News & Views

 

How Do You Start a Venture Firm? Here’s Our Story

Last year (yes really!) and this year we had discussions with people who know Madrona well, founders, early team members, and people like Ed Lazowska & Hank Levy from the Allen School at the University of Washington, Steve Yentzer from DLA Piper, Paul Kwan from Morgan Stanley and a host of others.

We turned some of those conversations into this podcast which kicks off our 4th season of Founded and Funded.  The Madrona co-founders did not set out to create a venture firm – this podcast tells the story in their own words.  Tune in to hear Tom Alberg, Paul Goodrich, Matt McIlwain, Greg Gottesman and Jerry Grinstein talk about the early days, weathering the ups and, pretty significant, headwinds – “near death experience”  is a phrase that is used.  Thanks for listening and advance apologies for the uneven sound quality!

POSTED IN: Madrona News

Founded and Funded – Meet the Founders of Sila, Delivering Banking as a Service

On this week’s Founded and Funded, we talk to the founders of Sila, Shamir Karkal and Angela Angelovska-Wilson.  Managing director, Hope Cochran, talks about why she invested, and the founders share their story of how they came to unite to build Sila.  Sila offers banking as a service to companies which are at their core Fintechs or need a Fintech based infrastructure.  Moving money on the internet, though envisioned from the very earliest days (do you know what error 402 means?) is not easy.  In the US alone there are many regulations at the federal and state levels.  Sila has navigated this complex regulatory and technical world to enable their customers to launch quickly and focus on their product.  The podcast is available on all platforms and below!


Transcript

 

Hope Cochran: [00:00:54] Hello and welcome to the Madrona podcast, Founded and Funded. It is so fun to me to be today with Angela and Shamir. The cofounders of Sila. I found them in my quest to solve financial infrastructure problems as the CFO of many large international companies that had to move lots of money, I was constantly frustrated with the lack of ease in this space.

And so I went in search of someone who understood and knew the problem well, and I found Shamir and Angela. So I am thrilled to be partnering with them, in this quest to solve this very complicated problem, both from a technology perspective and a regulatory perspective. And as I got to know them, I was so taken by their backgrounds and what brought them to this place.

First of all, I’ll just say both of you came from other countries to the United States, you’ve had interesting journeys that led you down the FinTech route. I would love just to hear about those journeys first and foremost, before we get into the vision of Sila  So Shamir could you kick us off?

Thank you.

Shamir Karkal: [00:02:05] My journey in financial technology actually started very early. My grandfather on my mother’s side was a banker.

My parents were bankers. And so I could say I’m a third generation banker, And I wrote my first computer program and I wrote my first check both at the age of 10, back in the 80’s. And I realize that’s a really weird upbringing, but it seemed normal at the time. Of course as.

one does,  I decided in my teens that I was going to do anything except banking and went off to become a software engineer, did that for a few years, came to the U S And was working as a software engineer, went to business school and business school is really where I first learned about the broader world of business and everything that was out there.

Before business school, I was just happy writing code, like 14 hours a day. And after business school, I ended up becoming a consultant at McKinsey and Company, which is a consulting firm . The first project I got assigned to almost randomly, was in financial technology, doing strategy for a bank processor.

And I just fell into that. It was stuff that I knew and understood well, and spent three and a half years at McKinsey, both in North America, Europe, and in the Middle East, just doing more stuff around financial technology, but very broadly defined, processors , banks, insurers, even one country bail out within 2008.

And so in 2009, a classmate and good friend from business school, Josh Shreesh, started asking me all these questions about banking and the story there was, I was the only person who knew the answers, who would actually talk to him. And he was frustrated with his own personal banking experience.

He was a startup entrepreneur. Sold one business before he came to business school and went back to work in startups, straight from business school.  And so he had the entrepreneurial ideas. He sent me an email saying, let’s start a retail bank. And he laid out this vision for how a bank should be tech forward consumer centric, actually helping people manage their finances and, and then building a platform to provide all the other services that people need apart from a checking account and a debit card. And there’s such a compelling vision. I was like, yes, let’s do that. Somebody should do that. And I guess it might just want to be us.

And, you see how crazy I am that in 2009 I thought it was a good idea  to leave, McKinsey and go start a bank, which is what we set out to do. and that was my first startup. It was an online neobank called Simple. We started it in New York in 2009, a couple of years later in 2011,

I moved to Portland,  and Josh moved over to Portland into how’s an 11 launched simple in 2012.

The story there was, it took three years. From first email to launch, and three years to launch is if you ask anybody in the startup world, it’s just unimaginably slow. and then on the flip side, if you ask anybody in the banking world, that actually seems fast. And that was the, the dichotomy that Simple hit head on is the pace difference between those two worlds.

The real reason was it took us about two and a half years to find a bank partner, find a processor, figured out how to connect them, figured out it was not working. Then redo that and then find five more processors and finally build this kind of internal API layer on top of which we could then build a web and mobile apps that customers saw.

And really at Simple and I think at probably at all, fintechs it’s out there, the consumer facing, or the business facing part of the tech stack that people see is really just like the tip of the iceberg. And we finally figured it out, and launched it. And then a couple of years later, Simple, was acquired by a big Spanish bank, BBVA was back then, and still is I think, a very forward thinking bank. They saw the FinTech revolution coming probably before anybody else. And they wanted to partner with Simple. And then the partnership discussions turned into acquisitions as does happen. A few months after the acquisition, I was in, Madrid talking to the guy who’s now the chairman of, BBA. And they, you mentioned this idea of building an API platform. And my immediate reaction was, yes, please. Do it, the world needs API platforms in banking. If such a thing had existed, Josh and I wouldn’t have spent three years launching simple. We could have launched it in six months.

And then who knows what we could have done any sort of payment and LGV spent building our own, internal infrastructure. And, but please do it right. Don’t screw it up. Quickly realized that it was really just an idea at BBVA. Nobody had even put together a document of any sort. So I did and circulated it internally.

They create an internal venture steam. Fast forward a year later and I was running that business. So built and shipped to API forms at BBVA. Did that for a couple of years,  one in Europe, one in, one in the U S but got frustrated by the parts of the organization that I could not control was the back.

So we could build that ship, that deck. And I think the BBB open platform is still a great platform, but we could never onboard customers. And at the speed that I wanted to because of risk compliance, legal and all the internal bank processes. So I left in 2017. Thought about what to do with the rest of my life.

And then, ended up co-founding Cilla with Angela, Alex, and Isaac.

Hope Cochran: [00:07:34] Yeah. And Angela, you have such a tremendous journey and unique background. I really look forward to hearing about it in your words.

Angela Angelovska-Wilson: [00:07:41] thanks. Hope and I, again, thank you for having us on the podcast today. I am a little bit of an unusual, cofounder of a FinTech company, due to the fact that I come from my legal, regulatory background. I started my journey. actually also as an immigrant, I came to the U S when I was 17 as an exchange student and never thought that I would actually stay here and, have my life in the United States.

And definitely did not think that was going to go into, banking or law. Unlike Shamir I come from a family that is everybody is a doctor.  I was on the path of becoming a doctor, but that was definitely , not where my heart was. Due to the fact that I’m the year I came to the U S very, bloody civil war developed.

in former Yugoslavia, I actually got stuck in the United States , as I like to say

 

I was all packed. I was ready to go back. A life for a teenager in the U S when you’re 17 or 18 is not as fun as one in Europe, I have to say. So I was definitely missing my family, my friends, and everybody else. But, It was actually a very interesting time, which kind of set me off on my legal journey because I found myself without a country.

So the country I came to in the United States was the Socialist Federal Republic of Yugoslavia. During my time here that country no longer existed, it had become several different countries. The one country I did have. The right to citizenship, was Serbia, through my mother, but Serbia was the antagonist in the war, and, was under very strict, international sanctions.

So maybe, you’re going to compare it to like Iran, at this time. So , nothing was going in and out. I couldn’t go. And my other country, that I have a right to citizenship where I actually grew up, Macedonia, was not yet to country. So I had to figure out a way to stay legally in the United States, which was quite a challenge because I fit none of the categories.

I was not a refugee because I had not escaped from the war. I was not that nice side lead because I wasn’t afraid to go back. I just couldn’t. So it was the beginning of my legal journey, trying to figure out creative ways of how to make what is in the box and the principles of the laws, fit the unique situations that I was facing.

So the one way to do this was, actually for me to go to university, which was challenging because I never took any entrance exams because I was, not interested in going to university in the U S but through help from my American host family, and many others, I was able to enroll at a university.

Taylor University. And that’s really where my interest and love of technology. And seeing how you can use technology in everyday life and how transformative it’s, what it is in all aspects of life really began. I was a public relations major and, I saw and had an opportunity to really work on, AOL and CompuServe.

And saw that potential. Absolutely loved it. and then moved to, the very beginnings of the internet. I coded in HTML waited until midnight to download the first version of that scape. And, I guess that was the beginning of my entrepreneurial streak in the United States, as well as banking.

I had my own web development company and one of the first projects I did was help a small, very forward looking credit union actually, and offer their services of what is now common place, online banking. And so that was kinda my first thing that I did. And instead of heading to Silicon Valley, at the height of the internet boom, I decided to go to law school.  In law school I focused on electronic commerce and the fledging  law of the internet.

And then, In my private practice at  very prominent law firms, I specialized in financial regulation and technology, and my background and love of tech have really come through, because  I have been able to combine the two in order to understand, the principles of regulation, and how they can be really applied to some of the, technological solutions that are being presented.

In 2018, I heard Shamir’s vision about Sila and I said, Oh my gosh. Yes, because for about 20 years of my career, I watched and helped  FinTech startups navigate all of the different legal, regulatory problems that they had in order to launch, as, Shamir said, the tech was the easy part.It was, navigating the alphabet soup of regulators and regulations that applied to their innovative services, that were no longer siloed out as they are typically in traditional banks. That really was, the biggest challenge. And plus I passed Shamir’s test, he asked me if I knew what internet code 402 stood for and I

Hope Cochran: [00:13:39] did.

 

Okay, you’re going to have to tell us, Angela, what does 402 stand for?

Angela Angelovska-Wilson: [00:13:44] It’s a reserved, error code on the internet and it was built  at the very beginning of the internet protocols. And it stands for payment not found. So the internet was always meant to have a payment protocol built into it it’s just they never got around to it.

Hope Cochran: [00:14:03] Both of you have such interesting and deep journeys that really brought you together to solve this very complex problem that involves both deep technology understanding, deep banking understanding and deep regulatory world to develop Sila. Shamir, I’d love to hear your description of Stila and the vision you have for it.

Shamir Karkal: [00:14:27] I think really the way I like to talk about Sila is really to start with the problem. And the way we define the problem is that it’s just too hard to program with money. There’s been an explosion over the last 30 years since the internet of people building programmed solutions, startups, applications, and all other sorts of things, Alexa skills, to do things right.

But at the end of it, it comes down to writing code and writing code to do different things. So if you’re a developer and you wake up tomorrow, whether it’s in San Francisco or in Shanghai, and you decide that you want to build  any type of online application or you already have a large existing app and you want to embed the email capability into it, for example, that’s you know, that’s easy to do. It’s open protocols, there’s APIs. There’s SDKs. There’s developer tooling  There’s whole ecosystems of industries, which will help you manage email on whatever it is.

As soon as you want to program with money, and that might involve building an online FinTech startup or an online bank, like Simple,  or you might just want to embed a simple payment or money storage or money movement capability into an existing app.

Suddenly, it really does matter whether you’re in San Francisco or Shanghai and you’ll realize that the internet is not one place when it comes to money. There are  no open protocols. There’s almost no APIs or SDKs, at least until silver came along. It really is impossible to do across the internet and that’s what we want to change. We want to make it as easy to program with money as it is to program with email or with any other  internet mechanism. Money actually is just a type of messaging network.

The problem is all about the complexity of the existing payment systems and the existing

regulatory structures and figuring out how to build a layer on top of it, which is really useful for programmers. We started with that vision of really, making money programmable, easily programmable and, launched Sila in October of last year.

Our core product is an API platform. It’s really, a developer platform , which allow people to easily plug in and build the applications they want  and it’s the modern way of doing that. We offer a few services, in the U S currently, we do, online identity verification.

So if you, if you give us, an individual or a business and give us that information, we can verify that using our APIs and our backend technologies  We allow you to securely link a bank account. If you have an account at Chase or Bank of America or Wells or whatever, we can connect to it and securely get the data that we need, which is mainly the routing and account number.

and then we can debit those bank accounts via ACH or credit then via ACH, and do in and out of those bank accounts. One of the unique features of Sila is that we make it as easy to hold money on our platform as it is to move money. And we make it easy to do all combinations of that and program with that, wherever you want to program the it.

Hope Cochran: [00:17:45] Shamir, I think you hit on a really important point there, the ability to not only move money, but to hold money. And it’s a simple statement, but it’s actually really difficult to accomplish that. And that’s where you get into needing  the regulatory requirements and whatnot to, allow your business to grow if you’re holding the money. When I think of what Sila is doing, would it be fair to say that you’re really providing banking as a service to companies who just want to get on with their business, but somehow involve moving and holding money?

Shamir Karkal: [00:18:20] That’s exactly the right description. This nuance to distinction between banking and payments. When people think about payment, they think about transferring money between, two bank accounts or from one card to another. And when they think of banking, they think about holding money.

The core of Sila is that those are both flip sides of the same coin, right? If you’re going to transfer money from A to B, then there’s many times where you might want to transfer it from A to X and then transfer some of it to B, and some of it to C and then some of it to D based on some set of rules and that’s what business is all about.

That, we focus on making both of those things as easy as they can be, and then making it seamless, across them. So we automatically create a wallet for every, individual and business on the platform. We automatically hold funds in those wallets and you can hold it for a second and just transfer it in and transfer it out.

And it’s just a payment, or you can hold it for days or weeks or years and do other things with it. It really comes down to what the business logic and the use case is. We focus on making that very easy for developers, but the back end complexity that comes with it, especially on the regulatory side is  far from trivial is probably the best way to put it.

Depending on kind of what the funds flow is. It that can be additional regulations, the top of that, and understanding those, supporting our customers who are doing those, making sure that we do all of that client fashion and manage risk well, and in fact, building management into the API, that’s the whole secret sauce of the business.

In the FinTech world that, everybody starts off by focusing on kind of building out a payment flow for an end user, and then eventually realizes that really half the company is doing risk management. The famous quote that I always remember,

it was somebody I think might have been Reid Hoffman who said that in the early days of PayPal, he did some math and then told Peter Thiel that it would be cheaper for them to go to the roof of the office and throw sacks of cash off the roof as quickly as possible, rather than operate the business because they were losing money so quickly to fraud.

So we try to make it as easy for developers as possible.

Hope Cochran: [00:20:40] When I really think of what you are enabling is you’re enabling builders to get their product out there faster. And you’ve got some great examples of that in your customer base today, these startups or young, innovative entrepreneurs who want to get to market and don’t even think about the fact that money is actually an important part, and that really could slow them down for years in terms of trying to solve that problem. For instance, I think of Sloan one of your current customers, that is doing student loans and helping people address their student loans.

Or Dinero, which is addressing the Latin community and trying to help them with rewards from day to day shopping. They have purposes that weren’t really to be in FinTech, they need to move money. And so Sila has been a great solution for them.

Shamir Karkal: [00:21:32] There’s a journey that companies typically go through where they start off and they’re focused around solving a problem for a customer. And what we try to do is  to help them stay focused on that problem, right? So for Sloan, what we try to do is to say, Listen, you need to understand your customers’ problems around their student loan payments, how to manage their money, how to most effectively make those student loan payments.

We’d like to remove as many barriers as possible, at least on the programming with money side so that you can get to product market fit as efficiently and quickly as possible, and then scale from there. and this is a journey that, I think a lot of the large, all the large and tech companies, right?

Like Simple or Chime, of course, PayPal, and all of them have gone through. But I also think that a lot of the tech companies have gone through it as well. And I think it’s not always clear. Sometimes you don’t realize whether it’s a large tech company or even a large traditional international company, how much complexity is tied up in large teams of controllers and back end finance people and product managers, just building systems to manage money.

Hope Cochran: [00:22:42] Absolutely. One of the pieces of magic here there that we talked about earlier was the regulatory aspect. Shamir, you addressed a lot of the technical challenges and providing tools to the developers to be able to address those. But really one of the largest hurdles in this world is the regulatory hurdles that you have to go through.

And Angela, this is where you are navigating this. So definitely it’s very impressive. What I appreciate about you, Angela, is that you seem to have this ability to understand the why of what regulatory is meant to do and then navigate within it. So maybe you can talk to us a little bit about the regulatory environment.

It’s one of these environments that’s always changing and adjusting, and I feel like there’s even more change on the horizon. So we’d love to hear your thoughts on that.

Angela Angelovska-Wilson: [00:23:34] One of the things that is very difficult for, especially technology entrepreneurs to understand is that barrier to entry the regulatory moat that exists around financial institutions and even for FinTech providers that have made it, big, And that is, their compliance with the patchwork of regulatory requirements, licenses, compliance obligations, and the rest.

And, around the world, there is a very clear understand. Standing now that the business of banking is really the business of financial technology.  Many years ago I had the opportunity to actually work on the Visa IPO. And, if you look at the filings for the Visa IPO, Visa was a financial company.

Financial payments companies is how they describe their business model. Today, they describe themselves as a technology company. And I think  the regulation of FinTech is, I would call it the, yeah, the number one priority for regulators around the world. There are two, I would call it, very distinct areas that regulators around the world are being focused on with respect to FinTechs.

And the first one is understanding the various technologies that all these new entrants, all the new fintechs are using in order to provide different types of products and services into the marketplace. They’re trying to understand, how people are using biometrics, how people are using AI. Finance is being run by algorithms, after all these days, how new technologies like distributed ledger, blockchain technologies are impacting some of the thinking and the way that we regulate things.

And then the ability of FinTechs technology is borderless. It is global, at the very beginning, that’s the point of the internet. So the use of all these underlying networks that are global in nature, when we have very local stringent regulations, really provides a very difficult environment for fintechs to operate. Even PayPal after so many years in business is not available as an option in every country of the world. They operate in 50 plus jurisdictions last time I checked. So financial regulators are playing catch up. like every other regulation, typically, regulation is catching up to the marketplace and trying to understand how to prevent disasters.

At the same time, providing innovation and encouraging competition. One of my mentors, I’m based in Washington DC, and one of my mentors here once told me that congress does two things, nothing or overreacts. And I think financial regulators around the world are making sure that they are balancing those two acts of doing nothing versus overreacting and really stifling innovation.

So in the US it’s really difficult. I would say that from a global perspective, the U S is probably one of the most difficult jurisdictions to navigate for FinTechs to offer their services. I have helped many companies, that, made their name and are well known internationally, or they started out in Europe or other parts of the world.

And when they come to the United States, they really have a hard time understanding the regulatory regimes because we have a dual system. We have the federal regulators that have their own regulations and principles and then the state regulators. At the end of the day, like we said at the beginning and you did Hope, regulators are looking for those principles of the regulation, so understanding why certain regulations were inactive. Why the legislature reacted. Best example of this is Dod Frank, right? The 2008 crisis, we got 10,000 pages of regulation that turned into couple hundred thousand pages once it was all written and done.

And, we put it in and now we are, putting it away slowly because we have realized that it has really impeded the ability of some of the financial institutions that it regulates to actually do business.  Again, I started from the point of there very few entrepreneurs that start on this journey that are intent on violating law. Being outside the law is never a good business model.

And so when they are trying to navigate all this regulation, it’s difficult for them to understand now I have to really have a calculation on my loan in every single state differently? I can’t do it with just one interest rate? I can’t export that interest rate? Or, if you’re a payments related company, I have to get the license from 49 different states?

And every state is asking me a little bit of a different type of information for my submission? And I’m subject to their oversight and control over the my business every year and I have 49 of them. That seems really unattainable to operate a profitable, forward-moving innovative business, especially when you compare it to the regulations that we have in other jurisdictions like the European Union, with their ability to passport and their ability to have a very streamlined  regulation. Even in the Asian countries it’s much easier to comply with things than in the United States.

Hope Cochran: [00:29:58] That’s right. Angela and Shamir, you both articulated so well some of the real practical challenges with the regulatory environment in the US with the federal and then by each state and just how overwhelming that is for an entrepreneur to navigate. And so when I think about Sila, you’re providing that for them so that they can get going on the business that they’re wanting to run which is such a great service to them. Now, one of the things I want to hit on a little bit is the regulatory environment is important as Angela pointed out because you’re moving money and fraud can happen and all of these things.

So there is a reason for it. And so one of the things that I’ve been so impressed with you all is that you vet your customers, and make sure that  they have the right purpose, integrity, and intent before you allow them to use your system.

Angela Angelovska-Wilson: [00:30:49] Our customers are subjected to, I would call it best practices in the large financial institutions. Again, our backgrounds allow us to have been able to view the kind of industry best practices and to understand why some of those best practices were put in place to begin with. Also, we’ve been burned once or twice in our careers.

So we’ve learned from some of those experiences and we have tried to make the process, that our customers go through as streamlined as possible. But that does not mean that we are lax in any way, shape or form. We are very stringent about making sure that our customers understand and are compliant with the applicable laws and regulations. That is a key to their success. If they are not, their business will suffer, at the end of the day. And so we want everyone to succeed and in order to be able to succeed, compliance is key.

Hope Cochran: [00:32:02] I’m going to switch gears a little bit as we can’t ignore the current environment that we’re all operating with  quarantine and COVID  in our midst. You both have been entrepreneurs multiple times running your own businesses. You’ve led people in companies through difficult times. This is not your first difficult period.

What are some suggestions you have for other leaders on how to continue to move forward, bring growth to your company, but also be a great leader during this environment.

Shamir Karkal: [00:32:36] Anytime you start your own business and go on the entrepreneurial journey, it is always hard and the default outcome is failure. And so  it requires a certain mindset and a certain sort of willpower to just keep powering through.

 

And at least if I can look back and I’m like, how was I, how would we be able to make Simple into a success? And even the BVBA open platform and everything else, a lot of luck for sure and probably some skill involved, but I think like just persistence is massively important. Things will get better. You have to be there when they get better. If there’s one thing I’ve realized is, and I realize it more and more every day is how important communication is. When I was able to sit in the office and of course, we always had at least some team members who were remote, most of the team was in the office in Portland, just being able to like sit around and just lean over and have a chat with product, or engineering.

There was a lot of knowledge that got disseminated through kind of osmosis. It’s hard to tell nobody announced it, but within a few hours, everybody in the office knew sort of thing  That doesn’t happen anymore and communication is always super important to leadership, but it’s, I think it’s even more important now because unless you make it happen, there’s no default communication happening.

And so you can have just people in the company who just don’t know things because nobody told them and they wouldn’t have found out because nobody is sitting next to them to tell them stuff anymore. There’s no water cooler conversation. I have tried and we have tried to be much more mindful about communications and it reminds me a little bit of Simple went from two to about 300 people by the time I left, and.

When you’re at the 200 person stage, you realize that a large part of an executive’s life is all about communication, and doing that well. And then making sure that not just you telling people stuff, but the right people are talking to each other about the right things and managing that.

Angela Angelovska-Wilson: [00:34:41] .

Yeah, I would agree with all of that. And I think one of the other unique opportunities that COVID and this situation has given us is to assure that we are looking at our coworkers and our team  as  a window to their everyday life. And being able to see Shamir as our leader in the closet and being interrupted by his children shows everyone that we are all, facing, different, yet the same challenges on working from home.

Getting our work done, getting our families together and dealing with the new normal, whatever that is these days. So I have really cherished the ability to have established a deeper bond with some of our teammates on a personal level during this time, and really understand about who they are as a person and how they want to grow as a person, not just as a team player, not just this part of the company.

But really understand their challenges and then also give them, sometimes leadership can, seem, separated out, but give them a view of we get frustrated. We have to deal with the kids too.  These are all things that are okay.

Hope Cochran: [00:36:03] I love it. Persistence is one of my themes as well. There’s been many times when you have to find that grit, so I appreciate that. And intentional communication has been something that I think we’ve all had to embrace and address. And Angela, I love your points about just getting to know each other on a deeper level.

And, I’ll just say I’ve loved working with the two of you and getting to know you on a deeper level as well. And I’m proud to be a part of Sila. So thank you all for this time. And, I appreciate you all listening to Founded and Funded.

Shamir Karkal: [00:36:36] Thank you thank you for having us Hope.

Thanks for joining us at Madrona venture group for founded and funded. We really appreciate you listening. Please subscribe, send any comments you have to me. I’m at erica(Replace this parenthesis with the @ sign)madrona.com and it’s E R I K a. At madrona.com. Till next time.

 

 

 

POSTED IN: Madrona News

Our Investment in Coda & The Future of Work

Today we are excited to announce our investment in Coda.

Recently, we wrote some blog posts about our core investment themes. Specifically, two of the themes relating to Coda are the Future of Work, Workforce and Workplace as well as Low code/No Code development platforms.

There are several market trends that drive our thesis on these areas.

  1. Companies want to move faster and be more agile
  2. Cloud-native apps make it easier to access data
  3. More “makers” than ever before
  4. Multi-player collaboration and digital-first workflows

These trends together are driving innovation in how people are reimagining what tools people need to be effective and successful in today’s day and age.

The team at Coda recognized these trends when they first began working on Coda and have been building a fantastic product to serve these market needs.

The Coda team saw these trends and through their product have fundamentally reimagined how we work. They recognized that we move from application to application, and when applications talk to each other to share data and be dynamic, that is where the work gets done. So, they started with that as a core design point.

Coda is a single canvas that brings together the best of documents, spreadsheets, databases and applications. The flexibility of Coda enables users to become ‘makers’, authoring dynamic documents where the lines between a document and application are blurring and becoming one and the same.

Coda envisions a future where documents are alive and interactive – enabling users to interact with data, to interact with systems, and to automate previously manual processes. Coda imagines a world where everybody can be a “maker” and can use Coda to express what they want to and collaborate with others seamlessly.

We believe this is a massive opportunity. The “Maker Generation” has rapidly adopted new platforms and tools to solve problems, build products, and start new businesses, and we have seen many examples of this in other industries – from producing channels on YouTube, to building web sites in WordPress, or developing new games on Roblox.

Coda’s team believes they can unlock the power of software development for the Maker Generation by providing them with the platform and building blocks to build apps that look like docs, and we are already seeing thousands of users building these apps on Coda today.

We are particularly committed believers because we are Coda users. As investors we make decisions on whether to invest in an idea, founder or company together and on many different factors. We built one of the tools we use to start conversations and look at challenges, in Coda. Earlier this year we published this as a document in the Coda Doc Gallery for anyone to use.

Beyond the large market opportunity, we are also thrilled to back this world-class team. We have known Shishir Mehrotra for years since Microsoft where he worked on SQL Server, Windows, and Office before eventually moving down to the Bay Area to join Google as YouTube’s VP of Product, Engineering, and UX. Shishir’s cofounder and CTO, Alex DeNeui is also a world-class technology leader in real-time collaboration tools, and his previous company, DocVerse, was acquired by Google.

With the combination of a fantastic team, great product, and a massive market opportunity, we are looking forward to joining Coda in this journey to reimagine the future of productivity and collaboration. Coda’s blog on their funding is here.

AND we talked to Shishir about his journey to start Coda for our newest Founded and Funded Podcast – you can listen here!

 

Podcast Transcript

 

Erika: [00:00:11] Welcome to Founded and Funded. I’m Erika Shaffer with Madrona Venture Group. And today we’re really excited to bring you Shishir Mehrotra. The founder and CEO of Coda.  Coda announced a new funding round today of $80 million, which we participated in and in this conversation with Madrona managing director Soma and Madrona, senior associate Elisa La Cava, Shishir talks about what Coda is, how it got founded, what you really need to start a company in his view and the very interesting journey that Coda has taken to release their first product, which was five years in the making.  Before founding Coda show this year started his company. Worked at Microsoft for many years where he knew Soma. And then went to run YouTube for Google. Let’s pick up here, where Soma introduces the conversation.

Soma: [00:01:12] Hello, everybody. I’m very excited to be here today to talk about one of our core investment themes, the future of work with the founder and CEO of Coda Shishir Mehrotra. Welcome to Shishir.

Shishir: [00:01:27] Hi, Soma. It’s nice to be here. I was just to comment that you’re one of the few interviewers who can pronounce my name so clearly, okay.

Soma: [00:01:35] Yep. It’s another advantage of coming from the same part of the world. Yeah, but Shishir, really excited to have you on this podcast with us today and as we are very thrilled to be on the Coda journey with you as investors in the funding round that you announced earlier today.

Shishir : [00:01:50] Yeah. Welcome aboard.

Soma: [00:01:51] Thank you. We absolutely believe the Coda is one of the companies leading the charge on enabling what we call the future of work. The thing that is most impressive to me about Coda, when I think about it is how you all are reimagining how the world of documents and applications can come together and goes way beyond what people have access to in terms of productivity tools and collaboration tools that they are used to today.

So that’s been very exciting for us. And the future of work is an area that we’ve been investing for many years now, but we believe that the pace of innovation and more importantly, the demand from customers for adoption of great communication, collaboration tools has dramatically accelerated since the onset of Covid.

We are also going to have with us Elisa La Cava, one of my colleagues at Madrona and she’s been part of the team that has helped us formulate a lot of our thinking on the future of work. So I thought, Shishir, that we’d get started off with your personal journey, talking with you, talking a little bit about your personal journey, leading up to both founding and stuff in Coda, you came out of MIT with your undergrad and right off the bat, you founded a company called Centrata, which was built around that.  How do you describe the entrepreneurial bug that bit you at that early stage in your sort of career as you are just coming out of school? And what do you think it takes for a  person today to cross over into entrepreneurship, challenge themselves and decide to create something that is going to be phenomenally better for the world at large?

Shishir Mehrotra: [00:03:26] I think it’s a great question. Maybe as a piece of background, this is my second time founding a company , I’ve been involved with startups for a long time, but, directly second time founding a company.

And, I think people are addicted to starting companies. I’m sure. I’m sure you invest in some people where every idea that I think of is formulated as a startup. I’m not one of those people I’m quite comfortable with large environment, small environments, like you I’ve had a chance to work in both of those contexts.

And so it gives me a little bit of appreciation for entrepreneurs and what makes that unique. And I think. When I was at Google before, a very common interaction with somebody would come to me and say, I want to leave to go start a company. And each of us, I’m sure you had this in your past roles as well.

We just developed our viewpoint on how to have these conversations. And I settled on two questions and generally these questions were asked a little bit as almost as a deterrent in some ways, the two questions were. If somebody says they want to start a company, I would ask number one.

Do you have an idea you can’t imagine not working on and number two, do you have a person you can’t imagine not working with? And inevitably people would answer yes. To one of the questions and no to the other. And then we’d have a conversation about, why magic hits when these two things come together.

And they talk about we’ll have this great idea, but I haven’t been able to convince anybody else to do it, or they would talk about how they have a perfect partner, but they haven’t settled on an idea yet. And, I found that the, for entrepreneurship to hit that sort of magic has to hit at that right moment.

So those are the two questions that I’ve developed over time as a kind of litmus test of, should you start a company? And actually in my own journey with Coda, I wasn’t actually trying to start a company. I was fairly sure I would have continued on at Google, running large teams. And for me, these two questions, all of a sudden they answered yes. And I just, couldn’t not start a company. And I often describe entrepreneurship, not as a gift, but as a curse. And at that point, you just can’t think about anything else and everything else seems small. Everything else seems not worth doing. That’s when you, I think start a company and jump all the way in.

Soma: [00:05:30] It’s pretty impressive to see the journey you’ve gone through Shishir, but let me hand it over to Elisa to ask you the next set of questions.

Elisa La Cava: [00:05:38] So after the Centrata experience, I know you did a tour of duty, about six years at Microsoft and another six at Google before founding Coda.

And what I’m curious is what was different for you? If anything, this time around when you started Coda versus when you started Centrata during the height of the .com era, what was different for you in terms of the conditions to start a company, but also your entrepreneurial mindset and drive and determination to build something new.

Shishir Mehrotra: [00:06:13] very interesting question. At 15 years apart in that cycle, my situation  the starting of the companies could not be more different. Cenrata I was coming out of school, we were converting my graduate work into a company. One fun story was the way the financing happened.

The company was in Toronto  and was funded by, a guy named Vinod Khosla. We had been trying to raise money for nine months, flying back and forth from Boston to California. And no real success in doing it. And I get this email from Vinod and, it says, I read your business plan.

I’d like to, I’d like to fund your business. Vinod, is pretty direct, so his emails are direct and short, they’re full of misspellings. It’s like half the words or half the words are misspelled. And so I get this email and, this is, it’s 2000, this is a timeframe when there was no Wikipedia, there was no LinkedIn.

So I, this is a little embarrassing to say, but I had no idea who Vinod was. And so I write one of my, angel. So I had this angel, who had promised to put a half a million bucks into the company, but hadn’t actually done it yet. And so I write him and I say, do you think this email is real?

Is this like spam? Is this what, it’s full of misspellings. I’m not sure who it is. And so the angel says to me,

Elisa La Cava: [00:07:18] Right and you and you hadn’t, you hadn’t spoken yet. He had just looked at your business plan without even talking to you.

Shishir Mehrotra: [00:07:23] And it’s like, what are the chances? That somebody wants to fund the business.

So the  angel says to me  why don’t you walk down the street to the bookstore, the college bookstore and go to the magazine rack, see the person whose face is on all the magazines. That’s Vinod Khosla because that’s when he was at the top of his game. The funny part starts when I come back to my dorm room and my CFO in quotes was my, housemate.

I’m walking back into the house and I’m excited about this and he stops me and I said, I have something important to share. And he says, Oh yeah, I was actually gonna ask $500,000 just showed up in the bank account. Like what, where did that come from? This angel had heard this and wired the money in.

The first experience of starting Centrata was, we didn’t know what we were doing. I didn’t know who the financers were. You’re just figuring everything out from, from scratch. And I think there’s a level of blind determination. You’re not bogged down by the reality of the world. Coda, I got started, we raised our first round of financing  in a weekend. I had a much better sense of what we were doing. I knew what terms to ask for. and so it’s like dramatically different that way.

But what I’d say about that was similar was at these two incredibly different moments of my life. One where,  I didn’t really know what we were doing. And the other one where, I had a better sense of how this whole process works. The similarity, I think was that same level of ridiculous conviction on an idea that honestly, everybody else around us thought was weird and I wasn’t quite sure what to make of it. And I think that similarity and that determination, you can spot it, the eyes of every entrepreneur at that moment. They just don’t understand why you don’t get it.

It’s just so obvious. Like it says, obviously going to work and that’s what you have to have because you’re going to get every type of  you’re going to get every type of no, why don’t you go get a real job, getting all different versions of that.

