Our latest Intacct Industry Insights interview took place with Bob Spinner, a Managing Director at Sigma West, an early to mid-stage venture capital firm in Silicon Valley. Sigma West has been an early cloud evangelist with investments including: Demandbase, Docusign, oDesk, Responsys, Strava, YouSendIt, and Intacct. Previously, Spinner held senior level positions at three start-up companies, all of which went public: Extensity, Clarify, and Sybase. Spinner’s focus is on applications and infrastructure with a particular focus in Software as a Service (SaaS) and cloud computing. Spinner also sits on the Intacct Board of Directors.
Our conversation with Bob covered topics including concerns around cloud computing, elements of a successful cloud start-up, and the differences between being a CEO and VC. Here are the highlights...
INTACCT: What is the level of concern today among companies moving to the cloud?
BOB SPINNER: The cloud is the most important evolution in corporate IT over the last 15 years. Just look at every venture funding announcement or speak to any CIO, and this is clear. That said, any cloud provider must prove its ability to protect the resources of their customers. IT organizations at some companies have thousands of man-years in building secure environments to ensure their data is protected within its four walls. Handing over the protection of their key IP, computer resources, or customer data will not happen without ample consideration. This creates tremendous opportunities for vendors that can minimize that risk.
INTACCT: How do you define a successful cloud software start-up?
BOB SPINNER: Building a successful software company is a challenge under any circumstances. A cloud solution has some unique characteristics, which benefit both the provider and the customer. For example:
- Highly satisfied customers. No company can be successful without satisfied customers. However, nowhere is this more clear than in a recurring revenue model, where the initial purchase is a small part of the lifetime value of a customer and customers are asked to continually renew their commitment. This means customers need to get unique value, get it fast, and get it again and again.
- Competitive offerings with a culture for innovation. With the advent of the cloud and mobile platforms, the rate of new development has accelerated dramatically. It isn't enough that companies can develop an interesting solution. They must be able to defend it over time. Innovative and open-minded company culture and leadership is the foundation for a company’s continued leadership.
- Innovative go-to-market strategies. The cloud has presented new opportunities for reaching customers and provisioning services. Freemium solutions, self-service provisioning, free trials, e-commerce and adoption of new technologies have changed the high touch sales model of the past. However, this isn't simply an investment in a new go-to-market strategy but a new approach to product development, communication, training, partner development and customer outreach.
INTACCT: It sounds like one of the big differences in evaluating companies today is the consumer IT factor?
BOB SPINNER: The way enterprises are buying technology has changed. This has both changed the opportunity for new start-ups to reach the enterprise, as well as set a higher bar for technologies to be adopted in the enterprise. Some examples include:
- The aesthetics of business applications are changing. Business users now require that their applications are as elegant and simple as those on their mobile devices for their personal use. This means that the vendors providing the new apps must design accordingly.
- The line between personal applications and business applications is changing. There are many applications that are used for both business and personal efforts. This creates an interesting opportunity for new companies to market to individuals who can then serve to endorse these technologies for the enterprise.
- These personal and business applications will co-exist on the same devices—often the work device. How the enterprise deals with this evolution can affect both the culture of their company and the integrity of their business data.
INTACCT: Enterprise software has been more or less dominated by a few huge vendors over the past 20 years. Is the cloud going to democratize the software market or will companies grow and consolidate just as always?
BOB SPINNER: Having observed multiple shifts in enterprise software over the last 20 years, the one thing I am confident of is that there will always be start-ups that innovate and larger successful companies that will thrive. As a venture investor, we are betting on the innovation of young companies. Some of those companies will become the larger companies of the next decade and some will be acquired at what we hope will be very high multiples.
INTACCT: What’s more fun: working as the CEO of a start-up, or on the VC side?
BOB SPINNER: As a CEO and as a sales leader before that, I was emotionally in one company all the time. The highs are higher and the lows are lower. There is nothing like it when you are winning. As a venture investor, I currently sit on eight boards, which means I learn a lot quickly across many markets, technologies and market strategies. I love the concurrent challenges and learn a lot working with many great executives. All in all, I am happy with my current role and believe I am a much better investor because of my time as an operating executive. It has crossed my mind, however, that after nine years in the venture business, I may be a better CEO if I were to do it again.
INTACCT: Now a few final questions, just for fun...
Would you call yourself a technology gadget geek? What products get you excited outside of work?
BOB SPINNER: I am a modest geek. I think I have every version of every Apple mobile device ever made. I love the technology behind bicycles and their components, and have allowed myself better equipment than I deserve. My GPS systems all load to Strava where I track all my rides.
Can you have a life as a Silicon Valley VC? If so, what do you do for fun?
BOB SPINNER: Absolutely. I don’t think anyone can be happy or successful for long if they do not have activities outside of work that keep them healthy and happy. My family of four women (my wife and three daughters) has always been my priority. Beyond that, I have always been a workout nut. It gives me some cover for the lack of discipline in my eating. In the past two years, I have been addicted to a fitness program includes spinning, rowing and stretching. And I still maintain a close connection to my roots to the New York area where my identical twin and the rest of my family reside.
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