Matt Turck

Quick S-1 Teardown: Palantir

The Palantir S-1 is a long and meaty read, and a pretty fascinating one considering the company was highly secretive, and often controversial, for so many years. It is also written in a very opinionated style: the newly Colorado-based company takes aim at Silicon Valley and is not exactly charitable to its competitors.

Particularly compared to a Snowflake that has had a meteoric rise since inception in 2012 (see our Snowflake teardown here), the Palantir S-1 also presents the picture of a company that, while unique, has had a long road since it was founded in 2003.

It seems that the company went through an important transition in the last couple of years on the product and go to market front – evolving away from a services company into more of a software one – perhaps in anticipation of an IPO.

Ironically, in some ways, this evolution has made Palantir look more like the Silicon Valley companies it feels so different from.

Here are some quick thoughts and notes (from Avery Klemmer and myself)

From Student Project to Unicorn: In Conversation with Alexander Rinke, CEO, Celonis

Celonis was founded in 2011 by three students who didn’t know they wanted to start a company, but fell in the love with a school project.

Today, Celonis is a Forbes Cloud 100 company, and the leader in a very interesting category, enterprise performance acceleration software, leveraging a company’s data exhaust to understand which processes work and which need to be be optimized, through process mining technology.

It’s also a unicorn startup with $367 million raised to date, most recently at a $2.5 billion valuation from investors such as Accel, 83North, our friends at Arena Holdings (who kindly introduced us to Alex) and Qualtrics founder Ryan Smith, who spoke at Data Driven NYC a few years ago, and then famously went on to sell his company, Qualtrics, to SAP for $8 billion.

We had a really fun chat at our most recent Data Driven NYC, with Celonis co-CEO Alexander Rinke:

How Celonis started as university consulting project when the founders were 21
How Alex waited several hours outside the VIP area of a tech event, until he was able to talk to the founder of SAP, which resulted in a transformative partnership
How the company was bootstrapped for 5 years before taking any VC money
What it takes for a startup to successfully expand internationally
What is process mining software and how does it work
Go to market strategies – horizontal vs vertical
And a lot more

Here’s the video, and below is a full transcript of the chat:

In Conversation with Nate Stewart, Chief Product Officer, Cockroach Labs

While we miss the special energy of having 350+ people in a room every month, it’s been fun to settle into the routine of hosting the online version of Data Driven NYC — our 19,000 person community focused on all things data, AI/ML and enterprise software. Our events are free and open to all, and having them online has enabled many more folks around the world to attend them live – to the point that my co-organizer Jack Cohen and I have been mulling renaming the event “Data Driven Global”.

At the most recent event a few days ago, we had the pleasure of hosting Nate Stewart, Chief Product Officer, and newly appointed Board Member, at Cockroach Labs.

Cockroach is an exciting, fast-growing startup. Named to the 2020 “Future Unicorn” list by CB Insights and Fast Company, it is the company behind CockroachDB, a distributed database with standard SQL for cloud applications. The company has raised $195m to date, from a long list of great investors such as Benchmark, GV, Index, Redpoint, Altimeter, Tiger, Bond, Work Bench – and our firm FirstMark, since the very first round of funding.

VP of Finance: The Non-Obvious Hire

A few days ago, I tweeted this:

This generated a good discussion in the thread with some great input.

VPs of Finance are a little bit of a counter-intuitive hire in early-stage startups. It’s pretty obvious to most founders why they need senior people in charge of engineering, product, sales and marketing. You need people to build, and you need people to sell.

But finance feels like a back-office role, a cost center. Sure, we’ll need one, but “later”. If we hired them now, what would they do all day? Would they have enough work? Can’t we just outsource the role for now? Shouldn’t we prioritize other roles, like Head of People or Head of Legal? Can we even afford one? Shouldn’t we hire one or two more engineers instead?

Yet, interestingly, I’ve never heard a startup CEO say after the fact that they regretted hiring a VP of Finance too early. But I’ve heard several CEOs say they wish they had hired one much earlier.

When is AI not AI?

Earlier this week, Forbes published a piece on ScaleFactor, a startup using AI to automate accounting, which shut down after raising $100m.

