Barry McCarthy was CFO at Netflix and Spotify during periods of explosive growth, and he took both companies public – in different ways. Our latest episode of Growth Journeys pairs exceptional operator Barry McCarthy with veteran investor Woody Marshall, a Spotify board member and TCV General partner. Together they explore how “visionary” founders and CEOs need to be able to see the future while staying grounded in the present, and how strategic CFOs develop their own ability to see around corners and help the team navigate both choppy waters and growth opportunities in finance and operations. McCarthy and Marshall then apply these lessons to the timely topic of managing in a crisis, and the critically important relationship between CEOs and their boards of directors. Take-aways include:
Three fundamental leadership qualities exemplified by Reed Hastings and Daniel Ek.
How McCarthy learned to staff and task his team for challenges that were still months in the future.
How taking risks separates industry leaders from the pack.
Why Spotify went public with a direct listing – and why others are following its lead.
The single most important adjustment that leaders must make in a crisis.
The invisible but essential quality that binds CEOs and their boards of directors
For all this and more, settle back and press play.
Keeping our team members safe and helping our companies navigate COVID-19 and prepare for the rebound has been our main focus at TCV. Our Portfolio Operations group, along with our Investment, Legal, Marketing and Capital Markets teams, are providing a surge of support for our companies. The takeaways of these efforts are the main themes of this newsletter. We hope that you will find nuggets you can apply in your business, in areas such as talent, sales and marketing, systems and technology, and more.
Menlo Park, CA – March 9, 2020 — TCV is delighted to announce that Neil Tolaney — a seasoned investor in the consumer internet, digital media, and subscription industries — has joined the firm as a General Partner. Founded in 1995, TCV has invested over $13 billion in more than 350 technology companies in both consumer and enterprise industries. Neil was actively involved in a number of those investments, including Facebook, AppNexus, Minted, and Prodege, when he was with the firm from 2011 to 2013.
Neil returns to TCV bringing a combination of investing and operating experience in consumer technology. Most recently, Neil was a Deal Partner at Francisco Partners, where he focused on growth equity and buyouts of consumer internet assets. As an operator, Neil was managing director of PersonalizationMall.com, an e-commerce direct marketer and category leader of personalized gifts (acquired by Bed Bath & Beyond); prior to that he directed strategy development at LegalZoom.com.
“We see tremendous opportunities in B2C investing and Neil’s background will be instrumental in helping guide our companies through their evolution into market leadership positions,” said Woody Marshall, General Partner at TCV. “Neil has built his career in the consumer internet sector, where experience really counts. Scaling high growth businesses requires differentiated pattern recognition, solid understanding of metrics and markets combined with conviction and alignment with management teams. To all of these Neil adds genuine empathy for everyone involved in the growth journey.”
Over the last six years, TCV’s General Partners have had the
opportunity to continue to work alongside Neil on shared boards among TCV portfolio
Based on the broad scope of shared experience, values, and
philosophies, we are thrilled to welcome Neil back to the investment team and
look forward to his contributions as TCV embarks on its next 25 years of
The General Partners of TCV
letter is not an offer to sell or the solicitation of an offer to purchase an
interest in any private fund managed or sponsored by TCMI, Inc. or its
affiliates (“TCV”) or any of the securities of any company
discussed. The TCV portfolio companies identified above are not
necessarily representative of all TCV investments, and no assumption should be
made that the investments identified were or will be profitable. For a complete
list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this
website, available at http://www.tcv.com/terms-of-use/.
members can bring a wealth of experience and advice to their CEOs – and not
just when the board convenes each quarter. The chemistry of this critical
relationship requires careful attention, particularly when selecting and
onboarding new directors, coaching the team and providing diverse insights. Tayloe
Stansbury, Venture Partner at TCV, shares lessons and insights from his board
memberships and two decades reporting to corporate boards as CTO at Intuit, CIO
at VMware, and EVP at Ariba. Beth Knuppel, Principal in TCV’s Portfolio Operations,
guides the conversation to the key moments and processes that board members and
CEOs need to master so that their relationships – and the business – can
podcast, Beth and Tayloe address practical questions for anyone coming onto a
board or running a company with board support, such as:
The most important criteria for joining a board
How to maintain diversity of opinion on the board while
still providing the CEO with convergent advice
Why board members should meet with their CEO informally
between board meetings
How to set efficient board meeting agendas that allow for
in-depth discussion of pressing issues
Why board members should evaluate their own performance
and not just the CEO’s
For this and more, settle back and click play.
Beth Knuppel: Welcome to Growth Journeys. This is a
podcast series from TCV focused on lessons from the field from both operators
and entrepreneurs in the TCV ecosystem. I’m Beth Knuppel. I’m an Operating Principal
at TCV, where I lead our talent center of excellence within portfolio
operations. Our podcast today is all about the CEO board partnership and
lessons learned for effective governance. I’m joined today by Tayloe Stansbury.
