Byron Deeter

Partner at Bessemer Ventures

THIS CHAT HAPPENED ON August 15, 2016

Discussion

Byron Deeter@bdeeter · BVP
I’m Byron and I’m all about cloud. I built my first cloud company, Trigo Technologies, at age 26 — where I first worked with Bessemer as a founder — and later sold it to IBM. As head of BVP’s cloud investments team, I’ve led over half-dozen cloud unicorn investments and we’ve been the anchor investor in 5 out of the 8 cloud IPOs since 2015. I’ve been honored to work with breakthrough founders at Twilio, Box, Gainsight, Cornerstone, Intercom, Adaptive Insights, Procore, SendGrid, DoubleDutch, Tile, Instructure, Docusign, Rainforest, ServiceTitan, and Vidyard, to name a few. I’ve also co-authored the BVP Cloud Index, BVP’s 10 Laws of Cloud Computing and the State of the Cloud Report. I’m a former college Rugby national champ (go Bears!) and, most importantly, a husband and father of 3 kids. Ask me anything!
Paul Sondhi@paulsondhi · Student
Hey Byron, Thanks for doing this! As a college student myself, I'm interested to know if you would suggest working at a startup to recent grads interested in tech? Of course, circumstances matter (student loans, etc.), but in your experience does the idea that the most learning for a young person happens at a startup hold true?
Byron Deeter@bdeeter · BVP
@paulsondhi Hey Paul – It’s awesome that you’re still in college and already thinking about the world of startups. I wish I was fully aware of this world when I was still in school as you’ve got a jump on me and others! The short answer is Yes! There are very few jobs that offer the same learning experience that startups do, especially a smaller startups, where you will be encouraged to lead and explore a number of different roles and build processes and judgment with limited information. But, make sure you have done your homework on the market and the product, and most importantly, the team you’ll be working with. You will spend many many hours with these people – so make sure you get along! I would STRONGLY counsel you to join a high quality company with a great manager, and focus on that above role and title. It’s important for your early jobs to get mental models of success. If you don’t feel like you’ll be with great people, then go somewhere you will – join a larger tech company for a few years, or even a consulting firm (I sincerely had a great experience at McKinsey for 2 years as an analyst and it really helped me understand basic business). Early jobs are important to build a high quality network (of future co-founders!) and to learn how to build companies and products the right ways.
Paul Sondhi@paulsondhi · Student
@bdeeter Thank you for the response! I see a lot of students get a bit caught up in role and title in search of credibility; I'll aim not to make that mistake myself :) The other tough issue is the lack of formal intern recruiting at startups (understandably so). Undergrads these days are looking for summer internships that can carry over into full-time offers, which are non-existent at the earliest startups. Interesting to see if there will be any changes in this realm in the future... P.S. If you're ever in NYC, would love to have you speak to members of an undergrad VC club at NYU!
Thomas Stöcklein@tomstocklein · FoundersFundersFuture.com
To what extent are you and your partners using ProductHunt to identify new potential investments?
Byron Deeter@bdeeter · BVP
@tomstocklein Morning peeps and thanks for joining! A good amount - we try to use all sources we can! We are constantly looking for new product ideas from all people in our network and online places. Also, one of my favorite candidate interview questions is "what cool apps are on your home screen that I probably haven't seen yet?"
Thomas Stöcklein@tomstocklein · FoundersFundersFuture.com
During your 11 years at the firm, which contributions (if any) have you made to the Anti-Portfolio?
Jack Smith@_jacksmith · Serial Entrepreneur & Startup Adviser
Byron Deeter@bdeeter · BVP
@_jacksmith @tomstocklein thanks Jack, and yes...Tesla stings every day I drive my (full priced) X to work!
Uhma@deleted-594972 · Brr
Hello Byron, Thank you for giving an opportunity to ask you questions. In reviewing magnitude of submitted business plans, what kind of submissions get discarded right away, which ones get the most attention? Do you ever miss great ideas, which later on, become successful with the help of other VCs? Thank you.