Here’s the heart of the issue covered in the story: “Instead of [AI] producing financial statements, dozens of accountants did most of it manually from ScaleFactor’s Austin headquarters or from an outsourcing office in the Philippines, according to former employees. Some customers say they received books filled with errors, and were forced to re-hire accountants, or clean up the mess themselves.“

Quick S-1 Teardown: nCino

[July 14, 2020 IPO update – stock popped + 195% first day of trading, see end of post for details on IPO]

The upcoming nCino IPO is an interesting story, and a good reminder that strong cloud/SaaS companies can be built outside of the usual Silicon Valley or NYC venture path (even with VCs on board)

(As a side note: we often do those S-1 summaries internally to keep tabs on the software IPO market, so my colleague Avery Klemmer and I figured we’d “open source” this one in case it might be interesting to others – thoughts and comments welcome. Our firm FirstMark is not an investor in nCino)

HIGH LEVEL THOUGHTS & LESSONS:

nCino is a refreshing example of a successful software company that’s built a little bit outside of what’s currently in favor in venture capital circles:

Vertical software: Many VCs these days tend to prefer broad horizontal opportunities, with a concern that vertical software ultimately has a limited TAM, even a large one – but nCino is 100% focused on the banking market
Service heavy, no bottoms up GTM: nCino sells its products through AEs , with long sales cycles, and significant implementation services are involved
Platform dependency? Being built on top of someone else’s platform is often a concern for investors. nCino is built on top of Salesforce (like Veeva). They’ve seemingly safeproofed this relationship by reselling Salesforce products in their deals, and raising money from Salesforce, wnich is a large investor.
Not a Silicon Valley or NYC story: Launched in 2012 by executives of North Carolina-based Live Oak Bank as a spin-off venture. Still based in Wilmington, North Carolina
It’s a spinoff from a bank: the company was originally founded as a majority-owned subsidiary of Live Oak Bancshares, a bank holding company. It then raised $9m in seed funding in 2013 from a variety of individuals including John Mack of Morgan Stanley and Chip Mahan, the Chairman of Live Oak Bank. So nCino didn’t have the structure that most VCs like to see, where the founding team has high ownership and the first money in comes from institutional investors. This history as a spin-off is probably the reason why the CEO of the company owned only 1.6% at IPO time, although we don’t know this for sure).

Facebook as an AI company: In conversation with Jerome Pesenti, VP of AI, Facebook

While AI may seem like a futuristic goal for most companies around the world, Facebook has already been there for a while. “There’s pretty much a deep learning system in every single Facebook product and they are very much at the core of them” says our guest Jerome Pesenti, VP of AI at Facebook.

Jerome leads the development of artificial intelligence at Facebook, and oversees hundreds of scientists and engineers whose work shapes the company’s direction and impacts our world.

We had had the pleasure of welcoming Jerome at Data Driven NYC in October 2017, in his prior role as CEO, BenevolentAI, and we had chatted about using AI for drug discovery.

It was wonderful to welcome him back in his new capacity at our first **online** Data Driven NYC, courtesy of the coronavirus. It was a fascinating, in-depth conversation.

Below are: a) the video, b) some highlights and c) the full transcript.

Pages: 12

New York: The New Center of Gravity of European Tech

While it’s certainly possible to build a tech giant solely in Europe, the path to building a global, category-dominating company will, for most European tech startups, require building a strong presence in the US.

As a result, sooner rather than later, European startups will start thinking through their US expansion strategy. One deceptively simple question of that strategy is “where should we build our US headquarter”?

Up until a few years ago, there wasn’t much of a debate: Silicon Valley, despite the distance and time difference with Europe, was the obvious choice. There was essentially nowhere else to go, except perhaps Boston for life sciences.

AI, Data, Culture: In Conversation with Ben Horowitz, GP, a16z

Photo Credit: Jack Cohen. Bottom left picture: Amr Awadallah (VP Developer Relations, Google Cloud), Matt Turck (FirstMark), Ben Horowitz (a16z), Michael James ( Founder and Chief Software Architect at Cerebras Systems)

Ben Horowitz resoundingly falls in the category of “needing no introduction”: a highly successful entrepreneur who navigated a perilous situation with his business (Loudcloud, which became Opsware) to a $1.65B acquisition by HP, he’s also the founder of premier Silicon Valley venture capital firm Andreessen Horowitz (aka “a16z”), and the best selling author of two books: “The Hard Thing About Hard Things” and the newly-released “What You Do Is Who You Are”.

It was a special treat to host Ben for a fireside chat at the most recent most recent edition of Data Driven NYC – a great evening that included two other terrific speakers: Amr Adwallah, now VP of Developer Relations at Google Cloud, and previously co-founder and CTO at Cloudera (NYSE: CLDR) and Michael James, co-founder of AI chip Cerebras.

