Developing Solutions for an Evolving Workforce
Emergence Capital was launched in 2003 to focus on cloud-based enterprise software startups. Since then, it’s helped grow companies like Salesforce.com Inc. (NYSE: CRM), Veeva Systems Inc. (NYSE: VEEV) and Box Inc. (NYSE: BOX) in their respective industries. We spoke with general partner Kevin Spain about the changing role of VC firms and the next wave of mobile technology startups.
What’s the question you get asked most often as a VC?
The most common question is, “What does it take to build a successful enterprise technology company?” When we talk to entrepreneurs, they are interested in capital obviously, but what they are really interested in is what we can bring to the table to help them really make the most of the opportunity. They are always curious about what lessons we’ve gathered from our successful companies that will help them increase their chances of becoming the next Salesforce. And the disappointing answer is that you have to have it all. You need a really compelling product, a really strong team, a great market fit and a great go-to-market strategy.
Today’s startup market is dizzyingly complex. How do you keep up with it all?
We have the luxury of focusing on the enterprise market, which is really the luxury of ignoring everything else. That focus allows us to hone in tightly on the things that matter, and helps us decide what to do. Or sometimes, more importantly, what not to do.
As the cost of starting a company drops, does that diminish the role of VC companies in the startup markets?
It’s cheaper than ever to get a business started in our space, but you have to raise and spend capital if you want to build a Salesforce-scale business. If you want to have a chance of building a billion-plus-dollar company, you need to get the word out and talk to customers. That means great sales and great marketing leadership and programs. That’s where most of the companies we invest in spend the capital we provide. You can start a cloud or SaaS company without a lot of capital. But once you get beyond the initial product build, cloud and SaaS companies still require capital to scale.
What are the latest trends you’re seeing in the VC space?
Mobile is the most important business segment for us right now. Mobile today is where we were 13 years ago with SaaS, which is when Emergence Capital started. In the next 5 to 10 years, mobile enterprise is going to be as big as — if not bigger than — what we’ve seen today with SaaS.
What makes mobile so significant?
Eighty percent of the world’s workforce is deskless, meaning they do not sit at a desk to do their job. These are workers in retail or manufacturing or health care. Historically it’s been hard to build applications that help them do their jobs more effectively. Now that every worker has a smartphone in their pocket, you can build entirely new application categories that service this huge workforce segment. Two hundred billion is spent annually on software for business workers sitting at desks; how much is going to be spent per year on the other 80 percent of the world’s workforce? I believe the market opportunity there is going to be larger than what we’ve seen so far in business software.
What Emergence companies are you most excited about?
I’m excited about our whole portfolio, but I’ll mention two.
DroneDeploy is a company that helps businesses get value out of drones. I’m not just talking about using drones to make Amazon deliveries. I’m talking about using the cameras on off-the-shelf drones to get a better sense of how your crops are growing, or measuring progress at an excavation site. DroneDeploy is building the operating system for the commercial drone world to help business capture that value. This is not some futuristic project. They have thousands of users generating business value every single day.
Another is ZOOM, which makes next-generation videoconferencing tools. If you’ve ever tried apps like Skype or Google Hangouts, you know they don’t always work that well. ZOOM is creating a truly elegant, truly cost-effective conferencing app that is growing like an absolute weed. That’s another company I would definitely keep an eye on.