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— Venture Capital —
Never mind that his group, called GM Advanced Technology, is part of an automaker that is staring down the barrel of bankruptcy. The big challenge has to do with how different GM is from many corporate venture units in Silicon Valley, where innovation and experimentation are part of their parents' DNA and investing in startups is natural. "The automotive industry works in a very different way than Silicon Valley," says Shaw, 41.
His seven-person group is charged with sniffing out technologies that could be of strategic value to GM, partnering with venture capitalists and entrepreneurs to vet new products that could one day become part of a GM vehicle or support company efforts in new fuels and getting them in front of the right eyes in Detroit. Problem is, the century-old automaker is literally and figuratively miles away from the fast-paced, quick-to-market world of tech startups. "Auto guys don't do venture very well," says Shaw, whose group is part of GM's research and development organization. "Our presence is a kind of socialization, if anything, a way of helping GM know how it works out here." It's a laborious process and represents a big challenge for Shaw, who holds a Ph.D. in mechanical engineering from the University of California, Berkeley, and is accustomed to rolling up his sleeves and "soldering and writing code." After serving as a GM engineer in the mid-1990s, he established a Silicon Valley outpost for BMW AG in 1998. The Skunk Works-like operation dabbled in promising technologies, including hard-disk drive motors that were the basis for a throttle-control technology that was put into production in BMW motorcycles. Shaw also shepherded the development of BMW's iDrive, which enables a driver to control multiple car systems all from a single knob on the dashboard. After leaving the automotive world early in the decade and founding a small photovoltaics startup, Shaw returned to the industry and helped found GM's Silicon Valley tech outpost in 2006. Successes are small but hard-won for Shaw's shop, which does not make equity investments. Those tend to come directly from GM's treasury department or via a partnership with Greenwich, Conn., investment firm Performance Equity Management LLC. "We're not coming in with cash, but we are well positioned to do due diligence for VCs, and we can vet technology," working alongside VC partners, Shaw says. It's a corporate VC model similar to what IBM Corp. and Microsoft Corp. use. But, again, because of the history and philosophy of the parent company, it's a bigger challenge to find technologies that GM will accept, Shaw says. "It is pretty easy to meet someone from GM and find your way in, and become a neat project," he says. "But we strive to make sure that we can help startups prep their wares so they can get taken more seriously." Any technology that could compete against something GM is developing is a particularly difficult pitch to make, Shaw adds, as it tends to "trigger corporate antibodies." One success Shaw points to is a partnership between GM and AutoNet Mobile Inc., a San Francisco-based startup, backed by Morgenthaler Ventures and Easton Capital Investment Group, whose technology enables wireless Internet access in cars. Performance Equity Management tipped off Shaw's team to AutoNet's technology, which GM's Cadillac division has agreed to install in its CTS sports sedans. "There was no investment, but we got in touch with the company through the VC community, through our connection with PEM, and built the resulting relationship," Shaw says. GM's woes would not seem to make things easier for Shaw. The company, after all, this month announced a $6 billion first-quarter loss and said its revenue was almost halved during the period, from $42.4 billion to $22.4 billion. Yet there is a silver lining to that, Shaw says. The unprecedented nature of the situation has made anything possible -- for worse or better. "We have a window of opportunity to really demonstrate something that works that is far afield of what GM is used to doing," says Shaw hopefully. |
It's hardly an easy time for corporate venture units, with the soured economy a compelling reason for a corporate parent to keep cash close. But Byron Shaw, a managing director at General Motors Corp.'s venture unit, has more hurdles to get over than your average corporate investment executive. 
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