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Growing the Team – Paul Willard

 

We are happy to announce that Paul has decided to join the team at Storm as partner. We started working together in early 2017 and we both had the opportunity to see how each other works and thinks. Beyond Paul, we have been growing the Storm team including Pascale Diaine who joined the investment team last spring from Orange where she was the lead manager for Orange Fab incubator for more than 10 years.

Since the beginning of Storm, we have been following a strategy focused on helping to build enterprise leaders. We have tried hard to be the partner for entrepreneurs for the entire startup journey and find ways to support them. We have learned a lot along the way, made a lot of mistakes and found a lot of success including generating returns for our investors. One of our lessons has been that our success as an investment team depends a lot on our shared values – in terms of how we think about helping our companies find success and how we approach working with entrepreneurs. While seemingly obvious, it can be difficult to balance both diversity of thought and alignment of values.

This alignment is foundational to why we believe Paul is not only going to continue to make for an impressive investor but also a great team member. After working at 4 fast growing startups over 14 years including Atlassian, Paul found his motivation by forming lifelong relationships with the amazing people he worked with along the way. Like Storm, Paul found success and passion in working with enterprise focused teams and opportunities.

After his last executive role, Paul co-founded Subtraction Capital making the transition to a venture investor in order to be able to work with more enterprise entrepreneurs and share much of what he has learned over his years as an operator. After his first fund, Paul realized he wanted to be a part of larger team focused similarly on early-stage enterprise opportunities.

Having worked together for much of the past year, it is clear we both value diverse backgrounds, opinions, and perspectives. Like the team at Storm, he shares the view that the contributions of a collaborative team far exceed a collection of individuals operating on their own. This is fundamental to our success at Storm. We often have different perspectives but the diversity of backgrounds and thought contribute to better investment decisions.

 

Paul is a rare engineer that has written real code, become a CMO and gone on to form his own venture firm. He has a broad set of experiences and an early track record of success that would put him at the top of any entrepreneur’s list of people to work with in building their next blockbuster enterprise opportunity. He tops our list as well. Welcome Paul!

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Why Storm invested in Workato

As enterprises continue to migrate applications and workflows to the cloud, Storm has been interested in investing in companies that make that process even more compelling and easier. Companies need to be able to connect applications (think marketing automation with CRM) but many want to go beyond and enable the custom workflows where they can use business rules to integrate other data and devices into their SaaS applications. One of the enormous benefits of cloud based applications is the ease at which they can be connected together via APIs.

Much of the technology today is complex and meant for IT experts only. Many of the large consulting firms still have enormous practices building bespoke custom integrations between legacy on-premise applications. In many cases, the integration and custom workflows cost as much as the application itself.
It doesn’t have to be that hard.

The team at Workato had the vision to build a company with enterprise requirements and at the same time reduces complexity to enable business users to build and operate. Workato achieves results by having an incredible focus in UX and by being cloud native in its architecture and deployment. The team has the credibility in the enterprise, based on their prior experience, and understands what is required to deliver — truly deliver — enterprise scalability and reliability, which, for this market, is critical. After all, if your business rules fail, your application has essentially failed. This is the team to build this solution. This team also has the consumer chops to bring amazing user experiences, which has become a critical requirement in the modern enterprise.

We wrestle with lots of questions with any investment we make — and the questions change depending on the situation. One of the questions surrounding Workato — why fund a new company where there are large incumbents like Tibco, Informatica and the recently public MuleSoft among others. Workato is in a competitive market. Mulesoft is an incredible company and has built a great business.

Workato has clearly demonstrated a growing market for the need to connect and integrate custom workflows into applications. We believed:

(1) the market for building business rules around SaaS applications is going to grow as adoption grows and that it will be the business users who will be looking to building and managing these rules
(2) the most interesting part of the market is the enterprise which requires certain functionality and capability
(3) having an architecture that was fundamentally designed for the cloud and cloud native would be an advantage with companies that had their applications and data in the cloud (with some on premise).
(4) Finally, for the business users (like sales ops, marketing ops) who will be building and managing them — user experience will become of paramount importance.

So, we felt that integration in the modern world requires a platform that is powerful, yet so easy to use that business users can build and operate them. Without that IT would be completely swamped with building integrations.

