1Mby1M Virtual Accelerator Investor Forum: With Warren Weiss of Foundation Capital (Part 4)

Sramana Mitra: At the same time, the cash is tight. How do you put one foot before the other? I saw that in your portfolio, there are some SaaS companies that are related to enterprise HR. What’s the thinking behind that?

Warren Weiss: One is a company called SilkRoad Technology. It’s a mini-Workday for small businesses with as little as 50 people that don’t have access to a full talent management system with a system of records and performance compensation management. It’s simple and easy to use.

What was done on spreadsheets is very complex for small businesses, especially if compliance issues can be done by them.

The other company is a company called Visier and it’s based in Vancouver, Canada. It’s the original team that did Crystal Reports a number of years ago. They’re brilliant people and have a very interesting technical breakthrough that I think will change how analytics are presented. They’ve come up with a way to use English as a metaphor to build analytics. You ask questions in English, and it gets converted to business metadata. It gives you applications like workforce planning and analytics.

These are questions that are asked at board meeting where someone says, “I’ll find somebody to put together a spreadsheet to answer these questions.” This is so they could answer things like, “Give me workers between 25 and 35 that are in China that are multi-lingual.” None of the system of record of companies have that ability to answer such analytical questions that are needed to run businesses.

That metaphor is a platform that could be used for a lot of applications. In the past, data warehouses would charge large companies millions of dollars, and IT departments would take years to set up to work their way through a mundane SQL statement to build a report. Then everybody in the company would fight about the information being accurate.

In this metaphor, everything is in real-time in a computer. We found that in most organizations, there’s probably 10% to 15% of capital that could be freed up if they only knew what was the truth inside of their ERP system versus their data warehouse. It’s a very exciting field. Analytics, across the board, will get reinvented in the cloud with a SaaS application.

Sramana Mitra: Absolutely. Obviously, analytics and Big Data are the in-our-face trends right now. The other trend is, software that were once available only to the very, very large enterprises are now available to the very small enterprises.

These are under 50 people companies or even under 10-20 people companies. They are now able to access cloud technologies and services in all aspects of running a business. That one that is likely to produce a bunch of very serious scale companies.

Warren Weiss:. I have a funny story. My son is 25. He’s changing jobs and one of the new employers at one of the world’s largest software company said, “We run on Windows.” He said, “I can’t go to work for your company if you run on Windows. All the applications that I use to automate my sales, marketing, and analytics run on Mac. So they’re getting him a Mac computer.

Sramana Mitra: One of our case studies that has done phenomenally well in catering to the very small businesses is Zoho. The case study is in the book. It has the entire CRM suite. It’s a competitor in places to Salesforce, Google, and Microsoft.

As Sridhar Vembu, the entrepreneur, puts it, they are building an operating system for running small businesses on the cloud. The company is 100% bootstrapped and is a spectacular piece of achievement. Very hard to do, but he’s done it. What stages do you like to invest? That would probably be the last piece of topic that we cover.

Warren Weiss: We invest, 80% of the time, in really early stage. For example, we’ve built a company called Atheros Computer that invented WiFi. It was essentially three people who were trying to figure out how to put a radio on a CMOS chip. There was no wireless industry then. This was the brave new world kind of investing. Those kind of investments lead to incredible rapiers. They are super super risky but if you are successful, you build new industries.

Then, we also do Series A investing. We like to be the first institutional investor. We work with lots of micro-VCs and angels. It’s all hands on deck to help the company be successful.

We do invest in things where we’re stage agnostic, where we have deep knowledge such as financial services or marketing. We might have missed those in the early stages or we might know the new CEO of the company or have relationship with the investors. In the end, we’re there to make money for our limited partners.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Warren Weiss of Foundation Capital
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