“We want to be able to invest in companies that can change the world.“
Matt Salloway is an international business executive, venture capitalist, investor and attorney. He serves as the Chief Executive Officer of GSI Ventures, a top 50 Global Family Office, with a focus on venture capital and portfolio market expansion into the MENA region.
GSI Ventures stands for Growth, Sustainability, and Integrity – pillars that drive the firm’s investment philosophy. GSI deploys capital through a diversified investment approach across a variety of cross-border asset classes, while serving as a reliable partner that seeks to make sustainable and impactful allocations. His strategy also looks to the US for next-generation technology, where it can be grown and subsequently introduced to GSI Ventures’ home country of the Kingdom of Saudi Arabia. This is in lock step with Saudi Vision 2030, a strategic framework to reduce the Kingdom’s dependence on oil and diversify its economy.
Matt is also the Co-Founder and Managing Partner of SIP Global Partners (“SIP”), an independent, cross-border venture capital firm anchored by a top global corporate. Based in Japan, the US, and the Middle East, SIP targets market-expansion and value-add investments in high-growth US technology startups. It invests primarily in US companies driving the "Global Connected Economy" in sectors such as AR/VR/XR, artificial intelligence, machine learning, edge computing, digital media, network infrastructure (5G) and enterprise software. Matt is also a film producer.
LISTEN AND SUBSCRIBE
SPEAKER
Matt Salloway
Chief Executive Officer
GSI Ventures
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
Rachel Pether: (00:08)
Hi everyone and welcome back to SALT Talks. I'm Rachel Pether. I'm a senior advisor to SkyBridge Capital, a global alternative investments firm, as well as being the emcee for SALT, a thought leadership forum and networking platform that encompasses business, finance and politics. SALT Talks is a series of digital interviews where we speak to some of the world's foremost investors, creators and thinkers. And just as we do at our global SALT events, which, unfortunately, we haven't been able to do this year, we aim to empower really big important ideas and provide our audience a window into the mind of subject matter experts.
Rachel Pether: (00:47)
Today, I'm very excited to be welcoming Matt Salloway to SALT Talks. Matt's the CEO of GSI Ventures, which is a top 50 Global Family Office that focuses on venture capital and business development or company expansion into the MENA region. He's also the co-founder and managing partner of SIP Global Partners, an international venture firm with offices in New York and Tokyo. Previously, Matt was the founder and managing partner of Salloway Law Group, an international law firm based in Manhattan, and he's also worked as a consultant with McKinsey and a research associate at Harvard Business School. And if that's not enough, Matt is also a successful film producer, with some of his credits including The Butler, starring Oprah Winfrey and Forest Whitaker; The Ides of March, starring George Clooney and Ryan Gosling; and The War With Grandpa, which actually opens in the U.S. this week, starring Robert DeNiro.
Rachel Pether: (01:44)
Just a quick reminder. If you have any questions for Matt during today's session, just enter them in the Q&A box on your Zoom screen. And with that, Matt, welcome to SALT Talks.
Matt Salloway: (01:55)
Thank you, Rachel. It's a pleasure to be here and so thankful for the opportunity.
Rachel Pether: (02:01)
No, we're very happy that you're joining us today. And we have so many subjects that we could go into, because you do wear a number of hats, but I'd really like to start with GSI Ventures, which is the Family Office that you run for a prominent Saudi. So, maybe you could tell me a bit about your journey and what took you to the Kingdom originally.
Matt Salloway: (02:24)
Sure, I'd be happy to. Just as background, I grew up in Boston, so spent most of my life there before moving to New York, where I've been living for about 16 years. Again, as you mentioned, trained as an attorney and then now got into what I am doing. And GSI is really a single family office that's focused on managing the assets and the affairs for this family. GSI stands for Growth, Sustainability and Integrity. Those are our core pillars and values that we live by. For me, getting into Saudi Arabia was sort of a very fortuitous experience. I was an attorney before, as I mentioned, and I started at a firm called O'Melveny & Myers, where I was working... Mostly corporate law, doing private equity and mergers and acquisitions, venture capital.
Matt Salloway: (03:21)
In 2004, when I started, it was really one of the most active times in the private equity market, with leveraged buyouts. I was representing companies like Apollo and JP Morgan Partners, and it was really great training ground. But for me, I really wanted to get into counseling, advising, guiding, really serving as a personal advisor that could help clients meet their goals. And being at a large firm was great training for me, but it wasn't necessarily where I wanted to spend the rest of my career. So, I ended up launching my own law firm, which I've now transitioned into doing the Family Office, but the law firm was really focused on helping high net worths, international families, companies, meet their goals.