And  when it works, it’s a particularly exciting, but that’s some similarities and some dramatic differences.

Elisa La Cava: [00:09:12] I love that though. You’re talking about that determination and it sounds like with Coda, you kept thinking about it and thinking about it. And then at one point you just thought, Oh, like I have to do this.

There’s no alternative.

Shishir Mehrotra: [00:09:25] Coda is one of those products where first off, when you can picture it just feels that’s obviously how it should be.

And that, that seems like really clear. Why would anybody bother building it any other way? The other thing that happens with Coda is it’s like this meta product where almost every idea that was pitched to me, I could picture that product, every idea I heard was, Oh yeah, I should just build that on this platform.

Like that. that’s exactly what we should go do. And so it became this sort of, every idea felt small compared to this thing. Now, the flip side, I call my parents, my wife’s on, they all look at me and say, what’s wrong with Microsoft Office? Like, why do you want to go do that? That seems silly.

So you had to, square those two pieces away. And of course, for the, when you cross that entrepreneurship hill and you’re in that convicted, you can’t imagine not working on this thing. You can’t imagine it not working now. Everybody else’s lack of faith actually, emboldens you and you get even more determined.

And even when you get even more certain that, if I don’t do this, then nobody will do it and then I’ll feel really bad, and then, I think Jeff Bezos was talking a lot about regret minimization framework. Yeah. Then you’re going to really feel like, man, if I had just done that,  then the world would have this new product , and it would have worked out in this different way.

And so I think that the, that determination is very similar.

Soma: [00:10:42] That’s a fantastic story, Shishir. You already started talking a little bit about Coda, but I thought, let me pause for a second and hear from you. How would you describe,  what Coda is  all about?

Shishir Mehrotra: [00:10:53] Yeah. I think our users would describe Coda as an all-in-one interactive document and what they would probably say is it blends the best parts of documents, spreadsheets, presentations, and applications together into one new surface.

Our promise is that it allows anyone to make a doc as powerful as an app. And that’s a, that’s the bold promise and something that we’re fairly committed to the, I think that if you step back for a moment, Coda was formed with two primary observations of the world. The first observation is that the world runs on docs, not apps. And that if you were to look yeah, that any team, business, family, individual, and say, what do you use to run yourself, your team, your business, so on. They’ll probably rattle off a set of applications they use, and a lot of packaged applications and I have the CRM system and this inventory system and this task system, and, so on.

But then if you watch them all day long and just stand behind their desk and see what they’re working on, you’ll see them in documents, spreadsheets, presentations, and communication tools all day long. And this observation was pretty stark when I worked at Microsoft on the office team, so that was pretty stark then, but it was particularly vivid for me at Google.

I got to Google 2008, right when Google docs came out and it was transforming the way we ran our businesses. And so YouTube, 2008, we basically ran everything on Google Docs, Google Sheets, and Google Sites. And, there was some kind of extreme examples of this, I have to pick one crazy example. If you hit flag on a YouTube video back in that 2008, 2009 period, it would create a row in a spreadsheet on an ops person’s desk. And that was how, that’s how pervasive this was. And for a lot of people that sounded crazy. But for me, it was part of this observation, that docs, not apps run the world and I think people saw that as a weakness, I saw that as a strength, it gave us complete agility. It meant that when we wanted to change how we did planning, we could do it instantly.

And as the world of how we thought about flagging and content moderation, so on evolved we had total control over it. So this kind of observation, number one, docs not apps run the world. The second observation is that those surfaces document, spreadsheets, presentations haven’t fundamentally changed in over 40 years.

And there’s a running joke in the company that if Austin Powers popped out of his freezing chamber, he wouldn’t know what clothes to wear. He wouldn’t know what music to listen to, but he would know how to work a document, a spreadsheet and presentation because none of them have fundamentally changed since the 1970s.

And this is, if you go back to WordStar Harvard graphics and VisiCalc, and you just take those metaphors. And you just watch really four decades of copy forward and we just took it and we just changed the environment. And we went from green screens to Dos, to Windows, to MacOS, to the web, to the mobile phone, but all the same core metaphors are the same.

 

The operating systems are unrecognizable from that period to now things like web browsers didn’t exist. Databases that we thought were very fundamental are completely different. The search engines didn’t exist. And yet this thing that we stare at, we, the first thing we opened in the morning, the first thing we put our new ideas and the thing that runs our board meetings, the thing that runs our town runs our compensation.

That thing hasn’t changed in 40 years, that seemed crazy to us. So when we started, we took these two observations. So the world runs on docs on apps. Those haven’t changed in 40 years. Why don’t we start from scratch? And so we built a new doc and that’s what became Coda.

Soma: [00:14:21] That’s awesome, Shishir. I want you to go back to the early days of Coda. You started the company, you brought on the first set of people, and the founding team for Coda.

And you started working on what I call the first MVP, the first version that he wanted to put out and see what customers thought about it kind of thing. When you did that, what are the feedback like? Did it catch on like wildfire? I would love to hear the journey that you went through to a place where you found initial product market fit.

Shishir Mehrotra: [00:14:51] Yeah, I think the, I always love this question for entrepreneurs. Cause I feel like it’s a debunking of real products appear. And it just seems Oh, that must have caught right away. And then you go look underneath and you see what the iteration went into it. One thing we decided when we started the company was we decided to start it in stealth, which is not a typical decision.

And there was a bunch of different reasons for it, but the main one was, I didn’t want the team to be distracted. And I felt like we had a number of prominent people in the company and. And backing the company and so on. And I thought if we spend time talking, we wouldn’t really be talking about the product.

So we basically told the company we’re not going to ship, or we’re not going to talk about the company until we can shift the product and let the product lead the story. Which I had no idea how long that would take. So we got started, at the same time, my philosophy was don’t build in a vacuum.

So as soon as possible, if you want to get people onto the product, so our first milestone was just getting to our own usability. You can sometimes we call that a dog food milestone. We had a particular use case we had in mind for that. The company was only six or seven people at the time and we basically converted our planning and task tracking system into Coda.

And then, so we’re feeling pretty good about that. We’re about four or five months in, and we say, okay, let’s, let’s find someone else. Let’s find someone other than us to do it. And so a friend of mine, a guy named Nolan Lavinsky was starting a company and there were also about six people.

And so I called them up and said, Hey, this is working well for us. Would you try it and give us some feedback? And, gladly agreed and said, I’d be happy to do it. So we had a little dashboard that tracked our daily active users and it only went from zero to six because that’s how many people they had in the company.

And then one day this thing hit zero and we wait a day and it’s still at zero the next day. And I call up Nome and I say, I said, what happened? Did you guys go on vacation? Are you having an offsite or for, he says, no, actually I’ve been meaning to call you and tell you.

We, we had a team discussion and, I have some news for you. The team all told me that if I make them keep using Coda, they’re all gonna quit. And so we had to pause and I, my first reaction was okay, I don’t know how you’re going to sugarcoat this. That sounds pretty extreme.

And, and he said, but I have some good news. Okay, what’s the good news. And he said, they’re all totally aligned on the mission for where you’re headed. They just have lots and lots of feedback on things they think you should be fixing. And we’ve built a list of 30 things that you should go work on.

And if you get these things done, we’d be happy to try again. And the interesting thing about this journey and this product, and by the way, that process repeats itself, many times we, Started the company in 2014 and we actually didn’t launch Coda 1.0 until February of 2019. About four and a half years after.

And so it was a much harder product to build than I expected, early on. And I think part of the reason, and we would hear that pattern of feedback over and over again. I totally believe in the mission. I totally understand where you’re headed. I love the promise. Can you fix these 30 things?

And gradually that 30 would go to 25 and go to 20 and so on and you get there, but everybody’s listed 30 was a little bit different. So it wasn’t just like, you could just keep working the same list and I think one of the things about building a product like this, I was talking to a friend of mine who’s deep into the video game space and builds lots of a video game.

And he says, there’s two types of video games you make, there’s some video games where you make a one level and you put it out and you don’t even bother making level two. You see how a level one goes. And once people start beating that, then you make level two. And then he was telling me this other game they made, that was this big Star Wars game.

And they worked on it for, five years. And no one of the components actually work together at all until three months before launch. And the whole thing made no sense until it all worked together. And he said, there’s a sort of two different types of products he sometimes built. And I didn’t know it at the time, but that’s what Coda ended up being.

And I think the reason for that is fairly simple Coda is a product with very high ambitions and aspirations. It’s an empowerment product. but it’s also displacing a set of tools that as I said, had been around for 40 or 50 years. And so the expectations are incredibly high. And so it became a part of, I sometimes describe Coda, like a piece of music when, when one note is off, the whole thing just sounds wrong.

And so you’re constantly finding all those different areas. So anyway, the process of building Coda was very deep interaction with customers and lots of love your vision. Fix these 30 things. I think it worked.

Soma: [00:18:59] Got it. That’s fantastic. Because like you said, most people looking at it from the outside think Hey, you go build something and then boom, it takes off kind of thing.

And maybe occasionally it does, but for a lot of people who now put something out, listen to customers. Iterate and then go through the process in a tight loop fashion, and sooner or later you get to the right place kind of thing. So that’s great to hear your sort of story during the early days of Coda.

Shishir Mehrotra: [00:19:22] Very few people know this, but YouTube started as a dating site and YouTube was more of an overnight success than most, but even there, the migration was, was meaningful.

 

Elisa La Cava: [00:19:34] I loved hearing, about how, the feedback from your early customers, giving you 30 different list of 30 things.

And then today, what you called a meta site, you can create to do lists, brainstorm ideas, manage projects, publish websites, the capabilities are incredibly powerful, and growing and endless.

But on the fun side of things. What have you seen? What’s a neat and perhaps unusual or overlooked use case you’ve seen a maker or user use Coda for so far?

Shishir Mehrotra: [00:20:06] One of the fun parts about working on platforms is that you’re constantly surprised at what people do and YouTube was similar.

I’d walked into YouTube some days and you’d look at it and you’d say, I can’t believe people did that sometimes in a good way, sometimes in a not very good way. And I think Coda has a similar element to that. There’s an incredibly long tail of what people do. Pick one fun example. There’s a venture firm called Madrona that’s apparently making investment decisions in Coda, which I think is actually a really fun one and maybe joking aside is, I think, is a really good representation of how to think about very fundamental processes a little bit differently. And I think that one is a great example of removing bias and a really hard process, and avoiding group think and really soliciting and getting the most out of a partnership, which I think is a really hard thing to do.

Let’s see. Other interesting use cases. One that sort of outside of the traditional teams using Coda to run themselves, Sal Khan’s building one right now called schoolhouse.world, which I think is, I think it was really cool. And this one was interesting, Sal is actually an old college buddy of mine.

He and I both went to school together at MIT and known each other for years, both ended up marrying our college sweethearts and actually lived just a couple of miles from each other. We launched a feature in Coda called publishing where you can publish a code of doc as a website.

And, when we launched that, he emailed me and said, Hey, could I use this to build this thing I’ve been meaning to build? And apparently his basic idea is that Khan Academy is his primary creation, which is, most people know of as a great educational site. He wrote a book called One World Schoolhouse.

And, at that time, he bought a domain called schoolhouse.world, which is, the, his sort of working view is that the boundaries of what we consider school to be will shift from being physical, to being encompassing of the whole world. And so the way the site works is pretty simple. It’s a doc where anybody can sign up as either as a tutor or as a student, and describe what you want to get to and you get match made to different group tutoring sessions.

And, it’s really interesting. It’s being run by a group of volunteers. And I think one of the, one of the really interesting things about it is Sal called me and asked about this and it was up and running in a weekend, because it was so easy to make. So I think that is a really interesting one, I think the breadth of use cases is really fun. It’s really inspiring. It’s really challenging. Building a product that can actually handle all those use cases is not easy. And you can imagine everybody’s list of 30 different things to change is very different across that spectrum, but a lot of fun.

 

Soma: [00:22:33] Awesome, Shishir. Particularly, now I do want to make a plug into Seattle here. I know that earlier on you decided that Hey, as you think about creating a distributed team, that one of the locations you are going to build a team around is in the greater Seattle area in Bellevue.

And given the amount of technical talent, particularly, but in general, the technology ecosystem talent that’s available here, I’m glad that you made that decision earlier on and hope you are happy with the decision so far.

Shishir Mehrotra: [00:23:00] Oh, the first, I think the second person we hired, it was Nigel Ellis who was running engineering for SQL Server at the time, on my old teams.

And, we had this sort of debate about it and said, are we, I know to show you talk about distributed teams being better and so on, but are we really ready to do this and discussion with our board. And honestly, most people’s reaction was that’s a little bit nuts. Like you’re six people. Like, why would you want to be split in multiple offices now?

And you all live near each other. That seems crazy. And one of the arguments I made, I think that distributed teams work better. And I also think that teams that start distributed have a much easier time staying distributed.

Actually one of my pet peeves is when people use the term remote. Remote I view as a pejorative term, a remote implies a headquarters. And I think if you think that way, if you think headquarters and remote, you’ll build one culture. If you think distributed, you have built a very different culture.

And so we started with that and it was an easy case to make it was, Nigel was great and he’s like a great person to hire. And by the way, there’s like thousands of other great engineers in Seattle that are clearly qualified to work on Coda and will be very relevant to us. Why would you box them out of being part of our journey?

And that turned out great. And we’ve got a great, thriving team in Bellevue and now all over the country and all over the world. But I think it was very helpful and setting the right scaffolding for building a distributed team.

Soma: [00:24:19] That’s great. Hey, Shishir in building on the culture that you talked about a lot so far, there is one other thing that I’ve heard about Coda, both from you, as well as  from other people in the ecosystem that I want to start off and ask you about. In the six years that you’ve been around you.

You have a tremendous track record of what I call close rates of candidates. Particularly Hey, when you make an offer to a candidate, I hope many of them, they can actually end up joining. You have a very high number related to pretty much any other startup that I’ve encountered in the last many years.

Tell me what makes you and Coda and the team so special that you have such a high rate, I guess I have heard through the grape vine, it might be related to how you take care of the employees. It could be a charming personality. It could be a vision, maybe your equity policy, maybe all of the above.

So I’d love to hear, what is the reason for the success. And I think this is something that every entrepreneur should pay attention to.

Shishir Mehrotra: [00:25:15] I’m going to give you a right brain and left brain answer to this question. And thanks for the positive thoughts. I think we do well.

I’m sure we can do better. When I was debating, leaving Google to start Coda, as mentioning I was going through my two questions. So I have an idea I can’t imagine not working on and a person I can’t imagine not working with. And, I’m gradually getting conviction on both things and the idea I just couldn’t stop thinking about.

And Alex and I were very clearly like the right pair to go work on this idea. But I was still pretty resistant to starting a company. And a lot of it was because I had a friend of mine who had started a company and I was talking to him and I said, Hey Alex, so I’ve been talking about this idea.

I can’t stop thinking about it. I think I should. I think I should start this company. And this friend of mine said, she said, you can’t do that. And I said, why not? And, and he said, there’s a thousand reasons, but she should, let me give you just one reason. He said, what’s your, close rate for hiring people into YouTube.

And I just come out of a meeting with my HR lead and, and so I had the stats like right on my tip of my tongue. It was about 92%. Like it was. And you to remember at this time, YouTube was like a great place to work. Is startup inside big company, like big mission? well known product, lots of scale, but lots of opportunity for innovation.

We were pretty good at recruiting people and it was very rare that we gave offers and people didn’t accept. And so I’m talking to this friend of mine, he says, okay, that’s interesting, 92%. We sit in the forties. And we said, I spent all day long trying to find the people that are too tall for Google and too fat for Facebook.

and that was his analogy that I’m quoting him, not me and it struck me, he said, you’re just going to find yourself trying to recruit people, and you’re not going to be able to recruit the best, and you’re going to drive yourself nuts.

And for me, that sounded terrible. Like I really wanted to work on this problem. And I thought I had someone great to work with, one of the things you get used to working in a place like Google, Microsoft, and so on is you work with great people and, people that are really talented.

And the idea that I’m going to go try to find second servings from each of these companies, that sounded really terrible. And so I went and had this conversation with reading him with Reid Hoffman, and Hamilton, which ended up being the primary financier is of Coda.

And I talked to both of them about it and they both told me, look, that’s not, what’s going to happen to you and we’re going to help you understand why. And I think those conversations were really critical and me deciding to start Coda. And, so right brain, left brain. The right brain side of this is people join missions.

And the, if you have a big, bold mission and you can get people excited about it, people will find that same level of enthusiasm that you feel in going after this mission. And if you look at people joining Coda, many of them, when they describe why they’re joining and so on, they’ll describe a lot of left brain things.

I’ll talk about in a moment. But they’ll all start with I just thought it was a chance to build a thing that really mattered. And that’s a thing that when you get those opportunities, you get excited about and you really feel motivated about, and that can drive a lot. And I think it’s one of the things I ended up coaching entrepreneurs on a lot is how to tell your story in a way that lets people go on that journey with you.

And there’s probably a version of it that caused you as an entrepreneur to feel that convicted about it. But sometimes telling that and helping people feel part of it is really important. And I think we do a pretty good job with that. I think Coda has a big mission and has it has a good chance of impact lots of the world and lots of different aspects of the world.

And yeah, somebody, if I just talk about, for example, we talked about with distributed teams and changing how you think about bias and that’s the type of thing that would not be obvious. I just told you, Hey, we’re going to go rebuild office because we think it hasn’t been rebuilt in 40 years you probably would be excited, but maybe not that excited, but if I told you, I think the world is full of cases where whole groups of people are ignored  or don’t realize their voice, their potential.

So you might be inspired by it in a totally different way. and so I think getting good at telling that story is really important. And I think, I think my, our recruiting team, each of our leaders are all very good at this and they will tell some version of this in a good way.

And it’s infectious. Then each person that turns around and tells it to the next person and so on. So I think that’s really important. I think people don’t spend enough time on this. Kenny Mendez who runs, people in operations for us is always one of the best storytellers I know. And, and has been a really good at not only doing this himself, but building a team of people that can do this well, that’s the right brain side, the left brain side, talking to him and Reid about this.

They said, look, you’re going to tell a great story. you have a pretty good network to build off of, and people want to join places where they can join other great people. And I think that’s really important, but there’s a practical side of joining a startup. And one of the things that I think companies don’t do.

And so this will get to the mechanical part of this is they’re unrealistic about the decision facing an employee and these employees, anybody you want to hire has many offers and that’s good. Like liquidity is good. The job market is generally healthy. You don’t generally want the person that is not able to get other offers.

In fact, we often offer genuinely to help people with it.  I’ll help people connect with other companies. I’ll help them. I’ll reference, check for them if they, if that’s helpful and someone, because I feel like when you join a place like Coda, I don’t want you to joining because we were your last resort.

I want you to joining because you understood your options and you decided this was the best one. And if it’s not that’s okay. And I think being clear on that is helpful, but at that point, they’re going to have a decision to make, and that decision is likely not theirs alone.

Like they may have a spouse or partner. They may have a parent or family members that are coaching them, they may have an advisor or so on, and those people are gonna start left brain. And I think that from that perspective, the main thing that we end up talking about is we treat employees, making a decision to join a company as being investors.

And that philosophy is the way I think about it is I always tell people, look, when you’re joining a company you’re investing and you’re investing with your time, not with your money, but, boy, time is a way more precious resource the money. So you need to think about it in that way.

And we’ll do a lot of work too try to make this process clear to people. And, I’ll just to give a few of them first off, we’re very generous with equity. We make it such that, and that starts by, we didn’t sell that much to investors so you can get more to employees. My view is most companies end up being held too much by investors and founders and not enough by employees and it’s not a good thing.

So being generous with equity is really important. How you present the offers. I can’t tell you how many people present offers and here’s your number of shares and they don’t tell you basic information. What’s the total float of the company? What was the last round? What were the terms?

What are the gotchas in the around? Are there any special provisions? Like all these things just don’t give enough information for the person to think like an investor. And so we built an offer model that helps people run through this process. One of the things that model does is it gives an unexpected value calculator.

Which is another thing that, most employers I’ll have many employees look at equity and they’ll think of it is worth either zero or worth of a jillion dollars. The employees have no way to gauge anything in between. But smart investors know that’s not how you should think about equity.

And there’s four new investor. In a company, there’s some percentage chance of the mega outcome. And there’s some percentage chance of the mediocre outcome. And there’s some percentage chance of the zero. And yeah. And you define your scenarios and we don’t fill in anybody’s numbers and you should make your own decisions, but we just help people through that decision, give you enough information and to be able to have this conversation with your partner, with your spouse, with your family members and so on.

And, and realize that you may be excited because you want to change the world and you want to change how things operate and so on, but they want to make sure that you’re making an economically sound decision for your, for your family as well. There’s a number of other things we do there. We do a thing called founders preferred stock, which is a special tier of stock that converts a little bit closer to a preferred stock.

The ways we do the actual mechanics of the offer is and options and so on is a little bit different, but the basic philosophy is how people have that same founder level of conviction on your mission, and then treat them like investors as they make a decision to invest their time into your company.

And I thought those were like those two things together lead to building a company full of great people.

Soma: [00:33:11] We’ve had these conversations over the last couple of years, but every time sort of hearing from you about your journey about Coda journey, it’s always been fun.

It’s great. So thank you. Thank you for sharing your sort of thoughts and perspectives and your journey with us.

 

Shishir Mehrotra: [00:33:25] All right. Thank you. This was a lot of fun, lots of great questions and a great exploration. Thank you.

Erika: [00:33:32] Thanks for joining us for Founded and Funded. That was a great conversation with Shishir and there is more to come. We have another podcast coming later this week. That really goes a little bit more in depth into the future of work with Shishir.

Erika: [00:33:48]

Please stay tuned for that podcast coming up later this week. And send us any feedback that you have about the podcast. You can send it directly to me. It’s erika(Replace this parenthesis with the @ sign)madrona.com and that’s E R I K A.

At madrona.com. Thanks and we hope you have a great week

 

POSTED IN: Madrona News

Founded and Funded – AI, NLP and Technology in the Physician’s Office with Saykara

(Dr. Graham Hughes and Harjinder Sandhu of Saykara)

On the newest Founded and Funded podcast, join Madrona managing director, Tim Porter, as he sits down with Founder, Harjinder Sandhu, and President, Dr. Graham Hughes of Saykara to discuss the future of AI in the healthcare provider’s domain. Saykara is an AI, Natural Language Processing and speech recognition-based iOS application for physicians to help them significantly decrease the amount of time they need to spend charting – entering information into the electronic medical record.  Saykara listens and assists the physician, much like a human scribe might do,  interpreting and transforming the doctor- patient conversations into the salient content required for notes, orders, referrals, and scheduling.

But building a business around natural language processing and speech recognition, as you’ll hear, was no easy task. Harjinder and Graham reflect on how these two technologies have evolved – and how combining them with AI has led to an application that is changing physicians’ lives across the country.  The two also talk about the challenges and thrills of building a startup that is doing something entirely new.

When Madrona first invested in Saykara in 2016 we were excited about the technology trends around voice, machine learning and natural language processing and it’s rewarding to see this come to fruition and be changing physician’s lives for the better.

Listen here or on the podcast platform of your choice!

Transcript

Tim

Hi, Harjinder. Hi Graham. Great to be here with you today in this fully remote virtual world. This is my first podcast recording where we’re not all in one little studio, but nice to see you both today.

Saykara is really the first truly intelligent AI assistant that automates physician charting. So, we’ll get more into that. Quick background on Harjinder and Graham, we’re going to talk a little bit today about Saykara, a little bit about startups and the challenge of founding and scaling startups successfully, and a little bit about things going on in healthcare IT broadly of which Saykara is in a really interesting part in the middle of that. Harjinder is the co-founder and CEO of the company. He started his career back as a professor of computer science at York University, and then co-founded a company called Med Remote, which was really one of the first automated medical speech transcription companies that was then acquired by Nuance and helped build what’s become a powerhouse business for Nuance around healthcare speech services. This is his second startup since Med Remote. He co-founded a company called Twistle also in healthcare IT, so he’s a veteran of healthcare and ML-related startups. So, lots of great insights there. And Graham joined as president of Saykara last year and comes with an interesting set of backgrounds as well. Most recently, as CEO of Sutherland Healthcare Solutions and before that, his experience ranged from being a doctor, he’s an MD himself, as well as building healthcare software systems like EMRs, working at GE healthcare and also working on machine learning applied to healthcare at SAS. And so, a great wealth of experience here that’s coming to bear to build Saykara.

 

Let’s jump in. Harjinder, as I mentioned, you’ve been working at the forefront of speech rec and ML in healthcare for over 20 years. Can you just give us a brief history, a primer, on how those technologies developed and where you see things today?

 

Harjinder

Healthcare has been one of the key drivers in the adoption of speech recognition. While in other industries, voice and speech have been interesting modalities to use and it’s alongside other things in healthcare, voice has always been one of the primary modalities that providers have used for documentation. Whenever a physician, a provider sees a patient, they’re required to document that encounter. They need to do so both for legal and billing and clinical purposes. If you’re a typical physician and you see 20 to 25 patients a day, every encounter that you do, with each of those patients, requires a page or two of documentation. If you add all of that up in a typical day, that’s a lot of documentation that a physician has to do.

 

Back in the day before the internet, physicians would dictate their notes and you’d have transcriptionists listening to those dictations and typing them up. Back in around 2000 or so,  myself and a colleague and a few others started looking at how to apply speech recognition to this natural use of voice, which is how do we take this dictation and rather than have people sitting there typing it up, how do we apply speech recognition to this and make this process much more cost effective. Back in those days, transcription used to be about a 10 to 20-billion-dollar industry in this country. So that’s really where speech recognition found a home. In 2000, speech recognition was still very much in its early days, it wasn’t really ready for this space. It took us about three years to get speech recognition to the point where it was actually useful in this space and useful actually meant not that it was replacing transcriptionists, but that it was augmenting the transcriptionists.

 

So, if you think about the cost of transcription, the spend in the millions of dollars for a typical health system, our goal was to use speech recognition to augment the transcriptionist in a way that reduced that transcription costs. We were able to do so and do so very successfully, and speech recognition continued to improve over the years. The use of speech recognition as a tool directly for physicians started around the same time, but really was just for early adopters that would use it for documenting care, but it was really the wealth of data that we were able to capture through this speech recognition process, where we were augmenting transcriptions that gave rise to the real success of speech recognition in healthcare.

 

NLP, natural language processing, was always a secondary focus and that really came about because again, in healthcare, if you think about the use case of physician documentation — 20 years ago, almost all medical documentation was in the form of these narrative notes that were being created through the dictation process or else being typed up by physicians. So, the idea was, and many people were thinking about this back then, is that as long as medical documentation is a narrative format, it’s not really amenable to any kind of automated processes. You can’t do simple analytics on it. You can’t do any kind of drug-drug interaction checking, if all you have is a bunch of narrative that talks about these medications and allergies and all that kind of stuff. So, we had started working on ways to interpret what the system was hearing through this dictation process and that NLP work continues till this day. It actually turned out that NLP was a much harder challenge when it came to interpreting natural language dictations by physicians than speech recognition. Speech recognition has gotten to the point of course today where it’s a commodity. Lots of companies do speech recognition very, very well, but NLP continues to be a challenge.

 

Tim

That’s great. When we originally invested in Saykara a few years ago, we loved the technology trends around voice, around machine learning and around NLP, and as we dug into the use case and problem you’re solving here for physicians, we just thought it was one of the great applications of these set of technologies to solve a really burning pain point for customers. I mean, you’ve both seen both large companies and small companies succeed and fail, maybe fail more often than not, trying to kind of crack the nut around these technologies in healthcare. What are some of the places you’ve seen, quickly, both succeed and fail and kind of what are those characteristics that gets to the kind of why now for Saykara?

 

Harjinder

I would say in terms of success, speech recognition by and large has been a tremendous success. It’s taken many years, but it’s been successful. The primary source of failure I think has been that NLP never kept pace with the quality of speech recognition. So, you think about, again, what everybody wanted to do was put structured data within the medical record and a lot of focus went into how do we take what physicians are saying through their speech recognition process and break it apart into the discrete data components. So, you want to be able to put what medications a patient’s on, what problems they’re being diagnosed with, what procedures they’re undergoing and then all the details around all of those directly into discrete fields in the EHR. And that, by and large, in years past failed. And I think the tail end of your question, in terms of why now for Saykara, largely, because we’re looking at right now is the confluence of speech recognition and NLP capabilities that are now able to do what we weren’t able to do 10 years ago. So, it’s not a bold prediction anymore to say that we are now on the cusp of having automated systems that can both transcribe and interpret what physicians are saying and put that data directly into the medical record.

 

Tim (

Graham, do you want to add anything there?

 

Graham

What I would say is that electronic health record systems and other vendors who’ve tried to look at this space have often made it too complicated and too much of a burden on the physician, or on the backend, it’s not granular enough to really be usable and meaningful for the physician. So, the confluence of technologies and the pressures that doctors are under, I think just makes this the right time.

 

Tim

Yeah, that’s great. So some big . . . the confluence of some big technology trends that have been building for years now, and some big healthcare trends, and I want to come back and talk more about some of those healthcare specific trends, but maybe describe exactly what Saykara is doing. Right? We sort of shorthand AI virtual scribe. What is that and what makes Saykara different and talk about what really are we solving for physicians in the healthcare system.

 

Harjinder

Ultimately physicians just want to talk to their patients, and they want to provide care. They don’t want the tedium of documentation. So, what Saykara focuses on is listening in on doctor-patient conversations and interpreting those conversations and generating out of that conversation a note that otherwise a physician would have to create. Ultimately, the holy grail in this space is that a system such as ours can listen in on that doctor-patient encounter and simply interpret and create that note. I’ve already mentioned that NLP has come a long way, but it remains a very difficult challenge to figure out how to interpret conversations. It’s hard enough to just interpret a dictation, let alone a two-way conversation between a doctor and a patient and then sometimes of course you have more than just two parties in the room. And so, I think the differentiator here for Saykara as a company is our ability to do this successfully in an augmented fashion. What I mean by that is, that having a system that can do this completely autonomously without any human assistance remains our goal, our vision, and something that we’re working towards and making progress towards, but in the meantime, we use a augmented AI solution and have humans that are helping the system to learn. What differentiates us from, I think, virtually everybody else in this space is our ability to actually make that AI system continuously learn from the human in that loop. I would say there’s a lot of companies in this space that are purely human only solutions and they may talk about how they’re trying to incorporate AI into their solutions, but they’re by and large just human transcription companies. And what we’ve been able to do is create a platform that incorporates a combination of AI and human, and in many tasks now, the AI is actually able to do this completely autonomously on specific kinds of tasks within that encounter. That capability is getting better and better over time.

 

Tim

We have this broad investment theme around intelligent applications, and I think a core piece to successful intelligent applications needs to be this continuous learning loop. We were impressed from the beginning and your vision for how to implement that and we think that fully automating this process with this learning system, yet being able to fully delight doctors right away, with the product that we have today, but yet it’s going to continue to get more efficient and over time, is really insightful and exciting part about Saykara and what differentiates you. We also always think about with an investment, you know, who are all the constituents that matter here. And so, clearly, helping physicians is the number one driver, and it helps them with their documentation burden, etc., but health systems like this too, because physician burnout is a key issue for them. They’re not getting the data into the EHR that they originally intended, you know, to be there. I think patients, you know, we’ve learned, like this also kind of makes it more transparent, “What is my physician doing when I’m trying to tell her or him what’s wrong and they’re typing away on the screen and not paying attention to me?” So, really this kind of value prop that’s for the physician, for the system and for the patient I think is really important and exciting about this space. But Graham, not to put blame on you, but you built some of these EHR systems, how do we get to this point, right, where the EHR was supposed to capture all this information, and it’s not fully succeeding at that and yet, physicians like hate it, and so it’s sort of on both ends, you know, causing friction and a problem, you know, in the world right now? How do we sort of get to this point and maybe talk a little bit about how you got excited about Saykara’s solution for it and have come on board here in the last year?

 

Graham

Yeah. That’s true. I kind of joke to Harjinder that I’m here to pay my penance for building these things. What the electronic health record companies tried to do, to their credit, was to try and make this as comprehensive as possible so that you could cover all angles. You know, they ended up, unfortunately though, by trying to accommodate all of those things, is that they created a monster, which meant that doctors ended up getting dragged into using the computer screen and pulled away from the patient interaction. You talked about burnout. That’s really a feeling that about 50% of the doctors in this country have, depending on specialty, where, they’re feeling disempowered, they’ve lost control, they don’t really have the passion for the work anymore and they’re doing the best that they can under terrible situation, where they’re spending sometimes up to three hours at night, trying to catch up on the documentation. With that said, my background, having been involved in physician workflow all my life — as a physician, then working in this space — and then having spent so much time working on natural language processing and analytics and advanced AI at SAS, it just felt to me that this was a problem that needs to be solved. And, I had the great fortune of meeting Harjinder. I love to work with people who live in the future. They’re developing assets that we will be using in four or five- or ten-year’s time. This one was incubated well enough that I could see the great potential, but also the reality of how this could work. So, I’m excited about it, Tim, and I get more excited every day and seeing what we’re doing with customers and the promise of the tech.

 

Tim

That’s great. Really a unique set of backgrounds that allowed you to see this problem/opportunity from all sides. Strategically the opportunity made a lot of sense to you and your experience allowed you to see it from various sides. You know, we had a lot of listeners to the podcast who maybe are not in healthcare related, but they maybe are at a big company thinking about going to a smaller company. So, maybe just talk for a minute on a personal level, making that decision, it made sense strategically, but then, it’s going to work every day and look, Saykara has hundreds of physicians on the system; Harjinder had built the company to a really interesting place, so it wasn’t like this was a de novo startup when you joined, but compared to Sutherland, much smaller. Talk about what that transition was like and how you kind of thought that this was the right time for you personally to make that kind of move once you saw that strategically the company and the solution made great sense.

 

Graham

Yeah, no, you’re right, a lot of organizations at the larger level are somewhat risk averse because they’re trying to keep their performance machine, the existing engine running, and innovation, which could potentially disrupt your existing business, is problematic. And you’ve probably seen, Tim, many, many organizations that have struggled with how to incubate new offerings out of large companies. And so, I actually had found that my passion lay with that type of innovation and transformation. And for me, having run large organizations, it just felt that working with a bunch of really smart people, people who I like, who have deep experience in the industry, strong tech, definitely are thinking about the transformation in healthcare that needs to happen is that for me, I wanted to take everything that I’d learned at a large product and services organizations and then just bring it into Saykara and see what we could do. I love the mission, love the challenge, love the people. Let’s do something really meaningful to transform the lives of hopefully hundreds of thousands of doctors.

