Entrepreneur, and venture capitalist Gordon Ritter gave the keynote talk at Princeton University’s 11th Annual Innovation Forum. His closing remarks at the University’s celebration of innovation held on February 24 followed a pitch competition showcasing Princeton research.
“This is a day where breakthrough Princeton Research meets commercialization and it’s an amazing opportunity for this school to be able to bridge the core research we do with how it connects with the real world,” stated Ritter.
Ritter who began his career in investment banking moved to Silicon Valley four years after graduating from Princeton in 1986. He described his decision to leave the stability and security of investment banking to become an entrepreneur as a part of a lifelong pattern that began in his early childhood.
“I always hated doing what everyone else was doing around me,” said Ritter. He wryly described it as “a little bit of a personal disorder or latent introversion” that prompted him to intentionally look for something different from what others were doing. While it often led to periods of isolation, it was the making of an innovative mindset that as an adult would bring him great success.
Ritter cited, as an example, his family’s move to Maine when he was a child which he embraced. Surprisingly to himself, he did not fear it, but looked forward to it and the unknowns it would bring.
“I think Maine started this pattern for me where taking some kind of a different path has always paid off at the end,” Ritter explained. His choice to attend Princeton over Harvard presented a similar opportunity of taking a less clear path with the potential to attain something special, while passing up something having a surer result. Be a member of Princeton’s unproven rowing team or join Harvard’s already established award winning team, but have a less satisfying role?
“The positive loop of being a contrarian and receiving these outside returns was now ingrained,” noted Ritter about his time spent at Princeton. Decisions he then made early in his business career continued this pattern.
Now as chairman of venture capital firm Emergence Capital that he founded in 2000, Ritter looks back on a highly successful entrepreneurial career that includes three successful startups in three industry sectors. He served as Chairman of Industry Cloud pioneer Veeva Systems, co-founder and CEO of Software As Service, a web services platform company, and co-founded Whistle Communication that was bought by IBM’s Global Business Division.
Princeton’s recent acceptance of Ritter’s son into the class of 2020 prompted him to reflect about his time in Silicon Valley and put together “a heartfelt set of lessons that I truly want to hand down”. His talk entitled, “Avoid the Herd: Lessons from 25 Years of Tech Start-Ups in Silicon Valley” presented the five fundamental lessons he learned as a successful innovative entrepreneur.
Lesson #1: “Avoid the Herd”
Ritter describes this as his first and most fundamental lesson. While so much of his life adhered to this precept which put him on a “lonely and challenging path”, he no longer pursues risk that way today. Instead he works with “amazing entrepreneurs”, some of whom are at Princeton, who look to differentiate themselves from peers and seek out risk.
Ritter’s first investment by his tech venture firm in 2003 was in Salesforce.com and he used it to exemplify how boldly separating your business from competitors can yield high returns. According to Ritter, founder and CEO Marc Benioff took a number of risks—that Ritter feels the best and most successful companies are willing to do.
Salesforce.com separated itself from its competition in three distinct ways: moving client data onto the cloud, leading the way into this technology at the time, then innovatively setting up their systems that co-mingled client data with customers and even competitors, and then changing the company’s selling model from a field sales force to an inside sales model. Any one of these moves could have ended the company from Ritter’s perspective, but instead made Salesforce.com a huge success.
“If you don’t try, you won’t actually have the big wins,” Ritter said, re-iterating the payoff that risk taking may have.
Lesson #2: Seek out people different from you
When Ritter is looking for a company to invest in, he makes sure that the team has a diverse set of backgrounds because he feels a strong team comes from diversity. He not only looks for different skill sets among the members, but he also values different personality traits and backgrounds.
According to Ritter, diversity does not happen often because many people are not comfortable with going outside of what they know. He refers to this as the “country club” challenge where comfort is derived from similarity. However, Ritter feels this is a false comfort because there is the risk of blind spots that can adverse repercussions.
“If you have a diverse team, you will always be challenging one another and as long as you trust that your team members will be coming from a different perspective. This is the root of success in a team.”
Lesson #3: Follow good leaders
Ritter emphasizes that it is important to follow and emulate good leaders and be able to distinguish them from successful leaders. You must be able to work well together in order to succeed, according to Ritter.
In his own experience, Ritter confides: “I choose to work with entrepreneurs that share my values and more importantly never put their personal advancement ahead of the company.” Ritter simplifies this point further, “never work with someone you would be afraid to introduce to your family”. He views these other relationships as fleeting.
“Focus on the CEOs that truly have humility,” Ritter cautions. He cautions entrepreneurs to stay humble with success.
Lesson #4: Find your superpower
Ritter begins his fourth lesson plain and simple: “If we truly understood what we love to do, what we do extremely well and naturally well, and focus on doing more of that, the world would be unbelievably a better place.”
Over the years, Ritter has experienced a countless number of entrepreneurs who are unwilling to focus on just one unique talent because they want to be able to say they are well-rounded. However, he argues that if each team member focuses on their specific talent, “it really is magic that occurs.”
Lesson #5: Jump off cliffs (as much as possible)
Gordon’s final lesson re-affirms the spirit of innovation and entrepreneurship by encouraging a commitment to an attitude of risk taking. He advocates to jump off cliffs “as often as possible.” This is something he says his team regularly asks themselves.
His venture firm’s portfolio companies are encouraged to strive for a seemingly impossible goal. In doing so, the firm is able to cultivate the idea of risk among the companies, according to Ritter. Striving for this goal enables the companies to look at their processes in a new light. They also avoid taking an incremental approach in goal setting.
Ritter applies risk taking to some of his own personal challenges. He could have scaled a mountain or take a 250 mile trail run. The latter he just recently completed. He says, “It was more satisfying to complete this run than it was to climb the mountain because it was completely unknown.”
Ritter directly encouraged the Princeton audience to move forward in their journey and be aware of risk. “So for all the innovators in this room make sure you chart your own course and take enough risk…all of the energy, time, passion, being away from families, and sweat, requires you to make sure at the end of it, it is worth the energy and the return.”
