Thinking about Enterprise Software Startups

I ended up down a rabbit hole of research on Sapphire Ventures thanks to the Origins (Notation Capital) podcast on my flight home from Boston early this morning. Sapphire invests in Enterprise software companies. I got to thinking, if I were to analyze companies in that space with my Product Manager hat on, what would I look for?

These 5 areas came to mind.

1. How will the Product interoperate?

Ex: Zapier, BI fabric, Hybrid Cloud

Is the team thinking about how to move pieces of data around from their app to other apps, from their app to the Enterprise systems, between their Public Cloud and the Enterprise’s on-prem and Dedicated Clouds?

How will insights and raw data from their product be accessible to the Enterprise’s BI Fabric, Data Scientists, etc? How does that strengthen the value of the offering?

2. Where are Users interacting with the Product?

Ex: Mobile, APIs, Slackbots, Echo

Is their product enabling all types of Users to be engaged anywhere? Is extension of the product easy by a Customer Developer via APIs? Is there potential for an Ecosystem to organically grow around the product? Does it feel like a Platform? Is the pretty Mobile app for the on-the-go Sales person just as well thought out as the Developer API?

3. What are the Combinatorial Effects?

Ex: Exongenous Datasets, Data Network Effects

Is the team thinking about combining datasets together to create something new? Does the product have inherent data network efforts? As more people use this, will the value increase?

What two features used together accomlishing something really powerful?

4. What role does analytics play?

Ex: NLP, Computer Vision, Salesforce Einstein

Enterprise data is flowing through the product. How is that data being mined into features? How are signals being extracted using NLP, Computer Vision, Machine Learning, etc? Does the business analysis get smarter the more people use it? Does AI feel like a foundational part of their approach or do they think of it as gimmicky and a nice-to-have?

5. Talk about the Tech Stack

Ex: Microservices, Serverless

Is the team using technologies like AWS Lambda? Do they talk about Reference Architectures and Blueprints? Are they taking a Microservices-first approach?

A few more articles I came across while writing this post:

It’s fun to think this stuff through. I remember the days of meeting with investor after investor while in Techstars and how many of those conversations led to strategy and product improvements.

Healthcare and Life Sciences Corporate Venture Capital

Moving from a background in AI and Developer Tools to Healthcare has required a crash course in healthcare policy, finance, technology and regulations. I’ve always looked to investing trends and analysis to help me better understand a market. Looking at Corporate Venture Capital (CVC) in healthcare and life sciences is a fun exercise.

“over 48% of the top Fortune 100 companies have a corporate VC arm and these corporate VCs have participated in 24% of total deals globally for the past 4 years.” [source]

First, a few basics on Corporate Venture Capital…

Why does the Corporate Venture Group exist?

  • Generate financial returns for Limited Partners (LPs) including parent Corporation
  • Generate revenue for the Corporation
  • M&A channel
  • Licensing, Divestiture, Partnerships
  • Foster Innovation, Identify Global Market Opportunities, funding initiatives that need to exist outside parent Corporation structure

What do Corporate Venture Groups do?

  • Build a Portfolio of Investments that could range from Series A to “evergreen”
  • Build an Ecosystem of Strategic Partners
  • Generate revenue from revenue share deals and equity positions
  • Invest as a Limited Partner (LP) in other Venture firms

So, what’s going on in Healthcare and Life Sciences Corporate Venture funds?

From this CB Insights report, you can see the most active funds include Merck Global Health Innovation Fund, Kaiser Permanente Ventures, Lilly Ventures, Siemens Venture Capital, Pfizer Venture Investments, Novartis Venture Funds, GE Ventures and of course Google Ventures.

Corporate Venture Capital (CVC) in Healthcare

Includes Information Technology, Therapeutics, Diagnostics and Drug Delivery, Diagnostics, Behavioral Health, retail healthcare and rise of consumerism, new provider payment models, delivery of care, implementation of the Affordable Care Act, Data and Analytics.