 

Tim

You used the word passion and as we’ve seen people successfully go from bigger companies to smaller ones, that’s the number one thing. The second one is, kind of, revel in getting your hands dirty and going and doing stuff and not just kind of directing. We’ve seen that as you’ve jumped in with customers and analytics and internal processes, and we’ll get into a little more of that, but back to the offering. One of the fun things about Saykara is we all know doctors. We’ve heard about this burnout issue, but what are we seeing about the receptivity to use this type of technology? Where are we kind of in the cycle from an adoption standpoint?

 

Graham

It’s interesting because you often think of cool new tech and interesting tech, and you think about, you know, hey, this is going to appeal to the PlayStation generation of doctors — people who grew up with technology in their back pocket, they can’t remember life without Google, and they think that maybe they would be the only folks who are really drawn to this. In fact, nothing could be further from the case. I think that there are physicians who started their career with the idea of just focusing on the patient and whether they had gone through the years of dictation and transcription or whatever, they immediately understand the idea that, hey, this thing would get me away from a computer, it allows me to focus. It’s by reducing all this hassle that’s been brought into their lives over the last 10 years, it’s actually like coming home. So, for doctors, it’s like what they got into medicine for. The time’s right, we’re just seeing an incredible amount of demand out there in the industry, not surprising. Whether it’s doctors in large health systems, individual group practices, large multispecialty practices, ambulatory surgery centers, it’s all about just getting the friction out of their day-to-day life. That’s probably no different than many, many other industries. If you can make it easy for someone to get their job done, and you can make it as transparent as possible, people are going to want to do that.

 

Tim

You refer to the product as a virtual scribe, an AI virtual scribe. So, some physicians actually are fortunate enough to have a person that follows them around and that I believe is sort of why it’s called a scribe. One of the things we loved about, and I loved about Saykara, is it really democratizes access to that type of service, right? Where I think scribes today, it’s very high end specialties who can afford that, and Saykara is at a price point and capability where family docs can have access to this, and also, Saykara doesn’t leave for medical school every one or two years, having to retrain someone else. What are your thoughts and sort of that — Saykara, sort of this AI option versus an in-person?

 

Graham

There’s been an absolute explosion over the last few years of medical scribes, but the problem is, that’s a very expensive model is bringing another person into the room for every visit. It’s also, as you said, these are difficult to train up, you try to bring someone on board and make sure they understand your specialty, understand the way you work, understand the types of way that you document and work with patients. Often times, patients don’t feel that comfortable either having another person in the room. So, we found a tremendous amount of receptivity to the idea that there’s this virtual AI assistant on a mobile device, it just sits there on your mobile phone and, and is unintrusive. The doctor says, “Hey, do you mind if I use my AI assistant — this system that’ll help me here to make sure that we capture everything?” And, the patient has always agreed. I don’t think I’ve ever seen anyone or heard of anyone who’s got a problem with it.

 

Tim

Not to mention, there hasn’t been a lot of people standing together in rooms here over the last few months, how has COVID impacted this whole market? The move to telemedicine is well understood and well-documented, but has this new normal, is this a tailwind for Saykara? Is it a challenge? What have you seen?

 

Graham

For us, it’s a tremendous tailwind. Our system works just great for telemedicine visits. All that it has to do is to be able to really hear the physician, if it can hear the patient too, even better. But if you’re on a video call with a patient, it’s very difficult to be on your computer, hunting and pecking and clicking through menus. So, yeah, telemedicine visits when you’re face to face with a patient in that way, the ability to just pick up on the voice. Doctors love that ability to just continue to have a hundred percent attention through telemedicine visits and Kara picks it up just as it would do if the patient was in the room.

 

Tim

So, Graham shared some color on what it’s been like and why he made a move from a bigger company to an earlier stage company. Harjinder I guess, at this point, you’re a serial entrepreneur. This is number three. What made you take this leap again? Why do you keep going after these healthcare problems and starting companies? Maybe share a little of the motivations and starting Saykara beyond the technical kind of strategic reasons you shared earlier.

 

Harjinder

Uh, in a word, I like punishment, I guess. Tim, as you probably know, having invested in a lot of companies that the highs and the lows of a startup are pretty extreme versus being in a big company where you have a salary regardless of your successes or failures, but in a startup, you can go from one extreme to another very rapidly. The thrill that I get of a startup is particularly around building solutions that people want to use and that make a difference in people’s lives. I think that I would put a premium on that. When people, when physicians use our solution, it makes a real difference. We hear from physicians that they’re spending hours, literally hours less per day on documentation and the physician burnout problem is so huge, as Graham also talked about. But then, the other side of that, as I said, is getting to work on problems that are unsolved problems that are really difficult problems. Conversational AI is one of those problems. Twenty years ago, speech recognition was one of those problems and getting to kind of join these two things together, the joy of users getting satisfaction out of using your system and building something that’s really complex and hard and has never been done before. That’s what wakes me up every day and gets me excited about working.

 

Tim

You were mostly joking about the punishment comment, but is it fair to say that that largely refers to the sales cycles can be long, that you sort of like, hey, this solution solves the problem, but yet there can be a fair amount of friction to sort of successfully get installed and implemented? Is that sort of some of the challenge? And maybe expand a little bit on other people starting companies in the healthcare space, any advice from what you’ve learned across these three companies and what it takes to be successful?

 

Harjinder

Yeh, so healthcare is particularly challenging largely. In healthcare, for most digital health companies, sales cycles can be anywhere from 9 to 18 months long. That’s typically what you’ll hear quoted from a lot of veterans in this space. Fortunately, ours are not that long, in general, and it really comes down to your sales strategy. We’re able to sell both to very large health systems, which do have these lengthy sales cycles, but next to that we’re also selling to small independent practice or specialty groups and they make decisions much more rapidly. We’ve been able to turn around a lot of deals within the space of a couple of months, which is phenomenal in healthcare. As far as advice to other entrepreneurs, I think the biggest thing I generally think about, and I recommend to others is that, when you’re doing a startup, you have to have, I think, two components, you have to have a big vision and you have to have a small vision. The big vision is, you know, if we’re wildly successful, what can we do here that’s earth shattering, changes the game completely. And you need that to motivate yourself, you need that as kind of that guiding vision of where we can get to. The problem that I see a lot of people get into is they get hung up on that big vision and they don’t actually see or map out the steps that are required to get there, and so, I always like to couple what we do with both that big vision and the small vision. The small vision for us is, there’s a physician that wants to do documentation, and forget about everything else, how do we make that physician happy? How do we save that physician two or three hours a day? Because if we can make that individual physician happy in his or her day-to-day work, we’re going to have the ability to do many more exciting things. I would say, having both those components in mind is critical.

 

Tim

That’s great advice. Couple your big vision with an initial specific problem that you’re going to go solve for a customer, and that they’re going to pay you money for it. I couldn’t say it better myself. Graham, you know, on this sales cycle and go-to-the market side of things, a big piece of what you’re leading for the company is scaling the go-to-market side of the business. Maybe give just a little bit of a sense for where things are today and what you see as the keys to scale to the next level and beyond. Again, with an eye towards, these I think principles and things you’re doing are really broadly applicable while you’re a healthcare IT company or another tech founder here looking to scale their company.

 

Graham

What I’ve learned over the years is you’ve got nothing if you don’t have happy customers. So it always, to me, on a go-to-market, sounds kind of, sort of back to front, which is you focus on your customers to be able to sell more, but it’s kind of obvious as well, is that focusing intensely on delighting our customers with great service and great responsiveness and a level of humility that shows that we respect the complexity of the work they do, and the problem that we’re trying to solve. Once you have that, then you’re in a position I think to start to work on the other pillars, which is figuring out how best to segment and target the market that you want to go after, who’s the right fit for your product in the short term. You’ll take those that happen to sort of find your products as well, but that you focus really your attention right on building the right market awareness, the right outreach, get the target market that you want. For us, we’re small getting the word out there and also managing channels. So, channel partnership relationships become very important. So, I’d say, start with the customer, make sure you’ve got the right market and then start to aggressively communicate to that market and you have to build channel partnerships to help you scale. So those are the three points that we’re focused on.

 

Tim

Talk a little bit more about the channel partnership part. We see a fairly consistent misconception or maybe mistake is for early stage companies to think they’re going to get partners and channels to help them early on before they build enough sort of scale direct selling, customer references, etc. On the other hand, particularly for our market, without figuring out how you work with the other people in the ecosystem and who might be partners, I think you’re really hamstringing yourself, also. So how do you kind of balance that — the direct selling piece versus channel partners, for our market?

 

Graham

Yeah. The point you’re making is right on. I mean our sense is that we’re now at a level where we, I think, have proven our capability in the marketplace, we’ve grown and we’re pretty well penetrated into a number of the markets or at least really started to get a lot of traction. My sense is that we’re looking now not for someone to sort of be the mega company that will push and promote our software and services and the capabilities we have. It’s more to do with finding those types of very strategic alliances where it’s in everyone’s best interest. Where I would recommend that people start is, pick one or two potential strategic partnerships that can help your channel, but no more than that, because you really need to stick to your knitting and make sure that you control the message, control your brand and control the service that you’re delivering. So, much of that, when I’m talking about channels, is on mutually beneficial sales channel relationships and co-marketing arrangements. You still need to control your brand, your customer experience, and ideally, you’re still controlling the majority of the sales cycle once you’ve identified the lead opportunity.

POSTED IN: Madrona News

Founded and Funded – from ‘Cow Tipping’ to CrowdCow with Founder Joe Heitzeberg and Scott Jacobson

L-R: Joe Heitzeberg, Wagyu Rancher, Msakii Ishii, a Cow in Gorgeous Setting

We’ve seen some brilliant ideas take off by way of crowdfunding, but crowdfunding the protein you eat is was a new take on the idea – and it worked!  In this episode of Founded and Funded, Madrona managing director Scott Jacobson sits down with serial founder and CEO of Crowd Cow, Joe Heitzeberg to discuss how Crowd Cow has made quality meat and seafood more accessible at scale while simultaneously cultivating a conscious and responsible consumer culture around protein consumption and working with small ranchers to help them deliver meat directly to consumers.

With the goal of creating a more meaningful connection between the farmer and the consumer, Crowd Cow posed an alternative to the current meat commodity system.  Joe intertwines his learnings from his time leading Madrona Venture Labs with early stage anecdotes of how he and his co-founder, Ethan Lowry, came up with the idea and ‘tested’ it with random Starbucks customers. Stemming from a co-worker who prized his relationship with a local rancher who supplied him with high quality beef, Joe and Ethan, took both a creative and innovative approach to mapping their solution Buy shares of a cow and when all the shares are claimed, the cow tips.  And then you are a ‘steak holder’! Ideas that were jokingly suggested by the founders gained traction, eventually equipping the company with data to keep their customers connected to quality beef, pork, poultry and seafood for every type of consumer and every kind of occasion. Local, quality product delivered from the farm to your door with just the tap of a button– a fresh solution, underpinned by consumer trends around sustainable and transparent purchases.

As the Covid-19 pandemic quickly became an imminent threat to the commercial meat industry, consumers began to see a rise in nationwide meat shortages due to production methodology of big agriculture. Flaws in this system became more apparent and Crowd Cow was not only able to build resilience as a company, but make a case for informed and conscious consumer behavior. In creating a culture of dependability, Joe emphasizes just how important it is for a company to be there for their customers through trying times. Scott and Joe also discuss the future of Crowd Cow and the online grocery industry. For the founder or entrepreneurial listener looking for creative problem solving inspiration or guidance on picking the right investors, this episode is absolutely for you. Listen in and be sure to check out Crowd Cow on social media at @crowdcowusa and www.crowdcow.com.

Full Transcript

Erika

Welcome to Founded and Funded. My name is Erika Shaffer. I work at Madrona Venture Group and I’m very pleased to be here with Scott Jacobson, Managing Director of Madrona Venture Group and Joe Heitzeberg, the Co-founder and CEO of Crowd Cow. Crowd Cow is a marketplace for high quality craft meats from farms and ranches around the world. They deliver directly to you through subscription and direct ordering. This is Joe’s third successful startup. Each of those startups were in somewhat different industries, but they were all looking to help people connect in meaningful and authentic ways. Crowd Cow is taking up that mantle to connect consumers to farmers and ranchers through the dinner table. And the company has some very clever ways of doing that. But I’m getting a little bit ahead of myself. I thought we would start with hearing from Joe about how Crowd Cow got started, where did the idea come from, how did you test it out?

 

Joe

Thank you. Thanks for having me. So, the origin story of Crowd Cow, if you will, was my Co- founder, Ethan Lowry, and I were talking to each other and committed to like working together. We worked together way back in the .com era days, way back when which is now 20 years ago. We have remained friends since, but since that early time we’d never actually collaborated again. We’d both gone off and done different startups on our own, and, I think, always wanted to work with each other again, since we got along so well. And I’d been a solo founder and really wanted to return to having a Co- founder. So, we started a list of ideas. You know, the spreadsheet of different ideas, the thesis, how we might test it, how interested we are, how uniquely we are suited doing that idea, how big the market is… just sort of ranking, ranking what we’d go learn about and test, and to figure out what we’re going to do.

 

Crowd Cow was not on that list at all. It was a guy named Brendan, who had worked for Ethan at Urbanspoon, Ethan’s previous company, as an engineer and then he had worked for me at Madrona Venture Labs. He had come to the office one day saying something like, oh man, I’m so excited, I’m getting a cow on Friday! We’re in this high-rise in downtown Seattle and we’re like, what? You’re getting a cow? He was so excited, and he explained how the farmer takes care of every animal. And by the way, when you when you sail in on the boat that settles the island, as this family did generations ago, you get the best land. And let me tell you, it’s about growing grass, as much as it is about raising animals because it’s about what they eat. The nutrient dense native grasses of this place, they got their pick of the best part of the island, you know, it’s in the family. And he’s explaining, in every different way, how much better this connection he had with his food was, for one, but he also emphasized how the beef tastes incredible. I looked at Brendan. He was so excited and oozing joy, and describing it in a joyful way, and I love beef. It was like when I was five, I would get that excited when my mom said we’re having steak on Friday. So, I can’t have it because he wouldn’t share. And I’m going to go hungry now, so I’m going to schlep it back to the grocery store where they don’t have anything like what he described. The best they seem to have been able to do is a little orange sticker that says “special”. So, whenever you have identified something you really want, that is clearly better for the planet, for the animal, tastes better, and you know the person you will support a small community, well, that is the thing that I want to serve my kid and make my kid excited about. But I don’t have that, the markets not giving me that, so no matter how much money I have, to want to buy that item, it’s inaccessible. Brendan, as he explained it, would drive a truck out there and bring home 500 pounds of meat. You had a huge meat freezer and it just sounded like a pain. I, for example, said, will you introduce me to the farm? And he said, oh, you’re too late, they only slaughter once a year. So, when you had a set of desires and a lot of pain to get there, in early adopters, you know going to that level of trouble, there is an opportunity in that. I didn’t realize that right away it was more just, hey, Ethan, you know, Brendan, you know this thing where he buys a cow? Ethan was like, yeah, he’s been doing that for years and would you ever do that? It sounds cool. Nicole’s a vegetarian, Ethan’s wife, so he’s not going to get a meat freezer. And we just got to talking about like why can’t I just buy five pounds of that somehow and just tap my phone and it shows up? And as we framed it that way, Ethan kind of had the light bulb of, well gee, there really should be a website where you can literally kind of quote “meet the farmer” sitting on your couch on your iPhone, watch a video, see some photos, get that intimacy. And maybe you are buying a cow. Why don’t we crowdfund an actual cow and 50 random strangers on the internet? Can each get their five to 10 pounds? And then we were riffing on this just as kind of a joking around conversation, like, oh, yeah, yeah, you claimed the shares. And when they’ve all sold the cow tips, and you become a stakeholder. It was too fun, we were laughing and smiling and so it was a very real problem. A cool solution that made you laugh and smile underpinned with fundamental consumer trends around sustainable transparent purchases within the beef or protein world. Its environmental concerns, animal welfare, it’s taste, I want the best steak if I’m going to eat steak, eat less meat, eat better meat, there are these mega trends happening. And we knew there was something potent about that idea. I think when we thought through the incumbent industry being so slow and big and vertically integrated, that we thought they’re not going to go do this, you know, and sold offline. They’re not even online yet. It felt like, wow, have we just sort of like identified a very big market. Well, how big is it? You know, beef 100 billion dollars if you add pork, or if you add chicken, it’s like another 40 odd billion dollars. And it just felt potent. The next step was, how do we validate this? And, one of the things that I learned at Madrona Venture Labs was you don’t go and build code or build a prototype, you just start talking to people. So, Ethan called 10 friends and I called 10 friends, literally right then and there, just to get reactions on the elevator pitch and the reactions were so black and white. It was just like, I’m totally doing this, or I’m never doing this I’m a vegetarian. And, so you really have that kind of black and white feedback to an elevator pitch. You usually have a lot of questions and nuances. So, this was great, but those people are our friends. So, we went down to the Starbucks, the nearest Starbucks, literally right then, on the spot, and just randomly went up to strangers. Excuse me, sir, may I ask you, do eat beef? Can I ask you some questions? We’re product designers and we have an idea. We got the same reaction. In fact, people were like, what is the URL, I have got to write this down. You know, we didn’t have a URL or a name or anything, it was just a concept. It was all very encouraging so that we thought, let’s go, let’s get a cow, let’s try to sell it using this crowdfunding thing. If we can sell it, great, that’s validation and we can keep exploring. If we can’t sell it, then you and I will get meat freezers, and we’ll shut it down, and in the worst case we’ll have a lot of great meat to eat. Our wives will be a little mad as us, maybe, but you know, in the name of entrepreneurship, you’ve got to try things you’ve got to be willing to fail. That was the origin story. We sold that first cow within 24 hours and we sent emails to our friends, but we had orders from random strangers. It just, right off the bat, felt right.

 

Scott

I’ll take it from here. It’s a great kind of founding story and you know. Ultimately Crowd Cow has expanded from selling product kind of one cow at a time to a broad assortment, lots of different proteins you can buy at any time, but Crowd Cow isn’t the first company to sell meat online. So, give us a little bit more about what makes Crowd Cow special and different for both your customers and the farmers you work with.

 

Joe

Yeah, and I will say, just in terms of assortment, you’re right, it’s at this point, beef, pork chicken, bison, seafood. In fact, and given the, the quality and assortment even within each of those categories, I think that today Crowd Cow has the best assortment, of any online retailer or offline frankly. Only the pure play seafood things might be some that beat us because we’re just building out our seafood now, but even that assortment is very strong. What really makes us unique is – this idea of a connection to where your food came from! We started with knocking on doors of farms and we built our own supply chain, where we’re talking about farms from 22 different states all across the United States and wild-cut fish from Alaska, etc., where it was literally down to the name of the boat and the fisherman, etc., right there on the pack of meat that shows up at your door with you in charge of which one you’re going to buy and why, and then favoriting your favorites. And, we did not work with the incumbent supply chain at all, we built something completely stand alone, so that gives us and gives you as a consumer access to things you just literally can’t find anywhere else, unless you live within 20 miles of that particular farm and they’re also at a farmer’s market, kind of, you know, quality and assortment. So that’s really that connection back to the producer, that transparency, to know that you’re in control of where your dollars go, who you’re supporting, what you’re eating, why, how it was produced and raised – full transparency on that. We’re really the only ones doing that all in.

 

Scott

Yeah, and that’s powerful. One of the great things about e-commerce, and we’re here in Seattle, in the backyard of Amazon, is just the simplicity for the customer you – you find some things you want to buy, you click and then in a day or two it shows up on your on your front doorstep but there’s obviously a lot of complexity and special things that go into making such a seamless experience. Can you give us a little bit of a look under the hood? What are the some of the things you built out that supply chain that enable that sort of magical customer experience?

 

Joe

A lot of it is forecasting and process and then tools to support all that. So, you didn’t, just back to the very earliest days, we did crowdfund the first cow then go and buy it, get it butchered and wrapped and then we packed and shipped it and that first cow actually shipped exactly five years ago today. It took from the time credit cards were charged, and the cow tipped, probably three weeks before it shipped. And we knew, beyond a niche, people aren’t going to wait that long. It’s got to be, really, the vision of tap your phone and it shows up, right? Instantaneous. We worked hard too and knowing that that was going to be the case, and knowing that we’d have this incredible assortment, we’re not going to have one New York steak product’s queue. That’s the commodity world. The best they can give you is price per pound, and a sticker that says “special”. We’re going to give you variety, different breeds, qualities, dry-aged, grass, grain, your choice, all the farms local, you want something local or want something from Japan. So, we’re going to have a lot of New York steak skews. As we did the math, we’re like we’re going to have hundreds of skews. One of the things we saw right away, when you’re shipping a perishable and you’re getting it to the door frozen and safe is there aren’t, still, and there was certainly not five years ago, third-party logistics companies that could do that for you. It’s possible to sell shampoo, get a Shopify website, and hire a three PL and your shipping orders now – not going to be cheap, they’re not going to be accurate. They’re not going to be cost effective, but they can do it for you. Perishables? They’re going to say, I can’t do that. And especially when you say, well, we’ve got 1000 plus product skews. They’ll just literally look at you and say, I, go away, I can’t even price that I don’t even know. So, we very early on knew that we’d have to build that piece. So just in terms of our supply chain, we don’t raise animals that’s farms. We don’t slaughter them. We don’t do the butcher piece. That’s a network we’ve assembled and coordinate with software. But we do, do the order packing and shipping because there was no one else who could do that. And that’s become a real asset. So, between that whole end to end, from the farm to your door, all the pieces in between, we control that picking piece and we control the curation the relationships, we obviously control the website. But all that software coordination using data will inform us how to keep this the virtual shelves stocked and how we can optimize things so that you know, when you when you place your order today, your order will ship out tomorrow. And if you live in most major cities, you’re going to get it the next day or two days. So, it’s, there’s tons of technology in the whole system.

 

Scott

So, as an entrepreneur you know that product market fit and building delightful customer experiences is tough. Sometimes even when you do that, it’s tough to build a good business. And, you know, I’d love to hear a bit about the journey. How do you go from building the delightful customer experience which you clearly have to navigating to building a great business?

 

Joe

Yeah, that’s a great one. I think first, just to note is Ethan and are not the ying and the yang co-founders that complement each other. We’re probably more similar than we are different. And one of the things we’re most similar on is delightful customer experiences. And I don’t mean just user interface, I really mean customer experience all the way through every point of contact and communication – the physical opening of the box, every aspect of that, measuring it, testing into it, and creating experiences that people want to share with others and make them smile and make them come back. So, we’ve biased for that, we also biased early for scale, because we did want to build a big business. So, we really spent a lot of time as technical co-founders, right, by background, on pre planning and building all the systems for scale and making choices in the business to support scale. We would joke the first maybe one or two years in we were, as you take a step back from all you’ve accomplished, in whatever period of time, we would joke a lot about well we have built the, the most overbuilt meat selling system ever for sure. Because we were doing a small volume of orders with an extremely high attention to detail in terms of the logistics and especially the customer experience, that was preparing for scale. I think the part where it’s always the hardest part in any business in ours, there’s a supply side and the demand side. In our business, the supply side is hard. Shipping orders is hard. The software is hard to supply chain is hard. These are farms don’t have websites, and they don’t answer their phone. So, in the early days, we were knocking on doors and getting the car and driving to meet farms, just to get our base built. And then once we had a reputation, they started coming to us, but it took a while to get over those kinds of humps. They’re not software pumps at all. It took a lot of time. But we always kind of knew, if we were hiring where would we hire complement ourselves. So, for us it’s the growth marketing and the merchandising side of the business. More so than the technical aspects. And certainly, logistics is also an area where the domain industry expertise and experience are very relevant.

 

Scott

COVID-19 has had a major impact on the world and on all our lives and it’s had an outsized impact on the meat industry in which in which you participate. Tell us about the impact COVID-19 has had on Crowd Cow and on the broader industry.

 

Joe

We’ve been at home for a while and our kids aren’t going back to school, right, necessarily, or if they do, we doubt they’ll stay back. And this is already been many months into it. We’re also not going back to work, right? So, so much fundamental demand and behavior has changed. Fundamentally for now going on three or four months and looks to stay changed for a quite long time. For us that meant you know, a lot fewer meals are being eaten in restaurants, initially starting with restaurant demand going to zero, and now creeping up very slowly. All that has gone home, all the school meals and, and lunchtime meals at work have gone home. So, all the at home meal cooked and eaten stuff has gone up dramatically. And that’s accelerated the, the shift to online grocery. Furthermore, I think in our industry, the meat plants had disproportionately been negatively affected by COVID virus infections. These big super scale meat plants, where people are standing shoulder to shoulder it’s all about efficiency and commodity to get you that steak that I described in the grocery store, can’t work with social distancing at the scale and efficiency that it that it used to. And so that created shortages. You know, it’s just viral infections rips through but then they have to re-engineer their processes, space people out and ad automation, that stuff takes a lot of time. So, meat shortages even further shifted the demand towards, towards online. And so, for us the massive uptick in demand immediately overnight. And that’s here to stay for quite some time, fundamentally. I think it exposed some weaknesses in that existing supply chain and hopefully,  also it’s given people a chance to not just panic by… here’s what we hear from our customers –  thank you for doing what you do. And I’ve introduced so many people to it, my parents, other neighbors and friends, people love to be the hero and everyone’s looking for the solution. And we’ve got such a great solution and people are happy to share great things with others. So, we’ve benefited tremendously from all of that.

 

I think the weakness and the incumbents, what I’m trying to say there is there are kind of three big things in the last 10 or 15 years. A series of Netflix documentaries that expose big AG, as having negative environmental and animal welfare consequences that made meat lovers feel guilty and question their habit. Then there was a wave of alt meat, for example, Bill Gates is funding a vegetable-based protein because we’ve got to save the planet. These kinds of messages in the mainstream, again, caused meat lovers to question or feel guilty. It didn’t cause them to stop eating meat, by the way, but it caused them to think about it more. And then the third wave is the fact that you can’t buy meat in any grocery store for a week or more. And the reason why is because these extreme viral infections that just the implications to labor exposes again, once again to the mass populace that, maybe we should be thinking about a better way to do the meat thing. And they’re finding us the ones that are finding us. It is a better way. That’s why we built it. So that’s exciting that we’re getting long term habits formed, but also just the shift of awareness that, hey, there can be another way to do this. It happened in beer and wine, it happened in chocolate and lots of other food categories went from one or two brands that were commodity orientation to local and international and varieties and artisanal, and that’s where meat should be,, too and on the dimension of connected back to the source. So.

 

Scott

You know, I know safety is paramount for you as it relates to your team. Give me a little bit more on why you why Crowd Cow hasn’t been impacted in the ways that that some of the larger players in its market have.

 

Joe

Yeah, so you know, when COVID first hit, it hit in Seattle, which I feel grateful or lucky for, because it made us all here in Seattle, think about COVID. I remember, you remember Scott, Covid-19 was in the local news and it wasn’t in the national news, and we all felt kind of weird about that because we had community spread, and we were all talking about oh no, this is unescapable now, it’s going to change things. And it was weird to not see the national news talking about it yet, there was a period of a few weeks there, at the very, very beginning. So, we took that as we’ve got to act now. I remember Redfin, I think had an infection, right. So, they had also been very exposed to it early, and they’d sent their whole headquarters home. Someone in our office said, oh, wow, my friend works there. And you know, they were just told to work from home. Are we considering that should we send everybody home? And I was like, well, I think the first thing we need to do is I’m going to, I’m driving to our fulfillment center tomorrow, see you, bye. The first thing we need to do is figure out safety for our guys packing the orders out. The vision here is, what we do is we provide a service that allows you to tap your phone and it just shows up. That’s our fulfillment staff. They can’t work from home. It triggered a sort of wartime mentality, we rallied everyone around like, okay, this is real. What are we going to do for safety? What is it going to mean for the business? How do we plan? We sort of got into this like, very wartime mode. And then when we realized what it meant for the business, it was very positive, in terms of demand. What it meant for a lot of our friends’ businesses was very negative, in other industries. We all felt a gratefulness and a responsibility, and like, this is our moment. This is our game day. Our customers need us more than ever. And then, if you think through our farms need is more than ever, because a lot of them depend on restaurant sales, which goes to zero. And our very diverse supply chain to kind of answer your question, little regional processors, little farms, co-ops all across the country were diversified, so even if they’re impacted by the virus in terms of infection, we’ve got so many of them, there’s no single point of failure. So, wow, we’re resilient. In terms of if they’re affected by COVID in terms of restaurant demand going by going down, we can really help them because we’ve got online and we’re already their partner. We sort of realized right away, wow, we’re in a really, we’re ready for this. Very grateful for that.

 

Scott

Broad assortment, as you talked about, ala cart and subscription model easy button for customers, click a couple things on your phone, and it just shows up. You’re in a great spot. What’s the future look like for Crowd Cow? What are what are we seeing five years from now?

 

Joe

Five years is a very long horizon. You know, we’re certainly bullish on online and there are theoretically things in the five-year time frame that would go beyond just online. I don’t know how much I can really talk to that on the podcast. And we’ve dabbled in this, we were suppliers to Shake Shack and the Seattle Mariners, and we’ve done some direct sales to restaurants. We’ve got the number one online Japanese wagyu seller, by far, we are. And that’s a restaurant meat. And so, there are things beyond just online that I think in the five-year timeframe we will consider. In the near term, we’re selling just proteins and people don’t eat just proteins. There are lots of ways to cook proteins and gifting is not a super big part of our business and we have a great product that’s eminently giftable, so I think in the one to two year timeframe, there’s clear growth opportunities for us just in the online business and immediate adjacencies. In the five-year time frame, ambitions can include things that aren’t as adjacent to what’s on your plate and meat, but look like things that could, that our platform could easily accommodate. And of course, the platform in terms of fulfillment is very special. And it’s currently amortized on one brand – Crowd Cow. And I think that there’s opportunity there to amortize that more broadly.

 

Scott

I can appreciate not wanting to share the full playbook with the entire world, so I appreciate the broad approach. To close let’s just talk about, this is not, by far, your first rodeo, you’ve been an entrepreneur many times over, a founder/CEO several times – what are things that you bring from, for the entrepreneurs who are listening here, company to company that you know and have learned over the years, that you’d encourage people to think about?

 

Joe

That’s a great question. Why do I do it is a question I talk to myself in my internal dialogue about a lot over the years – because I think each time I jump into a startup, I guess one thing is to realize you’re jumping into a multi-year thing. Don’t be paralyzed by that, and indecisive, but just because you’ve got to put one foot in front of the other and not give up, ever, just keep going. You also know that you’re on a journey that’s going to take you far down. I’m far deeper in the beef world than I ever thought. And I’ve met with the big major players in the industry at this point. And I’m so much deeper in that industry than I ever would have imagined, if you’d asked me 10 years ago. So, just choose carefully, and keep going.

 

In the early stage, demand is the most important thing. A lot of tech founders and I made this mistake for years. A lot of tech founders use the hammer they’ve got which is tech building, coding, prototyping. There was a whole dialogue for a long time, maybe still is I don’t pay attention, but, on Twitter about MVP, and rapid testing and now they’ve got the no code thing. You can test ideas quick. I don’t even think that’s the right first step. Why would you take your idea and build a website for even three weeks, when you could call the right people, call representative customers, or call people who’ve sold similar things to those same target customers? That was my number one learning at Madrona Venture Labs where we realized we’ve got to be fast at validating. So, as we thought through the problem of how to get fast at validating, it always started with phone calls. And I remember, you remember Scott, we worked in a security camera AI enabled security camera platform, right? There are a lot of different target markets, but we killed the idea. We’d worked on it for quite a long time, like a month or two, and we killed it. Really the day it died, was when we finally talked to this guy, who was a sales guy for 20 plus years selling security camera systems into every possible target market, like airport and apartment buildings, real estate, private home everything, and, he knew all the vendors, he knew all the customer types, he knew all the objections, he knew all the technologies, he knew the patent landscape. He knew all things we didn’t know that you can’t just Google for and talking to him, we realized between the fragmentation and the cost in the market and the patent portfolios that people were litigious about and everything. We realized this is not a good place, right now, at this point in time, for a startup from our lab, at least. And so, I was talking to people, it’s good advice for a technical founder – don’t go build stuff. Go talk to people.

 

Scott

That’s great. No, that resonates, and I think it’s it that’s a good place to wrap. Well, Joe, it’s been an absolute pleasure and honor to be able to ride along with you on this journey. And it’s really a fun story to tell and a very relatable story for customers, for suppliers for everybody. So, thanks for spending some time with us today. And we look forward to all the great things that are ahead of us to come.

 

Joe

Yeah, thank you. If I could put in one more plug, too, this is advice I always give entrepreneurs – when it comes to finding investors to work with, you don’t often have a choice, right? Or as much as you want. But to the extent you’ve got choices, or you want to prioritize your time, go for people who’ve got founder empathy. One of the reasons I really appreciate you, Scott, and working with you, what the pleasure is, is you’ve been an operator, and you can be direct. And the more you can have people around the table, who have got experience and have founder empathy, the happier you’re going to be as a founder, the more successful you’re going to be as a team. So, thank you.

 

Scott

I appreciate that!

 

Transcribed by https://otter.ai

POSTED IN: Madrona News

Madrona’s Investment Themes for 2020 and Beyond

Over these last months of quarantine, we at Madrona have remained very busy, first and foremost working with our portfolio companies to help them navigate the economic turmoil of a global pandemic.  Second, but also importantly, we have continued to invest, adding eight new companies to our portfolio since quarantine began in March (Fauna, VNDLY, Go1, Zeitworks and four others still unannounced).  This continued active pace of investment exemplifies both our commitment to the long-term opportunities we have identified, as well our belief that downturns can be the best time to invest.

As we have been quarantined in home offices in front of Zoom and Teams, we have also taken the opportunity to step back and revisit our investment themes and think about which trends we continue to be most excited, which are emerging, and which perhaps are being accelerated (or dampened) by the aftermath and “new normal” of COVID-19.

It has been 18 months since we last posted about the investment themes that are driving our activities at Madrona.  When we took a fresh look at our current thinking on technology trends that we believe will drive the industry in the next five, ten, or 20 years, the picture that emerged shows significant consistency with our view of the world 18 months ago, but also interesting new opportunities and trends.  The figure above illustrates the overall areas we find most compelling for new company and investment opportunities.

In this post we offer a preview of the themes and will follow this up with deeper dives on the areas outlined in the image above.  We work as a team to fully investigate and build our investment themes and you will see many from the Madrona team as authors – please reach out to us with ideas and your thoughts!

At the center of our investment themes, we continue to see a massive opportunity for companies to create businesses around intelligent applications, fueled by machine learning and modern user interfaces.  We believe that every successful application being built today should be an intelligent application, with a data strategy and continuous learning system at its core.  Intelligent applications have been the single largest area of investment for us over the previous several years, and we expect this to continue for the foreseeable future.  We will continue to invest in the next generation of line-of-business applications being reinvented by machine learning and cloud native delivery. Read more about the areas we are seeing opportunity in intelligent applications in our deep dive.