Tayloe is a Venture Partner at TCV, where he works with existing portfolio
companies, and he’s also involved in diligence for potential investments. In
addition, Tayloe serves on the board of directors at Coupa Software and
BlueJeans. Welcome to Growth Journeys, Tayloe.
Tayloe Stansbury: Thank you very much. It’s great to
Beth Knuppel: So, Tayloe, you had a long, successful
corporate career before joining TCV as a venture partner. Most recently you
were CTO at Intuit. Tell me a little bit about your background and how you got
to this point.
Tayloe Stansbury: For the last decade, I was CTO at
Intuit. I looked after all their technology operations — so engineering, data
AI, IT, and information security. And before that, I worked at a number of
other companies, including Ariba. I was EVP of product and operations there,
which included customer support, product management, engineering, and
operations. I worked also at VMware, Calico, Xerox, Sun, and Borland in a
variety of different engineering and general management positions.
Beth Knuppel: So you are a technology veteran, for
Tayloe Stansbury: I guess.
Beth Knuppel: In addition to those roles, I mentioned
you also serve in some board of director roles. You were on the board of
Shutterfly for three years. You continue to serve on the board at Coupa and at
BlueJeans. What was it that attracted you to board service in the first place?
Tayloe Stansbury: I was a direct report to CEOs of
public companies for some 20 years, which meant that most every quarter I was
doing presentations to boards. And it started to intrigue me that maybe I could
contribute at a different level. And that’s what led me to getting onto my
Beth Knuppel: When you say at a different level, tell
me more about what that means to you. What is it that a good board really adds
to a company?
Tayloe Stansbury: Boards advise, right? Boards don’t
manage. Management manages. And I think that distinction is really important.
Boards bring a wealth of experience that is orthogonal to what some of the
managers have and can advise them on new situations that arise and how to think
about new problems.
Beth Knuppel: I think that a lot of people have in
their mind this outdated stereotype of the board member who sort of jets in,
goes to dinner, maybe makes a few pithy comments at the meeting the next day,
and then you don’t hear from them again for another quarter. I should say, that
is definitely not the model at TCV. Our boards are really engaged. But I’m
curious, what would a management team expect, or what should they expect, in
terms of engagement in between those quarterly board meetings? How do you work
with the board in between those formal opportunities?
Tayloe Stansbury: For myself, I’d say, I generally
meet with the CEO of each of the boards that I’m on once in between each board
meeting — go out to dinner, to breakfast, or something like that — and just
talk about whatever’s on their mind. And I usually adopt one or two, sometimes
three members of the senior management team that I coach. And I usually meet
with them once off-cycle between board meetings. And those meetings can be a
lot of fun, high engagement.
Beth Knuppel: Got it. You know, a lot of our audience
are founders who may not have ever worked with a board before. So you’re
talking about this engagement in between. Who’s initiating that? Is that you,
on the board? How should the CEO be reaching out?
Tayloe Stansbury: I think it’s best always if the CEO
is making the introductions so you’re not invading their space and having
meetings unbeknownst to the CEO. I’d give an example from a board I was on that
was for a college. And the president asked me if I would lead the advancement
committee, which means fundraising. And I said, “Hey, I’ll do anything for
you, but I know nothing about fundraising.” And she said, “You’ll
figure it out,” and turned around and then walked away. So she did
actually introduce me to the head of fundraising and, we had a very fruitful
relationship, where I would come down before each of the board meetings and go
over his management challenges, his prioritization challenges, and how it is
that he was going to present to the board, because while he was very
experienced in fundraising and I was not, I knew something about presenting to
boards and he didn’t. And so it would end up being a very fruitful relationship
and we blew through all our targets and it was great.
Beth Knuppel: That’s great. One of the sayings that
we have here at TCV is that the journey to the top is never a straight line,
right? Every organization experiences setbacks and challenges. But I’m
wondering, the CEO is typically looking to put their best foot forward with the
board. How should a CEO balance that? How should they bring bad news or maybe
challenging situations to the attention of their board?
Tayloe Stansbury: If all you’re doing is the
Pollyanna version, nobody learns anything. I think what’s really best is
approaching it with complete transparency and an attitude of seeking counsel,
because that’s when you get the true value out of a board member who may have
been through some of these things, or have cognated things before. So that’s
hard to do. It means you’ve got to show your dirty laundry. But over time, you
can build a relationship with a board where that’s okay, because they’ve had
dirty laundry in managing the things that they did earlier in their lives as
well. And they’re not going to be freaked out about it, and they’ll be able to
give you much better advice which will enable you to perform better over time,
with the transparency.
Beth Knuppel: It sounds like a key piece of that is
just developing trust.
Tayloe Stansbury: Absolutely.