Matt Salloway: (04:07)
And I actually had a great-uncle who was a very successful prominent lawyer in a small town in the United States and I used to hear stories about how he really added so much value to the lives of his clients and I wanted to replicate that. That was sort of the same type of thing that I wanted to do, and obviously New York City is a much, much larger, bigger place than a small town, but I wanted to provide that same type of guidance and counsel and I was fortunate to start working with clients in that world and started representing a lot of international families, and one of which still with today. A wonderful family, very humble, very sophisticated, but shares the same values, and I was just excited to get that opportunity to start working together.
Rachel Pether: (04:58)
So, let's take that acronym that you just mentioned, GSI. The growth, the sustainability and the integrity. What does that actually mean in practice? So, what types of investments are you looking at? And maybe you can also talk about the growth aspect, particularly in Saudi Arabia.
Matt Salloway: (05:16)
Sure. So, we started the Family Office in 2016. So, we've been evolving, as has the world been, and especially in Saudi, you see a lot of the changes that are occurring. But primarily, the goal of the Family Office is to manage the affairs of the family, to have the right portfolio allocation focused on capital growth, obviously capital preservation, and having the right diversification strategy, because as you may know, a lot of families in the Middle East and even internationally sometimes do get very concentrated in one part of the world or one asset class, and being fortunate to be based in the United States, a lot of our focus and my focus is helping to find the right opportunities globally and especially in the States and Europe, where we can really diversify the portfolio.
Matt Salloway: (06:06)
So, growth, sustainability are the core pillars of the Family Office. So, growth obviously is a very clear path and most Family Offices share that same vision. They want to make sure that the capital is going in the right direction. A lot of families get bogged down in spending patterns and also, again, concentration in areas that may be too [inaudible 00:06:30] liquid or not provide the right balance, and as we see in the economy, things change. It can change very quickly and you need to make sure you have the right balance in place.
Matt Salloway: (06:39)
Sustainability, integrity are also very core pillars. Integrity, I'll start with first. That's just a foundational aspect of how we do business, the people we want to work with, really sort of the way we want to have that reputation of being the right partners and the right investors. Sustainability is important as a long term goal. We've done some... Although we're mostly focused on our portfolio and our... Growing sort of that, those buckets, we're also focused on impact investing and we've participated in a... Couple years ago, a class at Harvard that brought together some of the largest international families in the world with two professors there, and we've wanted to be somewhat of a catalyst for that philosophy in the region, telling people that it is important to consider ways that you can use your resources to do good for the world and make a difference. It's not all about the bottom line. Although that is very important, it's nice to have some buckets where you can have impact on your society and the global marketplace, as try to do at GSI.
Rachel Pether: (07:53)
I'd love to come back to that point on impact later, and also sort of weave that into the work that you're doing on the film side. But you mention the concentrated portfolios, and one thing I've noticed in the Middle East is there is a huge home bias here, right? So, a lot of people are investing in the region. And I know that part of your mandate is also to bring companies to the Middle East, so how do you balance that between sort of the diversified portfolio but also not having so much of a home bias? How do you manage those two pieces?
Matt Salloway: (08:26)
Yeah, it's a great question. I think the way that we look at our investing is somewhat of a strategic. So, when we invest into technology, and specifically in the United States, we look for ways that we can take that technology as a strategic partner and grow it into the region. So, there's somewhat of a... It's, in a way, a great way to improve our investment chances because we have great infrastructure in the region, and to be able to take an investment that we think is best in class and then introduce it into a country like Saudi Arabia, which is a difficult market to penetrate unless you have on-the-ground resources, and be able to bring the best in class technology into the country, which is very much aligned with what they're trying to do in Vision 2030, which I know we'll probably talk about a little later.
Matt Salloway: (09:19)
But we want to be able to invest in companies that can change the world, and that's been a big focus of GSI. It's been a big focus of SIP, of investing in the next generation of world class transformational technology. And that technology is not only a good investment, but it also can improve the economy of the countries that we're trying to grow in. It can add jobs. It can improve the quality of life. It can make a real difference in the region, and that's how we see ourselves as somewhat of a strategic partner, where we're not necessarily overlooking the home country where we want to have a lot of influence and connectivity. But it also is a way that we can diversify our investing and get access to best in class technology because there's also an interest in growing those companies globally.
