I'm Vivek Saraswat, investor in Dev Tools + Infra startups @ Mayfield and former product leader @ Docker/VMware/AWS. AMA!

Hi folks--Vivek Saraswat here from Mayfield. I invest in early stage infrastructure and product development tools startups, including partnering at the Series A with the amazing team at DEV (hi @ben @jess @peter 👋). Prior to investing, I managed the primary enterprise product at Docker, launched the Storage for Cloud Native Apps product initiative at VMware, and worked on EBS Snapshots at Amazon Web Services.

In talking with many founders and developers, I've found people often have questions around areas like open-source commercialization, monetizing dev tools, enterprise product and go-to-market strategy, and early-stage company building. Recently I joined @the_prion on Software Engineering Daily where we discussed topics like what to consider when building an infrastructure startup, the evolution of the cloud native ecosystem, and strategies for bottoms-up adoption and product-led go-to-market. I also previously gave a talk at the Open Core Summit organized by @asynchio on commercial open-source product strategy, architecture and teams.

Since many of us are holed up remotely right now, I'm here to answer any questions you might have around these topics or any others--I'm also a singer/guitarist, video/tabletop gamer, and sci-fi/fantasy fan.

AMA! (and follow me on Twitter at @theVSaraswat for more on these topics)

Comments

[Ben Halpern]

First of all, great episode Vivek....

Infrastructure Investing with Vivek Saraswat Software Engineering Daily  

1x initializing... ×

(Coming at some point to DEV: Tagging users in industry podcast appearances they've made)

Anyway, what would your advice entrepreneurs in identifying trends in software adoption and validating ideas before devoting to projects which might not have a realistic path to adoption?

[Vivek Saraswat]

Hey Ben, sounds like a great feature to build =P

Really good question. I think there's two potential pieces of advice I can give here:

• Market validation. Most people build first and then validate with users--the best entrepreneurs start by understanding market needs first. Identify the prototypical user and buyer who you think would most benefit from the project you are considering developing, and start surveying them on whether they actually would in fact use your project. There are tons of slack/discord channels, community forums, github repos, etc. where you can seek out users who have interests in specifics areas. From a commercial standpoint, reach out to mid-level leaders at companies to see if what you are building meets a strong pain point. This kind of need-finding can save you a lot of headache (and possible carpal tunnel syndrome) of building something nobody wants. If you haven't yet found that need, keep iterating.
• Rapid prototyping and feedback. Once you have an idea of where to point the ship, build a rough MVP of the product, lock down some early users, and quickly get feedback from them on as to whether you are headed in the right direction. Course correct as necessary. And importantly, don't just talk to the people who use your product, talk to the people who chose NOT to use your product. You may not choose to prioritize everyone's input, but it is important to understand fundamentally what is working and what is not.

[EPPR]

Hey Vivek, I'm here to ask non-tech questions.

:) Here it goes

[EPPR]

First computer?

[Vivek Saraswat]

Macintosh II. I was all Macs growing up, then started building my own PCs in high school and college, and then switched back to Macs somewhere in my late-20s.

[EPPR]

Favorite TV Show when you were a kid?

[Vivek Saraswat]

I'm dating myself here, but the Super Mario Bros Super Show, and especially the days they had Legend of Zelda. "Well Excuuuuse me Princess!"

I'm also a big anime fan, so I grew up on a steady diet of stuff like Gundam Wing, Dragon Ball Z, Sailor Moon, Robotech/Macross, Pokemon, Tekkaman Blade, etc.

[EPPR]

Sports

Do you play any?
Do you watch any?

[Vivek Saraswat]

Play: I used to run cross-country and do martial arts (Jeet Kune Do & Eskrima). I had a foot injury awhile ago which more or less stopped that, so now I use the gym instead (elliptical, weight training, etc.).

Watch: Tennis and College Football (Go Stanford Cardinal!) Though tbh not as much time as I used to have.

[EPPR]

Favorite movie in the last year?