Beth Knuppel: How do you think about doing that when
you’ve joined a new board and you’re establishing your own relationships with
the other board members, with the CEO? How do you think about your entry into
Tayloe Stansbury: Well, I think you’re hitting on a
really important issue which is that the relationships are really important.
And I think boards work best when there’s diversity of thought, everybody is
respectful of each other’s opinions, but they’re also able to converge towards
something which is a plan of action or a consistent set of advice for the
management team. And I think the same thing is true with management. There has
to be that trust of each other, the sense that different people are bringing
something different to the party that is worth listening to and every now and
then might be the key thing you need to know to manage through a tough
situation. Mechanically, how that would work is going out to dinner with these
people off-cycle from regular board meetings, getting to know them, and getting
to build up that level of trust and respect for what it is that they’ve done.
Beth Knuppel: Right. I’m curious. As you work with a
CEO, you want to build that trusted relationship, but at the end of the day, as
a member of the board, part of your job is to evaluate the performance of the
Tayloe Stansbury: That’s right.
Beth Knuppel: How do you work through CEO evaluation?
Tayloe Stansbury: I think it’s best practice to have
an annual evaluation of the CEO and actually even an annual evaluation of the
other board members, where you think about: “What are the objectives that were
set for the company, what are the objectives that the CEO may have set?” And
everybody actually scores the CEO on that. You have a discussion as a board,
and that gets presented to the CEO on an annual basis. And that discussion
precedes setting the compensation for the CEO for the following year. I think that
detachment where you can help and also provide some evaluation — hopefully
which has got constructive ideas as to how the CEO can improve in areas where
perhaps they need to grow.
Beth Knuppel: And you mentioned that you think it’s
good hygiene for the board to engage in some self-reflection as well.
Tayloe Stansbury: Yes.
Beth Knuppel: How does that process work?
Tayloe Stansbury: Same way. Score each other, get
together to have a couple-hour discussion about what came out in the survey.
And if it’s a board that has mutual respect, those kinds of comments can end up
helping bring the board closer together and help smooth out some rough spots.
Beth Knuppel: In the case of, maybe, a board that’s
underperforming, what are some of the things that in the past you’ve
encountered that help address an underperforming board?
Tayloe Stansbury: I see it as a spectrum – where at
one end of the spectrum, you have a rubber-stamp board that’s not really
providing any meaningful thought diversity to the problem, and the other end,
where you have an acrimonious board which can’t agree on anything and they’re
just fighting over stuff. And I think the sweet spot is somewhere in the
middle, where everybody is thoughtful, they’re presenting diverse points of
view, and they’re figuring out how to converge that into something that is
constructive for the management team. And how do you get there? Again, I think
it’s by spending time with each other and learning to appreciate what each
other’s gifts are, what each other’s experiences are, what their scars are that
they’ve managed to live through and learn things from. On a rare occasion, it
may be best if some people move off the board if they just can’t get aligned
with the rest of the team.
Beth Knuppel: Are there any common pitfalls that you
Tayloe Stansbury: In one case in particular, we did
have a board that was pretty acrimonious and couldn’t get on the same page and
it was very hard to get anything done. It was very hard to give consistent
advice to the president of that organization. What happened in the end is some
of the people who were really on a different page rolled off. And we got down
to a set of people not who were rubber-stamped, who had diverse points of view
but were able to come together in the end.
Beth Knuppel: I know at Coupa, you’re a member of the
nominating and governance committee. What is it that you think about when
you’re evaluating somebody who might potentially join the board? For CEOs out
there, what should they be looking for when they’re thinking about board
Tayloe Stansbury: We look at: “What is the skill set?”
We have a whole matrix for skill sets that would be desirable for the board,
and we score each other on how strong we think we are on those things. And that
leaves it clear where there are some areas where we may have some gaps, some
skills gaps — some experience gaps — that it would be really nice to flesh
the board out with. And so then you go and say, “Well, who would be the
people who could best fill those skill or experience gaps?” And then you
look for, “Who are the people who are going to work well with the rest of
the board, whose voices will be heard, who will hear other people’s voices, and
will actually be convergent in their thinking, over time.”
Beth Knuppel: And, of course, the other side of the
coin, as you’ve joined boards, you’re also making an evaluation. What is it
that you look for to figure out whether a board is a good fit or not?
Tayloe Stansbury: The first thing is, you’ve got to
have a passion for the business. If it isn’t a business that you love, then you
probably shouldn’t be taking up space on the board. Another thing I really want
is to have a visceral sense of what is the strategic path to success for this
organization. So how is it that they’re going to weather whatever competitive
threats and come out on top? Your sense of that may change over time, but I
think you have to go in with a pretty good hypothesis of how this organization
can become durable and win against the invariable competition. And the last
thing is, it’s got to be people I like, because you’re going to be working with
these people over several years. And you’re going to have to come to converged
advice for management. It helps if you like everybody who’s involved.
Beth Knuppel: Sure. I’m curious to get your
perspective on bringing on a new board member. Is there anything that you’ve
experienced personally, or you’ve seen done really well, in terms of onboarding
somebody onto the board?
Tayloe Stansbury: I think that bringing on a new
board member is a big deal, and if you just hand them a board book and say,
“Show up for the next meeting,” they’re going to come in without a
lot of context, and they’re going to feel a little bit not on the inside, and
their questions are just going to be off-kilter. And what I’ve seen as a best
practice is you invest several hours, like a day, in training a new board
member by having them meet with some of the senior management people,
one-to-one, and then also go through a full rundown on the products, including
demos of the products, so they have a real feel for the business and the
Beth Knuppel: I’d love to get your perspective on how
you think about the board agenda, and what topics are actually covered. Board
time is so precious, you want to make sure that you’ve got a thoughtfully
constructed agenda. What, in your view, rises to the level of importance for a
Tayloe Stansbury: One thing I’ve seen that doesn’t
really work really well for board agendas is to try to have every key member of
the senior leadership team talk about the progress in their area every single
board meeting. What I have found works a lot, lot better is if you look at the
board calendar over the course of a year and say, “How do we make sure
that every function gets their day in court, if you will, with the board, over
the course of a year rather than the course of a single meeting?” And
everybody can have a deeper discussion, and you get into the meatier stuff. Now, to complement that, I think
having board materials that are first-rate, that come out early enough so that
all the board members have a chance to read and digest them, is really
And what you
can do in the board materials is make sure that the board materials include
some news about what’s happening in every function that has something to report
— even if they’re not going to present — so the board gets a view of that as
it’s happening but then gets the deeper-dive discussions.
Beth Knuppel: Great. When I was presenting to boards
on a regular basis, one of the things my CEO always said was, “Be bright,
be brief, be gone.” In other words, do whatever you need to, to avoid the
dreaded page flip where it’s kind of a march through slides that hopefully the
board has already read. Is there anything you would share with folks who are in
that spot of presenting to the board?
Tayloe Stansbury: I think it’s important for
presenters to realize that the board has read the materials in advance and say
the things only that punch up the most important parts of what’s on the pages.
I think another good practice is you may think that you’re going to have an
hour to present or half an hour to present, and it may be that the schedule
goes sideways and you end up with only 5 or 10 minutes to present. It’s always
good to have the 5-minute version of your presentation in the back of your mind
so if you’re asked to do that, you can say something intelligent and helpful
during whatever time remains. An important thing to remember about board
members is they come and engage only periodically in the business. You, as an
operating leader, are in there every single day. The board member isn’t going
to remember all the context that you’ve got in your brain, and they’re not
going to remember the thing that you told them three months ago. So making sure
that you show not current state, but trajectory over what’s happened before,
can help make sense for the board member.
Beth Knuppel: Great. Good advice. I want to close out
with two questions. And first, I’m curious, if you look back over your board
service, what do you think is the biggest learning that you’ve taken away? What
is it that you would do differently the next time you join a board?
Tayloe Stansbury: You know, I think that getting to a
sense of flow with a board, where you’ve got good ideas that are coming in,
people bringing diverse thoughts, and where people are thoughtful about that
and get to a good place quickly in terms of advising management, those are the
boards that feel really good. The ones where you have people who are on a
different place of, “Hey, I’m excited about this company,” and others
who are thinking, “We ought to sell this company,” and you just can’t
get them together, those end up being pretty rough situations. And you want to
avoid the latter, if you can.
Beth Knuppel: Finally, for founders, for management
teams who might be listening, what would you say would be the key takeaway that
you would offer them for, really, how do you build and leverage an effective
Tayloe Stansbury: Look for openness and trust. Build
a board where that exists. And working together, you can actually be a lot
smarter than you can individually.
Beth Knuppel: Absolutely. Great insights, Tayloe.
Thank you so much for joining us today.
Tayloe Stansbury: Thank you so much.
views and opinions expressed are those of the speakers and do not necessarily
reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not
verified the accuracy of any statements by the speakers and disclaims any
responsibility therefor. This blog post is not an offer to sell or the
solicitation of an offer to purchase an interest in any private fund managed or
sponsored by TCV or any of the securities of any company discussed. The
TCV portfolio companies identified above, if any, are not necessarily
representative of all TCV investments, and no assumption should be made that
the investments identified were or will be profitable. For a complete list of
TCV investments, please visit www.tcv.com/all-companies/. For additional
important disclaimers regarding this document, please see “Informational
TCV is delighted to announce that Gopi Vaddi, a seasoned investor with broad international experience, has joined the firm as a General Partner. Founded in 1995, TCV has invested over $13 billion in more than 350 consumer and enterprise technology companies, including $2 billion in Europe, where Gopi will be focused. TCV investments in Europe include Believe, FlixMobility, Brillen.de, RELEX Solutions, RMS, Sitecore, Sportradar, Spotify, The Pracuj Group, and WorldRemit.