Rachel Pether: (10:16)
You mention SIP, which is one of the other hats that you wear, SIP Global Partners, and that's tied to the Japanese institutions. What do you see happening with Japan with regards to technology and are you bringing some of those into Saudi Arabia as well?
Matt Salloway: (10:34)
Sure. So, SIP was founded about a year ago to specifically address what we saw was the opportunity in Japan. Now, historically, Japan has been a leader in innovation and technology. In the 1970s, 1980s, I remember as a kid having the Panasonic television, the Sony Walkmans, these very sleekly designed and the hardware was really innovative. That has changed over time in Japan and you really haven't seen significant amount of innovation coming out of Japan in the last 20 to 25 years. So, why is that? I mean, it's hard to understand because Japan is the third largest economy. Japan has a very sophisticated workforce. Japan has just as much intellectual property as other countries. It's a stable democracy. So, why are they not innovating at the same extent? [inaudible 00:11:36] Excuse me.
Matt Salloway: (11:36)
And the reason, at least in what I've heard and what I've seen, spending a lot of time there, is that, first of all, there's a culture that's somewhat risk-averse and it's better to not fail than to succeed, in a sense. I mean, that's somewhat of a underpinning philosophy. I personally, as an American, have lived by the Teddy Roosevelt, who used to say, "Far better is it to dare mighty things even though checkered by failure than to dwell in the perpetual twilight that knows not victory or defeat." That's how a lot of Americans live. We'll take risks. And a lot of other countries too. But Japan is a little bit more risk-averse.
Matt Salloway: (12:17)
So, all that being said, that is starting to change and evolve in a positive way. So, I'll give you just a couple of statistics. There's a university called Keio University in Japan which was the university that gave the country the most entrepreneurs. So, if you were going to go into a start-up, you normally would graduate from Keio, not the University of Tokyo. So, I think 10, 15 years ago, 30% of the entrepreneurs were coming out of Keio and maybe 2% were coming out of University of Tokyo in that realm. That has actually switched in recent years. So now, University of Tokyo is producing a lot more entrepreneurs that are going into start-up companies.
Matt Salloway: (13:03)
So, as that's starting to shift and as you're starting to see more money being put into venture capital domestically in Japan, there is starting to be more of a focus on innovation and technology. Part of that is focused on the essential need for them to innovate because of the aging problem. Japan has, I think... The median age is 48 years old. It's the second oldest demographic in the world. As the country continues to age, there is going to be an impact on the economy. So, there is a real need for the country to start innovation and that's where we believe there's an opportunity for us to come in as SIP.
Matt Salloway: (13:49)
We are an independent venture capital cross-border technology company. Japan has mostly corporate venture capital investors. Fifty percent of the money that's going into Japanese technology is coming from CVC, corporate venture capitals, in Japan. So, as an independent venture fund, which we are, we believe that there's a strong opportunity to bring best in class technology, which the country's hungry for, which the country needs, from other places like where we're based in the United States, into the country where we have a very strong infrastructure and connectivity.
Matt Salloway: (14:26)
So, that's a bit long-winded, but a bit about our thesis into Japan, where the opportunity is, how things are now starting to evolve. And we're very excited about what we're doing there and the future of Japan's growth and innovation.
Rachel Pether: (14:43)
Yeah, that's really interesting points that you made on the demographic side as well, because I guess when you look to the decades when they were strong, the seventies, the eighties, the nineties, the median age was much lower then. So, I wonder if that sort of plays into the cultural aspect as well. But it sounds like, from what you're saying, you are now seeing a new wave of entrepreneurs that aren't so scared about failing.
Matt Salloway: (15:08)
Yeah. [crosstalk 00:15:09] It's changing slowly and I would caution... Even though [inaudible 00:15:13] again, my opinions. But as COVID has come in unexpectedly, it may slow a bit, but we are seeing people leaving and going into start-ups because in Japan, it was very accepted to just go to a large corporate and spend your entire career there. It was very stable. It's prestigious. It's safe. So, you go and you work for a conglomerate and you spend your career there. But now, it's becoming more accepted and you're seeing a lot of changes that are happening. Slowly, but it's occurring.
Rachel Pether: (15:46)
Yeah. They were the sort of ultimate salary man, wasn't it?
Matt Salloway: (15:51)
Yes.
Rachel Pether: (15:52)
Your job for life kind of aspect. I also wanted to... Talked about Saudi and Japan and maybe go a bit deeper into geopolitics. We actually had... I don't know if you saw the SALT Talk. We had Dr. Kai-Fu Lee on a previous SALT Talk and he was talking about artificial intelligence and how China and the U.S. were the clear front-runners in terms of an aggregate score, which is research plus implementation plus monetization. How do you see the tensions...? You know, you're on the ground in the U.S. How do you see the tensions between America and China as it relates to AI? And I guess that's part of the broader question about how geopolitics sort of intersects with venture capital?
Matt Salloway: (16:39)
Yeah. It's a great question and we see it every day playing out with news flashes and... I guess let me take the geopolitical question. The way that we see it is really there's a bifurcation in the world in terms of how countries are making alliances. And they're not necessarily strict formal alliances. They're more loose. But if you want to look at it... And I'm giving generalizations here... Look at it from a broad perspective, you've got China, Russia, Iran, Pakistan, all sort of on one side of the world. And then you've got... And again, broad generalizations. You've got the United States, Japan, Saudi Arabia, Europe, Israel. You've got sort of this sort of loose affiliation and that sort of relates to inward and outward investment flows, intellectual property, transfers and exchanges, knowledge transfers. It really relates to a lot of various aspects of business and collaboration.
Matt Salloway: (17:47)
So, I think, number one, with China and seeing what's happened with Firma and the changes... I mean, we've seen, statistically, tremendous change from the United States investing in China. I think... Again, I'm trying to recall numbers, but I think it was 20 billion was invested a number of years ago into China. Now, it was five billion most recently. And same with Chinese investment into United States has really, has had to decrease. So, there's now opportunities for other people and other players to step up. Number one, we see Japan as a very interesting country that could fill some of that gap. And again, that's why we're very bullish and very involved in Japan, so Japan can now start investing more into the United States. There's also the opportunity for the U.S. to invest into Japan. Again, very large... Third largest economy. Very stable country in terms of government, democracy. Very, sort of, sophisticated workforce.
Matt Salloway: (18:50)
The other thing I would mention is Israel. And with the Abraham Accords, which was a recent piece of agreement between the United... I'm sorry. Between Israel and the United Arab Emirates, where you are, Rachel, as well as Bahrain. I think it's a tremendous opportunity for growth in the Middle East. Israel, just taking a step back, is really the size of New Jersey. So, it's a small, small country. It has nine million people. It's 72 years old. It's a relatively young country, but statistically, per capita, it has the most venture capital technology and start-ups in the world and we've seen some tremendous technologies come out of Israel. You've seen Waze, the navigation technology. There's a mobile [inaudible 00:19:47], the recent huge acquisition that happened for autonomous driving. There's a company called PillCam, which is a medical technology, which you take the pill and it can video your diagnostics for health care. EXO, there's an exoskeleton company which can help people without limbs walk.
Matt Salloway: (20:12)
There's... And just, historically speaking, as a side note, instant messaging came out of Israel. The zip drive, the SanDisk zip drives came out of Israel. Operating systems for Microsoft. So, it's a really tremendous place, and I think having now this collaboration together between countries will be significant for the future of development of the venture capital ecosystem.
Rachel Pether: (20:40)
And so, when you're looking at some of these cross-border transactions, particularly bringing some of the verticals into Saudi Arabia, what are some of the top three verticals that you're looking at in terms of inward and into Saudi?
Matt Salloway: (20:55)
So, I guess let me... I don't know, again, in terms of the viewers, if they know a lot about Saudi Arabia, and I didn't speak about it and I'd love to give a little context to answer that question. So, Saudi Arabia has historically... There's... To give people a little background on Vision 2030, which was created a number of years ago, which was focused on finding ways to diversify the kingdom away from oil assets, to make sure the economy could sustain. So, Vision 2030 had all these reforms and goals, some very aspirational, but tremendous plan for the country and the future. As part of that, we're seeing a lot of the impact of those plans and goals and government support.
Matt Salloway: (21:52)
So, I want to talk, I think, about two areas that I see as being the most areas of... Which answers this question in terms of verticals, of growth in Saudi Arabia. I think the first is technology venture capital and the second is entertainment and tourism. I'm generalizing and grouping these together. But if you look at venture capital and technology... So, Saudi Arabia was never... In recent years, was not a start-up hub, but it's starting to become a start-up hub. In recent years, it's become the number three most active economy in MENA in terms of venture capital investing and technology, behind the Emirates and Egypt. So, it's starting to see a little bit more growth trajectory in that area, and that's interesting because Saudi Arabia is the largest economy in the Middle East and it has, I think, 70% of the population is under the age of 30 or 35. So, very young demographic. People that are very technologically advanced and with the government really supporting technology and entrepreneurs.
