Let It Snow!

Sometimes you find a team and a technology that is just poised to take off. Snowflake was at that point when we invested in Snowflake in the very early part of 2017. Snowflake did not look like other companies we had invested in up to that time – it was an actual Snowflake for us. The stage and valuation made it a stretch for our core investment fund which focuses on seed and Series A (Investments like Snowflake are one reason we raised our Acceleration Fund in order to invest in and work with companies already quickly scaling). But our conviction about the team, the opportunity, and the early traction was high and continues to be so on this momentous day.

This week is another beginning for the company – and an exciting milestone – an IPO and becoming a publicly traded company (NYSE: SNOW). The IPO reflects a fulfilling journey over the last 8 years building a successful cloud infrastructure service while the public cloud vendors continued to scale, and enterprise adoption of the cloud took off. We believe this is just the beginning of what is possible for Snowflake in the future.

In our 25-year history at Madrona, we have been fortunate to invest and participate in many companies that have completed the IPO milestone. Notably, Snowflake is the 6th company in our portfolio to go through the IPO milestone in the last 4 years.

The main reasons we invested in Snowflake in early 2017 came down to team, technology and the market.

  • Snowflake’s founding team (Benoit Dageville, Thierry Cruanes, Marcin Zukowski) had built an incredible cloud native data-warehouse that had incredible room to grow – as the enterprise adoption increased and feature sets were built. And with a seasoned executive in Bob Muglia as CEO – it was a world-class team.
  • Snowflake’s product was truly revolutionary in terms of architecture (designed for the cloud from day1) and as a result allowed for superior performance, scale and capabilities.
  • We believed in Snowflake’s pursuit of the secular trend of cloud-first and cloud-only infrastructure and more importantly data in the cloud (today it seems a no-brainer) and hence we saw a massive opportunity.
  • We knew we could bring our relationship and deep connections with Amazon and Microsoft to help Snowflake partner with them to scale their business, given Snowflake’s intent to run on multiple public clouds. Snowflake has strong and solid relationships today with both companies that are the two largest public cloud providers in the world.

Snowflake had also made the decision then to set up an engineering office in the Greater Seattle area (Bellevue), and we worked hard to help them build their team here with outstanding talent.

One of the things that I remember vividly in some of the earlier conversations we had with Bob was how they were able to successfully utilize the land and expand sales pattern that enterprise software companies aspire to – starting at $20k/annually and rising in quick succession to multiples of that amount. This was a great validation in terms of how critical Snowflake could quickly become in how enterprise companies utilize their data. And this was just on AWS at that time. Today Snowflake runs on all three of the major public clouds.

Fast forward to early 2019 when Frank Slootman (with a tremendous track record and accomplishments across Data Domain/EMC and ServiceNow) came on board as the CEO. In the last year and a half Frank and his leadership team have continued the transformation of Snowflake from a cloud data warehouse platform to a cloud data platform.

Over my career in tech leading large business groups at Microsoft, I worked toward and witnessed growth curves like this and together with the experience of being a part of the Snowflake journey, here are some lessons for companies embarking on this growth journey:

  • Build a unique, differentiated, superior product that can help build a strong moat over time.
  • Deliver a product experience that provides a seamless, friction-free and self-serve on-ramp, to enable a bottom-up go-to-market model that can scale organically and fast.
  • Drive hard to a “land grab” and “growth” mode, when you see a massive market opportunity, while continuing to pay attention to unit economics. Grow fast and responsibly.
  • Build a culture that values and prioritizes customer focus and customer obsession from day one.
  • Hire the best and brightest. Every hiring decision is critical and creates a force multiplier. Everybody makes hiring mistakes – focus on minimizing them and pay attention to hiring great people that can fit in culturally.

Earlier this year, Frank Slootman and the Snowflake team unveiled their Data Cloud vision – a comprehensive data platform play on the cloud to completely mobilize your data in the service of your business. With that as a backdrop, I am eagerly looking forward to what Snowflake is going to accomplish in the coming years.

A hearty congratulations to everybody on the Snowflake team! Thank you for the opportunity to be a part of the Snowflake journey.

Our Investment In Fauna, The Data API For Client-Serverless Applications

Today we are announcing our investment in Fauna.

We believe that the next generation of applications will be serverless. Those applications can be completely new, “greenfield” applications – like a dynamic Jamstack web application, or they can be new functionality that is added to an existing application or service but leverages a rich mobile or web client with a serverless back end. We think of this model of development as the “Client-Serverless” model, and this represents the 4th generation of application architectures.