As the world continues to struggle through the COVID pandemic, we also see a massive acceleration in the emergence of technologies enabling the future of work.  This trend had been evolving for the last several years and the current environment has created an order of magnitude acceleration, as businesses of all sizes rush to find new intelligent applications that help them collaborate more effectively when all employees are remote, build and retain more diverse and distributed workforces, and prioritize digital-first workflows and processes that have remained largely “in-person” and workplace focused. Read more about the work, the workplace, and workforce in our deep dive.

A major new focus area for Madrona is the intersection of innovation between machine learning, intelligent applications, and life science.  We touched on this opportunity in our investment themes 18 months ago, and subsequently invested in several exciting companies including Twinstrand, Nautilus Biotechnology, and Terray Therapeutics.  As our partner Matt wrote when we announced our recent large investment in Nautilus: “Today, these domains are coming together to transform the ways we understand and improve life and health. The biological and chemical sciences are intersecting with computer and data sciences in precision medicine, digital pathology, proteomics and more.  At Madrona, we believe these intersections of innovation will be at the forefront of major breakthroughs in research, analysis, diagnostics, clinical processes, preventions and cures.”

Next, the march to the cloud and broader adoption of the cloud computing model by enterprises continue to create myriad opportunities for next-generation software infrastructure companies — despite the increasing dominance of the hyperscale public cloud providers.  These steady improvements to software infrastructure enable and increase the pace of innovation for all the applications higher in the stack that leverage these cloud services.  Enterprise need for better usability, manageability, security, cost-savings, and performance across diverse devices, cloud platforms and environments will drive new business opportunities that provide hybrid and multi-cloud management, infrastructure automation, and new architectures that leverage serverless and event-driven architectures. Read more in our deep dive on The Remaking of Enterprise Infrastructure.

Another investment theme created by the need to move faster, increase productivity and reduce cost is in the area of low-code or no-code platforms and applications.  The next generation of workers is more tech savvy, and there are more “makers” in business teams and organizations who want to build things directly and not wait for IT, engineering or the data science team.  These range from developers who need to incorporate ML directly into the applications they are building to information workers who become citizen developers in order to quickly solve business problems. Read more about how we think about no-code/low-code in our deep dive.

While we have invested a somewhat higher percentage of our last several Funds in B2B companies, we continue to strongly believe in and invest in new consumer services, often where the digital and physical worlds are fused in a way that create a virtuous cycle to provide a more compelling and fully integrated experience.  This digital transformation of consumer experiences, where mobile-first applications streamline, simplify, and save consumers time and money, is a core pillar in our investment themes going forward.  Read our deep dive on the areas we see changing dramatically in the next five years here.

We are eager to engage with all of you in the community around these updated investment themes.  Each time we have published our thoughts in the past, we have been energized and humbled with the feedback we have received – from founders whose vision hew closely to one of our themes to constructive debate on how we are too early or too late with our ideas.  In the coming weeks, we will post six deeper dives into our themes around software infrastructure, intelligent applications, the future of work, the intersections of innovation, low-code/no-code platforms, and the digital transformation of consumer experiences.  We can’t wait to further discuss, debate and learn from all of you. In the process, we look forward to investing and working alongside some of you to build the next generation of companies that address these exciting areas of innovation.

Send us an email or connect with us on Linked In (all contact info is in our bios which are linked above).

 

 

 

POSTED IN: Madrona News

Angel Investors – Standing Behind Startups

When Madrona Venture Group was founded in 1995, it did not start by raising a venture capital fund right away. In the early days, Madrona invested with funds solely from the four founders: Tom Alberg, Paul Goodrich, Gerald Grinstein and William Ruckelshaus. It was a “super” angel group, so to speak. One of those early angel investments that Tom Alberg made was in a first- time founder with a plan to sell books on the internet – Jeff Bezos and the company that became Amazon.  25 years later, Amazon has fundamentally changed retail as we know it.

It took four years of investing as angels before the founders decided to raise an outside fund.  Building on this history, we, at Madrona, have consistently had a focus on investing in the early stage of companies over the intervening years and have a deep understanding that, for founders, these investors, and other assistance such as accelerators and incubators, at the earliest stages are the most crucial.

We have a long history of collaboration with the angel community here and continue to invest alongside them. Over the past decade, Madrona has participated in 78 deals alongside angel investors, mostly in companies here in our region. In fact, some of our most recent investments have been alongside angel investors, including The Riveter, OctoML and MontyCloud.

The total capital invested by angels in the PNW has steadily increased over the last decade. Alliance of Angels, Keiretsu and Element 8 have been among the most active angel investing groups in the PNW – investing in a combined total of over 1,300 deals over the last decade.

While the individual checks an angel investor or group write may feel small in comparison to the ever-increasing later-stage rounds, that amount adds up. According to Pitchbook, there were 25 PNW angel groups that made investments in 2019, totaling $145M in capital contribution. In contrast, 2009 had 12 PNW angel groups that invested a collective $11M. As part of angels’ commitment through the long run, they participate in later-stage rounds as well. In fact, angel investors participated in over 200 deals that raised $2.8B in the PNW in 2019 alone.

It is important to note that angel investing’s importance extends far beyond capital. While these investments may come in different forms and sizes, a common denominator is the support they provide at a critical time in a new company’s journey. Angels invest early, sometimes alongside seed stage investments from larger funds like Madrona. These investments are personal, ones that the investors are particularly passionate about – and subsequently, angels are known for rolling up their sleeves and getting deeply involved in formative stages. Not only can they be a key factor in reaching the next stage of funding by bringing other investors and VCs to the table, but angel investors provide advice, coaching and network access that remains influential throughout the entirety of a company’s journey. As an example, the Angel Capital Association estimated in 2017 that roughly 40% of angel investors take board seats, and almost 50% have active board advisory roles. In short, when angel investors commit to fostering this growth, they are giving back to the community over the long run – and truly living up to their name.

For those who have yet to take a step into this community, angel investing can be an incredible way to get involved in the rich and vibrant startup community in the PNW. To some, it may seem risky a risky endeavor, rife with unknowns. In many ways, this is the beauty of angel investing; taking a bet on a founding team in an early stage company and helping them navigate growth challenges is an invigorating way to allocate both your capital and time.

A study of over 1,500 angel investors in the US showed that nearly 66% initially got involved in the discipline through angel groups. Participating in these larger groups and communities can create a structured approach, share risk across a variety of investments, learn from each other and alleviate some of the initial apprehension to starting angel investments.

Downturns do affect investing but if history is to be believed, not that much when it comes to angels.  Take 2008 for example where angel investing was relatively consistent through the downturn. The total early-stage venture funding raised in the PNW dropped by 13% from the prior year, and again by 9% from 2008-09. However, seed stage and angel investing only decreased by 10% from 2007-08, and actually increased by 18% the following year, bouncing back to pre-recession levels within 2 years.

If we use sentiment as a historical guidepost, we would have expected to see the venture community invest in fewer deals, at lower valuations and increase their focus on existing portfolios. We have demonstrated, however, resiliency in the face of difficulty. And now, more than ever, fostering innovation is critical.

Madrona has always been excited about the technology innovation and start-up ecosystem in the PNW, but today, we are reaffirming our commitment to invest through the downturn. We continue to remain focused on investing from Day One to the long run. As Seed stage investors, we will roll up our sleeves and partner to go the distance together. By extension, that means working closely with angel investors, other seed funds and entrepreneurs in the community.

We will continue to support Create33, TechStars, Madrona Venture Labs, AI2, FFA among other groups that help get startups ready for any kind of early stage funding. Further, we have a roundtable of start-up founders and senior technology executives working with us on our Pioneer Fund.  These experienced technology execs are also angel investors. The Pioneer Fund enables them to bring more funding to startups through partnering with Madrona in their own angel investments.

To other members of the ecosystem – angel investors and other funds alike – let’s lean in through this tough period. We have a shared responsibility to help both existing and new start-ups continue to innovate through this downturn. Washington State has led the country in COVID-19 responses in a number of ways already. Together, we have the potential to continue leading by demonstrating our commitment to the start-up ecosystem in the Pacific Northwest.

POSTED IN: Madrona News

Investing in VNDLY and the Future of Enterprise Applications – Intelligent Apps

Over the past few years and the next few years, we will see the formation of the next generation of enterprise application companies, companies applying intelligence to their applications.  Over the subsequent decade those companies will replace legacy companies such as SAP, Oracle, NetSuite [part of Oracle] and Salesforce.

This will happen for a simple reason.  It will happen because applications will become, well, intelligent.  As ML/AI becomes integrated into every element of the application stack, applications will learn on a real-time basis and they will start to take actions on our behalf.  Intelligent applications will deliver a far better customer experience, solve more of the customer problem set, and do so at far better economics than traditional or even SaaS applications.

That thesis on intelligent applications is why I am so excited about many of the companies we are working with including, Clari [Revenue Operations], a stealth corporate travel startup, a stealth financial application startup, and our most recent investment, VNDLY.

VNDLY, is a talent management solution founded by Shashank Saxena and Narayan Surabhi.  Based in Cincinnati, OH, VNDLY’s clould-native vendor management solution gives employers and contractors an AI-based platform that adapts to the changing needs of both groups.

Over the past few decades, the contract and contingent portion of the corporate workforce has grown from less than 20% to more than 40%.  My experience leading the Fieldglass team at SAP helped me to see the scale of the challenge businesses face in effectively recruiting, paying, managing and engaging with this critical part of a company.

Like every other component of the enterprise application stack, there is an opportunity to materially improve the completeness, the economic value and the ease of use, of solutions focused on the vendor and contract workforce.

There is an opportunity to serve this part of the workforce with the same fullness of solutions that companies like WorkDay, provide for full-time employees.

Shashank, who was previously an executive at Kroger, and I met a few years ago.  I knew at that time that I would enjoy working with him.  Shashank and his team are customer centric, insatiably curious, intellectually honest and continually raise the bar on themselves.

I am thrilled to have led Madrona’s investment in VNDLY and excited to work alongside Shashank and team as VNDLY’s newest board member.

Our investment in VNDLY is an Acceleration Fund investment, which is focused on companies that have found product and market fit and are scaling their businesses.

 

POSTED IN: Madrona News

Back To Work Toolkit Launched!

As businesses across the nation start thinking about the new normal and how to bring people back to work and back to the office, Madrona launched, in partnership with the Bellevue and Seattle Metropolitan Chambers of Commerce as well as the greater venture network in the region, a Back to Work Toolkit.

Created through hours of conversations with leading companies in our region such as Microsoft, Amazon, Starbucks, Alaska Airlines, Costco, JLL and CBRE, and after combing through hundreds of documents, we launched with a site that has a full webinar on our findings split into three areas.

  • How to Get Started
  • Preparing the Office
  • Preparing the People

On the site you will find documents, templates and guides that have been curated and created for your use.

Please share widely – and thanks to Katie Drucker, Shannon Anderson and Ishani Ummat for their work on this as well as everyone at Madrona who contributed to this production!

POSTED IN: Madrona News

How Sales Leaders are Meeting the Challenge of COVID19 and Work-From-Home with Snowflake, Clari and SeekOut

(Photo Clockwise, Soma, Tony, Scott and Kevin) 

In this environment, Sales and Go-to-Market (GTM) for enterprise companies has changed, sometimes drastically.  What we do know is that in the work-from-home environment, tight coordination and focus is even more important in selling and GTM.  We spoke with sales leaders representing early, mid and later stage enterprise SaaS startups late last week about how they dealt with the onset of Covid19 and what has emerged as some best practices. See the summary of this below and listen to the podcast for more details on how these companies are continuing to build their business.

We spoke with

  1. Focus on your customers. Connect personally with each and every one.  Be transparent and think outside the box in how you can help them. Being clear that a current contract might not work for the company anymore and figuring out how to work with them regardless, creates loyalty and value in the relationship.
  2. Build your internal competency. Tight sales teamwork is required, and you need the regular check-ins with your team and across teams to ensure everyone is working on the right things for customers and pipeline.  Develop a regular cadence when the whole team comes together and for lower level check-ins – don’t forget the starting or younger employees who might need more support.
  3. Create a classification system for customers and prospects, from those feeling headwinds to tailwinds and adjust your approach and message appropriately.
  4. Introduce price flexibility or financial flexibility for customers who are undergoing stress. Again, being honest and transparent about your situation and wanting to understand the customer helps move these conversations along.
  5. To continue to build the funnel, double down on direct marketing, digital events and being creative. One great example was from Clari, which holds many regional in person dinner or lunch events.  They held it digitally and offered attendees a dinner delivery.


Transcript

Soma
Good afternoon, everyone. We all know this, but we live in unprecedented times now. Whether you call it work from home or shelter in place or social distancing, the COVID-19 situation has had  a tremendous amount of impact in all facets of life, including how companies market and sell to their customers. And today, I’m excited to have a handful of sales leaders from three different companies representing early stage, mid stage and later stage startups, to talk to us about how their sales and go to market efforts, as well as teams have had to change significantly to doing business effectively in this new environment. Please join me in welcoming Kevin Knieriem, Scott Gudmundson and Tony Jackson. Before we get started, can each of you take maybe a minute to introduce yourself and briefly talk about the company that you’re a part of and what business you’re in? And let’s start with the Kevin.

Kevin
Great, thank you, Soma. And thanks for the opportunity to join this call. Kevin Knieriem, I’m the Chief Revenue Officer at Clari. For those of you that don’t know who we are what we do, we help companies provide revenue confidence, and we’re a platform that brings together all of their revenue constituents in a common place. We think of revenue truly as a process and not an outcome. And we provide the instrumentation for sales reps, sales managers, sales leaders, and any really revenue participant to run the business. Our solution quite honestly has allowed us to really navigate COVID-19, understand the impact of business understand where we need to lean in. And we’re working really hard to help our customers go through that same analysis of their business. Thank you, Soma.

Soma
Scott let’s go with you next.

Scott
Yeah, thank you for having me. So, I’m Scott Gudmundson, Head of Sales at SeekOut.io. We are a SaaS-based platform that helps recruiters and sourcers find hard to find and diverse talent. We’re really on the forefront of educating the HR space on a technology stack. And really how we can fit into that stack and help bring multiple pieces of product together to really find that diverse and hard to find talent. And today, I’m representing the small business side of the conversation. So, thank you.

Tony
Awesome. Yeah, thanks for having me, Soma. Tony Jackson, I’m a Seattle native. I spent my entire career in software sales. Half of that’s been at early stage startups. So, I have an appreciation for what’s going on there. The other half has been kind of the pre-IPO through IPO journeys at Tableau Software, MongoDB, and Snowflake. For those that aren’t familiar with snowflake, we effectively help organizations get value out of data through internal analytics, building data products, monetizing data with third parties. And we do that through a completely differentiated Cloud Data Platform. Our company has been around since 2012, products in market since 2015. And we’ve been dubbed the fastest growing enterprise SAS company in history. So really excited to talk through what some of that means in terms of navigating COVID.

Soma
Fantastic, great to have you all join us today. Just to get started, I thought it’d be great if you guys could take a couple of minutes and set some context. And when I say context, it’d be great if you can walk me through what happened in your teams and in your company. In the first few weeks of when stay at home or work from home happened. Okay, and Tony, do you want to continue with that?

Tony
Yeah, absolutely. It was a fun time, I guess we’ll say. So, context setting. I had a two-day QBR scheduled on March 16, and 17th. And it was pretty elaborate. So I had leaders from all across the company and all across the country flying in, we had a day at our office in Bellevue scheduled and we actually had a day of workshops at your office in Madrona scheduled and, the entire thing was designed to be, collaborative with a lot of hands on workshops, and team building exercises, and completely come out of this thing, you know, singing Kumbaya, and we’re ready to go March 4th for the year. March 2nd rolls around and we start, this thing’s picking up steam and we say, hey, asking, should we make travel optional? That was a hard decision, on March 2, right? We do that and, of course, and March 16th rolls around and everybody was at home by themselves. And so, when you say the word scramble, that’s exactly what it was to convert a lot of investment in terms of a two-day, well thought out agenda, and try to convert that into a one-day remote, and try to drive some of the same outcomes was an incredibly challenging. I would say, the things that worked well, I made my intentions clear in terms of what I wanted in terms of outcomes of highly collaborative and participatory. I was impressed at how my team leaned in. Katie Drucker from Madrona participated in the full day remotely, which I’m really appreciative of, and I told her after the fact, that she was the MVP of our QBR. Because she brought a lot of, I’d say, industry and market insights that really shaped the way that we were thinking about going to market in our region. And then on an account level really gave us that board executive viewpoint about how different organizations might be thinking about COVID impacting them. That was a transformational exercise and just all of the conversation around that really inspired us to say hey, how do we be on the right side of history and get out in front of this thing? So, we decided to roll out a two week program where each one of our reps would call every single one of their customers, every prospect that they had an open opportunity with, to show them that we care about them both as a person and about their company and to listen and to learn, and to try to take what we’re learning and come back. And both, at an individual account level, how do we help them outside the context of Snowflake? And then what learnings can we share among our team? I’ve just been blown away by the results of that, but for our team and the response from our customers.

Soma
Awesome. Scott or Kevin, do you guys want to add something to this?

Kevin
Yeah, happy to go next. Our board meeting was March 5th, and that was the last day I traveled. Our CEO was such a hard charger. If you know him, he actually went to London the next week, and we were just trying to get him home and thankfully got back before they shut down travel. That next week for us was really the transition week to okay, are we ready to work virtually? Fortunately, we had a couple things right. We had the right instrumentation. So, the biggest challenge area for us really wasn’t the field sellers, it was our SDR team. We’re used to working in pods, used to working together and that camaraderie and now a lot of these folks were really young folks who in some cases, were still living at home with their families. They were transitioning to TV tables next to their bed in their in their bedrooms, right? And so, we made sure that they were ready and engaged, but more importantly, still had that camaraderie and social engagement. And I’ve got to hand it to my rev dev team, is what we call our inside team, that they really brought that together quickly. What we found was with a lot of our events being canceled, that we could still drive top of funnel remotely and we’ve been trying to have a lot of fun and learnings on how do you best conduct a remote meeting. And we actually just today or this morning rolled out an internal enablement and in selling guide to help us sell and make our meetings with our customers and our prospects super impactful. We’ve also tried interesting things with our prospects and our customers. More of this format of social engagement over Zoom. So, I think, learnings for all of us, I think the hardest part of it has been the end to end Zooms that are on all day. And being able to find the one or two minutes you need to transition from one meeting to the next. So interesting times we feel like we’re taking on the challenge and quite honestly trying to learn from it and become better remote sellers.

Scott
Yeah, I would echo what Kevin said there a little bit, I think the first couple of weeks right as this unfolded was just a frantic pace for everybody. You’re just constantly on back to back, Zoom meetings, not a lot of time to get to the things you really need to do attend to. And so, it’s been nice to see our team particularly, and we’re a smaller group of just 30 in the whole company so, it’s a little different than some of the others, but it’s been nice for us to settle into a nice pace. Similar to Kevin, we had a technology stack, we did 90% of our selling remote already. So, we’ve seen fairly little impact from that standpoint. I think the area that we really needed to double down, and focus was the team, and really making sure that the team was connecting regularly. We started off just being so frantic that some of the people kind of got left off on their own little island. And it became clear really quick that we needed to get the teams together. So I think one of the biggest changes we’ve seen, is both at a company level getting together on a weekly basis, but then individual teams making sure that they’re meeting even two or three times a week sharing best practices, because the one thing that seems to be evolving in this is that what we thought two weeks ago isn’t even the same now. And so, it’s this constant evolution of trying to stay on top of what is the latest moves, what’s happening and how do we adjust to that. But I will say our CEO did a great job when this rolled out of really focusing us on a growth mindset and saying, okay, as opposed to being victims in the situation, how do we go take advantage of what presents itself? And how can we continue to be successful even though times are going to be challenging for the next while?

Soma
Great, I thought I want to take a few minutes and talk about, what are you doing in this environment with your current customer base? Tony just mentioned that he instituted a two-week program, where every account rep reached out to both existing customers, as well as customers in the pipeline to show that, hey, we are here to support you through this. We care about you. I thought that was a great best practice that Tony and his team followed. But in general, how are you thinking about taking care of your existing customers because that, to me, looks like priority number one. And that means, what does your customer success team need to do differently in this current environment? And as a sales leader, how are you thinking about success for your team and for your customer success team in this regard? And have you changed what you’re expecting out of your customer success team in the process? Sort of a bunch of questions but all related to how you are working with your customer success team and your sales team in taking care of your current customers and keeping them happy and successful through this tough time.

Kevin
Our number one goal as a company right now is protect the base right and to rally around our customers. And one of the things that myself and my CEO have been doing is reaching out to our peers, whether you’re a CEO, CFO, or  Head of Sales, and actually walking them through how we are using our own solution not to turn this into a Clari commercial, but using our own solution to navigate COVID-19 and as part of that, we actually come out with a lot of learnings that we’ve been able to help our customers implement. We’ve also been doing things like revenue assessments and health checks for our customers and getting much more focused on them. We have a pretty big rev dev team or inside sales team as well. And as we did this analysis of our installed base and our prospects, we kind of categorize them into headwind or tailwind companies those that are either flourishing, surviving, or are in a challenge. And based on that, we’ve sort of reoriented our focus in our message into those three buckets and so we’ve redeployed some of our rev dev team against our customers to help them better utilize Clari so at the sales rep level, at the manager level, and so trying to get the entire company around this customer first, when you don’t need your full gamut of SDR’s out there just prospecting.

Tony
Yeah, I think I can piggyback on that, I think I’m seeing the same where I think there’re some clear winners and losers in terms of impact in at least the short term, and certainly probably beyond. But being able to identify and categorize which companies fall into which bucket, I think that informs your strategy on how you can help them, our expectations haven’t really changed. And for us, just for context, we don’t have a customer success team, all of that falls into the field sales organization. And, based on the way our business works, which is a utilization and consumption-based service, we’re always very closely aligned with our customers, but I would say the nuances and emphasis on things like overcoming what’s going to happen in every organization is scrutiny on spend, right? And so, we’re being even more proactive about having value engineering, business value realization type conversations and documentation and framework for our customers. One of the things that we’re seeing on both sides is the companies that are being impacted from a personnel perspective and having to undergo layoffs. We’re helpful to them by figuring out, can we help plug gaps for them, while they’re, being short staffed and trying to operate more efficiently? And can we help some of their people land within some of the customer base that is growing and is hiring. And so, we’re adding value to the customers that are growing by connecting them with top talent that now is available that that probably wouldn’t have otherwise been. So those are some of the things again, I think, from our perspective, that we’re just people first, I think, is kind of the way that we’re approaching those situations.

Scott
For us being in the hiring space, obviously, directly impacted pretty quick. We’ve had an opportunity to be able to work with customers on individual basis to put them on pause from their subscription standpoint, work with them around just payment options, and do all of those things that are the right thing to do right now. And we’ve had the luxury of having very deep relationships with our customers. And so, they’ve appreciated being able to come to us and just have very, fact-based conversations and outcomes that are working for both of us. So that’s one thing that I say has helped us. The other thing is, we’ve been fortunate enough to have a really solid customer advisory board. So, we’ve been able to rally them A. check in on them and how they’re doing but B. get their feedback on things that we can be doing to help their businesses. And that’s been pretty valuable for us and just knowing how to move forward.

Soma
Switching focus from protecting the base like you said, Kevin, to starting to think about, hey, how do you move customers through the pipeline? You’ve got each of you have a pipeline of customers in varying stages. What are you doing to be able to move your customers through the pipeline and getting them to be a paid customer and close a deal? How are you thinking about the mechanics of sort of closing a customer? And one important question in that regard is, how are you thinking about price? Or in other words, are you thinking about price as a lever? Because everybody is sort of thinking about budgets every is cost conscious today. Are you sort of saying, hey, let’s use price as the lever for the first year, or at least in the short term, and maybe worry about not the right phrase a year from now, but let’s focus on closing the customer and getting the deal done? I would love to hear some thoughts on that.

Kevin
Yeah, happy having to go again on this one. So obviously, like other companies, we’ve experienced headwinds, right, we’ve had customers budgets freeze, or be put on hold for a while in deals slipped from our Q1 into our Q2. I’m assuming we’re all seeing very similar things. And what I’ve noticed, as well as a lot of companies are still going through their replanning process, which means they’re kind of in this pause mode. And so, as we’ve talked about earlier, as we started to categorize companies based on where they fit and the things that they’re experiencing. From there, we’ve looked at flexibility in some cases, we just want to help and so we’ve done what we consider revenue assessments where we’ve hooked up our solution to their Salesforce instance and have been able to drive insights right away so that they can inform the changes to their operating plan. In others we’ve done, let’s just call it financial flexibility, to allow them to start with us and flexibility through the first year, not necessarily price reductions, if you will, but more just sort of flexibility based on constraints that they have from a budget and an OpEx spend scenario. So, we’re, we’re treating them each uniquely because every company is different. We don’t have a, let’s say, a cookie cutter COVID-19 offer, but we are really trying to lead with that revenue confidence and help these companies navigate.

Tony
Yeah, I would, I would echo those sentiments, I think especially the piece that every customer is in a unique circumstance. And so being really flexible around, what does this customer need and putting first how do we add value for them is kind of the approach that we’ve taken. I’ll take a different lens on the question, Soma, which is the thing that I’ve noticed is it forces really tight sales execution. It reinforces all the discipline around doing the right things around qualification and really being dialed in on understanding, what are the challenges that this customer is going through? What is the business impact that’s available to them? And how can our solution help them and then being really proactive about articulating that, demonstrating that, getting hands on with the product. There’s no room for laziness during these times from a Field Sales execution perspective,

Scott
I would just say you both you both talked at this, being able to classify your pipeline into the heavily impacted, the lightly impacted, and being able to really get down on the deal by deal level for us has been very important. There’s always a lot of deals in the pipeline, but every quarter comes down to a handful of deals that are going to make it or break it. And we found, classifying those deals and really focusing on the ones that have potential is where we’ve seen success. I would also say that a lot of the early prospecting and selling couple weeks back was, hey, people now have time to look at technology. And that quickly burned out, right? That message, if I see that again, I think I might scream. But people do have time right now to evaluate their technology stacks, in whatever vertical, whatever space you’re playing in. And I think that’s a really strong message to go to executives with is to say, hey, while people have a little time to breathe right now evaluating your technology stack and, and how it’s being used is a strong conversation to have with folks to get their attention to get some mindshare and then to potentially see if then you can apply what Tony said and strong sales discipline to actually get a deal closed.

Soma
And we all know that, hey, sales techniques and sales approaches can vary depending on who are target customer bases. Sometimes we are targeting small and medium businesses, mid-market customers, enterprise customers, sometimes we are dealing with inbound leads, sometimes we are looking at outbound leads. And each of these things are has a unique flavor and unique nuance for how we think about go to market, or sales approach kind of thing. To the extent that this kind of thinking applies to your business or to the customers that you target, are there any best practices for how you deal with, say, SMB customer versus an enterprise customer in this situation, any sort of best practices or learnings to be had here?

Scott
I think I’ll take that here, just right out of the gate. The SMB space right now is really tough. They’re definitely tightened up on budgets and everything else. So, in that instance, you’ve really got to be looking for what is their use case and their need and if there’s a fit, then continuing the conversation, if not putting things on pause, I think is the right thing to do. And particularly prospecting thing into that group right now is tough. But in the enterprise, people are still buying people are still needing to do business. And there’s a lot of opportunity there. And what we’re seeing work is we’re having conversations in sales right now, which are much more genuine than they’ve ever been with customers. we’re much more open and transparent in our conversations. And people are seeing that. And it’s resonating, because we’re just having honest dialogue back and forth about what people’s needs are and how we can serve them. And I found that that that’s been a big help for our sales team is just being very genuine and open and building deep relationships. That’s leading to success.

Tony
Yeah, I would add that I’m seeing the same thing. And I think if that if that genuine approach, and that transparency is being reciprocated. And then I think the key is, at more of an organizational level, how quickly can we iterate and share feedback across the team. So, I think that’s the internal aspect, how do you create that collaborative environment is really important. We’ve moved to a cadence of Monday morning calls focused on topics around,  some of the things that we’re learning in dealings with customers. And then bringing in the right subject matter experts potentially, to present to us on how we might be able to help our customers. And then we’ve moved to a cadence in terms of our one on one meetings where every alternate week we do one on ones on Monday, from an AE perspective, and then on the sales engineering side, our counterparts. And then on the alternating weeks, we actually come together two on two where it’s a sales engineering manager and myself with the AE and their sales engineering counterpart. And that’s actually been really helpful at keeping people focused on the right things. And then on Fridays, we actually get together and we just spend probably two or three minutes on each person. What did you accomplish this week? What’s something that you learned and what’s something you either want to learn, focus on, or get better at in the following week, and just creating that framework or foundation to allow for the team to operate as a team, versus a bunch of individuals operating out of their houses has been really, really helpful. And I’ve seen a ton of benefit from it.

Soma
Right? Hey Kevin, you guys, like pretty much every other company on the planet now has gone through a recent process of replanning and reforecasting for the rest of the year, given everything that’s changing around us kind of thing, right? In that context, how do you think about changing compensation targets for your sales people, whether you’re adjusting the sales quota, whether it’s up or down kind of thing, so that you’ve had the right balance between doing what you think is right for the sales teams to keep them motivated and performing well, while still keeping the right business outcome in mind so that you are not on one end of the spectrum or the other. Can you share some of your thinking on that?

Kevin
Yeah, a couple of things on that.  One of the things we did was we really kind of focused our sellers, those that are purely acquisition and those that are taking care of the customer. We didn’t have that model before. Obviously, with growth and complexity, you kind of go to that model. And so, we’ve just implemented that. I’ll  look at it from two areas, for those that are account managers, one of the things we’re focusing on, is there an opportunity to renew customers early. And as part of renewing early, can you expand? Can you understand their business scenario, maybe get creative? So, we spent on early renewals, right, to try and get a quarter plus out ahead of those, right, to secure the business, right. And so, we can focus on driving value versus negotiating the different point in time,  For our sellers and their quota, yes, we’ve made a reduction, not a drastic one. Some of you have seen some of the studies that are floating out around there, I assume what revenue collective put out, quota adjustments have been from zero to 50% or 60%. So, we didn’t ones across the board based on territories that were in line with some of the top line adjustments we made to our targets for the year. We used our own solutions to try and figure out what that should be based on where we were seeing those opportunities that were pushing where they were going to within the year. What we wanted to do most importantly, was to continue to motivate our sellers, to get to feel like they had a fighting chance. And quite honestly, some of the additional things we added in their plans were new logo, right? It is just as important as protecting and surrounding and bear hugging your customers is making sure that you continue to grow me continue to bring new logos into the family.

Scott
So, I take a bit of a different approach just because we’re smaller, right, but for us, going back and analyzing the assumptions we put into the comp plan to begin with and saying do those assumptions still hold or do we need to evaluate a changing landscape. And luckily for us, those assumptions are for the most part holding. So, we’re in a wait and see mode right now on quotas and we’re going to assess at the half year, take a look and kind of see how things are coming along. But I think the most important thing from my perspective is analyzing your assumptions. And if there’s major changes, then you’ve got to address it, or you will have morale trouble real quick.

Tony
Yeah, I think adversity is such a, it just reveals what your culture is, right? And for us, we were in a unique circumstance, in part based on the performance of the company. But the message from us has been, we think we can hit our plan, and we’re still marching towards that. But it hasn’t swung so far on the pendulum such there are a lot of companies that are saying that it appears tone deaf, right, Snowflake I think the history here is that we actually last year revised our plan mid-year, from a quota perspective, not the corporate perspective. And so, knowing that as the company was overachieving, but based on the fact that we resegmented our business mid-year last year, and the company did the right thing, has built a foundation of trust where people all feel really good about, hey, we can march forward. And we know that if this turns out to not be attainable, based on circumstances outside of our control, we have a belief that the company will do the right thing.

Soma
Got it. I want to switch to one question that came in from the audience. This is a question from Gabriel, for Scott. Scott, as you were talking about this is an opportunity or there’s a good opportunity where companies, particularly SMBs, or enterprise, or whoever you are starting to think about no technology stacks. As a way to sort of say, hey, things are changing, some things work. Some things don’t work. Let me sort of take a step back and think about what technology stack I have, or I don’t have an What do I need to do kind of thing. The question specifically is the following. Do you think that people are already evaluating their tech stacks because they want to find ways to cut costs, or what do you think is the reason why this is happening?

Scott
I think, just based on my experience in the limited number of customers I’ve spoken with, and there’s two camps, or people who are doing well, and now is a time for them to evaluate, how can we continue? And how do we shore that up? And then there’s the second camp, which is definitely. there are a lot of reactive companies that have instantly said we need to reduce spend by 40%. And so, we’re seeing people come back and say, okay, who are our more expensive vendors? What is our usage looking like? And they’re starting to make decisions based on those things. And so, we’ve talked about that a little bit as a group here today, but you got to shore up your customer base, for sure. And make sure usage is there, but more importantly, when you’re going after and having these conversations depending on your product and where you’re set in the marketplace there’s at least for us a great advantage to go get share from some of the bigger players that for years have been it price increases. And the value has gone down a bit. And so, we see it as an opportunity as people are evaluating tech stacks to really get in and display share from some of the bigger players in the space.

Soma
Got it! Thanks, Scott. Here’s another question from the audience. The question is this. We are getting a lot of sales email responses such as, let’s revisit post forward. How are you navigating those situations without pushing everything out? Kevin or Tony, do one of you want to start and try to answer this?

Kevin
Part of it depends on the persona of the person. So, for instance, if the persona is a Head of Sales, or CRO which is our typical, executive buyer, or CFO, we might come back with something creative says let us realize your budget frozen, realize you see value in our solution. Let us get you on it now in a creative way. If the persona is a sales manager or an operations director who is just starting to look, we’ll keep them engaged, we’ll keep them educated. But we’ll come back and revisit when we can actually start a real process with them. I think we were finding in this world we’re all working at home. At least on our side, it’s much easier for us to set meetings and get time with people. And we continue to actually overachieve on our goals in setting what we call our RS zeros. So, we’re still doing really well in creating demand, and setting meetings and having those meetings happen. And then it’s sort of a way of qualifying is this an opportunity or is this something that we just want to continue to nurture?

Soma
Okay, Kevin, I have a sub question that is there a way where you got to think about changing your positioning or the value proposition to make it more resonating with people and They say they’re going to either wait for six months or whatever it is kind of thing, as opposed to, let’s engage now and continue the conversation. That kind of thing.

