Mark Fernandes is a managing partner at Sierra Ventures, an early stage VC firm that specializes in enterprise and emerging tech companies. Mark hit a home run in his first adventure when his first ever investment in Sourcefire paid off bigly when it was acquired by Cisco for $2.7 billion in 2013.  Mark has invested in several companies that have been acquired by Microsoft, VMware, Palo Alto networks among many others

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Detailed transcript :

Mark: What I’ve learned over time in the venture business is you always have to look at what could this company be and not what could go wrong. And I think too often we get caught up in what could go wrong. And eventually, those have come back to bite me.   

Introduction

Ankur: Hello, everyone. Welcome to another episode of Zero to Exit. This is Ankur and Neelima, your hosts. 

So far on this podcast, we have talked to builders and buyers. In today’s show, we’re going to talk to an investor to help understand what separates a good entrepreneur from a great one and how the high stakes venture business works.

We’re fortunate to have Mark Fernandes with us. Mark is a managing partner at Sierra Ventures, an early stage VC firm that specializes in enterprise and emerging tech companies. Sierra Ventures has had a long and illustrious history of investing in great companies that have consistently seen great outcomes, including a hundred plus IPO’s.

Mark hit a home run in his first adventure when his first ever investment in Sourcefire paid off bigly when it was acquired by Cisco for $2.7 billion in 2013. This was at a time when a billion plus exit was a big deal. Since then, Mark has invested in several companies that have been acquired by Microsoft, VMware, Palo Alto networks and others.

I’ve personally known Mark through RedLock for over three years and I can tell you that he’s one of the most cerebral, thoughtful and starter friendly investor I’ve ever met. 

Interview

Ankur: Hi Mark. Welcome to the show.

Mark: Hi Ankur. Hi Neelima

Childhood, Educational and Professional Journey

Ankur: Awesome. To kick things off Mark, tell us a little bit about your childhood and upbringing. I read somewhere that you dropped out of medical school or you were about to go to a medical school. Tell us more about it.

Mark: Sure. I grew up in India in Bombay in a middle-class family. They thought I was either going to be an engineer or a doctor. Because my older brothers were in engineering, I said I want to be a doctor. I showed up to medical school. The first day saw a lot of blood turned around and left.

Ankur: (Laughs)

Mark: I ended up just heading back home home and asking my dad what I should do. And I think I just joined my brother in a little engineering school called Manipal. My brother’s classmate as I found out later, was Satya Nadella. So, I was fortunate to be surrounded by some really smart people at Manipal. 

I was a mechanical engineer and decided to come to Berkeley for grad school. I did my Masters in Robotics at Berkeley and then we can talk about the rest of my career but it’s been a bunch of left turns to get to the right turn. But that’s a little bit about my story.

Neelima: As you had mentioned Mark, you came to the US in the 90’s and you basically had nothing. And the first year was very hard. Can you tell us a little bit about that?

Mark: Yeah, So when I came to Berkeley, I didn’t know any better. I was just fortunate to be at a school like Berkeley, doing my masters in Robotics there. And the very first year I think I had a bike and the gears didn’t shift on that bike and Berkeley is a very hilly campus. I had a desk and a sleeping bag and I lived on the border of Oakland and Berkeley with four other grad students. So it was a very interesting time but you don’t know better. And for me it was all about taking advantage of the opportunity. And it taught me a lot about  life and life lessons for much later on. And so, it was great because I had an opportunity to learn from some of the best professors at Berkeley. And even my classmates were incredibly brilliant folks in grad school. So, it was great when you didn’t think about the rest, but sometimes you wonder, if that hunger that comes from basically, essentially I would call it surviving at that time was really critical. And it’s stayed with me for a long time, even now with all the luxuries and stuff that come along with the business. I feel like you’d never forget those early days. And that’s super important to keep that hunger. And we look for it when we talk to entrepreneurs, we know when somebody has a chip on their shoulder and they need to do something that hunger always shows.

Neelima: Yep. You call yourself an accidental VC. After the grad school, you started working at Seagate, then went to B school and had some really good friends there and then ended on Wall Street from there. How did the venture business transformation happen?

