Emerging Technology - Interview with Bruce Miller, Angel Investor

Bruce Miller, a Boston based technologist and Angel investor talks about his criteria for making angel investments. He also discusses the problem of packet-loss with mobile communication, and the technology that is being developed to solve this problem.

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Today we’re joined by Bruce Miller who is an Angel investor and technologist based out of Boston, Massachusetts. Bruce is a smart guy. He’s got a couple patents to his name. And he wants to talk to us today about investing in Boston, a little company he’s got going out in South Dakota, and packet loss technology. So stay tuned and we’ll get to all of that. But first could you introduce yourself, and tell us a little bit about your background?

Sure, my name is Bruce Miller. Today I’m operating as a consultant and Angel investor. I’m a technologist by background. I have a set of degrees from Rensselaer Polytechnic Institute back…probably embarrassingly way back, I graduated many years ago. And my background includes medical instrumentation, fault tolerant computing, artificial intelligence, and more recently data communications and telecommunications. I started with a little company called Wealthly back in the nineties, and that became a company called Bing Networks ultimately part of Nortel, probably companies that you recognize. I went off at that point and started a company called Astral Point Communications, and we developed some of the early optical technology that went into the networking infrastructure. We were ultimately bought by Alcatel. And I stayed on with Alcatel for about five years, operating as the lead strategist and technologist for the North American Optical Division. And after that I’ve got involved in data center technology. I was working with a company called Force Ten Networks out of California, which fairly recently got acquired by Dell. And now I’m back to my roots which is more small stuff, more individual level stuff. I’m very involved with my investments, and I have a reasonably busy consulting agenda.

So can you tell us about those Angel investments you’ve made recently? Because there’s some interesting companies there, and I’d love to talk about some of those.

Yes I’m probably more diversified than most of the angels that you’re used to dealing with. I’m a technology guy, and a lot of the angels you deal with to the comfort zone and stay there. I tend not to do that, part of the reason is, opportunities come in lots of forms. And also for me it’s more interesting to be involved in a variety of different areas. Right now I’m heavily involved with four companies and four areas. One of them is a social networking company called Pingup. It was originally called Gettable. And this is a company that operates out of what Massachusetts is calling the innovation district. We have a bit of a migration from the innovation area, which used to be in the shadow of MIT, to the waterfront. So it’s kind of interesting to see the waterfront becoming more of a dynamic environment. I have a second company that I’m invested in which is in MIT’s spinout. It was started by a group of MIT, University of Porto, and Cal Tech professors called Code-On Technologies. I have a third one which was started by a good friend of mine, I was sort of instrumental in helping get him going which called Q Factor Communications, and the fourth one, which is completely different, is called BBT Homes and we’re building residential housing up in North Dakota. And there’s a reason for that. We didn’t pick North Dakota because we threw a dart at a map or anything.

So what’s the reason for that? Shale exploration?

Yeah, it’s fracking. What’s going on up there is, housing is a rare commodity because of the infrastructure growth. So we chose that area because we knew there would be a demand. And it sort of fit our model for what we could build and what we thought we could make money.

That’s a scalable business, and there’s clearly a demand. There’s a lot of cash-rich people with nowhere to put the cash right now, and supplying them with a single-family home makes a lot of sense. But this is a technology podcast, Bruce, so tell us about Q Factor.

So let’s go back to technology. You don’t want to hear about lumber and concrete.

Maybe in another podcast

So let’s go back to technology.

The have a multiplicity of patents. The formation of the company occurred initially by leasing intellectual property rights out of Code-On Technologies. And then subsequently augmented that with…the last time I talked to them, about a half dozen patents of their own.

Interesting, so can you tell us a little about the technology. And you don’t have to reveal anything proprietary, obviously. But explain to the listener what Q Factor does in terms packet loss, why when they’re using their iPhone, it slows down, and why Q Factor thinks it has the technology to solve that problem.

Ok I mean what happens is, there’s a technology out of MIT based on randomized packet encoding. And this was a technology that’s been developed, as I said, by multiplicity of universities. What it does is it basically takes packet information and encodes it as coefficients and spreads this misinformation out over a communication stream. And what that does is it says that when you have sort of randomized errors – packet drops, there are certain cases where you can reconstruct that information, and the technique is very low overhead.

So if I could explain that in layman’s terms, you’re seeing a particular pattern and then you’re using an algorithm to predict what should be there. Because when there’s packet loss, there’s a loss of information. And this technology basically substitutes that lost information without actually having tho pull it over the Wi-Fi network. Am I correct in saying that?

Well that’s fairly close, and they use of multiplicity of techniques, so we’ll talk about several if there are interest. So, basically think about it as adding a small amount of information to a packet, which can encode the packet stream and spread out fashion, so if you lose one piece of information, the information that’s spread out can be recompiled to recreate that packet.

Ok, so that’s slightly different from what I said. That’s interesting. So it’s actually coming from the origin.

