A Late Bloomer on Building a Legitimate Unicorn: Veeva Systems CEO Peter Gassner (Part 7)

Sramana Mitra: What about funding?

Peter Gassner: We had funding from angel investors. We started off with $3 million. Then we said, “This is good, but we need some funding from outside. We were looking for validation and professional funding, and the things that a VC could bring.” We raised $4 million. We thought we needed the money, but it turns out we didn’t actually need that money. We never actually dipped into that $4 million. The sales came faster than we thought. I didn’t know what I was doing there, and I got lucky.

Sramana Mitra: How did Emergence find you? At that time, Emergence was just starting to evolve. I’ve known them for a long time. I’m friends with Brian Jacobs.

Peter Gassner: There’s a funny story there. We were raising funds in 2008, which wasn’t the prime time for fundraising. We said, “We’re doing this industry-specific thing.” We’re building on Salesforce. The prevailing wisdom from all the VCs was, “That’s a very small market. You’re building on somebody else’s platform? Don’t you know there’s no exit strategy?”

The vast majority of people just look at the basic and say, “He used to be smart, but he’s not smart anymore.” I met Gordon because he was an early investor in Salesforce. He was around in the early days of trying to figure out what to do with the platform. I liked him and thought, “He will be the one I’ll reach out to.” Gordon thinks far ahead. He built a firm around cloud software investing in 2000 when everybody thought that was crazy. In 2008, he was starting to think, “I got to invest in industry-specific things.” Everybody was saying, “You can’t invest in industry-specific things.” He had this idea that that would be good. I think he believed in me too.

Sramana Mitra: I suppose you didn’t have the objection of building on somebody else’s platform. I know Kirk Krappe. He built the same thing. He built the whole conrtact management on top of Salesforce. He had this prior experience of doing the whole thing from scratch in contract management and raising venture capital. He got nowhere. He didn’t make any money at all. He was very determined not to raise financing. He was doing more than $5 million in revenue before he raised a penny of venture capital.

Peter Gassner: Yes. Gordon also thought, “Who knows how it’s going to work out building on Salesforce. It might end up good. If so, there’s a first mover advantage.”

Sramana Mitra: Also, it’s a lot less capital-intensive if you don’t have to build the whole stack. If you’re building on top of somebody else’s stack, it takes away a huge amount of development costs.

Peter Gassner: It’s logical. I’ve built platforms at Peoplesoft and Salesforce. I know how hard it is. The only issue at that time was there was no business model proof. I just thought, “It’s logical and it could work out.” Any VC that thinks I’m making an investment in a company and it’s surefire home run, that’s something you ought to be suspicious of.

Sramana Mitra: Also, there is this tendency in the venture capital industry to follow herds. They don’t think for themselves. They identify a trend and everybody is running after that trend. Currently, that trend is AI. Everybody wants to invest in AI. I’ve seen those other trends. I’ve seen the SaaS trend. I’ve seen the social media trend. I have tremendous respect for investors who are contrarian investors and who have their own point of view. This is one thing that I’ve always liked about the beginnings of Emergence. It was a completely contrarian bet.

Peter Gassner: It is. It has this old notion of there’s risk and reward. Why is it logical to search for the things with the least risk? It’s not logical. Not many people want to take risk so therefore, that’s where the reward must be. I don’t think it’s logical to seek out investments that don’t have risk.

Sramana Mitra: At the same time, you have to be a thinker of a very different order to be able to reconcile all of those factors.

Peter Gassner: It’s not logical to avoid risk in venture capital.

Sramana Mitra: That’s what they’re trying to do. That’s the whole dichotomy of the whole business. You went public two years ago?

Peter Gassner: Almost three years ago.

Sramana Mitra: You are continuing to run Veeva at this point. Is that something you want to do long-term?

Peter Gassner: Yes. Honestly, for the first time in my life, I really have a career plan. I think that this will most likely be my last job. On most days when I’m not traveling, I ride my bicycle to work. I eat great healthy food at our kitchen. I work around great people. I’m solving complex puzzles. This is what I want to do.

Sramana Mitra: Thank you for your time. It was nice talking to you.

This segment is part 7 in the series : A Late Bloomer on Building a Legitimate Unicorn: Veeva Systems CEO Peter Gassner
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