[Vivek Saraswat]

This is tough...trying to avoid covid19 wfh recency bias.

I think I'll have to go with Joker. Incredibly dark, fantastically freaky performance by Joaquin Phoenix, and a hauntingly surreal soundtrack.

Runner-up goes to Marriage Story which was IMO underrated. Adam Driver and Scarlet Johansson convincingly portray flawed yet sympathetic characters in what could have been a real story.

[Julianna Tetreault]

Hi Vivek!

I have two questions for you:

• What advice would you give to someone looking to move into a product manager role?
• What would you consider to be some red flags for you when deciding to invest in an early-stage company?

[Vivek Saraswat]

Hi Julianna!

• Glad to see you're interested in PM! I believe the single most important trait a potential product manager can develop is empathy. The PM is the voice of the customer, the bridge to non-technical teams (sales/marketing/ops etc.), and the closest partner to engineering. This requires that a product manager be really, really good at putting themselves in another person's shoes and understanding what drives them. There are several good resources on building empathy as a PM--I have a few links in an article I wrote on building empathy in enterprise product last year. Aside from that, I would spend time working with PMs, and importantly with other related orgs like sales and marketing to understand how each of them connect within the business, as PMs often need to coordinate and fit everything together.

• There's a definitely a lot that goes into evaluating and early stage company...I wrote up a framework of my evaluation here in case you'd like more details. There's very few straight up red flags, but here are some:
  1) The CEO lies about anything and it comes up later in diligence. This one should be obvious, but you'd be surprised, it happens.
  2) The CEO doesn't know key metrics of the business (revenues, burn rate, etc.). This is part of the fundraise process and should be expected.
  3) The CEO is seriously trying to decide between raising an early stage round or selling the company. This suggests they aren't serious about building a large-scale business.
  4) The CEO is rude or dismissive to members of the Mayfield staff. It's totally fine if folks are nervous or buttoned up. That's ok. But People-First is one of our principles and I won't tolerate that kind of behavior.

[Julianna Tetreault]

Thanks so much for the thorough response, Vivek! I found your articles insightful and was particularly interested in the live-fire exercises that you mentioned—empathizing with the customer is incredibly underrated.

[Josh Puetz]

Hi Vivek! As an investor what impacts do you see the current COVID-19 crisis having on the startup scene?

[Vivek Saraswat]

Hi Josh! The short answer is that everyone is hurting from the COVID-19 crisis right now. This is an unprecedented event in recent global history. The long answer is that for the startup it really depends on what stage (early stage vs. late stage) what industry (enterprise vs. consumer) and what sales motion (top-down vs. bottoms-up). I'll try to hit each of these briefly:

• Earlier stage startups can more easily weather the storm the right now as they can keep their team size nimble, and are usually not reliant on customer revenues, to keep burn rates low. Late stage startups that have already built large teams are usually reliant on customer revenues and thus may be in a more precarious position.

• Enterprise startups with a top-down sales motion used to rely a lot more on selling in person which is now much more difficult. What was once done over handshakes with C-suite and VP leaders must now be done over Zoom. Startups with a bottoms-up sales motions are having an easier time by nature of their design. Consumer startups are seeing impacts from changes in spending patterns as well (look at the travel, hospitality, and on-demand industries) but remains to be seen what long term effects on other areas will be.

• As an early stage investor, I am certainly still talking to new companies (over Zoom of course...) as we are always thinking with a long-term lens. But simultaneously we are working closely with our portfolio companies to help them get through the crisis.

[Jacob Herrington (he/him)]

Hey Vivek!

I listened to your interview and really enjoyed it, thanks for sharing.

Two questions:

1) How did you transition from managing tech products to investing? Any key transformative periods or was it a gradual change? Did you receive any traditional education regarding early-stage investing or did you learn as you went? (I'm reading your post from July about a year in VC, but any other thoughts would be awesome!)

2) Favorite edition and/or class in D&D (or your preferred tabletop game if you don't play D&D)?

