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How to break into Silicon Valley as an outsider
Domm Holland, co-founder and CEO of e-commerce startup Fast, appears to be living a founder’s dream.
His big idea came from a small moment in his real life. Holland watched as his wife’s grandmother tried to order groceries, but she had forgotten her password and wasn’t able to complete the transaction.
“I just remember thinking it was preposterous,” Holland said. “It defied belief that some arbitrary string of text was a blocker to commerce.”
So he built a prototype of a passwordless authentication system where users would fill out their information once and would never need to do so again. Within 24 hours, tens of thousands of people had used it.
Nothing beats building human networks. That’s the way that you’re going to get this done in terms of fundraising.
Shoppers weren’t the only ones on board with this idea. In less than two years, Holland has raised $124 million in three rounds of fundraising, bringing on partners like Index Ventures and Stripe.
Although the success of Fast’s one-click checkout product has been speedy, it hasn’t been effortless.
For one thing, Holland is Australian, which means he started out as a Silicon Valley outsider. When he arrived in the U.S. in the summer of 2019, he had exactly one Bay Area contact in his phone. He built his network from the ground up, a strategic process he credits to one thing: hard work.
On an episode of the “How I Raised It” podcast, Holland talks about how he built his network, why it’s important — not just for fundraising but for building the entire business — and how to avoid the mistakes he sees new founders make.
Reach out with relevance
Holland’s primary strategy in building networks sounds like an obvious one — reach out to relevant people.
“When I first got to the States, I wanted to build networks,” Holland said, “but I didn’t really know anyone here in the Bay Area. So I spent a lot of time reaching out to relevant people — people working in payments, people working in technology, people working in identity authentication — just really relevant people in the space working in Big Tech who were building large-scale networks.”
One of the people Holland connected with was Allison Barr Allen, then the head of global product operations at Uber. Barr Allen managed her own angel investment fund, but Holland wasn’t actually looking for money when he reached out to her. He was much more interested in her perspective as the leader of an enormous financial services operation.
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Analytics as a service: Why more enterprises should consider outsourcing
With an increasing number of enterprise systems, growing teams, a rising proliferation of the web and multiple digital initiatives, companies of all sizes are creating loads of data every day. This data contains excellent business insights and immense opportunities, but it has become impossible for companies to derive actionable insights from this data consistently due to its sheer volume.
According to Verified Market Research, the analytics-as-a-service (AaaS) market is expected to grow to $101.29 billion by 2026. Organizations that have not started on their analytics journey or are spending scarce data engineer resources to resolve issues with analytics implementations are not identifying actionable data insights. Through AaaS, managed services providers (MSPs) can help organizations get started on their analytics journey immediately without extravagant capital investment.
MSPs can take ownership of the company’s immediate data analytics needs, resolve ongoing challenges and integrate new data sources to manage dashboard visualizations, reporting and predictive modeling — enabling companies to make data-driven decisions every day.
AaaS could come bundled with multiple business-intelligence-related services. Primarily, the service includes (1) services for data warehouses; (2) services for visualizations and reports; and (3) services for predictive analytics, artificial intelligence (AI) and machine learning (ML). When a company partners with an MSP for analytics as a service, organizations are able to tap into business intelligence easily, instantly and at a lower cost of ownership than doing it in-house. This empowers the enterprise to focus on delivering better customer experiences, be unencumbered with decision-making and build data-driven strategies.
Organizations that have not started on their analytics journey or are spending scarce data engineer resources to resolve issues with analytics implementations are not identifying actionable data insights.
In today’s world, where customers value experiences over transactions, AaaS helps businesses dig deeper into their psyche and tap insights to build long-term winning strategies. It also enables enterprises to forecast and predict business trends by looking at their data and allows employees at every level to make informed decisions.
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The health data transparency movement is birthing a new generation of startups
In the early 2000s, Jeff Bezos gave a seminal TED Talk titled “The Electricity Metaphor for the Web’s Future.” In it, he argued that the internet will enable innovation on the same scale that electricity did.
We are at a similar inflection point in healthcare, with the recent movement toward data transparency birthing a new generation of innovation and startups.
Those who follow the space closely may have noticed that there are twin struggles taking place: a push for more transparency on provider and payer data, including anonymous patient data, and another for strict privacy protection for personal patient data. What’s the main difference?
This sector is still somewhat nascent — we are in the first wave of innovation, with much more to come.
Anonymized data is much more freely available, while personal data is being locked even tighter (as it should be) due to regulations like GDPR, CCPA and their equivalents around the world.
The former trend is enabling a host of new vendors and services that will ultimately make healthcare better and more transparent for all of us.