Fauna helps developers to simplify code, reduce (development and operational) costs and ship faster by replacing their data infrastructure with a single serverless API that is easy to use, maintenance-free, yet full-featured. Fauna is the data API for Client-Serverless applications.

As computing platforms evolve, new opportunities for developer and application platform products are created. Some patterns (like the client/server era) were brought about by new technologies (Windows, SQL Server and the Windows hardware ecosystem) while others were as existing technologies aligned against important use cases (such as the LAMP stack for web applications) and just became “the best way to do it”. At any layer of the platform stack, if you can align with (or better yet create) one of these rising tides it can help you scale more efficiently. Changes in infrastructure also create opportunity, such as what we’ve seen in the Data Warehouse market where Snowflake’s forward-looking bet on exploiting elasticity and scale of cloud infrastructure have enabled them to disrupt a large and existing market.

The database market is massive and there are always opportunities for new platforms to emerge and differentiate. However, this has proven difficult as it is expensive to build a new database and even more expensive to sell one. Nowadays, decisions around infrastructure are more and more driven by developers and so any new platform needs to win the hearts and minds of developers first and foremost. Without this, the only way to land new customers is going to be through a deep technical sales process. You can argue that most of the NoSQL era (Mongo for example) came about via more effectively targeting developers – via Open Source and having more approachable platforms that were on trend for where applications were headed.

So, it is somewhat of a straightforward formula for success in the database market: build a database and latch on to the most important trends and developer technologies. This is what Fauna has done and why they are so well positioned.

Developers are moving en masse to serverless architectures for new applications, marking the dawn of serverless as the next tool chain for building global, hyperscale apps. FaunaDB plugs in seamlessly into this new ecosystem and uniquely extends the serverless experience all the way to the database. This developer journey began with the move to the cloud, but Fauna has correctly identified serverless as the next frontier for cloud and has succeeded in building the database of choice for this new era.

FaunaDB is unique in the market combining the following attributes into a single data API:

  1. Focus on developer productivity: Web-native API with GraphQL, custom business logic and integration with serverless ecosystem for any framework
  2. Modern, no-compromise programmable platform: Underlying globally distributed storage and compute engine that is fast, consistent and reliable, with a modern security infrastructure
  3. No database operations: Total freedom from database operations at any scale

Consequently, Fauna has seen its developer community grow quickly to over 25,000 users over the past year and has developed one of the strongest brands within the serverless and Jamstack ecosystem.

While it is great to identify a massive opportunity with a differentiated product, the most important part of investing in a company is the team.

The two co-founders, Evan Weaver and Matt Freels are amazing engineering and product leaders who were instrumental in building a scalable, distributed system at Twitter, where they witnessed the signs of where the world was moving and went on to build Fauna to fulfill their vision. They built Fauna as a 100% remote team from day 1 with the right focus of communication and collaboration to enable a high performing team aligned on a common vision. With a lot of the tech industry talking about working remotely currently, Evan and Matt have been leaders in adopting the “future of work” and setting up a strong culture for success as the team continues to scale in the new post COVID-19 era.

Eric Berg, who recently joined Fauna as the CEO is somebody that I have worked with at Microsoft in the past, was a key leader at one of Madrona’s portfolio companies (Apptio) and most recently the Chief Product Officer at Okta. During his eight-year Okta experience, he took a pre-Series A company through IPO, developing an identity product no one was sure they needed into a huge success.

And of course, I am very excited to have the opportunity to work together with Bob Muglia again as the Chairman of the Board at Fauna. I have had the opportunity to work together with Bob over the decades, initially at Microsoft and more recently at Snowflake and am thrilled to be able to work with him again here. Bob and I share a common vision of Client-Serverless being the next generation application model – applications are composed of Internet connected services using standard REST and GraphQL APIs, the Jamstack and the browser being the universal client and a globally distributed database as a cornerstone of this ecosystem.

With such a stellar team, a great product and a massive potential opportunity, it is a no-brainer for me to want to be a part of this journey and that’s one of the main reasons we decided to invest in Fauna. Looking forward to this journey!

