News & Views

 

Doubling Down on Jama

Today, Madrona is incredibly excited to participate in one of the largest investments ever in an Oregon-based software company, the $200M growth equity investment in Jama Software led by Insight Venture Partners.

Madrona first invested in Jama in 2013 based on our belief that product managers needed better, more modern tools, or even a system of record.  Further, we believed in founder and CEO Eric Winquist, the team, and in the product they had developed since 2008, starting with a better approach for requirements management and extending to purposeful collaboration that helped teams build great products.

The company made a successful transition to a subscription business model and cloud-hosted SaaS.  Eric then recruited Scott Roth as CEO, who added to the great Jama team by recruiting additional experienced and high-performing executives.  Scott has done an amazing job scaling the company.

Today, Jama has grown into a leading product development platform provider for companies building complex products and integrated systems. The Jama Product Development Platform helps companies establish a process to mitigate risk, improve quality, identify opportunities and decrease time to market via an integrated solution for guiding the product lifecycle from idea to launch. More than 600 innovative companies use Jama Software to modernize their product development process.

This significant investment from leading growth equity firm, Insight Venture Partners, is validation of the value Jama provides to customers, its market leading position, as well as its rapid ARR growth.  Even more importantly, this new investment round validates the opportunity that lies ahead.  This is what is most exciting to Madrona.  We see considerably more growth in Jama’s core market, winning new customers and converting others from older systems like IBM DOORS.  The company is just starting to scratch the surface with its business outside of North America, as well as working more closely with key partners.  The launch of Predictive Product Development and Jama Analyze in April were examples of a number of new product and service enhancements in which the company will continue to invest.

Madrona loves to partner with founders from Day One.  In many ways, it’s Day One again at Jama.  We are delighted to continue to partner with Scott Roth and the Jama team, and now Richard Wells and Insight.  We will continue to roll up our sleeves and work hard to help grow Jama into an indelible Pacific Northwest success story.

POSTED IN: Madrona News

Welcoming Micah Baldwin

(Pictured Micah Baldwin, S. Somasegar, Scott Jacobson) 

I am excited to announce that Micah Baldwin has joined us as Executive Director of the founder-focused innovation center we will be opening later this summer. In the spring, we shared that Madrona signed a ten-year lease for the 33rd floor of our building (directly below the Madrona offices) that will be dedicated to supporting tech founders and the startup ecosystem in Seattle. A key ingredient to the success of such an endeavor is a leader with equal parts vision and ability to execute, and we found our leader in Micah. Micah brings more than twenty years of startup experience as a serial founder, mentor and ecosystem supporter. While steeped in all things startup, Micah joins us from Amazon Web Services, where he developed and operated the AWS Connections program, which helps enterprises identify and collaborate with tech startups.

In the innovation center he will be doing that and much more for great Seattle founders and founding teams. Micah has an expansive vision for new and additive ways to create value for founders in our region and help to grow the next generation of world class technology companies in Seattle. We are looking forward to getting started and could not be more enthusiastic about Micah joining us in this endeavor.

We will have a lot more to share in the coming weeks. Welcome Micah!

And get in touch innovate(Replace this parenthesis with the @ sign)madrona.com if you are interested in exploring membership or space in the innovation space!

POSTED IN: Madrona News

Rigado – Edge Computing for IoT Devices

(Pictured Ben Corrado, co-founder and CEO, and Len Jordan)

Today I’m very pleased to announce our investment in Rigado, developers of an ‘edge-as-a-service’ platform for next generation IoT applications.  We have known members of the Rigado team for many years, are impressed with their product/business progress and are glad to be leading their A round of $15 million with participation from existing investors Oregon Venture Fund, FusionX and Vanedge Capital.

Rigado’s platform plays an important role in the hybrid distributed computing world that marries the cloud with processing at the edge.  Their recent release of ‘Cascade’ leverages the team’s strong history in device connectivity with a sophisticated container-based software API system and gateway for security, management, provisioning orchestration and cloud integration.

We have been studying the IoT market for several years and believe it will become more and more important as intelligence at the edge matures.  We are especially impressed with Rigado’s customer traction in new commercial applications like retail/hospitality, building management and more classic IoT use cases around asset tracking and telemetry.

We look forward to working closely with the team, they have strong relationships with important partners like Microsoft and Amazon who are well-known to Madrona.  We are also especially happy to be working with another great company in Oregon and look forward to connecting Rigado to our colleagues up and down the Cascade corridor.

 

POSTED IN: Madrona News

Announcing $300 Million for Technology Entrepreneurs and Founders

Today the Madrona Team is gratified to announce our latest $300 million fund, Madrona Fund VII, for investing in exceptional technology entrepreneurs and founders in the Pacific Northwest from Day One.  Our longstanding endowment, foundation and family office investors see a huge amount of opportunity for growth in our market.  We agree – we think the next big technology trends of cloud computing, intelligent applications powered by AI/ML, multi-sense user interfaces and solutions combining the digital and physical world will drive the next decade of innovation are all happening in greater Seattle better than anywhere else in the world.

We look forward to working with great entrepreneurs, co-investors, and partners as we build the next big companies for the future.  Here are the details: we raised $300 million from which we will make initial investments over the next 3-4 years and use to continue to support those companies over the long run – often for 10+ years. Four of our companies have IPO’d in the last two years (Smartsheet, Redfin, Apptio and Impinj) and they exemplify how we work. We were there at day one through the ups and downs for every one of those companies.  The average time from inception to IPO for those companies was 12 years.  We believe whole heartedly in the innovation of people in the Northwest and we are excited every day to get up and work with you to build success.

Thank you!

Below is our press release on the new fund.

Madrona Venture Group Expands Capital for Entrepreneurs in the Pacific Northwest – Announces a New $300 Million Fund for Early-Stage Technology Companies

Fresh from Four IPOs, Madrona’s Fund VII was Over-Subscribed with Investors Interested in Participating in the Growing Innovation Ecosystem in the Pacific Northwest

Seattle, WA – May 22, 2018 – Madrona Venture Group (www.madrona.com) today announced the closing of a $300 million investment fund, Madrona’s seventh.   Madrona’s strategy is to partner with the most promising technology entrepreneurs and their teams from day one through the long term. Madrona primarily focuses on great founders based in the Pacific Northwest, which is home to two of the world’s four largest technology companies, Microsoft and Amazon, as well as a thriving technology and startup ecosystem.

In the past two years, four of Madrona’s portfolio companies have gone public.  With each of these companies – Smartsheet, Redfin, Apptio and Impinj – Madrona was there at day one and partnered with the team every step of the way.  The average time from initial investment to IPO for these companies was 12 years, exemplifying the firm’s long-term commitment to entrepreneurs.

“The entrepreneurs in our region continue to build exceptional companies on the leading edge of major customer, technology and business model changes.  We believe cloud computing, intelligent applications powered by AI/ML, multi-sense user interfaces and solutions combining the digital and physical world will drive the next decade of innovation,” said Matt McIlwain, managing director, Madrona Venture Group. “On behalf of the entire Madrona team, we are proud to have the trust of our many limited partners and outstanding founders.”

Madrona Venture Group Managing Directors

Fund VII is Madrona’s seventh fund over the last 23 years and brings funds under management to nearly $1.6 billion.  The oversubscribed fund is supported by a diverse set of repeat and long-term investors including the nation’s premier endowments, foundations, family offices, Outsourced Chief Investment Offices (OCIOs) and entrepreneurs.

