For much of the past four years, Saeed Amidi has been shepherding a generation of entrepreneurs into the global economy. From his vantage point as founder and CEO of Plug and Play Tech Center in Silicon Valley, he has witnessed the launch of more than 250 startups, including some 50 international firms. Plug and Play provides services to help develop products and get them to market, while also fostering a communal environment in which entrepreneurs from around the world can share and adapt successful formulas for starting up businesses. Born and raised in Iran, Amidi, 50, is a long-time entrepreneur, who started a bottled-water distribution company while a student at Menlo College in California in 1979 and made the leap into technology in 2000. He recently spent an afternoon with Arabic Knowledge@Wharton at Plug and Play’s headquarters in Sunnyvale, California to talk about how his venture is part of a global ecosystem of entrepreneurship.
An edited transcript of the conversation follows.
Arabic Knowledge@Wharton: What makes a good foundation for a start-up?
Saeed Amidi: I compare it very much to team sports. If you build your core [culture] and depend on each other in a way a football team does, it really is the way to win. When I want to make a seed-round investment, it’s a negative sign for me if one individual owns more than 50% of the company. I like two founders owning one half each or three founders owning 30%-30%-40%. They must really respect each other’s capability. If there is a business founder and a technological founder, they must trust and respect each other. It’s almost like having a defense and offense…. The beginning team, philosophy, culture and productivity are important, but as you grow, it is important how you add experience without changing the core culture.
Arabic Knowledge@Wharton: Plug and Play is the mother’s milk of entrepreneurship. How did the idea evolve?
Amidi: A company I started 30 years ago involved packaging and bottled water at 165 University Ave. [in Palo Alto, California]. I saw Osborne computer come in next to me and build the first portable computer. This is before I knew what technology was. Then I had Pierluigi Zappacosta bring Logitech from Switzerland and build a great company in the Bay Area. I saw the journey of PayPal and finally Google. I’ve watched these companies grow.
By coincidence after the dotcom bust, [my brother and I] launched a start-up in Los Angeles called Hollywood Productions for over 100 shows being produced, and built a community of digital media properties. [The community] shared ideas and personnel. As one filming winds down, the post-production equipment is used for another. The entertainment industry is almost like a start-up. They start with an idea and script then build a team: The producer, the director, the cast and a product.
Arabic Knowledge@Wharton: It sounds like that was the bridge for you to get to where you are now.
Amidi: I had the beginning of an idea from the little building in Palo Alto. I said, "Imagine if it is a lot of companies working toward their dreams in one location." After we built [Plug and Play], we realized [the entrepreneurs] needed to build a community for networking. That’s why we have 100 events a year here. What else do they need? They need angel money and venture capital (VC). This is why we have Band of Angels [a Silicon Valley seed-money investment firm] next door to work with their portfolio companies and members. The idea of having a community of start-ups focused on its own goals but at the same time willing to help each other is a good one.
Arabic Knowledge@Wharton: They need the same tools?
Amidi: If you’re doing iPhone apps, there is no competition between one app and another. But they all need to learn how to monetize the iPhone, grow their customer base, and build a relationship between one app and another app to create "virality." Even though the product or application may be different, 80% of the process is the same.
One thing I am proud of at Plug and Play is the community of 250 start-ups that are physically here and the extended community of maybe another 750 start-ups associated with it.
Arabic Knowledge@Wharton: They are from around the world?
Amidi: This is the fascinating part. Initially, we were helping start-ups out of Silicon Valley. Then we realized that start-ups from around the world needed almost more help. Right now, we have over 60 companies that keep their production and technology in Vienna, but have their headquarters and staff to raise money here.
Arabic Knowledge@Wharton: How do you go from being a bricks-and-mortar entrepreneur to a major player in Silicon Valley?
Amidi: I didn’t study software or mechanical engineering. I couldn’t understand technology. Because I do not understand technology, I have surrounded myself with entrepreneurs who help me do the due diligence. When we look at an idea as most VCs do, you have another portfolio company that you respect do the evaluation….
