CEOInterviews.AIAlfred Chuang 💻 Il Miliardario della Silicon Valley che non conoscevi

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Narrator0:10

He is Alfred Chuang, he witnessed the birth of the internet and was one of the first hires at Sun Microsystems, one of the most historic companies in Silicon Valley. From there, he founded his own company and sold it to Oracle for 9 billion dollars, although he was forced to do so by Carl Icahn, the legendary investor. After that, he founded his Venture Capital firm: 'Race Capital' which is located right in the heart of Silicon Valley. So, during my stay, I reached out to him and convinced him to do an interview with me, where he told me his incredible story and shared his thoughts on the future of technology.

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Alfred Chuang0:39

I was born and mostly as a child I was raised in Hong Kong. I came actually to North America, Canada first for schooling and I came here for university. And then after university I went to graduate school. This is at UC Davis and I studied the whole time studying computer science but very theoretical things, mostly on database technology and then through really totally a serendipity situation.

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Narrator1:11

All the famous people, Bill Joy, Vinod Khosla was CEO, Scott McNeely, Andy Bechtolsheim and Eric Schmidt, he was an employee and a director of engineering. Carol Bartz, who was my boss at one point she was running as customer service. So all these famous people were in this company. History of Silicon Valley, you could see that. History of Silicon Valley is a historical Silicon Valley company.

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Alfred Chuang1:29

I went to work for them. I was actually there for a very long time, eight and a half years. Through a very serendipity process. Sun is a very interesting company.

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Interviewer1:36

What were you doing there?

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Alfred Chuang1:37

I did almost just about anything. So I was doing Technology development, worked on Databases, worked on Operating systems, worked on Windowing systems. And then I was in the field. I have worked for them at one point in Japan, an international group. I have worked in IT. I transformed Sun's own operations that used to run on an HP. I know it was very bad. And then at the end, towards the end, when I was leaving, I was actually working on a project

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Narrator2:12

Sun Microsystems started as a company that made computers, hardware, physical things, real computers, but it also developed software to interface with these machines. Gradually, over the years, Silicon Valley became less about hardware and more about software. And Alfred Chuang was catching onto this shift, helping Sun Microsystems transition from a desktop company to a server company. And it was during this process that Alfred Chuang made the most important discovery of his career.

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Alfred Chuang2:36

I discovered, at the time, the stack with the Unix computer, last server, along with follow-up operating system and running a database system were insufficient because the customers are basically moving from the mainframe having very large computational models running in batch form so everything runs in a sequence. So now they're running everything in real-time, in a real-time access database.

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Narrator2:56

Okay, unless you're an expert or a veteran, I need to explain this part to you.

And it's also controlled by a few companies, like Microsoft, Amazon, and Google. So what we think of as the ether is actually physical servers somewhere in Silicon Valley owned by Google, Amazon, and these other companies. This is called Cloud Computing, which means all the computational power needed for our tasks happens in the cloud, or rather, on someone else's computer. But what happened in the 1990s was completely different. All the operations on a computer back then were executed on a server called a 'mainframe,' and everything was processed by one large computer, one task at a time, known as 'batch processing.' This meant that if I had a thousand requests or needed to perform a thousand operations, I couldn't do them all simultaneously, but only one after the other. And sometimes, these tasks would take hours or days. So at some point, Alfred realized that if things were to be done in real time, Distributed Computing was the way to go, meaning the computational power needed to be spread across multiple servers

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Alfred Chuang4:10

To allow both the compute and also the storage to be distributed on multiple machines. I didn't know what it was called. And later on I coined it with a name called 'middleware' because it's in between the Operating system and the Database.

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Narrator4:21

This is how Alfred Chuang invented 'middleware,' a piece of code that allows the operating system to communicate with servers. That's why it's in the middle and called 'middleware.' In this way, unlike before, operations no longer happen in batch, one after the other, but can occur simultaneously, distributed across multiple machines. This is the very foundation of Distributed Computing that later led to the concept of the cloud I mentioned earlier.