Madrona’s philosophy of supporting technology entrepreneurs and startups in their earliest days continues with this fund, and the firm will deploy capital to lead and participate in seed and Series A investment rounds.  In addition, the entire Madrona team will continue to roll up their sleeves to help with recruiting great talent, making strategic business decisions, amplifying company stories, connecting them with partners and customers and raising follow-on financings.

Mark Mader, long-time CEO of newly public Smartsheet (NYSE: SMAR) commented, “Madrona understood Smartsheet’s vision and the value of our innovation from our earliest days, even when some others did not. In the eleven years since, our partnership has yielded significant growth, supported by Madrona’s valued counsel on market trends, buyer needs, funding, executive talent, and ability to collaborate with other growth investors. As I reflect on the early decisions that made a positive difference for Smartsheet’s business, our decision to partner with Madrona is one that delivered in the short, medium, and long term.”

Madrona has been committed to supporting, spurring and fostering the innovation ecosystem in the Pacific Northwest over its history, ranging from creating Seattle’s first startup studio, Madrona Venture Labs, five years ago; launching and supporting Seattle TechStars; partnering with the University of Washington Allen School of Computer Science; and working with the angel investor community.  This year, Madrona will open Floor 33, a Seattle innovation community co-located with Madrona that will house an expanded Madrona Venture Labs and a curated co-working space for founders and their teams featuring programming for residents and the entire community.  This 22,000 square foot location will open later this summer.

Current and new portfolio companies will benefit from an expanded group of Managing Directors, investment professionals, Venture Partners and professionals dedicated to helping our companies succeed. Recent additions include: Managing Director, S. Somasegar; Venture Partners, Ted Kummert, Hope Cochran, and Luis Ceze; Strategic Director, Betsy Sutter; investment professionals Maria Karaivanova, Sudip Chakrabarti and Chris Picardo; Talent Director, Shannon Anderson; and Business Development and Investor Relations Director, Alice Ryder.

About Madrona

Madrona is an early stage venture capital firm in the Pacific Northwest.  The firm invests in technology entrepreneurs and companies, and works with them to build their businesses. Madrona manages nearly $1.6 billion and was an early investor in companies such as Amazon.com, Apptio, Smartsheet, Rover.com, and Redfin.

Contact:  Erika Shaffer erika(Replace this parenthesis with the @ sign)madrona.com  206-972-5514

POSTED IN: Madrona News

Insight from the “Day One To IPO” Experience

Technology IPOs have rebounded the past couple of years with an especially strong start to 2018. In the first four months of 2018, there have already been 17 tech IPOs raising over $8 billion which is double the pace of 2017 in deals and capital raised. And, three companies founded in Seattle (Docusign, NLight and Smartsheet) all went public last week.   At Madrona, we have had the privilege to support four portfolio company IPOs the past 2 years; Impinj, Apptio, Redfin, and Smartsheet. In every single case, we were involved at or near Day One and on average it took 12 years from our initial investment to IPO milestone.

When you invest in entrepreneurs and their companies from Day One, you build deep, trust-based relationships. You also learn some key insights that could help the next generation of innovators who are aspiring to build companies change the world. These insights include:

  • Be obsessed with early customer-product fit
  • Maintain “unreasonably high” expectations and standards
  • Constantly look “around corners” to anticipate what needs to change
  • Align for long-term and mutually beneficial strategies
  • Establish and maintain deep, trust-based relationships

Be obsessed with early customer-product fit

Successful companies always begin with a maniacal focus on a core customer and problem. This initial focus is on customers and not “markets.” Markets often don’t exist yet when a team starts a company to solve a problem better than it could ever be solved before. And, the customers themselves take two general forms – the user and the buyer. Sometimes these two roles come in one person, but often in B2B businesses they are separate.

Today end users are increasingly empowered to find, try and adopt innovative new products. This bottoms-up adoption creates momentum for new solutions in both the consumer (Spotify, Redfin) and commercial (MongoDB, Smartsheet) worlds. Often these better solutions to real problems lead to customer adoption and early monetization. And, it is then that new channels in the consumer world or economic buyers in the commercial world emerge. But, it always starts with an end-user with a specific need (either explicit or latent) that can be better addressed with new products. The broader market or category for innovative products usually emerges later.

At Madrona, we find that you want to work with entrepreneurs who have high conviction about what the customer is hiring them to do. But, we also look for people who will hold their convictions “loosely in their hands” and willingly alter and shift their convictions as data and experience point to the need for changes in products, strategies or team members.

Mark Mader, CEO of Smartsheet and Matt McIlwain

The Smartsheet team’s vision for a cloud collaboration platform for teams has been a constant, but it took two versions of the user interface to gain broad customer adoption.  And, over a decade later, they are using machine learning, API integrations and workflows to continually improve how customers leverage Smartsheet.

Maintain unreasonably high expectations and standards

Entrepreneurs have a complex mix of personal attributes that often include substantial confidence and conviction combined with genuine humility and curiosity. Better yet, successful founders have a healthy dose of self-awareness of their strengths and weaknesses.

With these attributes as a foundation, it is possible to set unreasonably high expectations. High standards attract other talented people to be part of a team building truly breakthrough products and go-to-market models. And, high expectations motivate those talented people to do their best as individuals and as a team. This dynamic often creates a virtuous cycle of talent attracting talent, experiments that deliver iterative learnings, and ultimately the creation of market leading products that exceed customer expectations. Jeff Bezos summarized this dynamic well in his most recent Amazon Shareholder Letter.

The biggest risk to setting such aggressive standards and aspirations is when founders/executives don’t have sufficient humility and self-awareness to recognize their limits. These limits may be their personal development areas or the limits of those things they can’t directly control. These can produce internal dysfunction or cultural decay. Combining high standards and high self-awareness is often a path to success.

Constantly look “around corners” to anticipate what needs to change

One critical way to constantly calibrate which standards and expectations are reasonable is to look around corners and anticipate strategies, systems, structures and even functional leaders that need to change. Companies, and their leaders, are often better at introspection and adaptation when they face struggles. But, many of the very best performers are looking ahead, in the face of rapid growth, at how scale drives the need for adaptation.

Several years ago, Apptio founder and CEO Sunny Gupta identified that their strategic platform approach to cost transparency products would not enable them to predictably and

Matt McIlwain and Sunny Gupta

sustainably grow.  He and his team developed a complimentary strategy to “appify” core customer use cases, including IT planning and financial management, and sell them to relatively smaller enterprise customers.  Their enterprise applications strategy has meaningfully contributed to customer and revenue growth in recent years.

I think of the CEO role as really the Chief Alignment Officer. They are constantly looking out ahead toward the macro trends, market dynamics and internal constraints that need to be addressed. Often these forces are not going to show up in current operations in a clear way. CEOs need to find systematic ways, both quantitative and qualitative, to identify what is breaking (or will be breaking soon) and prioritize what must be fixed. Then, it is essential to align their teams, strategies and structures toward overcoming these challenges before it is too late.

Align for long-term and mutually beneficial strategies

Companies that focus on the long term are often internally aligned. And, of equal importance this clarity of objectives and goals helps produce external alignment. The best CEOs are seeking alignment externally with customers, partners, investors and more. They triangulate their own perspective along with internal and external viewpoints to make decisions. And, they look for mutually beneficial ways to win in the market.

While innovation can negatively impact outdated and legacy products and customers, finding alignment around a “growth mindset” can create a bigger pie of economic success. Satya Nadella has emphasized this mindset as CEO of Microsoft. He constantly encourages the company to be more customer and externally focused rather than competitor and internally focused.  From a partnering perspective, this means actively working with game changing startups and balancing platform goals with the temptations to build products to that will compete with partners.

For startups this external alignment is crucial to long term company health and success.  Entrepreneurs like Kabir Shahani of Amperity or Bob Muglia of Snowflake have identified a customer pain point and worked hard to align their product approach to meet this customer pain.  They have also recognized the power of go-to-market partners such as Microsoft and AWS which provide core computing platforms for these global customers. These go-to-market partners can be extremely valuable for a startup, but it creates some inevitable tension between the platform and application provider.  For start-ups, partner alignment becomes one of those key areas to be regularly assessing and looking “around corners” at what is on the horizon.

Establish and maintain deep, trust-based relationships

The mission of taking a Day One idea from improbable to inevitable is a daunting one. It is filled with mountaintop moments and times of doubt and discouragement. The reward, far beyond the financial benefits, is truly in the experiences and the people you get to travel the journey with together.

These relationships are built on respect, candor and integrity. They are best strengthened by how you handle the more challenging moments in a company’s life. When you miss a quarter. When you lose a key employee or customer. When you uncover unethical or self-centered behavior. When an external partner lets you down. When you must decide whether to sell or not to sell. There are many of these moments along the journey. And, nobody’s judgement or demeanor will be perfect. But, trying your best to do the right thing in the right way will strengthen the bonds of trust and respect with others. It is simply amazing how often those people who impress you most in challenging times become lifelong friends and professional colleagues.

Every journey from Day One to long run success is indeed a winding road. Customer obsession, high standards, looking around corners, long-term alignment and mutual trust are a powerful combination of attributes that I have found increase the potential for success along that path. Success has many dimensions including product success, customer success, team success and most importantly success in life. While an IPO is just a milestone along a bigger journey, it is a monumental one. It signals a coming of age for a team and a company that is ready to embrace new opportunities and expand their horizons. And, if a company is ready, current market dynamics are highly favorable for companies to access capital and leverage the benefits of being public.  We look forward to helping to build more teams and companies that get to experience these great moments – and we hope you are on one of those teams!

Interested?  talent(Replace this parenthesis with the @ sign)madrona.com

 

POSTED IN: Madrona News

The Finalists in Microsoft Ventures and Madrona Venture Group Innovate.AI Startup Competition

It’s been an exciting time since we announced the Innovate.AI startup competition with our partners at Microsoft Ventures last October. What started as an idea we shared with our friends there, evolved into a global competition generating interest from some of the most innovative companies in the ML/AI field.  We’ve been thrilled with the enthusiasm and strong response we received and would like to thank each participating company for their submission and the judges for the countless hours they spent evaluating each application.

The competition showcased the breadth of problems and use cases that companies are addressing by applying ML/AI.   A couple of interesting observations about trends from the applicant pool emerged:

  • Intelligent Applications are on the rise – as data become plentiful and easily available and accessible, using AI and ML to build a continuous learning system is a fundamental fabric of every application is the way of the future. Many of the companies are targeting a variety of industries with plentiful and readily available datasets.
  • Innovation follows data availability – most companies that are thinking about innovative ways to provide insights and predictive analytics focus a lot on their data strategy and how to best organize and use the data they have as an integral part of the value they can and want to deliver to their customers.
  • Business models are still evolving: most ML/AI companies don’t fit the traditional software model of selling licenses or software-as-a-service. We saw a combination of business models, some leaning towards pure professional services, others a hybrid between licensing and SaaS. It’s clearly an area that will evolve as the companies mature.

Additionally, we saw a concentration in the following verticals:

  • Healthcare & Research: personal and mental health assistants, drug research and diagnosis, and computer vision to spot patterns and abnormalities.
  • Financial Services: research summaries and insights for investment professionals.
  • IoT & Edge Computing: analyzing data from edge devices, predictive maintenance, security and autonomous vehicle applications
  • Sales & Marketing: optimizing leads and focusing sales people on top opportunities.
  • Retail: Using computer vision to automatically recognize and tag items in images and video, enhanced advertising & shopping experiences.

And finally, we’d like to congratulate all of our finalists and welcome them to the final stage of the competition. Here is a closer look at who they are:

  • Alpha Vertex: cognitive systems for the financial services community.
  • ConceptualEyes: accelerates the speed of pharmaceutical research and discovery with artificial intelligence.
  • Envisagencis, Inc.: uses artificial intelligence to unlock cures for hundreds of diseases caused by RNA splicing.
  • FunnelBeam: a customizable sales intelligence platform.
  • ID R&D Inc: next-generation authentication solutions including voice, behavioral, and fusion biometrics.
  • TARA Intelligence Inc: a SaaS application to scope projects, assign developers, and monitor ongoing performance to build software faster.
  • Uru: fusing computer vision and artificial intelligence to create better ad experiences for video.
  • Wallarm: an adaptive, intelligent, application security platform.
  • Waygum, Inc.: intelligent IOT platform and mobile app for manufacturing.

 

To see a list of finalists in Europe and Israel, visit Microsoft Ventures.

 

POSTED IN: Madrona News

And the Madrona Prize goes to . . .

(pictured Madrona team, Hank Levy, Runners Up and Madrona Prize Winners)

Last night, Madrona awarded the 12th Annual Madrona Prize to the team at the University of Washington Paul G. Allen School of Computer Science and Electrical Engineering that is building the LabintheWild platform. Working with assistant professor Katharina Reinecke, the team is enabling scientists from all over the world to study how culture influences people’s preferences and abilities while interacting with technology.  The LabintheWild platform uses human curiosity to build a thriving community that is helping to increase the understanding of cultural differences.  Additionally, the prize was shared with Augury, a program that leverages the insight from LabintheWild to predict how a website will be perceived in different cultures and countries.

(pictured Eunice Jun and Manuel Nordhoff)

This year the Madrona Prize went to the team that is working on LabintheWild, which has been used by nearly 4 million participants and is a platform for scientists to test behavioral response and perceptions across the globe. Users take these surveys and immediately see how their response compares with other people in their region and beyond.  Augury shared this prize and has leveraged learnings from the LabintheWild platform to create a system that enables website builders to test the response to their design by country.  The team on this project who will share the prize are Eunice Jun, Nigini Oliveira, and Manuel Nordhoff. The prize is a cash award that goes directly to the team involved in directing and conducting the research.

The newly named Paul G. Allen School has a long history of research that improves lives and delivers business and research growth to the region

Tim Porter, Managing Director

The Runner Up projects were focused in the areas of machine learning and VR. The open source TVM framework simplifies and optimizes running deep learning models on a variety of hardware. A Unified Approach to Interpreting Model Predictions tackles explaining the output from ML models, using other computational methods.  Understanding the “why” behind the insights produced by AI and ML is becoming increasingly important across businesses and research institutions.  And,  Real-Time VR Video Processing with the Hardware-Friendly Bilateral Solver optimizes the processing of VR video in the cloud, a commercial problem we are well acquainted working with VR companies such as Pixvana.

“The newly named Paul G. Allen School has a long history of research that improves lives and delivers business and research growth to the region,” said Tim Porter managing director, Madrona Venture Group. “The UW is an invaluable resource to our technology ecosystem and we are looking forward to the increased impact that the new Bill and Melinda Gates Center will make possible.  Research such as LabintheWild and the runners up are key components to what makes the Seattle technology industry so vibrant.”