Matt Salloway: (23:14)
PIF created the large... One of the largest [inaudible 00:23:17] funds, [inaudible 00:23:18] that's putting close to a billion dollars or over a billion dollars, I think, into local, regional start-ups. The Saudi Venture Capital Company, SVC, was created with $750 million to invest into the region. So, there's a lot of government assistance that's being helped and pushed to encourage start-ups and technology and we're seeing the results. So, I think in 2020, there was 95 million invested in Saudi start-ups, which, with COVID and some of the just world events, that's incredible. That's the largest ever, a tremendous increase. I think in 2015 it was seven million. So, you see a really big shift.
Matt Salloway: (24:03)
In terms of the industries in technology and venture capital that we're seeing, I'd say there's a few. The first is e-commerce. That's been a very active area. A company called Jahez, which is a grocery delivery company... They recently had one of their largest rounds, this year. I think it was around $36 million, or they've raised 36 million for the company. Another company and area that we're seeing growth in Saudi is education technology. There's a company called Noon, which is... Noon Academy, which raised $13 million recently, which is a online educational company. There's a lot with financial technology, e-payments and digital payments and e-wallets, those types of things, that the country is focusing on. Cybersecurity is another area that the country is focusing on.
Matt Salloway: (24:58)
So, those are some of the areas in technology and venture capital. We as a venture capital firm are also a beneficiary of some of the government initiatives. The government set up, through SAGIA, which is the Saudi Arabia General Investment Authority, a venture initiative where it's trying to attract the best global venture funds into Saudi Arabia, and we recently were granted, as part of that program, to get a license and be involved. So, technology, venture capital, those areas are really growing significantly.
Matt Salloway: (25:35)
The other area, very quickly, is the entertainment and tourism. So, I'm sure... I don't know if most of the viewers have been to Saudi, but historically, it was very hard. You had to get the right visa. Even myself, I had to have a special visa. They created a system where 49 countries around the world can now visit Saudi Arabia as a tourist for 90 days. And you can get this very easily and quickly online. So, there's a real focus on bringing people into the country.
Matt Salloway: (26:06)
On the other side, there's a focus on keeping people in the country. And Saudi Arabians... Having worked with families there for the last 10 years, people travel. A lot of the country spends time in Europe and the United States and Dubai, so they spend a lot of money elsewhere. The government is focused on trying to keep the people in Saudi longer during the year and spend more money, spend more of their earnings in the actual country. So, there's been a huge focus on tourism and entertainment. As examples, the country opened movie theaters. Thirty-five year moratorium was on movie theaters in the country. Now there's movie theaters. There's now live music. When I was there, there were live music concerts. The WWE signed a 10-year deal with the government, so they're bringing in very well-known players. Formula One was there recently. They're building a live music hall. So, there's a tremendous amount of progress, I'd say, in that space.
Matt Salloway: (27:09)
One last point. Seasons, which is the sort of large malls and shopping areas that have been created all across the country, are a result of the government and getting people... And I've been to the Seasons a few times. Bringing the best restaurants, the best stores, into the country and subsidized significantly by the government. But you walk around and people are very happy they're able to get some of the food and products that they used to get in Europe and the United States. They can now get it in Saudi. So, it's a really exciting time and there's a lot of change and progress.
Rachel Pether: (27:46)
No, I completely agree. I've only been going there for a couple of years, but on every successive trip, you notice at least 4,000 things that have changed from the last time. Conveniently, you talk about opening movie theaters, which is a very nice segue way to another piece that I want to talk to you about. We've had a lot of audience questions come in as well, so I'll go to those in a minute. But I want to pivot from the use of technology to do good to looking at film and how that can positively affect society. I did mention, but I'm going to mention again, that you have some pretty impressive movie credits on The Butler, The Ides of March and The War With Grandpa.
Rachel Pether: (28:27)
So, what led to your interest in film, because this seems to me quite separate from the Family Office [inaudible 00:28:34] things. So, I'd love to know more about what brought that into your life.