[Vivek Saraswat]

Hi Jacob! Thanks for listening to the interview.

1) I was lucky enough to make the transition because the folks at Mayfield gave me an incredible opportunity. My biggest realization as a product manager was that I liked helping other people build things, and venture gave me the chance to do that at scale by working with multiple companies and helping their teams grow. During my time at VMware and Docker I spent time helping VCs with due diligence around the cloud-native ecosystem, and at Stanford I took one class which walked through mechanics of the venture industry (e.g. term sheets, investments, etc.). Most of my education and past experience was focused on operating life however, and much of the venture side was learned on the job.

2) I've been playing D&D since 2nd edition. My favorite version is definitely 5E. I think it strikes the right balance between simplicity, game balance, and freedom of expression. In terms of favorite class, I really like what they've done with the Paladin in 5E. No longer tied purely to Lawful Good, the smiting mechanic is awesome, and the subclasses have a lot of interesting flavor variances (Oath of Ancients being my personal favorite).

[Jacob Herrington (he/him)]

Thanks for getting back to me! Seems like you've got a super interesting path.

I've only played 5e, but I love the simplicity and focus on storytelling. May the dice gods favor you. :)

[Robin Kretzschmar]

Hi Vivek,

Besides developing, I'm also interested in markets, investing, stocks, strategies and everything that is related to companies. How would you advice to start out if there is only a relatively small amount of money to invest (say <10.000€) and I want to learn how to invest in companies or get to know when there is an opportunity to invest?

[Vivek Saraswat]

Hi Robin!

Well, public and private investing are very different beasts. For what it's worth, when it comes to public markets, I prefer things like index funds, mutual funds, ETFs etc, and not individual stocks.

That said, one option to consider is looking at platforms that do fractional shares of investment. This allows you to study the market and experiment without committing larger amounts of capital.

[Robin Kretzschmar]

Hi Vivek, thanks for your answer. I know this is not a topic that can be discussed in a couple of sentences here but I appreciate you taking the time to reply ☺️

Fractional shares sounds like a good idea to start, I did an investment at such a platform years ago (MicroVentures) but the problem was the language barrier. As English is not my native language, it can be hard to understand all the documents in the beginning. I'll take that and search for a German platform to get familiar with the topic 👍

[Molly Struve (she/her)]

When a company develops a widely adopted and used open-source tool (anything from a Ruby gem to a framework such as DEV) what advice do you give them when they are looking to monetize it? Is there a "usual" path you like to take or is it very dependant on the technology and what it does?

Thanks for taking the time to do this amongst all the chaos!!!

[Vivek Saraswat]

Hi Molly! Commercializing an open-source tool is definitely a hotly debated topic with lots of opinions =). There isn't a "usual" path per se because it does depend a lot on the technology. It also depends on whether the team wants to build venture-backed, high-growth business (e.g. Hashicorp, Elastic, Confluent), or a more bootstrapped, long-scale model (e.g. JetBrains).

That said, I do have some opinions on this from my past experiences, some of which I elaborated on in my presentation at the Open Core Summit on "Putting the Product in Product-Led GTM". I'll summarize some of my thoughts below:

• Develop a "critical path" value proposition, for your community user, effectively one that is so important that it gets the open-source adopted into the core workflows and architecture, and "designed-in" as the process of record for every team in both communities and enterprises alike.
• Understand what your enterprise buyer actually values (usually some combination of piece-of-mind, collaboration, and performance). Influence them to provide the enterprise version of your product as a service to their users as an upsell.
• Make the upsell as frictionless as possible--use an inside sales process that takes advantage of the bottoms-up nature of your product, and architecturally either use hosted SaaS or don't force your customers to swap out binaries to upgrade.
• Create a balanced product/engineering team culture. Don't put a firewall between your community and commercial teams; your product and engineering folks should have empathy for both sets of users and buyers.

[Michael Tharrington]

Hey Vivek! What was it like working at Docker in their earlier stages?