“The Allen School is lucky to be part of a region teeming with global technology companies who partner with us, and our yearly research day is an opportunity to showcase our latest research innovations and our talented students for this community,” said Hank Levy, Director of the Allen School. “We really appreciate Madrona’s partnership over the years and their role in our ecosystem.  They encourage our students through the Madrona Prize and they amplify our impact by starting and building companies based on technologies we develop.”

The Madrona Prize is awarded at the end of the Allen School Industrial Affiliates day.  The Industrial Affiliates brings together all the top research projects and papers being pursued by professors, graduate and undergraduate students at the school.   The Madrona prize goes to the research project with the most commercial potential.  Since Madrona’s inception, more than two decades ago, Madrona has funded 17 companies out of the University of Washington.  These companies include Impinj (NAS:PI), SkyTap and Turi (acquired by Apple.)

Each year, the Madrona committee also awards Runner up prizes.  This year the Runners up were:

Runners Up

A Unified Approach to Interpreting Model Predictions

Scott Lundberg

Adviser:  Su-In Lee

TVM:  End-to-End IR Stack for Deep Learning Systems

Tianqi Chen; Thierry Moreau; Haichen Shen

Advisers:  Luis Ceze, Carlos Guestrin, Arvind Krishnamurthy

Real-Time VR Video Processing with the Hardware-Friendly Bilateral Solver

Amrita Mazudar, Armin Alaghi

Advisers:  Luis Ceze, Mark Oskin

POSTED IN: Madrona News

Madrona Welcomes Back Ted Kummert

Today we are pleased to announce that Ted Kummert is rejoining Madrona as Venture Partner.

Ted spent the last four years at Apptio as EVP of Engineering and Cloud Operations. While at Apptio (NASDAQ:APTI), Ted built a world-class engineering and product team and transformed Apptio’s core platform from a custom solution to distinct, SaaS applications designed for enterprise and federal CIOs and CFOs. Under Ted’s leadership, the team conducted a major modernization of Apptio’s underlying technology, developed real-time analytics for leading public cloud providers, and built the industry’s standard model for IT costing into Apptio’s applications. Ted also led the release of new cost transparency, planning, benchmarking and IT chargeback applications while tuning Apptio’s technology to the needs of public sector IT leaders.

Prior to Apptio, Ted was a Venture Partner at Madrona where he worked with our growing companies on the engineering and management challenges of small and mid-sized companies.  Ted came to Madrona from Microsoft where he drove major product and business initiatives while leading the database and SQL server division for the company.

Ted was a valuable resource to our companies and the Madrona team during his first stint as Venture Partner and we are excited to have him back!

POSTED IN: Madrona News

Matt McIlwain to Receive Emerging Company Director Award

Next week Matt McIlwain will be awarded the Emerging Director of the Year award from the Puget Sound Business Journal, in partnership with the prestigious National Association of Corporate Directors’ (NACD) Northwest chapter.

We congratulate Matt but we are not surprised.

Matt joined Madrona in 2000 and has played an important role in the growth of the technology industry in the greater Seattle region. He has advised founders and entrepreneurs, CEOs, executives and brilliant engineers.

Matt also puts his passion for education and research to work on the non profit side, serving on non-profit boards such as the nationally recognized Fred Hutchinson Cancer Research Institute and the Greater Foundation.

Tom Alberg, co-founder and managing director at Madrona commented, “Where Matt’s depth of passion, experience, and acumen comes into play on a daily basis at Madrona is helping our companies grow.”

The CEOs and founders he works with offered these observations.

Mark Mader, CEO Smartsheet
Matt intuitively understood the value of Smartsheet’s innovation in our earliest days, even when the “signal” was not as pronounced as it is now. In the years since, his counsel and guidance helped us deliver wave upon wave of growth. He digs in deep to understand our needs from multiple perspectives – market trends, buyer needs, funding, executive talent – and offers observations that continue to make a difference for our business. We’re proud to have Matt on the Smartsheet Board and could not be happier for the recognition he so richly deserves.

Bill Richter, CEO Qumulo
What makes Matt truly special is everything beyond his role as a company director.   . . .  as a CEO, Matt’s often the first person I call when I need perspective.  I’ve been through many difficult situations with Matt.  While others are prone to wilt under pressure or compromise core values, Matt’s counsel and leadership only gets better.

Sunny Gupta, Founder and CEO, Apptio
I consider Matt to be a co-founder of Apptio.  Right from day one, Matt has been a sounding board for me regarding my team, product, market, early employee hiring.   As a board member of Apptio today, Matt continues to provide amazing contributions including recruiting new board members, engaging deeply on market expansion strategy and helping my team think about  critical issues – he is always there for me – I usually call him weekly on my way home and always appreciate talking about issues/challenges/opportunities at Apptio – he is a great listener and provides candid advice (always speaks the truth).

Frank Mycroft, Founder and CEO, Booster
Matt is the kind of company-building partner that any entrepreneur would be blessed to have on your side from Day 1.  A mentor and river guide, in it for all the right reasons.

Arif Kareem, CEO of ExtraHop
Matt has had a tremendous impact on the growth of the Seattle tech community over the years. His vision in major market categories like Cloud and Big Data has been a driver of the Puget Sound region’s rise to prominence as a center of innovation in the United States. ExtraHop, along with many other Seattle-based tech companies, has benefitted greatly from Matt’s thoughtful and insightful guidance. Congratulations Matt, on this well-deserved honor.

Jason LeeKeenan, Co-Founder and CEO, TraceMe
Matt is one of the most strategic people I have ever met and has been incredibly valuable as a board member for TraceMe.  We are in the early phases of the company and his strategic perspectives around what capabilities we need to build have been tremendously important to the company.  We are very fortunate to have Matt on our board and I believe he’s one of the best early-company board members in the Pacific Northwest.

Kabir Shahani, Co-Founder and CEO, Amperity
Matt is one of my most trusted advisors and an extraordinary coach. He knows how to bring out the best in his CEOs — and is able to do that alongside tangible, actionable, operational guidance and perspective. He’s a life long learner and that is just one of the characteristics that makes him more effective each and every day. I can’t think of a more deserving Director for this award.

Kiran Bhageshpur, Founder and CEO, Igneous Systems
No one can contest Matt has an incredibly deep understanding of the storage market and he was the logical person for us to go see when we were starting Igneous.  Not only was he quick to understand the market we were attacking, he had and continues to have creative ideas and bring an untiring energy to board meetings and beyond as we work to build a next generation storage company. Having him as an active board member, coach and business partner makes all the difference.

Doug Schneider, CEO 2nd Watch
Matt’s business and market acumen coupled with his relentless drive to build market leading companies is a true asset to any CEO he collaborates with.

Thor Culverhouse, CEO SkyTap
I have had the opportunity to work with Matt over the past 4 years while growing and building out our company, Skytap.  In that endeavor, I have always viewed Matt not as just investor, but rather a business partner.  He has provided guidance in the areas of overall strategy, product positioning, personnel and even sales campaigns.  He is truly one of the great minds of our industry and pleasure to work with.

Brad Jefferson, Founder and CEO, Animoto
Matt joined our board nine years ago and is a great great strategic advisor for the company but what I appreciate just as much is his mentorship to me personally as I grow as a CEO.