Kaiser Permanente Ventures

Siemens Venture Capital

Mitsubishi Healthcare

Vesalius Ventures (Vanguard Ventures, Fremont Ventures and Guidant Corporation)

GE Healthymagination

Merck Global Health Innovation Fund

Johnson & Johnson Innovation

Zaffre Investments (BCBS of Massachusetts)

BlueCross BlueShield Venture Partners

MemorialCare Innovation Fund

McKesson Ventures

Cambia Health Solutions

Rex Strategic Innovations

Corporate Venture Capital (CVC) in Life Sciences

Includes Biotechnology, Biopharma, Medical Devices and Diagnostics, Drug Discovery, Pharmaceutical services, Pharma value chain.

Nova Novartis Venture Fund and Novo Ventures

Mitsubishi Life Science

MedImmune Ventures (AstraZeneca)

SR One (GlaxoSmithKline)

Lilly Ventures (Eli Lilly and Company)

Amgen Ventures

Roche Venture Fund

Samsung Ventures

F-Prime Capital Partners (Fidelity Biosciences)

Takeda Ventures

Baxter

Pfizer

Some additional reading:

Making Sense of Corporate Venture Capital

The 117 Most Active Corporate VC Firms Of The Last Year

Digital Health Funding: 2015 Year in Review (Rock Health)

Tencent, Google Capital Invest In Indian Healthcare Startup Practo

Medtronic, Sequoia launch $60M VC fund for Chinese med tech startups

Understanding the portfolios of these Healthcare and Life Sciences Corporate Venture Capital funds, the backgrounds of the Partners, where they are based and what companies they invest in help paint a picture for where things are going.

To learn a bit more about Healthcare technology read There’s a lot going on in Healthcare tech right now.

There’s a lot going on in Healthcare Tech

In 2015, venture funding of digital health companies surpassed $4.3B and accounted for 7% of total VC funding in the US. Deal sizes are growing and the percentage of later stage deals is increasing signaling a maturing in healthcare investments.

In my first six months as part of the Watson Health team, I’ve observed a few trends such as:

Google’s Investment in India will impact Healthcare
Google announced they will train 2M Indians on Android OS and promote internet use among rural women by 2019. In India, 5% of the population has health insurance (“cash for care”) and over 70% live in rural areas without access to quality healthcare (source). No doubt Entrepreneurs and Engineers will be creating major innovations in this space. Related: IBM and Manipal announcement

a16z is talking about Digital Therapeutics
Behavioral change is an area Startups/Developers/Apps have and will continue to embrace. A positive signal is a16z’s movement into this space asVijay Pande talks about in this interview. In this class of app, Email/SMS/Push Notifications/Phone calls are the engagement mechanisms.

VC Investing has increased == Startup activity is very hot
A few months ago Rock Health published their 2015 Healthcare Funding report, a must read. Combine this funding data with a review of new Healthcare products on Product Hunt,new Healthcare companies raising capital on AngelList and scanning Dan Primack’s Term Sheet or any other funding source and you will have a good grasp of the pace.

Regulation continues to provide opportunities
Today, major Health IT spend is in certified electronic health record (CEHRT) technology needed to comply with the federal meaningful use (MU) program, better security systems, and ICD-10 conversion software. Coming soon, additional legislation from the Protecting Access to Medicare Act kicks in mandating “that starting January 1, 2017, physicians ordering advanced diagnostic imaging exams (CT, MRI, nuclear medicine and PET) must consult government- approved, evidence-based appropriate-use criteria, namely through a CDS system.” (source)

Another helpful way to look at the Healthcare VC space is to think about the trends and contrast with VC investments.

Macro-Trends

  • The Consumerization of Healthcare
  • Consolidation of and competition between Hospitals and Integrated delivery systems
  • Strategic Investing (ex: Mayo investing in Helix)
  • Monitoring and Prevention
  • “Obamacare” disruption

Healthcare Funding Categories

  • Health IT Software
  • Digital Health
  • Medical Devices
  • Payer Disruption
  • Biotech

For further reading, I recommend checking out the various portfolio companies from Rock Health, Kapor Capital, SafeGuard, Arsenal and GV. Also checkout the Accelerator programs like Techstars Cedars-Sinai andMore Disruption Please to get a feel for the early stage. CB Insights is always publishing great insights such as this Healthcare IoT market map.

