Jeff Schumacher, CEO of Digital Ventures (DV), talks about the third iteration of the company as well as why people are the core of the DV business. Schumacher also spends some time discussing why it’s essential to create the right environment to inspire the best talent to come work for Digital Ventures.
So, Jeff what’s your story?
Growing up in Minnesota, I spent a lot of time outdoors. But when I wasn’t off exploring, I was constantly tinkering with things, taking them apart, learning what made them tick, and usually putting them back together in the wrong way. This was not well received by my parents, but you can’t innovate unless you understand the system underneath.
As a father to my own children now, six-year-old twins—a boy and a girl— I’m constantly learning from them, observing how their minds work. They couldn’t be more different in terms of how they look at things and approach life, and I’m fascinated by the idea that you can put two people in the same environment and get completely different outputs. The natural desire to understand how things work, both people and systems, has always been a big driver for me.
These days, my job takes me to some pretty remote places. It’s not unusual for me to be in a different country every day of the week, and my wife and I try to take our kids with us as much as we can. As a result, they’ve traveled far more than I ever did at their age, but the curiosity is the same. I love seeing the world through their eyes, and try to preserve and foster this sense of awe for the world not only in my children, but also in myself and my team at Digital Ventures.
Why should leaders lead, and what is their first responsibility?
A leader needs to have passion and a clear vision for the change they want to effect, both in the world and in the lives of their teams. As a leader, my first responsibility is to the talent. People are the core of my business, and it’s very important to me to create the right environment to inspire the best talent to come work with me. Surrounding myself with a diverse tribe of innovators and visionaries makes me better at my job.
It’s important for me to manage down, not up. I need to be where the innovation is happening, that’s why I don’t have an office and my partners don’t have offices. I want to be in the soup.
It’s also important for me as a leader to create innovation that can be helpful to the broader society, and we’re doing this at DV through our work in technologies like the blockchain, for example.
What is more important to you, the traditional hierarchy (director, manager, the boss, etc.) or how teams are formed to get the work done?
I always go back to options—you want to create as many as you can. For the entrepreneurs out there, the decisions you make in your company should give you more options post the decision than you had prior, or it was probably a bad decision. My wife always says ‘what about marriage,’ but that’s the outlier.
Creating options requires innovation, and traditional hierarchy doesn’t lend itself to this process. Many corporations face the innovator’s dilemma, in which they are constrained by the focus on creating successful products and improving them over time—not on creating something novel and new.
We believe that corporations will own the next horizon of innovation and it’s my job to help them learn how to think and act like startups. For this to happen, they must start thinking about how to use their assets in a different way, uncover new markets, find product/market fit and match it to world-class entrepreneurs to create new hyper-growth companies.
Are you open to the nontraditional ways that teams can get work done? Can you cite one example you are currently fostering?
DV is currently in its third iteration. Back in our first iteration when DV had just begun, we were incubating three different ventures in rectangular conference rooms. We noticed our product managers writing on the windows, using a louver to separate the upper and lower part of the glass to segment their thinking. When we moved to our headquarters in Manhattan Beach, we used these insights to create a hexagon-shaped venture room to provide more writing space.
We began to think of these rooms as beehives; interconnected platforms allowing our teams to pollinate new businesses from the ground up. Our tight-knit multidisciplinary teams pilot new methods to innovation while creating a portfolio of ideas for our corporate partners, who are embedded in our ventures. They work together, they live together; each one operating like the founding members of a company, allowing us to get to an integrative vision much faster.
Almost all of the ventures we do today are non-traditional. They are made possible by this space we have created, which is one of the most advanced innovation and investment centers in the world, and core to our business model.
How do you make sure that when you are assessing talent, you are not only identifying the ability to do the job but the talent’s capacity to scale and do more?
We are 500 and growing at DV, and everybody always says ‘why do you have so many people,’ but it’s because all of them are entrepreneurs. We acquire a lot of broken startups—entrepreneurs that tried and didn’t get funding, but we like the team, we like the IP, and we bring them on and find another venture to put them into.
Not all of our talent comes from broken, startups. We also recruit a good deal of seasoned entrepreneurs, operators and investors who have themselves been through several successful exits. These industry veterans have proven their abilities with many years of experience and deep-connection within the startup ecosystem. Over time, we’ve codified our methodologies and our talent that reflects these processes and our values.
What book would you recommend to a close friend?
“Oh, the Places You’ll Go!,” by Dr. Seuss, is one of my children’s favorite books and a classic I always enjoy reading to them. I learn more from reading to my kids than just for myself and I think people should read to their children more often. We can learn valuable lessons from the way they think and learn—insights which often lend to innovation.
Of the more adult variety, I recently read Scale: “The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies,” by the visionary physicist Geoffrey West. I’m fascinated by the way he has applied his revolutionary work to the world of business. It’s a must read.