By Ben Fu
I recently joined the team at OMERS Ventures as a Partner, to lead investments in enterprise infrastructure, AI and cloud. I join during one of the greatest technology shifts in history and am convinced the next generation Google, Meta, and Amazons of tomorrow are still to be discovered. As someone who’s deeply passionate about technology and its transformative power to shape business, this market energizes me and allows me to tap into not just my investing experience, but to leverage my engineering depth as well.
This moment in time is extremely exciting for enterprise infrastructure due to the confluence of enterprise data growth, exponential advancements in models especially in GenAI, and the modern GPU hardware systems to run these powerful models. With AI workloads and data needs being distinctly different than what existing system can handle, there is an incredible opportunity to create the next great tech companies in the AI infrastructure stack as well as AI-native applications.
In venture capital hindsight is always 20:20. As I think about identifying investment opportunities at OMERS Ventures, I rely on the insights gained and lessons learned from some of the most significant investments I’ve been involved in to date. It’s a cliché to talk about pattern matching in VC investing, but it is the framework and set of guideposts that can lead you to the path of success. Especially in early-stage VC, when you're betting on the founder as much as the product or the market, it pays to home in on the key ingredients that have led to successes in the past.
Huge startup successes may be born in the product and the market it plays in, but realizing that success ultimately comes down to the founder. To that end, I thought it would be useful to share insights into four leading companies I’ve been very fortunate to have partnered with, and characteristics I focus on when evaluating investment opportunities.
Box: From thumb-drive in the sky to a full content collaboration platform for businesses
Aaron Levie, the founder of Box, started developing the original service in college, dropping out of school to launch the company with his with his long-time friend and cofounder Dylan Smith. Launching Box as his first job, Aaron didn’t have a long history of working in startups, let alone building one. In the pre-cloud era of spinning disks and limited bandwidth, Box’s technology had its fits and starts, but he had a very strong point of view, and an initial vision: building the ubiquitous Web 2.0 ‘thumb drive in the sky’. I can still remember his pitch to this day at the Dow Jones Web Ventures 2007 conference. Aaron was early but had a clear perspective of where he believed the market was going (all data and workflows will move to the cloud!), a deep understanding of products that customers of the future would need, and conviction about where the most valuable opportunity lay. He wasn’t afraid to stand up to enormous competition (Microsoft SkyDrive, Google Drive, Apple’s various cloud storage offerings over the years) nor was he afraid to later burn the boats by giving up the hot Web 2.0 consumer market and going all-in on enterprise.
The recognition that while Box’s early success was in winning over consumer users, their long-term revenue growth and scale lay with B2B offerings is similar in some ways to the path that Shopify (an OMERS Ventures portfolio company) ended up taking. While it seems obvious in retrospect, it was a much more counterintuitive choice at the time.
Today, Box continues to execute against Aaron’s expanding vision, generating $1B in annual revenues and has expanded into a full suite of business products including content management, collaboration, e-signature, data protection, and AI.
HubSpot: Fully committed to SMB + building Act 2, Act 3, and beyond
When Brian Halligan and Dharmesh Shah created HubSpot, it wasn’t obvious the company would become one of the largest SaaS companies in the market. At inception, the duo had a strong history of entrepreneurial and sales leadership between them, but what really stood out over time was their ability to make smart, non-intuitive strategic decisions, and execute on them.
Brian and Dharmesh had a single-minded focus of transforming how marketing was done, but specifically helping the millions of companies in the SMB market. Ask almost any investor and they’ll tell you it is excruciatingly difficult to make money if SMBs are your primary market (though there are notable companies that have done just that, such as Jobber, an OV portfolio company). But these founders didn’t give into the consensus belief that to succeed they had to shift everything upmarket.
HubSpot experienced years of strong growth with its initial inbound marketing product. However, when it looked like the first product might have been reaching a plateau they unlocked more TAM by building a GTM muscle that leveraged web agencies as a distributed salesforce to expand internationally and amplify HubSpot’s community (also a playbook Shopify employed in bolstering its sales). When it looked like the web agency channel strategy might have been reaching its maturity curve, their Act 2 was embarking on a multi-product strategy, adding a powerful marketing automation product. Act 3 was the introduction of the sales hub product line, then the customer service hub, and the list goes on.
The combination of customer-centric focus, sticking to SMB when the market said otherwise, and a willingness to continually build new ambitious products led to a business that eventually went public and has reached a market cap of over $25B in its time.
