If you ever stop by the Tigerlabs incubator, you might see a redheaded businessman there working, sometimes in a Steve Jobsian black turtleneck, and wonder what he’s up to. It turns out Sean O’Sullivan, a recent arrival in the Princeton business community, has quite a few irons in the fire.
O’Sullivan, 53, runs some of world’s most successful startup accelerator programs, is a prize-winning filmmaker, spent time dodging bullets while running an NGO in Iraq at the height of the conflict there, was a singer in a rock band, and is the father of two and husband of a successful journalist.
He is also credited with coming up with the phrase “cloud computing.”
O’Sullivan started and runs SOSV, a collection of seven accelerators around the world. One of SOSV’s catch phrases is “venture capital for startups who make the impossible inevitable.”
The accelerators provide seed and follow-on funding for more than 150 companies every year and include two computer hardware accelerators: HAX Growth in San Francisco, and HAX Accelerator in Dalian, China; two life sciences accelerators, IndieBio in San Francisco, and RebelBio in London, UK, and Cork, Ireland (where O’Sullivan lived before moving to Princeton in 2015); MOX, a mobile startups accelerator in Taiwan; Chinaccelerator, in Shanghai, focused on companies there; and Food-X, based in New York City, which focuses on food-based companies. Food-X is directed by another Princeton resident and veteran entrepreneur, Andrew Ive.
In 2010 SOSV had eight staffers. Now it has 90 globally. Given the scope of what SOSV does, that is still a pretty lean operation.
O’Sullivan is a man who likes to move quickly. “The more entrepreneurial you are, the more ideas you stumble upon,” he says. “The person who wins is the person who learns the fastest. Mistakes are a great way to learn quickly.”
O’Sullivan grew up the eighth of nine children in Schoharie, New York. It was just his mother and his eight siblings from the age of three. His mother left his father out of fear for the “safety of her children and herself.”
“I grew up poor, on the welfare system,” he says. “When you’re a kid, you don’t really know people have it better than you.” His family never had enough heat or food. In the frigid upstate New York winters, if he left a glass of water out overnight, it might be ice in morning.
As soon as the children were old enough, his mother resumed work full time for Catholic Charities. O’Sullivan speaks of her with great pride, telling how she was integral in creating a program for home health care aides that became a model for others in the country. “She was very much a mover and shaker and a well-respected woman,” he says.
Was growing up poor a motivator for him? Yes, he says, “not to be rich, but to be in control of my destiny. I figured out in eighth grade not to be an hourly wage earner. To be financially secure, you needed to create a company rather than work for a company.”
O’Sullivan found his way into the computer business before he was even done with high school. He had his first serious interaction with computers via a New Deal-style government jobs program that existed in the 1970s.
“ I started by looking at printouts that my brother had gotten and saved when he went to college,” O’Sullivan says. “At the time there was a CETA (Comprehensive Employment and Training Act) that was targeted at providing jobs for the poorest of the poor as teenagers to upskill them for permanent jobs later in life. I was hired as a janitor, but was able to convince the federal agency that if I was able to find a position that would employ me in a computer-related role that would be more useful for training. I found a local government agency that said I could start as a data entry operator at 14, but within a few months I was programming for the government 90 percent of the time.”
O’Sullivan graduated from high school at age 16, then went to Rensselaer Polytechnic Institute in Troy, New York, to study engineering. By that age he had already developed a keen interest in computing and says he had learned 19 computer languages by the time he graduated from college.
“I fell in love with it very early,” he says of computer programming. “I loved having a computer do whatever I wanted it to do.”
His first major success right out of RPI in 1985 was to start a company called MapInfo, a precursor to the now familiar computer mapping programs. He got his initial funding from family, friends, and credit cards. MapInfo was the first company to put street maps onto personal computers.
“We invented loads and loads of technologies that are commonplace today.” He says the company was used by customers to do analysis on such matters as where crime occurred in cities and where parolees lived, where ATMs should be located, and where telecom companies should put cell towers.
“I got into it because I saw the culmination of several technologies making it possible for mapping to happen. I wasn’t a cartographer. I was electrical engineer and knew a lot about programming.”
Though it was difficult to get customers for the first year and a half, it then became amazingly easy. “Our technology was like 200 times faster than anything that had ever come before, so we had a long lead for a long, long time,” he says. “Basically 100 percent of Fortune 500 companies were our customers. Oracle built their mapping on our technology. Microsoft built their mapping on our technology.”