These new companies could not have existed five years ago. The Affordable Care Act was the first step toward making anonymized data more available. It required healthcare institutions (such as hospitals and healthcare systems) to publish data on costs and outcomes. This included the release of detailed data on providers.
Later legislation required biotech and pharma companies to disclose monies paid to research partners. And every physician in the U.S. is now required to be in the National Practitioner Identifier (NPI), a comprehensive public database of providers.
All of this allowed the creation of new types of companies that give both patients and providers more control over their data. Here are some key examples of how.
Allowing patients to access all their own health data in one place
This is a key capability of patients’ newly found access to health data. Think of how often, as a patient, providers aren’t aware of treatment or a test you’ve had elsewhere. Often you end up repeating a test because a provider doesn’t have a record of a test conducted elsewhere.
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Healthcare is the next wave of data liberation
Why can we see all our bank, credit card and brokerage data on our phones instantaneously in one app, yet walk into a doctor’s office blind to our healthcare records, diagnoses and prescriptions? Our health status should be as accessible as our checking account balance.
The liberation of financial data enabled by startups like Plaid is beginning to happen with healthcare data, which will have an even more profound impact on society; it will save and extend lives. This accessibility is quickly approaching.
As early investors in Quovo and PatientPing, two pioneering companies in financial and healthcare data, respectively, it’s evident to us the winners of the healthcare data transformation will look different than they did with financial data, even as we head toward a similar end state.
For over a decade, government agencies and consumers have pushed for this liberation.
This push for greater data liquidity coincides with demand from consumers for better information about cost and quality.
In 2009, the Health Information Technology for Economic and Clinical Health Act (HITECH) gave the first big industry push, catalyzing a wave of digitization through electronic health records (EHR). Today, over 98% of medical records are digitized. This market is dominated by multibillion‐dollar vendors like Epic, Cerner and Allscripts, which control 70% of patient records. However, these giant vendors have yet to make these records easily accessible.
A second wave of regulation has begun to address the problem of trapped data to make EHRs more interoperable and valuable. Agencies within the Department of Health and Human Services have mandated data sharing among payers and providers using a common standard, the Fast Healthcare Interoperability Resources (FHIR) protocol.
Image Credits: F-Prime Capital
This push for greater data liquidity coincides with demand from consumers for better information about cost and quality. Employers have been steadily shifting a greater share of healthcare expenses to consumers through high-deductible health plans — from 30% in 2012 to 51% in 2018. As consumers pay for more of the costs, they care more about the value of different health options, yet are unable to make those decisions without real-time access to cost and clinical data.
Image Credits: F-Prime Capital
Tech startups have an opportunity to ease the transmission of healthcare data and address the push of regulation and consumer demands. The lessons from fintech make it tempting to assume that a Plaid for healthcare data would be enough to address all of the challenges within healthcare, but it is not the right model. Plaid’s aggregator model benefited from a relatively high concentration of banks, a limited number of data types and low barriers to data access.
By contrast, healthcare data is scattered across tens of thousands of healthcare providers, stored in multiple data formats and systems per provider, and is rarely accessed by patients directly. Many people log into their bank apps frequently, but few log into their healthcare provider portals, if they even know one exists.
HIPPA regulations and strict patient consent requirements also meaningfully increase friction to data access and sharing. Financial data serves mostly one-to-one use cases, while healthcare data is a many-to-many problem. A single patient’s data is spread across many doctors and facilities and is needed by just as many for care coordination.
Because of this landscape, winning healthcare technology companies will need to build around four propositions:
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Fund managers can leverage ESG-related data to generate insights
Almost two centuries ago, gold prospectors in California set off one of the greatest rushes for wealth in history. Proponents of socially conscious investing claim fund managers will start a similar stampede when they discover that environmental, social and governance (ESG) insights can yield treasure in the form of alternative data that promise big payoffs — if only they knew how to mine it.
First, let’s be clear: ESG is not on the fringe.
There may be some truth to that line of thinking if you take some of the rhetoric and advertising out of the equation.
First, let’s be clear: ESG is not on the fringe. The European Union has implemented new financial regulations via the Sustainable Finance Disclosure Regulation (SFDR). These improve ESG disclosures and considerations and help to direct capital toward products and companies that benefit people and the planet. As we write, the U.S. Securities and Exchange Commission is also considering drafting and implementation of ESG-related regulations.
Whether enacted or currently under consideration, these rules encourage fund managers to integrate sustainability risks into their business processes, report on them publicly, stamp out greenwashing, and promote transparency and knowledge among investors. Accordingly, it will become easier to compare firms’ sustainability efforts, too, allowing stakeholders from all corners to make more informed decisions.
Incorporating ESG factors into investment strategies is not new, of course. The world’s largest asset managers have been practicing it for years. According to the Governance & Accountability Institute, 90% of companies listed on the S&P 500 now produce sustainability reports, an increase of 70 percentage points from more than a decade ago.
Yet some are still groaning about adopting an ESG investing mindset; they see ESG as a nuisance that detracts from their mission of earning high returns. But could this mindset mean they are missing important opportunities?
Don’t wait
Waiting for new mandatory ESG reporting and compliance framework standards in the U.S. puts Americas-focused managers at a significant disadvantage. Fund managers can start gaining insights today from alternative data originating in ESG-related data stemming from climate change, natural disasters, harassment and discrimination lawsuits, and other events and information that can be mined.
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Founders who don’t properly vet VCs set up both parties for failure
There’s a disconnect between reality and the added value investors are promising entrepreneurs. Three in five founders who were promised added value by their VCs felt duped by their negative experience.
While this feels like a letdown by investors, in reality, it shows fault on both sides. Due diligence isn’t a one-way street, and founders must do their homework to make sure they’re not jumping into deals with VCs who are only paying lip service to their value-add.
Looking into an investor’s past, reputation and connections isn’t about finding the perfect VC, it’s about knowing what shaking certain hands will entail — and either being ready for it or walking away.
Entrepreneurs are increasingly demanding more than a blank check: They want mentorship, product understanding and emotional support, as well as industry connections and expertise. If VCs can’t bring that value, founders now have plenty of other funding routes to choose from, like crowdfunding, angel syndicates, tokenization and SPACs.
To stay competitive, VCs have to at least advertise that they have more than deep pockets. But what if it stops there? Founders have to know exactly what they’re looking for in a VC, which means looking past the front page and vetting their investors.
The ideal investor for modern startups is an operator VC — someone who was a founder or operator at a company before becoming an investor. But even then, ticking boxes isn’t enough to ensure the investor won’t come with their own challenges, like being too hands-on or less strategically minded.
Looking into an investor’s past, reputation and connections isn’t about finding the perfect VC, it’s about knowing what shaking certain hands will entail — and either being ready for it or walking away. There is no single solution to this issue, but here are my recommendations to founders seeking a successful investor relationship in 2021.
Have a guiding framework
No founder-investor relationship can survive misalignment. Because you share responsibility on so many processes, both parties have to be on the same page. So before you even start fundraising, nail down the expectations you need your future investor to meet. What do you need the most? What does your dream investor look like?
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2021 should be a banner year for biotech startups that make smart choices early
Last year was a record 12 months for venture-backed biotech and pharma companies, with deal activity rising to $28.5 billion from $17.8 billion in 2019. As vaccines roll out, drug development pipelines return to normal, and next-generation therapies continue to hold investor interest, 2021 is on pace to be another blockbuster year.
The median step up in valuations from seed to Series A is now 2x, higher than in all later rounds. As a result, biotech startups will continue to attract more investment at earlier stages from a larger, more diverse pool of venture capitalists.
This may also change the nature of biotech founders themselves: As a blog post from Y Combinator suggests, these founders are trending younger and perhaps less willing to cede control to VCs and hired executives than they might have in years past (i.e., via the “venture creation” model so predominant among early-stage biotech companies).
Founders are some of the most creative people out there, but legal documentation should be anything but.
As longtime members of the biotech startup community — as executives, entrepreneurs, advisors and legal counsel — we’ve seen our fair share of founder missteps early in the fundraising journey result in severe consequences.
In this exciting moment, when younger founders will likely receive more attention, capital and control than ever, it’s crucial to avoid certain pitfalls.
Clarity trumps creativity
Founders are some of the most creative people out there, but legal documentation should be anything but. Keep it as simple and clear as possible. That means using National Venture Capital Corporation documents that everyone knows and understands, as well as keeping organized documentation for employee intellectual property (IP) assignment and NDAs, option grants, independent contractor agreements, tax documents and other key contracts and paperwork.
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To sell or not to sell: Lessons from a bootstrapped CEO
The clock begins ticking on a startup the day the doors open. Regardless of a young company’s struggles or success, sooner or later the question of when, how or whether to sell the enterprise presents itself. It’s possibly the biggest question an entrepreneur will face.
For founders who self-funded (bootstrapped) their startup, a boardroom full of additional factors come into play. Some are the same as for investor-funded firms, but many are unique.
Put happiness at the center of the decision, and let your intuition — the instincts that made you the person you are today — be your guide.
After 18 years of bootstrapping a BI software firm into a business that now serves 28,000 companies and three million users in 75 countries, here’s what I’ve learned about myself, my company, about entrepreneurship and about when to grab for that brass ring.
Profitable or bust
Starting a software company 7,900 miles southwest of Silicon Valley requires some forethought and not a small amount of crazy. When we opened, it didn’t occur to us that one could have an idea and then go knock on someone’s door and ask for money.
Bootstrapping forced us to be a bit more creative about how we would go about building our company. In the early days, it was a distraction to growth, because we were doing other revenue-generating activities like consulting, development work, whatever we could find to keep ourselves afloat while we built Yellowfin. It meant we couldn’t be 100% focused on our idea.
However, it also meant we had to generate income from our new company from Day One — something funded companies don’t have to do. We never got into the mindset that it was okay to burn lots of cash and then cross our fingers and hope that it worked.
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5 emerging use cases for productivity infrastructure in 2021
When the world flipped upside down last year, nearly every company in every industry was forced to implement a remote workforce in just a matter of days — they had to scramble to ensure employees had the right tools in place and customers felt little to no impact. While companies initially adopted solutions for employee safety, rapid response and short-term air cover, they are now shifting their focus to long-term, strategic investments that empower growth and streamline operations.
As a result, categories that make up productivity infrastructure — cloud communications services, API platforms, low-code development tools, business process automation and AI software development kits — grew exponentially in 2020. This growth was boosted by an increasing number of companies prioritizing tools that support communication, collaboration, transparency and a seamless end-to-end workflow.
Productivity infrastructure is on the rise and will continue to be front and center as companies evaluate what their future of work entails and how to maintain productivity, rapid software development and innovation with distributed teams.
According to McKinsey & Company, the pandemic accelerated the share of digitally enabled products by seven years, and “the digitization of customer and supply-chain interactions and of internal operations by three to four years.” As demand continues to grow, companies are taking advantage of the benefits productivity infrastructure brings to their organization both internally and externally, especially as many determine the future of their work.
Automate workflows and mitigate risk
Developers rely on platforms throughout the software development process to connect data, process it, increase their go-to-market velocity and stay ahead of the competition with new and existing products. They have enormous amounts of end-user data on hand, and productivity infrastructure can remove barriers to access, integrate and leverage this data to automate the workflow.
Access to rich interaction data combined with pre-trained ML models, automated workflows and configurable front-end components enables developers to drastically shorten development cycles. Through enhanced data protection and compliance, productivity infrastructure safeguards critical data and mitigates risk while reducing time to ROI.
As the post-pandemic workplace begins to take shape, how can productivity infrastructure support enterprises where they are now and where they need to go next?
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4 ways martech will shift in 2021
The tidal wave of growth is upon us — an unprecedented economic boom that will manifest later this year, bringing significant investments, acquisitions and customer growth. But most tech companies and startups are not adequately prepared to capitalize on the opportunity that lies ahead.
Here’s how marketing in tech will shift — and what you need to know to reach more customers and accelerate growth in 2021.
First and foremost, differentiation is going to be imperative. It’s already hard enough to stand out and get noticed, and it’s about to get much more difficult as new companies emerge and investments and budgets balloon in the latter half of the year. Virtually all major companies are increasing budgets to pre-pandemic levels, but will delay those investments until the second half of the year. This will result in an increased intensity of competition that will drown out any undifferentiated players.
The second half of 2021 will bring incredible growth, the likes of which we haven’t seen in a long time.
Additionally, tech companies need to be mindful not to ignore the most important part of the ecosystem: people. Technology will only take you so far, and it’s not going to be enough to survive the competition. Marketing is about people, including your customers, team, partners, investors and the broader community.
Understanding who your people are and how you can use their help to build a strong foundation and drive exponential growth is essential.
Tactically, the most successful tech companies will embrace video and experimentation in their marketing — two components that will catapult them ahead of the competition.
Ignoring these predictions, backed by empirical evidence, will be detrimental and devastating. Fasten your seatbelts: 2021 is going to be a turbocharged year of growth opportunities for marketing in tech.
Differentiation is crucial
The explosion of tech companies and startups seeking to be the next big thing isn’t over yet. However, many of them are indistinguishable from each other and lack a compelling value proposition. Just one look at the websites of new and existing tech companies will reveal a proliferation of buzzwords and conceptual illustrations, leaving them all looking and sounding alike.
The tech companies that succeed are those that embrace one of the fundamentals of effective marketing — positioning.
In the ’80s, Al Ries and Jack Trout published “Positioning: The Battle For Your Mind” and coined the term, which documented the best-known approach to standing out in a noisy marketplace. As the market heats up, companies will realize the need to sharpen their positioning and dial in their focus to break through the noise.
To get attention and build traction, companies need to establish a position they can own. The mashup method — “Netflix but for coding lessons” — is not real positioning; it’s simply a lazy gimmick.
It is imperative to identify who your ideal customer is and not just who could use your product. Focusing on a segment of the market rather than the whole is, perhaps counterintuitively, the most effective approach to capturing the larger market.
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