Category Archives: Venture Capital

Why I’m Joining Balderton as an Executive-in-Residence (EIR)

I’m thrilled to announce that I’ll be joining Balderton Capital on a part-time  basis to work with the firm and its portfolio companies on topics related to enterprise software, strategy, go-to-market, marketing, and SaaS metrics.  You know, my usual stuff.  In addition, I expect to do some more VC-style work such as helping with diligence, sourcing, best practice sharing, thought leadership, portfolio-company events, and maybe even expressing the odd opinion on how to best message and position the (already well positioned) firm.  Once a marketer, always a marketer.

The Why Behind the Move
So why did I decide to do this?

  • The people.  I’ve been highly impressed with everyone I’ve met at Balderton and believe they have built one of the top VC firms in Europe.  In particular, this opportunity gives me the chance to work again with my old boss, Business Objects founder and Balderton managing partner, Bernard Liautaud. Without singing his praises to excess, let’s just say that there aren’t many people in the world who have founded an enterprise software company, took it to $1B+ in revenues, then co-founded a second company (Dashlane), turned that company into a unicorn, and followed all that with a highly successful second career in venture capital. It’s enough to make you feel like an underachiever.
  • The work.  I very much enjoy doing all the things that Balderton wants (see below) and relish the opportunity to do my two absolutely favorite things:  teaching and learning.  I’ll spend time sharing what I’ve learned over the past 30 years in enterprise software all while simultaneously learning a ton from the Balderton team and their portfolio company executives.  As Steve Jobs said:  “learn continuously, there’s always one more thing to learn.”  The best way to learn is to surround yourself with great people and challenge each other.
  • The chance to help European companies.  With nine years experience at Business Objects (five of those based in Paris), nearly five years serving on the board of Paris-based Nuxeo, and my fairly recent appointment to the board of Tallinn-based (Estonia) Scoro, I have significant experience in both Silicon Valley and in Europe, enjoy bridging between the two, and have always been interested in the challenges faced by European companies launching and growing in the US and other global markets.  And if helping those companies involves the occasional trip to a farmhouse in Oxfordshire or the Luberon, well that’s just a sacrifice that I’m prepared to make.

What is an EIR Anyway?  Typically, Entrepreneur-in-Residence
EIR typically stands for entrepreneur-in-residence, a pretty varied role itself, but one whose core is this:  the entrepreneur-in-residence wants to return to an operating role and works on a mid-term basis at a VC firm, helping with what needs to be done while watching the deal flow and hoping to find an appropriate company (possibly in formation) that they can either join as a co-founder or as an executive, often CEO.   Sometimes startup CEOs (particularly non-founders) think of this type of EIR as “CEOs-in-waiting” and approach them cautiously as a result.  This is not the kind of EIR role that I’ll be doing.

The Other Kind of EIR:  Executive-in-Residence 
The less common use of EIR is as an acronym for executive-in-residence.  This is what I’ll be doing and the premise is different. An executive in residence typically is an experienced C-level executive who is looking to “stay in the game” but who is not seeking a full-time operational or venture capital role.  They’re typically looking:

  • To keep working, but not with heavy demands of a startup C-level executive
  • To get exposure to the inside of venture capital (often after having worked at VC-backed startups for decades)
  • To give back to entrepreneurs and startup executives by sharing their hard-won lessons
  • To find prospective companies for ongoing advisory or board roles
  • To find investment opportunities either through the VC funds themselves and/or through co-investment opportunities alongside them.

Basically, if the entrepreneur-in-residence is looking for their next gig and wants to spend 6-18 months looking at high-quality deal flow to find it, the executive-in-residence is looking to stay active, give back to the startup community, and find a few high-quality board or advisory roles in the process.  I have several friends, including Max Schireson at Battery, who do executive-in-residence roles and quite enjoy the depth and variety of the assignment.

What, Where, and How Much?
I expect the work to fall into two buckets, composed of the following:

  • Advising portfolio companies on strategy, go-to-market, marketing, planning, and SaaS metrics as well as on more CEO-specific subjects like board management and organizational development.
  • Supporting Balderton on diligence, sourcing, best practice sharing, thought leadership, portfolio-company events, and marketing.