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Alfred Chuang4:42

So when I went back to Sun and say: 'We have to be in this business.' 'This is where the money really is.' 'This could be bigger than a database company.' Sun, as a hardware company, decided they didn't want to be in the business. So I said: 'I'm gonna go do it.' So they were very supportive of that process and say: 'If it doesn't work, I'll just come back anytime.' 'If you need anything, let us know you need some computer, you need some money.' So they didn't get angry.

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Narrator5:10

So I ended up with that, started BEA systems. So, after discovering middleware, Alfred Chuang tries to convince Sun Microsystems to invest in this project. However, they decline because they are still focused on hardware. So, Alfred, along with two other colleagues from Sun, decides to found BEA, which are simply the initials of the three founders. BEA will focus specifically on middleware, helping all companies distribute their servers through this software. However, Alfred does not cut ties with Sun Microsystems. Historically, a lot of billion-dollar companies have spun off from that company, the most famous being NVIDIA, whose two co-founders also came from Sun. And not just companies, but also many CEOs have come from there, such as, for example, Eric Schmidt, the former CEO of Google, Satya, the CEO of Microsoft, the CEO of Autodesk, and the CEO of Motorola. Many of these companies, including BEA, drew their personnel directly from Sun Microsystems.

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Alfred Chuang5:55

We were all employees from Sun so that we originally recruited a lot of people from Sun until they told us to stop.

So a typical motion would be you walk into a store to buy a mobile phone and they will activate for you. Immediately, when you walk out, the phone's working. So they need real-time technology in the store to activate. You can't wait all night for the main firm to activate. So this actually makes perfect sense. And the other thing, as soon as you activate the phone, your bill's running. So they need billing also to be in real-time. So those two pieces cemented our position in the marketplace. And then obviously, once this got discovered, the bank, the pharmaceuticals, the transportation companies, the airlines

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Interviewer6:38

And that was the middleware?

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Alfred Chuang6:39

It was middleware. Yeah, our first product is a product called Tuxedo. So all it does is distribute our compute and storage onto multiple machines.

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Interviewer6:45

How does it make it faster?

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Alfred Chuang6:46

Because now you can actually have the data to sit locally. So in the beginning, it was all sitting in one server. Once this happened, it worked. And then internet speed increased. So we started distributing it out to become wide area in the workplace. This is the incarnation of the cloud.

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Narrator7:10

When you go to a phone store, you need to have your SIM activated immediately. You can't wait all night for a batch server to process all the operations, which number in the thousands or hundreds of thousands. To do this in real time, the store has to rely on Distributed Computing. And services like those provided by BEA became essential for the entire telecommunications sector. Then, once the internet became more popular, these services also became crucial for banks that wanted to start performing online transactions. For instance, wire transfers need to happen instantly. Or even more importantly, online trading, where financial transactions need to happen quickly.

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Alfred Chuang7:36

We have every telephone company in the world. In the farthest and the hardest place, they were all our customers because there's really no other way to do this. We became the lead player in this. And once we got that done, banking became our second, actually eventually become a larger sector because banking became real-time. Whether it is for personal or private banking, all the way to wholesale banking, fixed asset management, everything else become real-time.

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Narrator8:10

Enabling the customer to trade over the internet. Those are all for our technology.

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Interviewer8:14

Did you raise any capital when you wanted to raise the company?

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Alfred Chuang8:16

We did. Our fundraise was a unique one. Because back then, this idea was so far fetched that you tell someone in 20 years, the world's gonna work from a mainframe into now normal mainframe. To be now, we just had a bunch of server farms sitting in the ether. Anybody can get access to an instantaneously, they can start writing code and deploy. It's something that people cannot imagine. They couldn't understand. So we were very lucky. We ended up meeting a guy called Bill Janeway. So Bill Janeway was a VC. He's based in New York. So he ran all the technology investment at Warburg Pincus, which is a very old firm. Normally they invest in much later stage, but during that era in the late 90s they just met the late 90s they were very interested him in particular to build a practice to invest in basically groundbreaking technology for this transition. So this is very thesis driven, was to kill the mainframe. So we were very aligned.

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Interviewer9:11

And so this kind of freed us to go pursue the business itself. And they got a big chunk of the company?

