The Guts and Glory of Category Creation

Customer Success is an established concept these days. Harvard Business Review has written about it. There are how-to guides online, and “Customer Success” even has its own Wikipedia page. Customer Success Manager positions, are among the fastest growing in the titles in the US. Customer Success is definitely a “thing” now.

The rise of Customer Success didn’t happen organically. Nick Mehta and the rest of the Gainsight team put the Customer Success category on the map through a deliberate and inspired effort.

In this Q&A, TCV GP David Yuan and Gainsight CEO Nick Mehta share lessons on the pros and cons, and the key success drivers of building an entirely new category of enterprise software.

 ***

David Yuan: Let’s start with the basics. What is Customer Success, and what made you think it was a big enough problem space in which you could create a large company?

Nick Mehta: Most companies today either already have or are transitioning to a subscription-based business model, so that means retaining and providing value to your existing customers is more important than ever. That’s where Customer Success comes in—when you’re proactively engaging with customers, you’re able to stay ahead of customer churn and even discover other opportunities to provide more value and upsell. And you know all of that ends up increasing renewal rates and ARR. It’s really cool to see more and more businesses recognizing its value.

David Yuan: And why did you think it deserved its own category? You could have fit in a number of existing categories. Why try to create your own?

Nick Mehta: Yeah, Customer Success has been confused with customer support, customer service, professional services, or account management, but really, it’s a mash-up of those functions. Early on we didn’t know what to call it. Honestly, if you said “Customer Success Manager” to somebody back then, nobody would have any idea what you were talking about. But we knew we were looking at a new discipline for the next generation of businesses—something that’s at the intersection of customer support, service, customer analytics, customer machine learning, etc. They do share some similarities, but the fundamental shift is going from reactive (waiting for the phone call) to proactive (owning the customer’s outcome).

We could have attached ourselves to a category like account management and become a boring old company that’s somehow related to customer support. Many people actually tried to push us into those types of categories. Fortunately, we stuck to our gut because we knew none of those were a fit.

David Yuan:  To be honest, category creation is a little bit a of a flashback to the 1990’s when Ariba and i2 spent gobs of money making procurement and supply chain sexy. Hmm, must have been an interesting discussion with investors…

Nick Mehta: Yeah, people didn’t like it. Not only because of the potential expense with creating awareness, but also because they thought Customer Success was too much of a niche. That putting ourselves in the category would box us in.

David Yuan: Were they wrong?

Nick Mehta: Yes and no. It was certainly an obscure area, but we truly believed it could get big. So we went down that path and became very passionate about building the Customer Success company—we decided to go all in.

David Yuan: So how did you define scope? Define it tightly and you have 100% market share and no TAM, define it broadly and you have big TAM and you compete against everyone. In picking scope you get to pick who you compete with today and potential in the future, as well as who may view you as a strategic acquisition. Was this all in the plans, how intentional was your scope?

Nick Mehta: Really good question and we still wrestle with it. I think we embraced the concept early on of focusing on a very specific market (subscription) and persona (Customer Success). Many people said “your TAM will be limited” because of this. But the reality is that that market and persona have grown radically. So I think the lesson is there is a tradeoff to focus but it’s less of a tradeoff if the “niche” has a big tailwind behind it.

David Yuan: And how did you actually put on a name on the category. Customer Success actually feels really nature–simple and non-technical, yet distinctive.

Nick Mehta: We actually had a lot of debate about naming it because there were existing categories that we could have slotted into. Friends of the company suggested we call it “customer artificial intelligence.” Others told us we should call it “customer insights” or “customer machine learning.” But none of those fit for our vision.

We noticed Salesforce had a team of “Customer Success Managers” that had like 80 people in it and were starting to hire more, and when we saw this new job and description it made sense to us. There was also a small community of folks who met in online forums and around local offices in the Bay Area who really resonated with this Customer Success message.

David Yuan: It’s one thing to put a category name out there—most companies attempt to do that, but most are unsuccessful. How did you turn a Gainsight term into the category label?

Nick Mehta: We said to ourselves that we were going to create and really own the industry. We facilitated the creation of a community. With their help, we created best practices. We described what a Customer Success Manager does, how you pay them, and who they report to. We even published a book about the entire discipline. And we’re still helping define roles and titles based on the trends we’re seeing.

At first we wanted to do what a lot of enterprise software companies do: host a conference with our customers. The problem was that we didn’t have any customers, so a conference would have been depressing!  So instead of doing a company event, we decided to do an industry event. We focused on Customer Success Management, not our company per se. We said, let’s connect with other players in this still-young industry. We called the event “Pulse.” It was the most important thing we ever did as a company. When we sent out invites, we thought we’d get maybe 50 people to attend. Instead, 300 showed up the first year. Just to show you how fast this industry has grown, this year, our sixth year, we had over 5,000 people show up.

We’re not that big of a company, but our conference brand—Pulse—has become very big. We even expanded globally. We have a conference in London and we’re planning to continue that, and we’re hosting our first Pulse in Australia later this year.

David Yuan: Why do you think Pulse was so successful?

Nick Mehta: In order to create a category, we needed to create a community, and Pulse helped do just that. Fundamentally, in a new profession, people want to meet others “like them.” So Pulse has become in some ways like eHarmony for Customer Success.

David Yuan: Is it as expensive as it sounds?

Nick Mehta: Yeah, don’t do this if you’re bootstrapping. I don’t think it’d be possible since it’s not cheap. We raised $156 million in venture capital from investors who believed we could create this new marketplace. We were fortunate to receive their support because it allowed us to really distance ourselves from the little competition we had.

David Yuan: You’ve cultivated this community, so now what?

Nick Mehta: We try to put ourselves in the shoes of the people in the Pulse community. The terms “thought leadership” and “content marketing” have often been cheapened into thinly-veiled advertisement and we tried to change that. We strived to focus on the issues on the minds of people in Customer Success – from compensation to org models to career paths. We built a job board and an online university to help serve the career needs of our community.  At the end of the day, it’s fundamentally about the people.

David Yuan: How do you hire in an industry that’s so new?

Nick Mehta: Trying and failing. That’s the challenge. There is no playbook or existing job description to follow. So in the early days, we really focused on our value of “Shoshin” (Beginner’s Mind) – people that were creative and willing to learn.

David Yuan: You’ve said that you don’t sweat the competition. Why not?

Nick Mehta: In a new market, it’s not about the competition. It’s about creating the market. Our competition is inertia and ignorance.

David Yuan: Why don’t you have more competition?

Nick Mehta: In some new markets, the “friction” to get started is very high. In our example, you need to build a complex product AND a new profession!

David Yuan: You’ve put a lot of attention on your company’s culture. What have you done and why is it important?