It’s like judo. You take a weakness and turn it into strength. I don’t want to know everything there is about software, production, testing and delivery. Because I’m weak in that sense, I find people who have been experts for 20 or 30 years in that field to advise me about whether a technology is good, as well as the engineers and founding team.
I have incredible respect for the universities that train these engineers and the faculty who mentored them. Great education and great engineering schools are a huge part of the success of an entrepreneur’s journey. They are given a lot of credit but they should be credited a lot more. If I were born again, I would study more and go to more elite schools.
Arabic Knowledge@Wharton: Can you describe the ordeal of leaving your homeland to join the great Diaspora of Iranians who landed in America?
Amidi: I enjoy the opportunity America has granted me. I was from an affluent family in Iran. The 1978 revolution was almost like a wake-up call for me. I was 18. After being a spoiled student at Menlo College, I suddenly realized family wealth could disappear. I was almost forced to be an entrepreneur. My father was my mentor, my leader. Within 40 days of the revolution, he said, "Saeed, we can take care of the tuition. However, for living expenses, you’d better start working." He then gave me a solution: "Saeed, if you help me look for business opportunities, I can pay you." In a way, he put pressure on me to be an entrepreneur. That summer I started my business, American Liquid Packaging Systems.
My journey from Iran and restarting our family business from scratch was very tough, but it was a great experience…. I wish I had then all of the knowledge I do now. It took me 20 years to build my company. In the technology space, you need to do the same 20 years in two years, and find what the customer needs, build it and deliver it. You have to go through all the ups and downs at a fast pace. That is why it is so important to have mentors and advisers.
I’ve bootstrapped my companies [and financed them on my own] in the past. If I had to re-live my life, my first lesson would be to study more. The second lesson would be to surround myself with smarter people — team members to help me accelerate my journey.
Arabic Knowledge@Wharton: But don’t things happen when they are ready to happen?
Amidi: When I speak to students around the world, I tell them to make the best out of where they are, the university they graduated from and the cards they have in their hands. My father used to tell me that you have to work extremely hard every day toward your goal, but sometimes you don’t know what is in front of you. If you’re going in the right direction, new doors and opportunities could open a week or two from now that you cannot even imagine today.
Arabic Knowledge@Wharton: Doesn’t that symbolize what you and your brother, Rahim, have done?
Amidi: Yes. To go back to discussing why we started Plug and Play: We really enjoyed the experience we had in the small building in Palo Alto. We really enjoyed the experience we had in Los Angeles with Hollywood Production Center. When we launched Plug and Play in 2006, I could not imagine it would be a community of start-ups from all over the world. We have 25 to 30 countries represented here. Some formally, like the Australian and Austrian pavilions. Starting in January, we’ll have a Belgian, Czech and Canadian pavilion…. Four years ago, I would not even have been able [to consider] that. But because Plug and Play is able to attract talent at start-ups, partner with VCs, and partner with corporate America, like Microsoft, eBay, PayPal and Google, we have been given a new opportunity to bridge Silicon Valley with these countries.
Arabic Knowledge@Wharton: How did you conceive the name of your company?
Amidi: I came up with it because it’s ready to go, it’s playful, and it plugs you into the Silicon Valley ecosystem. I did not like "incubator" because most incubators are subsidized and are less entrepreneurial in structure. That’s why I chose "Tech Center." It’s a pretty long word: PlugandPlayTechCenter.com. But I like to have the meaning of our product represented in the name as much as possible.
Arabic Knowledge@Wharton: What is your vision for the global economy and Plug and Play’s role?
