The best VCs think different about enterprise IT. Benchmark's Matt Cohler is one, and it has paid handsome dividends.
In a world of vanilla venture capital, some firms know how to deliver Grandma's Cake Batter ice cream.
Take Benchmark, one of the most unique venture capital firms in Silicon Valley. They don't have the usual corporate website littered with unicorn logos--just two street addresses where you can find them, if you're looking for some smart money.
How smart? Well, they've pulled in a 1,000% return over the past decade, net of fees.
Matt Cohler joined Benchmark seven years ago when he was just 31. He was on the early teams at Facebook and LinkedIn and steered Benchmark into early investments in Asana, Domo, Instagram, Dropbox, Duo Security, Snapchat, Tinder, Uber, and Zendesk, among others.
Matt has provocative views on the consumerization of traditional enterprise software (everything should be as easy to use as Uber) and info-security products. I recently caught up with him to understand his investment strategy.
TechRepublic: What makes a market opportunity interesting for Benchmark? What do you look for in a prospective portfolio company and their industry?
Cohler: From an investment perspective, the companies that my partners and I get most excited about are not necessarily the ones operating in the largest incumbent market area. We tend to get most excited about the opportunities to grow a market, to grow demand, to reshape a market, to reshape demand.
Uber is a great example of that.
When Uber was getting started, a lot of people were asking the question, "Well how big can the taxi or limo substitute market be?" Turns out that Uber is very different and a lot more compelling than those traditional, legacy markets and is growing demand in the market enormously.
TechRepublic: How do you filter out the noise to hear signal? For example, what brought Duo Security to your attention in the first place?
Cohler: It's a rare thing to hear an entrepreneur or CEO talk about their security product. Our portfolio companies were talking about Duo.
What so excited my partners and I at Benchmark about Duo was that it was the first thing any of us had ever come across that really felt like a consumerized, consumer grade experience for the end user in the IT and security market. To me, that's critical. When you think about making security effective, if you can't actually enroll the employees and end users in your organization into your solution, then it isn't going to work.
Consumerization to me is the most exciting and most important shift in enterprise software generally, and it's really exciting to see it coming to IT in particular now.
TechRepublic: How is the enterprise going to adapt to a world of mobile, cloud, and BYOD?
Cohler: The heterogeneous environment is the new normal, and that applies not only to devices but also to applications and services. Lots of groups within organizations are choosing to stand up their own applications and services, and all of these things need to couple together and play nicely together.
What drives this new normal? The shift to a BYOD and mobile-centric world, the shift to a cloud-centric world and third, and equally important, this shift towards the user, the person as the focal point--not just for consumer products, but within enterprises and organizations as well.
TechRepublic: You have a philosophy about "starting simple" even in enterprise markets.
Cohler: Complex solutions that work always started as simple solutions that worked first. And that applies to company and company building, too, regardless of whether it's a consumer business or an enterprise business.
When you look at something like Facebook, Yelp, and Uber, they're all companies that have grown up to be really important, large-scale, global, complex systems but started from that really simple place.
It's important to start with something sharp, angular, different, and compelling--that also provides an amazing user experience.