We search out lots of advice and opinions before we invest — in addition to customer and team references like most investors. I got some advice from a long time friend, whom I trust — but even more important knows the market as well as anyone. He counseled me not to invest mainly because the market was crowded. He had never met Workato or used the product. I listened and took his input seriously — but in the end I obviously went another direction.

When looking at a new investment, there are always lots of opinions if you seek them out with some more meaningful than others.

Sometimes you need to do the work, believe in your thesis and make the investment. Widely held opinions are interesting and important to understand but don’t necessarily lead to the best investment decisions. In speaking with customer references, while it was clear there were other options, it was also clear Workato had something very special.

Workato’s thesis on where the market is headed and their approach is differentiated. We believe this team matched to this opportunity will continue to build a great business in the years to come. Welcome Workato!

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Getting Outside of Silicon Valley

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Storm Ventures is an early stage investor and partner for enterprise leaders.

I am not a road warrior. I don’t even spend a week a month on the road. But as an investor, I see many great opportunities that exist outside of Silicon Valley. Most of Storm’s investments are in the Bay Area and I am not sure that will change. But I am increasingly spending a lot of time on the phone talking with remote teams. I imagine we will be investing more in companies outside of Silicon Valley over time. We invested in Gather in Atlanta at the beginning of the year which I wrote about here. It has me thinking a lot about how to invest and work with teams where a direct flight is the fastest way to have an in-person meeting.

When I hear other venture investors talk about how they only want to invest in companies that they can locally drive to see it strikes me as strange. Most investors, I  believe,recognize its strange and don’t really want to admit it. I get the convenience. I also understand spending time and helping companies is easier in person. I understand that networks tend to be somewhat local.

However, with the bright light that has been shown on startups and the venture world, especially over the past ten years, through blogs, conferences, incubators, increases in the numbers of new companies etc., so much more is available to entrepreneurs without having to be physically present in Silicon Valley. People are starting companies – especially SaaS companies – with so much less capital where the currency of success has more to do with a deep understanding of the customer problem and a relentless drive to execute. Nothing to do with zipcode.

I  have learned that even working remotely, being in Silicon Valley actually is one of the ways I can help companies I work with the most. While the obvious downside is working more over the phone instead of as much face time, at least if I am in Silicon Valley I can be a part of the bridge to the broader community here for the remote team.

So a lot has been written about investing  in early stage businesses outside of Silicon Valley.  There are advantages and disadvantages – just two of many, one from Business Insider and one from the WSJ.  Many article have been written from the viewpoint of tech workers moving out of Silicon Valley – like this recent one in the WSJ. The punchline is that for business/ enterprise focused SaaS companies, which is all we at Storm invest in as a fund, I see no reason for a company to be based in Silicon Valley.

For companies coming from other locations around the globe outside the US – I do have a bias that being based in Silicon Valley or maybe New York is a net advantage. Silicon Valley is in many ways for technology what New York and London are to the financial markets. You don’t have to be based here but if you are not – you are likely going to get to know SFO/SJC/OAK airports well. If your company is based elsewhere in the world, the advantages of a US office in Silicon Valley are many but I am sure others would argue the point. It certainly isn’t a requirement.

The reason many remote teams (and investors) cite as the best reason to build outside of Silicon Valley is cost. No question – It is expensive to live in the Bay Area. Culture is another reason – I was recently in New York and was meeting with a company and the CEO said he likes being in Manhattan because of the culture there. Got it (and FWIW I think New York has a very bright future for enterprise SaaS). But cost and culture really miss the point (though both are great) – it’s really about finding the best people and talent for the business you are building.

By far the hardest part about being outside of Silicon Valley is hiring the executive team.  There are just not that many SaaS companies that have been built to scale in places like New York or Atlanta.  Take a relatively new area like customer success – there just are not that many people that have led growing organizations in that functional role, let alone outside of Silicon Valley. The center of gravity, that is Silicon Valley, provides a depth of executive talent as well as venture investors that just cannot be matched elsewhere. Some executives can make a commute work that involves a flight. Some do and are very successful at it but I am convinced it’s a relatively small group, most would struggle with the professional and personal constraints.

There are some areas where we are really active, like artificial intelligence and machine learning, where we are likely only to find the best people in London or Silicon Valley. But for many opportunities we are excited to find exceptional teams working on building the next great SaaS business outside of Silicon Valley.