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Alfred Chuang9:15

They got a very big chunk. So I just want to give you an idea. The $50 million they invested ended up returning to their limited partner almost $7 billion. This deal worked out very well. It was actually the highest return venture capital deal for 20 years even bigger than Google. A huge chunk of the company. Of course, and they deserved it because they were willing to back us a lot of money.

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Interviewer9:33

How did you use those money to scale?

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Alfred Chuang9:34

Once we got the money, we went off to obviously start implementing technology. Now the problem with any new technology and look at all the stops that we have now I'm now in the business of funding these technology companies. It just takes a long time because you think about the development, finding your proof of concept, and expand and hire people to sell because enterprise software, you need to sell them you need to help the customer. So we, because we have the capital, we started to think out of the box and is there any way to cheat?

So now we're in Europe. And most people won't start with France they have very smart engineers. So that's where we started back in the 90s. We bought a company here in Silicon Valley. We bought a company in the East Coast. With those three acquisitions, this company, Austin, had almost 150 people.

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Interviewer10:24

You were using money to scale faster, by M&A.

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Alfred Chuang10:26

By M&A, through acquiring channels. So now everybody does it. Our good friends at Bending Spoon he is using this exact playbook to get there faster. We get into a market, activate, reformate the technology precisely what we did. That allowed us to get ourselves up on the ground.

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Narrator10:39

So, to scale the business as quickly as possible, they spent $50 million to acquire other companies. In fact, hiring hundreds of people from scratch and finding many clients is very challenging. Instead, with an M&A strategy, they were able to move extremely fast. In just three years, they went public. BEA went public in three years with $100 million revenue.

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Alfred Chuang11:13

I have companies that we've invested in is closing in $2 billion in revenue, and still helped privately because now it's so hard to do. The compliance process is so difficult. Back then actually was much easier. Actually, our timing wasn't terrific when we went public.

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Interviewer11:26

How long did you?

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Alfred Chuang11:26

It took us probably three, four quarters, which is now nothing. Now people would take 10 years. The market was so turbulent. We have considered even after we went on the road show of pulling the plug on the whole IPO because the market was so bad. But I think obviously in retrospect we clearly made the right decision. Once we went public, people are discounting the value of being a public company to have yourself reporting so structurally. So your customer gain confidence to know when they buy from you this is a real thing. The value is very high.

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Interviewer11:53

What percentage of the company went actually public?

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Alfred Chuang11:55

Only about 10-15% at the time. Very little was floating, yeah.

Long-term business. I know this is the part that throws people off in business because everybody study and say well, who are the wealthiest people in the world? Elon Musk is, Jeff Bezos, Bill Gates is. All tech guys, okay? So people are mesmerized, they say, wow. Something with software have generated very high margin, hence generate a lot of cash. So they have very, very high beta. Now even hardware business look at, you know, Jen-Hsun, with NVIDIA they can reach $3-4 trillion in market cap. People believe that but they forgot sometime it takes 20-30 years to get there. So they love the story. So unlike anything else this is a very, very long game. Anyone who take a company in public you can't think about the stock price because it's gonna drive you crazy. What it goes up today, next week, next month it's almost irrelevant if you look into it for 10 years. We only hear about a story that people sold out their Apple stocks too early they sold out NVIDIA's too early. They didn't wait this time.

And build a product first, right? Technology. And then after that, one of my co-founder retired he decided to do a very interesting thing. He said, Alfred, you should run sales. If you were able to conquer this and be able to write a code and sell the code you're special. I looked at it. I said, well, it's very hard for a software engineer to go sell. To sell, you stick your hand out and you ask for something. You know, a 50-50 chance you'll be rejected. Introverted engineers is not designed to be rejected but if you're able to ever to cross that barrier it becomes very powerful. So I think now it's a much more common thing for engineers to know. Once you take on the CEO role you become the chief salesman. I took on that, I learned a lot. I learned how to create quota for the sales team. I know how to actually the construction of the sales team work out. I try to understand the psychology of a salesperson which is dramatically different than an engineer.

