An Early Facebook Investor Is Creating A Scouting Network F…


s venture capitalists mingled with members of the Golden State Warriors at a fall 2016 cocktail party, tech investor Ali Partovi scrambled to find something to talk about.

Then he realized that an idea he’d been pondering for years put him on common ground with these basketball legends: The NBA had a talent network. Silicon Valley did not. And Partovi wanted to build one.

Partovi, who with his twin brother, Hadi, had scored wins investing in Dropbox, Facebook, and Zappos and stands to reap millions from his stakes in IPO-bound Uber and Airbnb, started to lay out his vision. Taking a page from how the NBA starts scouting recruits when they’re still in high school, Partovi, 46, would identify the most brilliant young engineers and introduce them to his network of technologists, from Facebook CTO Mike Schroepfer to Stripe cofounder John Collison. In turn, he would promise to invest in anything the young engineers would do in the future simply because he believes they are so talented that they will become successful.

The result of Partovi’s 2016 brainstorm is Neo, a community launched in 2017 that brings together more than 30 college-age scholars and 170 industry veterans. Investing is the by-product, and Partovi raised an $80 million fund to one day back the budding talents, identified before many of them even have an idea for a company—or even what they want to do next summer. “Most people don’t realize that computer programming, similar to basketball, has the unique property where the very best talent is significantly better,” Partovi says.

“In the same way that sports teams are scouting out talent—not only in universities but in high schools or even younger than high school—somebody should be doing the same thing on behalf of the tech industry.”

Design: Nick DeSantis

It’s another take on Silicon Valley’s obsession with youth, and a model that’s been tried, in various versions, by the global entrepreneurship group Kairos Society and by Peter Thiel’s Thiel Fellowship, which pays students to drop out of college. Schools like UC Berkeley have venture funds focused on investing in students and alumni. Other firms invest only in college students. None have proved the model performs better than traditional venture capital, but that hasn’t tempered the appetite for ultra-early investing. Neo’s tactic is different: Students don’t need to have a startup or even experience building their own company before they’re invited to Neo. They just have to be the best young engineers.

Finding the candidates and making a long-term bet is the hard part, Partovi says. A cofounder of the nonprofit coding education company with Hadi, Partovi can draw on his Silicon Valley network, which reaches back two decades and into the C-suites of companies like Microsoft, Uber and Facebook. Partovi and Nadia Singer, the former head of recruiting for Quora who’s now a partner at Neo, have spent the past two years visiting college campuses, giving hundreds of technical interviews and hand-selecting who they think are the most talented computer scientists in the next generation. Today there are 30 Neo scholars, of whom 12 of were selected for the 2018-2019 class.

For students like 20-year-old Stanford University computer science major Rachel Gardner, a spot as a Neo scholar is a ticket into a connected network of 170 industry CEOs, executives and leading engineers that a college junior may not otherwise have access to and includes a three-day retreat in Arizona, where the Neo community comes together for its own, private version of Allen & Co’s Sun Valley.

For the CEOs and engineering directors who’ve already made it, the draw is access to fresh ideas. “The further up you get from the company, the less I find you have an opportunity to touch the world in an unfiltered way. Presentations come to you after having been practiced eight times,” says Uber CEO Dara Khosrowshahi, Partovi’s cousin and a backer of Neo’s fund. “Having direct access to the greatest ideas is something every leader needs.”

Partovi learned that lesson the hard way, making some well-placed bets and missing out on others.

Design: Nick DeSantis

As kids growing up in Iran, he and Hadi discovered a passion for programming, tapping out games on a Commodore 64 when their dad, a physics professor, brought the computer home from a trip overseas. Coding became an escape for the twins during the 1979 revolution when bombs would explode down the street. “Essentially computer programming was a safe space for us where we could also create our own rules and create anything that we imagined,” he says. After the family left for the U.S. in 1984, the awkward 11-year-olds—Hadi remembers starting the seventh grade in a three-piece suit—turned coding into a secret hobby as they tried to blend in with their American peers.

When they enrolled in Harvard, Partovi was considering a career in physics or applied mathematics. But two summers spent as a Microsoft intern became a seminal moment for the college student.

“They treated me as somebody extraordinary. And when you’re an insecure 18-year-old and you’re wondering what your place in life is going to be, it was a very, very powerful feeling that these guys saw so much value in me,” Partovi says. It’s a feeling he’d try to capture again later at Neo.