I will put together some learnings and thoughts over a few posts on how to make a remote relationship work and thrive with a venture investor. After all, money is money and every entrepreneur is after more of a contribution to the success of a business. Being remote is slightly harder – but I feel like I am beginning to find some ways to make it work.

Zuckerberg said if he were starting a company now, he would have stayed in Boston. Would Silicon Valley be the same today without Facebook? Would Facebook have been able to build the same quality team – would Sandberg have joined (I would guess probably not)? All of these questions are interesting – but hypothetical.

Let me know what you think. If you are a remote team, how have you made it work with venture investors? Am I crazy?

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Gather

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Recently in January, Storm was fortunate enough to invest in Gather, an Atlanta based company focused on event management SaaS.  I say fortunate because we are always grateful when we find a team and opportunity that matches what Storm is looking for as a fund.

 

Gather is a great example of vertical SaaS and carries the attributes that we think represent a large opportunity. Norwest put together a blog on The Rise of Vertical – Specific SaaS Vendors  and Redpoint as well on some of the Vertical SaaS Tradeoffs. We would agree that vertical SaaS is one of the most interesting areas today.

 

Prior to Gather, we knew nothing about the event management market. As a result, we looked for some initial product market fit in a business that we felt was ready to scale with a sales engine that was working plus a process we thought was repeatable. We also looked for a product that could deliver more value over time into that same customer base. For us, investing in a SaaS business without customers is hard and I think just about impossible in an unfamiliar market.

 

Investment: Storm invested $1.9m into Gather which is a mini-seed deal by Silicon Valley comparisons. In Atlanta, a dollar goes a long way.  The team has built a very efficient sales model which does not consume a lot of fuel – at least not today – with a plan to more than triple revenue this year. Battery Ventures put together a nice analysis of the importance of high growth early on with their Triple, Triple Double – T2D3 post.

 

Market: There are more than 350,000 restaurants and more than 100,000 event venues just in the US.  While the aggregate target venues is a large number, it must be and is critical as we need sell to many thousand locations in order to get to scale given the price points for the solution. Today, Gather is just shy of 2000 venues. There are other challenges to the market as well which include the restaurant and venue business is tough and many of these businesses simply don’t survive long term. As a result that brings with it natural churn – which is the worst kind of churn since there is nothing you can really do with the business to prevent it. Every SaaS company has some of some of this – as a result of M&A for example – but in this market it is more pronounced.

 

Team: The team wandered in the wilderness for some time before they really figured out the business. I didn’t get a chance to meet them until the business was working.  While obviously not a requirement, I am always impressed when you see founders that just won’t give up when they are in the ring and things are really tough. The founders at GuideSpark have a similar story.  In the early stages, it can be tempting to throw in the towel as there is not nearly as much to hold on to (like revenue)  in order to keep going and reveals the grit and resolve of many founders.  In early 2012, Gather started with what turned out to be a series of very large pivots from a Yelp like service to a site called Tablenow which was a “Hotel Tonight” for restaurants. They even endured investor meetings that included dove hunting (maybe a Southern thing). Tablenow was unable to anticipate inventory accurately so they resorted to a sort of “Wizard of Oz” strategy. This strategy was that within the app, when users would select an area they wanted, the team would manually in real time find inventory and book the restaurant. Obviously, this didn’t scale and they quickly backed into a concept called Supper Series which was a kind of curated dining event – and was the first time they really started making any money. Most importantly through the experience, they built relationships with their first customers. This experience made both the opportunity around private events and the need for a Gather solution very clear.

 

This experience also showed us domain experience. For me, this is not only important but a part of other investments that I have made. It’s hard for me to believe you have the right team, no matter how smart, if you don’t know the industry. Gather arguably learned the hard way after spending several hard years trying to solve problems. Ultimately, they found product market fit.

 

Location: Unlike many silicon Valley investors, Storm is 100% okay investing outside of the Bay Area especially for a business like Gather. I don’t subscribe to the belief that companies have to be in Silicon Valley. There weren’t a lot of business or technology partner dependencies that would make Silicon Valley a more logical choice. An argument could be made that it’s even more beneficial to build Gather in Atlanta for many reasons. Atlanta has come a long way as a technology community.   The team and I discussed early on that I couldn’t commit to being in Atlanta often in a way I could if the team was local to me in the Bay Area. We would need to do a lot of work over the phone. In fact, while I have met the team in person and been to Atlanta now several times, they’ve never been to our office in Silicon Valley. Never. The partnership meeting was done via Google hangout. The distance will be a challenge but we are going to make it work.

