GenuineVC David Beisel's Perspective on Digital Change

December 3, 2014

It’s official: now two months after the IPO, HubSpot has surpassed the $1B market cap threshold and has become that “pillar” company that the tech ecosystem long anticipated. The benefits have been touted previously: an anchor for attracting and retaining talent in Boston, as well as a breeding ground for the next set of great Boston entrepreneurs and founders.

Already, a handful of groups have spun out to start new ventures, like the teams at Driftt, Bedrock Data, Grokky, and NextView-backed InsightSquared. As HubSpot co-founder and CTO Dharmesh Shah recently told BostInno, “We’ve wanted to not just build a great company, but also build some great entrepreneurs.”

Talk with my fellow venture capitalists, and they’ll no doubt confess how they’re “tracking” a potential founder or a given team set at the company in order to be ready with funding when it’s time for them to spin out. This entrepreneurial HubSpot spirit has — and will continue to have — a ripple effect throughout the Boston early stage startup ecosystem.

 

The HubSpot “Mafia” Will Have a Bigger Contribution Than Founders

In addition to these founding teams, there’s an even bigger contribution which HubSpot is already making to this same landscape: the proliferation of skilled marketing talent into a broader set of startup companies.

Historically, one of the (admittedly fair) critiques of Boston as a tech ecosystem is that the community is just that: a very tech-focused ecosystem, often at the expense of good marketing. “Build it and they will come” has been the philosophy. The focus is on creating some awesome technology, which is critical, except that the sales and marketing piece has been an afterthought in many cases. I can’t tell you how many pitch decks from local startups I’ve received over the past decade that barely even touch upon the key subject of distribution. And that thinking has carried out into the companies as they were being built.

But all of that is quickly changing. HubSpot has trained everyone in the company incredibly well (not just future founders), and many will eventually move on to other roles and be oriented towards distribution first.  The marketing training ground that is HubSpot creates a local DNA which will begin to pervade all companies in the area.

In a world which is increasingly won by startups who reach and then accelerate their product-market fit, not technology-market fit, this matters. A lot. I’m not just talking about B2B SaaS companies that feel similar to HubSpot either. This culture of being noisy about what you’re doing and implementing the right tactical techniques to get noticed will spread to consumer-facing startups as well.

I’ve begun to notice this effect first hand. With Jay Acunzo, HubSpot’s former head of content marketing, joining our team at NextView from HubSpot to support our investments in a platform role, he’s pushed the thinking about marketing across the entire portfolio. Former HubSpot marketing leader Rick Burnes also recently left for consumer-facing BookBub, where I’m on the Board, as VP of Content Products. (Here’s Rick’s take on HubSpot’s company DNA.) It’s becoming obvious that HubSpot marketing instincts span both B2B and consumer, and these are spilling into our entire community of companies following the IPO.

The above were just two immediate examples for me, but there are many more individuals adding to this emerging “Marketer Mafia” phenomenon. Jay and I took a look and created a graphic below depicting this HubSpot marketing talent which is starting to penetrate the Boston ecosystem:

Yes, HubSpot is going to spawn many successful startups, which will have a real impact onto the Boston ecosystem, which hopefully creates another set of pillar companies. But the more immediate and arguably more important contribution which the company is making is the marketing talent which is leaking out and flooding the local startup community, elevating the entire startup ecosystem.

 

September 18, 2014

When Chad Pytel introduced me to Bryan Helmkamp, CEO/Co-founder of Code Climate, I knew that I had to pay attention.  Chad is the CEO of thoughtbot, a consulting firm that makes web + mobile apps for early-stage startups.  The two companies had been working together for a while, especially as both are deeply embedded within the Ruby on Rails developer community, with a strong following for their respective offerings.  As an Advisor to thoughtbot the past couple years, I’ve come to place a lot of weight and trust in Chad’s opinion.

So I chatted with Bryan about Code Climate’s service, which provides automated code review (originally Ruby, but also JavaScript and now PHP).  It essentially gives developers another set of eyes on every commit. Their platform leverages data and algorithms to help developers make their code faster, secure, maintainable, and bug-free.

The stats behind what Bryan and the team had accomplished while bootstrapping the business were incredible, including signing up over 1,000 paying accounts and analyzing over 30,000 code repositories EVERY DAY. In the three years since launching the business, they’ve become the clear market leader in SaaS static analysis.