Our Investment in GO1, Offering Online Training and Learning Content Platform Right When We Need It Most

We, at Madrona Venture Group, are excited to announce our investment in GO1, a company that is focused on making learning easy. GO1 has been quietly establishing their platform in a LMS (Learning Management System) agnostic way for corporations, educational institutions and continuing education organizations to reach their users with the content they need. When we first met with GO1’s Andrew Barnes, this current COVID-19 crisis was not even a whisper. Now at a roar, we are seeing that not only is GO1’s core business of corporate training strong, but the learning management systems that deliver content from top educational institutions to their students are expanding their usage. And we think they won’t turn back once we are out of this global pandemic.

GO1 delivers an onboarding, compliance, educational and professional development platform for employee and student education and training. By aggregating training content from a broad set of content providers, GO1 redefines how enterprises procure training content and how employees consume it in an on-demand basis via a modern self-service user experience. GO1 also integrates with a variety of key learning management platforms and integrates with front ends such as Microsoft Teams, which has seen incredible growth.

When I first met with Andrew Barnes, CEO and co-founder of GO1, I was a little skeptical about the training/learning market and opportunity. The worldwide training market is massive and estimated at low hundreds of billions of dollars worldwide. At the same time, it is a highly fragmented market. I was transparent with Andrew about my skepticism, and to his credit he took that as a challenge to educate me – and now we are investing. So, it worked!

GO1 is taking a unique approach to this massive opportunity. Rather than being yet another content creator, they have built a platform that aggregates any and all training content, provides an easy-to-consume user experience, and is LMS agnostic. Additionally, they have an easy API and can be integrated into corporate platforms and, as mentioned above, popular collaborative learning environments such as Microsoft Teams.

There are several changes underway in the market that together provide a massive opportunity for a platform like GO1 to fundamentally transform how people learn and train themselves to the ever- changing needs and requirements of the business world.

  • Secular trends are driving the need for more training including compliance and regulatory requirements.
  • Enterprises view access to world-class training and learning as a core value proposition for their employees – both in terms of increased productivity and satisfaction.
  • Consumerization forces drive employees to want access to training that is highly relevant and curated with an easy-to-consume on-demand experience.

GO1’s solution is squarely focused on taking advantage of these trends and delivering a scalable marketplace for corporate training and educational learning content. The access to data that they have about course consumption across users and industries provides a valuable opportunity to provide more curated and targeted content that is highly relevant for their users – driving consumption and satisfaction higher.

GO1 is part of the Madrona Acceleration Fund that we raised last year to invest in great companies and teams that have found product-market fit and are ready to scale to the next level. We are excited that Salesforce Ventures joined us as new investors in this round. With 1.5M+ learners already taking advantage of the GO1 platform, this company has laid a strong foundation for scale.

The world needs all kinds of support right now and we are excited for GO1 to be a company that can provide learning experiences to a broad audience, inspiring minds and inspiring change. We are looking forward to being a valuable partner for Andrew and his team as GO1 continues to build the world’s largest online learning platform.

Why We Are Doubling Down On Shyft

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

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

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

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

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

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

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

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

Innovate.AI – Announcing Our Investment in Envisagenics

Pictured S. Somasegar and Nagraj Kashyap

Today, in partnership with M12 (the newly renamed Microsoft Ventures), we are excited to announce the N. American winner of the Innovate.AI competition, a global startup competition to find the next generation of companies building intelligent applications.

The winning company, Envisagenics, has been awarded a $1M investment from Madrona Venture Group and M12, and we look forward to joining them on their journey to help solve some of the toughest problems in healthcare and biotechnology today.

Envisagenics Team.

We first explored the idea of an AI-focused startup competition with M12 in early 2017. Both Madrona and M12 have made large investments in AI, and we thought M12 would be the best partner to take this idea and help us reach a larger base of startups across North America. M12 was excited to partner with us on this and in addition took it global.

We received 250+ applications from companies in North America. Startups needed to have built products, achieved some level of customer progress and have raised limited capital to enter.

Working together with the team at M12, we pared this list of 250+ down to 9 finalists, who were working on intelligent applications in the fields of healthcare, financial services, cybersecurity, software development, enterprise sales, computer vision and manufacturing automation.

Each of the final teams were then invited to spend two days in Seattle at the Madrona and Microsoft offices to get to know one another and pitch to a team of VCs from both firms. The final presentations typically involved a presentation, Q&A, and live demo of the products, and we were very impressed with the quality of products that these teams have built.

Envisagenics, our winning company, is in the business of applying AI to RNA splicing. Founded by Maria Pineda and Martin Akerman, the company is using their proprietary data and machine learning models to build a drug discovery platform targeted at the large number of diseases caused by RNA splicing defects.