Kevin
Yeah, I think, obviously our offering is actually vital instrumentation now. So, we do, we have sort of pivoted our messaging to confidence, revenue, confidence and instrumentation and being able to help a company navigate, what is the impact this is having on the business? And how to, especially in a mobile world, where everyone is working virtually, how do you help kind of drive a consistent sales methodology and process across your entire sales organization? We really help companies do that. And so, our teams have really been enabled to continue to drive that. And obviously, we leverage challenger as part of our selling methodology and to challenge the status quo and to end in a way that we’re teaching so we’ve pivoted from what would be considered a pitch deck to a teach deck and trying to help educate our potential customers that we can help them through this environment, and it’s resonating.

Soma
That’s great. So, let me go to the next question. And this is a question that I also had, so I’m going to sort of frame my question and then sort of go to the specific question from the audience. Prior to a month ago, or a month and a half ago we were always looking at, conferences and events and other kinds of sort of physical, get togethers  as a way to reach out to customers to get leads to increase our leads to get more people to the top of the funnel, and all that fun stuff, right? That’s not happening now. So, to me, this feels like a phenomenal opportunity to say, how do I double down on what I call digital marketing? How are you thinking about doubling down on digital marketing in this current environment? And the specific question is, can you give some specific examples of how you are successfully generating leads, especially now with physical boundaries?

Tony
Yeah, I’ll take that one because one of the characteristics I would say about Snowflake in the past Soma, was that world class field marketing and that is that is central to our strategy with respect to top of funnel and influencing existing pipeline. Kevin mentioned earlier, his company being well set up and I think Scott agreed, well set up to support remote and we’re the same way, we practice what we preach as a company at Snowflake. So, we’re all in the cloud, we’re a data-oriented company. So, the pivot for us was really, really quick. And I’m just so appreciative, our entire field marketing effort. It probably took about a week to do a 180 and pivot to a virtual marketing team, and the amount of webinars that we’re doing and the thought that’s being put to behind those webinars and the ability to take our partner ecosystem and them in and let them draft off us and then attach to some of the things that they’re doing has been nothing short of remarkable from  our perspective and all of the statements that were made earlier in terms of people being at home, being able to look at things like this, there’s more time people are in less meetings, all of our digital footprint is going up every single week, and is already at record highs.

Scott
I think I throw out a couple learnings just on the smaller end, we really quick realize we weren’t spending enough on digital. And as the landscape has changed, some parts of digital have come down in cost. Others have gone up 5x. If you’re not paying attention to on the digital side, what your costs are looking like and what the rest of the market is doing. You may be spending the same amount of dollars and not getting any return right now and wondering why and those are all things you’ve got to be on top of. The other thing I just throw out real quick is just I think companies that are going to succeed through this, at least in the short term, have good outbound emotions. It’s taking that control of your own destiny and being able to know who your ideal customer profiles are, and sitting back and saying, Hey, have those ideal customer profiles changed in the last two weeks, three weeks, and then being able to. proactively go get in front of those folks. And obviously, that’s more for the enterprise sale, but I just throw that out there that digital is important, but I think success comes without bounding.

Kevin
Yeah, I think as a company, we really spent the last eight months before COVID-19 getting our top of funnel in order. We weren’t great at it before that. A lot of it was the right leadership, the right instrumentation. And so when this happened, obviously, like everyone else, we canceled all of our paid events, but we also had to cancel the events that we were doing and we do a lot of in city networking events where we bring sales operations and revenue leaders together in an online sessions like this where we share best practices and we talk. So, we continued that process virtually, where we have these regional virtual dinners. And we’ll actually send to those that are attending a way for them to either get food delivered or wine if it’s at night. And what we found is there great networking sessions and usually on them, I’ll have a couple customers who will comment, and I’ll have prospects and they’ll start actually selling and I’ll just take a backseat, those have been really effective for us. Our SDRs have gotten amazingly creative. They will share a rejection email with the team and that team will craft the response email together and that typically will get a person to react. So, I’m just I’m seeing unbelievable creativity coming out of our inside sales machine, which has been super important. I think one of the most important things that I think all of us can do as leaders for our sellers is, we’re now in a remote world and in a moment remote world, you now become more transparent. Right? We all now in front of each other on zoom, and having sellers, quite honestly who are open to being critiqued or open to being transparent on how effective they are. Are they making the calls? Are they having the meetings? I know I was one of those people, when I came to Starbucks, I had to transform I couldn’t hide. just behind the phone anymore. And so, if you can get your sellers to transform where they can now use data, and this, they’re going to become much better in this environment. The SDRs are now going through that process on our side.

Soma
Great. Thank you. And for the for the last question before we get into rapid mode. This is a question from Brad. Are you seeing projects that were classified as priority in normal times needing to be repositioned as lifeboat projects in COVID-19 times to achieve funding?

Soma
Do you want to take a crack at this?

Tony
Yeah, I would say pretty commonly, I’d say that’s a that’s a, maybe a daily occurrence in our world. So, yeah, absolutely, I think there’s everything is being reprioritized. So, things that were at the top of the list are now getting shuffled to, the middle or the bottom or uncertain. And then there are some things that were not even on the list that are now the top priority issue for our customers. And I think that just goes back to the key theme of being able to be intimate enough with your customers and your prospects to be able to have those conversations and stay close in terms of cadence and communication and understand where are things today versus yesterday or this week versus last week is the key there.

Scott
Well, I would just say that the one of the things that I think that we’ve seen important and I don’t know if this is going to directly answer the question or not, but getting close with the customer, both where they’re at so going to the communities that they’re in and listening to them, talk to their peers about what they’re experiencing, working with the channel partners to understand what they’re experiencing and what they’re going through, and taking all of these different data points into your decision making. And really getting frontline, I think that’s become much more imperative, at least for us than it was three, four weeks ago.

Soma
As part of wrapping this up, we’ve got about a minute or so to go. I thought I would summarize some of the key things that I heard in this conversation. And one of the things that you guys all have said consistently is, this is the time to strengthen your relationships with customers, or with existing customers to protect the base with pipeline customers and inside your own sales and customer relationship teams. My phrase is, you cannot overcommunicate in this environment. So please think about communicating whether to the customers or with your teams, as much as you can and need to. The second thing is customers appreciate transparency, honesty and going above and beyond to help them through this time, it’s all about engendering customer loyalty. And the more you learn, and the more customers love what you do for them, and that they will be with you for the long term. Third thing is, every customer and company has individual challenges. So, you have to be flexible, somebody mentioned, hey, it’s not a price reduction, but price flexibility. And I thought that was a fantastic way to think about, hey, what, what kind of things that we can be doing, or we should be doing to work with our customers in this tough situation. The other thing is be creative in how you work with customers, from helping them with internal insights, to helping laid-off employees land somewhere, and anything else that you think they’re facing as key challenges. And I think both Kevin and Tony mentioned this, one of the things that we do is, particularly for customers that are both existing customers, and also customers in the pipeline, categorizing them as customers who’re having tailwind and customers are having headwinds. And being able to both flexibly and creatively work with the customers depending on what situation they’re in. I thought that was a fantastic sort of piece of wisdom to keep in mind as we navigate through this. And finally, from an internal perspective, use this time to tighten teamwork, analyze internal sales assumptions. And as they are changing, because things are still changing and fluid, be ready to adjust them as and when you see changes as opposed to waiting until after the fact. These are what I thought were some of the key pieces of information that came out of this conversation. So, thank you all again. Thanks, Kevin. Thanks to Tony. And Thanks, Scott, for taking time out, and I know you guys are all busy, but. taking time out to be able to share your journey, your experiences and your learnings in terms of how go to market teams and sales teams are navigating through this tough situation. All of you be safe and take care.

Erika

Thank you for joining Founded and Funded. If you enjoyed this podcast, please like and share it with your friends. Please stay tuned for more podcasts to come your way and send us your ideas. We’re always looking for new content ideas, especially during this work from home and transition, we hope, back to the office and back to work period of time.

POSTED IN: Madrona News

Helping to Build a Platform Connecting Candidates and Companies in a COVID-19 World – Silver Linings

Plan C Is a Silver Lining in Cloud City

A few months ago we all had a pretty good Plan A, and those of us feeling extra clever had a good Plan B in our collective back pockets.

And then COVID-19 hit. Things are crazy right now for companies and all the good people that make up those companies. Nothing could have prepared us for the fall-out, and all of our Plan A’s and B’s are suddenly woefully inadequate.

Here at Madrona we’ve been working non-stop to support our portfolio company CEOs and HR leaders as they deal with the landfall of new challenges COVID-19 is causing. But it’s not enough, and I’ve been exploring what our greater role can be.

As an HR and TA leader in tech, I’m familiar with the typical open source google sheets typically passed around to communicate talent availabilities and vacancies. We are seeing the start of a mass global talent layoff, coupled with companies that are hiring like crazy. The current system for sharing this is not COVID 19-scalable.

A week ago I created a small task force, and we set out to build a platform to replace the google sheets (like this one https://bit.ly/3dOR6k6) that would be 100% free to the global tech community.

Our mission: To help those affected get back to work as soon as possible.

The team:

  • Madrona Venture Group (myself, Shannon Anderson and Matt Witt)—Seattle’s largest technology startup investor and the producers of the Founded and Funded podcast.
  • Chris Brownridge—who’s been providentially working on exactly the platform we need as a passion project. His Silver Lining platform is like the ultimate matchmaking app between employees and employers and was ready for scaling up to global proportions.
  • Jennie Ellis at Bandwidth (www.bandwidth.team)—Seattle’s most popular recruiting and workforce planning partner for startups. Jennie and Jill (see below) have expertize building and scaling massive teams and have worked through corporate layoffs as HR leaders.
  • Jill Domanico at Skytap—which provides businesses with the capability to run traditional workloads in the public cloud.

Our Plan:

Scale the Silver Lining platform as a not-for-profit, targeted solution that connects candidates and companies. 100% free to everyone. It’s designed so everyone can contribute and benefit. Whether that’s a company forced into layoffs, laid-off employees with great skills, or companies that are hiring and desperately need talent right now.

Why a New Platform Now?

Those of us on our task force are really busy right now. COVID-19 has created more work for us, not less. But we’ve all built careers by focusing on integrity, compassion, and teamwork. And we couldn’t just look away while our friends, neighbors, and casual connections risk losing everything.

We’ve experienced the powerful impact of positive collaboration. We’re curious and persistent learners. And we all believe that Silver Lining is not only a great solution to today’s challenges, but the right thing to do for the sake of our colleagues, entrepreneurs, and country.

How Does it Work?

Companies Who Are Hiring: Use Silver Lining for free. Create a profile and source/contact candidates. Create free unlimited postings and perhaps donate a few dollars to support the effort. (Any extra proceeds will be donated to the WHO Covid-19 Response Fund.) The updated talent dashboard allows for candidate searches by last employee, last job title, location, and job function.

Companies Who Are Laying Off: Use Silver Lining to confidentially submit names and emails of those affected by lay-offs. Once the names are submitted, each candidate will receive an email inviting them to opt in or out. Free of charge. We also have a sample email you can access to forward on to candidates so they know someone has submitted their name.

Companies in Both Scenarios: Use Silver Lining to source/contact candidates and submit names of those being laid off.

Candidates Seeking Work: Submit your profile and preference and then search for jobs. Share your resume, LinkedIn profile, experience level, ideal company size, and desired industry all for free.

Is It Working?

Yes. Candidates are already being approached for work they otherwise wouldn’t have heard of. Employers are discovering incredible talent with immediate availability and are actively interviewing.

We are initially focusing on the Seattle area, with expansions to all US based technology hubs and globally over the next week. Here’s where we’re at:

  • Nearly 2,000 active profiles from companies such as Sonder, Zipcar, Expedia, Bird, and Lyric, and these numbers are growing substantially by the day
  • Companies forced to lay off are submitting their employees to the platform and making a donation to support the service. (Remember, employees opt in before any information is shared on the site)
  • 140 companies have signed on to sourced and reach out to candidates
  • Over 500 live job posts from companies hiring

Are We Done?

No way! As we continue to develop Silver Lining, we are looking at other supportive initiatives for the community, in particular around career coaching, resume writing, and emotional support.

If you are interested in helping out, please contact chris(Replace this parenthesis with the @ sign)getsilverlining.com.

If you’ve been affected by a layoff (as an employee or a company), check Silver Lining out here. Silver Lining will remain 100% free to use for candidates and employers.

 

 

 

 

 

 

 

POSTED IN: Madrona News

Founded and Funded – Deploying ML Models in the Cloud, on Phones, in Devices with Luis Ceze and Jason Knight of OctoML

Photo: Luis Ceze

OctoML on Octomizing/Optimizing ML Models and Helping Chips, Servers and Devices Run Them Faster; Madrona doubles down on the Series A funding

Today OctoML announced the close of their $15 million Series A round led by Amplify Partners.  Madrona led the seed (with Amplify participating) and we are excited to continue to work with this team that is building technology based on the Apache TVM open source program.  Apache TVM is an open-source deep learning compiler stack for CPUs, GPUs, and specialized accelerators that the founders built several years ago.  OctoML aims to take the difficulty out of optimizing and deploying ML models.  Matt McIlwain sat down with Luis Ceze and Jason Knight on the eve of their Series A, to talk about the challenges with machine learning and deep learning that OctoML helps manage. Listen below!

Transcript below:
Intro
Welcome to found it and funded My name is Erika Shaffer and work at Madrona Venture Group and we are doing something a little different here. We’re here with Matt McIlwain, Luis Ceze, and Jason Knight to talk about OctoML. I’m going to turn it over to Matt, who has been leading this investment. We are all super excited about OctoML and in hearing about what you guys are doing.

Matt McIlwain
Well, thanks very much, Erika. We are indeed super excited about OctoML. And it’s been great to get to know Luis and Jason over many years, as well as the whole founding team at OctoML. And we’ll get to their story in just a second. The one reflection that I wanted to offer was that this whole era of what we think of as the intelligent applications era has been building in its momentum over the past several years. We think back to companies like Turi that we were involved with and Algorithmia and more recently Xnor and now I think a lot of those pieces are coming together in the fullest of ways, is what OctoML is doing. But rather than hear it from me, I think you’ll all enjoy hearing it more from the founders. So I want to start off with a question of going back, Luis, to the graduate school work that some of your PhD students were doing at the University of Washington. Now, tell us a little bit about the founding story of the technology, and the Apache TVM open source project.

Luis
Yeah, absolutely. First of all, I would say that if you’re excited, we’re even more excited about this and super excited about the work you’ve been doing with us. Yes, so the technology came to be because there was this observation that Carlos Guestrin and I had a few a few years ago, actually four years ago now, that said that, there are quite a few more machine learning models that were becoming more popular, more useful, and people tend to use them but then there’s also a growing set of hardware targets, one could map these models to so when you have, a great set of models and growing set of hardware targets. Back the question, so I said, “Well, what’s going to happen when people start optimizing models for different hardware and making the most out of their of their deployments.”. That was the genesis of the TVM project. So it essentially became what it is today a fully automated flow that ingests models from expressing a variety of all the popular machine learning frameworks, and then automatically optimizes them for chosen deployment targets. We couldn’t be more grateful to a big open source community that grew around it too. So the project started as an open source project from the beginning. And today, it has over 200 contributors and is in active deployments in a variety of applications you probably use every day from Amazon, Microsoft and in Facebook.

Matt
I think that our listeners always enjoy hearing about founding stories of companies and your founding team, and principally some of the graduate students that you and Carlos had been working with. Maybe tell a little bit about that and then it’d be great to have Jason join in since he joined up with all of you right at the beginning.

Luis
Absolutely, as soon as is a great way of looping in Jason into the right moment, too. So yeah, so as TVM started getting more and more traction, we did the conference at the end of 2018. And we have well over 200 people come and we’re like, “Oh, wow, this there’s something interesting happening here.” and, it was one of those moments where all stars align where the key PhD students behind the project, including Tianqi Chen, and Thierry Moreau, and Jared Roesch, were all close to graduation and thinking about what’s next. And I was also thinking about what to do next. And then Jason was at Intel at that time, and was really interested in and was a champion of TVM on the Intel side. And He then said, Oh, it turns out that I’m also looking for opportunities. So it’s like since he came and visited us and started talking more seriously and the thing evolved super quickly from there. And now you can hear from Jason himself

Jason
Yeah, actually my background is a data scientist. And through a complicated backstory, I ended up at Intel through a silicon hardware, startup acquisition. And I was running a team of product managers looking at the software stack for deep learning and how a company like Intel was going to, make inroads here and continue to impress and delight our huge customer base. And I was helping to fund some of the TVM work as a result of that and really seeing that, despite my best efforts at Intel, kind of pushing the big ship a few degrees at a time towards these kind of new compiler approaches to supporting this type of new workload and new hardware targets, it was clear that the traction was already taking place with open source TVM project and, and that was where the action was happening. And so it was a natural timing and opportunity for something to happen here in terms of not only Intel’s efforts but more broadly, the entire ecosystem needing a solution like this and the kind of pain points I’d seen over and over again at Intel of just end users wanting to do more with the hardware they had available and the hardware that was coming to them and what needed to happen to make that realistic. And so that was a natural genesis for you me and Luis to talk about this and, and make something happen here.

Matt
That’s fantastic. And of course We had known Jason for a little while at Madrona. And we’re just delighted that all these pieces were coming together. Hey, Luis, can you say a little bit more because you had that first conference in December of 2018 and then a subsequent one in December of 2019. It seemed to be that not only the open source community was coming together, but folks from some of the big companies that might want to help somebody build and refine their models or deploy their models were coming together too and that’s kind of a magical combination when you get all those people working together in the same place.

Luis
Yes, absolutely. So, yes, as I said, the conference that made us realize something big was going on was December 2018. And then a year later, we ran another conference. And by that time, OctoML had already been formed. So we formed the company in late July of 2019. And then by December, we already had the demo of our initial project – our initial product that Jason demoed for the conference. Yes. So in the December 2019 conference, we had pretty much all of the major players in machine learning – those that use machine learning to develop machine learning, were present. So we had, for example, several hardware vendors join us. Qualcomm was being fairly active in deploying a hardware for accelerating machine learning on mobile devices. They had Jeff Gehlhaar, there on the record saying that TVM is key to accessing, their new hardware called hexagon. We had ARM come and also talk about their experience in building a unified framework to unify machine learning support in CPUs, GPUs and their upcoming accelerators. We had Xilinx and we had a few others and Intel who came and talked about their experience in this space. So I wanted to add more to that, what was interesting during that conference was having companies like Facebook and Microsoft talking about how TVM was really helpful in reducing their deployment pains of optimizing models enough such that they can scale in the cloud. And also such that it can actually run well enough on on mobile devices. This was very heartwarming for us because it’s confirming our thesis that a lot of the pain in machine learning, in using machine learning modern applications is shifting from creating the model to really deploying and making the best use of them. And that’s really, our central effort right now is to make it super easy for anyone to get their models optimized and deployed. And by offering our TVM in the cloud flow, so maybe Jason can have a little bit to that from the product side.

Jason
Yeah, so it’s, it’s great seeing the amount of activity and innovation happening in the TVM space at the TVM conference. But it’s clear that there’s still a long, long way to go in terms of just better supporting the long tail of developers who maybe don’t have the amount of experience that some of these TVM developers do in terms of just getting their model and optimizing it and running on a difficult target, like a phone or an embedded platform. So yeah, we’re happy to talk more about that. We actually just put up a blog post kind of detailing some of the things we talked about at the TVM conference. And, and we’ll be giving out more details soon.

Matt
Yeah, maybe I think what’s interesting, if I think about it, from a sort of a business perspective is, on the one hand, you have all kinds of folks, with different levels of skills and experiences, building models, refining their models, optimizing their models, so that they can be deployed. And then you’ve got this whole sort of fragmented group of not just kind of chip makers as you’re referencing but also the hardware devices, that those chips go into to run, whether that’s a phone or a camera or other kinds of devices that you know can be anywhere in a consumer or commercial sense. And what’s interesting to me what I like about the business is that you guys are helping connect some of the dots between those worlds and, a kind of a simplified end to end sort of way. And it would be interesting to spend a little bit more time and maybe talk about the, the the Octomizer, your kind of your first product, specifically, but more generally, what you’re trying to do and connecting those worlds.

Jason
Yeah, definitely. So one way to look at this is we’ve seen a lot of great work from TensorFlow from Google and PYtorch from Facebook and others on the training side for creating deep learning models and training those from data sets, but when you look at the next step in the lifecycle of machine learning model, there’s a lot less hand holding and tools available to get those models deployed into production devices. When you care about things like model size and computational efficiency, and portability across different hardware platforms, etc. And so this actually sits right at the one of the difficulties of the underlying infrastructure and how that’s built with the dependence on hardware kernel libraries. So these are handwritten, hand optimized kernel libraries built by each vendor. And these are, somewhat holding the field back and making it more difficult for end users to get their models into production. And so TVM and the Octomizer that we’re building on top of that makes it easier to just take a model, run it through a system, look at the optimized benchmark numbers for that model across a variety of hardware targets, and then get that model back in a packaged format that’s ready to go for production use, whether you’re using writing a Python application, or you need to bring out every bit of performance with the C shared library and a C API. Or a Docker image with a GRPC wrapper if you want some easy serverless access. So that’s what we’re building with the Octomizer. And it’s designed to be a kind of one pane of glass for your machine learning solutions across any hardware that you care about. And, and, and then we build on top of that with things like quantization and compression and distillation as we move into the future.

Luis
A couple more points to that. Yeah. So those are definitely important. And is the very first step, we’re taking. One interesting to realize is what we’re doing here is that TVM really offers this opportunity of providing a unified foundation for machine learning software on top of our idea of hardware. So by unifying the foundation, in which one could use to deploy models you also create the perfect wedge for you to add more machine learning ops into the flow. So if you know people are starting to realize more and more that, regular software development has enjoyed, incredible progress in DevOps. But now, machine learning doesn’t have that, right. So when we see the Octomizer has a platform, which we start with model optimization and packaging, but it’s the perfect point for us to build on to offer things like instrumenting models to monitor how they’re doing during deployment, to also help understand how models are doing, and essentially provide a complete solution of automated services for machine learning Ops,

Jason
One of those applications as well as training on the edge. In addition, in the sense that training is no more than just a set of additional operations that are required. And having a compiler based approach, it’s quite easy to add these extra set of ops and deploy those to hardware. And so getting things like training on the edge is in target for us in the future as we look forward here.

Matt
That’s great. Well, I want to come back a little bit to the prospect side, but I’m super curious. Now we talked about the company name OctoML. We talked about the product name Octomizer. How did this all come about? How did you guys come up with this name? And, and it’s a lot of fun. I know the story, but for the most the folks here, what, what’s the story?

Luis
Okay, all right. So I always say I’m sure Jason and I can interleave with because we have, there’s multiple angles here. So it turns out, they’re both Jason and I and other folks in our group have an interest in in biology. So nature has been an incredible source of inspiration in building better systems. And nature has evolved incredible creatures, but when you when you look around and you think about some creatures like an octopus, you see how incredibly smart they are. They have distributed brains, right? So they are incredibly adaptable, and they’re very, very, very smart plus very happy and light hearted creatures and creative so this is something that To like resonated with everyone, so it stems really from, from an octopus and, and so like a lot of what we do now has a nautical theme. And then we have the Octomizer, you’re going to hear more in the future about something called aquarium and Cracken and the Barnacles, which are all things that are part of our daily communication, which makes it super creative and light hearted. So all right, Jason, maybe I talked too much. It’s your turn. Now,

Jason
I guess one thing to point out is we really applied machine learning slant to even our name selection, because the objective function or set of regulators, we applied to the name selection process itself, because it needs to be relatively short, easy to spell, easy to pronounce, somewhat unique, but not too unique. And then it has, all these other associations that Luis was mentioning or similar associations. So those are definitely in the objective function as we were working through this process. It’s also rhymes with optimal as well. So, yeah, it took us a while to get there, but we were happy with the result.

Matt
I think you guys did a great job. And I also like the visual notion of, even though they’ve got distributed brains that there is this sort of central part of an octopus and then there’s it can touch anything. So it’s kind of this build one’s gonna run many places sort of image that sort of flows through, but maybe I’m stretching it too much now

Luis
No, that this excellent point is that we do think about, TVM being in our technologies really be a central place, I can touch multiple targets in a very efficient and adaptable and automatic way, right. It’s a definitely within scope of how we’re thinking as well. So great.

Jason
So 9 bits in a byte by being a core primitive computational power of two.

Matt
Very good. Coming back to the open source community, you guys have partly because of your your academic backgrounds and in involvement in other ways in the open source community. So how is it? How are things working within the Apache TVM community along alongside OctoML. So very important time in the life of both and curious to get your thoughts on that.

Jason
Yeah, we really see OctoML as doing a lot of and pushing a lot of work that needs to be done in the open source community, eating our vegetables. So we’re currently ramping up the team to just put more of that vegetable eating spirit in the TVM project and helping pitch in on documentation and packaging, all those things that need to be done. But it’s difficult. Open source is known to attract people to scratch their own itch and solve their own problems. But these kind of less sexy tasks often get undone for long periods of time. So we hope to be a driving force in doing a lot of that. And of course, working with the community more broadly to, connect the dots and help coordinate larger structural decisions that need to be made for the project. And all of this being done under the Apache Foundation, umbrella and governance process. So we’re working closely with the Apache folks and continuing to, smooth and work under that umbrella.

Luis
Yeah, just to add a couple more thoughts here, we are contributing heavily to the Apache TVM project in multiple domains as Jason as Jason said, and we think that this is, also very, very fortuitous for us because we see TVM as well as you one could go and use TVM directly to go and go do what they want. But then, as they start using it they realize that there are a lot of things that a commercial offering, could do, for example, make it much more automated, make it plug and play. TVM the core idea from that start was a research idea and now it’s part of what it I, iss using machine learning for machine learning optimization, and that can be made much more effective with the right data that we are helping to produce as well. So, we couldn’t be happier with the synergy between the open source project, open source community, and also what we’re doing on our private side as well.

Jason
Also, when one thing that’s been nice to see is in talking to users, or soon to be users in the TVM project, they’ll say, Oh, it’s great to see you guys supporting TVM. We were hesitant of kind of jumping in because we didn’t want to jump in and then be lost without anyone to turn to for help. But having someone like yourselves, knowing that you’re there for support makes us feel better about you putting those initial feet on the ground there. So that’s been really nice to see as well.

Matt
Now, that’s really interesting and, we are recording this in a time when in fact, we’re all in different places because we’re in the midst of the Covid-19 crisis. I’m curious on a couple of different levels. One, is with, the open source community two is with the some folks that are interested in becoming, early customers, but even just Thirdly, with your team, how are all those things going for you all working in this environment? And certainly there’s companies like GitLab and others that have had lots of success, both, working as distributed teams and working with their customers in a distributed way. What are some of the early learnings for you all on that front?

Jason
Well, since TVM, start as an open source project, then a lot of us have that distributed collaborative, blood flowing through our veins to begin with. So working remotely in a distributed, asynchronous capacity is kind of part and parcel to working with open source community. So luckily, both those community and us as a company have been relatively untouched on that front.

Luis
Oh, absolutely. So when we when we started the company, we we’re heavily based in Seattle but in no Jason is based in San Diego that started initiatives and we started growing more distributed – we hired people in the Bay Area. We had people in Oregon in the team and it’s working so well it’s been so productive to we were very, very fortunate and lucky not only we already started somewhat distributed to begin with, and now it’s serving us really well. We had great investors with us by to being stuck with us and, and fun years right to the right moment where we need to continue growing. And in fact, we are hiring people in a distributed way. Like just yesterday we had another one another person that we really wanted to hire, assign and join, join our team. So we are fully operating in all capacities, including interviewing, hiring and doing this submitted way and I haven’t noticed any hit in productivity whatsoever. If anything, I think we’d probably be even more productive and focused, right.

Jason
And on the customer side, I would say been a mixed bag in terms of, there are those customers that kind of have some wiggle in their direction or roadmaps here and there, but then there’s also customers that have, orders of magnitude increase in their product demand because they’re serving, Voice over IP or something to that effect. It’s being really heavily in demand in this time of need. And so it just depends, and so luckily, there’s not been any kind of negative shifts there.

Matt
Yeah, you guys, I’ve really been blown away by your ability to attract some just incredible talent to the team here in just a short period of I don’t know, like, seven or eight months of really being a company and I get the sense that that momentum is just going to continue here. So congratulations on that front. I’m curious on the customer front, to pick up on what you were saying, Jason, what are you finding in terms of, kind of customer readiness? I think back to even a few years ago, it seemed like it was almost still too early, there was a lot of, tire kicking around applied machine learning and deep learning. And people were happy to have meetings, but they were more kind of curiosity meetings. Seems like there’s a lot more doing going on now. But I’d be interested in your perspectives on the state of play.

Jason
Yeah, but I would say it’s more than timing, it’s variance, and that we see a huge range and customers that have deep pain in this today in terms of getting computational costs on their cloud bill down yesterday. And because they’re spending, tons of GPU hours on every customer inference request that comes in. And then you have really large organizations with hundreds of data scientists trying to support these very complex set of deployments across, several, half dozen or dozens of different model hardware endpoints. And, and so there’s a lot of pain and a lot of different angles. And it’s, it’s mixed over the set of value propositions that we have performance, ease of use and portability across hardware platforms. And so it’s, been really nice to see, we’re just talking to a large telecom company just the other night. And yeah, just huge amounts of demand. And so it’s, it’s really nice to have the open source ecosystem as well, because it’s a natural, funnel to, to try to pick up on this activity and see, oh, we see someone coming through using the open source project and talking about it on the forums and we have going have a conversation. with them, and there’s naturally already a need there, because otherwise they wouldn’t be looking to the open source project.

Luis
Yeah. And just just one more thing that I think it’s interesting to observe that, yes. So there is there is indication that is, it’s early, but already big enough to have serious impact. For example, we hear companies wanting to move computation to the edge to not only save on cloud costs, but be more privacy conscious. Right now, as you can imagine, as a lot of people working or working from home, all of a sudden, we see a huge spike in conditional demands in the cloud. And, we have some reasons to believe that a lot of that involves running machine learning models in the cloud, that, companies will have to, reduce and improve the performance, because otherwise there’s just simply no way to scale as fast as they need to. So We’re seeing that this spike in demand of cloud services as well being a source of opportunity for us.

Jason
Also, also, one thing I’m excited about too, is on, on the embedded side of things, it’s one reason why there is there’s pent up demand. But it’s, essentially, there hasn’t been much activity in terms of machine learning and the embedded side of things, because there haven’t been solutions out there that people can use to go and deploy machine learning models into embedded processors. And so being able to kind of unlock that chicken and egg problem and solve one, crack the egg essentially, and have a chicken come out and start that cycle, and really unlock the embedded ml market. It’s really exciting proposition to me, as we get there, through our cloud, mobile and embedded efforts.

Matt
And I think that’s what we saw to from, having, been fortunate to, provide the seed capital last summer with you guys into the early fall. And really, be alongside you from day one on this journey. And I’m interested in sort of two things. One is, I think, in retrospect, right, you all made this decision in the early part of this year, that there was enough visibility enough evidence that you were going to go ahead and, and raise a round. And that’s looking like it was well timed now but maybe a little bit of like, why do you decide to do that? And then the second question is, well, what are you going to do with this $15 million that you’ve just raised? And and what’s the plan in terms of, growing the, the business side of the the TVM movement?

Luis
Yeah, absolutely. So we, as I said, we, it was incredibly well timed, by, by luck and good advice as well. Yeah. So at that time, what motivated us was that we had an opportunity to hire, incredible people, and it was quite faster. We actually be more successful in hiring than we could have even, hope for in the best case. So it’s like why not, in this climate when we have interesting people to hire and amazing people, we just go and hire them and need resources for that. And that was the first, let’s do this early. But and now know, as we, as Jason said, we started to engage with, with more customers and getting our technology in the hands of customers. And this is immediately puts, more pressure on us to hire more people to, make sure that our customer engagements are successful. So we’re going to staff that up and make sure that, we have the right resources to make them successful. And also as we as as we go to market and explore more, more thesis on how we build a business around the Octomizer requires effort. And that’s what we that’s we’re going to use the funds for is increase our machine learning systems technology team, and also, grow our platform team because what we’re building here is essentially a cloud platform to automate all of these, a process that requires, a significant amount of engineering. And we’ve been very, very engineering heavy so far naturally because we’re building the technology, and we are very much technologists first. But now’s the time to definitely beef up our business development side as well. And that’s where, a good chunk of our resources are going to go as well.

Jason
Also, one thing to point out is just given where the TVM project sits in the stack, in terms of, having the capability to support pretty much any hardware platform for machine learning, you’re talking about dozens of hardware vendors here, silicon vendors, and then basically be able to cater to any machine learning and deep learning workload on top, whether it’s in the cloud, mobile or embedded, and you’re talking about a huge space of opportunity, right and, and that’s just the beginning in terms of, there’s extensions upstream to training and downstream to post deployment and there’s classical ml and science as well. And so each one of these Kind of permutations is a huge effort in itself. And so just trying to take even small chunks of this huge pie is a big engineering effort. So that’s, that’s definitely where a lot of the money spent is going at this point.

Matt
Well, we’re really excited and honored to be continuing on this journey with both of you and they’re in the not only the founding team, but of course, all the talented folks that you’ve hired. And I think from a timing perspective, the fundraise was, well, timed. But I think from a market perspective, the role that you all are trying to play, the real problems that you’re trying to solve are exceptionally well timed. And so we’re looking forward to seeing how that develops here in the in the months and years ahead.

And we’re excited to be here. Thanks, Matt.

We couldn’t be we couldn’t be more excited. Thank you. Thank you for everything.

 

POSTED IN: Madrona News

Founded and Funded – Building a Distributed Workforce with Those Who Have Done It

What a change we have all experienced in these last few weeks.  Everything has been shifting at an incredibly rapid pace and we have all had to adjust both our personal and professional lives.  For those of us that can, we are primarily working at home, amongst our dogs, children and family.  We have become very familiar with Zoom, Google Hangouts, Microsoft Teams, Bluejeans, etc as we toggle between them.  But is it working?  Most likely, some things are and something aren’t, as we adjust to this new cadence

Recently, we were able to get a great group together to talk best practices in working and managing remotely.  We had Carlos Vega, CEO of Tesorio, Barry Wark, CEO of Ovation and Kara Hamilton, Chief People and Cultural officer of Smartsheet.  Together they talked about the challenges of keeping things on track  in a remote environment.   With big company goals, how do we ensure we are all marching towards them during this disruptive time?  How do we help our teams be productive and effective?  What tools have been most helpful?  We turned this conversation into a pubic podcast which you can listen to below my summary of the recommendations.