Nick Mehta: When you’re creating a category, your culture is doubly important – it’s the framework for your company AND for your community. One of our core values is Childlike Joy, which basically means we want people to embrace their inner kid and bring the kid in you to work. We really lean into our community with that. We’ve done all kinds of fun things. We wrote a children’s storybook for CS professionals to explain to their kids what they do at work. We also do a lot of things with music, like create a Customer Success version of a Taylor Swift song, a rap song, a musical, and even carpool karaoke with Aaron Levie from Box and Keith Krach from Docusign. We also had Vanilla Ice at one of our Pulse conferences. Actually, there was a time that if you googled Gainsight, it literally listed our company as a musical artist in the hip-hop/rap genre. #lifegoal

David Yuan: Ha! I’ll have to check it out. Vanilla Ice, that’s when you know you’ve made it. You’ve come a long way from ‘nerding’ out at Harvard, my man!

Nick Mehta: Yeah!

David Yuan: Awesome, thanks Nick. Really proud of what you’re doing at Gainsight and appreciate your sharing some of your learnings!

Nick Mehta: Awesome! Thank you for having me.

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The views and opinions expressed in the transcript above are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). This transcript 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 companies discussed above are not necessarily TCV portfolio companies and are not necessarily representative of any TCV investments. For additional important disclaimers regarding this document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.

 

 


Developing Narrative to Compel Action and Drive Results

nar·ra·tive

noun

  1. A spoken or written account of connected events; a story.

 What separates companies that move quickly towards a common goal from those that struggle to find unity? Why is it that some teams can routinely find a second, third, or fourth gear of execution? How do people who start with divergent objectives find common ground? Perhaps most importantly, why are some leaders successfully plug-and-play no matter what technical problem, cultural issue, or market challenge they are tasked with addressing?

In my last post on “Hiring for Leaders”, I talked about how you can both screen for and cultivate leadership qualities as your company scales. These qualities include taking positions, creating environments where multiple perspectives are acknowledged, and being adaptable. In this post I’ll build on that framework to discuss narrative – a critically important concept that is talked about often but still remains confusing for many people in business.

 

Why Is Narrative So Important?

During my time at Facebook and Pinterest, I noticed one element that drove successful outcomes: the connection between people and company objectives. This connection can take different forms: intuitively understanding the why of what people were tasked with, linking personal goals with company goals, creating less friction with other teams, and being resilient in the face of obstacles. The differentiator in all of this was the construction and delivery of a narrative.

Narrative creates the ability to connect people to your company and your company mission and drive collective action. The corollary to this deceptively simple statement is that narrative is not one thing – it’s not just a story. Narrative binds individuals to a living set of company attributes.

The following tenets are core to creating a compelling narrative.

 

Establish Clear Mission and Vision Statements

 You can think about the mission and vision as the why and the how. Both are critical to any organization, large or small, because they become the scaffolding for how teams construct their roadmaps and how leadership talks about them.

At Pinterest, the mission was to help people discover and do the things that they love. As our technology advanced and our customers engaged with it more fully, our vision of how Pinterest could change the world also changed. This taught me that while the vision of a future outcome may not stay the same, the mission – the why – should remain stable. It’s the foundation for how people and teams answer the “Why are we doing this?” questions that naturally arise. Changing the mission can create confusion about priorities.

Make sure every team creates a mission and vision statement for the work that they do. You may call it a scope doc, a PRD, MRD, or something else entirely. But if the mission doesn’t answer why people are working on something, and the vision doesn’t show how that work changes things for customers and the company, it’s difficult for people to understand why and how their work is helping the company achieve its objectives.

 

Develop Long-Term Roadmaps

A roadmap is a narrative about where you’re going and what happens along the way. Push your teams to create three-year roadmaps. Acknowledge that the value in the exercise is not the accuracy with which teams can predict the future, but rather the exercise itself.

Teams with a roadmap for the future end up moving faster because they have already envisioned a journey in the process of creating the roadmap. They’re not disoriented when the real road turns or twists, because they already foresaw and prepared for some of them – and anticipated that there might be a few surprises along the way. That in turn alleviates the level of oversight and explanation that leaders need to provide, because their teams are advancing within a larger, more longitudinal comfort zone.

In creating the roadmap, aim to resolve it to a vision statement. This should be a 1+1=3 exercise where individual functions intersect and combine to create an even more powerful outcome. The company vision should be a leading indicator of what teams should strive to accomplish.

A good way of thinking about this at the team level or even division level is to break out into thematic areas and assign varying levels of confidence in the work. Those confidence levels will decrease the further you get out into the future.

Even if the technology you envision doesn’t exist, writing down the roadmap is a helpful exercise to plotting out an initial path.

 

Measure Everything

Everything is measurable, but not everything can be measured in the same way. Create space for teams to define their metrics so that their output can be measured in ways that are meaningful. These metrics naturally generate narratives about how to meet or exceed them. They become a source of ongoing conversation within teams and between teams: Do we have the right metrics for meeting company objectives? Should we adjust them for technology or customer behavior? Do our metrics mesh with our mission and vision?

When these conversations take place, people feel naturally connected to the company and its goals. This process is so powerful that it’s essential to make sure that all the team-level metrics ladder up to company-level objectives. You don’t want people embracing their metrics (and their roadmap) and then arriving someplace the company did not want them to go.

You also need to ensure that team roadmaps do not collide and create conflict. If they do, reflect on each team independently and try to assess how it moves the company forward towards its top-level goals. If one team comes out on top, talk to the other team in the conflict about how they could adjust their roadmap and still achieve their goals and the company’s goals.

Know that there will always be trade-offs to make, and that your job as a leader is to create the narrative that keeps teams informed, aligned, and excited.

 

Create Cross-Functional Narrative Forums

Often as companies grow quickly, the first thing to go out the window is inter-team communication on strategy and goals. This can lead to misalignments, political posturing regarding resources, and management attrition. A great way to prevent this is to create regular forums for your leadership team to sit together and explain to one another what they are doing and why. You’re not asking them to justify their existence or run their numbers. You’re asking them to tell everyone else a narrative about their mission, vision and roadmap, and how the journey is progressing.

Smart leaders will bring a narrative that is tightly aligned with what they hear from their teams. It also gives the narrative “legs” for traveling across the entire enterprise – something that is otherwise rare.

Getting team-level narratives elevated to the leadership level, across functions, accomplishes a number of positive outcomes. First, it creates empathy among and within the leadership team about other team members’ goals, challenges and objectives. During resourcing conflicts, you want leadership team members to be able to advocate just as empathically for another team as they would for their own.

Second, it forces understanding. Anytime you have to tell a good story, you have to understand that story far better than the people you are delivering it to. The requirement to share your team’s story with other leaders forces you to master that narrative. Detailed work has to be distilled down to essentials. Technical complexity has to become clarity. Acronyms disappear, replaced by meaningful, memorable terms. Just the process of preparing a narrative about your team can help you spot work that is not truly aligned with company objectives.

Third, delivering cross-function narratives establishes trust at the inter-team level. Putting leaders in a position to explain to their teams why other teams are doing what they are, or why a trade-off decision went against them, establishes an authentic authority.