Gopi is an excellent fit with TCV’s long-term strategy and
focus of investing across geographies and domains, often far from major
technology and financial hubs. He was born and raised in India, took degrees in
business administration and electrical engineering in the U.S. and India, and
has experience investing in the U.S., Europe, and Asia. Most recently, he was a
partner at Providence Equity’s growth fund, where he worked on growth buyouts
and minority investments in software and payments. At TCV, Gopi will focus on
software and software-enabled businesses covering business applications, vertical
software, digital marketplaces, and infrastructure software.
“We take as much care in adding a new partner as we do in making a new investment,” said Jake Reynolds, General Partner at TCV. “Gopi’s success springs from the same qualities that have driven TCV for nearly a quarter-century: deep domain knowledge, keen market insight, and a passionate commitment to helping entrepreneurs achieve category leadership. He also complements the firm’s broad growth-biased investment approach with expertise in software buyouts and buy-and-build investing.”
Gopi understands TCV’s approach, just as we recognize the value he has brought to his investments, including a willingness to roll up his sleeves and work side by side with management. As a citizen of the world who started his career as an engineer and data modeler, he has an innate ability to identify and partner with the next generation of category leaders and the entrepreneurs steering them.
We are thrilled to welcome Gopi to the team.
The General Partners of TCV
companies identified above are not necessarily representative of all TCV
investments and no assumption should be made that the investments identified
were or will be profitable. For a complete list of TCV investments, please
visit www.tcv.com/portfolio-list/. For additional important disclaimers regarding this post,
TCV Expands Value Creation with New Portfolio Operations Team, Capital Markets Lead and Senior Hires in Finance and IR. Check out Recent Investments, M&A and IPOs, TCV Team News, Technology Perspectives and Events and our new podcast: Growth Journeys!
Creating revolutionary technology for hotels has historically been a slog but lately we’re seeing a change in fate for hotel software companies due to increased investment in the space. One of the biggest investors in hospitality tech is Menlo Park based TCV, the growth equity firm that has invested in breakout companies like Sojern and SiteMinder within hotel tech. TCV has also made major investments in the broader hospitality and travel space such as: Airbnb, TripAdvisor, HomeAway, Expedia, Orbitz, SeatGeek and Toast.
TCV is one of the largest names in the world of technology investing with a successful track record in the massive hospitality and travel vertical. Vertical market software is an extremely hot investment theme right now.
“The easy opportunities for disrupting old-line industries are drying up. Now, many of the up-and-coming start-ups that may become the next unicorns have names like Benchling and Blend. And they largely focus on software for specific industries.” New York Times
Long time TCV investor and former SiteMinder CFO John Burke is excited about the opportunities within the vertical market software. John and his team have identified a trend within a sub investment theme that they’ve coined: “SaaS as a Network”. Here’s how they describe the concept.
“When a SaaS provider starts serving a high enough density of merchants, they can leverage that strength to build two-sided marketplaces with the merchant’s customers, suppliers, and employees.”
David Yuan, TCV General Partner
The general hypothesis is that once vertical market software companies achieve scale with regards to their core products they can always bolt on new point solution functionality but would be wise to focus on a much bigger opportunity. Specifically, TCV believes that these software companies can create two-sided marketplaces that connect their users to new channels of customers, suppliers and employees. Back in February, Hotel Tech Report identified the explosion of marketplaces as one of the 5 biggest tech trends at ITB Berlin, a trend that mirror’s TCV’s investment thesis. Of all the software companies creating marketplaces in hospitality, TCV’s portfolio company SiteMinder has the largest scale to date.
Last year SiteMinder threw its hat in the ring with the launch of SiteMinder Exchange aimed at “breaking down the industry’s notorious integration barriers, connecting hotel systems and applications through smart and simple connectivity.”
“The reality is that few industries are as fragmented as hospitality particularly at the PMS level. There has always been demand for many of the new applications, but innovation has been stifled by lack of connectivity and the sales model makes the economics challenging. Some of these barriers are starting to be broken down by SiteMinder and others which I think can unlock a lot of innovation for the industry. But this is a hard problem and it’s a complicated space with lots of moving pieces so that makes it challenging.”
John Burke, TCV Executive Vice President
SiteMinder’s Exchange marketplace is aimed at allowing other applications to access the firm’s broad user base consisting of more than 30,000 hotels worldwide. Most of those hotels are using SiteMinder’s highly popular channel manager which connects hotel inventory to 3rd party distribution channels as well as other products within the firm’s broader guest acquisition platform such as a rate intelligence tool and an online booking engine. The firm is betting that it can add value for users by allowing them to try more hotel tech applications with ease and in turn create new business opportunities for those suppliers.