Matt Salloway: (28:39)
Sure. So, for me, film has always been a tremendous vehicle and medium to inspire people, to educate them, to change the world, in a sense, in some small ways. So, I've always been very passionate about film. In some ways, it's like venture capital from an investment perspective and looking at investment structures. And being a lawyer, when I started my firm, I was doing a lot in film in terms of distribution, film finance, representing people in the business. But it's a really incredible area to influence society. And as an example, The Butler, which we made with Forest Whitaker and Oprah Winfrey, was a true story about a butler who served for seven presidents in the United States. And the story is really a journey through the civil rights movement, culminating with Barack Obama becoming president.
Matt Salloway: (29:38)
And my mother... A lot of what I do has also been influenced by my family, and my mother was quite involved in the civil rights movement in the United States. My parents are also very involved in philanthropy. My grandmother started a nonprofit in the 1950s with some other women in Boston, helping mentally ill, homeless people, battered women. My parents actually now run that same organization in their retirement, all volunteer. So, I was raised with some of those values of wanting to have impact and make a difference, and that's part of what drives me. It drives me, obviously, in the Family Office. It drives me in the venture fund and it drives me across the board in film. All of these are ways that we can make a difference. Obviously, still being successful as a business person and meeting our business goals, but having positive impact on the people, on the world, on a society that we're interacting with.
Matt Salloway: (30:37)
So, that's the way, for me, film has been really an amazing vehicle for that. We have a bunch of other projects that are coming out. In addition, War with Grandpa, as you said, is starting on Friday. It's coming out across the United States. It's a heartwarming family comedy with Robert DeNiro, Uma Thurman, Rob Riggle, Christopher Walken, Jane Seymour. It's directed by the SpongeBob creator. So, it's a really, really wonderful story that's based on children's book about a grandfather that moves back in with his daughter and her family, and he takes his grandson's room and they start a bit of a war against each other. And we're excited for that to be released.
Matt Salloway: (31:22)
We're also working on a film that's called Worth, which is the story of Ken Feinberg, who was the 9/11 special master and really had to determine the value of human life. He was entrusted by President Bush and Congress in awarding monies to 9/11 victims' families, and he had to go through the process of interacting with families to figure out what was the value of that human life that was lost, which was a tremendous... Tremendous story, which we hope to release next year on the 20th anniversary of 9/11. And then we're working on a couple other projects. One is the story of the first female White House journalist, Connie Lawn, as well as a sequel to Dances With Wolves that we're excited about.
Matt Salloway: (32:10)
So, again, very broad and diverse, but a nice balance of opportunities that really make a difference, hopefully, in the world.
Rachel Pether: (32:22)
That's fabulous, and I think The War With Grandpa, probably many people have experienced that during COVID, haven't they? I know I would say 50% of the people I know have moved back in with their parents or somehow the family's been consolidated again. So, I'm sure that will resonate with a lot of people.
Rachel Pether: (32:40)
We have had so many questions coming in from the audience, so I am going to address them now. Broadly, they sort of fall into film and venture capital, so I'll start with some of the venture capital focused questions. In your opinion, what makes a unicorn, given that you see these deals all over the world?
Matt Salloway: (32:59)
Yeah, it's a great question, and obviously the... It's the Holy Grail for what venture capitalists look for. I think I read a statistic that unicorns... Your chances of becoming a unicorn are... Out of five million start-up investments, three become unicorns. So, it's very, very competitive and obviously that's what we aspire to. I think there's a couple... There's probably two points I'd make. The first is I've always believed in timing being a huge part of life, of business, and I don't know if a lot of the viewers know Wayne Gretzky, but he was really one of the most famous professional hockey players, professional athletes. And he used to say that, "I skate to where the puck is going, not to where the puck has been." And I think that's a huge part of becoming a successful start-up, is knowing where technology is going and being able to follow your instincts and follow the data to make that decision.
Matt Salloway: (33:59)
I think the second part of that is... And I've created a silly acronym for the way I think about unicorns. It's an investment that I don't want to miss, M-I-S-S. And that stands for really four things. One, management. So, who are the people that are going to be driving this opportunity? For me, I've invested, as a fund and as a Family Office, in people that we have longstanding relationships with. One of our portfolio companies is someone I've known for 20 years and he's one of the most successful venture capitalists in the United States. But he knows how to start a company. He knows how to also bring it to fruition. It's not just about having a great idea. It's being able to execute. So, it's the management team.
Matt Salloway: (34:49)
"I" stands for integrity. We talked about this earlier, but it's all about your reputation. It's all about trusting the people you're investing in. There's so much that you are putting into as investors in private equity, hedge funds, venture capital. You're entrusting your resources to other people and we've seen a lot of people get burned. We've seen there are a lot of unethical and unscrupulous people, so you really have to do the best you can to trust who you're working with. And it's about that belief in who you're partnering with.