But what impressed me most is what happened next.

I shared a link to Code Climate with a number of CTOs/VPs of Engineering in my network, both inside and outside the NextView portfolio, just asking for their quick opinion.  I expected to hear a balanced set of positive and negative feedback, after which it’s my job to sort through it as part of our diligence process.  Instead, the response was overwhelmingly positive. Their teams were either already customers or they had immediately become customers after learning about it.  Just a sampling of quotes from these responses:

  • “I think it’s a great service for developers. I consider it a must-have default for most projects.”
  • “I’m quite bullish.”
  • “I can definitely see it being pretty big.”
  • “I really like CC, and we’ve integrated it nicely into our workflow.”
  • “It’s indispensable.”

Today Code Climate is announcing that they’ve raised a $2M round of financing, led by us at NextView Ventures.  Joining us in the syndicate are Lerer Ventures, Trinity Ventures, and Fuel Capital.

Code Climate talks about a world where static analysis is as critical to every developer as GitHub and their text editor/IDE… and this new capital will help make that vision a reality. Chad Pytel at thoughtbot, many of the NextView portfolio companies, tens of thousands of developers, and I are already believers.

September 4, 2014

Mass transportation is the largest single source of travel within metropolitan areas across the globe, but our current fixed infrastructure approach hasn’t changed since the 19th century.  Here in our innovation hub of Boston, the country’s oldest subway tunnel built in 1897 is still in use as part of the MBTA Green Line.  Each day thousands of people commute to work on a system that is literally over a hundred years old.

This year, though, a local startup called Bridj has been making headlines by taking a fundamentally new approach to thinking about mass transportation.  On the surface, the company is running mini-busses between popular commuter pickup and drop-off locations.  More fundamentally, however, Bridj is leveraging layers of technology including mobile connectivity + big data coupled with flexible vehicle assets to create a dynamic transportation network.  The startup utilizes machine learning algorithms to become smarter as more users enter the system, striving towards the goal of a “living, breathing, and thinking” transportation system.

Today Bridj announced that it has raised $4M from our team at NextView Ventures, alongside Atlas Ventures, Suffolk Equity, and many of the original ZipCar investors like Jill Preotle, Andy Ross, and Peter Aldrich.

Coming straight out of my first meeting with Bridj’s Founder, Matthew George, I called both of my partners to share my excitement about what I had been immediately convinced was our next investment.  Not only did Matt share a crisp and articulate vision about transforming the future of transportation, he was an extremely authentic founder who had discovered the opportunity through operating his own profitable bus shuttle business which he had started literally out of his own college dorm room.  And it is clear given the reception that the company has received since launching the beta service that it has struck a chord with consumers – I see it daily in the feedback tweets of riders using the service.

All investments which we make become a journey along with the Founders.  I know that this one is going to be particularly special because of Matt, his vision, and the real impact he’s going have on the lives of people living in cities around the world.

July 8, 2014

This is an excerpt from the original post, found on NextView’s blog, The View From Seed, launched this week. Find the original post here.

As the VC seed market has institutionalized, especially over the past five years, there has emerged a prototypical seed round profile: $1M-$1.5M raised, the first non-friends-and-family capital, comprised of one to three institutional seed investors or larger VC funds, on a priced equity structure (though sometimes convertible note), with a valuation mechanism in place priced in the single digit millions.

While there has been much discussion about the variances on syndicate composition and structure, and of course pricing variance, but essentially the “deal” is becoming fairly standard for all parties. The standard seed round will buy the company 12 to 18 months of runway as it looks to prove out early-stage milestones to raise a Series A before running out of cash.

However, also occurring are a set of “seed” rounds which don’t look like the above, despite involving most of the same players.  They’re common enough to become sub-categories in and of themselves, but they are just atypical enough that they’re not as commonly discussed.

The following is a list of somewhat unusual (or at least less common) seed-like rounds. Note that some institutional VC investors who invest at the seed stage may also make these investments:

Continue reading this post on The View From Seed.

July 1, 2014

In every single venture investment I’m involved with here at NextView Ventures, I learn a lot from the Founders of their company.  But in the particular case of our portfolio company TapCommerce, which yesterday announced its acquisition by Twitter a mere two years after the company’s founding (more details), there have been some key lessons which I’ll meaningfully take away from my experience in working with Brian Long, Samir Mirza, and Andrew JonesFirst and most importantly, a huge congratulations goes to the three of them, as well as the entire TapCommerce team, in creating something truly special with a meaningful, asymmetric outcome is such a short amount of time.

