August 22, 2016

LaunchCapital's Woody Benson: A Storied History in the Tech Industry

Woody Benson has witnessed a long standing career in the tech industry across multiple operating and executive positions. He's seen a high level of success as an investor too with several exits including LogMeIn, where he is still on the Board of Directors. He saw LogMeIn go public back in 2009 and recently merge with Citrix's GoTo family of products. Benson recently joined LaunchCapital as a Venture Partner, where he is focused on early stage investing. Read more in the interview below.

Keith Cline:  Tell us about your background.

Woody Benson:  I grew up in Swampscott Mass. I am the youngest of three boys and my father was an accountant at a Big 8 firm, having started by taking accounting classes upon return of the World War II. He graduated from Bentley College in 1948 from night classes in the Boston location, where the great Harry Bentley actually taught some of the classes.

I was a regular North Shore sports focused kid playing football, street hockey, stick ball, little league, and the whole bit through the Bobby Orr/Big Bad Bruins hockey explosion years. We lived on a hill by Fisherman’s Beach in Swampscott, where I hung out with the local commercial fisherman and I worked on lobster and commercial fishing boats with my friends.

At 14 years old, I wanted to start a lobster business and I did. I borrowed money from my father (and created a bank book and paid him back weekly till fully paid) and bought a boat and 25 lobster traps. Everything was going fine until a major hurricane hit and I lost most of my traps. I said, no problem. I’ll going to start a water taxi business (my first pivot).

I became a boarding student to Governor Dummer Academy (now known as The Governor's Academy) as a freshman. I spent most of my four years at GDA on probation or in trouble. I was not a good student at all, until I met some great teachers who saw something in me that no one else saw.

I have always loved business and my father, who came from nothing and had sent his children to private schools, said I should learn how the guts of business worked. I applied to Bentley and Boston College. I was accepted to Bentley, I am sure as a legacy. It sure wasn’t my grades.

During my years at Bentley, I worked full time bartending and waiting on tables. I really learned how to sell, multi-task, use customer facing psychology and almost took a job at Berringer Wine as their National Sales Manager. But I was dating a girl who was a computer science major and was working part-time at an accounting software company, making $40K a year and driving a brand new blue Celica. I had to me get some of that.

My brother had told me that there were three industries going to take off in the 80s: micro-computers, solar energy, and cable TV. In November 1980, I started selling computers at Computer City store in Charlestown for $140 a week, plus commission. It was a crazy time to be in that business as we became a top Apple reseller in the country and people like Mitch Kapor, Bob Frankston, Adam Greene, George Tate often came by, even Steve Jobs.

Somehow I grew from the backroom of a small Computer City store to an assistant manager in a satellite store. A year later, I found myself in the corporate offices. A year after that, I helped oversee the liquidation of our inventory, as the company went bankrupt. Computer City died through a combination of full page ads in the Boston Globe, and zero supply chain or regard for planning. Fun times.

KC:  How did you get into the tech industry? Can you share the different roles and companies you worked for?

WB:  After Computer City, I worked in the top manufactures rep firm in New England (every major vendor in the nascent personal computer world went to market using rep firms, including Apple). Since our firm actually did represent Apple, if you were a manufacturer you had to go through our company. From 1982 to 1987, I represented some of the largest vendors like Sony Monitors, Sony Recording Media, Hayden, Software Publishing, Great Plains Software, and many more. We set up distribution for these vendors in the six New England states and sold to computer retailers, mass merchants, wholesale clubs, distributors, direct mail companies and OEMs. I lived through six years of every day being a product launch for somebody. Lessons, money, and opportunity abounded.

From there, I was recruited into Lotus Development, at that time the world’s largest software maker, to create a global channel OEM strategy. We sold tens of millions of Lotus Works’ software to all the leading OEMs like Packard Bell, IBM, NEC, HP, and more. And we got to bring Leon Navickas’ piece of balsa wood to market. The embedded version of 1-2-3 into an HP calculator spawned a business that Palm eventually purchased.

Jim Manzi called me one day and said that Andy Grove (the Intel CEO) told him that networking was going to be a big thing and I should go work in a new group called to spearhead our networking efforts. This did not last long, as I got a call from Shiva Corp which was a Kendall Square start-up funded by Kleiner Perkins & Greylock. They needed someone to run sales and marketing. So I left my job at Lotus, where, at that time, I was working for the CEO and had all that security: big pay (at the time) and a first class lifestyle (we called it the 18” shrimp days). I went to work for a startup that was essentially broke, had so many lawsuits against it (Christmas parties gone wild and an employee orientation that can’t be described). I did it because I saw a product in their lab called the LanRover that I felt was huge. We built LanRover Inc and Shiva from a small Apple networking company into a major player in the space, grew sales to almost $300M per year and went public in 1994.