Mark: Yeah. So, even if you play it back a little bit Neelima, I was tired of the whole being an engineer for a little while so I thought I’d go to business school. And so, when I went to business school, I thought I would go back to Cisco as I’d done a little project with them but then at the recruitment drive ended up with Biloba which was an investment bank. I became a Sell side research analyst and I didn’t even know what investments banks did then. I ended up covering a lot of the big security software companies, storage software companies back in the time and in the late 90’s, early 2000’s.

So, I was at Merrill Lynch and one of the companies that I took public was a Sierra Ventures company, Micronews. The Sierra guys were at a medical conference. They came up to me and started talking. I didn’t know what venture capitalists really did at the time. I was doing an 80/90 hour workweek as a Wall Street guy. And ended up, talking to these guys, really liked the team and joined Sierra back in 2002. So, it took me three lefts to make a right turn.

Ankur: Yeah, pretty incredible. Investment Banking is about investing and finding the right company and the venture business is the same. Was there something specific about CRS pitch that drew you in? Was it like, you were in Berkeley in Silicon Valley, so technology was the thing back then. Is that what drew you in? 

Mark: Yeah. It was. So, in the late 90’s and early 2000’s, every company was going public. If you think back to the companies that were going out, now are very large companies, whether it’s F5 networks or, I used to cover Verisign and Veritas and some of these gigantic companies. And now some of them have even gone private like Symantec. And so, for me it was fun but it was also the right time in life. If I look at my career, it’s been chunked up into four/ three pieces. The first two or four or five years were in  product management and engineering, then business school and then I did my Wall Street thing, my sell side research, which is very different from investment banking. The network you deal with some of the top, you know, CEOs of these companies and all. And so for me, venture capital was very interesting because it was basically doing what I did as a sell side research analyst covering public companies.  I was now doing it in the private world and it was the same thing as stock-picking.  As a Sell side research guy, you’re telling people whether to buy or sell stocks. And I think it is the same thing except you’re putting your money where your mouth is in venture capital. And so for me, it was doing more of the same and just doing it to the private level with our investors and our own money too. So I think that was the difference. And also,  that covering software and covering security at Merrill gave me that perspective that led into Sourcefire because that was and we can talk about that in more detail, but it was being able to see how to disrupt the security market with open source. I think that the progression from calling it a public company stocks to private company stocks is what that transition was. Even though on the surface, it seemed very different. It was similar in many, many ways to stock picking. 

Ankur: I’m always curious about folks who were here during the early stages of the internet revolution and the making of the Silicon Valley. Back in the days as an individual, did you have any predictions? Did you ever think that we’re going to see a 2020 and a technology boom, the way we do? Was any of this within your line of sight or this has blown through all expectations.

Mark: Yeah, but every cycle is different and every plateau seems to be a lot higher than the previous one. So, when I was going through this, this was the first internet wave. Amazon was just getting going and it was the late nineties, a lot of the e-commerce had just started, we had gone from the client server to the internet world. The next phase was in 2008-2009. After that crisis, we kind of saw the next wave in mobile. Mobile definitely took off at that time. I think every cycle and it has been a cycle but at the end of the day, the plateaus have gotten a lot higher and so the bar has gotten a lot higher. The transformations happen. And as I was talking to one of the executives from Microsoft in our CXO summit, I asked him this question, I said -is this the biggest transformation? And he said, yes, but it’s also the most rapid. I think what’s happened this year has been just to expedite everything, things that were in innovation labs moved into production in nine months. And so I feel this is definitely while it’s obviously the biggest but it’s the most rapid and could anybody have seen it? I don’t think so. People know that the trend lines are always up into the right, but it’s the slope of the curve. And I think the slope of this curve has definitely been accelerated by the pandemic so….

Neelima: Mark, you had some very interesting roommates when you were in           B school and some of them are real good friends even now. How did your time spent at B school kind of help your point of view? 

