Jul 11, 2016 – 11.00am
This story below was published in the Australian Financial Review by Yolanda Redrup in July 2016. This article is copyright The Australian Financial Review.
Silicon Valley with Melbourne’s best networker
Melbourne 30-year-old Phillip Kingston is a master networker – not that he particularly likes that word.
The Gen Y entrepreneur and venture capitalist, who is the managing director of Trimantium Capital, knows more people than most investors who are double his age. Highly connected to not just Silicon Valley, but London, Tel Aviv, China and the Middle East, Kingston counts world-renowned PayPal co-founder Peter Thiel, the Winklevoss twins and hollywood film producer Tom DeSanto in his close network.
It’s Kingston’s open-door attitude and philosophy of giving that’s resulted in his ability to not just form connections, but turn them into valuable business contacts, and in many cases friends.
“My approach to networking has just been to give, give, give and just keep giving, be it introductions, ideas or advice,” he says.
“The term networking is very scarred because it has this exploitation feel about it, sort of like I’m getting something from you.
“It may not be upfront, it may not be in the same kind of way, but if you get people involved in what you’re doing and help them with what they’re doing and with their problems, then you’ll find they help you with yours.”
After first meeting Kingston over coffee around October last year I have since been introduced to big-name investors from around the world, superannuation fund managers, investment bankers, politicians, start-up founders, serial entrepreneurs from many industries and a multitude of other interesting people.
Most recently I travelled with Kingston and a group of such people from more than 10 countries to San Francisco, to visit some of the best tech unicorns ($1 billion-plus companies) and start-ups in the region. The aim of the trip was to connect global investors to US deals.
First stop on the tour was big data analytics firm Palantir, often thought of as Silicon Valley’s most secretive company. As it turned out, the company lived up to its reputation. It refused to let me be part of the tour, but it was not entirely unexpected.
The company is known to have helped the US government track Osama bin Laden and continues to work in secret with defence organisations around the world. Led by chief executive Alex Karp, himself a private person who has his own security team, and apparently an office equipped to prevent eavesdropping, the firm had a leak of confidential documents to TechCrunch in January that revealed some of its major clients, such as the Los Angeles Police Department and 12 US government bodies such as the CIA and the FBI.
The next stop on the tour was Facebook. The group, which included UBS Wealth Management head of investment strategy, David Sokulsky, IOOF chief investment officer Steve Merlicek and early Skype and Baidu investor Roderick Thomson, were all excited, but it turned out to be disappointing.
There was a no-photos-inside-the-buildings rule, but as it turned out we never made it inside any of the buildings – unless you include the free ice creamery, bakery and gift shop. For Facebook employees though, there is very little reason to leave the office.The headquarters is a cross between a college campus and Disneyland. There’s a day spa where ladies can get their nails done, a pop-up clothing shop that helps support the local economy, a free bike servicing shop and multiple restaurants where the meals are free. What we saw of the headquarters felt like a playground for grown-ups.
While many of us in the group were San Francisco newbies, Kingston spends more than two weeks every month travelling and has visited San Francisco many times.
“Basically, the better the deal the shorter it travels. The very best deals in the world will rarely leave the living room of the founder,” he says.
“From an investors’ perspective, if you’re not deeply connected into the social circles of who they go to for advice, who they talk to about their business, then you’re not going to get the best deals. Deals don’t happen, as much as we like to pretend they do, in investment committees and board rooms.”
Trimantium Capital started out in 2008 as what was effectively a single family office, where it made investments for a high-wealth family. The company ran that way until 2013 when Kingston decided to bring in other wealthy families, predominantly from China and the US, and create a pooled balance sheet.
Unlike most firms he does not readily talk about the companies he’s backed or how much money they’ve raised.
“It’s hard to believe that we’d be able to access these companies, but we don’t want to draw attention to the wrong thing,” he says.
“All of our public communication is around trying to help the Australian ecosystem and trying to provide some thought leadership. A lot of people struggle to understand why we don’t talk about our portfolio.
“The media can focus on milestones that aren’t necessarily markers of commercial success… Winning clients or growing is what should be celebrated, not needing more capital to get the job done.”
The one commonality between the businesses the group visited in Silicon Valley and San Francisco was that they had been backed by Peter Thiel, who is renowned for picking winners.
One such company is Stemcentrx. Peter Thiel’s Founders Fund had invested about $US300 million in the company, which is developing cancer treatments that target stem cells, making it the firm’s largest external investor. In April the company was bought by pharmaceutical giant AbbVie for up to $US10.2 billion.