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Interviewer13:54

Why?

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Alfred Chuang13:54

To them, the complaint motivates them. It's beyond the money, it's what they live on.

And how you will sell and package differently. So now you fulfill the chain. That's kind of what I did. And then soon after that I became CEO of the company. So I was CEO for majority of the time. I had a very good time. I learned so much. There's no CEO school. Everything you have to learn from scratch it is not an easy thing but the challenge is so different every morning when you wake up. It is a very addictive process. If you can say what are the most important thing to be a great CEO. Number one is this business we don't have any machines other than a computer. We're in a people's business. So if you don't assemble the best of the best people you're just not gonna win hiring. If you don't think hiring is the number one of the number one priority that you have you won't be successful as a CEO. And it's never ending by the way because you will have people that, I tell the story all the time, they make too much money. They retire early. What do you do? You're gonna have to replace them. Some people, they can't scale the business. So you will have to replace them. The business is self expanding. I remember there was one year

You basically is all gun blazing. Now obviously have a hot company. It helps you to recruit for the people that will be interested in you. But then you first have to hire the best recruiter. You don't have the machine to recruit. No one is gonna come in. So that's very crucial. And how do you put together the compensation to he leaves other people, so they want to come work for you? How do you get them excited about business? And you tell them, I mean like who would have been in NVIDIA 30 years ago and say: 'This will become a $3 trillion company' No one will believe you. That is the job of the CEO to convince the people that will be the case. Those kind of things are super crucial. At some time, the company will also transition from just a growth company, very typical software, into a profit company into a cash generating machine. We always say cash flow generation is shareholder happiness because then it's a real business.

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Interviewer15:52

Yeah, that's the goal. Did you arrive at the point?

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Alfred Chuang15:54

We totally did. When the company was sold in 2008,

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Narrator16:11

Those were the years when the internet was growing exponentially. And they were ready to work with all the companies that were starting to operate on the web.

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Alfred Chuang16:18

Four years after the company was founded we pivoted the company to went straightly into the internet. There were a lot of doubters in 1998. Internet would become the backbone for all business transactions. Now it's crazy to think, but yes. I know. They were very large pharmaceutical company, even Telco would say, well, we'll never be on the internet. I know you look back and say, well, how long was that? Just like how we think of AI today. People say, oh, we'll never be using AI. That would not be a smart thing to think about. We actually pivoted the entire company and recreated the technology called the Web Application Server to do the distributed transaction processing to replace our core product, which is called Tuxedo, a new product that's called WebLogic. The WebLogic Application Server is still used in just about every e-commerce site. At times, I would still see errors. You know, when I check in the airline: 'ooh, these are our errors.'

Bigger than Sun was because Sun was only distributing on their machine. Everything else out of Sun were distributing the Java's for distribution.

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Interviewer17:16

So you were distributing Java from the internet.

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Alfred Chuang17:18

Oh yeah, that transition was monumental. We needed to do it because I believed in it. I believed that the internet was gonna be the media of how people would do everything. First, we were reading, then we have to be writing. So how do we actually be able to transact on the internet? Now you look back like you probably got here on an Uber. That's transacted on the internet. You put in some information, the car showed up, you get in the car, you get charged. It's amazing to buy a ticket to fly from Italy to here. You look back, it looks obvious. In the beginning, it wasn't. Our job was to convince the world, that this was gonna be the case. This one worked out very well. It was a nice boat to me.

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Interviewer17:46

Right.

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Narrator17:46

So, during the dot-com bubble years, Alfred saw his company grow tenfold in size, and he also saw his wealth increase tenfold. But then, as we know, the bubble burst.

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Alfred Chuang17:55

So when that bubble bursted and by the way, AI has a bubble, eventually it will burst

Exactly, do it fast. Fast speed trumps everything. You walked in here and say: 'Well, why is this place called Race Capital?' Because I believe if you don't move fast, you have no chance. Almost the concept of lead scaling, right? It is, it really is. So moving fast, but then at the end, you have to create a real business. So obviously, some of our customers disappear because our ISVs, you know, people that built on top of our platform they built the applications. Some of them, they didn't work up because the business wasn't solid enough. When you all of a sudden you lose capital, right, the capital market shrunk which is then the stock market crashed. It's very difficult to survive. The real ones, they survived and continue to prosper. We lose some customer, but our enterprise customer then really proceeded to implement it on the internet. So our business thrived and they actually not only survived but actually did very, very well after that.