 Nikesh Parekh, Founder and CEO, Suplari
I have known Matt for a long time.  We both moved to the Pacific Northwest in 2000 to work in venture capital.  Matt recruited me to be an EIR at Madrona in 2007 and lead our financing of Suplari in 2017.  Matt goes out of his way to understand, help, and support me in many ways over the last 17 years.  He is a great friend and partner in business.

Workwise, Matt is one of the strongest strategy and marketing minds for new and emerging enterprise software and cloud technologies in Seattle.  He is quick to see the big picture and understand the tactics to achieve key milestones.  I get the benefit of his experience with a large number of similar companies and he is always quick to get back to me, even when he is working with larger and perhaps more important companies in his portfolio.  

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Announcing the Microsoft Ventures and Madrona Venture Group AI Startup Competition

Today we are announcing our partnership with Microsoft Ventures to launch the Innovate.AI global startup competition. We are thrilled to be working with Microsoft on this project to find the world’s most promising early stage startups tackling unsolved problems, at scale, using machine learning and artificial intelligence.

At Madrona we have been early believers and investors in the transformative power of Artificial Intelligence and intelligent applications. The convergence of cloud computing (massive amounts of compute and storage available on the cloud at reasonable price points), specialized chips for machine learning (e.g., GPUs and FPGAs), and new advances in machine learning algorithms has created a unique opportunity for startups to build high value intelligent applications powered by unique and proprietary sources of data.

We have invested early with several platform companies and are actively looking at vertical applications.  Examples include Turi, purchased by Apple, Lattice Data, purchased by Apple, Xnor.ai, MightyAI, Amperity, SmartAssist, Suplari, Saykara, Versive and others.

In thinking about how we might reach companies as early as possible we came up with a couple of ideas including developing an “American Idol” like competition.  In discussions with our friends at Microsoft – we saw that we were aligned on interests in finding, supporting and investing in AI focused startups in the early days and we worked together to develop the AI:Innovate competition which Microsoft is taking Global.

We believe that in the next five to ten years, the impact of these technologies will transform most industries, from education, to real estate, to manufacturing, to transportation, to healthcare and we have only begun to see the impact of machine learning on the economy and society.

Over the next six months, Madrona will work closely with Microsoft Ventures to select a batch of promising startups that are either building new products and platforms with data and machine learning at their core or using AI to build the next generation intelligent applications.  These startups will compete for a $1M investment from Madrona and Microsoft Ventures as well as an Azure package of credits, Office 365 licenses, and technical support worth over $500K.

Additionally, startups may also win an “AI for Good” prize that will be awarded to one startup that is using AI to create a positive impact on society, which will earn $500K in funding from Microsoft Ventures and Azure package of credits, licenses, and support worth over $500K.

The qualification requirements for startups to participate in the Innovate.AI global startup competition are as follows:

  • Companies that have raised no more than $4M in equity funding and/or loans at day of application
  • Companies that offer or intend to release or build a product or platform which utilize machine learning; such product/service/platform must be based on a model developed by the company, and/or be trained with data obtained/generated by the company or a 3rd party, and/or make use of pre-trained ML/AI APIs
  • Companies can utilize any technology stack or cloud platform to build their product, but the intention will be to work with the winners to help them utilize Azure and MS technology through our BizSpark offers and portfolio development efforts

See Peggy Johnson’s (EVP, Microsoft) blog post  for more details about this competition.

Madrona is excited to kick off the Innovate.AI competition with Microsoft Ventures to find the next generation of great machine learning and artificial intelligence companies. The competition begins this month with applications, and we intend to select a final winner by Spring 2018. To find out more about entering the competition or submit an application, please visit the Innovate:AI page to view more information!

 

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Maybe It’s Time to Cede the Highways to Driverless Cars

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Introducing Wicket, a Video Analytics Platform

L-R Ian Blaine, CSO, Len Jordan, Madrona, Marty Roberts, CEO

A lot has changed in the media world since Bruce Springsteen delivered his eponymous lament “57 Channels and Nothing On” in 1984.  First, there are more than 57 ‘channels’ on cable and satellite TV. Neilsen data from a few years ago suggested that that the average home had access to 189 channels and watched only 17.  Perhaps more importantly, the US subscription cable/satellite business peaked at 100M users in late 2015 and although still a big business at just under $100B for 2016 the rise of ‘cord cutters’ or ‘cord nevers’ is creating a pre-Cambrian explosion of new over-the-top (OTT) IP video experiences.  There are now hundreds of conventional cable channels, thousands of live and on-demand OTT programs, (they aren’t really channels) and there is plenty of award-winning programming ‘on’, but other than that Mr. Springsteen was right. J

Today, we are excited to lead the $2M series seed round of Wicket Labs, a company directly attacking the value equation for media companies in this new blended world of OTT and traditional channels.    Wicket is building a SAAS platform for measuring and analyzing video consumption, giving media companies insight into how the many channels available to them are performing and which content is driving viewers.  The market opportunity is substantial- combined video revenues from subscription television, OTT services and advertising is projected to exceed $193B in the US this year.  The challenge for content creators, marketers and distributors is understanding the rapid and dramatic shifts in consumption patterns as users watch a growing selection of different programs on new networks, different devices and a complex array of pay and ad-supported services.

Wicket’s team is led by cofounders Marty Roberts and Ian Blaine from thePlatform (acquired by Comcast in 2006).  Marty and I worked together years ago at RealNetworks and it’s a privilege to be working together again- the quantity and color of our hair has changed but I’ve always felt hair is generally overrated.  Marty and Ian have deep relationships with TV studios, OTT services and distribution networks- they spent years understanding the challenges in the market and have developed a breakthrough product plan that will provide a compelling level of insights for the industry.

Wickets’ first product will help marketers understand consumption and retention patterns.  What are the attributes and characteristics of my customers? What programs are my customers watching and how often?  Live or time-shifted?  What other networks and programs are they watching?  How did I acquire the customer and what trial programs are most successful?  What patterns can be discerned from lost customers that would help me drive improved retention?

Over time Wicket will be able to help marketers, content creators and distributors understand the best approaches to producing and delivering the best customer experiences.  This will become even more important as the market continues to evolve.  There are now 11 different OTT services in the US generating more than $8B in 2015 and projected to grow to $23B by 2021 (Digital TV Research) More than 1/3 of US homes now have an OTT TV device (eg Roku) and as consumption on laptops and tablets accelerates there is a lot of opportunity for innovation in digital content creation, packaging, promotion and distribution.

sThe changing dynamic in video content may best be illustrated by this year’s Emmy awards where three of the top ten nominated networks (Netflix, Amazon and Hulu) were not even creating original content just five years ago.  Several of the other top ten networks (CBS, HBO, Disney/ABC) have announced or launched their own DTC (direct to consumer) OTT services and dozens more have announced plans or already launched.  Wicket hopes to be at the center of this market as a valued partner and we are excited to be part of their team.

 

 

 

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The Rise of Autonomous Vehicles and What It Means for Our Interstate Highways

Download the full report

As automakers and technology companies begin shipping and operating autonomous vehicles, legislators, regulators, and transportation planners need to examine and consider how autonomous vehicles and other innovations such as car-sharing and ride-sharing can be integrated in large-scale transportation planning.

We published a report last year that proposed a vision for converting I-5 into an autonomous vehicle corridor at some point in the future. This year, we updated that report based on new market conditions to be more specific and more aggressive as the roll out for autonomous vehicles has sped up beyond our expectations.

