DURHAM – In the startup world, failure is an option, according to Nihal Mehta, founding general partner of New York and San Francisco-based Eniac Ventures, at Moogfest’s “Startups of the Future and Business of Creativity” session at the American Underground at Main in Durham.

“I”ve learned a lot of lessons in 20 years in tech,” he told the American Underground’s Executive Director Doug Speight. Before launching Eniac Ventures, Mehta founded five startups across the mobile ecosystem, “And I learned the most from the failures,” he said. Failure “Gives you a muscle memory of what to avoid, and I used that knowledge when I became an investor.”

Eniac, founded in 2010, has made more than 150 investments and announced Eniac IV, a $100 million seed fund, in April, 2017.  The firm  focuses on mobile, artificial intelligence, augmented and virtual reality and other “disruptive” technologies.

Mehta’s first startup, Phillytonight.com, started in 1998, when, he said, “You could put dot com at the end of anything and raise money, which we did. We spent $1 million really well on commercials and billboards without any revenue to show for it.” Then, the dot com boom crashed and “We had to do the unthinkable, the unspeakable. We laid off 50 employees and declared bankruptcy in 2001. It was humbling.”

Still, he said, “Facing failure early in my career developed invincibility. You dust yourself off, do it again, and avoid the mistakes you made. My next startup was acquired.”

Mehta said that as an investor, “I look for founders who have tried and failed or tasted a small success.”

What is the most common startup killer?

What, Speight asked, “Is the most common startup killer?”

“Co-founder in-fighting,” Mehta said. “Startups are hard, making something out of nothing. Every day is tough. Often you can’t make that work with somebody. We look for teams that have worked together before and ideally, worked together and failed together but emerged liking each other. They’re more efficient when they have that working history and they have a chip on their shoulder and need to show the world they can do it, or they had some success and want more.”

Another thing Eniac looks for, he said, is a founder who makes the work his or her life mission. “It’s not like a business school exercise. A founder who is alive to the mission thinks about it 24 hours a day. So we love a founder-market fit. Those are the entrepreneurs we look for every day.”

Nihal Mehta, founding general partner of Eniac Ventures at Moogfest. Copyright Capitol Cities. All rights reserved.

Eniac started investing primarily in the mobile space, including Airbnb and Hush, but now invests in a broader core theme. “At the heart of all of our companies is deep technology, machine learning, computer vision,” Mehta said.  “Old unsexy industries like insurance, construction and real estate are being transformed by artificial intelligence to make them sexy again.”

He added, “We try to look ten years ahead. We just invested in software for autonomous private aircraft. How do we solve a traffic problem that keeps getting worse? Convert rooftops for these aircraft, which are carbon neutral and don’t cost much to use. You could go from Manhattan to JFK Airport for $20, cheaper than an Uber.”

He sees automation also coming to cars, trucks, deliveries, waiters and waitresses. “It’s a pretty interesting world we’re about to enter,” he said.

Diversity is key to innovation

Addressing the question of what creativity in business looks like in the future, Mehta said, “As Tim Cook, CEO of Apple said, innovation comes from diversity. You want to have as many diverse perspectives in background, race, gender and as many different facets as you can put together. That’s where most creativity and innovation comes from. Especially if you have a massive customer base, such as with Google or Facebook. You need to bring those things to the table because your customer base is diverse.”

Nevertheless, “In our industry, particularly in AI, a lot of the founders are dudes. Nine of ten engineers are men.” Mehta’s wife is leading one effort to change that, he said. “She founded Girls who Code. It has reached 100,000 girls in all 50 states, he said. “It’s not just about computer science, it’s also about poverty alleviation. It’s growing fast and it’s effective. It could lead to gender equality in STEM education in ten years if it continues to work.”

But, we need to change the culture to bring more diversity to the tech field. Eniac, he said, encourages its portfolio companies to interview at least one person with a diverse background for each role. “People tend to hire people who look like themselves. If they’re forced to interview someone not like them, they start to see networks they never knew existed. You just have to shake people up to find them.”

While it’s likely that in the next 5 to 20 years many jobs will be disrupted by AI, “There will always be areas where humans have a lot of relevance, areas that machines will never be able to do. Painting, poetry, screenplays, movies.”

Answering an audience question regarding a lack of venture funding in the Triangle, Mehta said, “A lot of investors realize now there is a lot of talent in academic hubs in this country. I think it’s changing, but it takes time. Moogfest can be phenomenal for this city.”

Also he said, “I’ve met a few investors in this area and people are super excited. You’ll have some big exits and all of a sudden more and more investors will come. If you’re in it at the beginning, a rising tide raises all ships and I think it’s happening.

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