Announcing our new Podcast Series ‘Focus on the Founder’ with our first guest – Ryan Williams of Cadre

Over the years, we’ve heard from our founders here at Matrix that some of the best learning opportunities they’ve had has come from 1:1 conversations with other entrepreneurs. And while there is no shortage of resources for entrepreneurs (including content we have built at Viewpoints and forEntrepreneurs), there are very few public forums where successful founders and operators speak candidly about their career journeys and discuss what has/ has not worked for them as they’ve scaled their businesses.

That is why we are excited to announce ‘Focus on the Founder’ – a podcast series that will do exactly what it sounds like—bring the focus back on the founder. In the coming months, we will be releasing a series of episodes where we ask successful founders and operators questions about their journey into entrepreneurship, how they’ve gone about making critical decisions (e.g. hiring, fundraising, etc.) and what they would do differently looking back.

The initial focus will be on founders and senior execs in FinTech—though this may evolve over time. We will keep the episodes short, informal and frank. The very first episode is with Ryan Williams the CEO and co-founder of Cadre. You can find the podcast episode on SoundCloud, iTunes & Google Play.

In this episode you will learn about…

  • How Ryan went from selling headbands at age 13 to flipping houses in college to launching Cadre. Or as he puts it “Headbands to Houses to High Rises”
  • When the real “Aha” moment came for Ryan that led him to believe that there was a big opportunity in real estate technology
  • What Ryan believes is the single most important characteristic behind the success of companies like Amazon, Airbnb and Fidelity and how Cadre has embraced that characteristic
  • How Ryan works with his investors and the value they have provided to him beyond the obvious capital injection
  • The crucial metrics and KPIs that Cadre tracks and measures
  • What other areas Ryan is excited about and would explore if he were not building Cadre…hint some of them are pretty controversial in the venture world today

Core & Emerging Platforms as we Move into 2017

Innovation at the platform level (whether it be improved hardware, changes in infrastructure or new ecosystems) has always led to new opportunity at the application level for both entrepreneurs and the investors that back them. As 2016 winds down and we look ahead to 2017, it’s as good a time as any to take stock of the innovation we’ve seen at the platform level in the last few years and the trends in tech that will drive new opportunity in application software.

More specifically, I see four core and emerging trends that will continue to dictate opportunity in B2B software: (1) continued dominance of cloud, (2) acceleration of mobile enterprise, (3) increased attention to AI (more specifically machine learning) and (4) the rise of AR & VR – particularly AR in the B2B setting. The figure below provides an overview that will be explained in further detail below:

tech-platforms

(1) Continued dominance of cloud

This is an “old” one but a good one. Of the four platform trends this is the most established one and has produced the most opportunity to-date.

From a horizontal perspective, the cloud has penetrated (though not yet dominated) every function within the enterprise. Salesforce is the prevalent choice for most in the sales / CRM functions. Companies like Workday, Cornerstone and SuccessFactors have gained real traction within HR. Eloqua, ExactTarget and Marketo are widely used marketing tools. NetSuite has a strong presence in ERP while Zendesk is a strong force in customer success. And there are many other more recent horizontal SaaS companies that have made big waves: Slack, Stripe, DocuSign and DropBox are just a few of many that had big years in 2016. And there are many more opportunities remaining in relatively untouched areas like: sales ops, SMB-focused HR tools, inventory management, market intelligence and customer care analytics.

Vertical software, is still very much in its infancy. There have certainly been some early winners like Veeva (life sciences), RealPage (real estate) and Fleetmatics (fleet management), but there are many more industry cloud winners to come. Industries like manufacturing, construction, logistics, agriculture, oil and gas and others have slowly begun moving to the cloud after remaining cloud-allergic for many years. 2017 will be a big year for many of these industries and the vertical-focused, category-winners that reshape them.