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Narrator18:48

So, despite the bursting of the dot-com bubble, BEA not only didn't fail, but it grew even more. In fact, generally, during such bubbles, it's not the foundational technologies that collapse,

Momentarily weakening BEA's position. To clarify, at this moment, most companies working on artificial intelligence actually, don't have any proprietary technology and are built on top of models from ChatGPT, Microsoft, Google, or Anthropic. And so, if and when the AI bubble bursts, the first projects to collapse will be theirs. And not, the companies that actually have foundational technologies, like OpenAI. So, we now know that BEA continued to grow significantly even after the crisis, but I imagine Alfred must have been worried when he saw most of his wealth disappear in such a short time.

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Interviewer19:39

During the free fall, were you scared?

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Alfred Chuang19:41

Personally, I wasn't, first, because I was just looking at our massive customer count. BEA is a company that in 15 years history, have racked up over 100,000 enterprise customers. There's Fortune 100, Fortune 1000, Fortune 2000, Fortune 3000 anybody who's really in business were using this technology.

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Interviewer20:12

Fine, not as bad as other companies.

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Alfred Chuang20:13

No. Well, no, it didn't drop 90%, but because of the whole overall market drop, they were not putting that kind of growth multiple on the stock anymore, it is just what it was. Your recruiting become more challenging because now, comparing to a brand new company, their prospect is unlimited. Now, your existing company, you see the jitter in the stock itself, but that was a short term thing and we were able to battle through that. The company to continue to grow headcount, no problem it just became a very large and solid company.

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Interviewer20:34

The company was thriving, but then you sold it.

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Alfred Chuang20:37

Yeah

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Interviewer20:37

How so? And I was researching on Wikipedia and I saw the name of Carl Icahn. Is it that true?

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Alfred Chuang20:43

It's true, it's true. So what happened was, and this would make perfect sense. You know, Larry Ellison, he runs Oracle. Larry is one of the smartest entrepreneur ever in software. Genuinely, I have huge respect for him and he has always been interested in our business. This would make sense to you. Why people want to acquire the business.

To free up competitive ground that you lose into your competitor, because they may have advantage over some other product that's surrounding the core product. That was the whole strategy of Oracle. That's exactly the whole strategy of Oracle. BEA was a very successful acquisition, obviously, there were no reason for me to sell him the company because we're generating so much cash we're growing 20% why do I sell my company? I always asked me, I said, well, what do you think is likely result if BEA is still around today? I said, well, if you just look at the numbers, we had over 100,000 customers and we were in the similar class of company as Adobe, Intuit, that class of company. We were actually much bigger in market cap than NVIDIA at the time. If you will just do the math and we continue to evolve the technology, that install base will likely survive. Today probably is a $1,500 billion company. I mean, life, there are many things can happen to you, you have to kind of adjust yourself to your situation

Strike dates do it like everybody else our investigator went on for six quarters so six quarter we couldn't report earnings. The idea were completely cleared we didn't do anything well but our stock was very depressed so Oracle say good time to buy! they did approach us and it went from a friendly kind of deal to all of a sudden that we have a activist shareholder which is called a very interesting man I spend a lot of time with him.

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Interviewer22:30

How did he get into the company in the first place?

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Alfred Chuang22:32

Oh, I mean, he does research he does research he is looking for value company right.

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Interviewer22:35

Stocks or private deal?

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Alfred Chuang22:36

No no no he accumulated a lot of... actually bought options to the shares. It would accumulate up to like 9% or whatever percentage that you don't have to report publicly. So you couldn't see them You kind of see right, so then he accumulate to a position and then he'll call me and say well I'll let you know. I'm now you're one of your biggest shareholder we need to have a talk. Well actually he does it on TV publicly so you wake up in the morning and say oh I'm on TV and he announced that

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Interviewer22:56

Really?