Byron Deeter@bdeeter · BVP
@victorpolyushko Let me save you a lot of time: don’t spend your time on a business plan! 30+ page business plans simply aren’t read anymore. My recommendation would be to spend time talking to potential customers and solidifying your product/market fit – rather than conjecturing about a 5-year business plan. We usually receive ideas in the form of a tight 5-15 page slide deck and/or a 2-page executive summary with key details and vision. You can actually hack together a demo product these days in the time folks used to spend drafting a business plan. In terms of "submission" of the exec summary - find an entrepreneur we have worked with in the past or a friend that can give you a warm intro to an investor at the firm. Cold emails almost never succeed. Part of it is just the sheer volume we receive, but the other part is that networking is critical for your overall success. If you can't network into a warm VC intro, then it'll be hard for you to get warm intros to customer prospects, future employees, etc.. Warm intros always go a long way, and we read 100% of quality referrals and meet with most of them. On your second question – yes, we absolutely miss great ideas. It is part of the job and hurts every week when I read online about another great team we missed. We like to poke fun at ourselves when we do though. I think you’ll enjoy our anti-portfolio: https://www.bvp.com/portfolio/an... (Tesla is my most embarassing one!!)
Uhma@deleted-594972 · Brr
@bdeeter You Rock! You just saved me a lot of time. Thanks much!
Emily Hodgins@ems_hodge · Operations @ Product Hunt
What one piece of advice do you often find yourself giving to new founders?
Byron Deeter@bdeeter · BVP
@ems_hodge Let me try to give a couple here: - know your "superpower" or your unfair advantage over everyone else. Why will you succeed in your market over everyone else. Of course it’s because you’re a better team, but what business/product advantage do you have that no one else does? - Know how to tell your story well. Why did you start this company? What brought you to this stage of your career and why are you passionate about this market area? Founders that don’t have strong conviction around this or a real pain point behind their company usually don’t have what it takes to stick it out during the crazy startup rollercoaster! - once you get rolling, have your hands around the metrics you care most about. It's not cool or acceptable for a growth stage CEO to say that your "operational team" handles that info. The best CEO's we've worked with (Jeff @ LinkedIn, Ben @ Pinterest, Jeff @ Twilio, etc..) all know their core metrics in great detail. It's possible (and needed) for you to be great at product and still understand KPIs and operational scale.
Thomas Stöcklein@tomstocklein · FoundersFundersFuture.com
Based on all the pitches you and BVP have received in the last 6 months, what are some major trends you've been noticing for 2016 so far?
Byron Deeter@bdeeter · BVP
@tomstocklein We've seen acceleration in several of our "sub" roadmaps, most specifically: - “Software” for large untapped verticals. We’ve done a lot of vertical SaaS and enterprise mobile in particular. ProCore in construction, ServiceTitan in plumbing/HVAC/electrical, DoubleDutch in marketing, etc… - Enterprise mobile (85% of americans between 18-29 have a smartphone, global mobile penetration has grown from 1 to 73% from 1995 to 2014, and internet usage has tipped to mobile with 50% of our internet time on mobile.) We are excited to FINALLY see more activity here, and hope to make a lot of investments in this area going forward. - Developer Roadmap (tools that make the developer’s life easier like SendGrid, Twilio, Auth0, etc.) are ramping quickly now
Anshul Gupta@anshul_gupta1 · Founder@arfi.in
What is your view on the freemium model for consumer facing apps in segments such as lifestyle and fashion?
Byron Deeter@bdeeter · BVP
@anshul_gupta1 Great question! I don’t entirely trust my judgment when it comes to consumer-facing apps such as lifestyle and fashion. I am more of a dev-focused/enterprise software guy! However, I have a number of colleagues (Jeremy, Kent, Talia, etc..) who have helped the firm navigate potential investments in the fashion/lifestyle space. They look for a number of traits including but not limited to: a strong brand presence, resilient word-of-mouth dynamics, high retention/low churn, a good CAC/LTV payback (sub 12 months), and user cohorts that increase spend every month. With a freemium model specifically, high conversion rates from free to paid are also crucial.