 

This is a business that needs to be built efficiently. There are lots of positive aspects to the high volume sales model as well. The sales cadence is very different compared to most enterprise SaaS companies.  Almost every opportunity at Gather is won or lost within the quarter. An account executive can hit a quota and be fully productive by month two. That is pretty rare in our group of SaaS companies.

 

SaaS continues its march further and further into more and more industries and markets. We are working hard to find these new opportunities. Check back with me in 18 months and we’ll see how the business is progressing at Gather. The future seems bright.

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The Story behind Digital Shadows

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The Digital Shadows team December 2014, London

 

With the next round of financing behind us and a great new investor, Fred Wang from Trinity Ventures, on the board, I thought I would look back at why we invested in Digital Shadows just over a year ago. I wanted to see how our thesis measured up and put a stake in the ground moving forward. Cyber security will be a continued theme for Storm in the enterprise.

Digital Shadows executed its plan incredibly well last year. When we invested they were still fairly early in their business, with mostly European customers and far less history as basis for an investment decision. At that time, the entire company was based in London (and still maintains most of its intelligence operations and development there). Soon after we invested, one of the founders and CEO, Alastair Paterson, relocated to San Francisco to start building the US team.

Looking back at the internal case for investing there were three key reasons that made the investment in Digital Shadows compelling: market, product fit, and team. While variations of these three reasons are the the foundation of all investments, I think it can be helpful to other entrepreneurs to understand the Digital Shadows case in more detail.

Market

As cyber attacks have become more sophisticated and targeted, there is an increasing need for solutions that deliver relevant intelligence about external threats taking aim at organizations. Digital Shadows delivers a scalable data analysis platform, complemented with an intelligence operations team, that tailors intelligence around the customer requirements that are truly unique to their organizations.  They call this approach cyber situational awareness.  While the global security market is very large, this is an example of a new emerging category of solutions as compared to like firewalls, which is much more mature and well understood market. Digital Shadows instead focuses on threats, and potential sensitive data loss, that exist beyond a customer’s perimeter, where most solutions only focus within the perimeter. Digital Shadows SearchLight is a true SaaS solution, bringing with it all the benefits of SaaS which we liked and we knew we could help accelerate. While the total size of their addressable market was an unknown (and still is, due to the crowding and confusion in threat intelligence), the company believes the market opportunity size to be more than a billion today and growing. But what we now know after a year is much more about the target customer profile  (>1000 employees, sensitive data, high profile executives, etc.). This has enabled us to accelerate our marketing efforts and continue to build the right sales and customer success organization. Although it’s still early, the indicators are good.

Product Fit

At Storm we spend a lot of time thinking about product fit. Unless we are explicitly making a seed / pre product investment, we are looking for companies in SaaS that have some initial indicators of fit. To some it may seem that we aren’t taking enough risk. In reality, we are most helpful to companies which have figured out their initial product market fit. Understanding in great detail a customer pain point and delivering a solution against that pain is a critical step in the startup journey before scale. Otherwise, you risk burning through a lot of cash, without results, if you apply venture dollars towards scaling a business before you have a clear product market fit. At the time of the investment, we believed Digital Shadows just found a clear product market fit with more than a dozen blue-chip customers who were paying enterprise amounts for the solution. The company grew its recurring revenues more than 4x in 2015, ahead of the Series A plan and are on track for an exciting 2016.

Team

The founders, who have deep understanding of the market and requirements, were a part of Detica. Detica was a threat intelligence security company that was sold to BAE Systems (a British defense contractor) in 2008. The security industry can carry heavy consequences and doesn’t tolerate impostors. What we saw was a team that had the security chops to sell to a challenging security buyer. We would not make an investment in a security company team that didn’t have this DNA, which is perhaps different than some other areas of SaaS. Looking back, one of the biggest risks Digital Shadows took was believing they could move to San Francisco and build an executive team in the US. Although their network was in London, they were successful in tackling the tremendous task of recruiting and hiring at team in San Francisco. While we helped, the team was able to build a solid foundation in the US in a remarkably short period of time.

It is all still relatively early for Digital Shadows. But if the past year is any indication of things to come, the future looks bright for the business. And our investment thesis – a year into things – looks to be more or less accurate. We’ll see with more time.