Mark: Yeah, my roommate before business school was Keerti Melkote, the guy who started Aruba networks. And, he worked for the CEO of Arista Networks, Jayshree Ullal. And so it’s always important to try to surround yourself with good people. I think in business school, what was different for me was transitioning from product management or engineering into the business world. If you think about what Simon Sinek says, it’s like the why, the what and the how. I definitely knew the how, I occasionally knew the what and I never knew the why. And it was when I went to business school, it was much about learning the why more than anything else. And I felt like coming out of that especially going to Wall Street, the real trick was understanding the why- why these companies were going to be big companies. And, so I think that transition from the how, the what and the why really happened through business school and through the people around because my friends and classmates and all people came from very diverse backgrounds. Not only would there be gender diversity and ethnic diversity but they came from around the world. I remember my circle of friends were from Malaysia, Australia, Ireland, a couple of Silicon Valley people but it was that diversity in thinking was critical. And that allowed me to shape the second half of my career, as I would describe it.

Neelima: Great insights. We’ll go now into a little bit of how the venture business works, demystifying the details around that. Perhaps, we can start with the process of raising money. How does that process work when you’re raising a new fund? We know that you just raised your 12th fund. So, if you can talk a little bit about that.

How Venture Business works- Raising Money

Mark: Yeah. So, Venture capital is quite a simple formula, right? If you think about what Amazon’s philosophy is- inputs versus outputs. It’s like, our investors give us money and we’re supposed to provide a good multiple on it and give them good returns at the end of the day. Very simple investment philosophy. But at the end of the day for the fundraising part of it, which is your question. Look, we have chosen to be on the smaller end of the spectrum because we liked the seeds and aids and the early end of the spectrum. We’ve had bigger funds in the past, but we really feel like the best stage in our career is where we really like to be the first  institutional investor. So, fundraising for us has been, because our fund size is 200-250 is what we set ourselves to goal. It’s been pretty straightforward and so our investors are probably a mix of institutional investors like pension funds or university endowments and some strategic investors. We do have some corporate investors who provide us some very good perspectives on newer trends and technologies. But for us, it’s every three years or three and a half years, we go out and raise this amount of money. We deploy that capital over a three-year period and then the life. These companies sometimes take 7 to 10 years and so the investment horizon for these funds are about 7 to 10 years. And while we invest in the initial check in at that three-year timeframe, it’s deployed over 7 to 10 years, or we have to work with these companies for 7 to 10 years. So our investors are pretty patient. They are very sophisticated about why they are investing in venture capital. This is a small portion of their portfolio but it’s been the best returns in many cases for them. And so we’ve been fortunate as a 12th fund to have a very good roster of investors that we’ve worked with for a period of time. That hopefully that answers your question.

Neelima: Yes, it does. And, what drives the decision making towards investing in Seed versus Series A, is there a set of expertise? Or is that the uncertainty part of it, which is exciting. What’s the decision factor around that?

Mark: I could do without uncertainty but no because at the end of the day, you have to do what you really like to do and you have to do what really gets you excited and what you’re good at. And what we’ve found is between Tim and myself, we really like that a lot of the value is created in the earliest rounds of financing. And you have to know what you’re good at and what you enjoy doing. And for us, we enjoy that company building at the early, early stage of it. And we will talk about the CXO board here in a second. But the reality is that’s the part that excites us the most. And while we’ve had the opportunity to do the full spectrum, we found that not only are we good at that early end of the spectrum, but we also enjoy it the most. And we find that the most value is built at that phase. So that’s why we’ve generally focused on the early stage of the spectrum.

Ankur: Thanks Mark. Appreciate the insights there. So having raised the funds, tell us a little bit more about how do you find the right company to invest in? You’re probably getting hundreds of emails a week. How do you find the right entrepreneur, the right company to invest in? Tell us a little bit about your decision making process there.

Mark: You never know where the next best entrepreneur comes from. We do count on referrals a lot from folks like you who understand and know great entrepreneurs around. We have good relationships with other VCs but that doesn’t mean that someone who reaches out over Linkedin is not going to get a connection with us. And, part of this is we’ll talk about this but the prepared mind, right? I may not respond to somebody who just blankets an email across because they can find our emails anywhere. It’s very hard to respond to everybody who reaches out. However, if somebody has taken the trouble to say- Hey, I see that you guys do healthcare investments. You guys have some interesting companies like Reify  Health or Deep Lens and we know so-and-so there and there are some warm connections, some prepared minds. The chances of that connection happening is so much higher than just the cold call email. I mean, it’s no different from sales or inside sales with companies. And so for us, that’s kind of how you connect. But I think the second part of your question or embedded in your question is what are we looking for? And at the end of the day, if you’re investing in Seed and Series A companies, a lot of it has to do with the entrepreneur. 