I started at Shiva in 1992 and worked in Kendall Square and re-built the sales/marketing team. I helped plant that flag into every country around the world and almost died in Japan from chicken pox. We set up an awesome distribution system that included competing OEMs (IBM, HP, Motorolla, etc), global distributors and sophisticated two step distribution. We left Cambridge for a campus setting in Bedford. We almost merged with Ascend Communications, who later sold to Lucent for $20B with a B$$.

Toward the end at Shiva, I got a call from a recruiter who represented Summit Partners (a large Boston PE firm), who had an investment in a Calgary company called MCK Communications. It did what Shiva did, but for voice. So in April 1997, I became CEO of MCK Communications. Quickly, we revamped our products, signed OEMs, moved to Boston, and invented a new branch product and established a unit to market to CLECs (new telephone companies offering services).

I replaced the entire management team and built a new team. We were able to grow that business rapidly and go pubic on my birthday in October 1997. With a peak market cap of close to $1B, MCK was a big win for our investors, Summit & Lazard Technology Partners. In 2000, I became Chairman of MCK and tried to take some time off with my family. We had a nice house, I had some money, and a CV. But I fundamentally knew that my greatest assets were the people I knew, who knew me, and that I was hopelessly in love with what was next.

Benson with Mark Cuban after an interview at MIT

KC:  Why did you end up becoming a venture capitalist?

WB:  Taking MCK public, flying around the world looking for public shareholders in private jets, meeting real bankers, I realized as great as I was being a CEO. I fell in love with the idea of being on the other side of the desk.

I started the Boston office for Lazard in September 2001. I always wanted to be a VC. A friend of mine back from the rep days, Stu Singer (a great mentor), told me he was doing some diligence work for Greylock and he explained to me how the VC business worked. So, when I interviewed with the great Henry McHance (Greylock founder) for the role at Shiva, I told him that I wanted to run a sales/marketing function for a VC-backed company and make them money, then be a CEO of a VC-backed company and make them money, and then be a VC. So I guess I was sort of self-programmed from a career perspective.

KC:  Can you share some of the investments that you made while at Lazard Technology Partners and Prism VentureWorks?

WB:  At Lazard, I invested in Tazz Networks, Kubi Software, and Aptsoft. Of those three, Aptsoft was sold to IBM. The others, while great ideas and teams, did not work out. At Prism, I invested in LogMeIn, M:Metrics, Maven Networks, KickApps, 5:1. Each of these companies had an exit, but m:metrics, Maven, and LogMeIn were the best. Some that didn’t make it were Everypoint,, and Worldwide Biggies.

Benson's office at Prism, described as "the lonely cave of a VC"

KC:  You were an early investor in LogMeIn and remain on their Board of Directors.  What was it about the company that led you to make an investment in the early days?

WB:  When I saw LogMeIn, it hit me like a ton of bricks that remote access as a service was a killer idea. The exact feeling I had when I first saw Shiva and MCK. It was a no brainer. Other people had issues with the deal, but not me. Also, they had a great business model, which enabled them to invent the freeium business model. Mike Simon was an awesome exec and the tech co-founder, Marton Anka, was as smart and talented as you could find.

I was lucky to have found the company and fortunate to meet so many great people and become close to so many Hungarians, too. When I met LogMeIn they were located in Budapest and that’s where the development still takes place. In many way, this is the VC dream: Be the first A round investor, lead the company through private financing and to an IPO, complete a secondary, and then do some kind of blockbuster deal which we just announced with buying the Citrix GoTo business.

KC:  You recently joined LaunchCapital as a Venture Partner.  What prompted you to join the team there?

WB:  I have worked with Elon Boms for several years across a few projects with ArccosGolf being the better known deal. I have great respect with what he, the Launch team, and the Pritsker family office are trying to accomplish. So when he approached me about being a Venture Partner, it was a complete no brainer.

In the venture business, it's best to do business with people you know and trust. Venture is hard and I was once told, “The worst ship to have in heavy seas is a partnership.” Also, Launch is not a fund, so there's no fund economics and portfolio-based decision making (which is a very good thing and LPs who don’t see that are missing something). And my mandate is to do early deals, which I really love. I am not a financial engineer and I love working with young and early teams and always searching for what the next new thing is.

