With over 35 years of venture capital investing experience, Mike Levinthal has helped drive the growth of such portfolio companies as Peloton, Paytm, Divvy, Podium, Degreed and Citrix. He was a Partner with Mayfield for two decades and holds an MBA from Stanford, where he also received his MS and BS degrees in Engineering. One of Mike’s proudest investments is the Mayfield Fellows Program that he helped establish in 1996, which develops entrepreneurial and leadership skills for top engineering and business students at Stanford.
Since leaving Mayfield, Mike relocated to Utah and has been involved in a number of successful companies and non-profit organisations, working closely with entrepreneurs to grow their business ideas. We caught up with this seasoned investor to find out his approach to risk-taking — covering everything from skeleton sledding, spacewalks and activism to the most reckless investment he’s made.
“Growing up around scientists and technologists and crazy entrepreneurs during the rise of Silicon Valley meant that I became comfortable with the notion of risk early on. I’ve always sought out new adventures, and I don’t have much fear of losing.”
As a venture capitalist, your life is defined by risk. Have you always been a risk-taker?
My father was a risk-taker, and that had a huge influence on me. He moved to the West Coast after graduating from MIT, where he got involved with a group of physicists and Silicon Valley pioneers. He did his PhD at Stanford, working on nuclear magnetic resonance, and eventually became Dean of Research at the Medical School and then Dean of Research at the School of Engineering — but along the way he pursued a wide range of passions, from radar to biochemistry and medicine to outer space. He worked with NASA on missions to Mars, founded his own electronics company that produced some of the first defibrillators, and he was involved in the first VC fund with Art Rock.
Growing up around scientists and technologists and crazy entrepreneurs during the rise of Silicon Valley meant that I became comfortable with the notion of risk early on. I was also fortunate to do a lot of adventure traveling and exploring with my dad. We went trekking in Nepal and visited Alaska on a trip arranged through the Sierra Club, where I got to meet Bill Hewlett, who was an avid mountain climber. This fostered my love of travel and of taking pretty terrifying risks — like skeleton, where you slide down a treacherous ice track head-first. I was scared out of my mind doing that! But I’d rather try something new than miss out. I suppose I’ve always sought out new adventures and risks, and I don’t have much fear of losing.
Would you say that anyone who wants to succeed as an investor or entrepreneur needs to be comfortable with taking risks?
Definitely. I grew up in the 60s, when we were captivated by space exploration, and I often use this as an analogy. The first spacewalks were tethered, which were pretty cool but not nearly as exciting as watching an untethered spacewalk. You’d see the hatch open and the astronaut would fly out — and there was this exhilarating and terrifying moment of uncertainty, thinking of all the possibilities that could go wrong. Years of training and technology went into that moment, but you had to have faith that it would work out. This is what it is to take a risk as an entrepreneur.
It’s also important to remember that risk occurs on many different levels and in different ways. Growing up in the Bay Area, I was surrounded by Civil Rights activism and protests against the Vietnam War, and this had a lasting impression on me. People take the biggest risks when standing up for what they believe in. Recently, I’ve been working closely with a group in Utah that supports the local LGBTQ community, which is affected by a high suicide rate; for them, coming out is a risk. When talking about risk, we really need to broaden our understanding of it.
The greater the risk, the greater the potential for failure. Is it equally important to become comfortable with failure?
Oh yes, I’m a big believer in this. When I was at college, we learnt all about learning to fail. If you don’t risk failure, you never grow. I’m an art lover, and a lot of this is encapsulated in two of my favorite photographs, which I hung in the lobby at Mayfield. The one is an image of a young schoolgirl sitting at a wooden desk with her hand raised high. I’ve always told my kids that if you don’t raise your hand and ask the question, you’ll never learn; everyone else in the class may have the same question, but they’re just too afraid to ask. The other is a Catherine Wagner piece; it’s a photo of a chalkboard, with the words ‘I don’t know’ written across it. To me, this is one of the most critical lessons in life — to embrace uncertainty. Where’s the fun if you already know what’s going to happen?
How do you perceive the difference between a calculated risk and recklessness?
I’ve invested in well over 100 companies, so I’ve definitely taken some risks that were reckless! One of the biggest mistakes I made was when I was at Mayfield; we invested in a startup that failed badly — a movie was actually made about it, Startup.com. It was reckless in that we got caught up in the heat of competition. We went into it too quickly and, in retrospect, we probably violated some fundamental rules by letting the entrepreneur get out of control. We were all involved, but I took the shot for it because I had gotten too excited. Thankfully, we had a really wonderful and supportive environment at Mayfield, so my partners didn’t beat me up over it.
Since leaving Mayfield, I’ve made a few reckless investments, where I’ve gotten seduced by an entrepreneur with a brilliant idea and ended up losing sight of whether it would work. On the other hand, some of my most successful deals have been reckless in certain respects. It’s a tricky balancing act, but I suppose a calculated risk is about going in slower and not getting sucked in too quickly.
Do you invest in the person or in the idea?
A great idea is worthless without the right person behind it, so I try to invest in quality people. Greed and aggressiveness are common characteristics of entrepreneurs — and I’ve seen a lot of unethical behavior, which I try to avoid. I’d rather walk away and risk losing money than be associated with people like that. When I’ve invested in someone who succeeds in their business and who treats their employees and customers well, that gives me deep satisfaction.
It’s been a devastating year on all fronts. Are you optimistic that things will improve?
Generally, I’m an optimist — but right now, I’m scared. I’m fearful of the violence that will be unleashed in the US after the November election, with the President setting off his Proud Boys to wreak havoc. I’m grateful that my parents aren’t alive right now; they got to live through decades of progress and saw the inspirational election of Obama. I would hate to be 95 in today’s world, seeing how things have regressed. In terms of the devastation of Covid, I’m particularly concerned about the implications for young people. From a mental health perspective, the isolation and the lack of jobs and financial insecurity they’re facing is overwhelming.
At the same time, disruption brings opportunity. From an entrepreneurial standpoint, Covid has major implications for a reset. The reset of education and how we think about learning has brought about some incredible ideas, as has the nature of remote working. I’ve seen some amazing companies being formed through this crisis. I’m working with a company focused on innovations in mental health and wellness support — maybe they’ll help 10 people or maybe they’ll help 10 million, but the point is that there are many people out there creating impactful solutions to meet the challenges of a rapidly changing world. And this is a cause for optimism.
