The 7 Questions Interview Series: Data and Venture Capital
The 7 Questions Interview Series: Data and Venture Capital “The 7 Questions Series” is an investigative content series where we seek out key leaders in a specific industry and/or subject matter expertise area and ask them 7 key questions that inquiring minds want to know in terms of how they view data as part of their investment process. However, there is a twist to these questions: we provide the interviewee with a hypothesis for each question to help frame and set context for their answer.
Data and Venture Capital Series Objectives
The objective of this series is to establish direct connections with venture capital organizations, angel investors and M&A specialists across the globe and ask them the same set of 7 questions regarding their orientation when looking to invest or investing in companies. We want to derive insights from their direct experiences and expertise that will help companies, both B2B and B2C, at all stages of their evolution. We are also curious to see if their answers are similar or different. These interviews will be featured on their website as part of an ongoing series.
Interview with Jon V. Ferrara, Founder & CEO at Nimble LLC
Jon V. Ferrara is an American entrepreneur and the founder of Nimble LLC, his most recent venture. Ferrara is best known as the co-founder of GoldMine Software Corp, one of the early pioneers in the Sales Force Automation (SFA) and Customer Relationship Management (CRM) software categories for Small to Medium sized Businesses (SMBs).
Robin Smith: Tell us a bit about you and your firm.
Jon V. Ferrara: It’s hard to talk about our firm, Nimble, without really talking about my passion, about relationships, and how relationships power your success as an individual or a company. I believe that people buy from people they like, and they like people who know them.
But it’s hard in our over connected, over communicated world to identify people that matter, reach out and build relevant and authentic relationships with them. Relationships that result in some form of mutually beneficial business outcome. This is a problem that the whole world suffers from. If you as an entrepreneur are going to be successful in building a product or a service and scaling it, finding other people who can believe in you and who will support you is critical. Whether you want them to work with you as team members, outside partners, or invest in your company.
I’m a big believer in investing, and I invest a lot of my time and money in building tools that help other people grow, because I think that’s what we’re on this planet to do. And if you can do that at scale, you can build a Gold Mine.
Robin: What types of companies, industries and areas are you investing in today? In the near future?
Jon: I like to invest in things that I’m passionate about and that I understand.
The worst thing in the world that you could ever do is invest in something that you don’t understand. If someone brings you an idea that sounds like it’s the best thing in the world but you don’t understand what it is, don’t invest in it. If I do understand it, the number one thing I invest in is the people: I look for winners. I look for founders who are resilient because nobody is going to figure it out right from the beginning; very few people do. Start-up founders must be relentless and stay with it. They can’t allow themselves to be pushed off the track, they need to believe in their “big idea” so much that they’ll debate you on it and not back off. They need to be good at networking because they can’t do everything on their own. They need to be fearless! When they walk in a room they need to immediately connect with other people in such a way that they will remember them and want to do things with them to help their company succeed.
And, then if you do invest in a startup, make sure you give the founders the right amount of time, because I think that your success as an investor is correlated with the amount of time that you give to them.
Robin: How valuable is data collection to today’s venture capitalist?
Jon: All companies must see data as a source of value and competitive advantage and it does factor into investment decision making and valuation. Nimble, for example, has information on millions of contacts and companies that help our customers better connect and engage with their partners, suppliers, influencers, customers and prospects.
The data being gathered and used comes from various sources including calendars, emails, engagement on social media, tasks, sales opportunities and more. Our customers are able to get a 360 degree view of the people and organizations that matter to them. We don’t sell this data, but the analytics and insights that our customers can get from this data can be really incredible, and I think that’s one of the reasons that made Mint so valuable, and why Intuit bought them for $170M.
“There are some businesses that invest in technology too early or for the wrong reasons. “
Robin: Does a company’s technology matter when choosing to invest?