Story Time

The most successful teams have leaders that can weave a story using the foundations described above and connect it at various altitudes throughout the company. Driving board alignment around a strategic shift isn’t that different than getting your ops teams to the same place. It’s about creating shared understanding that drives people’s internal connection to the company’s goals.

Metrics, technologies and quantitative goals are important for any business to succeed. But without a narrative that makes people own them, they’re just components of a machine without a soul.

###

 

Jonathan Shottan is an Executive-in-Residence at TCV.

The views and opinions expressed in the blog post above are that of the author and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). 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 Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.


Peloton Announces $550M In Series F Funding Led By TCV

NEW YORKAug. 3, 2018 — Peloton, the global fitness technology company, today announced a $550 million Series F financing round; capital that will enable it to continue to innovate aggressively and to expand into more international markets. The round is led by TCV, one of the world’s largest technology growth equity firms. Nearly all of Peloton’s existing institutional investors, including Tiger Global, True Ventures, Wellington Management, Fidelity (FMRCo), NBCUniversal, Kleiner Perkins and Balyasny participated in this round, joined by new investors, including Felix Capital, Winslow Capital and other mutual fund partners.

Jay Hoag, Founding General Partner of TCV, who also serves on the board of Netflix, Electronic Arts, Zillow, and other prominent technology companies, will join the Peloton Board of Directors. He joins TCV Venture Partner Erik Blachford, who has been on Peloton’s board since 2015.

“We are truly honored to partner with TCV and with Jay Hoag personally,” said John Foley, founder and CEO of Peloton. “TCV’s reputation, experience, and involvement in businesses like Netflix, Spotify and Facebook will be invaluable as we build Peloton into one of the most unique and influential global consumer product and media companies of our day.”

“We look for companies that offer their consumers a great value proposition, have engaged and delighted customers, and are led by visionary CEOs who have built a world-class management team,” said TCV’s Founding General Partner Jay Hoag. “We found all of these characteristics in Peloton and look forward to working with John and the entire team on their journey to revolutionize the home fitness category.”

The $550M Series F round brings the total equity raised by Peloton to nearly $1B since its inception, and positions Peloton to take full advantage of the growing global trend of instructor-led fitness classes moving into the home.

Since its last round of funding, Peloton has seen rapid growth across several key areas and is preparing to launch several new initiatives, including the following:

  • Global Expansion: This fall, the Peloton Bike will launch in the UK and Canada, marking the brand’s first new markets outside the US.
  • Retail Presence: Peloton plans to open at least 20 new retail showrooms in the US, UK and Canada by early 2019, bringing its total number of locations to more than 60 worldwide.
  • Peloton Tread: The company will launch its highly-anticipated second product, the Peloton Tread, this fall. Hundreds of running, walking, bootcamp and strength classes have already been produced in Peloton’s Tread Studio, which opened in New York’s West Village in May 2018.
  • Peloton Digital: Peloton recently introduced a new digital membership that offers over 10,000 live and on-demand, instructor-led classes across several fitness categories, such as cycling, running, walking, bootcamp, strength, stretching and yoga, for under $20/month.
  • Real Estate Footprint: Peloton announced plans to open a 25,000+ square foot campus in Plano, TX, which will serve as its member support hub, and Peloton Studios, a 35,000+ square foot, state-of-the-art flagship studio complex at Brookfield’s Manhattan West development in New York City. This new fitness facility will house Peloton’s broadcast and production operations and multiple studios from which thousands of group fitness classes will be hosted and live streamed for the Peloton Bike, Peloton Tread and Peloton Digital.

J.P. Morgan served as the sole placement agent to Peloton on the transaction.

The financing will be used for general corporate purposes, including providing liquidity to certain existing shareholders, and is scheduled to close in the third calendar quarter, subject to customary closing conditions and regulatory approvals.

About Peloton

Founded in 2012, Peloton is reinventing fitness by bringing live and on-demand boutique-style studio classes to the convenience and comfort of your own home. Our immersive fitness content, taught by Peloton’s roster of elite instructors, features real-time motivation and curated playlists of your favorite artists. The Peloton experience can be accessed through the Peloton Bike, the Peloton Tread, or Peloton Digital, an iOS app that offers an all-access pass to a full slate of fitness offerings, anytime, anywhere. Peloton is changing the way people get fit through a comprehensive and socially connected experience that makes every workout both efficient and addictive. The company has a growing number of retail showrooms across the US and, starting this fall, will launch in the UK and Canada. For more information, visit www.onepeloton.com.

About TCV

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. Investments include Airbnb, Altiris, AxiomSL, Believe Digital, Dollar Shave Club, EtQ, ExactTarget, Expedia, Facebook, Fandango, GoDaddy, HomeAway, LinkedIn, Netflix, Rent the Runway, Sitecore, Splunk, Spotify, TourRadar, 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.

Media Contacts: 

Jessica Kleiman, (646) 829-1633, jkleiman@onepeloton.com 

Katja Gagen, (415) 690-6689, kgagen@tcv.com

SOURCE Peloton

Related Links

http://www.onepeloton.com


tastytrade, Inc. Raises $20 Million in New Funding

CHICAGO — tastytrade, Inc., the award-winning, innovative financial media company and parent to financial subsidiaries, announced today $20 million in new funding from TCV. The funding will be used to continue to challenge the traditional financial models and products currently offered to retail, self-directed investors.

The funding follows the company’s 2017 expansion of launching tastyworks, a high-speed technology brokerage firm with low fees and capped commissions. In 2018, the team created an investment advisory initiative called Quiet Foundation based on data-driven research, which provides unique risk analysis of any investment portfolio held at any firm. tastytrade continues to level the playing field by formulating new trading vehicles appropriately sized for retail investors.

“tastytrade remains focused on fighting for and empowering the everyday investor, providing free and engaging video content that empowers investors with actionable information they can apply every day,” said Kristi Ross, co-CEO and President of tastytrade, Inc. “Research-based content, trading technology, and the tastyworks’ brokerage are just the base for what we’re building. The overall tastytrade vision encompasses an offering that goes much deeper than most large institutions are willing to go.”

Tom Sosnoff, co-CEO and Chairman of tastytrade, Inc. added, “If you’re going to change the world, it starts with changing the way people think about strategic active investing. TCV has been a long-term supporter of our vision and our mission, initially with thinkorswim in May 2004, and now with their continued investment in tastytrade.”

TCV is a leading, Silicon Valley-based provider of growth capital to private and public technology companies, that has deployed over $1.5 billion in the fintech sector. “TCV’s mission is to invest in exceptional management teams who are reshaping industries and are innovators willing to disrupt even their own business models,” said Jake Reynolds, general partner at TCV. “We’re supporting a team that we believe has and can continue to transform the way self-directed investors interact with trading technology, financial media and new products.”

To learn more about tastytrade’s financial and investment strategies, visit www.tastytrade.com and the tastyworks brokerage offering, visit www.tastyworks.com.

