When I first got into venture capital and the startup world in 1996, I remember the best words of advice were, “it’s about the people.” At the time, it sounded trite and way too simple. And 24 years later, that advice holds true more than ever.
At the pre-product stage, it’s always a question of whether you pick the 🏇🏼jockey or the 🐴 or the people or the market. While slightly nuanced, I like to think about “founder market fit” which means backing the jockey first but also emphasizing the importance of the market they are going after and their skillset/experience to do so. Many times true TAM (total addressable market) is non-existent and inherently unmeasurable except with common sense. A great example would be Snyk - the big bet was if you can create a developer friendly tool for security, will developers adopt it? True TAM, at the time, was small as the market for this was non-existent, but layering on a common sense approach, you can ask how many devs and if team could build the product, the market could actually be quite huge.
On the jockey or people front, the founder, Guy Podjarny, was a repeat founder that we had backed previously and had built similar types of tooling at companies like Sanctum/Watchfire and had the know how and ability to build and recruit. While it’s all about the product in the early days, it’s hard to build without the ability to take that vision and mission, shape into a story, sell it, and recruit a top notch team. This importance on storytelling and recruiting only grows more in importance over time as each new hire can catapult one’s company into a new trajectory.
A great example this past week, is the huge get by Replicated (a portfolio co) as they hired Mark Pundsack, Gitlab’s former CPO, as their Chief Product Officer.
We backed Grant Miller and his co-founder Marc Campbell with a first check end of 2014, and they’ve been consistently leading the charge for modern on-prem which is cloud-native in its pure essence. It hasn’t been easy, and many thought they were going against the tide with the cloud (which they actually weren’t 😃), but in the last twelve months they’ve built incredible momentum as they are powering the enterprise version of software for customers like Hashicorp, UIPath, Puppet, and Snyk. They never wavered from their original mission, and I’m excited to see them building momentum with each new customer and key hire. There are very few overnight successes in infrastructure land, so keep the faith, adapt, and remember, it’s about the people!
Have a great weekend and as always, 🙏🏼 for reading and please share with your friends and colleagues if you find this interesting!
Scaling Startups
Yep!
So good and so true (hat tip @Rob Bailey, founder/CEO of Backbone)! That’s why I like to call it enterprise design partnerships - need to get them to believe in you and your team’s ability to deliver knowing that there is still work to do.
Some resources besides pure product needs are the basics to be enterprise ready and here are some tips from a slide deck I put together on “breaking into your first enterprise IT account” (make sure under settings to open speaker notes) - notice i did not mention the word sale!
Speaking of customers, Lenny Rachitsky shares how today’s fastest growing B2B businesses found their first ten customers…
👇🏼Semil nails it…and important to remember.
👇🏼💯Read the thread but point is great founders and CEOs know how to sell, how to sell to recruit their first employees, their first customers, investors…
Ten Slack Commandments from Shopify - on point and fun listen.
Enterprise Tech
State of Data Science 2020 from Anaconda is out (data science platform with over 20mm users). 2 key findings: 1)Majority of time is spent cleansing and loading (45%) and 2) Privacy is one of biggest problems left to solve. Which is why I’m also super excited about Cape Privacy 😃
And privacy and social bias still huge, unsolved problems.
The 24 top emerging cloud infrastructure startups according to VCs and Business Insider - has your usual suspects like Snowflake, Auth0 and JFrog but also some up and comers like portfolio cos Env0, Replicated, and SpectroCloud.
State of Dev Rel report from WIP, one of the first marketing agencies to focus on developer relations. Some great data in here and lays out best channels for reaching developers, current state of tooling, metrics to track and what the role entails.
Must read - Redpoint 2020 GTM survey from Tomasz Tunguz and covers team structures (eng, sales, marketing), ratios for AEs to reps, and sales quotas for inside ($500k at 50th %) and outside ($1mm at 50th%) and sales ramp times about 5 months for direct.
Kubernetes market heating up as Rancher acquired by Linux company SUSE - rumors were in the $600-700mm range after raising about $100mm. Question is who’s next as there were multiple bidders…
Rancher’s core software draws on the Kubernetes container management software that Google released under an open-source license in 2014. People have downloaded it over 100 million times, the company said in March, and it claimed annualized revenue growth of 169% in 2019 without specifying a dollar amount. Rancher also offers its own small distribution of the Linux operating system.
Rancher’s customers include American Express, Comcast, Deutsche Bahn and Viasat.
The metaverse part 2! Already pre-ordered here.
Markets
Let’s save the money on these roadshows, create a more efficient process, and of course, fix the pricing and first day jump
Why are tech stocks hot? Great read from Techcrunch insider with my colleague Shomik Ghosh quoted - all about rising TAM
More on “frothy” cloud stocks from CNBC - question is what has accelerated due to one time, ST needs like VPNs and what is more secular like cloud spend overall?