Correct! And they’re multiple techniques. One technique is called randomized network coding, in which you don’t need to have communication between the source and destination. The algorithms can operate independently, and the reconstruction can be independent. Or you can have deterministic where, if you will, there is information exchanged, and the two ends can figure it out in concert. So what they can do, if you look at things like Wi-Fi networks, and you look at things like cellular networks, one form of loss is based on sort-of randomized dropouts. And when you get a packet drop, algorithms like TCP are not very gracious. When TCP was designed…I don’t know if you guys know what TCP is, I don’t know my audience so maybe I should define by acronyms. TCP is the fundamental control protocol that handles data transfers across the internet. And it’s an algorithm that was designed to be opportunistic. So basically it tries to shove a lot of information through the communication infrastructure, and when it sees things slow down or there’s a drop, it reels it way back down again. It says, “Oops, I got to go down to something little because I started losing throughput. And the problem with that is, in this day and age it can really screw up your communication in terms of the fidelity and efficiency of the network. So having any sort of packet drop in a communication network today is a really bad thing. Think of watching a movie, and you lose a key piece of information and your movie has to reconverge again. Right?

Right. this is stuff that is technically complicated, but it basically affects anyone with a smartphone or a tablet. It’s interesting technology because it’s looking to replace the IP protocol with something that is more designed for a wireless or a Wi-Fi connection.

Yeah, well it augments it. It can work in a domain which is graceful, you don’t have to change the end protocols. So this basically lives in the middle, dealing with the impairment. So if I have something like a cellphone, I can run their app on a cellphone, so the cellphone is a termination point and the other termination point can be on a server in the cloud. So the communication link between the server and your endpoint is covered by their algorithm. The other things to pay attention to, are things like burst mode losses. Sometimes you may do things like drive behind a building and lose a body of communication that can’t be reconstructed. So in those cases, what you have to do is either start a session over again, or have a mechanism to detect that and retransmit it. Which they do.

That’s pretty fascination. Oviously this is technology that could be useful to a wide breadth of people. How did you recognize this product as being investible? And how did you go about investing in this product?

Yeah this was a special case. I was on the board of Code-On. And Code-On is focusing on marketing intellectual property, and a lot of the companies that they were dealing with were very academically focused. Not commercially focused. And my feeling was that in order to get a product that was meaningful to the market and could solve the multiplicity of problems that you see, you really needed a skilled commercial team. So I have known the CEO, a fellow by the name of Subhash Roy, for many years. He’s an accomplished technologist, he had a stint in the VC world, he worked for Kodiak Venture Partners for a little while. And basically what I did is put the two ends together. I found Subhash, I was involved with the technology, and I suggested that he explore this. And then what we did is, the angel team that had funded Code-On moved over to capitalize him.

So they did a follow-on investment after their initial investment. Or was this kind of a spin-ff and it’s a little bit different?

Yeah, we did a seed round for him. He subsequently received a series A. So he’s moved beyond. Were all invested and heavily engaged. But he’s got his series A, and at some point he’ll be going for his series B.

Well, that’s obviously great for you as an angel investor to see an entrepreneur receive follow-on funding. Did you help at all with that follow-on funding round. Were you able to introduce him to some venture capitalists? How did that process go about for him?

For that one I did, but he was so involved with the VC community given his background. That he really need much help. He had all the contacts. He knew as many people in the industry as I did. So in Subhash’s case it was really lighting the fuse and to a certain extent standing back as the rocket took off.

Interesting. what’s something that our listeners who want to be , or aspire to be, angel investors—what’s something they can learn from this deal? What’s something they can take from our experience and model in their own life?

Well if you want to be an Angel investor, that’s sort of a complicated question, and certainly it’s a work in progress. The issue you run into is, there’s a tremendous amount of, if you will, companies today that are seeking investment and exposure. Back in the day, when I did Astral Point, being an entrepreneur was a little bit less common place. And as an angel investor I think the key is to have a relatively high level of discrimination. It’s very easy to invest in something that is not of sufficient quality, and in particular if a company is going to require funding beyond the seed round, you have to think like a venture capitalist to say, is this a company that a VC firm with fund? The funding is usually based on convertible debt. So if I put money into a company, basically that’s a note that says I get a discount when there’s a series A. Problem is is there’s no series A, my investment is worth nothing. Right?

Right. I mean there is a chance they could return the bond with the interest accrued, but that doesn’t normally happen. I’d say that’s a rarity.

You’re dealing with companies who justifiably should be investing all their money in their idea and not worrying about capital return to the investors. It’s very risk laden. And you’ve got to understand you’re playing statistics here. Not everything you invest in is going to succeed. So you have to think about, where do I put my money that has the best possibility? Where is the best team? Where is the large addressable of a market? Where is the disruption factor?

Did you ever have a company that you looked at, you thought about investing in, but you didn’t, but later wished that you had invested in them?

Not yet. The problem is that none of the companies have progressed to the point where you can say there’s successful or not unsuccessful yet. So I mean, if I saw a company is that have a big exit, and opportunity to invest in and I said, “oops, maybe it would’ve been nice”. I know some people who invested in Nest but that was before my time in terms of being an Angel investor. So I’m sure there’s some people could have invested in companies like that and said, “Well smart thermostats? Why do I want to invest in that?” Right?