There are three big buckets – Entrepreneur, Technology and markets. When I started, I was a little more focused on the markets because maybe there was more breathing room. But now every space has a dozen or more companies and it’s more about betting on the jockey here. And so for us, it’s making sure that you do your work on the entrepreneur and figure out what it is about him or her that makes sense for the opportunity. So I think people use the term Entrepreneurial market fit a lot and I feel like that has become even more important and relevant these days.

Neelima: And how much time do you spend with the portfolio companies? Does each member in the team spend with four or five of them?

Mark: Yeah. So the way to think about it is that it’s very different from when you start out a career and you don’t have any baggage with you versus kind of where we are in the journey. So if you think about this for me, I probably have 8 to 10 boards, and probably a dozen or so portfolio companies, because we may not be on the board of every single company that we’re involved with but most of them, but not all of them. So call it 8 to 10 boards and a dozen to 15 companies. So for me, the real leverage at the end of the day or if you ask me how do I split my week or my month up? I would tell you that it’s probably 45% on new companies, 45% on existing portfolio companies and 10% for other stuff, including CXO board and LP stuff and whatever else. But that was very different when I started out or for the younger principals and associates at the firm, heavily weighted towards deal sourcing. And so half my time that I spend with portfolio companies even that is about where do you get the most leverage?. So if I think about Varun at RedLock or any of this was for me- it was mostly about helping build a team. What are the team requirements? Because the only way entrepreneurs and CEOs scale is with their team. And so a lot of our efforts are helping entrepreneurs not just find talent, but really interview and help them especially first time entrepreneurs making sure they’re finding the right fit of talent for their companies. And that was one of the things I learned with Sourcefire. I mean that company went from pre-revenue and Marty’s basement to almost a billion dollars of revenue at Cisco and it was that team that we hired there stayed intact for a good part of 10 to 12 years as they grew that business. And I learned a lot from some of the executives there. So that’s where we spend our time in the existing portfolios-really around the team, customer interactions, all the stuff that VCs will tell you about. We’re very good at that but I think the biggest part for me is making sure that the team scales with the entrepreneur.

Consistent theme across companies that get it right

Ankur: Yeah, it’s a perfect segway into the main portion of the part where we want to talk about your hits, your losses and your misses. So obviously Sourcefire was a big hit. Tell us a little bit about what you saw early on and how the Sourcefire team and the leadership team were executing? What did they consistently get right? What are some of the consistent themes you’re finding in the hits you have seen, whether it’s Sourcefire or RedLock or  other companies, what do they get right across the board?

Mark: Yeah.So, there are cases and we can go through a couple of examples where the market just drags everything in the right direction. But most of the time, I would say it’s about that entrepreneur, who’s been able to look around the corner. And not just down the road, but around the corner because if you think about the big companies and what they’re interested in big public markets, it’s about someone who could see things that the rest of us mortals could not see for another three or four years.

So, if I think about Marty at Sourcefire, Marty had this open source project called Snort, which was in the intrusion detection space. And back in 2002, thinking about putting open source and security together was like fire and ice. Because, you think about open source that anybody can look at the code and do whatever and security is supposed to be this very secretive thing. Marty had that vision around how he was going to get it out there. We had 2 million downloads of Snort. We had big enterprises using and just wanting to pay for it and this was in 2002 when there were only a couple other Red Hat and MySQL were the only other open source things. Now everything’s open source. Everybody wants to use it. Every VC is chasing the next hot open source project. But I think back in the day it was Marty being able to see around the corner. And so I think for us, it’s those entrepreneurs who have been able to transform industries.

I’m involved with a company called Reify Health which is in the patient enrollment for clinical trials. Now with the pandemic, everybody’s talking about how clinical trials are getting decentralized and democratized but when Ralph started this two or three years ago, I mean, he was really, really innovating around stuff.

So to me, it’s that entrepreneur who has that ability to look around the corner, which is really critical.