This is a big problem and an impactful solution. Approximately 15% of all diseases are caused by disrupted splicing, including 50% of rare genetic disorders. Healthcare companies can drastically accelerate their drug discovery processes by using Envisagenics’s data and machine learning models to prioritize drug targets and biomarkers.

We believe there is massive potential in the future of intelligent applications, and we are thrilled to be investing in a company that is applying the power of ML and AI to a key pain point in the world of healthcare.

Please join us in welcoming Envisagenics to the Madrona and M12 families!

The Next Big Step in the Snowflake Journey

Early last year, we invested in Snowflake, which is quickly becoming the leader for data warehousing in the cloud. Now, less than a year later they have raised a substantial round of $263M that underscores their phenomenal success in building a solution that speaks to a real business problem shared by many, many large business customers around the world.

Having had the opportunity to learn more about Snowflake and see first-hand their customer momentum and their execution both on the product and go-to-market fronts, I am more bullish than ever before about what is possible in the years to come.

In addition to building the world’s best data warehousing solution for the cloud, Snowflake introduced Data Sharing last year. The ability to seamlessly share data with your customers and partners from within Snowflake opens up a huge opportunity for business customers. This has been an unsolved problem in the past and is something that is very complex and painful to do. Snowflake has solved that with their Data Sharing capabilities.

Snowflake has done an outstanding job of riding two important and massive technology trends – the enterprise move to the cloud and the need for accessibility from anywhere to massive amounts of business data + analytics. They have built a fantastic product on the cloud and for the cloud that is resonating extremely well with a broad set of customers.

For all of the above-mentioned reasons, we are very excited to invest in this latest round of fund raising by Snowflake. We are very much looking forward to furthering our partnership with Bob Muglia and team to help them scale and see the kind of success that we are confident they will achieve.

Welcome SmartAssist To The Madrona Family

It is exciting for me to announce our investment in SmartAssist and to welcome the team to our Madrona family. SmartAssist is applying AI to the business of customer support and is already assisting customers of brands you know including MailChimp and Twilio.

Application development and applications the last 10 years were primarily defined by movement to the cloud, SaaS delivery and touch as an interface. Looking ahead, we strongly believe that applications are going to be defined as intelligent applications with a broader set of natural user interfaces including voice/speech and vision. In our opinion, any application of consequence that is getting built now is an intelligent application. What differentiates the intelligent applications is the use of ML/AI and other techniques to apply on the ever-increasing data sets that enable applications to continuously learn and deliver more relevant and appropriate experience for the customers.

Applying ML/AI to intelligently automate use cases and workflows in enterprises is an area where we see a tremendous amount of opportunity and some of our recent investments reflect that investment thesis. As we think about beachhead use cases of ML/AI within enterprises, customer support stands out as one of the most tangible areas that could be fundamentally disrupted through technology.

By using intelligent routing, automated responses, and predictive modeling, SmartAssist helps enterprises significantly increase the efficiency and quality of services while decreasing customer service costs. The company is based on the platform developed by Wise.io which was acquired by GE in 2016. The team of Pradeep Rathinam and Prashant Luthra had a passion for this business and are taking that core business and building it into SmartAssist. Already they have secured some name brand customers. GE has an interest in the company and we expect to work with them as the company grows.

Another big reason for why we are excited about this investment is the entrepreneurial strength of the founding team. Both Pradeep and Prashant have led and been a part of successful start-ups in the past. Their focus and passion to make a difference in this space makes it a delight to partner with them.

We are thrilled to back the compelling vision of this leadership team and be part of a Seattle area start-up that is focused on driving customer success using ML/AI. All of us at Madrona are jazzed at the potential of what is possible here.

Looking forward to helping realize the potential with the SmartAssist team!

Investing in People – Developing and Adding to our Team at Madrona

At Madrona we are regularly encouraging our portfolio companies to hire and develop talented people. As organizations grow and change, including our own, it is important to continually be assessing your talent needs and promoting and adding team members. As we embark on a new year of innovation, invention and investment in our region and beyond, Madrona is pleased to announce several promotions and a new addition at the firm today.

All of these appointments speak to the growing opportunity that Madrona sees in our region to build lasting and large technology businesses. We had two successful IPOs last year – Impinj and Apptio – both of which are substantial forces not only here in the Seattle area but in the technology industry at large. In addition, the continued industry leadership of companies like Amazon and Microsoft and incredible talent in our region highlight the huge potential of our innovation ecosystem to create more great companies and products.