So I thought that on the day after the announcement, it would be useful to share these lessons which they taught me that I believe have broader applicability to other startups:

  1. Find a team who really gels together.  Of course you want the founding team to get along.  That’s a given.  But what bonds Brian, Samir, and Andrew is pretty awesome.   Classmates at NYU B-school, these guys started with a friendship which served as the foundation for a strong working relationship and truly equal partnership in all ways.  This inclusiveness and orientation toward collaboration carried into the whole company.  I specifically recall one of the first post-board meeting dinners, when nearly the whole company at the time decided to join investors for barbeque and beers… we spanned the restaurant’s whole long picnic table with everyone eating together.  This closeness of the entire team allowed for the company to rapidly react (see next point) in fast moving ad-tech space, empowering them to hone on product-market fit and begin scaling much more quickly than I’d ever seen before.
  2. Listen to the market while being “authentic.”  The company’s first pre-product website promoted a broad sweeping vision to “make it easier for people to shop on mobile phones and tablets” through a “suite of products help[ing] etailers at every step in the mobile shopping funnel.”  We at NextView invested behind the strong team going after this big idea, and that was certainly a big idea.  Subsequently, through learning first-hand via their own experimental shopping app called TapSave -and- attending to conferences to specifically speak to potential customers about painpoints, they focused in on an initial offering which was true to their ad-tech backgrounds.  Within a matter of months, a retention marketing service, namely mobile retargeting, was launched.
  3. Prioritize the right customers.  Over the past year and half with a product in the market, the customer demand has been insane.  Along the with the sales team headed by Tim Geisenheimer, the TapCommerce Founders had foresight to implement a formal program to deliberately prioritize the customers who had the potential to be the biggest down the road, instead of the natural tendency to prioritize those who were the squeakiest or showed up with the largest insertion order today.  It’s easy to say that you’ll prioritize strategic revenue, but it’s much much tougher to do in practice, especially at a startup.  I’ve been amazed at the discipline the TapCommerce team has instilled in prioritizing high-value clients, and even in a matter of months that strategy had just begun to pay off with notable customers like eBay, Zulily, Groupon, and Expedia among others.  If there’s one thing which I saw which the team did both differently and exceptional well, it was cultivate the relationships which mattered most.

Given the raw ingredients mentioned above, it’s not surprising that the company went from pre-revenue to a substantial revenue run-rate in a matter of 18 months.  Of course, the kudos go to the Founders and entire TapCommerce team, plus our syndicate coinvestors Bain Capital Ventures, RRE, ENIAC, and Metamorphic.  As for what’s next, it’s clear to me that the TapCommerce team integrated into Twitter is a wholly natural fit.  With Twitter continuing to push into mobile and programmatic ad buying, adding the increasingly valuable retargeting business line to their offering is a natural extension of their monetization strategy trajectory.   Twitter’s advertising blog posted that “together with the TapCommerce team, Twitter will be able to offer mobile app marketers more robust capabilities for app re-engagement, tools and managed service solutions for real-time programmatic buying, and better measurement capabilities.”

Last June I blogged that “our investment in TapCommerce is the Real Deal.”  That certainly turned out to be the case… as I learned a lot working with the real deal team of Brian, Samir, and Andrew.

 

 

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  • Rob Go
     - 14 hours ago
    How on earth has there not been a remake of The Running Man?
  • Lee Hower
     - 1 day ago
    @avidindoorsman hope you're good too. Going to roll dice w/ Jones, but benching TY Hilton… tough to miss both my WR studs for championship
  • Lee Hower
     - 1 day ago
    @avidindoorsman I'm in the exact same boat... tough call, I'm leaning towards playing Jones
  • Rob Go
     - 3 days ago
    RT @davidbeisel: What a year it's been! Looking back at everything that's happened to our firm @NextViewVC in 2014: http://t.co/u0Pi1AY9pq
  • David Beisel
     - 3 days ago
    What a year it's been! Looking back at everything that's happened to our firm @NextViewVC in 2014: http://t.co/u0Pi1AY9pq

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