Here’s a brief sampling of some investments I’ve seen recently in these areas:

  • Patient Engagement
  • Prescription Management
  • Healthcare Analytics
  • Genetic Testing
  • Elder Care
  • Life Sciences
  • Medical Devices
  • Nanotechnology
  • Biotech
  • Insurance
  • Gene Therapy
  • Health and Wellness
  • Digital Health
  • Health IT

In Health IT software:

Care Coordination: Patientping, HealthLoop
Payer Management: Oration
Data Analytics: Medivo, BeneStream
EMRs: Elation

In Digital Health we see:

“Communities” like:

  • Health coaches (eating, personal trainers, etc)
  • Community for X
  • Competition
  • Reviews and Ratings
  • Connecting Providers (Patientping), Caregivers to Seniors (Honor)
  • Crowdsourcing data (Human Dx)

“Monitoring” is a huge category including:

  • “smart devices”, watch, smart phones
  • insights, behaviorial analytics
  • personal health and nutrition assistants
  • DNA and other self testing (23andme, Helix, uBiome)

Health and Wellness Platforms like ShareCare, Welltok and Omada Health.

Products like monthly food (Birchbox) and care packages (Citrus Lane).

Content like articles, daily emails and health guides (HealthSherpa)

Dev Tools like HIPPA data stores (TrueVault, Aptible, Catalyze.io) and IoT data streaming (Sense360).

In Biotech we see…

Biorepository, Genetic Analysis, Cellular Models, Regenerative Medicine, Bioinformatic Analytics.

Startups are using new techniques to harden defensibility into their business models such as creating Developer Ecosystems and baking in data network effects. A good example of data network effects at work is Recombine, a genetic testing company. They have built a network of partner clinics that administer its tests; with each new test, Recombine gathers more DNA data which (with appropriate consent) it can run machine learning on to improve its tests and nimbly develop new ones (therefore gathering more data). Recombine uses Machine Learning tools to find and learn patterns in historical data and uses these patterns to generate predictions. Recombine is 4 years old and has raised $3.3M.

I hope this post gets your brain spinning on all of the opportunity and innovation that’s happening in healthcare.

Learning from the Launch Festival

thiel
Two weeks ago I shook Peter Thiel’s hand, said hello to Chris Sacca, ran into some old friends and got about 25k steps per day going for beautiful runs and walks around the Marina area of San Francisco.  Those are only four of the fifty or so awesome things that happened in a three day span at the Launch Festival.

tony-hawk
Tony Hawk and Chris Sacca talking to Jason

I’ve come to the Launch Festival a few years in a row now, here’s why I enjoy it so much.

Watching Startups Pitch On Stage

Each day, there are a bunch of Startups that “launch” their companies on stage. As a Product Manager, you can learn a lot from watching tons of pitches. You will see common patterns, demo techniques and recognize the difference between a clear value prop and a rambling one.

Getting Demos and Talking Product

At every conference I like to walk around and get demos. I’ve been in those shoes, standing for 2-3 days in a row on booth duty talking to tons and tons of people. Try and help each person demoing to you. Give them honest feedback, tell stories about how you would use the product and tell them what you understood about the pitch and where you got confused. The best conferences have either the Founder or Product people at the demo pod.

Great People Watching

I like the contrast between early stage companies looking for their first round of funding and the incredibly successful fireside chat speakers. It’s interesting to listen to the fireside chat macro views then walk over to the demo pit trenches and think about how truly hard it is to get a Startup to go big.  And of course, there’s always a wonderful mix of eccentrics, startup t-shirts and tech fashion to observe.

crowd
The Demo Pit, a great place to talk with awesome Startups about life and products

It’s Like Working From Home But At A Conference

During Launch, I spend a lot of time half listening and half writing blog posts or working on wireframes. Being surrounded by tons of cool features, products, apps, designs and ideas is a good influence on my projects.  Sometimes being away from the office is more important than being there for creativity and productivity.

run
Out for a run near Fort Mason Center

A few themes from this year:

  • SMS as the UI
  • Exploring the world (Detour Audio Tours, Recommendation Apps, Curated Social Driven Travel)
  • Group messaging apps mostly targeted at college kids
  • Content Tools (Sharing, Webinars)
  • Food Delivery
  • Wearables
You can see some of the themes merge together in companies like Etch (wearables, messaging)….and a few themes talked about on stage but not well represented in the demo pit:
Checkout the full list of companies that launched at Launch Festival and I’ll see you there next year!