About tastytrade, Inc.

tastytrade is one of the most-watched online financial networks, engaging investors and traders across 165 countries with 8 hours of daily, live, cost-free and commercial free programming with almost 100 million hours viewed. tastytrade offers over 50 original segments for new and seasoned veteran traders. tastytrade’s research-based content teaches a logical, mechanical approach to investing and identifying opportunities based on probability and volatility. Investors are continually challenged with financial math, humor and new market perspectives. tastytrade is also the parent company to tastyworks, a brokerage firm creating and leading a financial revolution for the do-it-yourself investor and to Quiet Foundation, a data science-driven, fee-free investment advisory service. tastytrade and its companies focus on empowering the individual investor through content, technology and know-how.

About TCV

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, Avalara, AxiomSL, Dollar Shave Club, Envestnet, EtQ, ExactTarget, Expedia, FinancialForce, GoDaddy, HomeAway, LinkedIn, MarketAxess, Netflix, OSIsoft, Payoneer, RiskMetrics, Sitecore, Spotify, thinkorswim, Webroot, Xero, 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 https://www.tcv.com/.

Contacts

Influence Consulting Group
Fran Del Valle
212-717-5499
917-922-5653
fran@influencecentral.com
or
TCV
Katja Gagen
415-690-6689
kgagen@tcv.com


Digital Measures Joins Watermark To Advance Educational Intelligence Solutions For Higher Education

NEW YORKJune 27, 2018 — Today, Watermark announced that Digital Measures, the leading provider of a web-based faculty activity reporting solution, joined the Watermark family. With this addition, Watermark becomes the market leader in outcomes assessment, accreditation management, and faculty activity reporting solutions to help colleges and universities streamline core institutional processes while capturing and using better data to drive improvements at all levels of the institution.

Digital Measures is a pioneer in the field of faculty activity reporting for higher education. Since 1999, Digital Measures has partnered with 3 of the 5 largest U.S. universities to achieve reporting success. Working closely with over 350 partner institutions and more than 400,000 faculty members, the company has gained a deep understanding of faculty needs, as well as the complexities of faculty activity reporting. Digital Measures was driven by a mission to help faculty more easily and efficiently document their teaching, research, and service activities and track progress for review processes, while simplifying inefficient reporting processes for administrators.

With a streamlined, centralized approach for capturing and reporting this information, the company’s flagship product, Activity Insight, and its Workflow Module have helped institutions more effectively leverage faculty activities and accomplishments and helped faculty prepare for annual performance, promotion, and tenure reviews.

“We deeply value the experience Digital Measures has in understanding faculty activity reporting processes at institutions,” said Kevin Michielsen, CEO of Watermark. “That kind of experience is invaluable and aligns well with our mission of helping institutions use better data to improve learning and institutional quality.”

“We understand that teaching and learning take place and are captured in many different areas and systems across campus. Being able to measure only a part of that picture is insufficient for an institution. By combining our experience with that of Digital Measures, we’re bringing together a more comprehensive set of solutions that better support and provide members of the higher ed community with the educational intelligence needed to improve outcomes.”

Matt Bartel, CEO and Founder of Digital Measures, commented, “We are excited to join the Watermark family and look forward to strengthening our commitment to support faculty. With the opportunity to draw feedback from a client base of over 1,400 institutions worldwide, we’re eager to contribute to Watermark’s vision for an integrated educational intelligence system that empowers administrators, faculty, and students with better-connected data to make evidence-based decisions.”

The Watermark team is excited to begin working with the Digital Measures team. “We believe Matt is an innovator in this space and recognize the company’s deep commitment to supporting faculty,” Michielsen said. “Digital Measures will play a key role as we work together toward this vision.”

The Largest Assessment and Faculty Activity Reporting Solutions Provider in the Industry.

In 2017, the three largest providers of ePortfolio and assessment management solutions for higher education –Taskstream, Tk20, and LiveText – joined forces to become what is now Watermark. With the addition of Digital Measures, Watermark now has over 65 years of combined experience developing software for higher education, supporting over 1,400 institutions across the globe. As one company, employees will be dedicated to serving this growing user community with innovative solutions and world-class support services that empower institutions with better data to make improvements at all levels.

“Thanks to Watermark’s rapid growth over the last year and half, we’re seeing a significant increase in the number of colleges and universities who look to Watermark for technology solutions to improve learning outcomes and institutional effectiveness,” said Nari Ansari, Principal at TCV – Watermark’s majority investor. “We believe Digital Measures will further strengthen Watermark’s position and accelerate work toward a vision for an educational intelligence system.”

Terms of the transaction are not disclosed. Tyton Partners acted as exclusive financial adviser to Digital Measures and Kramer Levin Naftalis & Frankel LLP and Godfrey & Kahn, S.C. served as legal counsel.

To learn more, visit www.watermarkinsights.com.

About Watermark™
Watermark’s mission is to put better data into the hands of administrators, faculty, and learners everywhere in order to empower them to connect information and gain insights into learning which will drive meaningful improvements. Through its innovative educational intelligence platform, Watermark supports institutions in developing an intentional approach to learning and development based on data they can trust. For more information, visit www.watermarkinsights.com.

About Digital Measures
Digital Measures seeks to empower universities to succeed at a higher level by helping them leverage faculty teaching, research and service information more effectively. The company’s flagship product, Activity Insight, simplifies faculty activity data collection and reporting, and its Workflow Module brings the same efficiency to faculty reviews and more. Digital Measures had partnered with three of the five largest U.S. universities to achieve reporting success. Since its inception, the company has fostered a culture of innovation focused on best-practice technology use and guidance for simplifying institutional processes. For more information, visit www.digitalmeasures.com.

Contact:
Victoria Guzzo
Director of Corporate Communications
708.250.4622
vguzzo@watermarkinsights.com

SOURCE Watermark

RELATED LINKS

www.watermarkinsights.com


TourRadar, #1 Online Travel Agency for Multi-Day Tours, Announces US$50M Series C Funding Round Led by TCV

VIENNA & TORONTO & BRISBANE, Australia — TourRadar, the largest OTA in the multi-day touring market, announced today a US$50m Series C, marking the largest tech funding in Austria in 2018. The round is led by TCV with existing investors Cherry Ventures, Endeit Capital, Hoxton Ventures and Speedinvest. TCV is one of the largest providers of capital to growth-stage private and public companies in the technology industry backing industry-leading companies including companies including Airbnb, Expedia, HomeAway, Netflix, SiteMinder, Spotify, and Zillow.

In connection with the funding, Erik Blachford, a venture partner at TCV and previously President and CEO of IAC Travel, has joined TourRadar’s supervisory board.

TourRadar intends to use the funding to expand its team globally and will invest in the technology platform to provide a personalized user experience for customers in new and existing source markets.

TourRadar markets multi-day tour and river cruising experiences from over 600 operators globally serving well-known and hundreds of specialty operators that otherwise rely on local agents. TourRadar supports operator partners through instant bookability, tour review functionality and campaigns including World Touring Day.

Founded in 2010, TourRadar has grown rapidly by providing consumers with easy access to the fast-growing multi-day tour category, with a total addressable market value estimated at $55 billion. Travelers of all ages are increasingly seeking authentic, off-the-beaten-path experiences when they travel, and TourRadar offers more than 25,000 tours in 200 countries on its platform.

