News & Views

 

Why We Are Doubling Down On Shyft

We are excited to announce today our Series A investment in Shyft.

Since investing in Shyft’s seed round nearly two years ago, we have watched Brett Patrontasch (CEO) and team continue to make impressive progress against their goal of reinventing the way hourly workers manage their shifts and the way national employers both manage and support their workforce.

We originally met Brett through our involvement and support of the TechStars program.  Shyft taps into our love of supporting scrappy entrepreneurs using technology to change people’s lives for the better.  Through a mobile cloud connected application, Shyft enables a workforce that has little control over their schedule to take control by easily swapping shifts.  Shyft started as a ground up platform that appealed to workers at Starbucks and many other retail chains, and, over the past two years, managers have taken note.

Shyft has responded by creating an enterprise software solution that enables retail outlets to manage their workforce while providing the flexibility that employees value.

This all comes at a crucial time in how the expectations of the modern workforce are changing and along with that, the move to create rules that protect this growing workforce.  Cities and legislatures around the country are taking a close look via Secure Scheduling (also known as Predictive Scheduling) at how these hourly workers are scheduled – and creating protections that require some stability of schedule.  This is a great thing, and as companies are required to support these regulations they need solutions like Shyft.

The proof is in the customers – and Gap has adopted the Shyft platform as their workforce management platform for all of their brands – Old Navy, Banana Republic, Althleta.  Companies such as the Gap are adopting Shyft because the app creates real collaboration amongst employees which helps with productivity and general satisfaction.

We are investing alongside Ignition Partners for this round and it is great to work with them again.

The team’s relentless focus on product and end user experience is inspiring and is winning them new customers every day. Brett and his team are extremely passionate about the market and their product and we believe that they’ve created a game changing company poised for continued success.

POSTED IN: Madrona News

Apptio and TBM’s Next Journey

The journey from Day One to building a successful customer base, company and market category is exhilarating! As company building partners, we are honored to work with great entrepreneurial teams every day. One of the most special companies and groups of people we have ever worked with is Apptio. Today is a major moment in Apptio’s 11-year company life and is the beginning of the next phase of their journey.

Apptio’s five founders, led by CEO Sunny Gupta, started the company in the fall of 2007. Their passion was to help Information Technology (IT) and finance organizations at large enterprises better manage the business of IT. As virtualization, and later cloud computing, were increasingly adopted in big companies, the technology business leaders didn’t have adequate management tools. Apptio started by categorizing and connecting the IT data around hardware, software and services costs with the finance and accounting cost systems. Over time this costing service was combined with SAAS-based planning, decisioning and agile learning systems. And, Apptio became the underlying system of record for enterprise CIOs. Within a few years, they were servicing several of the largest customers in the world and pioneered the category of Technology Business Management (TBM).

Sunny Gupta and I first met in 2001. From that first meeting, we both somehow knew that we were going to work together for many years to come.

He was and is one of those rare innovators who combines customer-centricity, product passion and genuine humility in an authentic way. And, he inspires teams to achieve their full potential.

We first worked together at Performant which was my first VC investment. In the spring of 2003 Performant was acquired.  In early 2005, Sunny, Jeff Gerber and I partnered to found and seed iConclude to automate IT “runbooks”. During those next few years, we added a great CFO in Kurt Shintaffer and outstanding co-investors Tom Bogan (then at Greylock) and Ravi Mohan from Shasta Ventures. iConclude was then acquired by Opsware.

While at Opsware, Sunny got increasing exposure to enterprise CIOs and the finance people who were helping understand and allocate the IT costs to different business units and teams. When Opsware was bought by HP in summer 2007, Sunny knew that a bigger opportunity was on the horizon to build a systematic way to align IT business units and finance. So, in the fall of 2007, we “brought the band back together” and started Apptio.

Apptio’s 11-year journey to date has, like every start up, included great mountaintop moments and a few low points. The highlights included early customer wins at companies like Cisco, Goldman Sachs and First American. Equally important were incredible executive hires including Larry Blasko, Chris Pick and Dione Hedgpeth. And, the company helped create and build a movement around cost transparency and data-driven decision making known as Technology Business Management. These successes were balanced with an early over-reliance on platform technology over finished SAAS apps and the occasional executive hire who proved not to be the best fit. But, by almost any measure, Apptio is an amazing success story.

On the financing front, Apptio raised several private rounds of private capital – each at a higher valuation. Then, in September 2016, the company went public at $16 per share and opened the first trading day at almost $24 per share. I will always cherish the celebration in New York City with the Apptio founders, team members customers and board!