[Vivek Saraswat]

Hi Michael! My early days working at Docker were awesome. Talented team, rapid iteration on the product, and a close relationship with customers.

Seeing internal hyper-growth firsthand is an experience. Internally, we went from dozens to hundreds quickly. When that happens, old processes stop working, and you have to swiftly put new ones into place. If you are thinking about being a founder or joining a high growth startup, make sure you have a tolerance for this kind of chaos. But, this is a unique experience and skillset that you can take with you anywhere.

The juxtaposition of communities was amazing too . At DockerCon 2016 I gave a keynote in front of an audience of several thousand (and thousands more over the livestream) while wearing an absolutely ridiculous Burning Man-esque getup--the videos are probably still somewhere on youtube. The next day, I was presenting the roadmap to our prominent enterprise customers while wearing far more dreary business casual attire. All part of the experience.

[Michael Tharrington]

Wow, moving from dozens to hundreds of coworkers was probably quite a shock!

I attended DockerCon 2017 in Austin and it was amazing — such a good time. I'm trying to dig up your keynote on YouTube, but am having no luck. However, I did find this:

Burning Man-esque getup indeed, haha! 😁

[rhymes]

Hi Vivek, thanks for doing this!

The first time I heard about what an "open source company" was, it was ages ago with Canonical, and thought "cool, didn't know one could make a company on top of opensource!", so my question is: what are the most exemplary successful open source companies? What did they do right or better than others?

[Vivek Saraswat]

Hi rhymes! Really great question. I would be remiss if I didn't point out @asynchio 's excellent spreadsheet of Commercial Open-Source companies with successful exits. If you look at these companies as well as the largest private COSS companies today, I believe there are a few key elements they have all gotten right:

• Critical path value propositions: Each of these companies has an open-source project which is fundamentally critical to their core users. Examples include Red Hat (Linux -- operating system), Elastic (ELK -- logging), Github (Git -- source code version control), Hashicorp (Vault -- secrets management, Terraform -- infrastructure provisioning), Confluent (Kafka -- event streaming). And importantly, these are things that their enterprise buyers who support those users cannot afford NOT to pay for.
• Ecosystem: Each of these players has built a thriving ecosystem which includes integrations across numerous open-source tools, commercial vendors, and cloud providers. This is crucial. The ecosystem both increases cooperation and helps provide a moat against other players. To become a large scale company, you simply cannot be an island.
• GTM: This is more for the newer private companies--the successful ones were all built with a primarily inside sales process, as opposed to a top-down direct sales process. This is more capital efficient and takes advantage of the bottoms-up nature of open-source. The large public companies have both inside and direct sales teams because they can afford to, but startups have to focus.

[rhymes]

Thank you for the thorough answer. I'll definitely take a look at the spreadsheet 🙂

[Andy Zhao (he/him)]

What was your first breakthrough into the industry, and do you feel like the lessons from that apply today?

[Vivek Saraswat]

Hmm..technically my first software job was a high school internship building Flash demos for an edtech startup. The lesson learned there was don't build stuff in Flash =P

More seriously, my first real breakthrough was as a Product Manager at Amazon Web Services for EBS Snapshots. Lessons learned from AWS:

• Creating a vision: When you want to introduce a product at Amazon, you go through a process called "Looking Backwards"--basically, what does this product look like at at scale, and then working back to the minimum viable product from there. The importance of this is understanding what it takes to build something big, and creating a process of how to get there.
• Being extremely customer focused. Everything in Amazon is about the customer, having a deep understanding of that customer, and what it takes to make that customer successful. It's stunning to me how many folks at startups and large companies alike don't understand or care about their users and customers, and I heavily respect the ones that actually do.
• Metrics: Part of Amazon's success is in using metrics very effectively to see what's moving the business forward. Track the things that matter, and put KPIs for your success. Beware of vanity metrics that make you feel good and look up and to the right, but don't actually contribute to your business success.