Ankur: Yeah. One of the key things you’ve talked about is the kind of market that drives the right type of people to build the right product and a big portion is the market but keep me honest here. Marty and the Sourcefire team must have gone through the dot-com hangover then ‘08 crisis and they navigated all of this. And we always hear in the startup land, lows are lower than highs are high. So, are there any stories that you remember where things were, whether it’s Sourcefire or any other company where things were low and the entrepreneur just through grit and sheer will pushed the company forward.

Mark: Oh, yeah. Look, venture and startups are never a straight line up into the right. It’s 18 years and I’m still waiting for the first one that’s been a straight line but the reality is whether it’s the market corrections or whatever. Sometimes team -you might hire an executive who didn’t work out or other external factors. That’s why the focus is on building a team around an entrepreneur. And I can’t tell you the number of crises that Marty faced in the early years and even in the later years, even as a public company, even once they went public. The first couple of quarters out of the gate were terrible and for me it all comes down to have you surround yourself with great people. And I think eventually there’s no substitute for that.

Missed opportunities

Ankur: Gotcha. In the VC business, one of the things that is often talked about is the misses. The misses sting a lot more than the losses. It’s just the nature of the business. Were there any misses in your career? What have you learned from that?

Mark: Yeah. How much time do we have? There’s a long list of misses. I’ll try to give you a couple of examples that highlight different situations. And probably two in the same bucket with different size and scale of outcome. 

I remember, there was a company, AdMob which was in the mobile advertising space and I’m not an advertising guy but I remember this was in probably 2007 or 2008 or something. I can’t remember when but somewhere around that time frame when Omar was a freshman at Wharton Business School doing his MBA. And       I found him through some blog posts somewhere and I reached out to him and he was like “Mark, I’m looking to raise $300,000”. It was probably the most thoughtful business plan I have ever seen in 18 years of doing this. And it was a 20 page doc. and it had all the details, lots of metrics, lots of data. And I was like, Damn, this is a no brainer. And I’ve been doing this for about five years as a VC and I remember taking them to the team and Sierra at the time was a much bigger team and more senior established partners. And unlike Sourcefire, where I knew security very well. And I had the conviction to tell everybody, guys, we got to do this deal. I didn’t know much about mobile advertising. And I remember one of my partners telling me, this guy should just focus on business school. Why is he doing this mobile advertising thing?

And anyway, long story short. We didn’t write that $300,000 check and the other dimension was also back in the day, nowadays people drop $300,000 in the lunch line, but back in the days that’s like $300,000. It was like, well, why does somebody want 300,000 bucks?

And, so long story short, Omar went on to build a phenomenal company. It was the first real big mobile advertising company and sold it to Google for $750 million. It is a key part of Google’s mobile app business. And we just missed it because I couldn’t see around the corner on that. And I didn’t have the conviction in doing spaces so that was one example.

And similar in that bucket would be Instacart. I remember we saw one of the principals at Sierra brought an Instacart right out of YC, just phenomenal, phenomenal. He had found his way intoYC and people didn’t see it. But at the end of the day, he struggled to raise right out of YC and we missed that opportunity and this story hasn’t fully been written yet but that’s a massive company.

And so for us it’s that ability to take the risks in areas and spaces that you may not know everything about. And it’s a calculated risk but then if you play this forward two spaces, I know a lot about sometimes. We saw Palo Alto networks when he was raising a Series B, we were conflicted a little bit because of Sourcefire at the time, but different funds and if there was really a way we would have probably done it. 

But I would just say for different reasons, whether it’s valuation or there’s something about the entrepreneur that maybe we don’t identify with this person or we don’t get along with something. I think to me there’s a long list of reasons why you can’t do a deal. What I’ve learned over time is in the venture business, you always have to look at what could this company be not what could go wrong. And I think too often we get caught up in the “what could go wrong” and eventually,   those have come back to bite me.

Neelima: So for the entrepreneurs or would be entrepreneurs, Mark, who are listening to this, what is a good way to show that vision to you? The opportunity around the corner or maybe it’s something that’s not in a space that you are investing in today, but you may want to invest in. Any guidance on that.