COSTAS ANDRIOPOULOS@candriopoulos · https://medium.com/strictly-curious
Hello Byron, and thank you for taking our questions today. 1. What kind of tools/websites do you use or consult to identify experts to help you with your investments? 2.Where do you look for startups in nascent industries (e.g. press/academic journals, events, websites, etc.)?
Byron Deeter@bdeeter · BVP
@candriopoulos A few answers here. Personally I have about 3 dozen websites that I visit daily and another several dozen via RSS/Feedly. That’s general tech/cloud/mobile/geek content just to stay current. From a longer term perspective, at Bessemer Venture Partners we spend a lot of time “roadmapping” future investments where we call out new sectors and spend years trying to become experts. We lean on the experts in our portfolio companies to make us smarter, we also often pull in academics, and occasionally paid consultants. We also try to train each other to continuously be thinking about the future. We do this in a couple of ways: 1) we have an annual meeting where the global team gets together for 2 days and does a deep dive on the past year. What did we do well? What could be better? What did we pass on that we shouldn’t have? Which areas are heating up? What data supports these assumptions? The annual event gives us good fodder to continue the process for the year and helps align the firm around 3-5 strong roadmaps of interest. For totally new areas, we sometimes have to start from ground zero. I’ll admit that my most recent (not yet announced) investment is in an area of cutting edge tech that I knew very little about before writing the check. I literally hit Wikipedia to prep for my first meeting. I had to start somewhere!
COSTAS ANDRIOPOULOS@candriopoulos · https://medium.com/strictly-curious
@bdeeter Thank you so much for your insightful answer. I really appreciate it.
Abhishek Kandoi@kandoiabhi · SDSLabs
Hello Byron, Shooting my questions: What is the single most important factor taken into consideration when an investment is finalized? If not a single, which is the most important for you? And which is the most important for other people in your team? What are your source of knowledge? CrunchBase data? Personal analysis (using what?) ? Mattermark? What else? For someone in his early 20's, is there something that one can do right now and not later? Something that might become a regret later? Or is "not hurrying" an advice you would give to someone who wants to leave an impact on earth? What is one thing that you personally believe in and no one else around you does?
Thomas Stöcklein@tomstocklein · FoundersFundersFuture.com
What was the most outrageous idea you were pitched so far?
Byron Deeter@bdeeter · BVP
@tomstocklein We get entertaining ones constantly, and it's great to see that sometimes these end up working years later...and it's a constant reminder that "thinking outside the box" can pay off big. A perfect example of this - ironically "in the box" - is Blue Apron. The founder, Matt, worked at BVP before and we all knew he was a super star, but I thought the idea was crazy. Boxed, semi-prepared food sent to your house?! I supported the deal because of Matt and because my partners Bob and Kent loved the idea, but I'll readily admit that I didn't get it at all. Now it's one of the fastest growing companies, ever, and hugely valuable. I'm glad Matt and his co founders had the vision, and my partners were smarter than me!
Bharath B Lohray@lordloh · PhD student at Texas Tech University
I came across - http://bit.ly/2aNJTCY ("7 Startup Ideas That Are Almost Always Terrible") and there are more such elsewhere. What do you think of such start up ideas? Are there certain ideas that are bound to fail today? Something that every VC would pass? Would you add something to this list? Or, do you have a contrasting view that you would share?
Mohit@mohitify · Developer - Product - UX - Mobile - SF
Out of all your investment which company's success caught you by surprise?
Byron Deeter@bdeeter · BVP
@mohitify I love to see software engineers on this thread! We've been fortunate to work with a long list of great teams and many experienced roller coaster rides along the way, but overall Criteo is probably the one that surprised us most. I doubt most of you have every heard of them, yet they're public and worth a couple billion. I believe they are the largest internet IPO out of Europe since 2000 and largely off the radar. There were several things that were counter intuitive about them when we invested, including being based in Paris, ad-tech, and having undergone a major business model pivot. It just goes to show: we'll travel anywhere in the world and invest in a variety of business models if the team is awesome and the product vision is solid!