In terms of location, part of the point is to bridge between Silicon Valley and Europe, so I will continue to be based here in Silicon Valley, but I do expect — as Covid hopefully gets back in control — to build up to periodic trips to Europe.

Regarding time and commitment, this is a part-time engagement.  While I expect it to be my largest single engagement, I also expect to have more than enough time to keep working with my existing advisory and board companies, and even take on a few more as those invariably ebb and flow over time.

I am very excited to be starting this new role.  My only regret is joining after the Patagonia branded vest ban.  Hopefully, Balderton has an XXL left over.

See you around the blockchain.

“The Board Brought Me In” Telltale

There’s only one executive who should ever say, “the board brought me in,” and that is the chief executive officer (CEO).  Yet, you’d be surprised how often you hear other executives — chief revenue officers (CROs), chief marketing officers (CMOs), chief product officers (CPOs), and most often chief financial officers (CFOs) — say, “the board brought me in.”

It usually comes up in an interview, with a candidate running through their background.

“Well, I was at XYZ-Co, and things were going great, but at PDQ-Co they needed some help, so the board brought me in to help get things back on track.”

A+ on storytelling, but (usually a) C- on reality attachment.  “And where,” methinks, “was the CEO during all this board bringing in and such?”

(And if things really were going so well at XYZ-Co, tell me why’d you jump ship to do a fixer-upper at PDQ-Co again?)

I always view “the board brought me in” language as a telltale.  Of what, I’m not entirely sure, but it’s usually one of these things:

  • Self-aggrandizement.  Sometimes, it’s just the candidate trying to sound larger-than-life and they think it sounds good to say, “the board brought me in.”  In this case, the candidate’s judgement and credibility come into question.
  • Innocent miscommunication.  Perhaps the candidate knew an existing board member and was referred into the position by them.  OK, I suppose technically they could think, “the board brought me in,” but didn’t the CEO interview them and make the final call?  Did the board really bring them in — as in, against the CEO’s wishes?  Maybe it’s just old-fashioned communications confusion.  Maybe.
  • Genuine confusion.  Or, perhaps the candidate is under the illusion that they somehow work for the board and not the CEO.  This can happen with CFOs in particular because, unlike all other CXOs, there is something of a special relationship between the board and the CFO.  But in tech startups, in my humble opinion, the CFO works for the CEO, period — not for the board.  They may have a special relationship with the board, they may meet with the board without the CEO being present (e.g., audit committees).  But they work for the CEO.  If you feel differently, great.  If you feel like I do — best to use this as a telltale of a potentially huge problem downstream.
  • A placeholder CEO.  There is always some chance the CEO is somehow a placeholder (e.g., a founder who’s lost all but positional power in the organization and acting in some lame duck capacity).  In this case, the CXO in question might just be saying the truth — perhaps the board really did bring them in.  But then the candidate’s going to need to explain why they jumped into such a mess [1].

I’m sure there are other possibilities as well.  But the main point of this post is to say that your ears should perk up every time you hear a CXO [2] candidate say, “the board brought me in.”  Mine do.

# # #

Notes

[1] And I suspect the most common answer will be, “and they were planning to make me CEO in X months once they worked on the transition.”  In which case, I’d want to understand why the candidate is so trusting (or naïve), what written assurances were given, and why they would take a CXO job with a dubious call option on CEO as opposed to taking a straight-up CEO job.  (To which the best, but still somewhat unfortunate, answer is — it was the only available path I had at the time.)

[2] For all values of X != E.

 

 

B2B SaaS Metrics 2020 Benchmark Report: A Discussion with Ray Rike and The SaaS CFO

The purpose of this post is to embed the video recording of my recent appearance on Monday Night Metrics with Ray Rike of RevOps^2 and Ben Murray, also known by the sobriquet, The SaaS CFO.

In this fast-paced episode we move through topical discussions of the major SaaS metrics followed by investors and operators alike, and look at the size-segmented benchmarks presented in Ray’s 2020 B2B SaaS Metrics report.

I think the episode is suitable both for the SaaS metrics beginner because we review the basics for most metrics as well as for the grizzled professional because we dive into topical (and sometimes fairly non-obvious) discussions for many of them.

Here’s the video:

Thanks to Ray and Ben for having me!