Travel between Vancouver and Seattle can be long, tedious, and dangerous, but autonomous vehicles offer a solution to decrease traffic accidents (and resulting congestion), decrease travel times, and help travelers recover valuable productive time. These vehicles will likely to be part of ride-sharing fleets and other travel services that will benefit the entire population and lower the cost of transportation for everyone.

In our updated 2017 report we propose to convert I-5 between Vancouver and Seattle into an autonomous vehicle corridor by 2040. We suggest a phased in approach that begins with allowing autonomous vehicles to share the HOV lanes immediately and progresses to devoting two lanes to autonomous vehicles (which will create space for three autonomous vehicle lanes). Finally, by 2040, we believe all lanes of I-5 will be dedicated to autonomous vehicles during peak travel times.

By actively embracing and planning for a future with autonomous vehicles, Vancouver and Seattle can be an innovation leaders to cities and regions around the world, serving as an example for how to proactively and responsible incorporate this important cultural and technological change into their regional city and transportation planning.

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Today We Join onBoarding Women

Caption L-R: Ed Thomas, Lucinda Stewart, Hope Cochran, Stewart Landefeld at the 2017 opening event for onBoarding Women)

Today Madrona is joining Deloitte, Perkins Coie, and Spencer Stuart in supporting onBoarding Women, an important program to increase the number of women on corporate boards.  This Seattle based, forward-thinking organization started two years ago with the mission to increase the number of women on public company boards.  There are many studies that show that companies with women in executive and board positions perform better for shareholders.  Nationally the percentage of women on public company boards is 19.5%.  Washington state, despite making recent gains, still lags behind.  onBoarding Women aims to change that and has already had success, graduating 35 women from the program and helping to place graduates on boards for companies such as Washington Federal.

As venture capitalists with more than 60 companies in our portfolio, we serve on a lot of boards – from early startups to late stage to the newly public. We see the value in developing a diverse and independent board that can guide a young company through the choppy waters of developing a product, finding a market, building partnerships, and nurturing customers.  Our portfolio company, Redfin,  recently went public and is a leader in creating diversity in the board room with women representing 25% of their current board. In July of this year, Redfin, announced a pledge to diversify startup boards that Madrona and another Redfin investor Greylock Partners supported.

It is in this light of helping our companies be the best they can be and supporting the broader Washington business community, that we are very excited to join onBoarding Women.  Hope Cochran, a Venture Partner with Madrona and experienced executive as well as private and public company board member, will be a mentor, and our whole team will be working with the new onBoarding Women cohort to build a strong pool of women who can help greater Seattle companies rise to the next level.

We are excited to work with the leadership of Ed Thomas – Deloitte, Lucinda Stewart – Spencer Stuart, and Stewart Landefeld – Perkins Coie to continue to bring more women into the board room – be that public or private!

 

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Cascadia Innovation Corridor Conference 2017 – Financial Innovation and Cross Border Discussion

Photo caption l-r  Tom Alberg, Glenn Kelman, CEO, Redfin, Heather Redman, Founder, Flying Fish Partners, Jeff Sinclair, Co-Founder and CEO, EventBase,  Scott Jacobson, Managing Director, Madrona Venture Group, Alexandre Guertin, Associate, Kensington Capital Partners

The second annual Cascadia Innovation Corridor Conference just concluded and the conference continues to spur ideas and cooperation between the metro areas of Seattle, WA and Vancouver, BC.  This conference brings together business, government and university leaders from both cities to talk about tech policy, life sciences, transportation and other aspects of our lives in the Pacific NW that bind us together and are areas for collaboration.

At the conference Madrona and Microsoft worked together to introduce the Financial Innovation Network (FIN)  – a Seattle /Vancouver group to be launched this fall. Announced by Microsoft President, Brad Smith, in his opening keynote he said of FIN “The key for success especially for this region is to frankly become bigger. What this Financial Innovation Network allows us to do is just that. It enables us to bring together startups and double our scale. This is a great example of how we can compete as a region and no longer think apart.”

As articulated by Madrona Managing Director, Tom Alberg, at the start of his “Spurring Increased Venture Capital Investment in the Corridor” panel yesterday, the purpose of the Financial Innovation Network is twofold: 1) To encourage more cross-border investment in early stage companies by creating a network to bring in more foreign capital and to work with existing local sources to increase investment. 2) to help develop a financial cluster of institutions and fintech companies that collaborate and create a powerful fintech and financial institutional presence in each city. While Vancouver ranks ahead of Seattle in international finance, Seattle has great tech to offer.

Tom’s fellow panelists agreed that both cities can benefit from increased access to capital, especially in order for startups to reach proper scale on a timeline that investors expect.

The long-term FIN strategic objective is the creation of an integrated financial services cluster that competes directly with other similar-sized International Financial Centers (IFC), such as Boston, Dublin, Shenzhen, Munich, and Melbourne. Initial FIN programs will include promotion of coordinated digital economy cross-border investments with an emphasis on fintech, mixed reality, artificial intelligence, intelligent apps and quantum computing.  The group will be administered by a cross border executive committee and Rex Hughes, a Madrona advisor.

 

 

POSTED IN: Madrona News

Heptio – a Day One Cloud Native Company Raises Series B

Today, Madrona is very pleased to announce that we are leading the new $25M Series B round in Heptio, partnering with existing investor Accel Partners and new investor Lightspeed Venture Partners.  Heptio is another example of a “Day One” investment for Madrona.  In November of 2016, we participated in the Heptio Series A led by Accel.  In doing so, we partnered with Heptio founders and Kubernetes co-creators Craig McLuckie and Joe Beda at the very formation of their company whose mission is to (initially) make Kubernetes more accessible for all enterprises and (longer term) provide the standard framework for delivering enterprise apps in a multi-cloud world.

Our thesis with the Series A was pretty simple:  (1) one of the largest trends in enterprise computing was the move to cloud native technology (container-based distributed microservices) and operations, (2) Kubernetes had become the leading way to orchestrate and manage container-based applications, (3) customers were beginning to demand better ease of use, accessibility, and an independent provider of support, services and training, and (4) the best team in the world to build this company began with Craig and Joe, two of the Kubernetes co-creators.

Since that time, the team has executed extremely well and, if anything, the market for Kubernetes has continued to explode even beyond expectations.  Today, 50 of the Fortune 100 are using Kubernetes across industry verticals from retail to banking to manufacturing.  Kubernetes continues to be the most active open source project in the world, and all the major cloud platforms are adopting it.  Craig and Joe have begun to build a world class team at Heptio, launched three initial products, landed a number of high-profile (although still confidential) customers, and laid the groundwork for key partnerships.

Given all this progress, and our conviction that Heptio can be one of the next billion-dollar cloud companies in Seattle, we were honored to partner with great open source and infrastructure investors like Ping Li from Accel and John Vrionis from Lightspeed to lead the Series B.  We are looking forward to continuing to partner closely with the Craig, Joe, and team to build Heptio through this next phase and beyond.

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Day One in the Cloud with Skytap

It was the spring of 2006.  Professor Hank Levy, incoming Chair of the University of Washington Computer Science Department (now the Paul G. Allen School) and I were catching up.  Hank and I had previously worked together on a successful start-up that he and his grad students co-founded called Performant.  As I sat watching Hank type on a keyboard, the words he typed appeared on a nearby computer monitor.  But, the application was not running on a local device, it was running “in the cloud.”