Gong: AI extracting value for all business conversations and driving a business outcomes mindset
Amit Bendov and Eilon Reshef, co-founders of Gong, had had significant startup success in the past. When they created Gong, they had a vision of a future where businesses could glean real, actionable insights about conversations happening in the company. First starting with sales conversations, it was essentially insight-rich game film for your sales team – not unlike how modern sports teams study past plays to improve future performance.
That vision wasn’t intuitive in 2015 when the company was created. Convincing investors and customers to buy into a future where technology would record and analyze every sales call wasn’t easy at the beginning. What salesperson would want a big brother-style analysis of their conversations and would prospects accept being recorded as well? And even if investors did buy into the vision, convincing them that some little startup would win, rather than Microsoft, Salesforce or Google (big incumbents in CRM or voice/NLP) was an even bigger ask.
Amit and Eilon’s longstanding GTM leadership and enterprise product experience gave them conviction that this AI-first technology – done right – could be a goldmine for businesses willing to adopt it. It was their combination of direct sales expertise, unfettered ambition and belief in the problem that needed solving that allowed this business to blossom.
Gong led the way in creating the conversational intelligence category and then built on it by transforming into an AI-powered intelligence platform for the entire revenue team. Having a customer-centric product culture forced the discipline to apply AI against focused business outcomes, which ended up resulting in a unique software product designed to benefit all of a customer’s stakeholders – from individual sales reps, to frontline managers, to CROs, CFOs and even CEOs – and turn them into what Ken Blanchard refers to as ‘Raving Fans.’
Today, Gong has over 4,000 customers and expanded its product lines and vision, becoming the leading revenue intelligence suite that spans conversational intelligence, forecasting, and sales engagement.
Honeycomb: Solving the unknown unknowns with authenticity
Founded in 2016 by Charity Majors and Christine Yen, Honeycomb is an observability platform for cloud-native application. For those who aren’t aware of it, it’s essentially a product that observes all aspects of the application such as uptime and performance, and when tech errors occur it helps software/infrastructure engineers identify the root cause, fast. The company was founded by two brilliant people who are deeply technical, coming from the software engineering (“Dev”) and infrastructure engineering (“Ops”) teams within Facebook. Having direct experience trying to solve complex DevOps issues there, they believed every company in the future would face similar problems and need their solution. When Honeycomb was founded, it was difficult to believe enterprises would have infrastructure pains similar to Facebook’s billion-user application, but Christine and Charity had conviction to build their product specifically for where the puck was going.
The key to their success here was building with a strong, opinionated take on the direction of the market – and of course being right in that belief.
To solve the problem with a scalable and performant solution, Honeycomb built a purpose-built datastore and query engine which was a large and difficult technical undertaking, but over time has become a competitive advantage. Fast forward to today, the Honeycomb team – a crew of contrarians and big-hearted rebels – wouldn’t have reached their level of success without being authentic to who they are and creating a product as unique as their culture.
So, what’s the pattern?
These four examples act as a proxy for the patterns I look for when meeting the teams building the next generation of great businesses. The key signals can be summarized as:
Unique market insight – founders with an extremely clear point of view on a market opportunity that very few or no others have, often gained because of direct experience with the problem, paired with conviction and insights on how to solve the problem
Ambition – founders aiming to change the way a market works, in a huge way (and not just altering a small part of it)
Exceptional execution – anyone can have big ideas – founders with a track record of acting on them (and iterating, fast)
Authenticity – Related to ambition, founders who have an authentic perspective and are committed to their mission, even in the face of doubters and short-term temptations to alter course
Acts 2, 3, 4 – Founders with visions that are expansive and evolving, clearly seeing opportunities where customers will benefit most from product expansion, and then relentlessly building that future
If these sound like you, read on
I’ve joined OMERS Ventures to build a center of excellence in the enterprise infrastructure space. What does that mean? You are probably selling your product to Heads of IT, Engineering, Product, Data, AI, Network Operations, or Security. Today, AI inevitably plays a core role in your product or service. You may or may not have a track record of building businesses, but you have technical expertise and a unique market insight.
And the problem you are trying to solve is enormous.
Here at OV, we typically invest at Series A – C with a first check of anywhere from $5-$25M. If you are interested, you can read more about our strategy here to see if it sounds like we could be a good fit for you.
I strive not to waste a founder’s time. After all, you are the ones doing the hard work of building a business. I hope this post helps signpost the sorts of companies and founders I am most likely to get excited about in the enterprise infrastructure space. If you feel these align with your values, and you would benefit from working with an investor with both a technical and sales background, reach out, I’d love to hear from you.