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Alfred Chuang22:56

Oh ya ya

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Interviewer22:57

Oh, that was an interesting day for you.

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Alfred Chuang22:58

Oh, Carl has a style.

Yahoo is the next one because it's risky right cause these company can recover and grow at a stock price and jump very fast so this is a new field for him but historically he went after like much older company that's much more established much slower growth these are very different that kind of helped the cause for Oracle to say back then we don't have like class 2 classes or shares so you have a stagger award but all you need is just kind of get the first generation of the first round of the directors off the board. They can start putting people on the board and they can stop rocking the boat so that was kind of intent. I think Oracle also get hired of you know not coming to a deal so the deal became hostile. Once you become hostile is a very different idea

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Interviewer23:44

It became hostile because Carl Icahn was buying, was buy more shares?

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Alfred Chuang23:47

No, not just because of Carl, because Carl obviously wanted to see an exit, he's only there to make money. was pushing the board

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Interviewer23:52

Oh sure, pushing the board, no doubt.

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Alfred Chuang23:54

pushing me and then Larry wanted to buy the company he will get impatient so he's pushing away

Now you have car which our industry have not seen now you have a friendly bid become a hostile bid and in the background always still very friendly with Larry as a friend, and then you have six quarient in reporting earnings And so now you're looking for sensational growth in the business. and then the financial crisis okay. We were, our number one vertical was banking.

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Interviewer24:27

So you were happy to sell in this specific command?

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Alfred Chuang24:29

So well, Lehman Brothers, Bear Stearns were big customers. They were using a lot of our technology for trading, for many things.

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Interviewer24:36

So you lost a huge customer.

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Alfred Chuang24:37

Well, we lost customer, so then when you take a company public, this wasn't my company, this is a shareholder's company. I think people really have to remind themselves when you take the company public is the public's company is not the CEO's company is not founder's company so then I have to do what is still in the best interest for those shareholders when you see the world could have completely collapsed which we thought yeah towards coming was getting worse and worse and worse

Is in the top radios and software so I thought it was something I needed to do I thought it was right decision for the shareholder as much as I love the company enough to people I still miss them every day my job wasn't to do that. My job was to No. 1 as think about shareholders

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Narrator25:23

So, on one hand, Alfred thinks that if he hadn't sold BEA, it could have become a 'trillion-dollar company' today. However, in that specific situation, there were many uncertainties, so he decided to sell, yielding to the pressure from Oracle, Carl Icahn, and fears stemming from the 2008 crisis. This decision still allowed him to make a $9 billion exit, of which, according to him, a substantial $7 billion went back to the earliest investors. So, I assume that between $1 and $2 billion were shared among shareholders, the original team, and the founders — no small amount.

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Interviewer25:49

You were in the time probably in the center of the world many thing happening things that right now are in documentaries and movies a crazy time to be in, after that is like the peace, how did you react?

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Alfred Chuang26:10

So mine already one chapter was close. I think I rushed into trying to do another new thing. I tried to do many things to fill the void of how my life was, which is kind of crazy I was on the road all the time and have access to almost every CEO on the planet and be it was top 3 or 4 largest software companies I was trying to fill the void. Now my advice to people that when this happened to them is really tried to take at least one year off I didn't do that I really should have done that. it is not that I didn't have other passion you walk in I'm really into cars are in the racing I should have really gone off to do that full time for you. I didn't do that I wanted to fill that void I restarted that too early the first couple four years was a tough journey for me to kind of find a new purpose of life.

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Narrator26:46

So, looking back, Alfred would at least take a sabbatical after the Exit, focusing on his passions, like hobbies outside of work. Additionally, in hindsight, he realized that even while working, it makes sense to have a hobby to avoid burnout.

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Alfred Chuang26:57

You can get burnout by the way.

I mean if you ask me what do I love the most I can't wait to get up in the morning and back to be doing work. I will always tell out our CEO system find something that good to distract yourself. So when you working you have to find a way to take the edge out get a hobby some people like to paint some people like to play music. For me, I love to collect model cars, love stuff with cars something that will allow you at all times to always take that 10 15% edge off of you so you have always have a reserve your mind is thinking about more broadly of things is actually good for the business.

