Hi folks--Vivek Saraswat here from Mayfield. I invest in early stage infrastructure and product development tools startups, including partnering at...
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First of all, great episode Vivek....
(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?
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:
Hi Vivek!
I have two questions for you:
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.
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.
Hey Vivek, I'm here to ask non-tech questions.
:) Here it goes
Favorite TV Show when you were a kid?
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.
First computer?
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.
Favorite movie in the last year?
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.
Sports
Do you play any?
Do you watch any?
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.
Hi Vivek! As an investor what impacts do you see the current COVID-19 crisis having on the startup scene?
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.
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)?
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).
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. :)
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?
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.
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 👍
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!!!
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:
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?
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:
Thank you for the thorough answer. I'll definitely take a look at the spreadsheet 🙂
What was your first breakthrough into the industry, and do you feel like the lessons from that apply today?
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:
Hello Vivek,
Good to have you around, what I would like to ask is...
Mostly what I have observed before the innovation years started, I am talking like in the 90s and following, there was a very thin timeframe in which innovation, as its meaning says, did play apart but what I saw before and now is the same. All goals converge to just one point whether a startup or an open-source or similar and that goal is getting the most MONEY OUT IN EVERY WAY POSSIBLE..
Now money was supposed to solve problems and give a peaceful route to our lives but yet it has brought more problems that it was supposed to solve. Therefore, the innovation and the growth that we as a human race was supposed to be taking, that leap of growth, I see it exponentially fading away.
with more poverty, famine and disease (highlighting COVID-19).
To summarize, all one wants is to sell and nothing else, kind of seems pointless and leading towards our own extinction.
What are your thoughts about it?
Hi Muhammad--I agree with you that if all someone wants is to sell and nothing else, that is rather pointless indeed. I don't look for founders who are in it only for the money, I am looking for people who also want to make a real impact by building large-scale companies. In venture people often talk about "missionary" versus "mercenary" i.e. are you motivated by money or a mission? I think it is possible to do both--you can have an impact while being commercially successful at the same time. That is why cultivating values and culture are so important when building your startup, or anything else for that matter.
Well as far as my experience goes, being at CollissionConf in New Orleans and exhibiting there as well. I might have to say that I disagree with you based on query for venture people. All I see is pure inclination towards profit in terms of financial gains.
Ex. I created a Geo Tagging application for locating blood donors in your area, that was way back on 2016 but I did got appreciated while spending all the money and time on it but didn't get anyone interested because all they wanted was ways to earn money from it and no one cared if it could actually be used to save human lives.
What I see is a total shift of priorities of the human race and maybe that's why we have the COVID-19. Only if people thought about well being more than money.
Hey Vivek, I'm fascinated by your story! What is your advice for young people who're just starting off their career in tech? Niche down into on specific domain (namely Tech, Design, Product) and focus on that or going as broad as possible?
For example, right after school I did an apprenticeship in a German bank. Right after that, I went back to school to get my A levels for being able to study computer science. Thanks to my apprenticeship, I'm good at valuating ideas and all that product/management stuff, but I'm just a mediocre developer atm. I'm going to got the university this summer and I don't really know what to focus on - either side hustle hard, build my own startup and treat my university half-hearted or focus completely on university and cs skills.
What would you do?
Hi Louis! I subscribe to the T-shaped Skills theory of development. Basically, the idea is to develop deep base in a specific area, while broadening your skillsets in related areas to augment this base. I also believe in having a growth-oriented mindset meaning that one's traits are not set and can improve through effort and persistence. I don't know the European system as well but all can I say is that I didn't treat my university studies half-heartedly; I focused on them hard, and then when I started working, I focused on that hard as well. If you have a burning startup idea that really excites you and you want to build it, that's one thing. But there is something to be said about developing the skill sets that will help make that dream a reality.
Which type of tech startups are going to be next billion dollars startups? Because THE APPS are too much and do you think if someone creates an APP, it may do a million dollar business?
Which domains are going to be next Facebook and Google.
Artificial Intelligence? AR/VR? Quantum Computing? What do you think?
