Interview in tech12
“It’s an excellent time for investments: there’s less competition and it’s easier to recruit talent”
After holding senior positions at Intel and Samsung, and setting up a few startups and exits – Young Sohn is one of the busiest investors in the world today, currently heading up Walden Catalyst Ventures. He has an affinity for Israeli companies and disruptive technologies.
Young Sohn is one of the most prominent investors in the fields of deep technology, a serial entrepreneur, CEO of multiple companies, a member of countless boards of directors and, until a year ago, Corporate President and Chief Strategic Manager of Samsung Electronics. So it seems a bit odd that during our interview with him he uses his new IPhone 14 to show us some slides and photos. Could the latest Samsung’s Galaxy not be good enough for him?
Sohn is amused. He’s used to questioning glances about it, but won’t give up his affinity for Apple technology under any circumstances. “I use both iPhone and Samsung,” he says. “It’s good for me regardless, because Apple is Samsung’s biggest client,” he adds.
There might be some symbolism in this, something that indicates an independent nature that doesn’t adhere to set patterns. He could have built a thriving career at Intel, he could have influenced the world through his positions at Samsung, he built and sold companies, brought companies to IPO, and always moved on to the next place.
Now, at Walden Catalyst Ventures, he’s in his comfort zone.
Sohn came to Israel to participate in EY’s Journey 2022 conference, in collaboration
with tech12 and taking place in Tel-Aviv today. He arrived with a few messages to pass on to Israelis, mainly to entrepreneurs and CEOs of startup companies. He calls it “conducting business in troubled times”. As someone who was the CEO of tech companies during the 2000 and 2008 crises, he’s well-acquainted with the pressures CEOs are under nowadays. As someone leading up investments in deep-tech, he’s also familiar with the investors’ side of this crisis.
What advice would you like to give to Israeli CEOs?
“I think it’s important to help CEOs who weren’t around for the previous crises. This is a new generation that didn’t know the prior hard times. Many of them are thinking – ‘if I grow, things will happen, whether I’m profitable or not.’ I think it’s very important to go back to basics, to see if your product has a market, because that’s the only way you’ll survive tough times.”
The CEOs are very concerned these days, mainly because investors aren’t providing money as easily as they did before, leading to low evaluations. It’s in your, the investors’, hands.
“The market has changed from a market of buyers to a market of sellers. But what matters, and always mattered, are the basic metrics. In troubled times good companies need to focus on their metrics, not growth at all costs. I’ve just come from a board meeting at Insurtech, one of the fastest-growing companies in Europe. The discussion was about how to combine growth with profitability. It takes a long time for CEOs to internalize that it’s important to balance the two, but I’ll say that if even you go a year back, just growth without profit wasn’t a good thing.
“I think it’s an excellent time for investments: there’s less competition and it’s easier to recruit talent. We invest but not at an insane rate. It might take another six to nine months, I believe that in 2023 we’ll hit the bottom and then people like us will probably be more active.”
What do you recommend for CEOs deliberating whether to deeply cut expenses and fire employees, or fundraise at a reduced rate, in a down round?
“First things first: companies won’t become big companies if they run out of cash, you have to ensure that you have cash. I don’t know how long the current situation will last, there’s an assumption it’ll go on for at least two years. So you have to survive the nuclear winter, or freeze and die. Second: to survive, your product must suit your customers so they’ll pay for it. Focus on that.” The problem is that the investors pressured companies to grow quickly, and now
they expect income and profits. “The problem was that there was a lot of money chasing after investments, which led to bad behavior on the part of the companies. When a lot of money comes in it’s like a huge wave you surf on, not noticing the rocks because of the tide. But when the tide comes in a lot of sharp rocks are exposed, and it’s very hard to navigate through them.
There’s no magic solution here. You have to do what’s needed to bolster the business and adapt yourself to customers.”
As an investor, are you still investing during troubled times or do you prefer to wait?
“Remember that we’re a young fund, luckily for us, and we’re a fund that invests in early stages. I think it’s an excellent time for investments: there’s less competition and it’s easier to recruit talent. We invest but not at an insane rate. It might take another six to nine months, I believe that in 2023 we’ll hit the bottom and then people like us will probably be more active.”
“The CEO of Intel said to me: ‘Young man, do you speak Korean?’”