What VCs look for-

Mark: Yeah. So, I have become a big, big believer in what I call full stack entrepreneurs. You guys talk about full stack developers and stuff but I think there are full-stack entrepreneurs. Full-stack entrepreneurs are people who can, essentially talk to customers, who can talk to investors, who can talk to their team, who can talk a bit about the product but also can talk about the market and the market opportunity.

So, let me say what I’m looking for or what entrepreneurs should keep in mind is that ability that too often people come in and tell you what they have versus what customers want. And, I’m not a technical guy. Yes, I have a robotics degree but I can’t hold my own deep technical conversations. And so for me, it’s more about product market fit. So the first thing I’d say in the full-stack entrepreneurs is know your audience, right? Someone needs to know- Hey, this is a guy who invests in these spaces. This is what he’s invested in security or in healthcare. So let me come in prepared on that front and then be able to talk about the market opportunity, the product market fit, where they are.

So I will rarely do two guys or two gals in a PowerPoint presentation but I definitely want to see what market discovery they’ve done. Have they figured out the ideal customer profile? I’m not looking for revenue or traction or how many customers you have given the stage we’re invested in but I’m definitely looking for what kind of customer discovery has someone done? Do they have it? 

Even if I think about Varun and RedLock. Varun had a couple of customers that were kicking around his product and that was it. And we literally met and we can dive into these details. We met at a bar and we sat at a table and within 45 minutes I was like I’m going to invest in this guy because he just could articulate, the product market fit, how this is going to be a big company, how he was going to get there, what kind of people he needed to get there. That’s what I mean by full stack entrepreneur. Somebody is not just in love with their own product but their ability to think through the full stack.

Companies that failed

Ankur: Very well said, never heard of the full-stack entrepreneur before. Be sure to use that and thank you for that. We talked about the hits, we talked about the misses. What have you learned from the losses? So obviously you invested in the entrepreneur, the market and the company. So things were pretty good that led you to make the investment. Is it the scaling phase typically between like Seed or A and B, where things start to get a little shaky for these people, the execution, risks. What have you seen from the companies that just couldn’t make it on the other side. Beyond the macro environment which obviously entrepreneurs can’t control.

Mark: Yeah. So, in the broad category of issues that are seen one is market risk. And when I say market risk, I really truly mean like, the market changed on you. Something happened, whether it was regulatory, whether it was, there’s a whole bunch of things that could change in the market and, good teams can see that earlier than most people and navigate there. 

I would separate this stuff into one that’s in your control and the other that’s not in your control. The stuff that’s under your control is the execution, risk and hiring and firing and all those pieces of it. And to me, where sometimes you just wait too long on making changes in the team or whatever else. And you got to help the founder or the CEO to see what’s necessary to some extent, right? Because we’re not running the companies, but we’ve got to be able to see what’s going on and be helpful to the teams too to adapt to those situations. So I would say, half of the stuff that hasn’t worked out is market risk related. I mean, just Facebook happened or, whatever, right. There’s certain things that are just beyond your control and yes, you should have seen it. Maybe you should have exited earlier but we don’t need to get into those details. I think the part where I’ve gotten burned is where we’ve not been able to adapt on the execution risk side of it and adapt soon enough. And that’s a very slippery slope because as you know, these windows of opportunity are getting narrower and narrower. And if you don’t execute the world passes you by.

Emerging Trends

Neelima: Yeah, great insights there. I want to switch now a little bit more in the future, in terms of the VC’s and market landscape over the next five years, besides healthcare and infrastructure. What are some of the other hot B2B trends that we may see?

Mark: I think you’re getting specialized in every area. Right? So as you look at it very broadly and this doesn’t do it justice, if you split it into infrastructure and applications. 

On the infrastructure side, you’ve seen how security has become while it’s the gift that keeps giving, it’s specialized down to application level. Scores of infrastructure, network related stuff. It’s very fine tune and you have to really thread the needle on some of these things.

On the application side, the way we’ve looked at it is by vertical. And so whether it’s healthcare or manufacturing or whatever else and then by function. Now you’re beginning to see companies that just focus on sales engineering or inside sales or it’s down those granular levels because each of these companies, each of these constituencies have buying power and so you just need to be able to figure that out.