When O’Sullivan was still in his 20s MapInfo went public, and he walked away with about $14 million — “a nice amount of money back then,” he says. The company still generates more than $100 million in revenue from its headquarters in Troy.
Looking for something new to do, O’Sullivan started an alternative rock band called Janet Speaks French in New York. He was a singer and keyboard player. “I was a fairly terrible musician, but I was a decent songwriter and singer,” he says.
“We were top 40 on like 80 radio stations.” That sounds pretty good, yes? “No. There’s like, 2500 radio stations. We were number one for a week in a radio station in New Hampshire.”
The gig lasted less than two years before O’Sullivan was “pulled into another startup” right around the time the internet was heating up in the mid-1990s.
The new company, NetCentric, was a telecommunications company that facilitated voice calls and faxes over the Internet. It was an “inside the Internet” company, which in those days meant it did its work in data centers rather than the end user’s computer. But soon there would be another phrase for that kind of service. It was during this period that O’Sullivan and a Compaq marketing executive named George Favaloro coined the term “cloud computing,” the now ubiquitous phrase for remote data storage, management, and processing.
He trademarked the term cloud computing (but has since let the trademark expire) in hopes of establishing it for industry conferences, publications, and such. Although there is some uncertainty over who first came up with the term, O’Sullivan and Favaloro are almost always mentioned in any article about its creation.
NetCentric was not a success. O’Sullivan says it overreached and had a “dead wrong” strategy. But it taught him many lessons.
“I learned a lot of lessons in humility,” he says. “After your first thing goes spectacularly well, you just think you can do it over and over again. I think I just assumed that it was preordained that whatever I touched would turn to gold.”
When NetCentric didn’t turn to gold, he departed after three years, “handing it over to better management than me.”
“It’s a good thing that venture wasn’t successful or I’d be unbearable,” he says.
His next priority was, as he put it, to go “in search of myself.” He attended the Semester at Sea program, traveling to mostly developing countries. As part of that travel he did some video work and created a movie, leading him to film school. With limited experience, he was accepted to the prestigious directors program at the University of Southern California, pursuing a three-year MFA degree.
He says he worked on something like 100 different projects at USC, but his thesis film, “String Worms at Budd Terrace,” is closest to his heart. The film about dementia in the elderly was about his mother. It won a national award for the best feature length documentary about issues affecting the elderly.
Never one to take traditional paths, O’Sullivan decided to apply his newfound filmmaking skills to the Iraq war, which was just starting. He printed fake press credentials, got a flak jacket, took a “journalists’ war zones safety course,” and went to Baghdad in March, 2003.
He says he went there to “bear witness, to try to provide another narrative to what was going on.” He arrived in Baghdad, allowed in by the Hussein regime, just in time for the U.S. military’s “shock and awe” bombing campaign. Tossed out of Iraq after couple of weeks, he returned in April.
This time his stay was longer, about 18 months, during which he shot footage for CNN and ABC and photos for numerous publications. Although “it wasn’t all gunfire all the time, there was gunfire every day, often in the distance, sometimes in your neighborhood.” O’Sullivan says a kid who used to sell cigarettes was killed by a bomb just outside the house where he was staying.
“You live in places that are hopefully safe,” he says, adding, “I have a bunch of friends who were killed, some who were tortured, some were kidnapped and released.”
Early on during his time in Iraq he co-founded and funded a humanitarian NGO called Jumpstart, designed to “show signs of progress” by cleaning up burned-out skyscrapers, looted and burned colleges, libraries, and hospitals. At its height Jumpstart had 3,500 people in the organization.
However, his organization, like others — the Red Cross, the United Nations, embassies — was targeted by terrorist organizations because of its humanitarian work. Organization leaders were forced publicly to renounce their efforts, among other things.
And then his co-founder, Mohaymen Al Saffar, was assassinated.
Talking about this many years later, O’Sullivan still tears up. It was clearly a very emotional event. Amid all this, O’Sullivan developed skin cancer as well as a viral eye infection that ate the epithelial layer of his cornea. Still, with thousands of people depending on him, he didn’t want to leave. But reality took over.
“Okay, I’ve got cancer and I’m blind in one eye, and I’m thinking, God is giving me a directive, no matter how much I wanted to ignore the information,” O’Sullivan recalls.