Hi Muhammad! If somebody knows exactly which startups would be the next billion companies, please let me know =). I certainly have my theories, which I outlined in this post from January. To reiterate briefly, they are Cloud Native Day 2 (operations that keep modernized apps aand infra running in a production setting), Developer Augmentation (workflows for product development personnel that augment repetitive tasks, provide actionable insights for executives, and facilitate remote collaboration) and ML for the Masses (provide infrastructure platforms for machine learning and unlock its potential for non-data scientists).
Hi Vivek! Thanks for doing this AMA. What did you like and dislike about working at Amazon?
Hi Nick! Great question. I touched upon some of my thoughts on Amazon in my Software Engineering Daily podcast earlier this week. Will add thoughts here:
Awesome. Thanks for the response!
Hey Vivek! What was it like working at Docker in their earlier stages?
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.
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! 😁
Why did you decide to get into investing?
Hi Liana!
Honestly? I like helping other people build things. As a materials engineer, I built solar cells that powered the infrastructure people used. As an product manager, I helped my team to build devops products that enterprises used to power their organizations. As a venture investor, I get to work with founders to help them build their companies. For a more in-depth answer, check out my post on my philosophy on Being a Servant Investor.
Hey Vivek, thanks for doing this!
Over the past 5 years, what would you say has surprised you the most about the open-source community?
Hi Alex! I think one thing that surprised me is how quickly open-source became mainstream--the community itself has seen a huge influx of developers from all kinds of backgrounds over the last few years, which I believe is an awesome and needed thing. On the commercial side, open-source has also become the norm as well. It used to be that enterprises were wary of using open-source code and preferred proprietary solutions. That era has long passed, and as a result of that now if you are building an infrastructure or developer-oriented startup, you strongly have to consider why you shouldn't use open-source as your code choice.
Thanks for doing this ama Vivek!
What's your opinion on licensing as it relates to commercial open source recently?
Once upon a time, you had only three real license choices when building a commercial open-source business--Apache 2.0, MIT, or GPL. Times have changed, there are a dizzying array of licenses now being introduced into the ecosystem, and the debate has gotten rather heated (witness the Twitter firestorm during the Open Core Summit last fall). There are many who feel that the cloud vendors in particular unfairly benefit from open source code. There are just many who believe that the restrictive licenses will make enterprises less likely to adopt open-source code in their infrastructure for fear of losing control of their code--which is a death knell for any startup looking to build a bottoms-up adoption based commercial go-to-market process.
I don't have a strong ideological opinion about what should or should not be considered "open-source." That said, it is very early to determine which new licenses will be truly successful within the market, and as a founder you need to consider whether to risk your startup's success on this. The safest bet for a startup is probably to use a tried-and-true tested license (e.g. Apache 2.0 or GPL) and then build a proprietary layer on top (e.g. OpenCore, managed SaaS, etc.). However, if one of the newer licenses ends up having the right checks and balances to be useful for community, startups, and enterprises alike, it may see widespread adoption. Time will tell.
Hey Vivek, thanks for doing this. How would you define "open core"?
Hey Brian!
IMO, Open Core means that the core platform which the user runs is open-source, and then the vendor offers a proprietary commercial layer wrapping this which the customer can purchase with additional features to augment the functionality of the product (but without necessarily changing the core value proposition of the product). This is usually offered "On-Premises" (the customer downloads the bits and runs in their own environment, whether in the cloud or on their own servers) but it can be run as a "Managed SaaS" (see below)
Contrast to Open Crust, in which the core product itself is proprietary/commercial code, but open source integrations are offered to the product, usually in order to allow facilitate a stronger ecosystem by allowing 3rd party vendors to create these integrations.
Compare and Contrast to Managed SaaS, in which the open-source software is run as a fully managed service by the vendor on behalf of the customer. The service may or may not be Open Core--that is, it may include proprietary features which are not included in the open-source software itself.
Hi Vivek! Which feature or product decision on the enterprise product do you think was influenced the most (if any) by the OSS community surrounding Docker in the first few years?
Hi Fernando! Pretty much everything from the open-source community was incorporated into the enterprise product as it was an open-core model. So we were certainly heavily influenced by the community. Key pieces from the OSS included the Docker engine, Swarm/Swarmkit, secrets management, storage volumes, overlay networks, etc. More generally, I think a commercial open-source company cannot be built without balancing the needs of both community and commercial alike.
Hi Vivek,
Do you only invest locally or do you look at opportunities globally?
What makes you decide to take someone’s call and let them pitch you?