We sat down with Burke to discuss his views on hotel tech, the future for platforms like SiteMinder Exchange and highlight the most cutting edge developments happening right now within the hotel space.
How did you get into venture investing?
I’ve been in and around venture since 2011. I started my career with EY in their audit and transaction advisory teams. Getting into venture was a bit of good timing and persistence. The TCV team were looking for an immediate hire and decided to take a chance. I was with TCV from 2011 to 2014 as part of the B2B software team. As I thought about what was next for me, I was drawn to the experiences and mentorship of the TCV Venture Partners (e.g. former senior operating executives such as Erik Blachford). The tech market at that time had been heating up with a few high-profile IPOs. It was my belief that the next wave of great investors was not going to be able to rely on multiple expansion or financial engineering. I believed the best investors over the next 10 years would need to be partners driving actual business growth.
That brought me to SiteMinder down in Sydney, Australia. TCV had just led the Series B investment in the company, and the fundamentals of the business were remarkable. On top of that, they were ramping up for aggressive growth across Europe, SE Asia and were about to launch in the U.S. which I thought would be great experience. I was also excited to work with Mike Ford and the entire SiteMinder team. Mike is a special entrepreneur who is not only very smart and a product visionary, but also authentic and humble. I joined SiteMinder initially in an analytics role and then for the next 3.5 years as CFO. For family reasons, we decided to move back to the U.S. last year, where I reconnected with TCV and rejoined the team. I continue to spend a lot of time in the hospitality and vertical software space and TCV just led an investment in Toast, an exciting next-generation restaurant platform.
Tell us about TCV.
TCV was founded in 1995 as a $100M venture fund and today has raised over $15 billion across 10 funds, focusing exclusively on technology companies. We recently began investing out of TCV X, a $3 billion fund. TCV looks to partner with companies that have potential for a sustained category leadership position and are looking to succeed at an even greater scale. This typically means that a company has been growing for several years — with a history of customer trust and engagement and a business model that is reflective of the value they provide. We are flexible on transaction type with experience in public and private markets and are comfortable in minority or majority positions. Over the past 24 years, we’ve had more than 60 IPOs in our portfolio and have worked with some of the largest franchises in technology including ExactTarget, Facebook, Netflix, GoDaddy and Spotify.
At this point, I’ve talked with many investors in the space which helps me appreciate how the various funds are different. For TCV, I think it’s the depth of industry knowledge and a growth mindset. We have close to 100 team members now and our investment team focuses every day on technology and goes deep in verticals and sub-verticals. When we identify a compelling technology trend, we take the time to thoroughly understand the underlying drivers, business model, and competitive environment. Having a developed perspective means we can have much more meaningful conversations about a company’s business and growth opportunities and are positioned to be a better thought partner for the executive teams as they drive towards expansion and category leadership. We’re not afraid to make bold bets especially when we have conviction on category leadership and to do whatever it takes to help companies reshape industries.
Can you talk about TCV’s view on hotel tech and its SiteMinder investment?
Travel and Hospitality has been a core focus of TCV for well over a decade. In addition to SiteMinder, the active portfolio companies we are working with include Airbnb, TripAdvisor, Sojern, Tour Radar, and Klook. Previously we were investors in Expedia, HomeAway, Orbitz, and Travelport, among others.
For SiteMinder, TCV led the Series B round and we have continued to stay active with the company as the lead director since then. Two of my partners David Yuan (General Partner) and Erik Blachford (Venture Partner) continue to serve on the Board of Directors.
SiteMinder has an incredible history, where is the company today?
SiteMinder is a hotel guest acquisition platform that connects hotels to future guests, so hoteliers can go back to doing what they love. It’s trusted by more than 30,000 hotels of all sizes, across 160 countries and has helped generate more than 87 million reservations worth over US$28 billion in revenue for hotels each year.
SiteMinder is based in Australia, how did you come across the investment?
It was a team effort. Back in 2011 to 2013 we spent a bunch of time mapping out the ecosystem for online travel and hospitality attending industry shows like HITEC and Phocuswright. Ultimately, we identified the channel management sector as promising albeit a lesser known segment in the category. Our view at the time was that online travel was increasingly complicated and in flux with new players vying for hotel distribution. Independent hotels were harder to aggregate but would also allow these same middlemen an ability to offer differentiated supply that was higher margin. Channel management became interesting because it aggregated and provided connectivity to this supply. We thought this was a hard problem particularly to do in a cost-effective way but when executed it could be highly strategic given the long-tail nature of both hotel supply and PMS. From there we focused on the best product and category leader which led us to SiteMinder. One of my colleagues got us an introduction to Mike Ford through an employee. We then got on the 14-hour flight over to Sydney and created a deal.