Matt Salloway: (35:26)
"S" and "S," the last two. "S" is sales. So, having the right sales strategy. You can have a phenomenal idea, but it doesn't mean that you're going to be able to sell it. And there's a lot of reasons how you sell. But you have to be passionate in the way you sell. You have to have the right people, the right connections, the right strategy. And then, the last thing is size, and I think you can have a great idea that you can sell, but it has to be sold to the right size, a sizeable market, in order for it to be a unicorn and to be profitable.
Matt Salloway: (35:57)
So, you have to have those, I think, those factors. Those are the four factors that I look for when I'm thinking about a unicorn.
Rachel Pether: (36:06)
Excellent. Thank you. I think that's the lawyer in you creating acronyms for everything, but it's good that you've got it in a structure. And we've got a question from Ken and I'm going to read out his name because he's such a great SALT Talk supporter, so thank you for your question, Ken Lustig. Matt, what are some of the ways that you help your portfolio companies develop opportunities for their products or technologies in Saudi Arabia? Can you give some tangible examples on that?
Matt Salloway: (36:35)
Sure. I think it ranges from a variety of alliances and partnerships. The first is the most basic, which is saying, "Look, you want to grow into Saudi. Let us give you some advice. Let us introduce you to the right people, the people that we think are knowledgeable in this space. Let us be a resource for you." Then it can get a little bit more active where we'll help set up an office and create a somewhat of a joint venture or partnership where we will help create the operations to manage this business. And again, it depends on the sectors, it depends... This is a broad answer, but our goal is to really open up access to a marketplace that is quite significant and also very difficult to get into. They're now changing and attracting a lot of foreign investment and people... It's becoming easier to do business in Saudi, but you still really need on the ground assistance.
Matt Salloway: (37:45)
And we see the same thing, obviously, in Japan. We see Japan as a springboard, also, to the rest of Asia. So, if a company can grow into Saudi, if it can grow into Japan, it can then also start growing into the rest of the region, which is also significant. And the same... Same is the case for the Middle East. There's a lot of opportunities throughout MENA for growth, depending on your technology company and product.
Rachel Pether: (38:15)
And you did touch on, before, the Abraham Accord and the relationships there between UAE and Bahrain. Do you think there's opportunities to look forward to there within Saudi as well, with some easing of diplomatic tensions? And how do you see that sort of Saudi/Israel partnership evolving?
Matt Salloway: (38:35)
Sure. I mean, it's... Look, this is only my personal perspective. I have no inside information. But it sounds, from what I've read and what I've seen, that there's a real growth in collaboration and it sounds like, hopefully, optimistically. For me, the more countries that can be allied and doing business together, the better it is for the entire world for us to grow the right kinds of technology. But from what I've heard... And I think there was an interview with one of the members of the royal family recently, talking about Israel and the technology. I read it online on one of the... It was Bloomberg or one of the other news outlets. So, I think that there's continuing to be a greater dialogue. Also, with Iran and some of the controversies and the complexity of the region, I think there's more reasons for countries to be closer in partnership and working together. So, I'm optimistic. I think it looks like there are other countries that are also in the region that might... Oman, that may follow as well. So, it's a really interesting story to watch.
Rachel Pether: (39:55)
Excellent. Thanks [inaudible 00:39:56] so much for that. And we've got a quick question on Japan as well. The way you're... When you're looking at the Japanese venture capital system, are you seeing it concentrated in certain areas, maybe such as automation? And if yes, could you give some specific examples of what you're seeing there?
Matt Salloway: (40:16)
Yeah. I mean, it's a really interesting question. I think there are a couple areas where there is a strong area of growth. Cybersecurity is one area where I think... Where we've actually had... My partners in Japan have brought companies, great technologies, into the region. Cybersecurity was also very important for the Olympics, which didn't happen, but the government was very focused on finding and creating best in class technology practices in the country. So, cyber's one area. I would say aging, digital. For the aging problem, there's a digital health care component. So, because you don't have enough people to care for the aging population demographic, there's a lot of advances that are happening in digital health which relates to AI, being able to create... I know that I read about some products that were helping care for the elderly, which there may be some automation in there, that are being developed.