Jack Smith@_jacksmith · Serial Entrepreneur & Startup Adviser
Hi Byron - I love the unicorn profile pic :) I can imagine that given all your success as investor, you must get a lot of people wanting to meet up with you. How do you generally respond to requests from people that want to meet you, without being clear about any specific purpose. e.g. they want to just "catch up", or "pick your brains", and you can't see it being a good use of your time?
Byron Deeter@bdeeter · BVP
@_jacksmith I will admit that I'm not a big fan of the "just want to catch up" meetings during the week - as we're all busy and moving fast. I try to use most work hours to meet with current portfolio teams, new teams coming together, or execs thinking about a company move. I love getting warm introductions from fellow investors or more importantly, entrepreneurs I’ve invested in. My portfolio company entrepreneurs know my style and often know the investment roadmaps I am currently exploring.
Vinay Khosla@vinay123 · Co-founder Zenyx.com. Builder. Investor.
Hi. 1- It it true that many VCs know if a pitch is worth consideration within the first 30seconds? 2- what's the average time you spend reviewing a unsolicited slide deck pitch? Thanks.
Byron Deeter@bdeeter · BVP
@vinay123 Answer: 1) 30 seconds is a stretch. Within a few minutes you often sense the excitement and vision of a team and start really "leaning in". After doing this for 13 years, I have a good sense of a team when they walk in and how they talk about market size and product – but it still takes me a full meeting of 30-45 minutes to decide if I want to dive in. There have been several times where I've offered to invest after just the first meeting, but typically it's a decision to spend more time together. Different entrepreneurs have varying styles, and no single style is necessary for success in startups. 2) Unless I get a warm introduction to a founder with an unsolicited slide deck pitch, I don’t spend much time at all reviewing it. There are so many ways to get in touch with me, I want entrepreneurs to display hustle in reaching out!
Vinay Khosla@vinay123 · Co-founder Zenyx.com. Builder. Investor.
@bdeeter thanks! Appreciate you taking the time to respond. Coming from the UK I thought the Valley would be different and more open to hear great stories. I guess "who you know" is important everywhere.
Sreekanth Dayanidhi@sreekanthrnsm · Founder and CEO
How do most of your successful entrepreneurs approach you? Through a referral? Cold calls/emails ?
Trevor Kimenye@kimenye · CEO, Ongair (http://ongair.im).
Hi Bryon. Have BVP made / considered making investments in companies not based in the US?
Byron Deeter@bdeeter · BVP
@kimenye Absolutely! I've personally been on several Boards outside of the US (including $1b+ IPOs with Criteo in France and Eloqua in Canada) and our firm has done successful investments all over the world including: Skype in Estonia, Celtel in Africa, Snapdeal in India, Parallels in Russia, Wix in Israel, etc.. Currently we have 6 offices around the world and will travel anywhere great teams exist!
Ben Holloway@ben_holloway · Private Equity, Turn/River Capital
Hi Byron, thanks again for doing this AMA. My question for you is: You and Bessemer have made a lot of successful investments, but for every one success I'm sure you've had a number of investment that weren't quite as successful. Could you speak to some of the investments that haven't been as successful and how those deals have influenced how you look at potential investments?
Rod Gaerlan@rodgaerlan
Did you have the opportunity watch Danny Barrett and US team at the Olympics Rugby 7s? Do you think we'll be seeing US compete for medals in future Olympics? Go Bears!
Byron Deeter@bdeeter · BVP
@rodgaerlan Absoultely- how cool was that??!! He's a beast, and as a former big man with zero moves, it was awesome to see him punch it in with a cut back. Although it's a bummer that the US lost our title as reigning gold medalists, it was wonderful for Fiji and their group singing at the end was very emotional. I absolutely believe the US can be competitive on the international stage going forward, and it's not crazy to think we could be metal contenders in Japan. I hope/plan to be there in person to see it! Tokyo 2020!!
Thomas Stöcklein@tomstocklein · FoundersFundersFuture.com
What current BVP investment are you most excited about? Which BVP exit are you most proud of?