TourRadar was founded by brothers Travis and Shawn Pittman, both native Australians. Travis, an engineer, is TourRadar’s Vienna-based CEO. Shawn, the company’s CFO, came from a successful career in investing. Both are avid travelers with many countries on their travel résumés, and a vision of connecting people to life-enriching travel experiences through multi-day touring.

“The experience and knowledge in the online travel sector that Erik Blachford and TCV bring to the table is exactly what we were looking for as we embark on this exciting next chapter at TourRadar,” said Travis Pittman, CEO and co-founder at TourRadar. “This stage will well and truly bring our vision to life and we’re excited to do this with their guidance.”

“Multi-day tours are the last frontier in online travel,” said Erik Blachford, a venture partner at TCV and former CEO at Expedia. “TourRadar has staked a claim, and I am looking forward to helping Travis and the team realize their vision.”

“We are thrilled to partner with Travis and the TourRadar team,” said John Doran, general partner at TCV. “We have been continually impressed with their unrivalled passion for travel and their vision to inspire the global travel community with the most convenient way to access the broadest choice of authentic multi-day tours across the world. We are delighted that Erik Blachford will join the board and look forward to supporting the entire team as they continue to build their business.”

For further information head to www.tourradar.com/press or contact:

About TourRadar

Based in Vienna (Austria) with service centers in Brisbane and Toronto, TourRadar is the world’s largest online travel agency for multi-day tours. For more information visit https://www.tourradar.com. In 2017, TourRadar was named one of the top three startups in Austria by Trend Magazine. TourRadar is looking for talent to join their team: https://www.tourradar.com/careers.

About TCV

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, Altiris, AxiomSL, Dollar Shave Club, EmbanetCompass, EtQ, ExactTarget, Expedia, Facebook, Fandango, GoDaddy, HomeAway, LinkedIn, Netflix, OSIsoft, Rent the Runway, Sitecore, 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 https://www.tcv.com/.

Contacts

TourRadar
Katie Stanwyck, +1-416-660-4659
katie@tourradar.com
or
TCV
Katja Gagen, +1 415-690-6689
kgagen@tcv.com


It’s Your Runway! Rent the Runway Is Redefining Your Closet Any or Everyday

As an MBA student, Jennifer Hyman had a deceptively simple idea that she successfully built into a powerful logistics and technology company – proving the power of web-based sharing models before Airbnb, Uber, and others came on the scene. TCV Founding General Partner and Rent the Runway board member Rick Kimball recently had a chance to talk with her about the journey from her original vision to the launch of Rent the Runway and making the “closet in the cloud” a reality for women across the U.S. Topics covered include:

  • Establishing a new category that helped create the sharing economy
  • Convincing her board to fund an extension of the original concept
  • Why your closet might soon reside in the cloud

 

Rick Kimball: Jennifer, most people know Rent the Runway, but can you share with us how the company came about?

Jennifer Hyman: My sister was getting ready to attend a wedding. She wanted to wear something new and aspirational. So she went out and purchased an extravagant dress that she knew she would likely wear only once and put her into credit card debt. This was a light-bulb moment for me.

I thought about separating wearing from ownership. My sister wanted the experience of wearing something different and aspirational – and that had nothing to do with actually owning the garment. Once you separate wearing from owning, there is a huge opportunity to totally disrupt the way we think about getting dressed.

Rick Kimball: What were your first steps in realizing your idea?

Jennifer Hyman: The first step was realizing that an initial idea isn’t a business. In our case, the idea needed to be iterated both for its customer value proposition as well as its supplier value proposition. We spent the next six months doing a series of iterative minimum viable product tests to assess whether we were on to a good idea or whether it was appealing only to us. When we launched, we had 100,000 people sign up for Rent the Runway in the first week of our business. So demand was not going to be the challenge.

Rick Kimball: What were the challenges?

Jennifer Hyman: Our business model requires our customers to return every single item we ship out. No one in retail does that. Plenty of companies have some reverse logistics capability for product returns, but we were doing reverse logistics as our entire business model, for expensive luxury products. There was no technology you could buy when we launched. We had to hire a hundred engineers and build everything ourselves. We also had to become the world’s biggest dry cleaner, and we had to become a data science company to gather, analyze, and leverage the mountains of data we were gathering on every transaction. Sometimes I joke that if I had known we were going to have to do all this just to rent clothing, I would never have launched the company.

Rick Kimball: It seems that your timing was great, considering some of the social and economic trends that began around that time.

Jennifer Hyman: It was late 2008, with social media really taking off. Women started posting piles of photos of themselves on the internet. They needed more variety in their wardrobe, as they did not want to be seen in the same outfit twice. This drove a huge emergence of fast fashion and off-price retail as a category. People were buying clothes in places other than traditional department stores. And the world has continued to change so quickly around us as we’ve built Rent the Runway. All the tailwinds are moving in the right direction.

Rick Kimball: Right. As you grew the team and your company, what was your focus in terms of creating a culture for the company?

Jennifer Hyman: Total, passionate focus on the customer backed by data. What does she need? What does she want? What is she telling us with her choices? Our original value proposition was that she wants to look fabulous at a black-tie event, without breaking the bank for a dress she might not wear again for a long time. Customers embraced that concept and pretty soon many of our customers were renting from us three or four times a year. We were relentless about gathering data on every rental, so we required customers to give us some information about wearing the dress: did it fit, did she love wearing it, and so on. That drove our inventory strategy. Ultimately listening to the customer led to our subscription service, called Unlimited.

Rick Kimball: The TCV team loves Unlimited. What drove the concept of Unlimited, which, today represents a large part of your business.

Jennifer Hyman: We were hearing from customers that renting the runway is great for big events on the weekend, but what about the other five days a week? Can you rent me clothes I can wear at work?

This wasn’t a surprise to us. I had the vision of a “closet in the cloud” from the very beginning. But first we had to make renting a mainstream experience. For perspective, keep in mind that late 2008 was before Uber, Airbnb, and WeWork, and before Spotify came to the United States. The big successful sharing models we have now were still in the future. So we had to normalize the behavior of renting first. But it was already obvious to me that working women needed a new way to get dressed. More women are entering the corporate workforce today, and more women are staying in the workforce after having kids. Women are out in public as working women and entrepreneurs. Now consider that the traditional expectation is that women at work wear a different outfit every day. Beyond that expectation, women want to feel like their best self at work. It matters to their confidence and self-presentation to be well dressed and put together. With Rent the Runway, they can feel like the best version of themselves everyday which is empowering.

Rick Kimball: But dressing this way can be hugely expensive?

Jennifer Hyman: Exactly. In the typical corporate environment, women need a huge number of individual items in order to have a different, great-looking outfit every day. We can make her life not only a lot easier – she can do a lot less shopping – but also more affordable and effective. In fact, our Unlimited customers on average dress with us 150 days a year. That’s 60% of their business year. And we think we could get to an average of 200 days a year.