KC:  You have been an investor in the Boston tech scene since 2001, how has the ecosystem evolved since then?

WB:  Oh man, I don’t know where to start. In 1980, there was a small ecosystem in the Boston Computing Society, that’s about it. But now, with incubators, MassChallenge, angel investors, universities, and hundreds of companies started from veterans of other companies, I would say our eco-system is world class.

I laugh at all the Valley comparisons. Tet them be great, they are. And so are we. I am very proud of the GE move to Boston, it says a lot.

The fund raising side has changed so much. Lets start with the end of the formal A round. It takes less capital to start a company now, and entrepreneurs have access to friends and family to get started, so there really is no traditional A round anymore. That quickly evolved, and there are less firms doing A round deals anymore. Firms like Kodiak, NorthBridge, Prism, etc. did not evolve into something else and the LPs like super specialized VC firms. This, combined with the increase of angel investing based on the wealth created by tech vets, has meant that companies can go one to four rounds without talking to a VC. And syndicate angel networks like AngelList further change the dynamic. Not to mention that some companies can crowdsource their way through the cycle.

KC:  What stage of investments do you primarily target?

WB:  We are not a fund, more like a balance sheet. We like early deals with big markets and can go deep on some. But our sweet spot is post-friends and family and to be involved in the first seed round.

KC:  What are the top traits you look for in terms of investing into a company or founder?

WB:  Vision, integrity, and humality. A leader who can attract others. A sense of humor is good too.

KC:  What sectors of technology, industries, or trends are of interest to you?

WB:  Right now, AI, bits, machine learning, analytics, sports tech.

KC:  What companies in Boston, outside of your portfolio, do you find interesting?

WB:  I am in awe of the biotech and life science companies. I think the AI and robotic trend is really interesting. I think these all show our university roots and I find these next gen technologies really interesting.

KC:  Greatest misses? What company(ies) have you passed on that you wish you hadn’t?

WB:  I’ve missed on a few that have had great financial returns, but I look at each deal as a mini-marriage. A five year deal where you spend a lot of time together, need to identify problems together and create solutions. From that perspective, I have no regrets about passing on any deals.

KC:  Who do you admire or who has been the greatest mentor for you?

WB:  I’m so lucky here. There are the ones from Governor Dummer I mentioned, but Jim Keily from Bentley let me be the first student in his Business Communication program, which earned me an internship in advertising. In the early days, Marvin Grossman and Stuart Singer were key. They taught me the psychology of selling to and working with retailers and how to get them how to behave.

At Lotus, Jim Manzi and Frank Ingari were big mentors and supporters. From Jim, I learned how to think, act, and play long term strategic ball. At Shiva, John Doerr and Henry McHance were huge supporters and mentors. I was lucky to spend a lot of time with John on pricing strategy which I will always appreciate. And at an industry conference John, my wife, Beth, and I were in the kids center cutting paper out for our then-two year olds and I got to see John as a person.

At MCK, I got to learn from Greg Avis, a Summit co-founder and all around super star. At MCK/Lazard, one of the original gentlemen of VC, Russell Planitzer, took me under his wing and taught me the VC business. My mentors have been a blessing me and I try to mentor others and would encourage everyone to find mentors or mentees. In fact one friend of mine, Colin Mahoney (Vertica/HP), has a reverse mentor dinner where he invites his mentors out. Imagine Andy Palmer, Howard Anderson, Chris Lynch, and me at a table. 

KC:  Outside of being a VC, what are you personal interests or activities?

WB:  I am married (now for 28 years) and love spending time with my family. We just moved into the Seaport, so we're exploring and dining a lot in the area, which is fun. I love sports, so we watch a lot of the Boston teams. I also love to play golf, which is mostly done on the Cape at New Seabury all 12 months of the year with the first tee times. And we loving boating around the Cape and Islands.

KC:  What type of music do you like?  

WB:  I'm about to see Government Mule, Umphrey McGee, ZZ Top with Greg Allman, and TTB. But no doubt my favorite is Frank Zappa. After 100 produced albums, thousands of live shows, and a vault which is getting published, there is always something great to listen to.

KC:  Are you involved in any charitable organizations?

WB:  I am an executive in residence at Bentley and teach an MBA class there called corporate immersion, where we won an international award and that program is now a graduate school requirement. Aside from financial donations, it's my way of giving back. I have been involved with the Red Cross and Dream Big!, as well.


Keith Cline is the founder of VentureFizz. Follow him on Twitter: @kcline6.