So, as we map that matrix out, it’s kind of saying, where are these next big things? So if I think about healthcare, for instance, we’ve kind of gone down and said- Hey, this payer and provider and all of these, all B2B stuff. But it’s not just healthcare it’s like within that, how did the payers work? How did the providers work? Should you go off to the pharmaceutical world? I mean, we are in that equation and within that you start saying, okay, clinical trials and each of these areas get very, very granular. And so for us, it’s just you can’t spread yourself through thin because with a fund our size, yes, we’re making a lot of early stage bets but I still do believe that there are certain areas that you’re just better qualified than other folks and so I try to be competitive in a handful of few areas.

Ankur: Yeah. you’ve touched upon healthcare a couple of times. And obviously like Peter Thiel said – In the last 50 years, we haven’t seen real innovation. Obviously with the RNA based vaccines, material science and real healthcare stuff we are seeing some innovation. What are some of the technology trends in healthcare? I mean above and beyond, I guess like telehealth. What gets you super excited?

Mark: Yeah. So, I just did a session with Gartner and with their Gartner Research Board and we had like about a dozen of the top CIOs and CTOs and chief digital offices of these across the spectrum like AmerisourceBergen or Merck and some of the others whether it was pharma, payer or provider across the spectrum.

And I think there are a few big trends. One of the biggest things that has happened with this pandemic is we’re going to see this decoupling. I use the term decoupling of assets from services, right. So everybody thinks about healthcare as Tele-health-My doctor’s visit is going to be a video conference and that’s what it is, but it’s way more than that. I think you’re going to get a lot of the remote monitoring. You’re going to get a lot of the diagnostics. You’re not going to have to go into your doctor’s office to get some of that stuff done. And you’ve seen this a little bit with the Teladoc merger. And so as you think about the different components and it’s massive and with Amazon getting into this, it’s going to completely change the landscape here.

But to us, we’re saying, we’re not biology, PhDs and biology, right? So we’re not going to do some of the life sciences oriented things. We’re saying- Hey, where do you apply technology to healthcare business problems and that’s how we’ve approached it. And that’s why we were like- Hey, Reify for clinical trials totally makes sense. It’s basically Google docs on steroids. It’s workflows, it could be applied to any space, it could be applied to manufacturing. And, we just think that the fit in this particular area within  patient enrollment for clinical trials is a big space. So that’s why we made that investment. There are tons of opportunities but you have to figure out what you do best. And I think there’s going to be a lot of digitization of the different healthcare processes.

Neelima: Speaking of Amazon and even Microsoft, consolidating infrastructure, really foraying into the security space as well as kind of taking the IAS space as well. What is the impact do you see like Microsoft is getting serious about a lot of horizontal layers, which it was not before for example. So, what would be the impact on the kind of opportunities that entrepreneurs will have because if one fine day, Google may say- I will add Google tables and a lot of productivity tools become obsolete or have a chance of that. So any trends you’re seeing around that?

Mark: Yeah look, this comes to entrepreneurs who can see around the corner, Neelima. Because I do feel at the end of the day, if you kind of worry about what Amazon, Microsoft, and Google are going to do, there’s very, very little white space. You just have to figure out what you can do better than them in the period of time that you have. And in particular, Microsoft, to some extent Google-  they’re very inquisitive on stuff. And you just have to be able to thread the needle, run the gauntlet better than them on some of this stuff. But I really do feel like there’s a ton of opportunity and especially as you start getting into different verticals because yes, they do have a lot of horizontal plays. But if I think about healthcare, some of these other spaces, they are going to get into these spaces, but they’re going to do it inorganically. And so to me, there’s tons of opportunity now and by the way it’s not just Microsoft and Amazon. I’ll give you one example: I’m on the board of a company called YelloChat which is basically conversational AI but based out of Mexico city, focused on LATAM and Asia and it’s essentially all based on WhatsApp and mostly WhatsApp, messenger and few other things, but mostly WhatsApp  in geos where WhatsApp is the strongest. And they are running the biggest businesses in these geos on WhatsApp. They are providing applications on top of WhatsApp that are running FEMSA, which is Coke’s gazillion dollar bottling business. They’re running Airline industries, they’re running hospitality. And this company is one of the fastest growing portfolio companies for us.