As hard as it may seem, in the spring of 2006, AWS had not launched Simple Storage Service (S3) or Elastic Compute Cloud (EC2) yet.  But Hank, two other remarkable Professors (Steve Gribble and Brian Bershad) and PhD student, David Richardson, were working on the underlying networking and compute technologies that would help power the cloud. As this group discussed the potential customer needs their technology could help address, we decided to found a company.

As we have written about recently, it is both energizing and inspiring to partner with founders from Day One.  Skytap, originally known as “illumita”, is the company we seeded in the summer of 2006 along with the Washington Research Foundation and Bezos Expeditions.  Eleven years later, Skytap is announcing its $45 million Series E round led by Goldman Sachs.

Skytap has always attracted incredible talent to the company.  In the early years, the company had to build most of a ‘cloud infrastructure platform’ themselves as the market for modern hypervisors, public cloud infrastructure and enterprise customer readiness were immature.  At that time, the team naturally focused on hiring world class product management and engineering executives.  In more recent years, under Thor Cullverhouse’s leadership, Skytap has built a world class go-to-market team.  Enterprise customers are now fully embracing the cloud in all its forms – public, hybrid and private.  And Skytap is accelerating cloud innovation for the hybrid applications that are developed and increasingly deployed by enterprises in the cloud.

The Madrona team has had the privilege of partnering with Skytap’s founders and team from Day One.  Eleven years later, we have never been more excited about the success and long-term potential of the company.  It is interesting to note that the three Madrona backed companies that went public in the past 12 months were part of the Madrona family on average for thirteen years at the IPO date.  We look forward to seeing what happens in two years when Skytap celebrates their thirteenth birthday!

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Why We Invested in GawkBox … in Three Charts and One Photo

Pictured in the Photo – L-R Andrew Allison, CRO; Hope Cochran, Venture Partner Madrona, Daniel Li, Senior Associate; Chris Brownridge, CEO; Tony Chong, CTO

Today we are excited to announce our investment in GawkBox. Over the last few years, we have closely followed the macro trends in live streaming, digital marketing, gaming, and eSports, and we are thrilled to be partnering with the GawkBox team to build a company at the center of this ecosystem.

GawkBox is a platform for the live streaming market that lets fans send sponsored “tips” to their favorite streamers by downloading and completing actions in specific games or apps. Fans can make donations to streamers without direct credit card purchases, and advertisers can engage fans of live streamers with targeted and measurable marketing campaigns.

GawkBox’s users, creators, and advertisers all love the platform because it solves the problem of monetization in the live video market, creating a win-win-win for everyone. Obviously, they have a great product, but why else are we excited about this? Here’s why in three charts:

Live Streaming and Online Video is the Future of Media

Over the last 5 years, the average daily viewership of Twitch has increased 10x to an average of nearly 800,000 viewers per day. In the same time period, Disney has lost over half of its key demographic of kids age 2-11. (For an additional point of comparison, the average daily viewership of CNN is ~700-800K and ESPN is ~800-900K viewers). While Twitch and other online video channels continue to grow, traditional broadcast and cable viewership is shrinking.

Why? Online streaming video is accessible anywhere, on-demand, and interactive. The unique combination of social and broadcast media on sites like Twitch or Facebook also makes live streaming incredibly sticky because of the ability to interact in real time with the people creating the content. Live, online video will redefine media, and we’re not the only ones who think so – Mark Zuckerberg is “obsessed” with live streaming too.

We’re excited about this because GawkBox is building a platform that helps more content creators earn money and build careers in live streaming and online video. By solving a key monetization problem, GawkBox is going to accelerate the growth of the industry.

Digital marketing is growing rapidly as advertisers see positive ROI

 It’s not a coincidence that two of the largest companies in the world today are digital marketing platforms focused on measurability and performance. Marketers and advertisers spend a lot of money on ads if they can measure a positive return on investment. (If you want to learn more about performance marketing from an advertiser’s perspective, I highly recommend this video with Gabe Heydon, the CEO of MachineZone, on what the future of marketing will look like).

Over the last century, newspaper advertising revenue reached a peak of $49B across all newspapers. Alphabet surpassed that in just 15 years because they were the first company to offer a performance marketing solution at scale. Facebook is growing just as quickly because it offers a straightforward way to market products and acquire users while allowing advertisers to measure their return on marketing spend.

Today, as a marketer, it’s very hard to deploy dollars into the live streaming market because it is not scalable to sign many deals with individual streamers, it is difficult to measure installs from impressions, and the live streaming format does not lend itself to traditional display, banner, or video ads. GawkBox is the first company that allows marketers to access the live streaming market with a performance marketing solution, and their ad ‘unit’ is a fun, endemic way to engage with fans. 

Gaming and eSports are massive, early-adopter markets

The media loves to cover eSports, especially tournaments with big prize pools, billionaires spending tens of millions of dollars to purchase teams, and young players who earn millions of dollars playing video games. However, the other topic that gets covered less is the pure entertainment value of gaming. Big gaming companies (and small indie game studios as well) have experienced massive growth over the last 5 years, and we’re willing to bet more kids in the US have played Minecraft than football, baseball, or soccer. In fact, there are 2.6 billion gamers around the world in 2017, compared to 100 million in 1995, according to Mary Meeker.

The growth in gaming can be attributed to many factors, including the ease of marketing and distribution across platforms like Steam, Xbox Live, and app stores, the gaming industry’s ability and willingness to innovate on their products, and a larger trend towards more interactive forms of entertainment.

Many of GawkBox’s earliest partners are gaming publishers, gamers, and other people in the gaming ecosystem, and we think this is a fantastic initial market. We’ve seen before that many innovations in gaming like online networking, graphics computation, secondary markets, messaging, and free to use/play business models quickly make their way to other industries and use cases, so there is a lot of room for GawkBox to expand into other types of customers after this initial early adopter audience.

We are big believers in this team and their ability to build a big business

Chris, Andrew, and Tony, the cofounders of GawkBox, worked together as early employees of Vungle, where they pioneered the concept of rewarded video ads and built a $300+ million revenue business. Since our first meeting, we have been consistently impressed with their ability to lead, execute, and envision the future of this market.

At Madrona, our philosophy is to partner early with the best entrepreneurs in the Pacific Northwest, and we have been lucky enough to work with many of our most successful companies from day one. After working with this team, we are absolutely convinced they are going to be doing big things, and we are very excited to be leading their Series A.

Finally, here is a link to the GawkBox website. I highly recommend checking it out and telling your favorite streamer about it!

  • If you’re a fan, you will love this product because you can support your favorite streamers without having to make actual credit card purchases. Just play games or download apps from the top publishers and earn tips for your streamers.
  • If you’re a streamer, you will love this product because it is a simple way for your fans to support you, and other streamers are doubling their monthly income after partnering with GawkBox.
  • Finally, if you’re an advertiser, you will love this product because you will be able to engage with the live streaming audience in a fun, unique, and native way. And you’ll be able to measure your return on advertising spend on a granular level and encourage users to reengage with your game or app after the initial install.

We are thrilled to be invested in this amazing Seattle-based team who has big plans for how they are going to change the world of live streaming, marketing, and gaming. It’s early days for this industry, and we are excited to be building the future together!