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Interviewer27:37

Your life changed right made also a little bit of money during the acquisition How did you adjust also to that? Did your lifestyle change?

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Alfred Chuang27:44

It didn't because I think I've already been added for a long period of time there were no need for me to drastically change my life and started to do dangerous rich people stuff I was taught in the family where you have to really ground yourself all the time and not get those kind of things affect you

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Interviewer28:10

And how did you transition to risk capital?

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Alfred Chuang28:13

A very natural thing to get very engaged in Silicon Valley if you're not directly running a company so this whole concept of helping other people mostly is through advicing and on also investing. So this all concept of the angel investor concept is monumentally big here this is a lifeline for how startup get going. Startup, they don't go to people who come to a firm like this in the beginning. They go to find their advices people they have been talking to or people that work for before they mentor them and they give them $50,000 and collectively get a few hundred thousand hundred thousand dollars million dollars you get the company off the ground then you raise money from the venture capital it's a very typical process so I was the same I was a big angel I invested in over a about close to 200 companies.

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Interviewer28:52

What's the biggest success

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Alfred Chuang28:53

Many big success I had marketing hot court company that were heavily useful

You want to go confide with someone that understand your pain, so I've been through this process one thing left that's how I build a reputation for being an angel that a CEO a founder can go confide will. So I was only funding technical founder. Someone actually a responsible building the property found the company, so they were about to go for my whole journey

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Narrator29:27

Over the years, Alfred made the natural transition of all successful founders in Silicon Valley: he became an Angel Investor and an Advisor. Over time, however, the number of companies he invested in kept growing. So, he decided to give structure to his activities and founded a proper Venture Capital firm, aptly named 'Race Capital.'

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Alfred Chuang29:43

First is a pretty exhausted process could make many people come to me, so now which one do you spend more time with because it's not somatic right so it's not a structured business wasn't a business is more like a hobby but except is become a very big hobby expensive big hobby but lots of fun.

So I've been toying for some time as well maybe I create a firm and culturally in Silicon Valley is very interesting. You go to angels for one thing, you go to the VC for another thing that other thing means sometime government bought seats sometime elasticity of how long they invest and these people become specialist that you're now on the same team with them. That also means it has to be real a BC means we have money behind us so we have our own governance so when we invest in them everything go through that chain of command so then you need a firm, you need a vehicle and so the race capital get started in 2019 for that reason was to make the into a business itself and it work I have an office, I come to the office you know once again the money. I am traveling to go see the companies helping them on the deal became a business. I have already been leading a years before founding Grace Capital I was already heavily investing in the big data.

I

Interviewer30:55

So why do you invest in big data there's only two reasons

A

Alfred Chuang31:12

Everything that we did before with data and machine learning now make perfect sense. If you walked around in this Palo Alto neighborhood, many people will say, we are a AI infrastructure investor we really are AI infrastructure invested we don't know how to do anything else. The speed of how we innovate you're so fast. I mean that's a very unique thing about this business The business we're in, you can see one generation of technology come, go, reinvent it. You still are in it. You still are in it you go for the reinvention it dies again and get reinvented again. No idea in the should I see what is in transportation is in medical have this level generations to see the queer Generations to see the... Prefer very lucky people you live basically 6 lifetimes.

I

Interviewer31:47

What about the next lifetime?

A

Alfred Chuang31:48

So you show internet from zero to everything and we are gonna see AI from zero to everything there Billion dollar question is how is gonna deploy

I

Interviewer31:57

Yeah which way where to invest...

