes to making the jump from CEO to investor, Brad doesn’t see the leap as necessarily being a step to a less demanding lifestyle – though Brad’s probably glad he’s past the days of sleeping on cots in his startups anymore. Rather, he believes that the transition occurred because he was given the opportunity to have his hands in a lot of places at once, and it turns out that he liked that style of work. As a number of Brad’s investments came to fruition in the form of liquidity events, he just so happened to be involved and connected to a lot of new businesses, and other folks interested in investing.

At this time, Brad’s focus is on his investor group Studio Ventures, and helping out Kairos and 1World as they grow and make similar transitions to those Brad got to experience in his days at the helm of companies and marketing departments of his own.

In our conversation, we likened it to a “helicopter view,” where after years of leading business in his fields of interest (including home automation), he now gets to take his combined experiences and lessons learned and apply them to the unique problems of a number of businesses that he knows he can help. “Business-wise, I didn’t feel like I got to a good level of skill as CEO until the third time around – even though I felt like I had a grasp of it after the second time – it really wasn’t until the third time as CEO that I felt like I started getting it,” says Brad. Now with younger companies like Goji and 1World, Brad’s higher perspective gets to come into play in a new way.

As for practical advice for other entrepreneurs looking to make the leap to “the dark side,” it’s Brad opinion that it’s really something you need to try out for a while, and see if it clicks with the pace and type of work you enjoy. As in entrepreneurship, there are new and sometimes hard lessons learned when investing and/or getting involved in other companies early on. For example, being a “time-sliced” CFO is far more palatable to being a time-sliced CMO. “The market never sleeps, it’s hard to have any specific, dedicated times to be a CMO” says Brad. The best way to get involved – in his mind – isn’t making a “leap,” it’s putting your toes in the water. If you begin investing, consulting with, and time-slicing yourself out to a few companies and find that it suits who you are the what you enjoy for a working style – then you’ll know, and you can get involved further from there. You might start, like Brad, by joining – or even founding – investor groups to help facilitate your investment ecosystem. It’s not a jump everyone should take, and it’s not a lazy-man’s route, it’s a choice each entrepreneur will make.

In terms of getting the funds and expertise together to put yourself in a position where you’re ready to invest? Well that one’s simple enough – hustling like heck and working hard on good business with smart people is the only algorithm there is. Once you’re there, however, the business world’s many-faceted levels of involvement open up – and if you’re like Brad – that might just mean new and better ways to help, and to grow your business skills along with your bank account.

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