Learning about Startup Investing

How are startups raising the seed funding they need to get to the next phase?  This is a very simple overview of a few vehicles that help startups raise capital and some new and interesting trends in the ecosystem.

Syndicates
An Angel or Fund can lead a Syndicate on AngelList. Investors that are backing the Syndicate have the option to invest in specific deals that are being syndicating. Syndication allows Investors to pool their resources and share risks.
Ex: FG Angels

Funds
Funds on AngelList are “index funds” or “fund of funds” that give Investors broad exposure to lots of deals within a specific vertical. An Investment committee votes on deals that have been syndicated.
Ex: AngelList Consumer Fund

Corporate Investment in Super Angels
Recently, Mailchimp invested $2M into Sig Mosley’s $30M super angel fund.  Thriving companies like Mailchimp see this type of investing as a way to diversify cash, help startups and get early access to the most innovative companies in their space.

Accelerators
Many startups choose to go through an Accelerator program. Typically an Accelerator program will take an equity stake in the startup and provide seed capital and a convertible note option, a loan that converts into equity at some point in time.
Ex: Techstars provides $118k for a 7-10% equity stake

Angel Investors
Individual Angels are a core part of the ecosystem. Startups will often bring on several Angel investments in combination with going into an Accelerator or using AngelList to assemble the seed capital they need.

Crowdfunding
Hardware and hard goods startups are using a combination of Angel investing to get the company running with a prototype built and Kickstarter to fund the first product release.  Ex: Ubooly

I recommend reading Venture Deals by Brad Feld and Jason Mendelson to get schooled on VC investing.

Learning about Startups

Occasionally people ask me “Where do you go to learn about cool startups?” Here are a few tips on how to get started and have fun learning more about the startup world.

Discover New Products
Product Hunt is a daily newsletter, mobile app and website of new products.  These can be anything from a new version of an existing product to a prototype to a new company. Almost every day I find value in scanning Product Hunt’s morning email.

AngelList is a platform for startups to showcase their company and post jobs. Investors use AngelList to participate in syndicates and research companies. Try browsing syndicates and investors to learn about the investments they are making, it’s a powerful way to learn about amazing companies and see trends.

Research Company Financings
Subscribe to Crunchbase or Dan Primack’s Term Sheet daily email for funding announcements. Dan goes deeper into deal analysis, PE and IPO news as well as personal stories which I find super interesting. From both of these emails you’ll be up-to-date on funding announcements and M&A in the startup world in a quick 5 min morning read.

Startups in your Network
This is another fun way to learn more about the startup world. Try looking into your extended network to see which of your friends, friends of friends and connections work at startups.

Facebook
Type “friends of my friends who are founders” into the search box. You’ll probably get a long list of people that work at startups. Click on the company name to learn more or follow.

Screen Shot 2014-10-27 at 10.03.22 AM

LinkedIn
Click on “Advanced” to the right of the search box and search for 2nd Connections, Company Size: 1-10, Keyword: Co-founder, Location: San Francisco. Like Facebook’s search, you’ll find a ton of people you are loosely connected with working at interesting startups.

Screen Shot 2014-10-27 at 10.04.32 AM

Attend an Event
Lastly, one of the most impactful and satisfying things you can do is get involved with your local startup community. Search meetup.com for an event and attend. Subscribe to the Startup Digest email for your city.  Connecting with your local startup community is inspiring, awesome for your personal network and helps all of the entrepreneurs trying to make a dent in the universe.-

Screen Shot 2014-10-27 at 10.06.15 AM

Of course, there are tons and tons of awesome resources out there for following startup news, learning about financing, finding a co-founder and more. Hopefully this gets you started.  Enjoy!

 

My Last Day At PivotDesk

David and I have decided that it’s time I leave PivotDesk.  This has been the hardest choice of my professional life.