Apptio missed Wall Street’s earnings expectations their second quarter as a public company causing some investors to lose faith and the stock to drop to under $12. But, Sunny and the Apptio team showed their resilience by clarifying priorities, building use-case specific applications and improving operational execution. In time, the business regained growth and momentum and the stock rallied back above the IPO price.

Throughout the Apptio journey, strategic and financial partners have had a strong desire to work with and invest in the company. Apptio’s strategic perspective on the enterprise journey to hybrid cloud and breadth of CIO relationships may be unmatched. Today, the company announced that it has entered into an agreement to be acquired by Vista Equity at a $38 share price or total equity value of approximately $1.94 billion.

Vista has a strong track record of investing in quality SAAS software companies like Marketo and Cvent and building even more value in those businesses.  When the acquisition closes, Sunny and the Apptio team will partner with Vista so they can best help enterprise customers fully embrace their cloud computing applications over the long-term. And, I am highly confident they will be aligned with their new investor partners to do just that!

For myself and Madrona, it is a day of mixed emotions. When the acquisition is finalized, we will no longer have a direct role with Apptio. I will greatly miss our spirited strategy discussions, the problem solving on hard challenges and the celebrations of successes. Which really means, I will miss the more frequent interactions with Apptio’s amazing board, executives and broader team. I can’t wait to see all the great things Apptio does under Sunny’s leadership in the years ahead.

Finally, I have no doubt that the Apptio team will be lifelong friends. Whether we are helping to build other companies together, making a positive difference in our community or cheering on our beloved Seahawks, we will be serving the Seattle innovation ecosystem for many years to come. And, in my heart, I will always be an Apptian!

Additional Information and Where to Find It

This communication is being made in respect of the proposed transaction involving Apptio, Inc. (“Apptio”) and Bellevue Parent, LLC (“Bellevue”).  In connection with the proposed transaction, Apptio intends to file and furnish relevant materials with the Securities and Exchange Commission (the “SEC”), including a proxy statement on Schedule 14A. Promptly after filing its definitive proxy statement with the SEC, Apptio will mail the definitive proxy statement and a proxy card to each stockholder of Apptio entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the proxy statement or any other document that Apptio may file with the SEC or send to its stockholders in connection with the proposed transaction. The proxy statement described above will contain important information about the proposed merger and related matters. BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF Apptio ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT Apptio WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT Apptio AND THE PROPOSED TRANSACTION. The definitive proxy statement and other relevant materials in connection with the proposed transaction (when they become available), and any other documents filed by Apptio with the SEC, may be obtained free of charge at the SEC’s website (http://www.sec.gov) or at Apptio’s website (http://www.apptio.com) or by contacting Apptio’s Investor Relations at ir(Replace this parenthesis with the @ sign)apptio.com.

Participants in the Solicitation

 Apptio and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Apptio’s stockholders with respect to the proposed transaction. Information about Apptio’s directors and executive officers and their ownership of Apptio’s common stock is set forth in Apptio’s proxy statement on Schedule 14A filed with the SEC on April 19, 2018, and Apptio’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 21, 2018. Additional information regarding the potential participants, and their direct or indirect interests in the proposed transaction, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with SEC in connection with the proposed transaction.

Notice Regarding Forward-Looking Statements

 This communication, and any documents to which Apptio refers you in this communication, contains not only historical information, but also forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Apptio’s current expectations or beliefs concerning future events, including but not limited to the expected completion and timing of the proposed transaction, expected benefits and costs of the proposed transaction, management plans and other information relating to the proposed transaction, strategies and objectives of Apptio for future operations and other information relating to the proposed transaction. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “intends,” “forecasts,” “should,” “estimates,” “contemplate,” “future,” “goal,” “potential,” “predict,” “project,” “projection,” “target,” “seek,” “may,” “will,” “could,” “should,” “would,” “assuming,” and similar expressions are intended to identify forward-looking statements. You should read any such forward-looking statements carefully, as they involve a number of risks, uncertainties and assumptions that may cause actual results to differ significantly from those projected or contemplated in any such forward-looking statement. Those risks, uncertainties and assumptions include, (i) the risk that the proposed transaction may not be completed in a timely manner or at all, which may adversely affect Apptio’s business and the price of the common stock of Apptio, (ii) the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the adoption of the merger agreement by the stockholders of Apptio and the receipt of certain regulatory approvals, (iii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement, (iv) the effect of the announcement or pendency of the proposed transaction on Apptio’s business relationships, operating results and business generally, (v) risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed transaction, (vi) risks related to diverting management’s attention from Apptio’s ongoing business operations, (vii) the outcome of any legal proceedings that may be instituted against us related to the merger agreement or the proposed transaction, (viii) unexpected costs, charges or expenses resulting from the proposed transaction, and (ix) other risks described in Apptio’s filings with the SEC, such as its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.  Forward-looking statements speak only as of the date of this communication or the date of any document incorporated by reference in this document. Except as required by applicable law or regulation, Apptio does not assume any obligation to update any such forward-looking statements whether as the result of new developments or otherwise.

POSTED IN: Madrona News

Allen School Industry Affiliates Day and the 2018 Madrona Prize

Tim Porter, Madrona, and Hank Levy, Allen School,  bracket the winners of the Madrona Prize and Runners Up

Again this year, it was a fun and inspiring night at UW Allen School of Computer Science & Engineering.  Every year we look forward to the day of presentations and then the frantic round robin of poster sessions in the evening.  It is inspiring and humbling to attend and listen to the invention and creative thinking that goes on at the Allen School.  And this year there were many breakthrough projects that spanned disciplines and schools at the University of Washington.  We also see this collaboration and collision of disciplines, particularly data science, computer science and life science,  in companies being built in the greater Seattle region and it is something we are excited about investing in as we move into our next 20 years.

Every year we award the Madrona prize to the most commercially viable ideas presented.  This year the winners were as follows.

Madrona Prize Winner

EMBARKER: A hierarchical Bayesian approach empowering big data with prior knowledge for expression marker discovery and its application to Alzheimer’s disease

Safiye Celik, Josh C. Russell, Cezar R. Pestana, Ting-I Lee, Shubhabrata Mukherjee, Paul K. Crane, C. Dirk Keene, Jennifer F. Bobb, Matt Kaeberlein

Advisor: Su-In Lee

 

Runners Up

Puddle: A System for High-Level Microfluidic Programming
Max Willsey, Ashley Stephenson, Chris Takahashi, Pranav Vaid, Bichlien Nguyen, Michal Piszczek, Christine Betts, Sharon Newman, Sarang Joshi

Advisors: Karin Strauss and Luis Ceze

Slim: OS Kernel Support for a Low-Overhead Container Overlay Network
Danyang Zhuo, Kaiyuan Zhang, Yibo Zhu, Hongqiang Harry Liu, Matthew Rockett,

Advisors: Arvind Krishnamurthy and Tom Anderson

Implantable Wireless Brain-Computer Interface
Jared Nakahara, Vaishnavi Ranganathan, Soshi Samejima, Nicholas Tolley, and Chet Moritz. See this for background on this poster.

Advisor: Joshua Smith

Press Release

POSTED IN: Madrona News

Paul Allen – A great man of science, culture, sports and a Seattle icon

Paul Allen is best known as the co-founder of Microsoft which alone is an incredibly important contribution to the world and how we live our lives now.  But he continued to work and arguably put in an entire life’s work after leaving his day to day role at Microsoft.  He had a vision for Seattle that revitalized a huge portion of the city and made way for one of the most successful companies in the world, Amazon, to establish headquarters in the city.

He was a visionary who saw the potential in everything from abandoned buildings and underutilized real estate to the ability of cultural, educational and sports institutions to energize a city.  He also continued to believe in the power of science to improve the lives of humans  – founding the Allen Institutes for Artificial Intelligence, Brain Science and Cell Science – all of which are focused on advancing our understanding of the world around us.

Madrona collaborated with Allen and specifically his company Vulcan over the years.  We co-invested in many companies including Decide, Igneous, Peach, Pixvana, Redfin, Turi, Unearth, Xnor.ai, Kitt.ai and Wrench.

“Paul Allen really was a true leader in our city, using his intellect, passions and wealth, to infuse the area with new life.  The music festival he started a couple years ago reflects his love of one of the pieces of musical cultural history that goes back to the 1920s here in Seattle, while his support of the Allen School for Computer Science and Engineering at the UW reflects his investment in the future of the young people of our region,” commented Tom Alberg.

He will be greatly missed.

POSTED IN: Madrona News

When the Digital World Meets the Physical World to Solve Real World Problems

We have been experiencing the modern era of our digital lives merging with the physical world, what I call Di-Phy, since the first iPhone in 2007.  This blending of the two worlds is all around us, through wearable exercise devices, package or luggage delivery service updates, car sharing and even food ordering.  But we are seeing through new advanced technologies an incredible expansion and success in these Di-Phy services.  At Madrona we have invested in this market heavily (Rover, Redfin, and Impinj to name just a few) and we are now seeing three trends come together which will move this confluence to a new level and make DiPhy integral in our lives and a change agent for new industries.

  • The ability to compute and intelligently interact at the edge
  • The near ubiquity of smart devices that run apps connecting our digital and physical worlds
  • The development and deployment of state of the art sensors & robotics

These developments combined with cloud technologies that run as a service enable the building of more automated and intelligent applications that make our lives easier and better.

To illustrate the types of solutions beginning to emerge, let’s look at two different industries that are seeing massive changes due to the revolution in DiPhy  – agriculture & mobile fueling – and a platform for running deep learning models at the edge.

Agricultural Automation

Many use cases for applied machine learning, robotics and general automation in the commercial world are only beginning to come to market.  One area we are seeing a lot of innovation is in agriculture – these solutions span preparing the ground, planting, weeding, and caring for the nation’s food.  One of Madrona’s newest investments is both a bet on this trend and on an incredibly talented serial entrepreneur.

TerraClear is a company recently launched by Brent Frei to take on the difficult and never ending task of rock removal on farmland.  TerraClear is utilizing state of the art sensors, machine learning, GPS, and robotics to bring the world of software and technology to the very physical task of removing rocks from fields.  This combination of digital and physical has the potential to have an incredible impact on one of the industries that has sometimes been slower to adopt technology but is more aggressively embracing innovation in recent years.  And Brent is the guy to do this – he is a charismatic, serial entrepreneur who started two companies which grew to be public companies – Smartsheet and Onyx Software.  He is also from a strong, multigenerational farming family in Idaho.  Having backed Brent before from day one, we are excited to see the innovations and efficiencies that TerraClear will bring to market.

Mobile Fueling

For decades consumers and businesses had to go to the gas station to fill up their vehicle.  But, that solution was inconvenient, time consuming and environmentally unfriendly.  With the power of mobile phones, GPS and route optimization, a new group of companies that deliver fuel to your vehicle on demand have emerged.  The early leader in this category is Booster Fuels.  Booster’s Founder and CEO Frank Mycroft had the initial insight that the combination of the digital world and GPS technology with the economics of mobile fueling could eliminate this annoying chore and be a good business.  He and his team have meticulously designed a mobile fuel delivery system that enables consumers to have their cars filled while they are at work.  By delivering to corporate campuses they can efficiently fill over 12 cars per hour in a manner that is superior to the gas station, cost comparable and very safe.  Regulators have learned that it is more environmentally friendly and safe and have become strongly supportive of Booster.

Booster also learned that their specially designed systems, vehicles and drivers could provide a superior service to commercial fleets.  This extension of their business is allowing them to expand rapidly to more geographies and provide related services.  Software, data, employee training, and vehicles with modern sensors all combine to make such a digital meets physical solution a success

Deep Learning at the Edge

Deep learning models are a fundamental breakthrough in how machines can be trained to recognize images for a broad variety of autonomous use cases.  The challenge with image recognition models is that they generally require significant compute, memory and power resources to run the models.  In order to unlock the power of these digital models to run and address real world problems at the edge, a solution was needed to build and compress the models and match them to the resources available.  These use cases also protect privacy and reduce latency relative to models require cloud resources.

In our portfolio, XNOR.ai has broken through with their data model pipeline and “binarization” capabilities to enable clearly superior models that run at the edge on devices with limited if any connectivity.  Ali Farhadi and Mohammad Ragestrani developed these techniques with their team at Paul Allen’s Institute for Artificial Intelligence in Seattle.  These models can be run on a mobile phone to improve picture taking.  They can be run on a security camera to distinguish between a vehicle, person or animal.  They can be run in a store like Amazon Go or Bingo Box to enable autonomous shopping. And, they can be used on home appliances to identify specific food items.  The applications are nearly limitless and will redefine how consumers interact with all kinds of physical world items.  More fundamentally, they will be required as part of the “sensor fusion” that unlocks the full potential of autonomous vehicles. Companies like Xnor.ai are creating the building blocks for breakout services in the DiPhy realm.

Focusing on the Customer and their Problems

An important key to success in this new generation of digital meets physical world solutions is to be “customer pulled” rather than “technology pushed.”  By understanding a customer’s need to remove rocks from farmland, fill their car up with fuel, or run image detection models at the edge successful companies are being built.  Being enamored with location aware devices, deep learning models or even the blockchain does not lead directly to identifying and understanding a real-world problem and building a superior solution.  In fact, though we didn’t talk about it here, we believe blockchain will play an important role in DiPhy. The real power of blockchain is likely using digital tokens to reduce friction with the ownership and utilization of assets in the physical world.  But, that is a topic for a future post.

POSTED IN: Madrona News

Kicking off Madrona Engineering Community Meetups with a Side of DevOps

If there is one topic that is on every engineering leader’s mind, regardless of the size of the company, it is how to ship more code more often and how to run that code reliably and efficiently. So, it was a no-brainer that we chose to kick off the first of our Madrona Engineering Community (MEC) meetups with an event on DevOps and Agile practices.

MEC meetups foster ongoing knowledge sharing and networking among engineering leaders across the Madrona portfolio. Our members are VPs of Engineering and CTOs across our portfolio companies.

As far as first events go, we started off with a bang! We had a packed house with over fifty of our engineering leaders attending as our panel of experienced speakers dove into the current and future for DevOps. Our panel was:

  • Tom Casey, SVP Engineering at DocuSign
  • John Ludeman, SVP Engineering at Skytap
  • Adam Johnson, Founder/CEO of IOPipe
  • Moderator, Joe Duffy (Founder/CEO of Pulumi

The make up of the panel was by design — to cover companies at different scale. DocuSign, for example, serves hundreds of millions of users and more than 1.5 million documents per day. Skytap is a mid-stage company that has seen its usage quadruple over the last two years, deploying up to 45,000 VMs and serving up to 2 petabytes of storage a day. IOPipe, in contrast, is in the early days of building its product with a distributed team churning out multiple releases every day! The DevOps goals and plans of each of these companies are different, which led to an interesting discussion under the expert probing of our masterful moderator Joe Duffy.

DevOps = ownership + accountability

While Joe did his best to instigate the speakers in taking opposing positions, he had no luck when it came to how they thought of DevOps. To each, DevOps was about aligning engineering teams with creating customer value and achieving business goals. The key, as each speaker emphasized, was to give developers end-to-end ownership (and the accountability that comes with it). Developers must be able to see the value they are delivering to the customers, or not. And, they must be provided with all the tools and processes, and more importantly, the organization and cultural support needed to succeed.

DevOps ≠ shipping more features

In the fog of war, there is often a tendency to add every feature request to the scrum. Shipping, however, is not a good measure of success. Adoption, utilization, learning, and direct revenue are much better measures of value creation. When it comes to DevOps, reemphasizing value creation and not just features shipped is important. DocuSign, for instance, made driving adoption (of their product) a company wide priority because, direct revenue is typically a trailing indicator of feature value. To keep everyone focused, they evaluated every shipped feature in light of adoption. It mostly worked for them.

DevOps is always a work in progress

No matter how small or big the company is, DevOps is never done. John from Skytap, for example, shared how, after operating for a few years, they realized that their organizational structure was getting in the way of shipping code quickly and efficiently. So, they reorganized and refocused the engineering teams to make sure that they stayed agile as the business scaled rapidly. Tom from DocuSign shared a similar experience, done at a greater scale in a more gradual manner. And, they both fully expect to redo their DevOps process and organization multiple times as their businesses continue to grow quickly.

No “no-ops” unless you also believe in unicorns

In this day and age of serverless, the topic of “no-ops” inevitably came up. To much of Joe’s delight, it elicited some strong reaction from the speakers. Long story short, the verdict was that no-ops does not work at scale. Every SaaS company, once it reaches a certain scale, needs specialized ops to ensure it can deliver the best user experience without blowing up its cost budget. DocuSign has “devs who op,” and every company could do with more of them. Similarly, the topic of SRE did not find a lot of love from the panel. The view was that, for most SaaS applications, it is impossible — or, at least not advisable — to insulate the developers from running the application.

Telemetry trumps testing

The other interesting insight that emerged from the discussion was that, no matter how much one invests in testing, telemetry is indispensable and if anything, more important. Skytap, for example, believes investing more in application telemetry than in running exhaustive regression tests. Similarly, DocuSign puts some of its best devs on telemetry. The emphasis on telemetry helps to speed up release cadence and detect unforeseen bugs.

Looking forward …

While most modern companies have adopted DevOps to a certain degree, most also struggle with several issues. First, balancing agile development with predictability (a must to run a business) is always hard. Hence, every engineering leader clamors for effective planning tools. The other issue is how to measure engineering productivity. Lines of code written or number of bugs fixed could be great vanity metrics, but they do not serve the real purpose. Finally, as we get ready for applications running on multiple clouds, we do not yet fully know the new challenges that will bring to DevOps.

Maybe, that’s where we will pick up at the next MEC meetup!

POSTED IN: Madrona News

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

 

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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.

 

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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.  

POSTED IN: Madrona News

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!

 

POSTED IN: Madrona News

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

POSTED IN: Portfolio Company News

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.

 

 

 

POSTED IN: Madrona News

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

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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.

POSTED IN: Madrona News

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!

 

POSTED IN: Madrona News