Today we are pleased to announce that S. “Soma” Somasegar has been promoted to Managing Director, Julie Sandler to Partner, Daniel Li to Senior Associate and that Hope Cochran is joining us as Venture Partner.

Soma joined us in 2015 as a Venture Partner. Since then he has added greatly to our existing portfolio companies with his deep, developer-centric understanding of both technological and management experience, and has also become a powerful voice internally and externally on key investment areas including DevOps, Machine Learning and Virtual Reality. Soma brings over 25 years of technology operating experience building world-class platforms at Microsoft that fuel cloud, mobile and client/server applications, and he is a passionate and experienced angel investor. Since joining Madrona, he championed investments including Pixvana, Heptio, Shyft and CloudCoreo. He will be a great addition to our Managing Director team.

Julie came to Madrona from Amazon, and has been a valued and invaluable member of the Madrona investment team for more than five years. Today we are excited to promote her to the role of Partner. At Madrona, Julie has led investments including Integris and Poppy, served on boards, helped companies navigate the challenges of finding initial product market fit and then scaling for growth. She has always been a strong and persistent voice supporting entrepreneurs and the community around us. She is a steward for our investors and a mentor to a growing number of people in the Seattle region. She recently completed the year-long Presidential Leadership Scholar program which brings together select national leaders from many disciplines to learn from the great political leaders of our country, and she is deeply committed to ensuring that the innovation ecosystem provides positive impacts for the broadest number of people. We look forward to a new year of company building guided by Julie’s leadership.

Daniel Li joined us in 2015 as an Associate, from the Seattle office of The Boston Consulting Group, and since then has had a tremendous and immediate impact, diving in to leverage communication platforms to help the firm communicate, penning many interesting pieces covering such diverse topics as eSports and autonomous vehicles, and helping our portfolio companies navigate business decisions. Dan is even known to code a few applications himself including a text polling app and a mobile game called Babel. Dan’s energy and attitude is appreciated by our companies and we are happy to recognize his accomplishments with the promotion to Senior Associate.

Finally, we are also announcing that Hope Cochran is joining Madrona as a Venture Partner. Hope most recently was the CFO of London-based, King Digital, which we all know as the creator of Candy Crush and other successful mobile games. At King, she helped lead the company through explosive revenue and employee growth, a successful IPO and a $5.9 billion acquisition by Activision. She has long been a friend and informal sounding board to us at Madrona and recently returned to the Seattle area from London.

Prior to King she was CFO at Clearwire where she worked closely with Craig McCaw, John Stanton and other innovators in our community. Prior to Clearwire, she started a company that grew to 200 employees, $10 million in revenue, and was acquired by enterprise software pioneer, PeopleSoft. Throughout these experiences she has navigated company growth, management and financing situations including raising more than $12 billion, driving two IPOs and a multibillion dollar acquisition. Hope was a popular speaker at our recent CFO conference and we are excited to have her on board to work directly with our portfolio companies. In addition, as a Venture Partner she will be investing time in developing our corporate development and later stage financing programs that connect portfolio companies with strategic partners and potential late-stage investors across a broad set of sectors.

Overall these promotions and additions are a great way to dive into 2017! Madrona is incredibly optimistic about the outlook for the technology industry and having these additions to our core team is crucial to our ability to help our companies grow as well as build the ecosystem in the region.

Madrona Venture Group Names S. Somasegar Managing Director

Experienced Technologist, Executive and Investor Expands Role

SEATTLE, WA – January 12, 2017 – Madrona Venture Group, an early-stage venture capital firm, announced today the appointment of S. “Soma” Somasegar to the role of Managing Director.

Soma joined Madrona in November 2015 as a Venture Partner, following a more than twenty five year career at Microsoft leading the company’s Developer Division and responsible for the Visual Studio and .NET family of products that enable tens of millions of developers to build applications and services for client, server, mobile and cloud platforms. Soma was also responsible for Microsoft’s R&D labs in Boston, China, India and Israel.

As a Venture Partner at Madrona, Soma became a powerful voice at the table on key investment areas including Machine Learning/Artificial Intelligence, Virtual Reality/Augmented Reality, next generation cloud infrastructure and intelligent applications. Soma led investments in Shyft and CloudCoreo, and he is also the Board Chair at Pixvana. Continue reading “Madrona Venture Group Names S. Somasegar Managing Director”