What’s one piece of advice you have for hotel tech entrepreneurs when raising capital?
Test the investors. Anyone can look at metrics, but make sure you push them on the nuances of your positioning and make sure they understand the depth of your industry and strategic implications of the various alternatives. Mike did this to us in a big way when we pursued SiteMinder and it always stuck with me.
One pitfall I’ve seen is entrepreneurs who get ahead of themselves with regards to the amount of capital raised or valuation and focus on those items vs. choosing the right partner. This can have implications down the road. I would say to raise what you need and what strategically makes sense given your market and opportunity. And focus as much time and energy as you can on the partner. In addition to the strategic perspective which is table stakes, I tend to think entrepreneurs should focus on investors with candor (to drive constructive feedback delivered in the right way) and humility (it’s all about the team and this also makes it more fun).
How do you think the hotel technology space will change over the next 5-years?
It’s a great time to be in hotel technology given how dynamic this market is. I think we are still early in the growth journey for hotel software. In my mind, there is no doubt that software will continue to play a larger and larger role in the next 5 years and continue to reshape the industry and guest and operator experience. We have also been spending a bunch of time on a thesis we are excited about, called “SaaS as a Platform and SaaS as a Network,” which is around the continued extension of the SaaS business model and platform companies leveraging their position in creating marketplaces with employees, suppliers, or customers. I think this trend has many opportunities in travel.
For hotels specifically, I think data, connectivity, and personalization will only increase in importance. Tools like SiteMinder Exchange, which is a data layer connecting PMS with applications and demand channels, can be a big part of this and drive innovation.
I also think there will continue to be more dominant global players with companies like Ctrip continuing global expansion and Google, Facebook/Instagram, and TripAdvisor starting to see momentum on their new models. The lines in the accommodation industry will continue to blur as Airbnb ramps up their investment and focus on hotels as well.
I also feel labor management will matter more, and there will be new innovative ways to tackle this challenge. This is something we’ve seen in the retail vertical which I think will also make its way to the travel industry.
People often say that the hotel industry is a bit slow to adopt technology. Do you agree?
I agree. But I don’t think it’s been driven by the lack of interest or desire. Hoteliers care deeply about guest experiences and the ones that I’ve spent time with often always go above and beyond what’s expected. The reality is that few industries are as fragmented as hospitality particularly at the PMS level. There has always been demand for many of the new applications, but innovation has been stifled by lack of connectivity and the sales model makes the economics challenging. Some of these barriers are starting to be broken down by SiteMinder and others which I think can unlock a lot of innovation for the industry. But this is a hard problem and it’s a complicated space with lots of moving pieces so that makes it challenging.R
If you were leaving venture capital tomorrow and forced to start a hotel technology company — what would it be?
That’s a tough one. Part of working in an operator role at SiteMinder helped me realize how hard it is to be an entrepreneur and scale a company. This only deepened my respect for what they do. I’m a big believer that you need to follow your heart, so I’d want to align it to something I am passionate about. Maybe I’d do something connecting hotels/travel and yoga which is something I’ve come to enjoy. And being a CFO and travelling a lot, I also think the opportunities in corporate travel remain significant.
What is the most interesting or surprising thing that you’ve learned from investing in hotel tech?
Not too much is surprising me at this point. It feels like there is never a dull day in hotel tech! One thing I did notice about some of the larger players in the space is that they serve hospitality, but at their core they are surprisingly not hospitable. One of my partners recently did a podcast with the former CMO at Airbnb and Coca-Cola and he talked about authenticity as an enduring and compounding competitive advantage. I think this is something that will matter more and more. I think it will eventually catch up with those companies who forget that, especially in hospitality tech.
What is the best book you’ve read lately and why?
“The Outsiders” by Will Thorndike. I read it a couple of years ago and it continues to stand out to me. The book profiles eight understated CEOs who took a different approach to corporate management. These “outsider” CEOs often didn’t have the charisma that society has conditioned us to expect and were often in their position for the first time. Humble, unassuming and often frugal, they shied away from advisors and the hottest new management trends, instead focusing on a pragmatic and a disciplined approach to capital allocation which drove extraordinary returns. I found myself getting lost in each of their stories and admiring their independent thinking and patience to wait for the right opportunity. “Shoe Dog” and “Limping on Water” are two others I enjoyed.
What is one thing that most people don’t know about you?
I love yoga and meditation.
For all the startups that might want to pitch in TCV’s office, what can you tell them about your investment criteria?
We recently began investing out of TCV X, a $3 billion fund, so the opportunities we pursue are typically between $30–300M. We tend to be flexible on all other aspects of a transaction type and focus on category leadership potential and growth. I really enjoy spending time with entrepreneurs and would love for folks to reach out even if they are a bit early. Companies can scale quickly so we would love to start a relationship well in advance.
