7 Lessons On Emerging Technology Investments From Ashton Kutcher

From Hollywood To VC

Known widely for his acting and producing career, Ashton Kutcher is also a highly accomplished technology investor and advocate for security and privacy issues. His venture firm, A-Grade Investments, has invested in some of tech's most successful startups, including Airbnb, Spotify, Uber, Flipboard, SoundCloud, Foursquare and Shazam. Kutcher took the stage last Wednesday at Focus 16 in Las Vegas with Intel Security SVP and GM Chris Young to talk about his experiences in the tech investing space and how he pinpoints winning emerging technologies. Take a look at some of the lessons partners can take away from what Kutcher said he's learned in his time as an investor in emerging technologies.

Something New

Kutcher said he has invested in companies that have both succeeded and not done well. One thing he said that stands out from those that have excelled in the market is they offer a technology that is doing something that is new and different from what's already out in the market. For example, Kutcher said he found that with companies like Spotify and Meerkat, which he invested in.

"We look for companies that are trying to do something that hasn’t been done before and are removing friction from a process that historically exists," Kutcher said.

High-Quality Team

Kutcher said the core of any successful startup is its leadership team. He said he looks for startups that have "brilliant people that are driven, have some level of domain expertise and that have charisma." The ultimate barometer, he said, is if his team would be willing to work themselves for the leaders the startup has in place.

Public Awareness

Public awareness of a startup can be a double-edged sword, Kutcher said, providing publicity if a startup is successful on one side but also heightened awareness of its failure if it goes the other way. Customers are also likely to only try a new product once before passing judgment on it, he said, which can be a problem if they try it too early in the development cycle. Kutcher said he has invested in about 100 companies over the past eight years, 20 percent of which have succeeded, 50 percent of which executed neutrally and the remainder of which have failed in some form.

"It was a learning process for me early on how much to go out and drive public awareness around a company because software is fragile and ideas are fragile," Kutcher said.

Ups And Downs Of An Elevated Profile

Kutcher said his celebrity profile is both a benefit and a drawback in the venture capital investing space. On the bright side, he said it is easier for him to get a meeting with companies and those he does invest in gets instant publicity. However, he said it also creates a lot of noise from companies who want investment from A-Grade Investments and heightened publicity if an investment fails. Kutcher also said his high-profile status also makes him a security target himself. He said he has to be careful that all his staff uses appropriate security technologies themselves to close up vulnerabilities, even tools as basic as two-step verification, to protect himself and his investments.

"There is so much attention put on the heart and so little put on the fingers, but the fingers have to be just as protected as the heart," Kutcher said.

Solve For Problems Ahead Of When Needed

Kutcher said some of the most interesting companies he has looked at are those that expose problems he didn't know existed, but wanted to be solved once he became aware of them. He said CoroNet, which searches for dummy WiFi signals and alerts you before you connect to them, is an example of that. He also gave SentinelOne as an example, with the company's next-generation endpoint security technology. Companies that solve those types of problems ahead of when they are needed or realized are the ones that are "giant green grass for investment," Kutcher said.

Invest In Security Early

When it comes to emerging companies investing in their own security solutions, Kutcher said he advises them to start early. Kutcher said he sees companies being most vulnerable when they've moved beyond early-stage startups to mid-stage companies, around the Series A or B timeframe. Kutcher said a good rule of thumb is when a company starts investing in marketing also to start investing in security. He said that is when A-Grade Investments begins encouraging them to invest in security technologies in a serious way.

"By the time you get big, it's too late if you haven't thought about it," Kutcher said.

Need Security Doctrine

From a public policy perspective, Kutcher urged the solution providers and security decision makers in the audience to push for a doctrine around cybersecurity. He said there needs to be a global doctrine around what happens in the event of a breach and implications after that.

"What needs to happen is there needs to be a public narrative that changes around cybersecurity where you don’t have to have a breach happen to realize how serious it is … We have to get people to think differently," Kutcher said. More importantly, he said emerging and legacy security companies need to step up and help policy makers define those doctrines in an informed way.