Rick Kimball: Does Unlimited offer casual clothes as well?

Jennifer Hyman: “Casual” is a big category that we like and have a great inventory for. Many companies have a dress policy known as “corporate casual,” so something you wear to work might also be appropriate for a brunch with friends on the weekend. We also offer clothes and accessories for off-work activities, such as patterned ski parkas and the right beach bag for your summer outfits.

Rick Kimball: How did you get Unlimited off the ground?

Jennifer Hyman: Surprisingly enough, one challenge was convincing my board of directors to raise and spend the money. We didn’t know if women would rent that many days a year, and people doubted that we could build a product to satisfy that demand. You have to remember that back then, massive subscription businesses were rare even for huge franchise companies. It took Netflix and Dropbox years to build a $100 million subscription business, and they were established brands with tens of millions of users. My argument was that with the data science capabilities we already had, we could manage a big increase in inventory without a big increase in risk. Also, the board members had seen some things come true that I had predicted way back when we were asking for our initial funding, such as the decline of department stores. So they, including TCV, trusted my vision and agreed to a beta test for twelve months, which was a success. We launched Unlimited in March of 2016 and it’s growing more than 150% a year.

Rick Kimball: A lot of people talk about big data and how to gain insights to drive better customer experiences. What are the key aspects of your data science strategy?

Jennifer Hyman: From day one we set up a rigorous data-centric culture in which the analytics team gathered suitcases full of data about our customers and our inventory. We also made sure that the data was transparent and usable to everyone in the organization. But it’s not just about numbers on a spreadsheet. We marry the quantitative data to qualitative data. If a customer says she didn’t wear something, we ask why. If she says she liked it but didn’t love it, we ask why. This is how we can constantly evolve our inventory toward higher customer satisfaction. Not only that, we can tell our brand partners what women think of their designs and their manufacturing. Before Rent the Runway, designers got this kind of feedback in little bits, anecdotally. We give them a steady stream of data, which they can use with their other partners. Everybody wins.

Rick Kimball: Describe your customers in more detail – it sounds like women only.

Jennifer Hyman: Men can wear the same three pairs of trousers and the same ten shirts all year and no one knows or cares. That’s why we are sticking with women for now. Our community includes 8.5 million of them, ranging from their teens up through their 60s. When we launched the business, Millennial customers were using us to rent the runway for a special event. Now our brand offering is 200X what it was at first, meaning we launched with clothes from 27 designers and now we have over 500 designers represented on the site. That means we cover a lot of different style types and can offer what you want no matter what your style is, or your age.

Rick Kimball: Is the customer age range the same for the special event dresses and the Unlimited service?

Jennifer Hyman: It is. The typical customer for upscale designer dresses is around 60 years old. So we’re introducing much younger customers to the fashion designers, which just delights both of them. It’s also giving the designers opportunities to create new work with more confidence and insight, because we bring them a large built-in customer base that includes feedback on how successful a garment is and could be. If you’re a young designer with aspirations, Rent the Runway has created a pathway to test your ideas and build your business that never existed before.

Rick Kimball: Do customers buy garments from those designers?

Jennifer Hyman: They do, but what Rent the Runway has really done is enable them to shop differently. Instead of buying a lot of separates, they rely on us for those. They invest in essentials, like a great-fitting pair of black pants that enables them to create millions of outfits. We are introducing our customer to brands she might not have been shopping before – without having to make expensive purchases.

Rick Kimball: You recently began opening brick-and-mortar stores. How does this fit into your strategic of building a comprehensive web-based reverse logistics platform?

Jennifer Hyman: Once we got to scale with a subscription service, we knew we had to achieve greater proximity to the customer. One dry cleaning facility in the middle of the country was not enough. A few warehouses of inventory were not enough. At the same time as we achieved numerical scale, we were scaling up qualitatively: women were trusting us as an essential utility and relying on us to get them dressed for work a majority of the time. So we opened retail stores where women can meet a stylist and try on different brands and pieces of clothing. This really enriches the data profile we have for them, and that makes it much easier for them to rent successfully for all their future occasions.

Rick Kimball: How have customers responded? How have you rounded out your team to deliver the best experiences online and in stores?

Jennifer Hyman: Customers have started to treat the stores as their physical closet. They can take any inventory they want off the shelf and walk out without swiping a credit card.

My vision for our business is that we are continuously disrupting ourselves, and our culture is built for that. We are in a primarily tech and logistics business, yet we are 70% female and 70% non-white. Our engineering team is 50% female. The leadership at Rent the Runway is 80% female. So we are defying the typical startup stereotypes. Come work at Rent the Runway to see the exception to the rule in action!

Rick Kimball: Such rapid growth involves a lot of learning on the job. Did you learn from what other companies were doing?

Jennifer Hyman: I wish that I had had more exposure to other companies in Silicon Valley. I’ve always been inspired by Netflix, but I didn’t know how Netflix was structured or how I could learn from them. I was sitting in New York as a 29-year-old woman with no experience in the tech industry, with no real connections to it and I had to figure this out by myself with my co-founder and our team.

Rick Kimball: This is something other female founders speak about. What’s your take?

Jennifer Hyman: There are some clear reasons why only 2% of venture capital dollars go to female founders. One huge disadvantage is that promising women are not mentored and lifted up early in their careers by others in the tech industry like men are. What you really need in the beginning of a company is tactical help, but if you are a woman, it is not always easy to meet the kind of people who can give you that. When you launch a company, you need someone who can pick up the phone and raise money. Someone who can refer you to talent. Someone who tells you how to set up your first HR system or write your first marketing plan. Those are the skills and help and tactical advice that female founders need. It’s not like we don’t have enough mentors. It’s that they are not mentoring enough women.

Rick Kimball: Speaking of investors and support, how did you get involved with TCV?

Jennifer Hyman: I got involved with TCV through the team, building a relationship with Rent the Runway over many years, and developing trust. And then simultaneously I was building a relationship with Barry McCarthy, the current CFO of Spotify and the former CFO of Netflix. I had a relationship with Barry and when I saw that he was also an advisor to TCV, I thought of it as the marriage of the financial support that we were going to receive as well as operational expertise and guidance.

Rick Kimball: How do you see Rent the Runway fitting into today’s economy and also the competitive landscape?

Jennifer Hyman: Well, I think that we are really the only ones who are trying to get you to buy less stuff. If you think about Amazon, Stitch Fix, Nordstrom, or Poshmark, a lot of what they’re doing is getting you to buy things in creative ways. But it is still buying and accumulating. It is a different value proposition to get you to not own and thus not buy things.

Rick Kimball: Looking out a few years, what excites you about the future of Rent the Runway?

Jennifer Hyman: I think I had a really big, bold vision at the beginning of Rent the Runway, but it’s not even comparable to how big and bold the vision is today. I am enthusiastic about the fact that this is only the beginning of transforming the modern woman’s relationship with her closet. We have to get dressed every single day, all over the world. We are focused on scaling our subscription service, making it even easier to access the “closet in the cloud” each and every day. There’s no reason why having this subscription to fashion shouldn’t become the dominant way that we experience clothing in the future.