(2) Acceleration of mobile enterprise

Aggregate mobile enterprise revenue in 2016 was just under $100B –pretty solid for a platform that didn’t exist 10 years ago. However, this one is also just getting started. Forecasts show this number doubling by 2020 (and I wouldn’t be surprised if the growth rate is higher than that). Part of this growth is fueled by increased vertical software opportunities. Procore is a great example of a company delivering a vertical specific solution (in construction) via mobile enterprise. Industries like education, insurance and real-estate will soon follow.

(3) Increased attention to AI  

2016 really marked THE year when AI (or more accurately, machine learning) really came into focus in the startup and venture community. As seen in the figure above, deals done and investment dollars poured into the sector have grown exponentially in the last 2-3 years. In that time, AI has done a few interesting things:

  • It has re-opened the door in a real way to more horizontal software opportunities giving rise to the “disruption of the disruptors.” Suddenly, machine intelligence has allowed for greater insights and better products and services that opened the door to new entrants looking to enter horizontal spaces.
  • It has allowed for more focused solutions that really benefit from machine learning applied to large data sets to flourish. Little Bird (a market intelligence and data analytics company based out of Oregon) that was recently acquired by Sprinklr is a good example. AI powered point solutions like Little Bird, once bolted onto larger platforms (like Sprinklr’s social media management platform) can exponentially increase the utility to their enterprise customers.
  • It has brought back IBM’s relevance among innovators and early stage companies. Ironically, rightly or wrongly, IBM’s Watson is the most common machine associated with machine learning. Whether IBM is able to harness the potential of AI remains to be seen, but the company attempts to be mounting a bigger challenge to be a dominant presence in the space rather than giving way to the big four (Apple, Facebook, Amazon and Google) as it did with consumer devices, social, ecommerce and search.

Expect AI to be a powerful trend in 2017 and beyond, with both startups and established players getting involved, especially as the technological innovation becomes more advanced.

(4) The rise of AR & VR

AR and VR are the furthest off in terms of real platform potential and 2016 was largely a pretty big disappointment for these platforms. The biggest thing in AR/VR in 2016 was Pokémon Go, which was an entirely consumer play (and appears to largely have been a fad). I expect VR to still be a few years away from going mainstream –and even when it does, it will continue to be a consumer play.

That being said, I do think in 2017 we will see the start of some AR-based software applications that will gain traction among enterprises. And by 2020 forecasted revenues in AR will near $120B. Some of the important early verticals AR will start with will be healthcare, manufacturing, defense and architecture among others. Some of the early startups playing in these spaces, that I’ll be following in 2017 include: CrowdOptics, APX Labs and Pristine.

Venture Debt: An Alternative form of Financing

In the tech ecosystem, we often associate entrepreneurial financing almost exclusively with venture capital. As a result, most of the fundraising resources for entrepreneurs are geared around venture capital. Likewise much of the media attention in the startup financing world is focused on venture capital investments.

The reality, however, is that there are many different forms of financing beyond traditional venture capital financing. And the type of fundraising instrument used is as important as the quantity being raised and who it is raised from. There is quite a bit of information out there about raising from friends and family, angel investors, crowd funding platforms and several of the other more common sources of financing outside of venture capital. But there is very little information about financing a startup through debt.

As such, Brian Feinstein of Bessemer Venture Partners, Craig Netterfield of Columbia Lake Partners and I put together a white paper on venture debt, which was released last week. It’s meant to be a fairly comprehensive guide for entrepreneurs who are interested in exploring venture debt as a viable option. Feel free to check it out here and send us any questions as they arise.

Cap Table Modeling: Understanding the Mechanics of Equity vs. Convertible Debt

Cap tables are an important concept for entrepreneurs to grasp when taking outside financing. A cap table is a schedule that lays out the ownership stakes in an early stage company. They typically take the form of a spreadsheet that changes over time as more capital is raised and more investors become involved in the growth of a company. Cap tables can also vary based on whether the capital is raised through equity or through convertible debt (debt that converts to equity at a future point in time).