A

Alfred Chuang32:10

Be able to be successful in training in the foundation model and the costly, right? so right now until we see the GPU prices goes down this a billion dollar year exercise. You only have large companies that participate in them make sense the Google the matter the Microsoft, Open AI, and that's likely is gonna be maybe one independent player at best those will be the survivors and you need huge amount of capital to continue to be in that business. The much more interesting for him to play will be the fetch part of it once you have the foundation model you may need some specialty things that like data that cannot share publicly when I train them, those will be very important and unique so let's say I'm a bank and I wanted to serve my customers or maybe I even create a product I want to reach out to the customer sold to them. Those are very proprietary to the person so the bank has responsibility to make sure that. anything about them is kept privately. So those type of training and those type of fetching even the fetching for the public data is extraordinary critical for the future of enterprise applications,

Development tool security tool. Remember 3 things that most important to these company is a sovereignty of the data, is compliance and security. We need tools be able to do that to saveguard a customer's property which is the data. So this stack the middleware will developing Gen AI application in the enterprise So we are heavily focusing on this thesis to make this happen.

N

Narrator33:29

Alfred's vision on AI is clear. Much like the internet, he wasn't concerned with building computers or creating software, but rather with developing the interface that allowed companies to use the internet. Similarly, with AI, he doesn't see the opportunity in building models, which is now largely dominated by the usual companies like OpenAI, Microsoft, and Google. Instead, he sees the opportunity to help companies create infrastructures to use models internally in a secure way. This is because companies have specific and often diverse needs, and they are frequently heavily regulated, requiring careful attention.

A

Alfred Chuang33:56

Right now is the far west on how these people access to data,

I think we're mixing two things one is regulating Because the way that our most popular models one is safety because the way that our most popular models are trained today are they don't know how to stop. So safety is a very important thing. The regulating who can do what to who is a whole different business so when it becomes a safety issue you may have to regulate. I think, I lean on much more of don't overregulate things that will ultimately will prohibit us from innovating, at this very important moment this is a moment where we about to have childbirth. The child's not born yet, he's right there ended up, you can either kill the baby or you can allow the baby to be healthy baby very, very useful to the society. and grow up to be very very useful to the society yeah that's kind of how I see it.

N

Narrator34:44

Among the projects he has invested in, we don't find only AI but also crypto, including the 'SOLANA' project, which is one of the most popular cryptocurrencies at the moment. So, I asked him what he thought about the crypto world.

I

Interviewer34:53

What do you think about the future of crypto?

A

Alfred Chuang34:55

You know how we actually ended up getting interested in web free not just crypto alone,

You just look at the reality is we have a lot of idol resources whether is disc or is actually computer, most of our desktops are idol, most our phones are idol but we have no way to reclaim them, when is not doing anything, and how many computers are burning off your energiex the expensive energy and valuable energy they don't do nothing but sitting. I think that you have to really think like we're free it though concept this it allowed that to be proliferated and validated completely in a fully decentralized fashion.

N

Narrator35:36

Here too, Chuang's vision aligns with his past. Distributed servers have been his life, so for him, it's natural to imagine a world where computing is fully distributed and not controlled by the usual companies, but decentralized across all devices. As he often points out, these devices are underutilized and consume energy, and of course, technology like blockchain can help in this case. However, for now, the crypto world hasn't moved in the direction he envisioned.

A

Alfred Chuang36:10

With a token makes perfect sense. Why would a developer keep using their stuff they should be sharing a piece of the action when the underpinning technology become successful cause have proliferated it, who can come misused So I think this is one area where some rules of engagement would be nice, wich I think this round two, one, three of crypto, hopefully we'll have more of that in place. I still believe in it, but I'm only investing in infrastructure type level type stuff. Layer one, makes sense, layer two, makes sense, They make sense to me, right?

I

Interviewer36:35

Why not here invest in some random protocol to try to make money?

A

Alfred Chuang36:38

That wouldn't make sense for us.

I

Interviewer36:39

Not stupid coins.

A

Alfred Chuang36:39

Exactly, yeah.

N

Narrator36:40

This conversation with Alfred has been enlightening. I always say this, I say it every time, but this year I would have never imagined having a conversation of this level. It's people like Alfred Chuang who have made Silicon Valley's history and who have enabled the things we use every day to work this way. So, it was an honor to have this chat. If you want to see more conversations like this, subscribe to the channel

Alfred Chuang 💻 Il Miliardario della Silicon Valley che non conoscevi

About Alfred Chuang