The views and opinions expressed in the post above are that
of the author and do not necessarily reflect those of TCMI, Inc. or its
affiliates (“TCV”). This post is not an offer to sell or the solicitation
of an offer to purchase an interest in any private fund managed or sponsored by
TCV or any of the securities of any company discussed. This post is
intended solely for prospective portfolio companies and their agents regarding
TCV’s potential financing capabilities. The TCV portfolio companies identified above,
if any, are not necessarily representative of all TCV investments, and no
assumption should be made that the investments identified were or will be
profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For
additional important disclaimers regarding this document, please see
Tell us about your firm. What makes TCV different?
CEOs and Founders tell us how TCV stands out for them: the depth of our knowledge in their particular industry and technology. When we identify a compelling technology trend, we take the time to thoroughly understand the underlying drivers, business model, and competitive environment. Having a developed perspective means we can have much more meaningful conversations about a company’s business and growth opportunities.
Where did the firm’s name come from?
We were founded in 1995 and were originally named Technology Crossover Ventures. “Crossover” means that we’re equally comfortable making both private and public investments, and that we help companies evolve from private to public ownership. Many CEOs appreciate a firm who can be a capital partner at multiple stages of their company’s evolution. For example, we invested multiple times in Netflix as a private company, and continued to support them as an investor after their IPO. Our original investment in the company was 20 years ago, and we continue to be investors today. Over the past 24 years, we’ve had more than 60 IPOs in our portfolio and we bring that experience to every new investment.
What defines your portfolio?
We look to partner with companies that have already established a leadership position in their market and are looking to succeed at an even greater scale. This typically means that a company has been growing for several years – with a history of delighting customers, an economic model that is reflective of the value they provide, and an opportunity to scale the business in the future.
How is the firm different today than when you first started?
Today’s technology market is much bigger than it was in 1995, and today TCV is also much bigger than in 1995. During the past 24 years, we’ve invested in hundreds of companies and evaluated thousands more, so our knowledge base, experience, and network has expanded dramatically. Because of that, we’re in a better position today to help companies scale smarter and faster.
Why is TCV a part of NVCA?
We are a collaborative firm, so being part of our own industry association is a natural fit. TCV was a founding member of the NVCA Growth Equity Group (GEG). Through our direct involvement on NVCA committees and task forces, we have witnessed first-hand how the NVCA works as an advocate for entrepreneurs as well as investors.
Tell us about the current VC landscape in your geography/region.
We have offices in Menlo Park, NYC, and London. While our geographic focus has generally been focused on companies headquartered in North America and Europe, most of our portfolio companies are – or are seeking to be – global leaders regardless of where “home base” is. Today, executives are building great companies everywhere, not just in the traditional technology hubs like the Bay Area, Boston, or New York. So we’re increasingly focused on finding the best companies regardless of where they are located.
What’s ahead for your firm in 2019?
Looking outward, we see more great technology companies and talented entrepreneurs than ever before. We recently began investing out of TCV X, a $3 billion fund, and are excited about the portfolio we’re assembling for that fund. Looking inward, we’re focused on making TCV an even better platform for the world’s best technology investors. We continue to grow our organization and provide a compelling career path for investors who can partner with the world’s best technology companies and deliver exceptional returns for our Limited Partners.
Describe your firm’s culture in 5 words or less
“Helping others succeed.” Internally, this means each of us are accountable for the success of the entire TCV team, and each of us are expected to actively support our colleagues. Externally, we all have the ability – and responsibility – to bring the capabilities of the entire firm to our portfolio companies and give them the best TCV has to offer.
Founded in 1995, TCV provides capital to growth-stage private and public companies in the technology industry. Since inception, TCV has invested over $10 billion in leading technology companies and has helped guide CEOs through more than 115 IPOs and strategic acquisitions. TCV’s investments include Airbnb, AxiomSL, Dollar Shave Club, EmbanetCompass, ExactTarget, Facebook, Fandango, GoDaddy, LinkedIn, Netflix, Rent the Runway, Splunk, Spotify, Varsity Tutors, and Zillow. TCV is headquartered in Menlo Park, California, with offices in New York and London. For more information about TCV, including a complete list of TCV investments, visit www.tcv.com.
The views and opinions
expressed in the post above are that of the author and do not necessarily
reflect those of TCMI, Inc. or its affiliates (“TCV”). This post is not an
offer to sell or the solicitation of an offer to purchase an interest in any
private fund managed or sponsored by TCV or any of the securities of any
company discussed. The TCV portfolio companies identified above, if any,
are not necessarily representative of all TCV investments, and no assumption
should be made that the investments identified were or will be profitable. For
a complete list of TCV investments, please visit www.tcv.com/all-companies/. For
additional important disclaimers regarding this document, please see