Amidi: … Everyone is embracing new digital media, social networking and smartphones as a way to change our lives. It will improve productivity and increase wealth, health and happiness. Using this mobile Internet platform, we will work and shop differently. I don’t think it is an incremental change; it is a gigantic change that will create new jobs, efficiency in health care and efficiency in green technology. I’m incredibly optimistic. There will be new jobs created in the U.S. and around the world. Maybe I haven’t been in technology long enough to remember the semiconductor or the PC revolution, [but] when the PC was born, everybody thought the super computer or the mainframe computer was going to fade away and the PC was going to change the world. And PCs changed the world for the better. We’re at that crossroad digitally now. All my health records will be on my smartphone and accessible from a "cloud."
Arabic Knowledge@Wharton: Just some basics. How does Plug and Play make money?
Amidi: My father said that if you become cash flow positive, you have a lot more chances of succeeding. I’ve tried to become cash flow positive in the different divisions of Plug and Play. The biggest one is real estate. We charge our start-ups rent. We have a data center, which is our second division that generates money. We have a corporate partnership division … to co-sponsor events with Samsung, Amazon, SalesForce.com and Qualcomm. We have an incubator and a joint effort with PayPal. We’re planning a joint venture with large technology companies to possibly spin out start-ups from corporate America.
As a bootstrapping entrepreneur, I believe each division should run profitably. Where we hope to make most of our profit is by getting a first-hand chance to invest in great companies in the early stage. The real moneymaker is to find the right opportunities and co-invest with our VC world.
Arabic Knowledge@Wharton: What do you look for when deciding to invest in a start-up?
Amidi: The most important thing is the passion and will of the entrepreneur. A will to win is almost more important than the idea, and more important than the technology. One of my favorite companies is Zoosk. The two entrepreneurs, Alex Mehr and Shyane Zadeh, felt there was a social networking revolution about three years ago. They thought that if they could offer products and services on the back of the social networking revolution, it would be a huge competitive advantage. They offer the first thing a man and a woman look for in life: A date. They executed it very well. Now Zoosk is an incredible company that started on top of social networks like Facebook and hi5.
Arabic Knowledge@Wharton: Which startup has been Plug and Play’s shining light, and why?
Amidi: A great search company is called InfoAxe, which was founded by two graduate students at Stanford University and is located in Sunnyvale. The search gets smarter as you use it. And I really like Twitvid, which is like Twitter but for video [and was started by Mo Adham and Adil Lalani, both of University of Waterloo in Canada].
It’s almost like saying, "Saeed, pick your favorite child." It’s really not possible. Each child has his or her own charm and excitement. I feel incredibly privileged to be part of their journey. Not all journeys are happy, but even the challenges that we go through are exciting and it is a learning curve for me and the entrepreneurs.
Arabic Knowledge@Wharton: Was there an idea you thought was a no-brainer that failed?
Amidi: One of the startups I really love is MyWave [a subscription video-on-demand platform launched in 2006 in Sunnyvale]. I’m a small investor in it. It is uncertain how the company is doing. I used to describe it as YouTube on mobile. I dreamed of incredible success for it. It has had some success but in Silicon Valley, if you don’t "hit the ball out of the park" and create an incredible, multimillion- or multibillion-dollar business, they don’t consider it a success anymore.
Arabic Knowledge@Wharton: I’ve read a quote from you: "Small and midsized companies are going to change the economies of the world." How will these companies do that?
Amidi: It’s not my quote. But the U.S. State Department [says] that two-thirds of new jobs around the world are generated by small and midsized business. I happen to specialize in technology-enabled businesses. I have at least two companies per month that grow to between 20 and 30 people and raise US$20 million. Each could create 100 to 150 jobs in three years. The good thing about these businesses is that there are a lot of them. You don’t have one big factory in California [that is] making [the economy] dependent on this one big factory to hire 1,000 or 2,000 people.
Some little companies, like Google, now have over 20,000 people working for them. Groupon has several thousand people in the Chicago area — a company that doesn’t have incredible technology, but a business model that is executed well based on technology…. There are going to be a lot of new business models that we don’t even know about yet.