During his time in Iraq he met a talented, energetic young journalist named Tish Durkin, a native of Essex, New Jersey, who was braving wartime conditions freelancing for the New York Observer, the New York Times Magazine, and others.
He and Durkin moved to Madrid, got married, “and nine months and seven days later (their daughter) Charlotte was born, so I swore off war zones.” He hasn’t been back to Iraq since and doesn’t feel the urge to go. “I don’t think the leadership of that country has been great,” he says.
Although he had started SOSV in 1995, it had been “just a single guy and a checkbook.” In addition to private tech investments, he also had bought stock in Apple, Amazon, and Netflix, and so he could “manage” SOSV even while getting shelled in Iraq. “Actually, if you’re a buy and hold investor you don’t have to do much. All I had to do was wait for the harvest and watch their quarterly results,” he says.
He left Madrid, moved his young family to Cork, Ireland, and got back to his ethnic roots and the tech world. Ireland was and is a tech hub, with a presence of many multinational firms and “a lot of talent,” O’Sullivan says. He started a transportation software company that took him frequently to China. China has the “great firewall” that doesn’t permit access to the internet the same way as in Western nations, which he saw as a great opportunity.
“The trade barrier China has established in order to make western companies non-competitive inside China creates opportunities for companies located inside China to create their own ecosystems,” he explained. “We started an accelerator there to help promote companies, to have an impact in that ecosystem.”
SOSV’s Chinaccelerator, started in 2010 in Dalian, China, was China’s first startup accelerator. At the time there was, he says, a “revolution” happening in venture capital. It was easy to fund groups of startups with a small amount of money, helping them get initial traction relatively quickly.
O’Sullivan has been expanding ever since, with deep and specialized startup accelerators. In 2012 SOSV launched the world’s first hardware accelerator, HAX. HAX has since funded more than 150 hardware companies, dozens of which are now worth tens to hundreds of millions of dollars.
SOSV also launched IndieBio, the world’s first life sciences startup accelerator, in San Francisco, followed in short order by the others mentioned above. The operating philosophy of SOSV’s accelerators, as described on its website, is: “Our accelerator programs take small-team startups and support them with funding, mentoring, and training for a set period in exchange for equity. Startups are accepted in batches, and applications are open to anyone. The programs are popular and highly competitive, with acceptance rates running below 5 percent, and in some cases, well below.”
During a two to four month period, the startups will receive intensive mentoring and training and are expected to iterate rapidly on their business. The startups all share a common workspace and receive immediate peer support and extensive feedback. At the end of each program SOSV organizes a Demo Day where the startups present to investors and key influencers. O’Sullivan says the value of the accelerator programs comes from the mentoring, connections, and recognition of being chosen to participate. The business model is focused on generating venture-style returns — not rent or fees for services.
O’Sullivan says that accelerators offer shared working space for several companies working in a compressed time period. “We often see a huge improvement of the companies during their time with the accelerator,” he says.
While some people use the terms “accelerators” and “incubators” interchangeably, O’Sullivan says incubators are generally real estate plays renting space to young companies, while accelerators provide money, mentoring, and introductions to investors. Places such as Princeton’s Tigerlabs on Nassau Street, where O’Sullivan often works, are co-working spaces, and, he says, “are great for the community and startups.”
“Most of our accelerators are ranked number one for what they do in the world, in their specific areas, based on activity and investment success,” he says. SOSV has backed more hardware companies — more than 150 — than “any other investor on the planet.”
“We’ve also backed more life sciences companies through IndieBio and RebelBio than any other.” IndieBio by itself is number one in its field in the world; RebelBio number two. “These days we generally average at least one investment per day. SOSV is actually ranked as the second most active seed investor in world.”
Since his accelerators accept less than five percent of those who apply — tougher than getting into Princeton — one has to ask, what is SOSV looking for?
Some who get chosen are only at the idea stage; some may have revenue of as much as $1 million a year, though rarely more. The chosen companies typically have two to five founders and have a working prototype of their product, though many do not necessarily have “any commercial marketplace traction.” They all have to have a full team in place, and the individual accelerator’s assessment of the team is critically important.
“We look at whether the team can benefit from our program, our assessment of the size of the market potential, if it is backable by venture capital, is a large enough market that it is worth pursuing, and the state of their product,” O’Sullivan says. “Some customer validation is also helpful.”