Well, they would be wrong.

They would be wrong. And sometimes companies that you don’t think are going to make it surprise you. Right? For as smart as you think you are, sometimes the most ridiculous things are the ones that will succeed, and the most well thought out things are the things that won’t.

Isn’t that funny. So, it’s almost a little bit of a gamble on the Angel investor’s part. Would you say there’s other things which really have to be attractive as an Angel investor other than the money? We’ve had other angel investors on here before for instance who’ve said if you’re doing it for the money, you’re doing it for the wrong reasons. Others have said if you’re trying to make money, you probably won’t. Would you say there’s other reasons beyond the monetary factors that enable you to make Angel investments that are really key and core to your beliefs and values?

Yeah, I mean I think we’re entrepreneurs turned Angel investors. Right? So as an entrepreneur, it’s a birthing process, it’s the intellectual process, seeing something grow and create something out in the industry. So I mean, I think Angels have different reasons. Certainly if you’re losing money on every one of them, you’re not going to be Angel investing too long. I think that’s called charitable contributions.

So what are your reasons? Why do you invest?

And why do I invest? Because at my point in my career, it’s a way for me to continue to be involved. Right? I’ve done a startup. I’ve seen everything there is to see about a startup. For me it’s better for me to be able to mentor, to coach, to subsidize—then to get involved in the daily activities of the company. I could coach ten companies. If I took a full time job, I could be involved in one. It’s great to see people develop. You look at a company like Q Factor, we went from two guys having a conversation over coffee, to a series A company that right now has a list of potential customers that are a who’s who? Right? So, it’s an edifying, fulfilling thing. Some people do it just for the money. I know people who do that. Some people specialize. I have a good friend who’s doing clean energy. But I think you’re going to find the motivations are highly varied.

We’re coming up on the end of the interview, but before we do, as usual we have to go through the lightning round of questions where we ask three questions, and then you fire back three answers at us. Does that sound OK to you?

Sounds good, my voice will hold out I hope.

So Bruce, what are you reading right now. What’s on your book stand?

“Paths to Power” is the latest one I’m reading. “Paths to Power”. I like reading books about what has happened in the industry and what lessons we’ve learned. One of my favorites is a book called “Optical Illusions” that was about Lucent, ’cause I lived all that stuff.

Interesting. So what’s one piece of advice you’d give to entrepreneurs who are just starting out their business?

Don’t be too quick to decide on what your product is. Make sure that you focus not only on the industry but the best opportunity. I see a lot of entrepreneurs who try to lock and load their product idea, and they don’t necessarily pick the best product or the best opportunity.

Let me dig into that a little bit further. Do you feel like there’s a lack of customer development being done, where they’re not properly finding out their product market fit? Or do you mean from a more holistic perspective of they’re just kind of jumping into something to make money rather than doing something that the market needs or they’re passionate about?

The problem is usually, you come up with a concept and then you try and vet it in the marketplace. And if you vet it properly, very often you to come back and say, “that’s a great idea. But what if I did this?” Right? Or what if we went to this other market? So it’s a learning process. You’ve got created a trajectory that very hard to change. And if you make a mistake in this day and age, it can be fatal. So the only time you get the chance to really play, is in the beginning. So use that time to try and create the best idea, the best product, and the best market opportunity.

Bruce, as a final question, give us a business idea. What company would you like to see started in the world?

I don’t know, there’s so many problems to solve. I mean when the day is done, what we need to do is figure out what the right problems are to solve. As an engineer that’s always the cathartic moment. You sit there and you go “oh I didn’t know this is a problem. I can solve that.” One of the articles I’ve read said we’re having a Cambrian explosion of startups. That was a time where life sort of exploded after an ice age. What I would personally like to see is well thought out, very high quality companies. I really personally don’t want to see the moccasin companies…I don’t want to see the fourteen wearable technology company, I want to see the companies that are solving fundamental problems, and are fundamentally disruptive.

Taking a page out of the Economist—I like it. So Bruce, thank you for your time, we really appreciate it. If there’s any way entrepreneurs want to get in touch with you. Is that possible? Do you prefer an introduction? How can they reach out to you?

Email address, I do answer emails. It’s Bruce dot Miller the numeric twelve at Comcast dot net.

Well, thanks a lot for your time today. Hopefully you get bombarded with emails from entrepreneurs. And don’t just ask him for money. Maybe you can engage with him in a meaningful conversation. Just because he’s an Angel investor doesn’t mean he wants to invest in your company. Reach out to him and get to know him first.

If you want interaction, I’m happy to do that. I don’t normally sound like this. I usually sound a little clearer so again apologize for the voice. If you want to discuss an idea, one of the things I always tell people is talk to the people who’ll tell you their mistakes. Because you can’t recreate success, but mistakes are usually invariant.

I’ll tell you my mistakes.

That’s a great quote to end on. Thanks very much, we appreciate your time.

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