As General Catalyst’s newest XIR, Unica founder Yuchun Lee hopes to hack the entrepreneur to VC transition
When entrepreneurs make the move to the other side of the table, becoming VCs, they often have difficulty with the shift from focusing deeply on a single company to the need to focus broadly (an oxymoron if there ever was one) across many portfolio companies. Former Unica co-founder, IBM executive, and MIT BlackJack team member Yuchun Lee is joining General Catalyst Partners today and thinks that the pair have found a unique solution to this issue.
Lee will be joining the firm’s XIR (Executive in Residence) program which, similar to the role of a venture partner, will give him full investment authority, but see him work only with a select few companies in an area of core competency. Yuchun will focus on growth stage companies in the enterprise software and data analytics spaces, and will look to become more active than the typical board member.
“I’m a big believer in concentrated risk,” Lee says. “General Catalyst will gives me the opportunity to focus on a limited number of companies and get back to the basics of building toward an exit. I’m very confident in my ability to identify organizational bottlenecks and help teams navigate around them.”
General Catalyst’s XIR program is somewhat unique in the industry. The firm seeks to attract “proven entrepreneurs who play leadership roles in transforming high growth businesses.” Other members of the program include American Medical Response co-founder Paul Verrochi, DataLogix founder Rob Gierkink, former Harvard Pilgrim Health Care CEO Charlie Baker, former BBN Technologies CEO Tad Elmer, former Amcom Software president Chris Heim and COO Dan Mayleben.
Lee co-founded Unica in 1992 to offer enterprise marketing management software to sectors including financial services, insurance, retail, telecommunications, and travel and hospitality. The business had a successful IPO in 2005 and was acquired by IBM in 2010 for $480 million, where Lee remained an executive until leaving to pursue his current opportunity as an investor.
“I feel like I have always been adjacent to venture business,” Lee says. “I have acquired a company every 12 to 18 months for the last 10 years, so I know the process well and have worked with many of the top firms.”
Prior to founding Unica, he was a senior executive at Digital Equipment Corporation and MIT’s Lincoln and Media Labs. While earning his undergraduate and masters degrees at MIT, Lee was a member of the infamous MIT BlackJack team that inspired the book, “Bringing Down the House,” and the subsequent movie, “21.”
Lee will look to invest in companies that have already achieved $10 million to $50 million in revenue and to apply his experience with Unica to help them achieve 5X to 10X growth. Working closely with a single (yet to be named) general partner in the firm’s growth equity business, he will assemble his own “mini-portfolio,” to use Lee’s words, with its own thesis and performance metrics. Lee believes the his experience in building an ecosystem, completing tuck in acquisitions, expanding internationally, and engineering cash flow will help facilitate the targeted growth within these portfolio companies.
Asked what the biggest misconception about General Catalyst is, Lee responded by saying that few outside the firm realize that it is among the most entrepreneur-friendly in the industry. “They’re not spreadsheet people,” Lee says, pointing out that nearly every general partner has founded a company previously. “They really stand behind their entrepreneurs and go all in.“ Interestingly, General Catalyst never invested in Lee prior to his joining the firm, but he did acquire companies that the firm had backed.
Also, while many think of the firm as a later stage, growth equity or mezzanine firm, General Catalyst has always been focused heavily on the early stage, Lee says. He points to the firm’s role in incubating and investing in travel search aggregator Kayak, which was recently acquired by Priceline for $1.8 billion, as evidence of this focus.
As for the health and future prospects of the Boston startup ecosystem, which has lost a bit of its luster in the last half-decade, Lee sees a bright future. “Boston is more conservative, and thus less volatile than other markets,” he says. “But this market will have a long run of prosperity due to the universities feeding the talent like a spring.”