Why I Admire Kevin Compton

Dean Kaman is the famed inventor of the Segway. A terrific invention but a mediocre commercial success. I remember all the hype surrounding the Segway. It was on the news, the morning shows, late night shows and cable.

Seemingly everywhere, it was designed to solve the problem of medium distance personal transportation. Why use a 3,500 pound automobile when you can jump on a Segway to get where you are going?

In the midst of all this hype, Bill Leonard and I were in Silicon Valley to meet with Kevin Compton. Compton, at the time, was a high-profile partner with Kleiner Perkins Caufield Byers, which was the most successful and highest-profile venture capital firm in the world.

No Segue to the Future

We were there to brief him on being the keynote speaker at the annual High Tech Prayer Breakfast in Atlanta. Our meeting ended, and we were headed to the elevator when I asked him a question, “Why did you invest in the Segway?”

I asked because I didn’t see how it would be a commercial success. I thought the product was really cool, as did the media, but I couldn’t figure out who would buy it.

The Segway was priced at $5,000. In the interviews and demonstrations, we were told it was a product for anyone who walks. Five grand in 2002 was a lot of money for a cool toy.

He answered, “The Segway will be one of the most successful products ever launched.”

I asked, “Why do you think that to be true?”

He said, “Watch.”

About 50,000 Segways were sold from their commercial launch in 2001 through 2009. I started seeing the odd Segway here and there. The only time I saw them in any concentration was at Atlanta airport. Some of the cops were using them on patrol.

Then, years later, I saw the Segways in Nashville as a group of tourist were using them on a tour of downtown. All my sightings, my casual market research, proved I was right. The Segway never really went anywhere.

I learned a valuable investor lesson from this experience. I need to trust my intuition and experience. It does not matter what others think is going to happen with a product or company, it matters what I think.

Although it was a cool product with some emotional appeal, the price point to utility value killed it. I knew this from the start in spite of what the world and experts were saying about it.

The Heart of Angel Investing

I admire Kevin Compton because he was the first investor in Segway. He invested because he believed. His intuition and experience told him to do it. He didn’t do it because everyone else was excited about the product. He did it because he believed in the product. He believed it would be a big winner.

He learned this lesson early in his venture capital career. He led the Kleiner Perkins investment in Citrix in the early 1990’s. Citrix hit hard times shortly after the KP investment, but Compton stuck with it. He believed.

As I understand it, he invested a lot of his personal time to get Citrix back on track. Management changes, strategy changes, and product changes. This belief and personal time investment reaped an amazing return. Citrix went public on December 8, 1995, with an end of day valuation approaching $500 million.

Compton believes and has high expectations. Although Segway wasn’t what he thought it might be, I am sure he did just fine. He also did a great job at the High Tech Prayer Breakfast. See for yourself.

As an investor in new technology companies, trust your instincts and experience. Invest because you believe the product or company is a winner, not because everyone else does. It is your money you are investing. Take the responsibility and be excited about your investment. This is the heart of angel investing.

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