 

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Storm Celebrates 15th Anniversary

In 2000 Tae Hea, Alex, Sanjay, Dick and myself founded Storm Ventures. We have had many struggles and many successes.  This past June we celebrated our 15 year anniversary along with our Annual Meeting.

 

We hosted our casino themed event at The Village in San Francisco, with over 300 friends and colleagues in attendance. We decided early on we didn’t want it to just be about Storm, but about all of the people who have helped and supported us throughout the years. We would not be where we are today without all the support of our limited partners, the entrepreneurs, our venture colleagues and so many more in our community.

 

It was also important to us to give back to our community.  We partnered with Project Homeless Connect in San Francisco and donated all of the proceeds from the casino games to them.  PHC’s mission is to “connect the most vulnerable San Franciscans to vital resources throughout the city. They link participants to difficult-to-obtain services including medical, dental and vision care, and employment assistance.”  They do amazing work.

Here are some photos from the event. You can find all of them here.
As we embark on year 16 we are excited for the next chapter and strive to continue to be your trusted advisor. Thank you for all your support and help. We are grateful to have such an incredible group of people to work with on a daily basis.

And especially thank you to our families (that is my wife Julie in the picture at top) who have been with us through the whole struggle. 

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AtScale has Soul

A Storm portfolio company AtScale made a little noise this week in the press mostly around detailing the recent financing.  Some of you might have heard of the company before: it got a lot of attention a few month ago, when it came out of stealth.  For a quick perspective, you might want to check out this Forbes article: AtScale Launches To Democratize Hadoop.

We were an early investor in the firm and this week, we were happy to announce renewed participation from our friends at XSeed as well as new investors and advisors, UMC Capital, AtScale is also pleased to have Jerry Yang (Yahoo! cofounder), Amr Awadallah (Cloudera cofounder) and Michael Franklin (AMPLab, Spark) as investors and advisors as well.

So why did Storm invest in AtScale?

As background, I met one of the founders, Dave Mariani, in 2013. I did not fully appreciate the opportunity and potential from our first meeting. Within a month and meeting Matt Baird, Dave’s early co-founder,  I was working convinced and really believed in the team and vision. I was working to find a syndicate partner for a seed round that saw things the same way. Fortunately, we met up with Xseed and the rest is history.

The vision for the company has been consistent since the beginning and I’ve been impressed by the team’s laser focus on the market opportunity around Business Intelligence on Hadoop. The rest of the founding team is impressive as well with equally deep domain expertise. After the seed financing, we were able to attract Josh Klahr from Greenplum / Pivotal and most recently Bruno Aziza from Business Objects and Microsoft to lead marketing.

Team: When I think back on that decision and what continues to give me conviction about the team is that they really understand the Business Intelligence (BI) problem. This team is not full of carpetbaggers. In fact, Dave Mariani has been a customer of BI in his roles at both Yahoo and Klout. He also built BI solutions at MineShare, a startup he founded and sold in 2000. This team knows the problem first hand and knows what solutions customers want based on that deep experience. In an area as technical and specific as BI, this experience has proven to be invaluable against a landscape of what seem to me to be weak set of competitive offerings often from teams that have remade themselves in the light of “big data” as the next new thing (and of course in full disclosure I am biased). It was difficult as an investor to wade through all the pitches of big data solutions to find something with soul. AtScale has soul.

Timing: The AtScale solution/product wasn’t possible “pre” Hadoop. Hadoop and the ecosystem that has emerged around it is a figurative freight train that has changed the data IT landscape in a remarkably short period of time.  AtScale’s solution would not be possible without the SQL-on-Hadoop innovations like Impala, Spark and TEZ which did not exist a few years ago.  As a result,  anyone trying to do something similar to AtScale earlier had to build the full Hadoop-like solution stack and now are somewhere on the tracks in front of the freight train. AtScale really is an example of the power of a new class of applications on Hadoop infrastructure. Infrastructure is only as valuable as the applications and insights that it can enable.