Much has been written on the merits and challenges of both equity and convertible debt. There are a number of great posts that explain each at a high level and then go on to take a stance on which method is preferred and when. A number of notable investors have weighed in on the topic through a variety of posts including: Fred Wilson, Mark Suster and Josh Kopelman. All of these posts do a great job of explaining the mechanics of each financing option and provide sound reasoning around when (and when not) to use convertible debt vs. equity.

The problem with these sources, is that rarely do they actually dive into the mechanics of building a cap table from scratch and modeling out the differences over time of equity vs. convertible debt. Of course, there are courses taught by organizations such as Wall Street Prep that do extensive training around cap table modeling. While these courses are great, they tend to be a) very expensive b) time-consuming and c) highly detailed-oriented (too detailed for what most entrepreneurs are looking for). So what do you do if you’re an entrepreneur who wants more than just a high level understanding of the pros and cons of various financing options but doesn’t want to pay a premium for a time-consuming, detail-heavy course?

I recently came across a great resource put together by my Professor at CBS and 37 Angels founder, Angela Lee. Professor Lee has built a step-by-step guide to modeling out cap tables for equity and convertible debt deals (both when the discount or cap come into play). The guide, which is posted below, provides detailed instructions on how to calculate the various components of a cap table (shares owned, share price, % owned, etc.,) across various rounds of fundraising. Although the tool is simplified, it provides an intuitive way to model various financing scenarios and their implications for your ownership over time. Hopefully this sheds a bit more light on the mechanics of how cap tables are put together. Big thanks again to Professor Lee!

37 Angels Cap Table Template

2013: Startups on the Rise

This is definitely a bit over due, but here are my thoughts on the up-and-coming start-ups to keep an eye on in 2013. Some of these have already built quite a bit of traction, others have been lurking for a while waiting for the right time and others were started less than a year ago. I’ll have to do a follow up post at the end of the year to see how they end up doing.

Uber: This mobile app takes much of the hassle out of finding a cab to get around town in. The app allows you to request a cab at any time, let’s you know how far away the cab is, texts you when your cab has arrived and then allows you to pay for the cab using the app. It’s a very convenient way of getting around. I’m hoping the Uber team can work out some of the product kinks (in NYC for example there are many restriction around the black cabs that Uber works with), so that the service can go more mainstream as it’s currently a much-needed service. Once these challenges are resolved, I think this app can have much success in most major metropolitan hubs.

MoviePass: As a movie theater subscription service, MoviePass is building something very new to the movie industry—the ability for viewers to go see an unlimited amount of movies each month for a flat fee rather than paying for each individual movie. It’s kind of like the concept of having season tickets to a sporting event. This will be particularly useful for avid moviegoers who see multiple movies each month. Many of my friends who are movie fanatics have already signed up for beta access to MoviePass.

Fab: Many thought that e-commerce was in decline but Etsy and Fab seem to be proving that theory wrong. Of particular importance Fab, with its focus on “everyday design”, has been an innovator in social commerce—seamlessly integrating with facebook and twitter. Fab also has created better mobile apps than any other e-commerce platform making it easier to make purchases regardless of location.

2U (formerly 2tor): 2U is disrupting education by providing high quality online learning environments. 2U partners with top-tier universities to deliver rigorous, and selective graduate degree and undergraduate for-credit programs online. Some of the universities currently using the 2U platform include: USC, UNC, Georgetown and Washington University in St. Louis. As a recent college grad, former teacher and soon-to-be graduate student, 2U’s approach seems to be the future of education and is already disrupting the way in which many universities think about education technology.

Stamped: Stamped is already becoming popular in several of my various friend circles. Now acquired by Yahoo, Stamp is a mobile app that lets you recommend and share your favorite things like: movies, books and restaurants. One of the best features is the ability to receive recommendations from friends and other reliable sources (rather than anonymous online reviews). The ideas behind this could disrupt the way online reviews and recommendation systems currently operate.

Looking Back at 2012: The Big Winners

Looking back at 2012, there have been a number of startups that have stepped it up. This is my list of 5 big winners from 2012, many of which started off the year as obscure little companies but have since become household names.