After he graduated from Harvard with a computer science degree in 1994, Partovi bounced between Oracle and a tech startup. Then in August 1996 his brother introduced him to two Harvard classmates who were starting an internet advertising network. Hours after meeting the cofounders, Partovi quit his job and signed on as a third cofounder for LinkExchange. Two years later Microsoft acquired the startup for $265 million.

Partovi and his brother pooled their money to start formally angel investing, or making small early-stage investments, as a pair. They focused not on the charismatic leaders but on the great engineers who could recruit other great engineers who wanted to learn and work for them. “For both of us, what’s most important is investing in the people and not just the idea. It’s an easy thing to say and it’s hard to stay true to,” Hadi says.

Design: Nick DeSantis

Case in point: In 1998, a college classmate had emailed the 26-year-old Partovi about a new company called Google that he had just joined as the first employee. But to Partovi, betting on a search engine seemed like a bad idea given the competition. “When I heard about Google, I remember thinking that it was kind of a lame business plan,” he says. “Like, they’re going to beat all the other search engines just because they have a slightly better algorithm?”

Another idea he tossed out the window? PayPal. Partovi knew Max Levchin through his work as a contractor at Partovi’s startup. “Even as a 22-year-old he was just legendary,” he says. But Partovi thought Levchin’s pitch for a company that could transfer money from Palm Pilot to Palm Pilot was dumb. That startup became PayPal, which was picked up by eBay for $1.5 billion in 2002.

“I wish at that time someone had told me that, like, if one of the smartest people you know starts a company, just don’t ask questions. Figure out how to invest in it,” Partovi says.

Google and PayPal were missed opportunities, but all it took was a phone call from Hadi saying that Mark Zuckerberg reminded him of a young Bill Gates for the two to invest. “I actually had misgivings about the whole Facebook business plan,” Partovi says. “Thankfully I overcame them because of how he spoke about Mark.”

Partovi spent the next decade angel investing and dabbling in a few startups. He wrote a screenplay only to have his laptop and draft of the play stolen during a meeting in L.A. (A way to back up files in the cloud became a pressing investment thesis, which eventually led him to Dropbox). Hadi ended up launching another company, Tellme, which he left in 2001 and eventually sold to Microsoft for more than $850 million in 2007. In 2006 the duo launched iLike, which showed users the music other people were listening to. It sold in 2009 to Myspace, reportedly for around $20 million.

Design: Nick DeSantis

Neither twin needed to work for money, since each had sold a startup for hundreds of millions. Hadi started focusing on an idea for bringing computer education to the masses. In 2012, the brothers cofounded, a nonprofit dedicated to expanding access to computer science education. “It was very much Hadi driving it,” Partovi says. “I think the biggest impact I had on the whole thing was to tell him to go for whatever was the most terrifying option.”

Partovi took time off to raise his children—he has four kids from two marriages—and had a nine-day stint at Hampton Creek, a vegan mayonnaise maker that’s since been rebranded as Just. But the idea of identifying the greatest young talent and forming a community to support them stayed with him.

A mailing list he’d started after college with around 10 of his top computer science classmates included the future CTO of Google, the future CTO of Salesforce, and the future CEO of Zappos. The “less successful ones” still sold startups for around $80 million, he says. That list alone would’ve been a good venture capital portfolio.

“Look at the network of people we knew at Harvard,” says Alfred Lin, a partner at Sequoia who knew Partovi in college and then at LinkExchange. “He didn’t think that was unique to our experience.”

In the fall of 2016, Partovi found himself at a party at San Francisco’s City Hall with the Warriors, chatting with point guard Stephen Curry about building a scouting network for engineering that took pro sports as its model. Walking away from the conversation, Partovi realized the idea wasn’t a theoretical anymore: He had told Curry—now he had to do it.