Market: I really believe that analytics is the first killer application on Hadoop. Hadoop is really incredible in terms of what it enables but the key is the applications. AtScale is the key enabler that ties both the Big Data market estimated at $50B by Wikibon to the Business Analytics market which IDC expects to grow to more than $50B by 2018. I know thats a lot of billions but I like to have sea room. AtScale not only is a force multiplier between these two markets but it can leverage BI interfaces like Tableau and Excel. It turns out Excel is really the largest BI tool in the market today with over 1 billion users worldwide. In addition to Excel, there are more than 100 million BI users of more dedicated applications today. These users are the key to pushing Hadoop even further into the enterprise as a critical asset. AtScale is the missing link.

We could find ourselves on the tracks in front of some other freight train – nothing is easy. But I think the opportunity in front of AtScale is just tremendous. There are many signs that point to other successful investments Storm has made over the years. I will do whatever I can to help AtScale reach all of its potential. After all, it’s not everyday you get to work with a company with real soul.

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The First Date – Just Get Out the Slides

I have had a few meetings in the last few weeks that have reminded me how important some structure is for the first date – or at least when you are really pitching – just quit the “lets just talk it through and see the demo” pitch.  Bring out the slides. I am not kidding. Structure is sweet. I am sure your product is awesome but the demo isn’t enough for me. Unless you are going to levitate, go back in time or some similar Blaine like feat, I am not investing in a demo. I have a lot of awesome interactions and conversations at places like Philz.

Sometimes like this morning I had a meeting to talk with an awesome entrepreneur and she had just taken over as CEO of a company and wanted to get me up to speed on the business as they will be out raising money later this year. Perfect – no slides. No need. But I know her well and I know she will have a deck when she goes to really start raising money. No question. I learn a lot in unstructured meetings (unstructured does not equal without purpose) and hopefully the people I meet with feel the same. Those conversations are great – and they build relationships and trust which are critical – but I cannot imagine really making a decision over a latte. Maybe there are other venture investors that will so chalk it up to just my style.

I know it sounds cool – just talk it through and they will get it. Much more casual and much more fun. But don’t do it. Even if the investor says it’s OK – go to the deck. I am not talking about going through a mountain of slides. Tell the story succinctly and get to critical aspects of the business. The structure makes a huge difference – at least to me. Slides can be light on the details – no one can digest a page of numbers easily but they serve as the illustration to the story you are telling. Just get out the slides. Please. There is some complexity to any business and team and we are all short on time (and maybe I am short on intelligence) but some structured flow to the conversation will not only be the most efficient way to spend out first date but it will also be the best way for teams to get funding. At best, an unstructured first date just leads to a second structured one.

I have made the mistake of letting teams present to my partners in an unstructured way. Totally my fault and I let everyone down.  I made it harder for my partners to fully understand the material – even if they had seen the deck – and I made it harder for the team to really make their key points. Random questions are just terrible in a room full of people because the interaction generally focuses more on one person and then is somewhat disjointed which puts everyone into thinking about what is for lunch.

What you need to do is to engage people. It doesn’t always mean that they are asking questions though that is an easy metric, but it means they are paying attention. They are interested in what you are saying. If a venture investor isn’t interested in what you are saying, does anyone think funding will follow? In conversation, it is way too easy to digress, go down that awful rathole. But it won’t be driving the engagement you need to get to the next step.

I am not sure who out there is giving entrepreneurs the advice to just talk it out – some sort of hug it out fuzzy approach – but I think it is just flawed and not doing anyone any favors. Without structure, its hard to be efficient with time and while I like to think I am probably more liberal than most with first meetings, I really cannot spend the time again on a second if things don’t make sense to me. I really don’t care if its Powerpoint, Keynote, old school foils or Prezi etc. but its got to be structured and thoughtful. Put in the work to distill the story. Iterate on it. Its hard for me to believe that better communication won’t lead to a better outcome.

If you want money for 18 months – be able to answer what that means. Please keep the hand waiving to a minimum. Be direct about what you know and what you don’t know. I don’t expect precise answers but I expect you know directionally what you are doing with the business. I am backing you not some other person I hope to hire.

So back to that product demo – they are great but secondary. I actually like seeing demos. I know you have been working hard on it for weeks or months and its the showcase of all of your vision but its hard for me to see as clearly as you do without the rest of the context.  I care generally about two things – team and market opportunity and the combination of why you are going to win. If we have time – I would love to see the product but lets not skip the main event.