I wrote the team at PivotDesk a few days ago and stopped by the office to wish everyone well.   We have made commerical real estate more efficient and cost effective for everyone from entrepreneurs to small business owners to brokers and I’m extremely proud of that.

Hopefully this post helps others avoid a similar situation in their companies and gives some context on how this can happen to the best of teams.  As several mentors and incredible friends have told me, this is way more common than people realize.

Alright (sigh), now that’s out of the way so let’s talk about what the hell happened.

Over the past six months I gradually lost the confidence of my teammates.

Here’s how it happened.

Tunnel Vision
For the past three years I’ve woken up in the morning thinking about how to grow PivotDesk and fallen asleep almost every night thinking about what else I should have done that day.  At the park with my kids I was always reviewing my task list, on the weekends I’d crave time alone so I could think about what’s coming up, everything was about growth, scale, more.

I was so caught up in this type of thinking for so long that I had blinded myself to all of the other things that make a team truly work well together.  As all teams do, we’ve had a few disagreements over a variety of situations.  I handled these situations with little care, love or respect for my teammates.  I just wanted it over so we could go back to growth, scale, more.  Little did I realize, I was slowly eroding the support from my team that is needed to succeed together.  And worse, I was growing defensive and outwardly frustrated as my stress level rose.

Stuggling With Co-founder Balance
I began as VPE at PivotDesk and after our MVP and Engineering team took shape moved to VP of Product where I’ve been for the past two years.  I also have a second job as Co-founder.  This job has no job description or performance metrics, rather it’s a mix of a zillion different things from sales to ops to bizdev to customer support.  Finding the balance between these two roles has not been easy and is another reason I ultimately lost the team’s support.

Just a few examples:

  • Taking coffee meetings instead of attending daily standup.
  • Running the company meeting instead of focusing on a great product update during that company meeting.
  • Letting my week fill up with sales, finance, pr and exec team meetings and not leaving myself enough time for deep product focus.

As I asked others on my team for feedback once I realized things were going sideways I heard things like “No one really knows what you do anymore.”

Making the Hard Decision
Saying “hard decision” doesn’t even come close.  When David and I talked about the possibility of me leaving I started visibly shaking, my mouth turned dry and I started having trouble breathing.  As the words “If I’m getting in the way at all, we should seriously consider that I unhook from PivotDesk” came out of my mouth it was surreal.  All of the emotions started kicking in; the Imposter syndrome, anger, disbelief.  We decided to give it a week, talk to the people that have seen this the most, then regroup and make a decision.  For a week I let all of the “Co-founder projects” slip and focused only on product.  I felt like our team was in perfect harmony and kicking ass.  We released a major feature and were collaborating perfectly on the next feature.   Our OKRs were lining up to our analytics informing what we were building and planning on our roadmap.  Ironically, it was one of my favorite weeks of work ever in my career.

At the end of the week David and I spoke again, there was no change in the team’s support, it was time to unhook.  I was crushed.

When talking with a good friend and mentor of mine this week he said “You are not special!”  As I laughed and said, “Hey, thanks a lot.  Is that supposed to make me feel better.”  He said yes and went on to talk about seeing this happen in different ways over and over in fast growing startups.  The company changes so fast and sometimes people and teams simply aren’t the right fit for the phase of the business anymore.  This did make me feel better and he encouraged me to not assume 100% of the burden.

The Next Chapter
It’s incredible how much of one’s identity can get wrapped up in the company they are trying to build.  The constant pitching, the t-shirt wardrobe peppered with company logos and talking about the business at every holiday, lunch with friends or phone call with Mom really adds up.  It’s what you live and breathe as a startup founder and I wouldn’t have had it any other way.

For me, one thing has always stayed constant over the past 20 years of my professional life whether working at a big company or startup, the love of building software.  From the first 10 years as a software engineer through today as a product guy, day-dreaming about cool ideas and turning them into reality is thrilling.  I still get nervous as a I watch customers, friends and teammates use the products I’ve help build.

I don’t know exactly how the next chapter reads, but I’m positive using PivotDesk to share office space will be a part of the mix.