And this whole digitization through the pandemic has just accelerated everybody. So to me, I feel like there are going to be these opportunities. There are companies like Salesforce and ServiceNow which are now very, very large companies that will compete and they are competing with Microsoft and Amazon and Google in different areas. So I think there’s lots of M&A activity that’ll happen over time. And I think the best companies will go public as you’re seeing that already. So I think there are tons of opportunities for us. It’s trying to figure out which ones can be large companies. There are a lot of tuck-in acquisitions but we’re trying to find those big ones.

Ankur: Well said. There’s a fair bit of froth in the market. It’s been like that for a few years now and feels like.com. When do you think the music stops?

Mark: Hey, that’s why I’m in venture and I’m not on Wall Street. I have no idea Ankur. When I thought it would have tapered off a little while ago but look I think with interest rates where they are and the equity markets are very vibrant. So I don’t know. Nobody could have seen what the mortgage stuff did back in 2008. You just can’t predict. And that’s why I believe in  managing what you can control and the stuff that’s beyond your control is really hard to tell.

Ankur: Well said. Last question before we move on to the rapid fire. We see business from the outside. It looks like a cool thing, meeting a whole bunch of people, invest in a lot of companies. What advice would you have for somebody who wants to get into the business?

Mark: It’s a hard business. No look, I’ve done this for 18 years. I’ve seen the transition, the phases in the venture business and it’s a fun business. The fun part in the sense that you get to meet the smartest people. You get to see the best ideas. All of that is terrific. The hard part in it is, like I was saying I have 8 to 10 portfolio companies or boards and then probably a dozen to 15 investments across the board. And at any given time, there are more companies who have problems than companies who are doing well. And these are emotional. These are teams. Many of the entrepreneurs have become friends and you’re trying to work with them closely. And it’s hard because their problems are my problems and it’s that emotional attachment being able to separate some fitout. But the reality is when companies have gone through rough times and you think about it and you try to help the entrepreneurs out and it’s difficult when you know. That’s the part that people don’t see from the outside. It’s those ups and downs and as an entrepreneur, your entire life is around one company but for us it’s at times a dozen. So, it’s challenging but it’s also fun. So when you actually have a good moment or  a happy moment there, you gotta embrace it. You got to take full advantage of it and you gotta celebrate those ups at the end of the day. So I love it and I had three jobs or four jobs and two master’s degrees in my first 10/12 years of my career. And I’ve done the same thing now for 18. So I guess I like it.

Neelima: Great with that we’ll go into the last round which is the rapid fire. Okay. Book of the year?

Mark: There are lots of books but for me my guilty pleasure is cooking. I love to cook. So I’m reading this book right now called Chocolate- a bittersweet saga, dark and light. It’s not just about the story of chocolate but the background, it’s like blood diamonds and whatever else. So it’s  just a guilty pleasure and escape for me.

Neelima: Awesome. Entrepreneur of the year.

Mark: Well, if you follow Time it’s gotta be what Zoom has done. So, Eric, yeah,

Neelima: Company of the year.

Mark: I would say Zoom too but I do think that companies like Veeva and ServiceNow have also made a tremendous difference. So. I would probably not just say Zoom because I gave it to Eric but I’d say ServiceNow and Veeva.

Neelima: Event of the year aside from COVID 

Mark: Okay. Is there anything else left? (Laughs) I mean that’d be the elections.

Neelima: (Laughs) Well, yes, of course. Is there going to be a Google in B2B security space anytime soon?

Mark: I think companies like Palo Alto have done a phenomenal job so I don’t think there’s going to be a Google but I think there’s going to be a lot of great companies.

Neelima: If you could name an entrepreneur, we should invite on the pod.

Mark: If you can get Ralph Pasaarella from Reify to do it. He’s changing clinical trials forever. And I know him, I know his mission. I would encourage you to try to get to Ralph. He’s just very busy.

Neelima: And last question- what advice would you give your 18 year old self?

Mark: don’t have a plan, just go with the flow.

Neelima: That’s great. With that Mark, we really want to thank you for your 50 plus minutes. We learned a lot and hopefully in a year or so, we’ll be able to talk to you on the pod again.

Ankur: Thanks, Mark. I appreciate the time. 

Mark: Yeah, thank you very much.