Jon: If I invest in a company that’s got a great product, the technology they invest in does matter to me. But there are some businesses that invest in technology too early or for the wrong reasons. There are examples where the people and processes of making a world class product don’t require technology. In fact, I know of a local business that was acquired by VCs who threw technology at it to automate processes that shouldn’t have been. They also offshored production to “scale” the business. Ultimately the venture failed because what mattered were the local people that made the product were gone along with the pride of making a world class experience for their customers. Regardless of the stage of investment you always invest in the product and the people first. Processes can be fixed and technology can be adopted. But it must be for the right reasons.
When Gold Mine started to get some traction, I needed to scale. In order to do that I found someone who had already scaled a company before. I hired him and let him do his job. He determined what processes needed to be changed and automated along with the technology needed to scale the business.
Robin: What industries are leveraging technology and data in order to innovate, grow and disrupt? Are there any industries that aren’t leveraging data that should?
Jon: I would say companies like Uber and Airbnb aren’t using data as much as they’re creating platforms or exchanges. Truly data-centric industries and companies are those that are getting mass amounts of data, analyzing it, and utilizing it to do things. One example is Bizo, acquired by LinkedIn in 2014 for $175M. Bizo gathered from various sources vast amounts of non-personally identifiable information from publishers, IP addresses, off-line databases and email data that was used to create bizographic profiles. They used data optimization techniques including data scoring algorithms, machine learning and human oversight to provide the highest quality, best performing business audience targeting data available to marketers. Overall, I would say the marketing and advertising industries are leading in leveraging data.
Some industries and organizations are behind though. I think about all the Chambers of Commerce and wonder about their use of technology and whether they understand the new digital customer journey, and how to engage with digital natives. I think there’s a lot of people who still advertise in the yellow pages, send quarterly newsletters and think traditional advertising is the way they’re going to generate awareness and customers.
Some do understand the digital customer journey and how to inspire and educate them, and build a relationship. But most of the people outside of the ‘social tech Kool Aid drinking coast’ don’t really understand that the world’s changing. The health care sector is a another example of an industry that is lagging. I was talking to a doctor the other day, and he was telling me that he left medicine altogether because he spent more time filling out paper forms than looking after patients.
Robin: Why are some SMBs late in adopting technology? Does this hinder your investment decision?
Jon: Any company, especially SMBs, rely on having good people and offering a great product or service. Their processes and the technologies come second as long as they’re not behind the curve and older technology isn’t keeping them back. A good example that everyone can relate to is Netflix and Blockbuster. Netflix changed their product offering from DVDs to online streaming which required them to adopt new technologies in order to fulfill their digital service. Had Blockbuster acted sooner, their larger loyal customer base and brand awareness, would have made it more difficult for Netflix to put them out of business.
The amount and timing of technology adoption really depends on the marketplace the SMB serves, and what the technology solutions will do for their offering, customers, and employees. The more attractive investment opportunities for me are those that have great people and a great product, but they’re not doing everything right. This represents an opportunity where I can use my knowledge, interest, connections, skills in addition to my investment to help the company succeed. Technology might be an area where they need to adopt or accelerate the use of it in order to grow.
Robin: Are you seeing more data centric startups? Might there be more in the future?
Jon: I think that the explosion of data, the popularity of mobile devices, and the ubiquity of the cloud is helping companies disrupt industries, create new business models, and innovative products. There are many data-centric startups that are in this space and building tools and dashboards to access and leverage information, and I think it’s only going to accelerate.
I think that one of the issues becomes accessing the data. If I was a startup, I would make sure that I was building integration with things where access couldn’t be turned off. For example, email and calendar is a great example of something that you’ll always be able to get access to because you control it. But if there are private APIs from other companies that startups are accessing and leveraging, they need to make sure they can always access the data or platform.
About Nimble LLC:
Nimble has re-imagined customer relationship management by pioneering the world’s first Intelligent Relationship platform. It auto-magically pulls contact profiles, email conversations and social signals into one simple place so you can effectively engage them everywhere you work.