I am not that product person that just gets it. I would posit that the same is true of most venture investors regardless of how they position themselves. You might be tired of talking through the pitch one more time with yet another venture investor. I understand. But my sincere advice is to get over it. It is possibly the easiest thing you will do as an entrepreneur. Really. My partners and I do it when we raise money from our limited partners (our investors). I have come to actually really enjoy telling the story and structure really helps to keep things on track for what I know is a small allotment of time. I know how hard it is to re-tell the same story but there is no reason to make life any harder.

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The Good, the Bad and the Ugly. Helping to Recruit and Build Teams.

It is a goal to help wherever I can and get out of the way when I can’t. Helping to recruit and build teams is one way I can do something other than write a check. I am sure a lot of venture investors do a better job than I do, but all the great ones I think make it a priority.

I try really hard as a venture investor to really help. I view it as critical to my ultimate success as a venture investor at least for the long game. Sometimes I do better than other times – though always paying attention to do no harm which I wrote about in a prior post on the (venture) hippocratic oath. Sometimes there is little I can do. For example, I can’t really help define a product or even dissect the friction in a sales process besides sharing stories of past experiences.

But over the years one area that I have found I can help a lot with hiring executives for the portfolio companies and spending time with employees that are trying to think through career decisions. Some might argue its not a great use of my time – and time it is – probably something like 10-20% in any given week. But I have come to the conclusion that at least for me, it is one way to provide some leverage for the portfolio companies. Its not altruistic – the reality is that with great teams my job as a venture investor is greatly simplified. As a result, helping to build and support those teams is a very good use of time and if I help its truly constructive to building the business – like introducing the company to a new customer.

So why the Good, the Bad and the Ugly? On this point I may differ from others in a material way. I try to give a full picture of the company. I assume that everyone I am meeting is smart. It drove me crazy when I was younger listening to venture investors spew mindless optimism about their companies. Most venture investors I know are loose with the facts. It does take eternal optimism to survive day to day in the venture business so its not all that surprising. I remember feeling like I was being treated like a second grader when I was leaving my last operating role. I couldn’t believe that people thought I had no other context for the opportunities – and generally those conversations made me want to run from the company because I assumed that this was how the investors (or CEOs) thought about the world. Who wants to work for someone who is delusional? I know that smart people will eventually discover all the challenges of any company (and every company has them) so better to discuss them in the process as it relates to fit and avoid surprises. I know of a recent situation where an executive was recruited into a company having been sold on certain sales numbers and customer contracts. The reality when he got there was that none of it was true. He left and everyone lost. Its not a unique situation.

One of the hardest parts in hiring, recruiting and retaining the best people is to balance giving a different perspective as an investor but at the same time do my best to act just like anyone else on the executive team – because ultimately its not my decision who we hire and who we don’t at a company. There are some situations where I have a strong opinion on someone but I try hard to not cross that imaginary line where a CEO or VP might think it would be a mistake to hire someone simply based on my view.  I need to respect the relationship. You cannot help if being critical is the only club in your bag.

I am fortunate in that most of the time when I am interviewing potential hires, I am not the initial screen so the people I am meeting are generally somewhat qualified at least on paper. Most of the time I am focused on fit – is the company the right place for the new hire in the role that they have in mind (scope, experience etc.) and does the role fit the career path and match against the passion of the individual. I have found this is a great way to get into the detail without the grind of typical interview questions. I have different discussions with different roles and I do have some basic questions like if I am talking with a VP Sales I want to understand how they have built teams, what sort of quota they carried, deal size etc. But I find this is a natural conversation for the pros. They never hesitate and its an easy discussion.  As a venture investor, I can offer up a different perspective as an investor – why I invested, what has worked, what hasn’t worked, how I think about the market etc.

Every company has issues. Its much better to put them out in the open and have everyone join the company with their eyes wide open. That way, while things may still not work out, it won’t be because expectations were not in line with reality. I think it makes a stronger case for the company and treats everyone like a professional – which all ultimately lead to a better outcome. eastwood_good_ugly

 

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OpenStack Podcast / Interview with NextCast’s Jeff Dickey and Cisco’s Niki Acosta

I will put up another post after the OpenStack Vancouver Summit in May with my thoughts but I got on the webcam with Jeff Dickey and Niki Acosta who produce OSpod – there are a ton of other great community members that they have had on the show. You can get past shows (video or podcast) on Jeff’s site NextCast or read the transcript on a Cisco blog post  and see the video there as well. I am still a believer in OpenStack – it is just growing. Walmart is the latest example.

 

 

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