Co-founder Brian Slingerland gave the group an inside look into the company and its laboratory. Like most unicorns, Stemcentrx does not fit with the status quo. The basic premise of its research – that stem cells are not always good and that cancerous stem cells are actually the root cause of the disease and why it often recurs – is contrary to the beliefs of many in the industry.
Each day scientists at Stemcentrx graft tumour cells into mice that have been genetically engineered to have no immune systems, all of which is done on the premises. Unlike most firms, it also manufactures the drugs on site, which is more expensive, but makes the process faster.
It’s no coincidence that the companies were Thiel-backed, Kingston says, as the famed investor was instrumental in arranging the trip.
“It’s both a result of him being invested in many of the great and exciting companies, but also him having helped us set up the tour,” Kingston says.
“Peter is connected to an outsized number of very successful companies. Having spent quite a bit of time with him, his investment philosophy is one of the very best in the world, if not the best.”
On day two the group – which included the managing director of the BlackRock family office practice, Edward Van Cutsem, who is also a friend of the British royal family, NetFin Marketing founder Thierry Delrieu and Australy International chief executive Matthew Kibble – visited Thiel-backed fintech companies SoFi and Max Levchin’s Affirm. SoFi, which focuses on providing student loan financing to young people who they determine to have strong potential of becoming high net worth individuals, is said to be valued around $US4 billion, having raised $US1 billion in capital last September in a Series E raise.
The company’s customers are largely in the United States, where student loans are very expensive, and the company’s aim is to hook the customer in early with favourable loan terms and incentives, and then keep them through their life cycle as they take out larger loans such as when they buy a house.
But SoFi’s current business model is unlikely to work as well in Australia, where higher education is less expensive and the government’s HECS-HELP scheme is widely used to finance university.
Affirm, started by PayPal co-founder Max Levchin, has aspirations to go global and to be a serious challenger to the major banks. The company lends money to consumers for retail purchases such as apparel or big-ticket items like mattresses, with transparent fixed fees that are disclosed at the time of purchase, so there’s no bill shock in a few months’ time.
Levchin, a Ukrainian-born cycling enthusiast who was the mastermind of PayPal’s anti-fraud technology, was inspired by his own experiences with banks in the US when starting Affirm. Thanks to a poor credit rating he’d obtained in college, the entrepreneur was still unable to get a loan for a car of his own accord after PayPal went public in 2002, and so developed an alternate algorithm to determine loan default risk.
Unsurprisingly, Levchin has also become a close connection of Kingston’s.
Kingston’s one rule when he invites you to an event is to bring someone new and this has served him well over the years.
Being social has helped him build his networks. When he travels he hosts dinner parties and he invites everyone he knows. “I’m shamelessly inclusive,” he says. But it’s not the only way Kingston has made his connections. He’s also involved with the World Economic Forum and was named by the organisation as a global shaper in 2013. He’s also worked as a consultant to the United Nations and been part of the World Investment Forum.
Concluding the San Francisco trip was a visit to freight forwarding and tech business Flexport, a meet and greet with Thiel and a cocktail party at his Presidio house. The rest of the group also got to visit the Airbnb headquarters, but only a few hours before the visit the company decided they did not want any media on the premises.
Flexport, the youngest of the companies we visited, was accurately labelled by TechCrunch “the unsexiest trillion dollar start-up”. Flexport, which is backed by firms such as Founders Fund, Google Ventures and YCombinator, doesn’t have a trillion-dollar valuation, but the company is tapped into a huge market that has hardly changed in decades.
Rather than sell its software to freight forwarders like Australian company WiseTech, Flexport founder Ryan Petersen decided to keep the company’s analytics and management platform for the business’s own advantage and build his own freight business. And while freight forwarding might not be sexy, like all good start-ups it did have an office dog.
The trip’s attendees were carefully selected by Kingston, who knew he wanted a group of people who would benefit as much from meeting each other, as they would from the companies we visited. But ultimately his goal was to connect outsiders to the Silicon Valley ecosystem.
“Our primary objective is to be a capital bridge for new money into Silicon Valley and also be useful for these companies as they look to expand,” Kingston says.
Despite also being an entrepreneur himself (he’s co-founded Good Super, internet solutions business KDIS and most recently tech consultancy Unit), Kingston credits some of his success to luck and chutzpah.
“I’ve been fortunate where all of the people I’ve interacted with, investors largely, have had a good experience so they’ve referred me through word of mouth,” he says.
“It’s about the confidence to overcome what might be called the imposter syndrome, to actually feel like you are part of this and to relentlessly go and participate.”
The reporter’s trip to San Francisco was co-sponsored by Trimantium Capital.