Matt Salloway: (41:27)
So, I think the country is... It's still very strong in robotics. It's still very strong in automation, in infrastructure. The bullet train, obviously one of the most advanced technologies, which has been around for a while. But I think they're starting now to broaden and to get... To have interest in best in class technologies globally that are outside of their traditional scope, and that's where... Again, where we've come in as SIP. My two partners in Japan are... One of them has been in Japan for many, many years. He was the CEO of a start-up that became public. He was the first foreign hire in Netscape. His father was actually the first venture capitalist in Japan. He brought the LP system into Japan in the seventies and co-founded JAFCO, which is a very storied institution.
Matt Salloway: (42:21)
So, we have a lot of expertise on the ground there from a venture capital start-up perspective and we're also anchored by one of the largest corporates in Japan that wanted access to technology. So, with all of sort of our expertise there, we believe we're very poised to bring a lot of diversity and interests into this massive market.
Rachel Pether: (42:45)
Can you give me some examples of some of the portfolio companies that SIP has invested in to date?
Matt Salloway: (42:52)
Sure. So, we have four companies, three that we have officially announced and one we're announcing later this month. But we've tried to focus on early growth stage, Series A, Series B, companies that are globally focused, and we believe that we get access to a lot of these companies not only because I talked about integrity and our reputation and our capital, but because a lot of the founders want access to these massive markets. So, we're getting the best in class access to deal flow, to best in class technology.
Matt Salloway: (43:29)
So, the companies that we've invested in... One is a company called Croquet, which is a web infrastructure. It's an operating system, co-founded actually by Alan Kay, who was the father of the personal computer. He was Steve Jobs' mentor. And it's now being run by David Smith, the former CIO of Lockheed Martin. Company's fascinating. We were... We have a board seat. We're one of the first investors in this company now, in this version of the company. We also have an investment in a company called Parallel Wireless, which is a 5G technology co-founded by Steve Papa, who is a multi-unicorn founder. I actually met him when I was... That year I spent at Harvard Business School. Got to know Steve and have kept a relationship. He founded Endeca, which he sold to Oracle for over a billion dollars. He's one of the founders of Toast, another unicorn. Really fantastic venture capital investor and also operator.
Matt Salloway: (44:30)
We also are an investor in a company called Fable, which is a animation design tool which we're very excited about. And the fourth company, which we'll release more later this month, is an AR technology that was 300 times oversubscribed. It was a very competitive investment. We led that round and it's really by one of... Co-founded by one of the top gaming technologists in the world.
Rachel Pether: (45:03)
Incredible. And on the SIP and also, I guess, GSI as well, we've had a few questions coming in. I'm going to group them together. Sorry everybody. But we've had a few questions coming in on the co-investment and syndication and LP front. How do you normally structure your deals and how do you go about finding other LPs and co-investment club deal partners, etc.?
Matt Salloway: (45:28)
Well, we... You know, we look for... We have been blessed to really create a large... A very strong network of Family Offices and investors. Some strategic, some that are people who are operators or have access to strategic partnerships which are quite attractive. But we've been blessed, having built, I think, a strong reputation. As Warren Buffett likes to say, I think it takes 20 years to build a reputation and 20 seconds to ruin it, which we've... Number one, not only because it's the right thing to do, which is really what drives us being good partners, having integrity, being reliable... And it's why we've had such a great strong network and co-investment partners. But it's also about your reputation and once you lose that, that's all you really have.
Rachel Pether: (46:27)
Yeah. You've shared a number of really great quotes during this discussion, but that one from Buffett was definitely a good one. We are over time, but I really like this question, so I'm going to take an executive decision and ask it to you anyway. Are you ever going to make a science fiction movie and combine your knowledge of film production and technology? And if so, which science fiction movie would you want to remake?
Matt Salloway: (46:56)
Wow. That's a fantastic question. So, the answer is hopefully one day. I think some of the technologies that we're seeing could be quite relevant in the cinematic world. I would say that there's actually a film that we're currently developing which is a strong AI technology-based film, which is just completely fortuitous. But we're actually developing this film currently with two partners, and it's a fascinating story and it does leverage cutting edge technology. So, I think that this will be an area where I will marry sort of my knowledge and connectivity in the cutting edge technology to the filmmaking world.
Rachel Pether: (47:47)
Excellent. Well, thank you so much, Matt. It's been a pleasure speaking to you today. I knew it would be just as much fun as ever, so thanks so much for your time and sharing your insights with us.
Matt Salloway: (48:00)
Thank you, Rachel. It's been an honor to be with you and I'm so thankful for the opportunity.