The conversation was kicked off with the topic of the cadence of meetings and work – have they changed as we have transitioned from being physically together verses in our remote locations?  Overall, the need for schedule and ‘showing up’ was emphasized, but this was combined with the understanding that this is an unusual time.  Due to kids being home and schedules being disrupted, the group emphasized the need to have great trust in your team – not to micro-manage.  But some specific tips that seem to help the day be more effective were:

  1. In the morning, act as if you are going to the office. Wear office appropriate attire, shower, get  your coffee, etc.  Have a concrete start to the day.
  2. For meetings turn your video on. It is important to see facial expressions and be present when a meeting is happening.
  3. Have a coffee or lunch virtually with a team member. By not being together in the office there are casual interactions that are missed.
  4. As a leader, have a standing time where you are on your video conferencing for a few hours and folks can ‘drop’ in.
  5. At the end of the day, have a transition. It used to be a commute – now maybe it is a walk outside.
  6. Create time in your calendar for thinking time. Block out time with no video meetings or other digital distractions

We also discussed the importance of tools that have been effective. What came out the most was regardless of the tool, the need for documentation was critically important.  It is easier to have misunderstandings when virtual, so writing down everything from process to a decision is imperative.  In regards to tools to enable all of that:

  1. Video Conferencing – Zoom, Microsoft Teams, Google hangouts
  2. Collaboration – Slack, Smartsheet, Confluence, Notion
  3. Fun! – Donut (nudges different employees to meet each other)

Culture and Hiring is more challenging when working remotely.  While we all work on culture even when we are together, much of it happens just through be present with each other and modeling it.  This is much tougher in a digital environment.  Some suggestions were

  1. Again – write it down! The values and goals to help communicate culture
  2. Remember you are still leading and living them by example even virtually.
  3. When not in a Covid crisis, bringing the company together multiple times a year is critical.
  4. If you feel you should get on a plane (not in this crisis period!) don’t hesitate – do it!
  5. Hiring – the job spec really to be written down and fully agreed to. Then in the virtual interview be more specific about what each person is interviewing for.
  6. OnBoarding – ensure that the new hires first day and week are full of intro meetings, virtual lunches. Also, sending swag or a care package that first week to the employee goes a long way.

Managing through this period is bringing new challenges to all of us.  Clearly, just adjusting to the new economic environment and the health of our people are the first things to address.  Hopefully the ideas above can help us handle them in a more constructive and productive way.

Transcript

Hope Cochran

So guys, thanks for joining. And you know, clearly we’ve all had dramatic changes in our life changes that we could have never ever predicted. I was just on a call with another CEO. And we were just commenting on the fact that we do a lot of scenario planning, but this is one we could have never drummed up in our imaginations. So here we are. And it’s been major changes to both our personal and our professional lives. And you all have the difficult task of driving companies that are supposedly growing quickly and have big goals and ambitious deadlines. And so how do we keep those on track during this time? Now, I brought together three panelists who have dealt with this before this period, meaning working with remote workforces. And so we thought we could pull us all together I’ll talk about some best practices as to what we found to be effective during this period and building things from the ground up in this way. So we’ve got Barry Wark from Ovation on with us, Carlos Vega from Tesorio, on with us and Kara Hamilton from Smartsheet.           And so I’ll just let them kick it off by introducing themselves and talking about how they built their companies. With this distributed workforce in mind from the ground up. Carlos, you want to kick it off?

 

Carlos Vega

Certainly, thank you for having us.

 

Carlos Vega

So, Carlos Vega, co founder and CEO of Tesorio. We’re a Series A stage company, Madrona letter A. And we’re very lucky to work with folks like Hope. And so our company you know, I’m originally from Panama. Probably not in San Francisco, I’m in Panama right now just don’t have a pretty Panama background. And my wife’s also from Panama. So I always knew that we would eventually move back. And so we started our company to be distributed. And so we are today based in have an office in Burlingame in the Bay Area. But we only have about eight or nine of our 31 employees there. Everyone else is distributed across the United States. And then we also have people in Brazil, Mexico, Colombia, and Uruguay and in Panama, so it’s a it’s been an exciting ride. I guess the one thing I’d say is that we have to be, you know, deliberate about how we do things more than they would happen if everyone was face to face. And yeah, and company background. In case you’re wondering, what we do is we help companies manage their cash flow actually. So manage their accounts receivable. Time their accounts payable strategically out so the high party vendors are getting paid that sort of thing. It’s a good time right now to be doing those things so I’m we’re trying to do it ourselves and eat our own dog food. So happy to be here and thanks for having me, Hope.

 

Hope Cochran

Yeah, I you know cash right now is King and I know that there was a webinar last week on that very topic. Carlos your product is right in the sweet spot of it so I’m sure it’s getting used widely and deeply by your customers at this moment. Carlos, can you just remind us how many employees Tesorio has currently?

 

Carlos Vega

Yes, we have 31 full time employees. We have also five contractors in Brazil and five contractors in Argentina as well.

Barry Wark

Thanks. Well, it’s a pleasure to be here. Thank you for inviting me. I’m Barry Wark. I’m the co-founder and CEO of Ovation. We’re a Series A clinical informatics company.

 

We’ve got 35 people now in 12 states and a dev team in Paraguay as well. And we, we operate in a very specific vertical, clinical diagnostic labs. There are some amazing world experts in this field in the US, but they’re not all in one place. And so we built ovation from the ground up as a distributed company, knowing that we were going to have to recruit that domain expertise, wherever it was. And we built some of that muscle originally. And it’s now I think, serving us pretty well.

 

Hope Cochran

Yeah. Are you is your company at all involved in helping out with the virus right now? Barry?

 

Barry Wark

Yeah, we’ve had a busy week. Yeah, we’ve got a number of labs that should be coming on this weekend with testing. We’re hoping to make a significant impact in the US testing capacity probably early next week.

 

Hope Cochran

That would be very well received. Thank you for that work. And how many employees are you currently?

 

Barry Wark

We’re currently 35 people

 

Hope Cochran

So Kara, you’re in a bit of a different stage with Smartsheet at but clearly very distributed as well as you guys build a product that helps distributed work. And just so the group knows Perez, the chief people officer and head of culture there at Smartsheet, which I think is definitely important aspect to this conversation.

Thank you Hope. Thanks. Thanks. Hello, everybody. Yes, I am the chief people and culture officer for Smartsheet. And we do provide a collaborative work management platform. So we are in the collaboration space, trying to best practice really with our own workforce. We have grown we are publicly traded now. We’ve grown from 30 people to 1600 in less than eight years, and Madrona was our first VC partner. So part of the family here. We have those 1600 employees are across Bellevue, Boston, Edinburgh, London and Sydney. And I would say we’ve grown from a very in office local to now a global company. And it’s the work has been. There’s technology work to do and tooling. And there’s also like a cultural, I think Barry mentioned this intention. And so I think they’re both equally important. growing into that.

 

Hope Cochran

So, yeah, that’ll be good to talk about. And let’s kick it off with just talking about what is the cadence of work, meaning, you know, when you come into an office, there’s kind of standard norms, you come in in the morning and you leave in the evening, whatever that looks like. How is that different in a virtual setting? Whoever wants to take it away.

 

Carlos Vega

Yeah, I’m happy to start unrelated to work it starts like with yourself Actually, I’m not all combed and shaved just because of this webinar. I actually do follow that routine as if I were going to the office. You know, I think people think remote work is great, I get to work in my PJs, but that there’s something like psychological about just preparing yourself and think you’re to work. So that’s, that’s pretty important the morning routine, and the other one which often gets forgotten, and I’m not good at it. But probably most co founders on this on this line are not going to do either is unplugging at the end of the day. You know, I can share what our teammates do.

 

Hope Cochran

I really struggle with that.

 

Carlos Vega

Yeah, yeah, I’m not I’m not the best example for that. But you know, our teammates Do you know, go for a walk or go for a run at the end of the day to simulate the commute, if you will, or you know, people just very explicitly changed our slack status or something like that. So yeah, so on that end, right? That’s a little bit on the personal side. And then on the work side, I think it all starts with a culture of trust, which is something we can talk about later. But that’s that’s the bit that creeps in the back of your mind like I was previously an investment banker. And at Lazard it’s all about FaceTime not the app, but you better be at your desk, you know, leaning forward with like, madly typing away in Excel all day and if the MD walks by and doesn’t see you there, you’re not working, it doesn’t matter what you’re doing. And so I’m not saying that’s exactly how I manage but, but that’s one of those things that really going completely on the other end is critical, which is making sure you trust your team otherwise you end up micromanaging so we can talk about that later, I’m sure. But over to someone else.

 

Hope Cochran

Barry What have you found similar? Yeah. Oh,

 

Kara Hamilton

I was just gonna say I think the culture of trust is so important and also a mutual understanding of priorities so that we’re all working on the right things. We have a lot of people leaders at Smartsheet that have employees on their team across many time zones. So also being intentional about when we’re going to check in so that people in all areas are feeling like they’re connecting during their work day. And I think that takes a lot of flexibility and intention from people leaders, to really set their teams up for that kind of healthy connection.

 

Barry Wark

Yeah, I think that I think that’s a really good jumping off point. We think a lot about trying to design our interactions and our work environment to leverage what’s great about distributed teams, but also substitute for what is lost when you’re not all in an office together. So one of the things that we find is we somewhat select in some cases for people who want to work from home because they have a child or a parent or some other dependent, that they are responsible for at, you know, odd times of the day. And that work from home schedule allows them to contribute, and, and maintain those other responsibilities. And so, you know, we don’t have a, you know, if you’re sitting at your desk 8am to 5pm kind of approach. It’s very much a, like I said, you have to trust people to be doing their work. And then we have intentionally scheduled sync up points, right, like standups or meetings. And, and, and on the flip side, trying not to spend all of our day on zoom in meetings, right? Something that we often rely on in office environments is we can have a coordination meeting, and then you get, you know, diffusion of knowledge from that meeting, just by people sort of walking around and talking to each other. You don’t get that in a distributed environment. And so we have to design for communicating what happens in those meetings without having to have you know, 1000 one-on-ones to train for that knowledge, and I’d say the last part of cadence that we think a little bit about is when are we actually going to meet up together in person. So we are very intentional about currently Ovation does three, all hands meetings a year, we do it in a location. And it’s, although there’s a little bit of business it’s very intentionally, mostly social and getting to know each other. And part of what Carlos was talking about trust is really hard to build over Slack and Zoom. It’s much easier to build in person, and then transfer that to the distributed environment.

 

Hope Cochran

Yeah, so you’re saying like three meetings a year or gathering zero of the company, Carlos, I feel like you’ve done a similar type pattern.

 

Carlos Vega

Yeah, that’s accurate. Yeah. So what we try to do at least one annual like everyone gets together, but then the different managers have the freedom to basically create all sides for specific purposes, right? So we have a pretty big project we’re working on with folks in different countries and different teams all together. So we all went to Nashville, right?   Which was fun, but the point is really all coming together can really there are certain things which to be honest, are just better done in person. And coordinating those big projects and the timelines and hammering out the details. Sometimes is better to just bring together and so some of that budget from the bigger offices can be dedicated for people to selectively use and that’s part of that trust factor right? Like if a manager of a team or product owner initiative owner is saying like, Look, I think we need to do this and they have a strong argument for it and then going for it is something that’s powerful.

 

Hope Cochran

Yeah. So, Barry you touched on it briefly, but I thought we could dive more into it that kind of meeting cadences meaning, like meeting with your direct team, like do you have regular times that you try and coordinate every week? Or how do you approach that?

 

Barry Wark 13:30

So I personally do scheduled one on ones with all of my team. Again, because we don’t have that sort of passing in the hall interactions always. Most of our teams do team stand ups and then you know, scheduled one on ones. But we also have started doing we call them random coffees, and we, you know, spin a wheel each weekend and assign people to find some time just to sit down over zoom or or chat or something and have a coffee. And what we found is that that feels like

 

Barry Wark 14:11

it may be taking time that you’d want to be doing something else. What we found is that it’s actually reduced the number of meetings we have, by more than the total number of minutes that people are spending and I’m just because we get a little bit of that, that diffusion and synchronization of what’s going on in people’s lives that way.

 

Hope Cochran14:29

Got it. Um, so, yeah,

 

Carlos Vega14:35

I know you have a section on tools later.

 

Hope Cochran 14:37

Yeah, we’re just heading into that. So good segue.

 

Carlos Vega 14:39

Okay, I was just gonna share what Barry just shared is something that one of our engineers suggested too and Barry I’ll admit, I was also like, do we really need to do this like I think we could be doing other work so congrats on the foresight, but one of our engineers implemented a tool called donut which is kind of cool. And here’s a screenshot. It just basically automatically pairs people and you can opt into it. You just put it in slack. And they’ll automatically start pairing different random conversations automatically ask you like a cheeky question to icebreaker. And we’ll create the calendar invite and allow you ought to just connect. So a virtual way of doing what Barry had the foresight to do.

 

Hope Cochran 15:23

That’s interesting. So it’s kind of creating unlikely pairs and relationships that maybe you would have developed in the office because you ran into them. And yet, it’s, it’s giving you that nudge. Right. Yeah. So let’s talk about tools. Kara, let you pick it up, and what tools have you found effective prior to this time, and during this time

 

Kara Hamilton

Yeah, I think we have an approach of kind of a host of tools, looking at different teams, utilizing different things. So Zoom, absolutely, we’ve been able to use zoom to have very large and have meetings like this where you can almost do a town hall. And that feels really good. And we get a lot of participation. Sometimes I think we get more participation than a big in person meeting because it’s almost leveled. everyone is on the same plane. We Slack, we use workplace for internal comms and that provides a lot of area to socialize online. And Smartsheet of course, and then Google Chat. I think I’m between like Google Video and zoom, like back and forth throughout the day for different applications.

 

Hope Cochran 16:35

Okay, you have to tell us like the best use of Smartsheet during this time, as well.

 

Kara Hamilton

The best use of Smartsheet during this particular time is we have a we have a dashboard for our Covid-19 preparedness and so we’re able to keep that updated for our employee base so they can see what each offices we’re now all on complete work from home but as you we were working through this different offices. We’re in different statuses and then lots of links and information and intake if you had something to tell us about what was going on with you, that actually that whole kit is available to any of our customers and free to anybody who was in trial. So that’s like our one of our uses right now. That is been really, really helpful to us. And then just the general collaboration and sharing that we that we’ve always utilized. Smartsheet for.

 

Hope Cochran 17:37

That’s great. Barry, what have you guys utilized?

 

Barry Wark 17:39

So I think actually, our most important tool is just an attitude around written documentation. So we’re going to talk about culture I know. But but in a distributed team against it without that office diffusion, written documentation of what’s been decided and why so that people who are working independently can act independently sort of in the, in the right direction, we found has been really critical. Most of our team failure is centered around lack of documentation. So we use Confluence currently for that. But I think that it is just the attitude that meeting notes, get documented decisions get documented plans get documented. And, again, I think like these random coffee meetings, I feels like a big burden. But it ends up saving us a lot of time in the in the end. We’re also big zoom users and slack as well. So I think I think that’s kind of baseline now even in office companies. Yeah. in office teams.

 

Hope Cochran 18:44

So yeah, you referenced this rigor around writing everything down. I think that’s really interesting. Did you start that from the beginning?

 

Barry Wark 18:54

No, we didn’t. (laughing) But we had a couple of great conversations with distributed teams that were a little bit farther down the road from us. And one of the things that they told us was, by the time they hit, actually now the stage that we’re at, they didn’t have a lot of that, that documentation sort of hygiene in place. And it really ended up being a drag on their team’s ability to execute. So we got we got serious about that, I think in time, and it’s now it’s now one of the sort of driving forces of a lot of our rules of engagement and how we, how we document what we’re doing. We’re not perfect at it yet, but we’re working on it.

 

Hope Cochran 19:36

Yeah. Carlos, I feel like you guys have that rigor as well.

 

Carlos Vega 19:41

Yeah, just echoing with what Barry shared about writing everything down. So we use an app called notion, which we all joke around that my co-founder and he’s a CTO, that he’s a angel investor, because if he sees anything that is, sounds like a process, he will immediately ping you on slack and say you should put that in notion. And so this has basically everything right? It’s got home with like the Quick Links for everything related to, you know, quick resource things that the team might want. But everything you can see over here, I don’t think I can zoom in. But on the left, we’ve been organizing, keeping through everything, everything from sock to processes. Now we’ve got a founders only folder for ourselves, like the different payroll process, employee onboarding, and off boarding, like everything’s on there. And it’s kind of cool. It gets managed, like a little Asana chart or Kanban style for the different proxies. You can choose different things that you do. And then we also just, it’s pretty straightforward. Just have a Google Sheet with all the key initiatives. And then every week when we meet, you know, everyone has the initiative. We have a weekly meeting of the initiative owners every Monday. They go through and they update the status on things and we go through and update, you know, whether something’s been, you know, backlog completed, etc. And this just helps us track like how things are going and what’s what’s, you know how things are progressing that, that we borrowed from a book called The Great CEO Within, which is, you know, a lot of you probably got a Google Doc for it. It’s a good one that was pretty valuable. So yeah, those are two of the main tools, other things, just like, you know, little rules around the tools also matter, right. So in Slack really enforcing people to use group chats instead of going direct, right, actually threading in in Slack, instead of having a massive conversation in the group channel. Always having your video on during a meeting is also really something is pretty relevant. And then establishing rules about when to use Slack when we use email, when you text, when to call. That’s also pretty valuable. And to Barry’s point earlier, like, we reached out also to folks like, like the CFO, CEO of Automatic is their customer and he’s become a good friend. They’re very distributed. And so he told me, basically write everything down everything that you think you kind of logically understand. make it explicit. And so that, that summarize everything. It’s make everything that’s implicit, explicit, and just keep that in your brain and just do that, but that they’ll have the outputs.

 

Hope Cochran 22:38

For Notion Carlos is that a, like an enterprise license that you pay, or

 

Carlos Vega 22:45

I don’t remember, it’s not that expensive. It’s, uh, yeah, it was, I think, I don’t remember honestly. We set it up. It wasn’t like a big decision at all.

 

Hope Cochran 22:54

Yeah. And then the other thing you mentioned, which I know is just a little point, but I’m just always do video when you’re doing these chats. I have found in the past week, I’m so much more present when my videos on. I wish I had the discipline to be as present when it’s off, but somehow I’m finding that when it’s on, it’s a lot more effective. And so as long as I’m not fighting for bandwidth with my teenagers um, let’s switch over to culture. And you know, there’s there’s the logistical aspect of this. And then there’s the cultural aspect. Yeah, Barry…

 

Barry Wark 23:30

Kind of one more thing just on tools that I think we didn’t mention. Not super applicable at the moment. But I think one of the important tools for distributed teams  are airplanes.  We have the now written rule that if you think you maybe should just get on an airplane and go sit and talk with someone, you should already be on the airplane. And what we found is that that breaks down a lot of the barriers that were you know, people are confused over Slack. For a long time, when they could have just sat down and talked about it, we don’t get that in this moment. And it’s definitely something that we’re starting to solve for now, but it’s a tool to have in your tool belt once once it comes back.

 

Hope Cochran 24:13

Very good. On the cultural and hiring like the HR side, we’ve got the logistics, of recruiting, hiring Clearly, we don’t want to be slowing down that process as talent is so key to us. And then also just how do you instill your culture throughout the company? So to kind of two legs to this topic, and let’s just take the tactical first care I’d love your thoughts on you know, how do you do recruiting? How do you do onboarding? I’m here during this time when we’re outside of our normal habits.

 

Kara Hamilton 24:48

Yes, during this time, we have for the past, I think three weeks, we moved all of our interview loops to video and we made a very intentional decision to move everything to video because we didn’t want to introduce bias of people who were this were these were the days where we’re still accepting visitors of the office with you know, health screening questions and we didn’t want people to feel like they didn’t have that they were putting themselves at a disadvantage. So we moved everything to video, it’s gone surprisingly well, we have we arm our candidates with some tips and tricks for video we asked them to practice we have recruiting coordinators that are able to like what I mean is practice the technology to so they can feel comfortable that they’re going to get it right the first time because it’s so nerve wracking, right or you’re already coming in and trying to present your best self and then if you get flustered over technology that can feel really bad onboarding where we have been very much, you know, that’s our touch point with people I can’t say enough about the airplanes and the in person meetings that provides such a great foundation to then build your district distributed relationships on. So onboarding has always been a time where we welcome people to the office, we have new employee orientations. In each office, we’ve gone completely virtual, we’re shipping laptops. And we are doing video calls to do HR onboarding, as well as it onboarding. And then we have sets of videos, I think we’ll do our first set of live new employee orientations. with senior team like every month, I do a half hour talk with all new employees who’ve on boarded in the last month. And so we’re going to start doing that more virtually than we ever have before. So it’s really just can we, I think we, we learned that we can do it. And I’ve gotten feedback from people who’ve been hired in the last few weeks and they’ve I think they see the intent wholly, you know, so that’s appreciated that they were still able to start on time and that we’re definitely doing our best and we’re learning as well. We go, but it’s been positive.

 

Hope Cochran27:02

That’s great.  And Barry and Carlos, you guys actively hiring and is it been awkward during this time or since you have set up this way already? Just continue as normal? And what does normal look like for you?

 

Barry Wark. 27:16

So we are we are still actively hiring. We did have at least some of our interview loops through Zoom already. Because our leadership team is distributed. And our team leaders are distributed. Everyone was always talking to at least a couple of folks on zoom. It has been there’s no question that having someone in person is a way to connect with them on a sort of non you know, not on the resume but just with them as a person. And we’re definitely still challenged to do that purely over zoom.

 

Hope Cochran 28:33

Carlos, you have a very rigorous like process before you start hiring.

 

Carlos Vega 28:41

Yes.

Hope Cochran 28:42

I think that’s interesting.

 

Carlos Vega 28:44

Yeah. It’s, uh, yeah, it’s, it’s, uh, I guess it came from Mike Maples at Floodgate and it’s pretty basic on paper, but it’s like takes about an hour and it really helps out and yeah, it feeds into like one of the points I was gonna make hope Yes. Thanks for bringing that up is like, what we found is to just be really rigorous about the role. And then how you validate that the person fits that description, just by having a lot written down and making sure that everyone’s aligned who is going to interview right. And so my mic, called it a hiring kickoff. And basically, you go through. First off, you define who the hiring committee is for that role. And then you schedule an hour-long call with that hiring committee. And you all work through two sets of questions. The first set is, you know, what are we expect this person to do and what could they be prepared for not doing? And that second part of that question, just kind of, I don’t know, it leads to a lot of passionate conversation, which is really interesting. And it’s mind blowing like, 100% of the time, like, I think we’re super clear on the type of marketing person that the company needs at our stage, given what we’re trying to accomplish and trying to create a category and do all that. And everyone shows up with a different, completely different perspective, that if we hadn’t done that, we would have been trying to hire the wrong like each person, we try and hire someone. Right? And then the second part is, how do you validate that the person meets these criteria? And what types of questions are you going to ask like to confirm that? Right? And that’s where we think about the questions and the exercises and things like that.

 

Hope Cochran 30:33

And I think as you’re hiring in a distributed environment, having this definition becomes so much more important. I do want to we got a question on q&a that I think fits in well here on this topic, which I think is interesting just about you know, maybe if during this specific time care, maybe you can jump in what are we allowing employees to expense and how are we handling their kind of at home stuff.

 

Kara Hamilton 31:00

So we have so what we’re allowing right now as we sent people home is the allowance for monitors because I feel that I mean, I know my first few days fully at home, being on my laptop was just exhausting between being on video and trying to work and collaborate. So monitors I think are like an instant productivity hit and my neck felt much better as well. So having my key like so little items like that, but as we are in a standard like in in our normal practice, if we have someone that is fully remote at home, which we have about 150 employees that are working, what we call in the field, we provide up to $700 allowance for them to set up whatever they need for their office that might be a chair, it might be a standing desk if that’s what they prefer. So it’s really up to them on what they need beyond the current technology that we provide. And we’re exploring a few other things. But right now we’re just on monitors and our IT team is pretty stocked with external keyboards and mice and everything else, you might need extra power cords. I think it’s all the little things that once you get set up, you can feel a little bit more productive. So we’re still exploring it.

 

Hope Cochran 32:28

Yeah, that’s great. Barry, you’d mentioned you know, get on a plane anytime you can. Clearly right now, we’re not getting on planes. But what are some of the ongoing expenses that you say, this is fine.

 

Barry Wark 32:38

That’s a great question. So we have actually, in in sort of normal mode. We do have folks working in offices and we do have folks working truly from home. The folks that are, you know, in the field working from home, one of the things that we pay attention to is like internet bandwidth and You know, when we, when we sent folks home this past week, anyone that didn’t have enough Internet bandwidth to make zoom work effectively. We just, we just paid for it.

 

Barry Wark 33:21

And, you know, I think the question of, you know, what do people expense at home versus at an office? we’ve we’ve been lucky so far. And admittedly, we’re not a huge company yet, in head count. We’ve been lucky that the people on our team have been pretty, pretty, pretty conscientious of what would I be spending in an office that the office would be providing versus what do I have at home? And and we assume that we’re spending about the same amount on people, whether they’re in an office or in their own home. So if we’re, you know, eating snacks or food or something for an office would do the same thing for folks at home.

 

Hope Cochran 33:57

Do they expense it or do you give them some sort of allowance?

 

Barry Wark 34:00

We’re still letting them expense it again because we’re small enough that you know we can see what’s going on before it gets out of hand. Yeah and we’ve got reliable people maybe this speaks I think back to Chris’s idea of you know trust in a distributed team is pretty crucial give people the guidelines and assume that they’re gonna operate within those guidelines.

 

Barry Wark 34:21

I see psi Kara smiling, it’s probably we’re probably going down a different road eventually here.

 

Kara Hamilton 34:28

It is a show of trust and we are not doing that.

 

Kara Hamilton 34:33

So I’m torn in my own head of like, okay, should we be doing that we do send care packages to our field employees every once in a while. So because they do miss out on little like swag that we might pass out in the office. We always make sure to mail anything like that to our field employees, but I have not we’re I don’t think the CFO and really allow us to have a snack budget for them.

 

Hope Cochran 35:00

I know Jenny and I would agree.

 

Kara Hamilton 35:02

It was a no go. But I’m gonna do more care packages because that’s in my control. So,

 

Hope Cochran 35:09

Carlos, are you doing anything for your employees?

 

Carlos Vega 35:13

Yeah, so we give them two options when they start. And we can either so first off, we give everyone laptops when they start, right, that’s something we, you know, at our stage, you know, we weren’t doing till we were about 15 people, but then we decided that that it was important. So that’s not part of this but we also give people $1,000 budget to build a home office. If they’re going to build from work from home they can expense whatever they want, you know, keep horse monitors desk chairs, whatever. And the funny part is, you know, by adding the thousand bucks you know, there’s a cap but man people buy some pretty expensive chairs is what I’ve noticed. It’s kind of it’s kind of wild. But um, but yeah, then then we if you’re not going to work from home, we also give you We pay up to $400 a month of co-working space that the company will cover for you. And most almost all of them are below that. And then that that co working space budget also comes with a $400 kind of budget to buy some equipment. If you’re working from home or benchmark on bigger companies, what automatic does is they give you a, I think they upped it to either $2,500 or $5,000 for your home office, and they also automatically update your laptop every six years. Right? That’s something else they do. And the chair and the desk are not part of that $2,500 budget. Those are must haves. And so that’s on top of that, and you can spend whatever you want on the chair and the desk, which again, I didn’t know it was such a thing but engineers and you know, mechanical keyboards really cool chairs and really good desks. It is a it’s a thing.

 

Hope Cochran 37:03

Okay. Let’s talk about culture. How do we establish and maintain our culture when we’ve got people working in all different locations? Do you want me to share it? Go for it?

 

Kara Hamilton 37:12

Okay, um, I think I mentioned workplace before, which is a Facebook product and platform and I think workplaces enabled us to stay well connected across our locations across different kind of interest groups. So we have all company announcements, but we also have different we have a diversity inclusion group, we have Smartsheet for dogs, we have, you know, Smartsheet kids, we have all sorts of different interest areas and that’s enabled I think relationships to bloom, where you might not expect them like we really want to have a lot of cross team connection as well as insight you know, in team connection. So that helps That kind of those flows. And I think we also are very purpose driven organization. So our purpose is, we empower everyone to improve how they work. And then we have a set of values that go with that and evaluate that action playbook. And, and I think that foundation that we built helps us we talk a lot about how, how am I showing up for Smartsheet? How am I showing up for my teams? How am I showing up for our customers? That’s all built into our kind of into our vernacular, and it’s built into our hiring process as well. Where Yes, like, where we are looking for expertise and experience and, you know, what is someone going to bring to the team from that side? How are they going to what are they going to bring in terms of leadership, but also what are they going to bring in terms of cultural add and are they are we aligned in our values and how we’re going to show up which is not an easy thing to write, um, like, believe me, we, we are on the journey of how you really evaluate that. But we’ve really looked at those three pillars and we’re dedicated to, to figuring out and doing our best because we think that’s, I think that the values and our purpose have helped immensely. And they communicate constant communication over workplace. I mean, I’ve put out three or four videos in the last month, where we’re doing a lot of lots and lots of updates. I think that kind of thing. Like, if you pull my arm, I’m going to talk about our values, our purpose, how we’re showing up what’s going on with Covid. And we can’t we almost can’t say it enough, because people need to feel that they need to feel that we’re there.

 

Hope Cochran 40:05

Yeah. Follow on conversation. And I want the other to comment on the cultural aspect too, but is worth continually hearing that people’s mental health is it’s hard right? Now, you know, people are feeling lonely. They’re feeling scared. Yeah. And so during this particular crisis time, what are your communication patterns? Or how are you trying to help employees? And so Kara maybe you want to kick us off at to kind of address that, too.

 

Kara Hamilton 40:21

As I talked about the cultural, I think the first thing is to be real about it. So I sent out a pretty long email to our entire workforce, about what it means to show up and our values through like where we are now, and how we have to be creative and flexible and support each other. We have a lot of people whose children I mean, we have a lot of parents who have school aged children, and they are trying to work, take care of their kids do the homeschool, and all of that. So I think it’s a lot about trust in space, and saying, like, we are going to, we’re in it together. We’re going to do the most important things, and we’re here for you and then the mental health things is extremely important. I’m really glad you mentioned that. I feel very fortunate that we had already rolled out better help, which is a virtual mental health tool where you can have a virtual session with the counselor. And we also provide membership to one medical which has virtual appointments. So that’s more of the standard health care. But better help I is great. We’ve also done some mindfulness training we’re very like one of our community awareness programs is is mental health for all and trying to stop the stigma. So it was already in our culture of people being brave enough to share about that. And so we’re and we’re being very intentional. I mean, I’m on our dashboard is are all the links to better health and our EAP and reminding people that we, we know they’re under stress, I think part is just like we’re not going to not talk about it. We’re not going to pretend that People aren’t struggling and aren’t scared. They don’t have the answers either where they’re where their employer and we’re going to do our best to show up how we can.

 

Hope Cochran 42:14

Yeah. Barry, are you seeing these issues more? You know, acute right now versus in your normal day to day or how are you addressing them?

 

Barry Wark 42:23

Um, so we definitely have recognized that it’s easy to suffer in silence when you’re not in an office. Yeah, and the, the sort of passive status update when you see someone you know, shoulders slumped, or, you know, head on the desk on a project, you actually gain a lot of status updates that way in an office environment. So we knew already that it’s easy to lose that in a distributed team. You know what Carlos showed the visible status dashboards kind of thing is a really important tool. And that’s something that You know, we sort of doubled down on in this environment. The flip side of that is over communicating. Like Kara said, We are in a distributed team, you it’s important to over communicate what you think are sort of obvious decisions that have been made. And it’s because you don’t get that diffusion of those announcements through it through a group, you really have to actively think about how are we going to communicate every decision that’s made, so that people stay up to speed and feel like they’re part of the conversation. So those two things are maybe accentuated by the current environment. For us, I don’t want to call it lucky. But we’ve got a you know, 24/7 kind of purpose that’s driving us at the moment to get testing capacity and to help our labs that are at the sort of the tip of the spear for this effort. So we’re, I think, again, very motivated at the moment, we haven’t had folks feeling like they’re lonely and adrift, but It’s certainly something that can happen anytime in a distributed team. And so I think there’s an approach to being very proactive and open about, hey, we know that this is potentially challenging, is valuable, especially for folks when they join our company, if they haven’t been in a distributed team before we spend a lot of time getting them one on one, just, again, sort of random coffee sessions with folks that have done it a lot before. And we found that there’s really nothing more helpful than saying, I remember the first week working from home and it’s really easy to feel like you’re alone and adrift. And you know, here, here are a couple tips. And, you know, here’s how you can reach me if you’re if you need if you need an adult to talk to that kind of stuff.

 

Hope Cochran 44:42

Carlos?

 

Carlos Vega 44:43

Yes. So I say Yeah, I agree with, with what’s being shared, and I’ll share some things that have specifically changed that we kind of went through. Just like last week, right? There were some, I guess what I’ve what I’ve found is, I guess as a company, like We’re I’m extremely transparent about everything. And then as a company, they’ve come to expect that right? So we had our board meeting last week. So at our all hands this week, I walked through the board deck and presented it to the whole company in our own hands. And then that Ned led naturally the conversation around kind of, you know, what are we doing with everything around Covid-19. And I guess what’s been interesting for us is seeing, I guess, you know, very to what you’re mentioning, like if you’re in a room, there’s kind of you can sense everyone in the room the same way where right now I don’t know if everyone can see this in the Brady Bunch view. In in zoom right with the gallery. You can’t quite see everyone just exactly the same, right. And so, as I was overly I guess what I’ve found that as a remote or distributed kind of team is you have to not just explain the decision, but also explain your logic and how you’re thinking about it. Like what’s your framework, and so everyone’s come to joke here goes Carlos with another framework but it just like, at least now they know like why I’m thinking a certain way, right? And so even after going out of my way to explain Hey, look, no failing to prepare is preparing to fail. There’s, you know, the old Churchill way of like, you know, talk about hard talk, not just happy talk. David Sacks wrote a really good post about last week. You know, there’s explained all that share the articles talk about it, but then you still have the folks who’ve never lived through a downturn, which a lot of us have on our team, just start to get really nervous, even though you’re talking about stuff, super overly caveated. Like, hey, these are just things we’ve talked about things we talked about, it’s better to talk about it now. I’ll think about it together. Being together like the kindest, most empathetic things you can say, still character what you’re sharing, right? People are still very nervous, and that’s just like in one ear out the other end. And so going out of the way to reach out, right and so Some things I’ve done, you know, every Monday now I’m just like hanging out by myself until someone joins in zoom meeting, and anyone can join at the company and chat about whatever right like and it’s been pretty interesting. who joins or what people want to talk about. And then the other one…

 

Hope Cochran 47:19

That’s interesting, Carlos, so you just open up zoom and you’re just there and anyone can click in to talk to you?

