1Mby1M Virtual Accelerator Investor Forum: With Warren Weiss, Managing Partner at WestWave Capital (Part 3)

Sramana Mitra: We have very aggressively developed a whole track within our program. We have a big education effort. We are scaling that with some very interesting partnerships including with Udemy. The theme that we have developed around this topic is Bootstrapping to Exit.

By bootstrapping, I don’t only mean companies that are working without outside capital. They are also companies that are working in a capital-efficient way. It’s the same philosophy that you do things very capital-efficiently and get to certain milestones without making the exit price too high. You’ve answered one of the questions that I had in my original talking points around chasing unicorns. 

Warren Weiss: They have this term minicorns now. I don’t really pay any attention to that. You’re rewarded by your execution and not by what you say. At the stage we’re at, you’re going to have a fairly high mortality rate. We’ve been very fortunate. We haven’t had a single loss in the portfolio in three years. I don’t know if that means that we’re doing a really good job or it’s the sign of the times, because so much capital is available. 

Sramana Mitra: The number of companies that have critical mass and can acquire is much higher now than what it was even 10 years ago. Look at the crop of SaaS companies. There are so many public SaaS companies that are now owned by private equity. There are many more exit opportunities than there ever was.

Warren Weiss: That’s a great point. That’s a very important point. The private equity late-stage buyout firms have been extremely aggressive and offer valuations that are close to what strategic acquisitions used to offer. You have a bidding war. Now you’ve got more players in the pool that want to acquire. When you’re working with these bankers, they are able to get a much larger set of firms interested.

Sramana Mitra: What is your analysis of the other channels of enterprise computing today? We’ve talked extensively of cyber security. We’ve talked about bootstrapping to exit. Do you see that applying to other avenues of enterprise software?

Warren Weiss: We have a thesis around each one of our current investment strategies. We believe the world needs to look more like Google search rather than learning SQL and mundane languages to extract data. There is so much data available today that you should be able to use. There’re neural networks and artificial intelligence to abstract that so that the end user can ask an English question.

In the area of multi-cloud, several years ago I funded a company called Clicker that was bought by Cisco. It was one of the first multi-cloud management companies. I remember talking to my partners at that time saying, “Amazon is going to own the cloud.” It never works that way in the IT industry. In multi-cloud world, you have the big three. Every part of the stack has to rebuilt for a multi-cloud environment. You see lots of winners in that space doing multi-cloud management. Lots of great things are going on there.

Everybody talks about artificial intelligence. Many times in the early days, they really don’t have the data they need. One area that we focus on is engineering, quality assurance, and building applications can be done mostly by machine learning versus hand coding traditional systems. We have a few companies that are in that space that are taking care of 80% of this using machine learning.

There’s just so much disruption. New trillion dollar industries are being created. You see banks becoming e-banks. You see insurance companies becoming e-insurance. One more thing that’s interesting is Blockchain. We don’t do any cryptocurrency, but in the enterprise Blockchain space, we’ve seen some terrific use around supply chain and security around anti-money laundering. We’re seeing a real resurgence in that area.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Warren Weiss, Managing Partner at WestWave Capital
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