Spotify: Music streaming service that provides access to millions of songs. Several things set Spotify apart from its competitors (like Pandora). First, the service is consistently good across a range of platforms including: computer, mobile, tablet and home entertainment system. It is even possible to download songs for when you are offline. Second, Spotify connects you with facebook friends allowing music selection and discovery to be a more social process. Third, Spotify offers different services and prices for different segments of customers allowing flexibility in the choice of a product line. Importantly, I have also found the search feature on Spotify to be far quicker and more accurate than that of its competitors.

Instagram: Since its acquisition by facebook, Instagram continues to be (in my mind) the best photo-sharing application out there. Instagram actually makes taking and sharing photos fun because it is easy to 1) take the photos 2) transform the photos into “works of art” and then 3) share the photos across a range of social platforms including facebook, twitter and tumblr. Instagram is also a case study on how to do mobile the right way.

Flipboard: Flipboard is one of my favorite news source apps because it lets me to read about things that I care about the most. The application aggregates news stories from various sources (everything from major news publications to twitter) and then provides a customized magazine-style interface from which to consume that news. I love how the app allows you to feel like you’re actually reading a physical magazine through its primary design feature—the ability to “flip” to the next page. The app also makes the internet-less subway ride to work everyday more enjoyable.

Pinterest: Pinterest is a fun way to view and share photos and videos from around the Internet in a social setting. The ability to share content via online pinboards also allows people to show their creativity and originality. I run an education-focused nonprofit on the side and while writing entries on our blog is certainly useful, I find collections of photos to be far more effective in communicating the vision behind what we’re doing.

Shazam: Shazam is a great tool for discovering new music. All you have to do is hold your phone up to the music or TV source and within seconds you’ll get more information about the song that is playing, like the name of the track and artist, streaming lyrics, videos and special offers. It’s a really great way to learn about new music, and I use the app all the time while on the go.

So You’ve Got An Idea

From speaking to friends and other students on campus, I’ve been impressed by the growing number of people who are interested in becoming entrepreneurs. The days of landing that safe and secure job at IBM are gone as more people are willing to enter the riskier but more exciting arena of entrepreneurship. Yet of all the people I’ve spoken with, only a select few have actually tinkered with starting a business. Still fewer have run a successful enterprise for a sizeable period of time.

I think that one of the hardest things for students who want to become entrepreneurs is moving from a concept or idea towards the creation of a startup. Often, students have a good idea and dream of the possibilities of that idea. But the excitement and passion behind the idea is never utilized to turn the idea into reality. While it’s true that the road to becoming an entrepreneur is generally long and narrow, I’m surprised that more people don’t give it a try.

At eClips, we have a lot of video clips devoted to educating entrepreneurs on what they can do to take that active step towards starting a business. Below is a list of 5 things you can do to get started today.

1) Figure out exactly why you want to become an entrepreneur. Do you dream of becoming rich? Do you want to have the independence of being your own boss? Do you simply enjoy innovating? Get your motives nailed down.

2) Completely map out your idea. What is your product or service? Who is your target market? How will you generate revenue? What is your business model?

3) Surround yourself with people who will add real value to your business. This includes finding a solid management team and an experienced board of advisors. This need not be very formal per say, but having others to help you out will broaden your pool of knowledge and make your chances of success higher.

4) Market your product and service to as many people as possible. This includes current clients, possible clients and even investors. You need not spend a lot of money here if you are creative and resourceful. What really matters is that you get your name out there.

5) Be persistent and take risks. It’s not always going to be easy, and you’re going to have to sacrifice a lot. But if you want to win big; you need to play big.

Hopefully, this is enough to get started. Once again eClips has tons of relevant information, so don’t hesitate to browse the site.

On a separate note, don’t forget that this weekend is Entrepreneruship @ Cornell Celebration. This is a great opportunity to network with other entrepreneurs or just learn something new.