Investor Victor Hwang on What Makes a High Quality Company

Krishna Rangasayee

I recently had the privilege of sitting down with Victor Hwang, Managing Director and Co-Head of MSD Growth at BDT & MSD Partners, who joined’s list of investors this past October.

Victor is a longtime veteran of the tech sector, and has seen the industry evolve first-hand since his days at Stanford University and Goldman Sachs. Since then, he has taken companies like eBay, Yahoo and Google to IPO.

Investing in explosive technology is at the heart of BDT & MSD’s goals. MSD Growth focuses on founder-led private companies, primarily in the technology and healthcare industries. Its growth investments to date have included Celonis, Cue Health, GitLab, GoodLeap, GoPuff, iCapital, Qualtrics, Resilience and Stripe.

With a track record of finding innovative companies that possess solid foundations and staying power, Victor and MSD believe in and its ability to disrupt the embedded edge market.

In this discussion, we talked about Victor’s varied and impressive background, how he sees the industry developing and why he thinks is destined for greatness. Here are some excerpts from our conversation:

Krishna: Victor, welcome. We’ve been fortunate to really get the best investors at the right time, and hopefully, I think they all see the same element of us building a long-term company that really should shift the industry in a big way. What did you see in SiMa, and what gave you the validation and conviction to invest despite market conditions?

Victor: I think it probably narrows down to two or three things. One is that the key trends you’re playing into are ones that we absolutely buy into, have bought into, and are excited about. I do think that with the way the cloud has become pervasive, it stands to reason that there are all these trends with the embedded edge. I think that market opportunity, that market gap, is something that is exciting.

Second, I think is really a testament to your approach, but also to your leadership and team. I would say being holistic with a system-on-a-chip approach is something that others clearly have not embraced. The industry, I think, really wants an alternative to NVIDIA. It’s never healthy for the industry to have someone who has too much power. I think you’re that sort of bright star. The path may be hard, but you know our “investment” is that you’re the right team with the right approach that can build a lasting enterprise. You don’t see that a lot, where a company has that long-term potential to be around 10 years from now powering a whole host of applications on the intelligent embedded edge.

Krishna: We are privileged to be working with you. None of us read tea leaves, but you have a far better vantage point for reading the macroeconomic environment than we do. I’d like to ask about two factors. First, there’s ongoing discussion that there is going to be a recession, and there’s a raging debate about what kind of a recession it’s going to be. How do you read the recession environment? You’re invested in so many sectors, what’s your outlook on what looks like a nuanced recession affecting different market segments in different ways? And the second element of it is really from a private investment view: How does this tie in with the macro picture, and what do you see as the economic outlook for private investments?

Victor: I’ll offer the caveat that I certainly don’t have a crystal ball, but I would say that on the macro economy you’re right—it’s a tricky time.

What we do know for sure is that we’ve seen the sectors that have been impacted first. It’s been almost a white collar recession. Tech has been hit hard, financial services have been hit hard. All the CEO’s are pulling back on CapEx tech spending. Consumers are still spending, they’re just being more selective. We haven’t seen a full scale stop.

It’s a very unstable time. How does that impact our framework? I think we just focus on quality. In any given cycle, you’ll make investments at a potentially higher or lower rate, but I think one of our priorities has to always be business quality. Is the company we’re investing in one that will stand the test of time? For us as a firm, we are definitely active. We’re not pulling back. We’re just pushing forward, ferreting out what we think are high-quality companies.

Our North Star is trying to find companies that we think will thrive in today’s environment. I think our attraction to is representative of that. It’s on the early side of where we normally invest, but we saw the opportunity in terms of what the company is building, buying into the embedded edge, and all the intelligence that’s going to go there over time and all the applications that need to be powered by And to be blunt, we were really attracted by you, Krishna, your team and your track record.

Krishna: I’d like to hear your read on two elements. One is, how do you see’s positioning? What do you think is our persistent advantage, and what should we be looking out for?

Victor: That’s a great question. I think it’s twofold on and differentiation. I really do think this holistic approach—bottom-up, full-stack software system-on-a-chip optimizing power per watt—stands out. You look at the other solutions and a lot of them are “point solutions.” Maybe they’re excellent point solutions, but they don’t have a holistic approach, and the software is lacking. I think the fact that you’ve built it from the ground up to be enduring and lasting is something that differentiates you.

Doubling down on that, you are going through a really critical year of delivering on product and turning commercial. You’re going to have bugs and glitches that you’re going to need to iron out through multiple successive releases. But this is an exciting time, and if you execute well, I think you’ll pull away from simply the fact that you’ll have commercial acceptance from real customers. You’ll get your software out there in the field and hopefully make solid progress on Gen. 2. It will become clear over time that was built from the ground up with this approach, and it’ll be validated through its results. I think we’ll create a story of a trajectory, and a confirmation of what you’ve built.

When we think about investing in companies at this juncture, it’s important to us that we invest in companies we think could play offense and distance themselves from others.

Krishna: For us, we want to swing for the fences – we have audacious goals as a company. You’ve seen many good companies, many different markets, and obviously invested in this. What words of advice would you have for us, and how could we stay hungry and stay foolish?

Victor: Just stay focused. This is a great year to, as you describe it, execute. You’ve got the balance sheet and the resources. It’s married with what we think organically from the ground up is the right holistic approach that’s differentiated you from the market. It’s built to last, and it’s built to succeed. I think, competitively, there isn’t another company out there that has this unique approach. You have terrific talent around the table, terrific leaders at the top and this year, it’s just about being really focused on execution and delivering. And remember to enjoy it at the same time. There are going to be bumps in the road, but you guys always tackle it, push hard and execute well.