1Mby1M Virtual Accelerator Investor Forum: With Tim Guleri, Managing Director at Sierra Ventures 2021 (Part 4)

Sramana Mitra: I was thinking about some of the work that we are doing right now around PaaS which is also a distribution innovation. One of the reasons why Salesforce has been successful as it has been is because it managed to do SaaS products but they also did this PaaS strategy early on.

They got traction on that and built traction on top of their platforms like Veeva and Velocity. I am curious to hear what you are seeing in your orbit of other companies pursuing this strategy.

Tim Guleri: This connects nicely with the earlier point that I had made which is how companies can get out of the gate fast without raising too much capital and get product-market fit. That is the reason why PaaS is popular because you can assume that the infrastructure is in place for you to build your application on.

Those services are world-class and they scale globally. You can just build and go. I have a couple of entrepreneurs from Tokyo that I backed that are great examples of that. The company is called Treasure Data. They built a marketing customer data platform or CDP. These are first-time entrepreneurs.

We did the classic Sierra move. We wrote the first check-in. They effectively built a data warehouse. Think of it as the prior generation to what Snowflake is doing today. The company was able to innovate quickly because they were using the object store that AWS had. They got to $40 million in ARR when they were approached and purchased by Softbank for $600 million.

That is a great example of innovating above what the PaaS platforms provide. I feel that any entrepreneur that is in the market today should be taking advantage of GCP, Azure, and others.

Sramana Mitra: Salesforce is the classic example but we are talking to a bunch of interesting companies that have both marketplaces and API strategies. Snowflake is an interesting one. There are a lot of companies building on top of Snowflake right now.

Atlassian has built a fabulous marketplace. They are acquiring from their marketplace. I spoke with a company. It’s a public company in the real-time workspace. They have done about 500 integrations and they are looking to build a large-scale PaaS ecosystem.

If you are in this real-time alert mode of application, that is an interesting stack to integrate with and leverage. There is interesting stuff going on from some of the largest players who are opening up their ecosystems, APIs, and platforms.

Have you seen companies that are coming up that are going to PaaS themselves or is ripe for a PaaS strategy? If you look at C3 AI, they are going after enterprises. There is no equivalent of C3 AI on which a hundred thousand startups can build AI apps. What is your analysis of that?

Tim Guleri: Never say never, but I think that it would be hard for entrepreneurs without deep access to capital to build a PaaS. For the same reason that you need to invest a lot of money in ensuring that all the lower layers of services are in place. These are expensive data centers.

The infrastructure also has to be scalable to have a brand new platform that would compete with the big three. IBM has made a recent set of public noise that they will come back to this market. 

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Tim Guleri, Managing Director at Sierra Ventures 2021
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