Rick Kimball: Thanks, Jennifer, and we wish you and the team continued success.

#######

 

TCV is an investor in Rent the Runway and Rick Kimball serves on the board of directors of the company.

The views and opinions expressed in the transcript above are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). This transcript 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 Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/


Welsh, Carson, Anderson & Stowe to Lead Majority Investment in Avetta Alongside TCV and Norwest Venture Partners

OREM, Utah, March 21, 2018 /PRNewswire/ — Avetta (www.avetta.com), a leading provider of cloud-based supply chain risk management solutions, today announced that Welsh, Carson, Anderson & Stowe (WCAS), a leading private equity firm focused exclusively on the technology and healthcare industries, will acquire a majority equity interest in the Company. In addition, TCV, a leading provider of capital to growth-stage private and public companies in the technology industry, will acquire a minority equity interest in Avetta. Norwest Venture Partners (Norwest), a premier multi-stage investment firm that partnered with Avetta in 2012, intends to retain a portion of its investment in the Company, alongside the founders and management.

Avetta provides cloud-based supplier risk management and compliance software that allows enterprises to more effectively manage and qualify service providers performing activities across their global operating sites to drive better safety, regulatory compliance and sustainability outcomes. The Company’s platform centralizes the management of contractors in a single system, enabling efficient assessment of safety, compliance and performance records. Avetta’s customers include more than 220 enterprises in over 100 countries. Over 55,000 suppliers and service providers use Avetta’s platform to manage their relationships with enterprise clients.

“We are proud of the role played by Avetta today in connecting the world’s leading organizations with qualified suppliers, contractors and vendors, and look forward to the next phase of our Company’s growth,” said John Herr, Chief Executive Officer of Avetta. “As we welcome WCAS and TCV on board as new partners to Avetta, we also thank Norwest for the support they have provided to our team over the past six years. We are excited to benefit from the combined support and expertise of WCAS, TCV and Norwest.”

Christopher Hooper, General Partner of WCAS, said, “Avetta is a compelling network-based platform given its clear and quantifiable value proposition to both enterprise clients and suppliers, underpinned by a scalable cloud-based software platform and distinguished by a strong leadership team. We look forward to partnering with and supporting John Herrand the broader Avetta team to capitalize on the Company’s significant growth opportunities to build the premier global supply chain risk management platform and continue to enhance safety, compliance and sustainability outcomes for its customers.”

David Yuan, General Partner at TCV, said, “The Avetta platform is unique in that it helps transform how enterprises assess and mitigate risk within their supply chains, simplifying the engagement and evaluation of suppliers to ensure alignment with each client’s unique operating requirements. We are excited to partner with the Avetta team as it pursues a broad range of market opportunities.”

Jon Kossow, Managing Partner at Norwest, said, “This is a fantastic outcome for Avetta’s founders, management team and shareholders. The Company’s technology platform, product roadmap and huge greenfield market opportunity suggest a future that’s just as bright for all parties involved.”

The Company has locations in Utah, California and Texas, with international offices in the UK, Australia and Canada.

Avetta and Norwest were advised by William Blair & Company, LLC. WCAS was advised by Raymond James & Associates.

About Avetta

Avetta provides a cloud-based supply chain risk management platform. Avetta’s global solution connects the world’s leading organizations with qualified suppliers, driving safe and sustainable supply chains. Its next-generation software is used by more than 55,000 active customers in over 100 countries to reduce risk and optimize efficiency. Over 220 of the world’s biggest organizations depend on Avetta every day. See www.avetta.com for more information.

About TCV

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 110 IPOs and strategic acquisitions. TCV’s investments include Airbnb, Altiris, AxiomSL, Dollar Shave Club, EtQ, ExactTarget, Expedia, Facebook, Fandango, GoDaddy, HomeAway, Netflix, Rent the Runway, Sitecore, Splunk, Spotify, VICE Media, and Zillow. TCV is headquartered in Palo Alto, California, with offices in New York and London. For more information about TCV, including a complete list of TCV investments, visit https://www.tcv.com.

All brands, names, or trademarks mentioned in this document are the property of their respective owners.

SOURCE Welsh, Carson, Anderson & Stowe; Avetta; TCV; Norwest Venture Partners

Contact:

Katja Gagen, TCV

kgagen@tcv.com

415-690-6689


10X: What 5G Means for Consumers and Enterprises

Depending on where you look, the number of connected devices, or ‘things’, out there is now in the region of 8.4 billion.  That’s a large number, but it’s barely the start.  By 2020, Gartner expects this total to jump to over 20 billion.

Importantly, this staggeringly fast growth of connectivity for consumer and enterprise use cases necessitates a high-performance network infrastructure and services and 5G will help take the industry to this next level.

In an era where just about everything will be connected—from the familiar smartphone to the connected robot, car or enhanced media distribution—there is a demand to share more wireless data.

3G arrived at the millennium, bringing us a major step forward in wireless connectivity speed. It offered connection speeds of around 380Kbps. The arrival of 4G networks built on that to deliver up to 100Mbps—the performance level many of us are familiar with today.

Even though 5G will be 10 times as fast, it won’t replace 4G in the same way that 2G (and gradually 3G) have been superseded since 4G’s arrival. 5G and 4G will work in complementary fashion to handle different types of traffic most efficiently. 5G remains in a technical trial stage as the standards for mobility and network interoperability continues being developed. Early commercial deployment is expected to start in late 2018. Yet, once the standards are set, there’s no turning back – 5G will be a catalyst for new applications and new opportunities that are just waiting to be imagined.

At the leading edge of this industry is Cradlepoint, an international market leader providing wired and wireless connectivity and networking solutions for distributed and mobile enterprises. Founded in 2006, the company has been at the forefront of providing 3G and LTE networking solutions for enterprises.  The company was first to market with LTE routing solutions. It now has 18,000 customers worldwide and has shipped more than 1.7 million cellular routing platforms.

In a recent conversation, Cradlepoint CEO George Mulhern explored the 5G opportunity with TCV Venture Partner Doug Gilstrap, an IT veteran and the former CSO of Ericsson.

 

Doug Gilstrap: If we believe everything we hear about 5G, it’s all expected to really start happening in 2018. Is that hype or hope?

George Mulhern:  The technical trials are underway as we speak.  The commercial production testing will start in 2018. There are already many 5G trials taking place around the world and 5G-ready base stations have been deployed by the major vendors. They’re already using some of the new spectrum for 5G both licensed and unlicensed spectrum, and the expectation is that it will be commercialized in 2019 and 2020.

Doug Gilstrap: When (and how) does 5G displace 4G? When will it be the new norm?

George Mulhern:  5G and existing LTE technologies are going to coexist for quite a while.

