Sramana Mitra: Double-click down for us into the B2B investments that you make. What sectors of B2B are particularly interesting? Where do you have expertise?
Clint Chao: When we say B2B, we’re essentially looking for companies that sell their product or service to other businesses. We’ve created our own investment thesis that we call Reimagine Work. We’re looking for entrepreneurs who are able to bring the efficiencies of IT into other industries that have not, previously, been able to benefit and enable them to create new categories of services or new capabilities that were previously not achievable.
We’re looking for entrepreneurs that have an understanding of specific verticals and industry domains and can take IT and create new efficiencies that, all of a sudden, can change the way work is done, how work is done, and how work is performed. As we’ve seen in the last couple of years, there’s an onslaught of new categories of connected devices and machines. We’re starting to see cars and drones. These are all new categories of connected devices.
Obviously, everybody knows that these capabilities are now possible. What everybody is still questioning is, how do you use these new technologies in industry and enterprises? What we’ve found is those entrepreneurs that are able to create a full solution incorporating these new types of machines and bringing them to particular industries that have an existing problem they’re trying to solve. In many cases, they’re taking these connected devices and coupling them with human beings that are working in those industries. This is something we call the empowered worker.
At the end of the day, what we’re looking for is a solution that if it’s correct, we like to think that the company has an opportunity to turn the table on the industry because some of these industries have not been able to benefit from the efficiencies of IT. Only until a few years ago could you make the general assumption that most workers in those industries have a connected device at their side at all times.
Now that that’s the case, what can we do? What kind of services can we create to change the game for these constituents in these industries? Every day, I’m amazed at the entrepreneurs that we get to meet. They have seen, firsthand, what’s going on in their respective industries. They have now been able to take IT and create something quite clever to bring this to market that could potentially change the game in the industry.
Sramana Mitra: There are two nuggest that I heard in your description there. One is the notion of the vertical. The second is the notion of the connected device and the combination of the two is where you are seeking innovation.
Clint Chao: Yes, and the derivative effect that is created when you have those kinds of connectivity in the industry. The ride-sharing industry became largely possible because it leveraged the fact that all of its users have smartphone technology at their side.
Sramana Mitra: An even more interesting example on the vertical side is the trends around vertical cloud. A company like Veeva for example is a very vertically-driven venture that has done very well by addressing the workflow issues of the particular vertical.
Clint Chao: The nice thing about what they did is, they targeted a market that was hungry for this kind of innovation and also big enough that you could build a lasting high-value company. As VCs, we have to look for companies that can build lasting presence in their industries. It’s not enough to just create a business that has the connectivity but to build a business on top of that where all constituents in the market can benefit from it.
Sramana Mitra: What is your geographical focus?
Clint Chao: We largely focus in the US. Two-thirds are California-based. A growing portion are actually originating outside of California. Many companies that we get involved with have hybrid locations where they have some physical presence in the Bay Area for reasons of having a business development outpost that could work with other technology companies.
Many of them have a foot in another market where there’s an opportunity to leverage the benefits of that area. If we’re investing in a technology company in the oil and gas space, it might not make sense for them to be based in the Bay Area. We have a company we’re involved with called Validere. It’s based out of Toronto. As you know, Canada is an oil-rich country. There’s a lot of technology going on there. We think that’s going to be a growing trend.