Neo scholars Joshua Meier (Harvard '18) and Christina Wadsworth (Stanford '18) talk to Neo partners Nadia Singer and Ali Partovi in San Francisco. Also pictured at top: Shirley Miao (University of Waterloo '18) and Faisal Gedi (Georgia Tech '19)

Neo scholars Joshua Meier (Harvard ’18) and Christina Wadsworth (Stanford ’18) talk to Neo partners Nadia Singer and Ali Partovi in San Francisco. Also pictured at top: Shirley Miao (University of Waterloo ’18) and Faisal Gedi (Georgia Tech ’19)Timothy Archibald for forbes

The question became how to build it. After talking with a Facebook recruiter, Partovi found out that Mark Zuckerberg liked to hold exclusive dinners with a dozen of the most promising engineering interns. Not only did that validate Partovi’s thesis that there was a top layer of talent above even the most talented interns; it also made him realize he could start by just tracking down those individuals. He emailed his vision for Neo to his contacts at each of the companies, and to his surprise, most companies agreed to help. Then he asked the Facebook interns who their smartest classmates were and started sending emails to them to arrange a meeting. He spent much of 2017 on plans to interview a narrowed-down list of over 100 students on college campuses around the country.

Uma Roy, now a 21-year-old senior at MIT, was one. Based on a friend’s personal recommendation, she agreed to meet Partovi for coffee. “In the beginning it seemed like, Okay, I get to meet interesting people, and Ali himself is an interesting person, so why not? What do I have to lose?” Roy says. Partovi and Neo ended up helping her find an internship at Awecom, a stealth startup founded by another Neo member.

Recruiting the 170 industry members ended up being an easier lift. Top technologists like Openwater’s Mary Lou Jepsen, former Dropbox CTO Aditya Agarwal, and Niantic’s Niniane Wang jumped on board. Golden State Warrior Andre Iguodala became an investor. Partovi also tapped into his network from his career. Xbox creator Nat Brown and iPhone leader Scott Forstall, officemates from his first internship at Microsoft, both joined. Levchin, the PayPal cofounder and now Affirm CEO, signed up.

The billionaires already in Partovi’s world proved to be easier recruits, but Partovi didn’t want to re-create his Harvard network of Ivy League-educated, mostly male executives, or search for the same thing across universities. Recruiting trips hit not only the Ivies but took Partovi and Singer to the University of Waterloo in Canada, Vanderbilt University in Nashville and Rice University in Houston. Before Neo even got started, though, Partovi sought feedback on how to make it inclusive from Diane Tang, a Harvard classmate and a distinguished engineer at Google, and Makinde Adeagbo, the founder of a nonprofit for black software engineers called /dev/color, who had known Partovi since his time as an intern at Microsoft.

Students don’t need to have a startup or even experience building their own company before they’re invited to Neo. They just have to be the best young engineers.

It was “pretty crazy” how dedicated to diversity Partovi was from the beginning, Adeagbo says. A lot of people of color will be concerned they are being invited to a group or event as a token or that they will be the only one, he says: “It takes someone like me or a few people like me vouching.” Today Neo’s community is 43% women and 15% people of color. Of the Neo fund’s investments, 40% of the money has gone to startups led by female CEOs.

“The old boys’ club is on its way out,” Partovi says. “I would say we’re creating something that’s replacing it with something that is merit-based and diverse from day one.”

There are big risks to Partovi’s people-first gambit: There’s no membership term limit for scholars and industry members, and the promise to invest in any future company means Neo is on the hook to support the scholars forever. Partovi is not currently taking a salary, and he covered all the expenses required to get Neo off the ground. The venture fund supports the community’s operations with its management fees of $2 million, or 2.5% of the assets, but it’s still not profitable, with no exits to date. What Neo will look like 10 years down the road is unknown. “We’re punting on this a little bit,” Singer says. “We’re at a size right now where we think things are okay and we have a few years until we really have to think about it.”

Then there’s the risk that the investing strategy that Partovi has thrown himself behind based on his own experience won’t scale. His backers are betting on Neo to spot the best and brightest, but it will take years before it’s known whether the scholars it selected really were cream of the crop. And for every future Mark Zuckerberg or Bill Gates Neo fails to spot, its value in the tech industry and reputation for cultivating young talent could diminish.

To generate venture returns on a time line that could return money to investors, the Neo fund is not limited to the network of the college-age scholars. Ten of the 14 investments it has made come from Partovi’s and Singer’s personal networks, and three are from referrals from scholars in the Neo community. For now, Neo’s only measure of success is in the connections its community has made to each other and the startups that have found either new recruits and the scholars who have found internships as a result. To Partovi, that’s been the goal from the beginning—investment returns, if they materialize, should come later.

“It’s strange that this organization fell into each of our laps and has this promise of being something that’s for life,” says Elliott Forde, a 21-year-old MIT student. “When you’re a student at this age and the world is in front of you and you don’t know which path to take, it’s really valuable to have somebody that simply believes you.”

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