We’ll start to see some limited early deployments in 2018, and it’ll grow from there—but it’s not going to completely displace 4G.  In fact, some of the early deployments will be based on the LTE core—so they’ll coexist. That’s going to be important for customers because they’re looking for a transition.

It’s not going to be a light switch moment where they wake up one morning and 5G is everywhere. It’s going to be expanding over the next two, three, four years. It’ll be a significant improvement to the wireless capabilities as it gets rolled out.

Doug Gilstrap: Whats 5Gs selling point? What benefits can 5G adopters expect?

George Mulhern: Efficiency. We see 5G offering significant cost savings to operators and end users.

Our customers with many sites, branch locations and IoT needs (buses, police cars etc.), can expect better performance with advances towards 5G. This means no lead time to connect and wait for broadband digs, so any new high-speed broadband connectivity can be met instantly.

Also, with 4G Advance and 5G inter-workings, some of our enterprise customers will have better performance compared to the existing fixed line infrastructure in place today.

For customers with massive amounts of logistics and transportation needs, the new 4G/5G data plan charges plus our hardware and software solution makes the implementation, the monitoring, and the usage tracking affordable. And the productivity gains will be impactful. This technology will be price competitive and offer a variety of physical and logical diversity for all our clients.

We’re seeing the operators charging hard into the mobile enterprise space as the next wave of market opportunity, and we are here, hand in hand with our solutions to help make it happen.

 

Doug Gilstrap: Is everything going to be wireless with 5G?

George Mulhern: Because of the 10X performance improvement, 10X latency improvement and capacity improvement, 5G is going to be a tremendous technology. It’ll be a dominant last mile technology, but I don’t think the wires are going to go away entirely.

It’s like when email first hit, and people predicted the post office would disappear. Email opened the way for a whole host of new applications and capabilities, but didn’t completely displace the older technology, although its role in communications has been significantly diminished.

Any time you get something as flexible as wireless that provides the kind of performance and capabilities people need, I think they’re going to naturally migrate towards that. It happened on the LAN with Wi-Fi. It’s happened in the Personal Area Network with Bluetooth. And it will happen on the WAN as well. I would bet Doug’s paycheck on it…

Doug Gilstrap: Thanks…! Do you expect there’ll be a different take-up in different countries, unlike 4G?

George Mulhern:  The race to 5G is full on right now.  It is likely that many of the same countries who led the way to 4G/LTE will be early to the 5G market.  Carriers in the United States, Korea and certain countries in Europe were early movers in LTE and are investing very heavily in 5G right now.  Japan is also investing heavily in 5G and plans to have the network built out when they host the Olympics in 2020.

5G is very important to the carriers/operators because it opens up a much broader set of applications and markets to them.  The mobile phone market has been a tremendous growth opportunity on the consumer side and especially the evolution to mobile broadband (3G+/4G), but it is saturated, and the operators are now really focused on growth in the wireless side for the enterprise.  Examples include fixed wireless access to the enterprise, which is core to Cradlepoint, and we look to provide solutions for growth in other areas as well.  5G will provide opportunities in Fixed Wireless Access (FWA) for enterprise and residential (video), Internet of Things applications, autonomous vehicles, etc. That hits home for companies like Cradlepoint who can help deliver these new applications and services to the end customer.

George Mulhern: Now, let me ask you, who do you think will benefit the most, consumers or the enterprise—and what industries will be early adopters?

Doug Gilstrap: I think both enterprise and consumers are going to benefit tremendously from this battle among carriers to get solutions to market first.  We have seen the industry pull in their timelines for 5G from what they were, and they’re currently selling 5G-ready radios and are in 5G trials with many of the largest operators.  We’ll see the commercial first movers with the device versions in the latter half of 2018.

For the enterprise specifically, there are a lot of use cases that will need lots of bandwidth, so operators are utilizing different options across the 5G spectrum such as 3.5 gigahertz and 28 gigahertz because more capacity is needed to meet enterprise needs—and not just speed, it’s throughput as well.

Think of mission-critical applications for the enterprise, where there’s a lot of imaging needs and where a lot of data throughput has to be in real time with no jitter because people are using that data to make decisions. Or think of the oil and gas or utility industries which have remote diagnostics and imaging requirements.

There’s also healthcare where imaging and X-rays need to be shared because professionals are doing their work remotely. It will also be massive for video distribution to the enterprise or to the consumer residential markets. These require high-end bandwidth and low latency for quality of service. Any mission-critical application that requires that fits 5G very well.

On the horizon are consumer applications such as augmented reality, virtual reality, and the autonomous car. If you consider all the sensors and the data transmission that has to go back and forth—from the speed of the car to the cars on the road and changing road conditions—there’s so much going on. It’s low latency and high throughput.

 

Doug Gilstrap: How should enterprises think about preparing for the deployment and adoption of 5G? What are best practices and pitfalls to avoid?

George Mulhern:  My advice for enterprises preparing for 5G would be: Don’t wait.

Start incorporating LTE into your organizations now. With gigabit LTE commercially available on multiple operator networks, you can get much of that performance already. In the digital economy, it’s the companies that can move with speed, agility and gain insight that will succeed. Incorporating wireless into their business today not only prepares them for 5G, but they’ll start to reap some of those benefits much earlier than their competitors.

Doug Gilstrap: How do businesses really take advantage of LTE and 5G? Because it’s not easy. You can’t just say, “Oh, I’m going to implement 5G, and we’re ready to go.” It’s gigabit LTE as well.

George Mulhern: Each customer has their own priorities and strategic goals. We have customers today using LTE as their only WAN source for their branch offices.  Others are using it for temporary networks (a pop-up store for example), or air-gapped networks for security reasons.  Smart City applications like connecting traffic lights, Wi-Fi in businesses, connected police cars, digital signage, surveillance cameras, kiosks, the list of “things” being connected now is endless.

What’s ideal for retail and transportation can be different than what’s needed in the public sector or in financial services, however high speed, secure mobile access fits in with each of these verticals.

It is our view that this next generation of edge networks need to be much more agile and flexible. They need to be able to expand, contract, and incorporate new applications as business needs dictate.  We call it the Elastic Edge.  These networks will be Software-Defined, Cloud Orchestrated, Wireless and much of the time delivered as a service to the customer. Therefore, 5G will be a game changer in terms of flexibility, agility, performance, and cost.

Doug Gilstrap: George, what’s the fastest chipset that you will have in your routers from a theoretical chipset speeds standpoint for 4G advanced next year?

George Mulhern: Today we know that there are many operators that have commercially launched LTE Advanced 1 Gigabit services and our solutions will support this gigabit speed.  As 5G moves above the 1 Gigabit level to 10 Gigabits, so will we, supporting gigabit speeds on our platform in 2018, as those networks become available to the enterprise.

Our goal will always be that our solutions will be able to operate as fast as the networks will support.

 

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TCV is an investor in Cradlepoint and Doug Gilstrap serves on the board of directors of the company.

The views and opinions expressed in the transcript above are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”).  This transcript 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 visitwww.tcv.com/all-companies/.  For additional important disclaimers regarding this document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/