POSTED IN: Madrona News

Partnering from Day One with Founders

There is something very special about being part of the team that builds a company from Day One.  We at Madrona have been both dogged and fortunate in our pursuit of Day One opportunities.  Placed is one of those.  The company’s acquisition by Snap! which closed last week is the beginning of another journey for the company and a huge endorsement of the path the company has taken to this point.

In the past twelve months, five of the companies the Madrona team has been involved with since Day One  had significant positive M&A activity or have entered the public markets.  These companies are Apptio, Impinj Turi (fka Dato), Lattice, and the aforementioned, Placed. In every case, these companies had exceptional founders who were with the company at day one and continue to be key executives at those companies or their acquirers today. It is also true that these founders and their companies had moments of despair, uncertainty, exhilaration and ultimately success.  These stories are truly incredible journeys and we are thrilled to have been there from the beginning to participate in the evolution and support at many points along the way.

Placed – A Day One Journey from Sewichi to Snap

Placed is a great example of how these companies grow. While many of our companies have a founding team, Placed was initially founded just by David Shim.  David had previously worked for two other Madrona portfolio companies, Farecast and aQuantive, and we had recognized him as a talented “rising star” in those companies.  After a short stint in California at Quantcast, he moved back to Seattle in early 2011 and shared an idea he had for creating a company focused on location analytics.  We had liked David and his scrappy approach at Farecast so we jumped on board.  David set up shop in our innovation space (then more limited than now) and got to work.

David understood that mobile and the cloud made it possible to create intersections of data between digital and physical locations.  With that he started coding, testing and talking to potential customers.

Soon after he came to Madrona, we helped found and seed fund Sewichi (Korean for Location, Location, Location) and then set to work helping David refine his ideas and recruit his team.  Initially he hired engineers and data scientists to help work with the data they would obtain – people like Nick Gerner and Weilie Yi who he connected through his network.  And then David added Andrea Eatherly who he had worked closely with at WebTrends and Quantcast to lead audience recruitment and customer success. Over time, Madrona helped recruit other key team members such as Elliott Waldron and Aaron Averbuch.  All of these core team members are still with Placed today.

The early days were hard as the iOS and Android ecosystems were nascent and applications that measured location were prone to using battery life.  In addition, it was not clear what economic incentives would be required to build a meaningful panel of consumers.  And, then there was the challenge of figuring out what model would be best to monetize the location-related data – research, measurement, or becoming an ad network?

By listening to customers (in this case the combination of advertisers, online publishers and ad networks) and making a strategic decision to remain an independent measurement company, Placed began to gain traction in the market.  In the past five years, Placed transformed the way brands understand the impact of their marketing investments in the digital and physical worlds, and the company has consistently grown revenues 100%+, beat their operating plan and done so profitably.

There have been many important strategic and partnering decisions to make along the journey as the world of digital advertising continually was shaped by trends like programmatic buying, the shift to mobile-first customer usage and the rise of social media engagement.  Last year, Placed added another industry expert and long-time Madrona friend Brian McAndrews to the board to help navigate these changing market dynamics.

By early 2017, Placed was pulling away as the market leader and the board sensed an opportunity to “step on the gas” with an expansion round of capital.  Multiple options emerged, and one of those options turned in to a conversation with social media app company, Snap!  Placed ultimately took the route of acquisition by Snap, which closed last week.  We are really excited to see how the Placed team, as an independent line of business, will help Snap continue to innovate and differentiate in the markets where they compete.

It is a privilege to work with companies from Day One – and we celebrate the founders who have the persistence, grit, and humility paired with the conviction to build a business, nurture a team and partner with both us and also the important industry stakeholders to move their company forward.  We have been on a similar journey with many other companies including Rover, Redfin, Turi, Lattice, Apptio, and Impinj – to name just a few that have been recently in the news, and look forward to applying our learnings and experience to working with new Day One founders.

If you are a potential Day One founder interested in working with a Day One partner, give us a shout!  Check out the bios here and reach out.

 

POSTED IN: Madrona News

Our Investment in Algorithmia

We first met Diego and Kenny in 2014 after being introduced by our friend Joe Heitzeberg, and immediately knew they were founders we wanted to work with.  Their idea resonated.  The world needed an app store for algorithms.  As all applications become intelligent applications, better ways were (and are) needed for developers to quickly and efficiently tap into intelligent algorithms – especially for machine learning.

Kenny and Diego’s vision was to bring together the largest collection of algorithms in the world, each with their own product detail page and community reviews, each accessible with a consistent API, each modifiable and combinable, with production-ready performance and reliability, no friction to get started, and affordable to use deeply and broadly.  And unlike most marketplaces where demand does not care until there is supply, and supply is not interested until there is demand – Algorithmia had a an elegant way to bootstrap their marketplace.  “Supply” was sourced from open source, from universities, and from bright algorithm developers around the world who did not have an outlet for their work, much less monetize it.  The Algorithmia marketplace launched in 2015.  Fast-forward two short years and over 3500 algorithms are now in the marketplace with almost 50,000 developers using the system.  The company’s early investments making Algorithmia one of the best platforms in the world to do ML and deep learnings have paid significant dividends.

 

Part of Kenny and Diego’s thesis has always been that enterprises and large organizations would want to tap into the Algorithmia “brain” of algorithms.  They started receiving signal to validate this idea early on.  Enterprises began to ask:

 

“Can we have our own Algorithmia?”

“Can we get an Algorithmia-in-a-box that we can populate with our own algorithms and also pull in yours?  We have a difficult time sharing our in-house developed algorithms across divisions and groups, which creates a huge cost of re-inventing the wheel.” 

“We need infrastructure and a microservices platform that can allow us to be agile with our machine learning models, and spin up these workloads as quickly, reliably and cost-effectively as Algorithmia.”

Thus, Codex was born, with In-Q-Tel becoming one of the early customers.   Now many enterprises are using Codex as their in-house machine learning platform.  The synergy between Codex and the public marketplace is essential – every enterprise customer or prospect has already tried, if not discovered, the company via Algorithmia marketplace.  Algorithmia today is truly more than a marketplace for algorithms – it is a microservices platform for machine learning both in the cloud and on-premise.

Kenny and Diego had a compelling vision, and they are also great full stack entrepeneurs.  Maniacally customer focused, tireless workers, very technical with sound business instincts.  They also have hired a GREAT team that has gotten more done, consuming fewer resources, than almost any team we have worked.  This has all translated into excellent execution.

Now, we are thrilled to have the new Google fund focused on AI and ML lead Algorithmia’s $10.5M Series A.  I am particularly excited to work on the board with Anna Patterson, a visionary engineering leader who has led large scale machine learning work and teams across Google, within Android, core search, and her own startup.  The broader Google team and world-class platform will be an incredible help to the company.

Algorithmia fits into Madrona’s goal to fund smart teams early in large, growing markets within key thematic areas. The shift to DevOps focused, cloud native enterprise computing and the rise of intelligent apps powered by AI and ML technologies are the megatrends driving Algorithmia and have been core themes for Madrona over the past several years.

We could not be more excited to continue to help Diego, Kenny and the team build and even more rapidly scale Algorithmia.  We are honored to be part of the investor group that includes other returning investors Rakuten, Osage Partners, as well as excellent new investor Work-Bench.

Whether you are a developer of any level – Algorithmia users range from university students and hobbyists to senior enterprise architects and data scientists — or an enterprise that needs a (better) ML platform, I highly encourage you to go give Algorithmia a try!

 

POSTED IN: Madrona News