Young Sohn’s personal history runs through some of the most significant companies in the worlds of technology. His biography looks like name-dropping, a gallery of dozens of prominent companies he’s run, been a board member of or consulted, most in the fields of chips, and some of which were investment funds. Here’s a brief history of Sohn. He’s 62, a native of Korea. When he was 15 his family immigrated to the United States. As a high school student he worked while studying, but managed to carve a path to elite universities – the University of Pennsylvania and MIT. After graduating, he founded a startup that failed. “I didn’t know how much I didn’t know,” he says, “I was very bold and wanted to be like Mitch Kapor (the founder of Lotus), who was two years ahead of me at MIT, but the product wasn’t ready and I didn’t know much about sales.”
Sohn sought a place to work, and found Intel. A young man named Pat Gelsinger, today the CEO of Intel, worked in the cubicle next to him. Sohn’s career leapt forward much faster: “One day they told me that Intel CEO Andy Grove wanted to talk to me. I said okay, wow. And he says to me: ‘Young man, do you speak Korean? I need to go to Korea to meet the CEO of Samsung, could you come with me?’ I said ‘Sure.’”
Matters proceeded quickly. At the Seoul meeting Intel and Samsung decided on joint operations. Sohn accompanied Grove on all his trips to Korea, and took part in promoting the operations. A year later Grove tasked Sohn with staying in Korea and establishing Intel’s operations in the country. “When I think whether I’d have let a 25-year-old take responsibility for operations in a country? I don’t think so…” he says. Regardless, for the next year and a half he spent in Korea, Sohn established the company and recruited 200 employees, running a billion-dollar-per-year business with Samsung.
Sohn served in several roles at Intel for the next ten years, until he decided to resign.
“I always wanted to be a startup guy,” he explains. “In Silicon Valley everyone’s chomping at the bit to be someone, to create something. I wanted to be my own boss.” During those years he jumped from company to company, including Quantum which developed disk drives and Oak Technology that developed disc burners. “We had technology that allowed for downloading songs and burning CDs. It was our contribution to humanity.”
Oak later merged with Israeli company Zoran in an attempt to set up a GPU company that could compete with Nvidia. “It was a little crazy,” Sohn admits. In 2003 he moved to Avago, a large American semiconductor company. In 2016 it acquired Broadcom and became one of the leading companies in the field of chips.
Sohn left long before that. In 2007 his friend and current partner at Walden Catalyst, Lip-Bu Tan, suggested taking the reins of INPHI, a startup company that developed a technology to accelerate Internet communications. But then the tech world collapsed and there was much less demand for networks. Sohn pivoted and adapted the technology to accelerating memory chips. In 2010 he brought the company to IPO. Two years ago it was purchased by Marvel for 10 billion dollars.
Of course, Sohn wasn’t there by that point. In 2012 he was appointed President and Chief Strategic Manager of Samsung, with a budget of 2 billion dollars to invest in new fields of technology. He prioritized artificial intelligence, digital health, IoT and Big Data, and he had a special interest in automotive and autonomous transportation. Under his leadership Samsung launched a 300 million-dollar fund for autonomous driving and acquired the car audio company Harman for 8 billion dollars. Sohn continues to serve as CEO of Harman to this day.
Sohn spent nine years at Samsung until he decided to resign last year, and establish Walden Catalyst Ventures with Lip-Bu Tan. About 20 of those investments were made along with Tan’s fund, including Israeli companies Habana Labs, Mellanox and Solar Edge.
Establishing Walden Catalyst cemented the bond between the two, he explains. The
fund raised 550 million dollars, and one of its first investments was in Prof. Amnon Shashua’s AI21 Labs.
How do you explain preferring to leave a position of influence and power at Samsung for a fund investing in other companies?
“I was an entrepreneur before, accompanying companies from start to IPO. Samsung was a period where I was called up because I was Korean, and I wanted to contribute and help the CEO. I thought I was coming there for three years, but I enjoyed myself so much that I stayed for over nine. But I always wanted to get back to my roots. Investment was my night job during those years.”
What technologies excite you?
“I love companies that bring about change. Like ARM, like Inphi, like Zoom (another investment of Sohn’s). Companies that make an impact through technology. One interesting field is robotics and autonomous driving. Our society is aging and people will need a lot of help, so I’ve invested in a company that’s developing exoskeletons, external frames to protect the back. Things like that really excite me. Another subject is climate. I think we need to do our part so I’ve established the Extreme Tech Challenge project, holding competitions for startups that make an impact.”
Do you feel there are technologies that are still missing?
“If you look at artificial intelligence, it’s still in its prenatal stages. There are two fields that have progressed – language processing (NLP) which is getting better, and image processing and identification. But in the field of business we’re still at a very early stage. AI isn’t really intelligent in these fields and we need to improve it.
They’re trying to do that at AI21. The next stage is problem-solving. I think the
ability to provide total answers is the way to go, that’s the new journey.”