We spent a good hour with Ben and covered a bunch of topics, loosely organized in two parts, first AI and data, and then culture an his new book.

Below are two videos covering each part, as well as a FULL TRANSCRIPT for anyone who prefers to read.

Building a $12B Public Company: In Conversation with Olivier Pomel, CEO, Datadog

By any measure, Datadog is an incredible entrepreneurial success story. The company went from a tiny startup in 2010 that had trouble raising money, to a public company that, at the time of writing, has a market capitalization of $12.5B. It was a pioneer in the category of DevOps and observability, and it’s now a clear leader. With revenues hovering around $350M, it has 1,300 employees across 31 locations around the world.

Perhaps improbably, the founders built the company out of New York, which many people over the years have thought of as a hub for adtech, media and commerce startups only. Along the way, they faced a lot of skepticism: “Whenever we pitched West Coast investors it was sort of seen as a form of mental deficiency to be based in New York and doing infrastructure“, says Olivier. I wrote a few months ago about the significance of the Datadog IPO for the ecosystem and beyond. Ironically, out of the three top public tech companies in New York today, two are infrastructure software companies (Datadog and MongoDB).

Not one for gratuitous self-aggrandizing, Olivier has given surprisingly few interviews over the years, and it was a real treat to sit down with him for a fireside chat in front of a packed house of 350 attendees at our most recent Data Driven NYC.

We had an in-depth conversations and covered a lot of topics.

The first half of our conversation was focused on Datadog itself, starting with a high level overview of the observability and DevOps space to make the discussion approachable by people who don’t know the space.

The second half of the conversation was focused on all sorts of lessons learned along the way of building a major company- sales, marketing, fundraising, etc.

Below is the video. We have also provided a full written transcript to make the content easy to scan through (many thanks to Karissa Domondon for her help with this).

Are There Still Fundraising Seasons?

No longer. But, also, kinda, yes… It’s complicated.

When people talk about “fundraising seasons”, they mean that there are certain times of the calendar year when you should be running your fundraising process. And conversely, there are times of the year when you shouldn’t, because venture capitalists won’t be paying attention.

Fundraising: Push vs Pull

Fundraising can feel like an awful lot of pushing. You push to get an introduction to investors, you push to get them to commit to a meeting, you push to convince them, you push to get them to issue a term sheet. Push, push, push. Historically, and for most people still, “push” has been the default mode.

But as an industry, we live in interesting times, and there’s more of an opportunity for founders to be in “pull” mode, a situation where investors come to you and do the courting and convincing – obviously, a much better position to be in for founders, especially when the investor is senior enough to write the check.

Fundraising: “Always Be Raising” vs “Heads Down”

(This is the fourth post in this fundraising mini-series: quick, simple ideas that I’ve used in various fundraising conversations over the years, that I’m sharing here, one by one)

If there’s one tactical topic everyone seems to have a strong opinion on when it comes to fundraising, it’s whether entrepreneurs should be actively talking to new VCs *in between* rounds of financing, for relationship building purposes.

Many founders have had the same experience: something public or semi-public comes out about your company (a funding announcement, a press article, a blog post, a tweet, even a LinkedIn update of some sort…) and, voila, your inbox starts filling up with emails, typically from VC firm associates saying that they “heard good things” about your company and would “love to catch up”. At first, it may be vaguely flattering, but as more emails pile up, it gets tedious, sometimes overwhelming. And perhaps slightly annoying: everyone says you’re supposed to get a warm intro to a VC, but then VCs can just email you cold, and somehow they expect you to drop everything you’re doing to talk to them? Sheesh, the nerve.

The Power of Open Source: In conversation with Mike Volpi, General Partner, Index Ventures

Our most recent VC guest at Data Driven NYC, Mike Volpi of Index, has had a pretty amazing last couple of years, with three of his venture investments going public: Zuora, Sonos and Elastic.

Before becoming a VC, Mike ran Cisco’s routing business where he managed a P&L in excess of $10 billion in revenues, and acquired over 70 companies (note: probably a pretty good way to make a lot of friends in Silicon Valley).

A partner at Index Ventures in San Francisco, Mike invests primarily in infrastructure, open-source and artificial intelligence companies, so he was a perfect guest to have at the event. In particular, he invested in two prior presenting companies: Confluent and Cockroach Labs (in which FirstMark is also an investor).

We had a really interesting conversation about open source, AI and venture capital. Here’s the video below, and l have jotted down a few notes as well, below the fold.

Notes from the chat: