364. The FTX Fallout, What’s Next for Crypto and Web 3.0, and Lessons From Backing 13 IPOs (Jai Das)

Jai Das of Sapphire Ventures joins Nick to discuss The FTX Fallout, What’s Next for Crypto and Web 3.0, and Lessons From Backing 13 IPOs. In this episode we cover:

Playing Defense and Offense in a Downturn
Predictions for Crypto and Web 3.0
Indicators of a Future IPO
And more!

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Transcribed with AI:

0:00
Jai Das joins us today from Palo Alto, California. Jai is a Co-Founder, Partner, and President at Sapphire Ventures where, he focuses on growth-stage investing across enterprise software and blockchain technologies. Jai has a prolific track record with 14 investments that have IPO-ed, including Box, Five9, and J. Frog to name a few. Prior to co-founding Sapphire, Jai began his career as a developer and eventually moved to Intel Capital where he began his investing career. Jai, welcome to the show.
0:33
Thanks for having me, Nate.
0:34
You bet. Can you walk us through your background and give us your path of venture?
0:40
Yeah, I although I’ve been in venture for almost two decades, now, I kind of think of myself as a VC by chance. That was not a career that I wanted to take. So I grew up in India, I came to the US from undergrad, I you know, and ended up joining after our graduation went to Oracle, to be a developer, and during the.com, boom, so you know, I had a company that I sold off and went to business school, and you know, out of business school, I kind of thought that I would come out and start another company. And that was the reason I went there. I just wanted to take two years, and learn some more about economics, mostly about behavioral economics, right. But while I was at booth, I ended up actually doing due diligence for a small brokerage, and kind of a venture shop called first analysis. And that’s still around. And you know, and that’s where I kind of got interested in investing in startups and seeing how startups kind of develop and build. And, you know, it was for somebody coming out of booth at that time, you know, this is like, 1999, it is really hard to, it used to be hard to get a job in venture, right, it was still not not the kind of industry where it’s right now, it was much more Tiki, you know, and you had to know people to get into venture. And I was lucky enough to join Intel Capital. And I was at Intel Capital for the first two years, and really spent my time actually learning how to be an investor in some way that Intel’s dime, because I invested during the.com bubble, where you know, things that I would invest and, you know, in, like six months later, it was like 5 billion $6 billion public company, I never thought that things would be very easy. And just like a lot of people are probably going through now, during who started investing the last two or three years, you know, every time you invested, you thought, you know, I saw the next round would be an up round. And you know, they would raise money like, two, three times a year. And you know, you would go off and be a public company. But that all changed, you know, after the bust happened. And that’s where I probably learned the most about being a VC during the first.com bust, where, you know, I had to go in and try to merge companies, I actually had to shut down a company where you had to pay off all the liabilities, like, you know, vacations and unpaid salaries and things like that, and, you know, sell out the assets to do an IT firm, things like that. Those are the days and when you realize that, look, you look back and you see a lot of people’s dreams were kind of, you know, washed away, right. But the industry recovered, right, I remember people saying that venture was dead, nothing could happen. And then it went on and you know, went through the whole boom, and you know, it took about four or five years to recover. And then, you know, we had another downturn in 2007 2008. And at that time, I had actually joined SAP ventures, which was, at that time, corporate arm of SAP, along with my co founder, Nino. And we had joined to kind of spin off the company and make it a platform. And we did that in 2011, after four years at SAP, and, you know, started with like, three 50 million in aum. And that was our first fund. And we were lucky enough to have a lot of investments that ended up doing really well, like, we were in LinkedIn, we were in exact target, but we were in, you know, Ultrix, MuleSoft, all of these were in fund one. And after that, you know, we ended up raising another, you know, 10 billion or so, over the next 10 years in our with the latest funding a $1.8 billion fund. So that has been the journey and you know, along the way, you know, it has never been the goals to be like, Okay, I want to be an investor. I think it has always been my goal to be kind of along with the founder. or help companies and entrepreneurs kind of build and scale and become companies of consequence. And for me, the fun part and why I still keep doing this is the whole product development and working with entrepreneurs, right? Figuring out the product, you know, figuring out the go to market strategy, those are the fun and challenging stuff, that never gets boring. And that is what you focus on, instead of, you know, and the returns, I think, when we started, we never thought that our firm would be as successful as it is now. Right. You know, I still remember when we raised our first billion dollar fund, we were like, wow, you know, we didn’t think we could get there. Right. And now we have ambitions to raise, you know, larger funds and you know, deploy more capital and the Global Fund. Yeah,
5:51
Well, congrats on all the success. I mean, for any of those in the ecosystem, they know the name Sapphire very well. And you touched on this a little bit, but in your own words, if you could describe the thesis that you guys have at Sapphire, that’d be great.
6:05
Yeah. So you know, when we started out, we thought that we would be a generalist fund, right. And quickly, we realized that, you know, we have to be specialized to be successful. In our new art journalized fund, one of the things that you run up against is how do you help your portfolio companies, right, so we invested in consumer companies, we invested in consumer companies in India and fintech companies in India. But what we realized was that helping those companies grow and scale is extremely hard. One, you don’t always know the domain. And you know, and you also cannot provide a lot of services that can help these companies grow and scale. So we in maybe, seven, eight years ago, decided to focus solely on enterprise b2b software, right. And even there, we decided that look, we are much better at helping companies scale and grow once they have had product market fit. So focus on you know, series later is B, B’s and cvcs. And beyond, where companies had at least 10 to 12 million in ARR. And you know, they have a repeatable sales motion, where we can come in, and give them capital to scale. And, you know, also help them with a lot of the services that we have, like ours, the XO network, which helps customers Talent Network, you know, for board members and management team members in an operating partner that can help people scale. And so that has been the focus now. So it’s three geography, the focus on US, Europe and Israel. And you know, anything in enterprise software all the way from infrastructure, all the way to application.
7:46
You’re one of the few recent guests that has seen multiple downturns that you talked about how you started investing around the.com bubble. And I believe this is the third time you’ve navigated your companies through a downturn. What is your biggest piece of advice for founders on how to navigate these turbulent times?
8:04
Yeah. So first and foremost, I think, number one, everybody keeps talking about that, hey, cash is king, if you don’t have cash, you don’t if you’re not able to meet payroll, you know, you’re not going to have a company. So that is the number one thing is that when you are going through a downturn, preserving cash is going to be number one, right? And people are doing that. I think the second thing that you have to also realize is that you know, in this downturn and trying to get the cash valuation doesn’t really matter, right? If you, you know, if you’re valued at a billion, but it’s what less, you know, it doesn’t really matter, even if you own like 10 20%. So a lot of entrepreneurs get caught up in the in the ownership game, where they’re saying, Okay, I’ll excuse me, I own 10% of some company. Now, if I get, you know, a new investor coming and they give me a down round, you know, I’m going to get 8%. And, you know, my answer to them is I look 8% of zero or 10% of 8%, or something is better than 10% on zero, right? So I think that is another thing that entrepreneurs have to remember is that, you know, down rounds can be bad, but I’ve had companies like both Infinera and Apogee went through down rounds, and they all ended up becoming really successful companies, right? So those are not really bad things, but getting the cash in the bank to keep the company going is more important than that. And then the last thing I would say is that, you know, even in these downturns, you can’t be only defense oriented, you kind of have to be offense oriented, where, you know, when there’s a downturn, you know, maybe your product strategy was all haphazard, because, you know, so many people were giving you money, and you know, you were building all of these things, which actually didn’t make any sense. So focus See on the product strategy focusing on how you’re going to increase the cross sell upsell, how you’re going to go into adjacent market to increase your terms. And then kind of executing on that, right, you can do a lot of aqua hires, you can do, you know, by, you know, get talent a lot better nowadays, because of the downturn. So, so ultimately, all it gets back to is that if you have the cash, you can do all of this. And so having that cash is probably the number one thing you should do.
10:29
Got it? Where are you advising portfolio companies to be in in terms of number of months, number of months for runway?
10:39
It depends on companies, right? So there are companies which are kind of struggling growing at 15 20%. For them, I’m really saying that, hey, look, you gotta get to cash flow, breakeven in these numbers, because you know, at 15 20% growth, you’re probably going to have a really hard time raising money. But if the companies are growing over, you know, 50 60%, then I’m telling them, Hey, grow, you know, patiently but, you know, have at least 24 months of runway, because I think you probably can raise money again, end of next year, more likely, middle of 2024, right? q1 q2, but But you know, also, I’m also advocating or advising companies to be much more efficient. Because if you look, last year, everybody had so much capital, that nobody paid attention to efficiency metrics. And every company I know, is going through this process and saying, Hey, we over hired. And, you know, we just hired the wrong type of employees that didn’t really fit. It’s not like the employees are not not good or anything with them. But they’re just not a fit with what we are trying to build, or what we are trying to sell. And just getting rid of all of these people that people have over hired, is going to make you much more efficient. So yeah, having people take a really, really hard look at employees is one other areas where, you know, I’m asking people to focus on,
12:09
you know, you talked about advising companies on whether to play offense or, you know, maybe bolster the war chest and add some capital, but are there any other factors that are going to set apart startups that will rise above and prevail during these times versus those that are going to fail?
12:29
Yeah, you know, I think at the end of the day, startups are very much driven by their CEOs and the grit and determination of the CEOs, right. There’ll be some times when people will say, Hey, look at this is just not worth it. I’m just going to sell the company, you know, and you know, there’s a math to be made, right? If you own 10% of the company, and, you know, you get 300 million 400 million for it, that’s still a big chunk of capital for you. So there is going to be some people, I think, who will take that route, and basically tell the company saying, hey, you know, I get 25 30 million out of this, I’m good. I’m, you know, if they haven’t raised too much money, I think people who are going to be successful are the ones who have the grit and the determination, first and foremost, who kind of say, okay, you know, what, I’m going to stay for the long, long run, and go for the home run, you know, and create a big company. And I think, second, they have to have a great management team around them, who can really take advantage of the downturn, because during a downturn, you know, being nimble, and figuring out, okay, who is not doing well, and which areas that we can get into quickly, and, you know, grab initiative, those are all the things that a great management team can be nimble and do. So if they have that, and they have the grit and determination, I think those are going to be the ones. But when you come out of it, you’re really strong. In two, three years.
14:02
Yeah. I’m sure you have a much better pulse on this than I do. From macro perspective. I’m curious what the next six to 12 months looks like from your point of view.
14:14
I wish I knew, because then, you know, I would be probably playing the stock market. I don’t know when the macro trends are going to change. I can’t forecast that. But I think our general Todd is that from a multiples perspective, I don’t think we are going ever going to go back to this I shouldn’t say ever, but you know, in the next three, four years, go back to the kind of revenue multiples for us to have a you know, in 21 And you know, end of 2020 Right? I think the revenue multiples are probably going back to four great companies probably eight to 10 times forward revenue multiples, you know, and then for people who are you know, growing less than 35% or Then go back to like, you know, three, four times or four, you know, five times maybe forward revenue multiples. And I think that is where it’s going to stay. I don’t think you know, and yeah, sure, as interest rates go back to zero at some point, maybe they come back, any go up a little bit more in the 12 15%. But well study 15x. But I think that is one thing that we are projecting, and what we are basing our investments saying that, you know, when these companies exit, the really good ones are going to exit at eight to 10 times forward multiple, and kind of work backwards to see what we can pay, and then also how long it will take us to get, say, a two and a half to 3x kind of return. Right. But that is the only thing I can say with surety that going to happen. I don’t know that from the macro standpoint, it is really hard to predict, because at some some say the ways that you know, there is still high, like look at the amount of the job report and everything seems to everything seems to be going well. But if you look in tech, I think the number of layoffs has been just going through the roof. Right? Somebody reported that November already had the highest number of layoffs, even more than April of 2020. And you know, it hasn’t, we haven’t seen the end of November yet. So I think in our small current the tech universe, there is already a big kind of recession or a slowdown going on in the greater economy. You know, it’s hard to say, what’s going to happen. But in pockets, you see the slowdown in housing, you know, the slowdown, you know, in different parts of the of the segment, and we’re seeing that in our portfolio companies, right, there are a lot more companies that missed in the q3 versus q2. And I think there’s gonna be a lot more companies as a percentage wise in our portfolio that will probably Miss Miss q4, you know, and then everybody, just like the public companies are going to reset their their 2023 numbers.
17:07
Last question before moving on, what advice would you have for emerging managers fundraising during the next six to 12 months?
17:15
Yeah, I think you have to be patient. I think, you know, one could not give up all because you’re probably going to have gets more frogs than you did before. But But look, I think in venture, I think at the end of the day, tenacity always wins. And II know doesn’t matter if you’re a CEO or an emerging manager. And so be it being tenacious and kind of being having the focus on keeping on going. I know, and spending a lot of time fundraising, I think LPS in general, you know, are kind of all inverted right now. Right? They have too much allocated to venture, they’re not getting enough capital back from the existing managers to kind of fund their commitments for next year. So you’ll see a lot of LTE is kind of, you know, saying that we are not doing anything next year. But that’s why you have to be patient and kind of see that your fundraise is probably going to take longer than what it was in the last few years. Yeah.
18:19
It also seems that LPs are prioritizing funds that have true DPI over TD, Have you have you noticed this as well? And I’d be curious to get your, your insight on on that.
18:33
Yeah, no, absolutely. You know, because look, DPI is what now matters, right? In some ways that people have all made these commitments and fund managers had come back like every 12 months, right, instead of even 18 months. So all of these fund managers or sorry, LPs have to commit to these funds that they have come in, you know, given they asked for the capital call, so they are looking for dpi. And I wouldn’t be surprised if some of these LPS actually sell their stake in the secondary market to get more liquid. Because, you know, they have made commitments. So they’re going to look at some of the managers that they’re not going to commit in in upcoming funding cycles. And they’re probably going to try to, you know, sell off their stakes, there’ll be stakes in the secondary market. So I think there’s going to be a lot of secondary sales of LP stakes going on next year.
19:29
Interesting. Yeah, I’d like to talk about a different area that I would say is as topical as a macro economic environment, and that’s crypto and what three, so no crypto web three blockchain it. Each is a fairly broad term, in my opinion, overall, what areas have true enterprise value and what areas are overhyped and you’re actively avoiding?
19:56
So you know, we were always looking at kind of the infrastructure for web three and blockchain, right, so we then actively invest in a lot of, you know, the lending companies, right, which are all having problems right now. You know, we were not smart enough to say that we knew it beforehand. But we also passed on investing in FTX. Because, you know, we’ve never invested at such high valuations, or, you know, round, which was not being led by a firm that we knew. So in general, you know, we didn’t invest in a lot of the lending kind of infrastructure like block phi, you know, and things like that that came by our desk. But I do think the whole blockchain and crypto and web three kind of play into each other, right. So first and foremost, the thing about blockchain is that you have these smart contracts. And one of the big things that has happened up till now in the protocol side, you know, internet protocols are gone. So it didn’t really have any logic and all the application and the logic was all hidden in application code right above when, which was always opaque that was never kind of transparent, and for everybody to see. And that is what the fundamental thing that is different with Blockchain is that actual logic can be pushed down into the protocol as a smart contract where everybody can see and interoperate, right, where you don’t always need to have a trusted party for a business network to form because the application is already you know, the application logic is out in the open. And I think those kinds of business networks where you needed an intermediary, trusted, intermediary may be financial, it can be like, you know, pharmaceutical kind of Consortium, or anything over time, you will not need it, because application, is that right? So that’s number one. On the infrastructure side, I think, you know, this distributed kind of computing that web three is kind of advocating and putting out in front of us, is actually something that hasn’t been done before. Like, if you look at it, cerium. Right, that is a infrastructure that is open source, you know, that is the proof of stake that happened was probably the largest open source event that has happened, right, that went off smoothly. And that allows you to build these applications, which are distributed and secure. And that, you know, nobody really has control over it. Right. You know, it’s like, nobody kind of builds like AWS or Google controls what that application is doing doing. And it’s kind of distributed across all the validators and and the node providers, right. But that is the other thing. And then the token stuff, you know, it hasn’t really worked yet. But if you look at it, there is a possibility of using tokens as a way to reward people who are building stuff for you, right and open source up till now, when developers built applicate built code, or wrote code, they never got to monetize it, unless they joined the company that was built around it. And somehow, you know, that company went public, and they got money out of that right? Tokens and enables you to reward people who are helping you build something, and overtime, potentially also incentivize users to use that platform. Now, it has been just like anything else, like in the internet days, people misused, you know, all the stuff that was going on. Similarly, tokens had been misused in the way that, you know, people were given tokens that got traded, you know, they sold out their tokens and moved on to the next protocol. But I think over time, you will see these tokens being used in a much more effective way to get developers to help you build the platform, you know, monetize and reward the community, and overtime also reward the user.
23:57
What do you think is going to prompt that? I mean, we just experienced the collapse of FTX. And there’s a call for regulation, in your opinion, what needs to happen for these technologies to reach their full potential?
24:08
So I definitely in side of having more regulations, I think I’ll be called by a narc. By all that crypto enthusiasts, but But you know, look, I think in some ways, having regulations is actually a good thing. You know, if it’s done properly, and I know, once regulators come in, they will probably flip over in a big way. And there’s a pendulum that always swings where it’ll go probably be more regulated, and it should be an overtime, the right and under regulation will will take hold. But I do think that because of this debacle with FTX and you know, three AC and airy and Luna, I think it has said back probably about three I don’t know if a couple of years, you know hopefully not longer than that, because you know all the financial oriented services like the lending and you know, kind of the hedging, those were the first use of of tokens, right? And crypto kind of the blockchains. And, you know, and usage of all the different protocols out there. So now finding the next use case, there’s a lot of activity around gaming that is going on with the protocols. Maybe that will be the next kind of a way that application that you that is used that kind of causes the adoption of the protocols and web three and blockchain. But I think finding the next application like you know, if you look back on the internet, the browser was the thing that really drove the adoption of the internet. Right? And and in crypto and blockchain, it was all a financial services oriented application that was driving the adoption of the protocols. I think there has to be something else that pops up that really drives the adoption of web three and blockchain.
25:56
It’s an interesting analog. Where do you think we’re at in terms of seeing the collapse of some of these companies? I mean, like we mentioned, FTX, obviously, that’s very top of mind for a number of people. But there’s block phi, Tara. I mean, do you expect this to be a similar trend moving forward over the next six to 12 months? Or what do you foresee happening?
26:21
I do think that, you know, there’s, there might be other companies that go, you know, go bankrupt, right? People are already talking about, you know, Genesis and things like that on Twitter. I don’t know they do, or they don’t, you know, but I do think that a lot of liquidity has gone away from the market, a lot of people on the institutional side who are trading crypto, and you know, are probably going to be a lot more wary of, kind of, you know, doing anything with crypto. And I think that retail investors are probably gone, a lot of retail investors are gone, because, you know, people will say, crypto is kind of, you know, I don’t want to go there, and Bitcoin, everything will go away. So I do think over time, institutional will come back into crypto trading, but that’s going to be probably in another 18 months before, there’s liquidity. And you know, there’s enough kind of lack of fear to go back and trade in all the tokens out there. But I do think what you’ll see is that, there’s also going to be a calling of the tokens, right around the protocols, like I think you will realize that Bitcoin eat, I don’t know, maybe one or two other protocols are the ones where everybody flocked to. And you know, and they’ll come to a point where you won’t have these dozens and dozens of protocols out there coming up every day trying to build an ecosystem around it. And everybody will just focus on four or five, maybe 10 different protocols and build everything on top of it.
27:55
An area that you said you’ve been spending a lot of time in is one three infrastructure, what are what major needs have yet to be met by existing tooling?
28:06
Everything right, so first and foremost, that there is no DevOps kind of tooling out there. Because I was a developer, the early parts of the of the.com. And you had to write everything from scratch, like you had to write the backend server, you had to write, you know, load balancers, you had to write everything to the point where, over time, you know, nowadays, you know, you can just write a few lines of JavaScript code, and have everything working, because AWS and GCP are all providing that we are far away from that, right, right. Now, if you want to program on IE, you kind of have to know solidity, right? So things that if you write a smart contract, you don’t know how to audit it, and make sure to test it and make sure that you know, you haven’t done something stupid in the smart contract that creates all kinds of issues down the line. So the testing tools, DevOps tool that helps you build these codes really easily, you know, integration tools, where you there is no communication between one chain to another, right, you have these bridges, but the bridges are in a very kind of I think backward using way of doing things where you actually holding value in the, in the chain itself in those bridges, rather than just communicating over the data between chains, to all of those things have to be built up. Before I think you can build a lot of applications and have, you know, kind of what you call it 1000s and 1000s of applications being built. Because most developers you know, if you do they’re, they’re not like want to learn everything from scratch. They don’t want to learn solidity they don’t want to learn, you know, how does the smart contract work in this chain versus that chain. They want to have an easy an interface that allows them to kind of abstract away all of these things and help them express what they need to do to get a program done and everything is done underneath for them. And that is why this interesting far as to invest in this kind of infrastructure, because if you look back at you know.com bubble, and you know, the thing, a lot of infrastructure companies came up, and you know, and they all became big. And of course, a lot of them got acquired by Cisco and you know, became part of Google and Yahoo. But that’s kind of, you know, where we think there’s a lot of money and big companies to be built. Yeah,
30:23
yeah. Where does the value accrue in the web? Three developers stack? And how does that differ than web two?
30:31
Ah, that’s a very interesting, I think, I think in web three, the developer who builds the application can actually accrue a lot more value than you know, like in web two, right? All the value kind of accrued in the people who aggregated all this information, right, that aggregated in Facebook, it aggregated in Google, because they were the ones who were at the end of the day, in front of the users, and they could aggregate all the, you know, usage that’s coming through down to the you know, who’s getting paid, right? I think in web three, the, there won’t be any chokehold, like you have in Google or Facebook, where all the money kind of goes down to one funnel, or Apple, right? Those are the main geocoder, you’ll see a lot more distributed kind of companies where, you know, 345, developers might have a lot of the ability to kind of monetize what they’re doing. And there might be an aggregation point where somebody kind of aggregates a lot of these developers together and build something on top of it. But I don’t think there will be like in the, you know, web two, world, four or five companies, that is basically owning all of our internet, you know, we have to kind of use it.
31:51
I want to shift gears a little bit to talk about your track record, because you’ve invested in 13 companies that have IP owed. And you noted how difficult it is to predict from C to A, or even all the way up to Series C, which CEO in team can actually create a highly valued public company. But again, I’ve been able to do this 13 times. So if you’re not looking at the team, I would be curious as to what you’re looking for, as far as indicators go, that a company can be valued in the public market as a highly valuable one.
32:28
Yeah, so I think one of the things that we are very lucky, because we are all looking at, you know, we look at a little bit later stage companies, right. And I think the number one thing that, you know, people will talk about team and culture, but for us, it’s also the efficiency, I think one of the context, you start out being a very efficient kind of team that growing really, really fast, you know, you kind of that think that DNA kind of stays in the company and keeps going, even though the team might not be that impressive, like, you know, I’ll talk about something that is not, you know, you know, I portfolio, but we looked at called Data dog right? There, the dog had incredibly efficient metrics when it went through and raise its round. But if you go back and look at, you know, talk to a lot of investors, they didn’t have a very easy time raising funding, they actually went around quite a bit, you know, because one, they were in an area where lots and lots of companies had been funded, and were not successful. You know, and, you know, the team wasn’t at that time, like the stellar team with lots of, you know, successes in the background that they had come with, right. But if you looked at the track record in there, you know, how well they were executing, and the efficiency that was kind of, you know, best of class that we’ve ever seen. And, you know, they kind of learn, right, I will also the fact that even after IPO, knowing that they have been able to kind of not only keep that machine going, but have been very nimble, right, that is one of the hallmarks of that of successful companies is that they’ve figured out the first product, and then once they went IPO, very quickly figured out the second and third product and became a platform. So, so yeah, so efficiency is is one thing that you have to look at it. And then also you have to look at the product roadmap in my mind, to see how quickly they can kind of, you know, not only have one product, but can sell multiple products and upsell and cross sell to the existing customer base, which allows them to have a really high end der. Yeah, yep.
34:42
I mean, it’s always easier in theory than in reality to upsell and cross sell customers. rippling is done incredibly well. Right. And we maybe we can spare the audience behind why they’ve been able to do that so well. But if we think more from a foundational standpoint, what separates the teams that have been able to do do this well, versus the ones that haven’t.
35:03
I think that the teams that have done well always have, in my look, I’m a developer. So I always buy through either to some extent, but they have like a product minded CEO, or, you know, a management team that is very, has a product team along with the go to market team, right. And I think that is the number one criteria, because if you have a product, lead CEO, who understands product recalls are good at go to market, they’re always going to, in some ways out execute, because at the end of the day, yeah, go to market wins. But ability to build a product that you can sell, cross sell, upsell, and increase the size of the TAM is more critical than just to go to market, right? Because you can always find the go to market leader that you can bring in. But it’s always sometimes hard to find that product minded CEO that can really take the company to the next level.
36:00
How do you advise companies from going wide and expanding the existing product into adjacent markets versus going vertical within the existing market and layering on additional product features and functionality?
36:16
Yeah, so you know, it all depends on you know, who you’re targeting, right? If you’re a, you know, if you’re a plant, like infrastructure company, you kind of have to, in some way, say, okay, am I going to be just focus on the developers? Or am I focused on the, you know, CIOs, I’m focused on the analyst, you know, because in infrastructure analytics are kind of a horizontal software company, you know, it’s very hard to go from selling to the analyst to the, you know, to the CFO, right, you kind of have to say, Okay, from the analysts, do I go sell to somebody in it, who might be also analysts or to the data scientists, you know, who is adjacent? With vertical SAS companies? Right? I think there it is much more about, okay, I’m focused on a specific vertical, what are the things I can do within that vertical that helps the, you know, people within that that organization, right, and a lot of time, those vertical SAS companies, I think have to monetize to payments, right? Like, Shopify is a great example. You know, Viva is another example where you know, they stayed in one vertical, but when Dino did more and more stuff for for the same business, or you sell to the CFO for the CMO for then maybe the CFO CPO within the same vertical, and this is more on the design side, business application side, then on the infrastructure side, because I think, on the infrastructure side, you really have to go horizontal to build a big, big company.
37:45
Yeah, do you have a preference for one versus the other.
37:50
So I like infrastructure, and I like analytics, I like the horizontal plays also have done like payments, like, you know, square, I’ve done, you know, call center company called five, nine. But I typically like the more inner platform, things like a mule soft in order j frog, which goes across horizontally, you know, across industries, but sells to a specific set of folks within that in, you know, in these industries.
38:16
Got it. Jai, if we could feature anyone on the show, who should we interview? And what topic would you like to hear them speak about?
41:04
That’s a hard question. You know, I think you should probably feature some of the CEOs who are kind of going through, you know, I would say, people who are building the next generation of, you know, kind of stuff, companies of consequence. I would say, Sanjay berry from Netskope, you wouldn’t be one great person to kind of talk to, you know, I would talk to Constantine from block demon. So he’s building kind of infrastructure for web three. And, you know, see what his thoughts are on that three, if you’re interested in that. And sanjak, you know, started net COVID is kind of trying to be the cloud security company. And you know, his talk. So yeah, those two people I would definitely recommend.
41:57
Jai, what do you know that you need to get better at?
42:03
Well, I think one is time management. I think I spent too much time on Twitter, even though you know, things are going haywire. And I think I know one of the things I think sometimes you always think about is getting better at saying no, like, you know, I know, we spend a lot of time saying no, in our profession, as you know, you know, no, to CEOs, no to next round of funding. But even then, I think we sometimes, you know, because of personal relationship. I have sometimes have a hard time saying no to some SEO, there’s some some founders that I’ve known for a while, and I always even though I might not be investing, I tried to invest my time in helping these founders. And sometimes, you know, that gets that becomes burdensome, but yeah, getting better at saying no.
43:00
And last question, Jai, what’s the best way for listeners to connect with you?
43:09
They can just send me an email at Jai at sapphireventures.com.
43:14
Awesome. Well, Jai, thanks again for coming on the show and enjoy Hawai’i.
43:18
Okay, thanks, man. Thanks for having me.
43:20
You bet.

Transcribed by https://otter.ai

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