 

Carlos Vega 47:24

It’s on my calendar. Yeah. And so people can go to my calendar and see it I send it out on the general channel in slack like Hey, remember I’m here I’ll be doing some work someone joins an office hours. Yeah, and then people would just show up and then like, managers are really important weapon right now to more asset not weapon in keeping in touch with those younger folks, or more anxious folks, or whatever it is, they know that the pulse of their, their team better than, than I do as a CEO and then giving you a heads up like So and so I was particularly nervous about that. And then I can vouch for that one on one, right and say, hey, let’s talk about this. Um, so I feel like we have a little bit of extra work right now because of the covert part of, like, extra degree of empathy. So, yeah, that’s, that’s a little bit of our experience, know some things that we could have done better. Some things that we’ve changed.

 

Unknown 48:22

Alright, you all thanks for joining me today. I really learned a lot and I’m learning a lot through this whole process. So I appreciate it. These conversations are helpful.

 

Transcribed by https://otter.ai

POSTED IN: Madrona News

Founded and Funded: Managing through the Downturn with Glenn Kelman, Robert Wahbe, Bill Richter and Steve Singh

These are certainly uncertain times.  The only certain thing is that the world has changed.  As these CEOs shifted to working from home and managing distributed teams, they got on a conference call with managing director, Steve Singh, to share how they have been addressing moving their business forward.  Everything from communication to how they are planning (or not!) for a very different year than was in the cards when we clicked over to 2020 is discussed.  Glenn, Robert, Bill and Steve share heartfelt lessons from previous downturns and how they are navigating their current reality and helping employees and customers through this time.


Transcript below

I’m Erika Shaffer. Welcome to founded and funded. I work at Madrona Venture Group. We are doing something a little different today. We have three CEOs with us. We have Bill Richter from Qumulo, Robert Wahbe, from Highspot and Glen Kelman from Redfin to talk about how they are managing through this really volatile period. As our moderator, we have a managing director, Steve Singh. Steve is best known as the CEO of Concur, which was pulling in a billion in revenue when SAP purchased it. But to get to that point, he had to manage through not one but two downturns. And so both he and Glenn can reflect on their experience of navigating the big recession of 2008 2009. And with that, I’ll turn it over to Steve. Thank you.

 

Steve Singh

Thank you, Erika. Good afternoon, everyone. Today our topic is managing through an economic downturn and we did a version of This webcast for Madrona only companies last week. This podcast is open for all companies. Sadly, the world has changed materially in the past week. At this point, it’s clear that we’re headed into an economic slowdown. Now we can all debate the depth and the duration of that economic slowdown. But what’s not debatable is that every business now has a new set of factors to consider in how they operate. Inclusive in that new operating model is that every company is learning how to efficiently and frankly at scale work remotely. So one of the many values of being a part of a community is that we get to share and learn from each other’s experiences.  Joining me today are three very accomplished leaders. Robert Wahbe, the CEO of Highspot, Bill Richter, the CEO of Qumulo, and Glenn Kelman, the CEO of Redfin. Each of these companies are market leaders operating in large markets, Qumulo and Highspot are private companies in the rapid growth phase of their business. And Redfin as a public company with a rich operating history, having navigated multiple economic cycles. Gentlemen, I’m going to ask each of you to briefly introduce yourself and your company. Robert, let’s start with you.

 

Robert Wahbe

Hi, everyone. My name is Robert Wahbe, CEO of Highspot. We are in the emerging category called sales enablement. We came to market around late 2015, early 2016. And we’ve been experiencing very rapid growth. So over the last 14 months, we’ve gone from about 150 people to about north of 450 people. So thinking about how we’re going to be having discipline growth going forward, given the economic downturn will be a very interesting part of the conversation. Also relevant to the conversation we just raised our series d 130 $5 million, series D, which gives us optionality, , but clearly we need to understand how we’re going to use that as we navigate the downturn. So looking forward to the conversation.

 

Steve

Thank you, Robert. Bill.

 

Bill Richter

Ah, hello, everyone. My name is Bill Richter. I’m the CEO of Qumulo. First, Steve, thanks for putting this on. It’s you and the gang over at Madrona has just been awesome in terms of bringing  together the community of companies to be able to share information quickly and learn from one another. So thanks for doing this. Qumulo is in the business of helping customers store, manage and understand vast sums of data. And we do that both in the public and the private cloud. So that’s our business and we’ve been at it for about eight years. Eight years now we have nearly 500 enterprise class customers and we just finished an absolute blockbuster record year and then we came into some of the new facts this year. And so we like everyone else are working through this downturn, and I’m looking forward to the conversation and to learn a few things the great fellow CEOs on the call here.

 

 

Glenn Kelman

Hi, I’m Glenn Kelman. I’m the CEO of Redfin, a technology powered real estate broker. Our mission is to redefine real estate in the consumers favor. We open for business more than 15 years ago, so survived the great financial crisis of 2008. Before that, I started Plumtree software, which went through the.com, boom, and then the crash before going public, in 2002. So I think I’ve been through some ups and downs and hope I can learn something today and also that I have something to share.

 

Steve

Thanks so much for joining us, Glenn. So my name is Steve Singh, and I’m a partner at Madrona Venture Group. And from time to time in this podcast, I’ll chime in with some of the lessons and strategies that we used to Concur as we managed a couple of economic downturns. But let’s start the conversation with Bill. Bill with the start of the new fiscal year, you sent a fairly detailed framework to your company on how you want Qumulo not just To operate, but to strengthen. So in what is clearly an economic downturn, obviously, you’ve got ahead of this, the key share the principles behind that framework, and maybe how the companies & your people are responding to it.

 

Bill

Yeah, sure. You know, listen, we we’ve been watching the news, like everyone over the last month, and about three weeks ago, or two and a half weeks ago, you know, when I saw enough of the evidence building, what I decided to do for my team is just to write my organization, my leadership team, a note saying, hey, look, let’s say we’re entering a recession right now, an economic downturn, that’s going to significantly impact our how our market behaves.  We don’t know exactly how but what we do know is that it will have an impact. And so I asked the organization just to sort of absorb that and clear the decks in terms of our current operating plan and start rethinking things with the idea that we were going to be entering this model. And one of the things I did for my organization is I kind of wrote them an FAQ, a frequently asked questions, Hey, what does this mean? Or, for example, you know, what if we get this wrong, and we overreact? What What, what will be the impacts of that? Should we act now? Or should we wait? And I walked through that with the team. And my strategy, there was really to, first of all, get the ball rolling quickly. I mean, like Glenn and yourself and Robert, I’ve been executive through the last couple downturns and, you know, you really learn a lot during those cycles. And one of the things I learned most quickly, was you have to move quickly. Going slow through these cycles is not helpful. And the second major thing I learned is that it’s important to communicate deep and wide with the team. And it turns out that people always surprise you when you give them enough information and you share what’s really on your mind. And so with those kind of two principles in mind sort of they are really recognizing that there really were a new set of rules to kind of admitting, hey, we’re going through an economic cycle, let’s get in front of it. And three, let me get really good at communicating with those three principles in mind. I shared a note with my team and said, hey, let’s, let’s rock and roll because the companies that operate well through this cycle will come out the other side, much, much, much stronger, and those that don’t will find themselves in very troubled waters.

 

Steve

Thanks, Bill. Robert, how are you thinking about this Highspot? Is this a process you already engaged in, as Bill has or is this something that you’re currently contemplating? Obviously, you’ve got a lot of capital on the balance sheet.

 

Robert

Yeah, I mean, very similar to bill. We’ve been communicating our plan and you know, we’re Really trying to face the reality that we’re going to be facing this economic downturn. We’re doing a few things. Probably the overarching theme for us is this phrase that we’re using which is ‘our job is to navigate the downturn, but invest for the upturn.” The one thing we know for sure is that inevitably, there will be an upturn. It might be in six months, it might be in 18 months. But  we need to react quickly. I completely agree with Bill. But we also have to not overreact. You know, building a company to survive is not the same thing as building a company to thrive. And you can look at a lot of the experiences in the post mortems from 2000 and 2008. And you talked about this Steve on the earlier panel, where you have to make sure that your balance between making sure you survive and making sure you’re ready to invest in that after and so that’s been kind of a theme for us. And it also helps the company as we communicate, why we might be pulling back in one area, but actually investing and even doubling down in another area because it might be confusing, they might think we should be locking down. But no, we got to be smart about this. And it’s art more than science about how to balance that. So one big thing is this notion of navigating the downturn investing for the upturn. The second thing is controlling costs, you know, and that is two things for us. One is it’s trying to save money wherever we can, but it’s also going through the exercise and not doing too much, because you can overdo this by trying to create optionality in our budgets and our operating plan. So we can say, based on trip wires that say the end of q1, the end of q2, the end of q3, what levers could we create now, so we can pull them whether it’s marketing, whether it’s other kinds of investment, so the second big thing for us is controlling costs. And then the final one, and this is really big, especially as you know, the pandemic has really changed over the last even two weeks and people are now really working from home and in certain cities based on your offices. They’re really required to shelter at home, and they can’t even leave this notion of focusing on execution, especially as opposed to forecasting. I think there’s very, there’s a very big tendency to say, you know what, let’s figure out what’s going to happen in the future, let’s start to think about what our conversion will look like, they start to think about how much we’re going to lose off the top line so we can begin to plan. And what I’ve been saying is, let’s not have that conversation. We don’t know enough yet. Let’s not forecast, it’s not clear how the operating model is going to change. Let’s just focus on execution. And really, we’ve been focused on kind of, you know, the details like, what does it mean to work from home? How should we use zoom and slack and G Suite? We literally had, believe it or not, in an all hands where we walk through best practices for zoom, slack and G Suite, trying to really focus on execution. And then the other part of that is really helping people as they’re anxious. They’re clearly very anxious, staying connected to them, to the company to their managers. And so a lot of talk in fact, I had a meeting today with all the people, managers, again, on best practices to keep connected even in this remote world. So those are kind of the three things that we’ve done. And there’s lots of details under there. But those are the three themes that we’ve we’ve approached it with.

 

Steve

Thank you. And obviously, there’s some themes emerging here. I want to pull the thread down a little bit further. But before we entertain that part of the conversation, Glenn let me ask you to share what’s happening at Redfin, as far as how are you dealing with this downturn? Obviously, I want to be sensitive to the fact that you run a public company. And so you know, the comments would be relative to what is appropriate to share within this context.

 

Glenn

Sure, well, I think we’ve been preparing for this day for a long time, in different ways. When we went public, we recorded a roadshow video that featured a cameo from Bane this villain from a Batman movie because we had told investors that you shouldn’t be afraid of Dark because we were born in the dark, and everyone at Redfin knows that we’re in a cyclical business, there will be ups and downs, and that we’re going to react very quickly to that. And so, if you don’t have that preparation, if you feel offended by a downturn, I think you spend valuable weeks and months, really wondering what to do. But if you’ve built the discipline from the beginning, that there are going to be ups and downs in every single business, and we have a mission that is fundamentally good to make real estate better for regular people. And that if we’re more efficient than other people, there will be times where revenue grows and times where it doesn’t, but over time, the business will become more valuable. So I think that’s the first theme which is just having a mentality, that there will be ups and downs and preparing for that before there are downs. On the second, which is related to is just talking about the mission of the company always because the reason someone should work at Redfin or Highspot or Qumulo is not just because you’re gonna go out and kill it. There’s always going to be a sexier business. There’s always somebody who’s growing five points faster than you. And so you have to develop a rationale to be at a company because you believe in the company. And if that rationale only comes to you, when you’re announcing a layoff, or some kind of cost cutting move, it sounds very hollow. But I remember in 2008 2009 2010 when I thought Redfin was going to go out of business. I told my wife that I felt like such a failure. And she said, Well, I thought you really believed in the mission of the company. And I said, Well, of course I do. But if we go out of business, I’ll still feel like a schmuck. And she said, Well, it’s still a good mission. And you need to be true to that. If you really believe in it, you shouldn’t abandon it now. And so I just think you Have to really reiterate the emotional, the soulful reason to be at a company in hard times because people need chicken soup for their soul as much as they need steaks in their freezer right now. And we try to address both of those issues.

 

Steve

That’s fantastic. I love that. Let’s, pull on a couple of threads. You all talked about a number of different themes, one of which is, is transparency and communication. One is really sharing the purpose of the business and why you’re doing what you’re doing. The other is just is. I think, Robert used the phrase optionality, really making sure that you’ve got lots of decision points or opportunities to react in a way that can add strength to the business over time, but let’s take the optionality piece for a second and drill down on it. Obviously, none of us knows what is going to happen over the next three to six months. How are you talking to the team about that? What is the definition of optionality? What does that mean? When you ask your team to look at optionality? And how much are you pushing on that topic? I mean, it’s easy, obviously, for people to come back and say, Look, of course, we can do lots of things. Are you then taking it to the next level of saying, I want to plan in every one of these areas? Anybody can jump in on this, bill? Maybe I can ask you to start but anybody should jump in.

 

Bill

Yeah, sure. There’s a lot of a lot of ideas come to mind there. I mean, look, we’ve kind of hit on this idea of planning and forecasting. I really like what Robert said that, you know, focus on execution, not forecasting right now. Because at some point that becomes, you know, an exercise that that’s not as valuable but what I’ve been telling my team is the following is, is you know, we at Qumulo really pride ourselves on running a data driven business. I mean, we, we, we talked about it all the time. It’s one of our values of the company, but what I’ve said lately over the last couple weeks is like, Hey, remember business leaders, your data right now in the cycle, your data is going to lie, your data is going to lie. And that’s something that we’re not accustomed to hearing. We love data. We’re a data company. And but what I really mean by that is like, hey, if you look at the old models, if you look at the old trends, if you look at a cost per or, you know, ramp rate of a certain segment of your business, or the performance of a, of a trade show, or whatever those types of things are, you know, you have to kind of figure that in this model right now, or this in this environment. You’re gonna, learn a lot of new things, and your historical data models are going to be far more fragile now than ever. And so what I’m asking people to do is sort of think around corners more than we ever have before. And, and do smaller things much more quickly and learn fast, and that’s going to give us a lot of optionality in terms of how we run the business and really how we resource the business. And actually, I gotta tell you, our team has been responding really well to these things.  We completely over the last two or three weeks, rebuilt our marketing plan for the year, for example, because a lot of our traditional marketing at Qumulo would rely on physical trade shows. So it’s like, okay, you know, that’s a great example. It’s like that the data that we have about performance of those trade shows is completely off. And most of the shows won’t take place, if they are happening, the attendance is going to be much lower, we have to change the way that we’re going to invest. And it’s through those fast changes that we create for more optionality in the business. And so that’s kind of a micro example. And then the macro one for the business, and I’ve been very clear with them on that we have a very healthy balance sheet here. Qumulo. We raised around about a year and a half ago, and we’ve been very slow to spend, which is good. And and in these environments, cash, I would say equals optionality. And so we’ve had very open conversations around that in the business, and people have been You know, I think more appreciative about balance sheet management than I’ve ever seen our tech, your average tech, tech and employee been in the past. And that’s kind of cool. It’s cool to see them adapt quickly.

 

Steve

Robert Glenn, would you want to jump in on this topic?

 

Robert

So one of the things that we’ve been doing, you got to not do this too much as we’ve been trying to take our plans. And we have this concept of a North Star, and then click stops along the way to that North Star. And so if you think about something that we might want to accomplish, whether it’s delivering a particular feature, or new new capability, or a marketing program, we’ve gotten more granular, and we’ve asked the teams, we understand your Northstar. And that took some amount of resources. Now think a little bit harder about could you do incremental things along the way. And then let’s think about kind of like a bill said, let’s do that. Click stop one right now. And let’s fund that right now. And let’s have some tripwires about how we think about click stop to and click stop three. If you go back, you know, it seems like so long ago, you go back on A month ago, we just said, Hey, the plan looks great, the North Star looks great, we’re going to invest toward that, you know, invest wisely, be smart about it. But we don’t need to have that finer grain in the plan. And that’s what’s happening. Now we’re getting much more fine grained in a lot of our big areas of investment, whether it’s marketing programs, whether it’s product capabilities, and the roadmap there, where our big spends are. And so this notion of getting more granular, the one thing I would caution is, you don’t want to do that too much, because then you just sit there and you analyze until the cows come home and you don’t actually execute. So a little bit more click stops a little bit more optionality a little bit more trip wires, and then go do that first click stop. Now right away.

 

Steve

And that goes really to the theme you brought up earlier, which is more data points, more engagement on day to day execution, to really be able to measure what’s going on. Glenn before we go to you,  one of the things I just jump in and share in 2008 2009, when concur was living through the financial crisis that obviously gripped the whole world. One of the data points that we did see early on, was advanced travel bookings were down 50% or there abouts immediately. And so literally on, on one day we saw for travel bookings drop off of a cliff. And in immediately you look at this and say, the first reaction is there’s something wrong in our systems, are we missing something, and then you realize, Okay, the next day, same things happening, same and so on. And what you saw was an immediate drop off in travel which followed very, very quickly with a whole string of other things, including drop off in employment. In fact, in the in the first month of 2009, you can literally pick up the Wall Street Journal. And on the cover of the journal were companies that were all our customers, where they’re laying off 25% of the workforce, 30% 40% of the workforce, or even going you know, bankrupt frankly, like a Lehman did. And so, one of the things that we really had to come to grips was that you All of our data elements as you’re is your highlighting Robert and Bill is that all the data and elements we had in the past were no longer valid. And we have to start measuring things on a daily basis, and learning how to react to things much more real time. And in one of the things we did we happen to be a business that was growing in the 30 40% per year range, and we’re 10% you know, free cash flow margins. But without certainty where the world was going, we decided to pull back and decided to pull back relatively hard. So much. So the operating margins jumped about 24 25% in the fourth year, and we still grew top line about 15% or so year over year. But in looking back at it, boy, I sure wish I hadn’t pulled back so hard. There are things within that, that that, you know, I feel like we might have gotten right there were instructive lessons. I’d love for you guys to comment on your businesses. One of the things we did is we realized that an economic downturn is an opportunity to actually distance yourself from the competition. To actually strengthen your business. And so while we slowed the rate of investment in every area of the business, we actually increased it in product development. So we decided we want to invest more in product and our key distance ourselves from everybody else who we know, didn’t have not just a balance sheet, but the operating, leverage and discipline the business to compete with us. And it has been a massive advantage for us in 2010. So Glenn, maybe you can, you know, kind of a segue off of that into into things that you saw at Redfin in the past, but frankly, also today, in how to improve your competitive position.

 

 

 

Glenn

The point that I wanted to make, which I think is really important is that you try to have employees hold two thoughts in their head at the same time, and one is about the fundamental long term strength in the business. And the second is the short term apocalypse that you’re now facing. Because if you only talk about how strong the company is long term, it sounds like happy horse manure when you’re cutting costs and freaking out. And if you talk only about how you have to cut costs, you throw the baby out with the bathwater. So you try to tell employees, it’s real. What we’re going through is perhaps an existential crisis if you’re a smaller company, but certainly a real threat to the business. And you have to hold that thought at the same time that you remember. We’re the best damn real estate brokerage or  are the best damn cloud software company in the world. And it’s hard for people to hold those to the people who think you’re great. often don’t respond with the right level of urgency. The people who respond with the right level of urgency often forget what made the business so great in the first place. And you just try to have both in your head at the same time. All the time.

 

Steve

Yeah. Bill, any thoughts on that?

 

Bill

I just love it. Like Glenn was talking about that when we think about the opportunities here. You know, I love this quote that gets tossed around, you know, big doesn’t beat small but fast beat slow. And so, you know, we compete with very, very large companies, and I think that they have a tougher time. We all face the kind of the environmentals, but the adaptability of an organization of our size with our mentality can be superior to large competitors. And all that’s in service of customers, right? If the faster that we can move, the more that we product that we can create more value that we can deliver to customers without having a massive amount of fixed costs and a bunch of entrenched people that make change difficult, gives us an advantage. And so that’s something that we’re talking about a lot around here. And then the other thing that just happens to be kind of a big opportunity for Qumulo is a lot of the vertical markets that we focus on, we think, have a decent chance of being counter cyclical here. You know, so for example, like the federal government’s becoming a fast growing market for Qumulo. That will likely be counter cyclical healthcare is a very large market for Qumulo. As healthcare organizations, you go to the doctor, a doctor visit generates an enormous amount of data for any patient. It’s very likely that healthcare will not be underfunded during this cycle. And so I can kind of go through some of the lists, but what we’ve told our organization is, you know, in every business is different. But we said, Hey, you know, pull back and think about the segments of your business that might be impacted less or more and every company’s different, and then go seize that opportunity. And so that’s like, gotten a lot of like, really exciting thinking going on around here. As you know, we’re talking about two things. What are the external opportunities and how nimble and agile can we be to go seize them? And how much faster Can we do that than our competitors? So that’s like been the rallying cry around here.

 

Glenn

I would just think about this as an opportunity to promote financial literacy. If you try to explain to an engineer or a marketer, a balance sheet, they just want to go back to writing their press release or putting together ones and zeros. But when you need to explain to people how much money you have in the bank, and what your ability is to withstand a downturn and you walk them through your income statement and your balance sheet, I think you really put them in your seat when they start seeing the business the way a CEO does, and just the level of urgency that conversation has in a tough time when people distrust rhetoric and just want to see the numbers can really be your friend, you can say, Listen, I’ll show you the business the way I see it. And I’ll explain what would trigger us to have to cut costs further, and how we make decisions about where to invest, and you’ll see exactly the numbers that the execs are seeing. And just walking people through that can build more trust than any bland proclamation about how much you love the employees, even though of course, all of us really do care about our culture and our people.

 

Robert

I was going to say one of the themes that’s emerging, is that done right coming out of an economic downturn, you can actually be a stronger company in many ways. You know, Glenn talked about financial discipline. Bill talked about being very smart about you know, segments. One of the things And I think is unique to this particular time is that we’re all working from home. And one thing that I think is happening is that we’re getting better at collaborating. We think of ourselves as very good at collaborating, but in lots of small and big ways, we’re getting better at it, because we’re having to get better as we work from home. So I think on every level, you can actually come out of this stronger whether it’s financial discipline, whether it’s being smarter about your marketing, whether it’s being better at collaborating. And that is a positive message which is looking at we’re getting better at you know, we had a hard time cutting costs, we’re getting better at it because we’re being forced to

 

Steve

Guys, let’s  pull on a thread here that certainly is becoming more top of mind for our people. And that is looking at difficult economic climate that some companies will have to deal with reducing their workforce. How do you think about engaging in that discussion with your evaluating whether or not it seems something you have to do., I would love to hear your thoughts on on this. What advice would you give others?

 

Glenn

I have been surprised talking to some startup CEOs around town, how slow people are to depart from the narrative of “we’re killing it”. They’re actually worried about what people will think, instead of just deciding what they can afford, and doing it as fast as possible so they can maximize severance for their people. There might be an exception, because some people are waiting for federal stimulus I can understand wanting to know what’s coming before e deciding but I’d still err on the side of moving fairly quickly so that you can give people the maximum amount of notice and respect.

 

Steve

So Glenn, on that transparency theme,  This is open to Bill and Robert How do you pull your team into that process? What have you historically done? What advice would you give young entrepreneurs who may not have gone through an economic downturn before?

 

Bill

I was having a text conversation with one of my leaders, and they were saying how they kind of appreciate what was going on, you know, how we were kind of working through this and, and, and what I told them is like, Look, you know, we get paid as leaders, not just for the kind of nice up into the right cycle, that has plenty of its own challenges, but you actually kind of like, earn your keep through managing through these cycles here. And this is like really, when you earn your stripes, and not just for a CEO, but for anybody in a company, but particularly like the leadership and management team. And, you know, the conversation I had with my leadership team is to say like, hey, just be cognizant of the fact that you’ll have many people that are management rolls in the company, some of them that run big teams that have never been through a cycle like this because they just haven’t been in their career long enough where we’re in a really odd scenario now where we’re sitting here on the back of like a 10,11 year, pure up into the right expansion. And so the implication there is you could be 10 or 11 years into your career. In fact, you could be more like 13 14,15 years into your career, but like as a manager, never having been a manager and not seen something like this. And so you have this scenario where you can have some of your veteran people that have not developed this skill set of being able to manage through a cycle like this and what I told the team is like saying, Hey, you know, the world is cyclical, it does go down. Like Glenn said a minute ago just kind of operating in the world killing it, cycle. Again, that’s hard because killing it’s not easy, but it’s through these cycles that you will really become like a veteran leader. And, you know, my team sort of like has responded to that they’re like, yeah, you know, this is a career development opportunity, as tough as it might be operating through the cycle.

 

Unknown 34:14

I don’t know if you want to add to that.

 

Robert

I agree with both the things that Glen and Bill said, the one piece of I would add is that, even as you’re trying to be transparent, you also have to think about the speed of information and how it lands. You know, as companies get bigger, and I’ve, we’ve some of us work in very, very large companies, the speed of information might be literally six months, six months before everybody in the organization for real for real, understands the key thing that you’re trying to do in small organizations that might be you know, that day in the conference room, but if you think about what’s happening right now, you know, I find that people are anxious enough that they’re not hearing the information as they used to even a month ago, and you have to repeat it a lot more often than I would expect. So for example, we’ve been pretty consistent and pretty disciplined about our work from home policy, starting back when King County did the first set of guidelines, and we’ve documented that we send out an email every Thursday at four o’clock we have within Highspot, you know, the fact we have all these things, and we’ve been very consistent.  I do think as part of transparency, consistency, repetition is more important than it’s been in previous times.

 

Steve

I just expand on one comment that Glen made in the for every entrepreneur, your board will always give you feedback. back and always provide input on what you want to board things that you can do better. I will tell you some of the best learning opportunities I had I Concur, were the mistakes that I made, and that, that fundamentally, those actions or those, those events, created amazing learning opportunities. If I think about the times when we had to do reduction in force, the single biggest thing that I really wrestled with was, how did I not see it coming? How did I not see that this event would happen one day? And why didn’t I have two three contingency plans that I could pull on way before an event happened? And I realized that it’s a high bar to hold yourself to, but it’s the bar that you have to hold yourself to as the CEO, you are responsible for not just the the investment that people have made in your company, but for the people who have trusted you to come to work at your company. So the real trick and CEO’s far better than myself and figured out how do you take that, that ownership and accountability model and keep pushing it down to every level of the business? Because it’s it’s a fallacy to assume that you and you alone can can address challenges or or see them entirely on your own, the more you share, and the more that you involve everybody in the decision process, the better your company becomes. So I really identify with the comments that all of you made. Um, I’m going to hit one more topic and then we’ll, we’ll wrap up. Over the last several years, especially in software businesses, the the world has moved to much more of a SaaS or consumption based model. And that model has tremendous upsides to the customer, but will certainly be put to the test in an economic downturn. And so I’d love to get your thoughts on how do you manage a SaaS business or consumption based business in a In a economic down cycle, and obviously I’d love to share some some experiences from concur as well. So, Bill, why don’t you jump in on this one first?

 

Bill

Yeah, well, I’ll make a few comments. And then I’m going to learn a lot more than I’m going to teach here, but a couple things. And I was having a conversation with someone on my team about this today. And I think in these cycles, what you have to remember is like, keep your customers. And what I really mean is if if you have a model where you like to bill for, you know, multiple years, and customers can’t afford it right now or their or their or their want to be risk adverse, they want to bring in that cycle, they want more flexibility, or if you have a model where you sell them this much, but they only want to be able to buy this much for a little while. I think it’s really important to sort of, sort of rethink how flexible you can you can be for customers, and that’s going to kind of keep them with you like in our business Qumulo. We’re making 5,10, 15 year or more relationships with our customers. And so if you if you think short sidedly about your structures with customers and really push them on it, you know, you might get the deal. But you, you might also force them to back away. And so my opinion is during these cycles, it’s like, you know, think a lot about flexibility. Keep your customers and I’ll give you the counter example, which is, maybe probably, perhaps more telling someone literally came into my office two hours ago and said, Hey, I have this contract from from a vendor, and they’re forcing us to buy for two years. And I just tell him, I told him, why don’t you tell that vendor, absolutely not, goodbye. Because we just want to buy one year. And it’s like, hey, during a cycle like this, I expect my vendors to show up and kind of really partner with us and be and be flexible. And if they’re not willing to do that. It’s like now I know who my partner is and who my partner isn’t. And that’s just kind of an attitudinal difference about operating and actually like forming deep customer and partner relationships during one of these cycles, and I think being rigid is not the way,

 

Steve

Robert.

 

Robert

Yeah, I mean, you know, different businesses are going to be impacted so much differently. And so we’re, I don’t know how much we’re countercyclical. But our usage is actually going up right now, in a couple of ways. One is that the people that naturally aren’t on our platform, because they’re working from home need to access the platform even more. So we have our usage almost doubled across many, many of our bigger customers. And we’re seeing another thing and this is where we’re trying to be creative. And we haven’t figured out the answer yet. But to kind of Bill’s point, they’re also saying, hey, can’t we for a certain amount of time, open up the platform to more people in our company that we want to pay for right now. They don’t normally need access to it. But right now, because everyone’s working from home, can you somehow facilitate that and it’s not just a licensing thing. It’s also just something we have to do Figure out programmatically. So I think this notion of being flexible, is really important. I do think that, you know, you will see in our business and others, you know, when you think about consumption, there’s kind of per user, and there’s per per activity. On the per user side, I think everybody’s gonna try to trim users. Now, we’ve already thought about some of our biggest spends, you know, we’ve been fairly. We’ve been fairly lax about if you have a need and a reasonable will give you a license. And now we might tighten that up. And I think we’ll all see that. I don’t know what’s going to happen on the consumption side where you’re doing activity like AWS, I think for a lot of businesses, those run critical systems, and I don’t know if they’re gonna see a downturn or not, because they they need to run those things. Just like Qumulo for data, you need that data. So it’d be very interesting to see if they really see a downturn as long as those applications continue to function.

 

Steve

First of all, I want to tell you, I happen to be a shareholder in all of your companies, and I’m listening to you, I am very glad I am. Um, there’s a there’s a theme that you guys bring out, which is really amazing. And that is the compassion of who you are, who your company is, has to extend not just to your people, but also to your customers. And it’s now more than ever, having a long term relationship with your client is critical. So I mean, one of the things we did and perhaps not purely out of a thoughtful, you know, planning, but as much as we just want to treat our customers the way we wanted to be treated in 2009, because travel lines are way  Down and expense reporting was way down. And so we went to our customers proactively and said, Look, we’ll let you tier down, you know, we’ll let you buy it, the whatever tier, you need to buy it. And so if you want to reduce your commitment by 25%, that’s fine. Now, obviously, it gave us a chance to re engage with the customer. And think about how we might expand other parts of our relationship either now or in the future. But the biggest thing is that they knew that we had their back and and we were acting in a way that was truly a partner. And, you know, we’re hoping that that kind of partnership building or the relationship building would, over the long term be constructive. And honestly, it was incredibly constructive. The I will give you an example. I’m on the board of Washington federal. And one of these I love about this company is that the CEO has got a culture that that that, you know, honestly it, it speaks to being a partner. It’s not, hey, I’m just a bank and I’m looking at business with you, but it’s a partner. He literally proactively at the beginning of this downturn, went to all of his SMB customers and said, you can move to interest only effective immediately. And it’s it’s that model that that really helps build loyalty and trust. And that’s what I hear in the comments that you guys made.

 

Let me do this. We’re coming up at the top of the hour. And I’m going to try to summarize this conversation. And if I’ve not summarize it correctly , please jump in wherever you like. First is that be decisive and take action now. The theme behind this is very simple the best always take a leadership position and define the path forward before it becomes obvious that has to be done. In that process. The advice we’re getting is be brutally honest and assessing the challenges that your company is facing or that it likely will face in a downturn. The second is cash is king. And that’s true not just in good economic climates, but even more so in tougher economic climates. Use this downturn. to really focus your business, whether it’s on unit economics of driving efficiency into your business, or whatever the metric might be, but make sure that you have you use this opportunity to actually fine tune your business, either build cash reserves or actually decrease your cash burn. Third is take the opportunity to make your company stronger, increase your competitive advantage. One proxy might be every dollar being spent on your top three initiatives. If it’s not, then why is it being spent. It’s an opportunity to increase product leadership. It’s an opportunity to differentiate your relationship with your customers, for example, the Wafed did. Fourth is be transparent and be authentic in your communications across the entire company. There’s no way to over communicate the rationale, the strategy with the specific tactics that you want your company to execute against. And I’ll borrow from a phrase that Glenn used, don’t forget your humanity. do what’s right for your business. But don’t forget that your people are and they’ll always be a huge part of creating your business. If you’re considering reducing the size of your team, do it with full transparency, and do it within the cultural values that define your company. simple lesson trust is really the critical currency that we all have. It always has been critical. It’s even more so in this type of climate. Fifth is, and this is really just what I’ve benefited from, in my experiences, that instrument your business, use this opportunity to make your business better. Are you really measuring the right things? How broadly are those metrics measured? How fast can you take actions based upon that instrumentation? And, you know, look, the best get better in difficult times. So think about it in the context of what’s your competition doing? And how does that factor into your plans? How do you raise the bar and yourself?

 

I’m going to close with two thoughts. That first is that the ideas they’re never the differentiator, these are great ideas that we’ve all shared here. But they’re never the differentiator. It’s the execution of those ideas that create distance between market leaders and those that aspire to be more computers. And then, you know one more thing, this too is going to pass. And when it does, the companies that have adjusted and really optimized, their businesses will be stronger. And they will distance themselves massively from the competition that couldn’t be agile and couldn’t deal with these  issues in honest, authentic way. Bill, Robert Glenn, I can’t thank you enough for sharing your time and your insights to all of our listeners for everyone that madona our best wishes to you and your families. Please be safe. Thank everyone.

 

POSTED IN: Madrona News

Founded and Funded – The Road to Product Market Fit is Not Smooth with David Shim, CEO of Foursquare and Founder of Placed

David Shim, founder of Placed, now CEO of Foursquare has some invaluable advice for founders.  He built Placed over six years from an idea incubated at Madrona into the industry standard for brands and advertising agencies – and an acquisition by Snap. This conversation with Matt McIwain, managing director, covers how David and his team transformed Placed’s core location technology into a solution for the age old problem of how does advertising actually perform.

We hear the story of how David harnessed the power of big location data and revolutionized the way companies market to and understand consumers. Although he had developed a solution to a pain-point for many businesses, he ran into a few pain-points of his own, especially around finding product/market fit and scaling the company.

Matt and David reminisce about the trials of building Placed and how listening to the market transformed the potential of Placed.  David and Matt talk about being frugal with spending early in a company’s journey.  That  frugality made it easier to raise more money and also created urgency amongst Placed’s team.

David recalls stories of his time with aQuantive, Farecast and Quantcast. He also weaves in a sheepish story of his time sharing Madrona office space with founder and CEO of Rover, Aaron Easterly.

This episode is well worth the listen!

