Lars Dalgaard, who sold SuccessFactors to SAP for $3.4 billion in 2011 before going into venture capital, is stepping down from his general partner role at VC firm Andreessen Horowitz to found his own investment firm.
His focus will be teaching entrepreneurs to lead with "more heart. Less ego."
The new fund, which he is tentatively calling Luv Ventures, will invest in "extraordinary companies that will literally revolutionize the world." He named synthetic biology, food and enterprise software as areas of interest.
But the main focus will be connecting with CEOs and helping them learn empathetic leadership.
He cites a running joke he had with Marc Andreessen: "I think Silicon Valley could be 10 to 20 times bigger if 80 percent of the companies were led better."
The time seems right. Silicon Valley is facing an identity crisis — once the poster child for futuristic innovation, it's increasingly seen as a bunch of rich white guys chasing money at the expense of everybody else, including their employees and society at large.
In 2017, the most valued start-up in the region, Uber, was beset by scandals ranging from widespread sexism to using technology to evade authorities, and ended up replacing CEO Travis Kalanick and other top execs. Tech giants like Facebook, Google and Apple have been slammed for propagating fake news, helping foreign governments influence the U.S. presidential election and/or creating overly addictive products.
Many of these failures come down to a lack of leadership. And while Dalgaard didn't criticize any company specifically, he noted that technology without good management gets "stuck."
"I've been helping people who are very creative, helping people who have nothing but tech in their head. In all cases, they have had no management experience before. Hell, some of them have not even had a job. But if you're committed to wanting to learn constantly how to be a leader and not just get stuck in your own head, around your own ideas and who you used to be, the stories you tell yourself, then I think there is really a breakout."
But empathetic leadership isn't only better for society, it's better business.
Dalgaard insists that CEOs can't understand how to sell products if they don't understand how to speak the language of their customers.
"The entrepreneurs themselves don't really know what the end customer exactly wants. They can sure visualize how this technology will work, but it's very hard for them to speak the language of the customer," he said. "I think I can help with some really crisp answers on both sides."
Dalgaard particulary admires Salesforce CEO Marc Benioff, once a fierce competitor and now a friend, as somebody he admires for his social conscience and willingness to "take daring positions that he might not have been known for originally, but he dances right into it."
He also deemed Facebook CEO Mark Zuckerberg "extraordinary," noting that while Facebook has been through plenty of issues in the last year, Zuckerberg himself has shown humility and a willingness to change. That shows up in the devotion of his employees.
"People just adore working for him. And I'm not talking about a cult. These people are experienced people, they've been with other companies first and they want to work there."
Dalgaard is a bit of an outsider in Silicon Valley himself. Born in Denmark, he spent time at Unilever and Novartis — not two companies associated with the high-tech boom — before founding SuccessFactors in 2001 and taking it public in 2007. After SAP bought the company, he was asked to stick around to help give the company some "cloud DNA," in the words of CEO Bill McDermott. He lasted a little more than a year before joining Andreessen Horowitz in the summer of 2013.
Although Dalgaard says he has higher purpose than making money, this is definitely an investment fund, not a nonprofit or consulting business.
Dalgaard will begin by investing his own money — something he could not do with Andreessen Horowitz, which does not allow its general partners to invest in companies the firm invests in. He said he already has a couple of prospects who are excited to work with him, though he declined to name them.
He also said he'll look for limited partner investors, particularly corporate investors who are outside the tech sector and want an entry into Silicon Valley.
Dalgaard will remain a board partner at Andreessen Horowitz, staying on the boards of several companies in which he led investments, including HR software start-up Zenefits and viral image warehouse Imgur.
He's also looking forward to slowing down a little bit. "I'm just going to take my time this time, and really meet with the people, and really make sure we're on the same page, because I want this firm to be a legacy that grows beyond me."