A Quick Critique of Clubhouse

As you may know, I have been experimenting with Clubhouse over roughly the past six months in several capacities:  as a regular user, an occasional audience participant/questioner, and as the host of a regular room I’ve been running with Thomas Otter, the SaaS Product Power Breakfast.

I love to get involved with new social media platforms early because I’m interested in new forms of media (and the often subtle differences they bring), I enjoy watching early evolution of the products and their usage (e.g., the invention of hashtags or URL shortening on Twitter, the applause convention [1], speaking protocols [2], or the use of Instagram DMs on Clubhouse [3]), I like watching the minimum viable product (MVP) questions play out in real time, and I love to see strategy at work.

So, in that light, here is my quick critique of Clubhouse intended as both critical and constructive.

As a startup- and media-watcher, I’m of the opinion that, after raising money at a $4B valuation in April (and with maybe 50 total employees at the time), Clubhouse appears to have lost significant momentum in the past several months.  Why?

  • The pandemic is winding down.  I think Clubhouse got a significant pandemic tailwind when people were locked in, Zoomed out, and looking for new ways to connect with other humans.
  • Certain communities returned to IRL mode, notably comedians, one of several core Clubhouse communities.  Some of my favorite rooms were in Leah Lamarr’s Hot on the Mike club and it appears that many of those outstanding comedians are back working at physical clubs.  That’s great for them, but not for me — as a Clubhouse user I can’t just login when I’m free and easily find a great comedy room as I once could.
  • It’s hard to reliably find live content.  The key difference between podcasts and Clubhouse rooms is the serendipity of live content (e.g., when I stumbled into a room with John Mayer) and the potential for interactivity [4].  Without those two things, I can just listen to a recorded podcast.  If you can’t find content, what good is the app?  It becomes like cable TV — 500 channels, but nothing to watch.  Every day I am less enthusiastic about firing up the app because I think I’ll either spend half my time looking for something [5] or fail entirely.
  • The app doesn’t get the most basic thing right:  language.  While I do listen to content in two languages, the app is constantly showing rooms in my hallway with titles (and dialog) in languages that I don’t speak.
  • The app has no room-search functionality.  The single most basic, MVP-level feature is (still) missing:  search in-progress rooms by keyword (or topic) in the title or description.  Not there.  Stunning.
  • The follow paradigm is wrong.  Content discovery is based primarily on people, not topics.  Using myself as an example, I like:  enterprise software, the Grateful Dead, French language, comedy, startups, mathematics, and philosophy.  Just because you like enterprise software doesn’t mean you like the Grateful Dead or topology.  While the app notionally supports topics, they appear ignored in composing your hallway [6].
  • The app does not appear to learn.  While the app does not appear to learn what I like in formulating suggestions in the hallway, it does appear to learn some bad lessons:  e.g., if you actually stumble into a single Russian room it seems to suggest them endlessly.
  • The app breaks trust in machine learning.  In an era of sophisticated users, I’m OK to hide-room numerous times in order to teach the app my preferences.  While hide-room didn’t appear to actually do anything (yet), I was confident that at some point they’d leverage that data to improve my experience.  Then one day hide-room seems to have simply disappeared from the app, so all that teaching appears to have been wasted.  That breaks my trust.  Don’t ask me questions if you’re going to throw away the answers.
  • The app is gameable in odd ways.  It appears that long-running rooms get some advantage in hallway prioritization so there are people who run rooms for days on end (e.g., Scenes From an Airport Terminal) that pollute my hallway, and that now I can’t even hide.  If the app were focused on topics and not people and duration, they could eliminate this.
  • The community has too many hucksters and charlatans.  Everyone seems to be a millionaire, successfully running five companies, a great venture investor, and yet still somehow need $99 from you to take their masterclass.  Just reading the bios of the moderators in many rooms makes me feel vaguely ill.  Hearing the advice these people give to would-be entrepreneurs makes me feel worse.  Don’t get me wrong, some rooms are amazing and offer an experience you can find nowhere else.  But a lot of Clubhouse feels like the vapid self-help section of a bookstore.  Oh, and don’t forget your laser eyes before going into the crypto rooms.

What to do about it?