Full transcript

Erika Shaffer 0:05
Welcome to Founded and Funded! This is Erika Shaffer from the Madrona Venture Group. In this episode, Matt McIlwain, Madrona Managing Director, sits down with David Shim. David founded Placed.com and is now the CEO of Foursquare. Placed was incubated at Madrona and the two worked closely together for years. They talk about the journey of building the company including the struggle to find product market fit. Throughout his founder journey, David has consistently recognized big trends and embraced frugality. They talk about spending venture capital with intention to fuel the simultaneous development of a company and a culture of accountability. Listen on.

Matt McIlwain 0:49
This is Matt McIlwain from Madrona and I’m really excited to be here with my good friend David Shim. David and I have worked together for a number of years on a couple of different companies, but why don’t I give him a chance to introduce himself.

David Shim 1:00
Yeah, David Shim CEO Foursquare. Previously, I was the founder and CEO of Placed. Before that it was called Sewichi,thanks to the board we changed the name of. And for those who don’t know, Sewichi is a Korean term that I made up where “se” is three and then “wichi” is location. So location, location, location.

Matt McIlwain 1:17
I love that! David and I have had a great opportunity to work together. I’m actually going to take you back before Placed for a second because we got to work together on a company called Farecast that our great friend Oren Etzioni had founded back in 2003. And you joined in the business development area. So tell us how you joined Farecast cast and what you learned from that experience.

David Shim 1:39
Farecast was great. That was my first real experience in a small startup. So prior to that I was at a company called the aQuantive, specifically Avenue A doing business intelligence. So looking at how digital advertising drives specific actions like purchase on a website. During that time, someone named Mike Fridgen came along and said, “Hey, I’ve heard good things about you. Do you want to meet up for coffee?” And this is the first time I’ve ever actually, like been recruited. I’m like, yeah, sure, let’s meet up for coffee. So we meet up for coffee. He starts telling me about this company called Farecast, or at that time, it was called Hamlet

Matt McIlwain 2:11
Yes, to buy or not to buy!

David Shim 2:12
So he started giving me the pitch. And I was like, why is he telling me all this stuff? Why is he goes so deep in the business, and then he ended with like, “Hey, we’d love for you to come on board.” And that was kind of a first for me where I was like, “Okay, this is really interesting.” I like the idea. But it’s a startup. I’ve always wanted to join a startup, but there’s risks associated with that. So I kind of did the math in my head. And ultimately, I was like, let’s take that jump. And I will say, knowing that Madrona was funding that company went a really long way. Someone smarter than me believed in this company, that I should be more comfortable in taking the leap.

Matt McIlwain 2:44
Well, you know, that’s an interesting point. I mean, we have the opportunity all the time to meet with the talented young, you know, executives and really, it does seem to matter that somebody who is doing this for a living and helping build companies is on board and as a validation. And we were really fortunate to have you come and join the team, Mike Fridgen, was the VP of Marketing and Hugh Crean was the CEO. And at the end of the day, that company was one of the early companies trying to use data science in a very basic way to predict in that case whether airfares went up or down, and ultimately they were competing against Kayak. So what was your role there?

David Shim 3:19
So when I first started there, this is where it started for interesting, I came on board to lead marketing, and he got me the experience around things like PR when you’re in an ad agency, you think you do PR, but in reality, you’re doing a lot of PowerPoint, you’re doing a lot of spreadsheets and Excel. And so it got me to understand what is the full marketing in it all the way from spending media to see how it performs, to going in and actually saying, did that actually drive return? What’s the right narrative that you want to put what’s the right creative, it was a great experience to do all of those things in a very short amount of time. And I wouldn’t trade that experience for the world in terms of it set me out for what I was going to do next. And then from the role itself, so it was doing marketing first, then we expanded to things like monetization. How are you going to make money? And are you getting traction there or not. And in those days, we had a search engine similar to Kayak, we had airfare price prediction, say is the price going up or down. And people were using us at a very high rate, we were getting great press because this was the early days of Web 2.0. But what happened was we weren’t monetizing it because we weren’t selling tickets directly, we send somebody else and we get a referral against that. So we started experiment with advertising. And that advertising was like, hey, let’s put a Google Ad here. Let’s put some text links here, hey, let’s start to put logos on here. Let’s start to drop them off into other online travel agency websites. And we started to see revenue starts to come in. And then it became really kind of this experiment where what is the right layout? What is the right kind of area to focus in on to drive maximum revenue? And it was really fun in those days, because there wasn’t a bunch of software solutions. We were actually working with the web developer with Google and saying, how do we actually monetize this?

Matt McIlwain 4:54
Yeah, it was a lot more hand rolled as it were back in the day and one of the things I I noticed about you then is that you were great at coming up with little hypotheses, testing, iterating testing iterating, and it just kept getting better. The company got bought by Microsoft and became Bing travel, you went off to California, you know, in a flight of fantasy maybe mentioned that for a second. And then we’ll come back to how that led to the startup Placed.

David Shim 5:16
Yeah, I think this is I want to go to the valley like that was one of the things like if you are in the startup scene, it’s kind of like if you’re in country music, you can be in LA, you can be in New York, but you want to go to Nashville at some point. I went to Nashville for me, Silicon Valley, work for a startup that had recently been acquired. And the thing that I was missing in my kind of portfolio was Farecast was doing really well. But at the same time, we weren’t going to have a team on the marketing side that was going to be 20, 30, 40 at the time, and the opportunity came up with the startup that was acquired to say, “hey, we want you to come on board and we’ve got a team of 40 people right now that you would be managing,” and I did that not because I didn’t like Farecast but it was just more something to fill out my resume. I stayed there for a year good experience. learned a lot of things and then ultimately made the jump over to a company called Quantcast. Quantcast was a great experience. So during that time, it was a little similar to farecast and Hamlet in the sense that they didn’t have any monetization, but they had a lot of great data, a lot of great engineers and data science. So for people who don’t know, Quantcast, you will put a pixel on your website, and they would give you analytics but not analytics on what pages were most visited. But it would give you analytics on demographics, and who actually came to your website. And then where else do they go, what other websites that they visit, and they build a very large business where at one point, I think they were measuring, you know, 90 plus percent of the internet population, the US because they were on so many different types of websites. And that was a lot of fun because I had this great data set and they said, “hey, let’s figure out how to monetize it.”

Matt McIlwain 6:47
Yeah, and you had some experience with that. And so it’s really interesting to think if you go back there’s you know, Avenue A and aQuantive. And then there’s Farecast and there’s Quantcast and these names are all kind of blending together a little bit here, but what I’m noticing is that both from a sort of domain experience perspective, it was building a lot of experience sets for you. And then from a skill building perspective, it was building a lot of capabilities to potentially step into that role of being a founder. And you came back to Seattle, you saw the light, realize that it wasn’t quite so wonderful down there in Silicon Valley came back up to Seattle. And I remember, it was right around the beginning of 2011, that we had this conversation now.

David Shim 7:26
Absolutely. So the first thing I did want to get back to Seattle was reach out to Matt, I said, “Hey, I’m starting this company.” I didn’t think Madrona be interested. So this is where I was a little bit of a rookie in terms of the entrepreneurial space or the funding space. I was more moved up to Seattle because I wanted to start the company outside of the noise of Silicon Valley, because in Silicon Valley at the time, everybody wanted to be a founder and people were raising like a million dollars $2 million with four engineers, but they were really diluting the equity value right off the bat. So I came up to Seattle, I had some money that I earned from the Farecast acquisition as well as a couple of other things that I said “Hey, I want hire one or two engineers and I want to build out a prototype.” I met with Matt. Matt said, “Hey, this, it is interesting,” but I think he more believed in me as an entrepreneur, “He said, Hey, you know, we do seed investing.” And I was like seed investing, I kind of know what it is, but I wasn’t like 100% sure. And I was like, “Yeah, I don’t know.” I remember the conversation. I was like, “Oh, I felt really honored that you would say something like that.” But I also it wasn’t necessary part of my original plan. We continued to have those conversations. And I was talking with engineers and product people and saying, like, “Hey, do you want to come on board?” And I kept on running to like, it’s a really good idea, but you have no track record. And, and then we continued the conversation. And it really when I mentioned to someone, I think I probably mentioned one of the engineers I was trying to recruit, “Hey, I’m talking with Madrona.” All of a sudden, he changed a little bit where I got further along in that recruiting conversation. I’m talking with Matt McIlwain, who made the Midas list he’s the only VC in Seattle did that. And that actually helped me out a lot as an entrepreneur because becasue I didn’t have a track record. So I was kind of borrowing from you, that really helped me kind of say, I do need to get money from a drama in a way that it would be beneficial for the company, as well as beneficial for recruiting.

Matt McIlwain 9:10
That’s an interesting set of dynamics. And we’re just delighted that sometimes we can be helpful in terms of both the early capital because sometimes people are taking a big risk on leaving an established company and established job, even if they’re willing to kind of in that short term sacrifice a paycheck or portion of a paycheck that they would otherwise be able to earn for the equity and the excitement of being in a startup. And they want to know that there’s some kind of hooks and kind of guardrails around this really early stage startup. You know, one of the other things that really impressed me in addition to kind of your ground truth understanding of the market, is that you saw some of these big trends. I mean, the way I think about at least be interesting to hear how you thought about it, you appreciated that, you know, smartphones at that point, which were only like three or four years old, you know, we’re really maturing and the 4g network was starting to come online, and even the fact that there were cloud services where you could actually do real time analytics. Tell us a little bit about some of the trends you were seeing that led you to believe that this thing that came to be known as Placed after it was called Sewichi, might be possible.

David Shim 10:11
One was, even while I was at Quantcast, I wanted as a company for us to do more and mobile because the iPhone had just come out while I was at Quantcast. When I left Quantcast, iPhone two had come out and Android was just rolling out as an operating system. And what I did during that time was I actually had an engineering friend and I paid him to go to different conferences for me and just check in and say here, here’s my thesis, I think location is going to be important. I think that it requires an operating system that is available widely. And it has to enable programs to run in background and persistently. Yeah, so those things for a while didn’t exist like iPhone didn’t nice actually let you run apps and background for a little bit. Android did not roll out yet. So there was no kind of widespread adoption across carriers. But he went to one conference for Android. I think it was an at&t. conference, they said you could actually do this. So that was my kind of tipping point to say, Do I leave the company and work on this project? Or do I stay at Quantcast and really kind of continue to build a great company. And that was a really hard decision. Because when you’re in a startup that’s successful, that’s doing really well where you’ve got a lot of opportunity in front of you. But it’s also you don’t get many chances where you see that product market fit. And then you see the market saying like, “Hey, there is no incumbent, there’s nobody that is better than you bigger than you. It’s wide open.” And that was something that got me really excited. So that was one thing. So the the operating systems for smartphones were enabled technology in the smartphones were “Hey, most people don’t know this right now. But you actually had to carry this computer around. You put it in your car, it’ll give you directions.”

And then getting it into the smartphone. That was crazy. That was like “What is going on here?” And you see that where if you ever remember going to the Best Buy in the 90’s. They had a whole section for navigation. Yeah, that section completely disappeared and it was replaced by smartphones. Right and that just got bigger. getting bigger and bigger. That was a huge opportunity as well, in terms of market was saying I’m buying smartphones, the technology to do GPS was built into the smartphones, the operating system existed, then it was kind of a bet to say are mobile phones going to be big. That wasn’t a really hard bet to say, it’s just more when it was going to happen. And it was right around that.

Matt McIlwain 12:18
But it’s good to tease out the GPS point too. It’s now 10 years post that timeframe. And we just take it for granted that you know, there were the 4g networks and there was the GPS network and you could leverage it. I mean, I remember in the earliest days of Placed, you know, we were worried that we were just killing the battery life on phones so there was a whole optimization even once these things were available that you could run the place that but maybe tell a little bit about well what was the purpose of the place to app and why was it at risk of burning somebody’s battery life and why does it even matter given what you were trying to do?

David Shim 12:49
We started with this when check-ins were big and this actually goes full circle back to when Placed was started we built an app that was called Check-in King. It let you check into Foursquare, Gowalla, Google and Facebook and this is when it was really a fun thing to do is check into a place, let everybody in your social network know. As part of that, we actually went out and said, “Hey, we’re going to build an aggregation app,” that aggregation app would let us run location data and background and users would opt into that. And we were transparent. But these were people that love to check in and they wanted to show people where they were. So that got us a lot of data where it said run the application and background, people are going to confirm where they are. So it’s ground truth data points. And then we had scientists that actually ran models against that to say, “Is there enough signal to predict a store visit occur?” And so in the old days, batteries used to die very quickly. And so you’d have to be very careful on how you collect or measure that data and process the data. So we did something that was kind of unique back then, we didn’t actually push it out to the cloud right away. We said store the data on the device, collect it, but then when someone charges their phone, there’s a flag when the battery starts to go, then sync that up and you don’t have to use the cell towers, but you can actually use the WiFi connection. They’ll be faster. So you had to find all these like novel hacks to solve that battery issue.

Matt McIlwain 14:04
Yeah, you guys were really great. Not only I think, you know, technologically speaking, also, culturally speaking, I mean, one of these things that I used to give you a little bit of a hard time about I don’t do this very often is you were pretty frugal. So just tell us a little bit about like, in those early days, you know why frugality was so important to you into the company.

David Shim 14:23
I thought of the VC money as my money, it was a very high bar to side what to spend against. And the way that I kind of addressed it was to say, “Hey, would I spend my own money in the same way,” and that let me make the right decisions for the business where we raised $300,000, $400,000 seed round, like that is nothing these days, but that was a very big round for me that we wanted to make sure and Shepherd that correctly. And the way that I wanted to go out and extend that even further was I took zero salary. So technically, I think I’m employee number seven or eight, because I was never on payroll. But that that was that extended the runway even further out, and that frugality actually helped out on the recruiting side because people started to understand like, this is a company that wants to be around for a long time, they’re not going to go out and flame out after three months because they spent all their money. And that let me recruit the right type of person. And that right mindset,

Matt McIlwain 15:12
and I think that that frugality did serve you well. And it was part of that it was one of the cultural cores of the organization. And what was interesting is that, you know, you needed to get to a critical mass of these consumers that decided, “Hey, I’ll trade off having your app running in the background on my phone.” And eventually, I think pretty quickly, kind of the trade was well Placed would give you something, a Starbucks gift card or other kinds of monetary appreciation for allowing us to have your data so it was a very explicit triple opt in tray, but it took time to build a critical mass of those folks, but because you were so capital efficient, I think it gave us the confidence because that was taking a little bit longer to collectively put some more money in together.

David Shim 15:53
I would say also the frugality also had hunger. Yeah, where he you had to be successful. You had a clock, it wasn’t something where I could wait six more months and kind of develop the code further try to test out these different ideas, you had to make a bet you had to go all in on the men, but that actually helped to the people that we brought on board as well. The frugality actually said, like, “Hey, we have a small amount of money, we’re investing it correctly. Now let’s go really aggressive and dive into it.” And that’s where people were wanting to stay. This is like the old school startups where people would stay till 9pm, 10pm, 11pm. Like it was nothing. And then we come back in early in the morning, but that was the culture that we had built. And we kind of extended that even further out where this is unheard of these days, but we had office hours, etc. So we, we said in the interview process, anybody who wants to join the company, we have office hours, nine to six o’clock, if you are not okay, with nine to six o’clock, you should not join this company.

Matt McIlwain 16:44
And what David means by that is that there is this expectation that we’re going to all be in the office together during that time window because we want to productively work together, engage with one another, and we’re going to make that commitment to each other. And yeah, sure there was going to be obviously people had a little bit of a here and there. And there’s gonna be times when you had to work later. But it was it was another interesting cultural dimension of the company. Before you know it, you had thousands of people that had made this trade and then even 10s of thousands of people, of course, it cost you some more money to get people to, because you had to market to them, get them to download the app store very nacent at the time. Eventually you started having enough data that you started to think about what might we do with this data that might be valuable in a kind of an anonymized, abstracted way to different audiences?

David Shim 17:31
Now, and that’s where the thesis was. The digital world is very measurable today. Like if you go to a website, they measure every possible action on the site, they try to get inferences on who you are when you visit the site. But when it comes to the physical world, there wasn’t a Nielsen there wasn’t a comScore, which are rating services to say how many people actually went into a Best Buy and how many people went into a Walmart, a Starbucks. And so the play for me originally was to say, let’s measure the physical world, make it as measurable as the digital world, and then the use cases will come. And the first use case that we had was called Placed Insights. And this was the idea that if you wanted to go to our website, you type in any business, let’s say Starbucks, we could show you how many people visited a Starbucks that month, we could break it down by day, our what other businesses they visited afterwards. And that got a ton of attention. Like we were in the New York Time, Wall Street Journal, and I was doing the press and this is where I probably should have someone else doing the press. But we had a lot of traction in market where people were talking with us, I had VP’s, CMO’s pinging me. The problem that I ran into, and this is where Matt was actually great was, and I didn’t think at the time I was like, now you don’t understand my business. I know what’s right. So we probably spent 18 months to 24 months, acquiring the data from users doing it in a very transparent way. Then we had the analytics where our team was predominantly there was almost no business people on the team. It was mostly data scientists crunching the data as well as engineers on building the app and processing it. We built this great suite got a lot of press. We were able to go in and for the first time ever tell someone how many people went into a given business on Black Friday, and was that up year over year, but people wouldn’t buy it.

Matt McIlwain 19:07
People liked it. They appreciated it. They thought it was interesting data and made for great media coverage. But there wasn’t a business model there that was a sustainable business model. It was kind of a researchy, novelty kind of thing.

David Shim 19:18
Absolutely. And this is where Matt did a great job. At first, he’s like, Hey, this is great. You’re getting a lot of traction. But let’s look at the pipeline. Like what’s the flow in from the meetings that you have to the actual in person that gets to an opportunity that turns into a contract, and we we had a couple wins, but it wasn’t something that was like replicable. It wasn’t like, hey, for every 10 we got two meetings in person that one turned into a contract. And that was strategically that was as an entrepreneur. The mistake I made was sticking too long to what I thought was right, versus I think this is where Matt did a great job of just pinging me just kind of reminding me like, what’s the revenue model? What’s the sales process look like? Are people actually buying this even though you’re getting all of these meetings and over time it’s a subtle process, but because it was never like you need to get revenue, it’s very much like, are you thinking about this and we got to the point where this is hard. It’s like a six to nine month sales cycle and we’re making 100 grand on a contract like this is tough.

Matt McIlwain 20:11
Probably not going to scale. One of the things that you did is you also noticed the rise of these mobile ad networks. And I think this is where, you know, while we might have been encouraging you to think about is there a real business model here, your insight around the attached to the mobile ad networks, you know, made a made a big difference in terms of getting advertisers to see the value in mobile ad attribution. Tell us about that.

David Shim 20:35
I take zero credit for the product that generated all the revenue and the acquisition that it drove from so one was the board kind of telling us “Hey, look for product market fit, you’ve got a great solution but you haven’t found the right product or services to sell to customers.” The big thank you will be to Ground Truth formerly known as xAd, where Monica Woo, who was their head of marketing reached out to me and said, “Hey, I see all this press about you. Everyone trusts the you’ve got really great data, what we would love you to do is actually take our ad impression data, bump it up against your store visits because we have an audience that opted in to let us measure where they go and tell us did that ad drive someone in the store?” I actually told her no for about three months. So I said, I don’t want to do this, like I am comScore Nielsen for the physical world. That’s a billion dollar company like this. Then I then you had mentioned like, Hey, what’s the process? What’s the revenue? How’s this flowing? Finally, we took it. And I said, Sure, we’ll do it. I’m getting enough pressure from the board. Let’s try something else. And it worked, where they’re like, “Hey, this is great. We’ll give you 10, 20 $30,000 for one report, we deliver the report like, “Hey, we want to do five more.” And I was like, okay, we’ll do five more report back to board a we get someone that wants to five more should we explore this like yes.

Matt McIlwain 21:47
Sounds like it’s a winner!

David Shim 21:48
They were growing at the time they were offering it to more and more advertisers. As advertisers received the report, they saw the benefit of measuring media to physical store behavior, so saying this address Someone in the store, they started to ask other publishers and mobile ad networks to include Placed. And that just snowballed where all of a sudden, without a sales team without a business development organization, we went from no business to, you know, 10s of millions of dollars, hundreds of partners on an annual basis. And we never actually grew out that function. But by the time we were acquired by Snapchat, we had over 400 publishers that were using us for in store attribution.

Matt McIlwain 22:26
Yeah, I think that that was just a high leveraged, you know, sort of frugal and smart way to scale your organization because it started to become the expectation that if you’re running mobile ads, where you’re going to be able to attribute that to whether or not people actually went into physical stores. You had this by now really built out healthy network of hundreds of thousands, if not millions of people that had downloaded the app, and you had a really great panel. So you could get down from a demographic level into a really precise level. And as you say, you know, you were doing 10s of millions in revenue growing very nicely. So what happened? Why did you guys sell to Snapchat?

David Shim 23:00
It was very interesting. So as a first time founder, you don’t know when you’re actually being courted a lot of times. And you had mentioned before we’re having meeting with this big internet company, even early days where we just raised a series A people would reach out to us and say, “Hey, do you want to meet?” And I didn’t understand the difference between Corp Dev and Biz Dev. It’s I go to these meetings, it’d be great. It’d be like, hey, do you want to come back again? I’m like, That sounds good. And I would tell you, like, I think they want something else. Yeah. And I’m like, I don’t think so, Matt, I think I just wanted the business deal with them. So we had a couple of opportunities. But as an entrepreneur, I would say one thing I would recommend to others and I’ve done this myself is never think about the exit until you’re right at that point, because the minute you do anyways, for my personal mindset is I’ll overthink it. I’ll start to go to that direction because now I’m thinking about, “Hey, if I have an exit, that’s great. My employees will make this much money. I’ll make this much money. Hey, what would I do with that money?” It starts to clear a path to go down that direction. I’m glad I didn’t do that because we had multiple offers or any indications of interest over the last kind of six years of the business while we were independent. And with Snapchat, it was really they came to us and said, We want to partner with someone location space.

Matt McIlwain 24:08
Tell me about what you look for because you get, you know, young entrepreneurs coming and knocking on your door to get your advice. And sometimes have you consider making an angel investment. What do you look for in an entrepreneur, that’s at the the early early point of their journey.

David Shim 24:23
So I’m probably the worst investor in the world when it comes to seeing opportunity.

David Shim 24:26
But there are things in terms of what I look for. But I will say the reason why I’m the worst investor just so people know, Madrona incubated so that you have a space they gave us, internet, they give us desks, all these things that were great. And Madrona has this program back then where it was more of a section of the office that we worked into, but it was incredibly helpful because I didn’t need to hire an executive assistant office manager. Right behind the wall. There was another company that was being founded that I thought was a horrible idea. I was like, Who would ever do this? It was called Rover.

David Shim 24:56
There were dogs running around the office and they were having accidents and I was like “Is this a real company?”

Matt McIlwain 25:01
What is Madrona thinking about?

David Shim 25:03
And looking back at it, I should have said, “Can I invest in this?”

Matt McIlwain 25:09
Well, they’re really fun thing about that, of course, is that both you and Aaron Easterly, who’s the founder and CEO of Rover, were ex aQuantive folks. And in fact, Brian McAndrews ended up being on the Placed board prior, who was the CEO of aQuantitive. And a longtime friend here at Madrona, it does come down to people.

David Shim 25:26
Absolutely, absolutely. And then I would say the investments that I’ve done, it’s been people that I’ve it’s very similar to kind of how you invested in Placed It was about the people that I know. So when they’ve had success in a career that I believe that they’re really the best or one of the best in a certain area or field. They’ll come to me and they’ll say, “Hey, would you be interested in investing?” And lately, at first I dive into the business model, I’d asked a bunch of questions. Then I realized, like if you’re giving 20 or $25,000, that’s a lot of money. But at the end of the day, they’re trying to raise a really big pie like I don’t want to distract so you really kind of have to bet on the person more than the idea to live have cases and I think that has its early days because I’ve only recently started investing. But I think those companies that I’ve invested in where it’s bet on the person, it really does mean a lot more from a return perspective versus Hey, it’s a referral from somebody else. I think this person’s good, but don’t know as well

Matt McIlwain 26:17
Maybe share a thought or two on where you think the big opportunities are going for areas that you are more excited about. And obviously, as you were just saying, you know, you want to have people that intersect with those opportunities that can do something really special. But as you think about opportunity spaces, what are areas you’re interested in,

David Shim 26:33
one of the biggest areas that I’m interested in as part of Foursquare, but I think from an investment thesis standpoint is privacy. I think privacy is something that people care about. There’s a lot of news stories, but there hasn’t been a company that has been able to kind of address privacy. I think the closest that you’ve been able to see is things like ad blockers where that’s great, you block an ad, but it doesn’t really help the ecosystem at all from a publisher who creates the content. It helps for the user to not see ads, but you also get a blocked area where there’s no ad. So it’s not a great experience. There are things where there are bad players in space around advertising and measurement…

Matt McIlwain 27:09
where you want to block those people and consumers want more ability to control who gets access to their data. And I think there is a big play there to say, who actually controls the data. And how do I meter that? How do I monitor that, as a consumer, I don’t know what the actual play is going to be. But that is something that I’m very interested in. And it’s on the privacy side of the business. And you guys were also I think, very early to go back like 2011, 2012, 2013 and understanding the potential in the data and using both AWS from a cloud perspective and then also, you know, hiring some some smart machine learning data scientists to leverage that. Things have come a long way since then, you know, do you see those areas accelerating as well?

David Shim 27:52
Absolutely. I can see on the cloud side, more services going on there. I think as a part of Foursquare, being the leader in location, we are getting a lot of people asking to say, “Hey, can you put your services in the cloud? Can you process data in the cloud,” and we are exploring those things today, we don’t have anything to announce specifically. But that is where the market is pushing. And people want the data within their walls, because that lets them kind of control who has access to it. And I think this goes to the privacy theme, where if you’re a company, you might have a partner that you’re interested in. But you don’t necessarily want to give up all your data. Now imagine being able to process it in the cloud in a protected environment, and then taking the data and the value out and then you deciding how you want to use it. So it becomes more of a relationship of a service than it is a product at the end of the day.

Matt McIlwain 28:36
Right? Well, maybe as we wrap up here, you know, if you’ve got any last words of wisdom to entrepreneurs, having been through this journey since day one have Placed and seen a lot of different angles on it over time. What would you say to the you know, kind of the the entrepreneur who’s either trying to decide if they’re going to take the leap, maybe leave one of the big companies here in town to go start their own business or they’ve just taken that leap. The most important thing or two that they should really focus on.

David Shim 29:01
Where I’d say I made the right decision was to quit a company that was doing incredibly well where my options were worth a lot. But it was a decision point where it was an idea that I wanted to go after that. And I was willing to walk away from all this opportunity. When I talk with founders from an investor’s standpoint, a lot of times they have their foot halfway out the door, but not all the way out. And I think a lot of investors will disagree with me. But my take is that it is important for you to go all in. You don’t have to take zero salary like I did. But it’s you need to go all in and say, can you actually make this work? By doing it as a side project? I think from an investor from a an advisor perspective, it’s kind of like if you don’t believe in it enough, why should I believe in it, and I think you should, if you believe in the idea, you should make the full jump. Now with that said, I made the full jump where I spent money to hire a friend that went to different conferences, and he validated this this idea as possible. So there’s also you make the jump You make an educated jump to say, “Hey, does this idea exist in the marketplace? Is this even possible to do?” And there are a lot of entrepreneurs, and I’m sure you get this a lot where they haven’t done the research to say, Is there somebody already in this space doing this? And I think that’s important. I think the second is really being able to go in and say, an idea has failed. When I saw I didn’t have product market fit for placed insights, I should have moved more quickly, where I did see product market fit versus I was a little bit hard headed as an entrepreneur and saying, like, my vision, my way, I believe I have the force to make this a thing. And in reality, you can do that a little bit, but not all the way. And I think the easier path was the one where the market said do this. And then I was able to apply the same type of force. And I was able to accelerate that to a very large business.

Matt McIlwain 30:48
Well, it was such a pleasure to work with you for all those years. I miss it and I’m looking forward to the opportunity we get to partner together again and building a great business. So thanks for spending time with us today.

David Shim 30:59
Thanks a lot, Matt.

Erika Shaffer 31:01
Thanks for listening. You can find Placed powered by Foursquare on the web at Placed.com. If you like this podcast, please share it with your friends and subscribe. We have more great episodes coming in 2020 so stay tuned.

Transcribed by https://otter.ai

POSTED IN: Madrona News

Welcome to Ishani Ummat

Madrona is excited to welcome Ishani Ummat as our new Associate. Ishani hails from the Seattle area and graduated magna cum laude and Phi Beta Kappa from the University of Washington with a degree in Finance and concentrations in Global Health and the Comparative History of Ideas.

As her degree implies, Ishani has varied interests and approaches problems with a broad viewpoint.  She joined us directly from Bain & Co in San Francisco where she worked across a variety of technology and healthcare strategy and operational projects, ranging from digital user experience and customer journeys to strategic M&A.

As a key member of our investment team, Ishani will be spending her time evaluating prospective new investments, identifying new trends and developing our investment themes, and working closely with existing portfolio companies to help them with growth and strategy.  A significant portion of her time will be spent getting out in the Pacific NW community, meeting founders and young companies across the technology ecosystem in the Puget Sound, Portland and Vancouver, BC.  Ishani is particularly interested in how the next wave of digital-physical customer experiences are going to shape verticals like fintech and healthcare.

“Seattle is home to so much interdisciplinary innovation already and I’m incredibly excited to work alongside this community of founders and builders to create more. I believe in the power of young entrepreneurs with bold ideas to change the world. Perhaps I’m a biased native, but I think the Pacific Northwest is one of the best places to start,” said Ishani.

Tim Porter commented, “We work in a dynamic industry and when we go to hire we look for people who are self-starters, passionate about technology, analytical thinkers, team players and who are entrepreneurial and love working with early stage companies. Ishani is all of these things and brings an authentic curiosity to everything she does.  Welcome!”

While not visiting companies or at Madrona, Ishani can be found skiing, biking or backpacking across the Pacific Northwest.  She looks forward to meeting many of you in the community!

POSTED IN: Madrona News

Founded and Funded: The unwritten rules of fundraising with serial founder Kristen Hamilton

In our third episode of Season Two, Tim Porter connects with serial founder and seasoned fundraiser, Kristen Hamilton. Kristen co-founded early e-commerce highflier, Onvia (so much so that the company received an early cease and desist letter from Amazon about Onvia’s ‘superstore’ tagline). Onvia went public 10 days before the tech market drop in 2000. Following the IPO, Kristen took a deep dive into tech and education with Microsoft and a global NGO. She later joined Maveron as an EIR, and then founded her second company, Koru, bringing together her education and tech experience to help college graduates get jobs and help companies find the right hires in a field of many applicants.

Having successfully founded two companies, Kristen has constructed quite the fundraising resume. She has raised six rounds of funding and estimates that she has given 120 pitches to venture investors! Listen in as Tim and Kristen discuss the unwritten rules of fundraising, the nature of the relationship between entrepreneur and investor, and what it really takes to get your fundraising wings as a first-time founder.

Kristen provides some guardrails and rules to live by and illustrates these with stories such as when a pitch to an investor was on the verge of falling flat and what she did to change the entire direction of the conversation.

Hear it all from someone who has undeniably been there and done that.

POSTED IN: Madrona News

Founded and Funded: Growing a Business Depends on People, How to Build with Intention with Mikaela Kiner, Founder of Reverb, Author of Female Firebrands

Wow I just listened to this episode with Mikaela Kiner, the founder of Reverb and the author of the new book, Female Firebrands and it’s wide ranging and inspiring.  We hear the story of how Mikaela left her corporate career to strike out on her own and ended up building a company to help thoughtful leaders build the kind of culture that sustains a company.

While D&I topics are scattered throughout here, the conversation makes them real and not buzzwords.  “Culture” is the new “HR” and the conversation with Shannon Anderson, our director of Talent, and Mikaela gets into why human resources, people management, human capital – whatever you call it, is a crucial ingredient to building a company that people want to work for and that succeeds.

Great stories in here from companies like TomboyX and Heptio as well as stories and call outs from Female Firebrands, including a stunning story from Dr. Cheryl Ingram, CEO of Diverse City and Inclusology.

This one goes a little longer than most but it’s worth it!

K

POSTED IN: Madrona News

Founded and Funded: Starting a Company with your Best Friend, the co-founders of Algorithmia, Kenny and Diego

(Kenny Daniel and Diego Oppenheimer)

Tim Porter opens Season Two of Founded and Funded, with Algorithmia’s founders, Kenny Daniel and Diego Oppenheimer.  This duo started Algorithmia in 2014 and teamed up with Madrona, working out of our office for a while as they got off the ground.  The team has made huge strides since their initial algorithm marketplace.  Corporations and government institutions now turn to Algorithmia  to enable them deploy AI models and run them at scale.

Kenny and Diego met in college at Carnegie Mellon and stayed in touch as they went very different directions – Kenny to do a PhD and Diego into business at Microsoft.  They came back together to bring the power of academia to business and started the company to unlock the power of algorithms.

They talk about everything from the six month backpacking trip with a beat up laptop that was the genesis of the company to building a distributed team (by happenstance) to where we are in the adoption of machine learning and intelligent applications in this wave of innovation.

 

Also available on all your favorite podcast platforms.

POSTED IN: Madrona News

Disrupting the TV Ad Industry with Sean Muller, Founder of iSpot.tv

Madrona funded iSpot.tv in 2013 based on the idea that TV advertising was ripe for disruption. Social network signals measured impact of the ads, and digital technologies enabled iSpot.tv to report on which shows ran which ads. Within a year, the company narrowed its focus to provide advertisers with stats on where their ads ran, where their competitors ads ran and the engagement with them. Fast forward to today and iSpot.tv is the leading provider of TV attribution – how effective was your TV ad at spurring customers into action to go purchase your product.

In the latest Founded and Funded, Madrona Managing Director, Len Jordan, sits down with iSpot.tv founder, Sean Muller, to talk over his journey from wanting to know more about who was responsible for the creative in ads to tying effective advertising to business outcomes.

They talk about how these digital media natives who founded iSpot.tv didn’t entirely realize what they had in terms of a data and business asset when they first launched. Could it be that TV advertising was not measured in real time in 2014? (Yes!)

Sean recounts how they got their first customers – a semi-cold call from ESPN – and the targeted use of the mute button during conference calls. He also talks about how having pivoted to a provider of metrics he foresaw that they had to take a bold step to bet the company on doing a deal with a TV manufacturer to take their business to where it is today – the go to source for TV attribution data.

iSpot.tv’s journey from startup to established provider of TV advertising and business outcomes data is one of both finding the market and then seeing where it could go – and pursuing that course. Available here and on all podcast platforms!

POSTED IN: Madrona News