O’Sullivan admits SOSV doesn’t have many “household names” among its success stories — yet. But he expects that to change. IndieBio has backed Memphis Meats, a company that makes meat without cows. Instead of being grown on living organisms, muscle tissue is grown in a bioreactor, not attached to a nervous system, in a process he compares to growing yeast in a vat. O’Sullivan says “cellular agriculture” promises “a world without slaughter.”
Eventually the technology promises milk without cows. “By eliminating the animal from the process, it eliminates a tremendous amount of agriculture waste, global warming gasses, and the issues of ethics of slaughtering animals,” he says.
Other SOSV-backed companies include successful producers of video games (Harmonix, developers of the Rock Band series), a STEM robotics company with $60 million in revenue (MakeBlock), and a company just acquired by Amazon whose name he can’t disclose.
Noting that all the accelerators are less than eight years old, he says, “In the last five years we’ve had about two dozen of our companies that each generate tens of millions in revenues, coming from nothing.” More than 70 of the SOSV-backed companies are generating more than $1 million in revenues.
SOSV puts about $50 million of its own money into these companies each year, with the rest of its 110 or so other investors in their syndicate — institutions, venture capital firms and family offices — putting in another $250 million annually. SOSV also has a network of another couple hundred “angel” investors, those who specialize only in early stage investments.
SOSV measures success by IRR — Internal Rate of Return, a somewhat less conventional measure than ROI — Return on Investment. The difference is technical, but important — IRR measures growth in money from year to year while ROI is growth over the total investment period. SOSV’s record IRR is 38 percent. O’Sullivan says that in the venture community, a 14 percent IRR is considered good.
He is concerned about more than just financial returns. He notes that the best companies are those that feel a “debt of gratitude not just to their investors but to the community they serve. They are trying to serve society well, serve customers well through products they are creating.”
One of the benefits of startups, he says, is “they don’t have the revenue stream to continue policies that don’t work. These stringent economics mean they are at death’s door every month,” and have to learn to pivot quickly. “You have to fire your strategy if it’s not working for you. Pivot and find a new one and put all of your energy behind the one that is the new hope.”
And sometimes, startups fail because “they’re led by a leader who is afraid to create a strong team. They want to be the boss. They don’t want to share the load, share the equity among a senior group of equally committed people.”
But he is an ardent capitalist. “Having run an NGO, and having been a capitalist, and a venture capitalist I’ve seen that I’ve been able to have far more impact on the world by creating companies that create value for society than by giving away money in a charitable way only,” he says.
O’Sullivan and Tish Durkin, who have an autistic son, moved to Princeton about three years ago because of the reputation of the Eden School for autistic children. And they plan to stay. “I love Princeton. I’d love to stay here for next 20 years,” he says.
That said, he isn’t as sanguine about the venture capital environment here as he would like to be. “You’d think with all the capabilities and resources of this area, that New Jersey would be thriving with startups. There should just be dozens of major startups doing tens of millions in revenue in the Princeton area, and there really aren’t, and that is a shame. I think we’re not capitalizing on young graduates of Princeton University.”
Talented Princeton graduates are going for the big money on Wall Street and the tech giants of Silicon Valley, he noted, rather than “rolling the dice” on creating their own startups.
Changing that won’t be easy, O’Sullivan concedes. Students and others need to sense that it is possible to create companies here. He says that when he was a student at RPI, he witnessed startups coming out of its incubator program, starting national companies in that part of upstate New York.
“It would be good if there were a world-class accelerator in Princeton to attract people to entrepreneurship and develop their talents.” Which, given his success in this arena, raises the obvious question. “I’ve got enough accelerators right now. I don’t need to start another one.”
So what are his goals? He is pretty ambitious, to put it mildly. He would like to see at least 20 or so of his companies to become part of the Fortune 500. “We’re creating whole new industries,” he says.
He would like five or ten Nobel Prizes to come from SOSV-backed startups. Drugs for pancreatic cancer and lung cancer are being developed by some of his companies. One of SOSV’s startups has developed an artificial kidney that is going through animal trials.
“I’d love to have our companies be saving a million more lives a year through work they are doing. Those would be outcomes that would be wonderful for the planet,” O’Sullivan says. Lofty goals indeed. But given what he has accomplished, it might be unwise to bet against him.
SOSV, Tigerlabs, 238 Nassau Street, Princeton. Sean O’Sullivan, founder. www.sosv.com.