  • Strategically, Clubhouse seems to have missed the systematic expansion memo (e.g., Amazon from books to DVDs to cameras and onward, or Facebook from Harvard students to Ivy League students to College students to broader groups).  I think their decision to port the app to Android before coming even close to completing it (e.g., content discovery, search) was a big mistake.  They need to focus on completing the app first.  Get to MVP before porting the app.
  • Systematic expansion includes not only product but community.  Just as they need to prioritize their product features to complete the product in a logical order, they need to decide which communities they want to serve (and, no, “creators” is not a sufficiently focused community definition).  I think comedians may be gone for good because the time that people want to hear them is precisely the time they are out at work.  But there are lots and lots of communities on Clubhouse they can try to develop (e.g., Silicon Valley VC/startups which had an early focus but seems to have faded away, crypto, activism, real estate, investing).  Just pick some and complete the app for them.
  • Appoint community mangers.  In addition to product managers to drive functionality, appoint and empower community managers and not just to makes rules about content [7] but to help build the community in a given topic area.  Just as retailers have category managers (someone responsible for, e.g., swimwear at a business level) so should Clubhouse have community managers.
  • Play for your users, not your VCs.  Existing users definitionally were not pushing for Android.  I’m guessing the VCs were — so they could continue to show great adoption.  But what good is great adoption if, after using the app a few times, everyone drops off because they can’t find anything they want to listen to?  Without great content on the app, there is no need for the app.
  • Stay in touch and on the ground.  One of my favorite rooms was cofounder Paul Davison’s weekly introduction [8] for new members (on Thursday evenings) that I assume he’s still running.  I know he runs a weekly Town Hall as well.  Paul is a great spokesperson, communicator, and listener and I love that he stays in such direct touch with his user base.  They just need to add some more systematic strategic focus atop that and some Geoffrey Moore 101 to go with it — complete the app, use-case by use-case and don’t get stretched too far, too fast in the process.

# # #

Notes

[1] Muting and unmuting your microphone in rapid succession

[2] Examples:  Pull-to-refresh (PTR) order.  Or the “this is Dave and I am done speaking” protocol, which is seemingly for several reasons including:  to identify speakers in rooms with large numbers of moderators where you may not be able to find the speaker (e.g., if they are buried three screens down), as a basic courtesy protocol, and for accessibility reasons for people who are unable see the grey ring indicating speaker identity.

[3] A great example of not needlessly building DMs a feature, but instead supporting profiles that link to Instagram and the community quickly embracing Instagram as the default DM method on Clubhouse.

[4] If you want to raise your hand and ask a question and are so selected — itself another issue as I’d been in numerous rooms where people said they waited literally for hours

[5] And because Clubhouse can be and is often best done while multi-tasking, it needs to be fast and easy to find something, e.g., when you’re hopping on the treadmill.

[6] The app suggests if you’re not finding content you want to “follow more people” — not to like more topics.

[7] The narrow definition of community manager is about making and enforcing rules for rooms, dealing with reported speakers, etc.  While such activity is important, it’s table stakes — a community manager should be far more than a security guard, but instead a leader trying to build the community, drive membership, foster and promote rooms, etc.

[8] Even though it was notionally an “introduction” I attended for several weeks just to hear Paul talk about the app and his vision.

 

SaaS Product Power Breakfast with Evan Kaplan of Influx Data

Please join us for tomorrow’s SaaS Product Power Breakfast, Thursday 6/24 at 8am Pacific.  Our guest is veteran technology executive Evan Kaplan, CEO of Influx Data, makers of the open-source, time-series database InfluxDB.

Our theme for tomorrow’s episode is how to manage the transition from traditional open source to true cloud native, something relatively few companies have done, and a transition that Evan has overseen at Influx Data.

We’ll cover questions including:

  • A primer on the traditional open source model
  • What it means to be true cloud native
  • How to approach the transition to true cloud native
  • Perils and pitfalls in the transition
  • Organizational (and people) change in the transition
  • Licensing implications, including protecting the open source from cloud hyperscalers and while trying not to alienate the traditional open source community

Influx Data is a category leader that has raised about $120M from top-tier investors.  Evan has a spectacular background, having been founder/CEO of Aventail for about a decade, CEO of iPass for half a decade, the member of numerous boards, and having serving 5+ years at Influx Data.  I’m super excited to have him on the show.  See you there!