Newsela Secures $50 Million Series C from TCV for Growth and Expanded Content

NEW YORK, March 13, 2019 /PRNewswire/ — Leading instructional content platform, Newsela, announced today a $50 million C investment from growth equity firm TCV, who has a history of backing successful content platforms, including Netflix and Spotify. Newsela will use these funds to accelerate its rapidly expanding footprint in schools across the country. With over 20M students and 1.8M teachers on the platform, Newsela is now being used in 90% of U.S. schools.

A classroom utilizes Newsela's instructional content platform. With over 20M students and 1.8M teachers on the platform, Newsela is now being used in 90% of U.S. schools.
A classroom utilizes Newsela’s instructional content platform. With over 20M students and 1.8M teachers on the platform, Newsela is now being used in 90% of U.S. schools.

Newsela sources and curates rich, engaging digital content from hundreds of partners, making it accessible and personalized to student interests. Teachers rely on Newsela as a trusted source to help them move past lecturing and deliver a more modern social learning approach that fosters deeper connections with every student in the classroom, piques their curiosity, and enables discussion.

The investment from TCV will also fuel expansion of Newsela’s new Custom Collections offering, allowing districts to customize materials that match their unique curriculum standards.

“At TCV, we focus on finding transformative EdTech companies, and Newsela has proven to be a tool that boosts learning outcomes,” said Woody Marshall, General Partner at TCV. “Our investment will help extend the platform and make it more accessible and even more valuable to students, teachers, and administrators. We are especially excited by the great engagement and feedback that Newsela already has with their users.”

As part of the transaction, Woody Marshall, a General Partner at TCV, has joined Newsela’s Board of Directors.

“Today’s digital-savvy kids have unprecedented access to content they care about. But in the classroom, they’re often limited to textbooks and other outdated, inflexible materials that aren’t engaging. Most teachers resort to piecing together content found in web searches, which is not sustainable. This lack of relevant, safe, reliable and accessible materials has created a massive engagement gap in our schools. The future of education lies in closing this gap,” said Matthew Gross, CEO of Newsela.

“With high-speed broadband now ubiquitous and 1:1 computing (a non-shared laptop available to every student) the norm in classrooms, school districts are actively seeking solutions to this problem. They’re increasingly choosing Newsela to provide safe, trusted, accessible and engaging content and assessments, while giving teachers the freedom to personalize for their students’ interests and needs. With this investment from TCV, we will scale efforts to help districts turn their technology infrastructure into quantifiable results that improve learning outcomes.”

As a company, Newsela has grown significantly, increasing staff 50% in the past 12 months. It was in the top 50 (#35) recipients of Deloitte’s Technology Fast 500™ of 2018, and was named to Fast Company’s list of World’s Most Innovative Companies in 2017 and 2018.

For more information about Newsela or to join the team, visit Newsela.com.

About Newsela

Newsela is an Instructional Content Platform that combines engaging, leveled content with integrated formative assessments and insights to supercharge engagement and learning in every subject. Students and teachers use Newsela to find digital content from 100+ of the best sources—from National Geographic to NASA, Biography.com to Encyclopedia Britannica, the Washington Post to the Wichita Eagle. Content is instructionalized to meet students where they are, with interactive tools and analytics to take them where they want to go. Newsela has become an essential solution for schools and districts, with a presence in over 90% of U.S. K-12 schools. Newsela is the content platform for the connected classroom. www.newsela.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 $11 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, Believe, Dollar Shave Club, EmbanetCompass, EtQ, ExactTarget, Expedia, Facebook, Fandango, GoDaddy, HomeAway, LinkedIn, Netflix, OSIsoft, Rent the Runway, Sitecore, Splunk, Sportradar, Spotify, TourRadar, Varsity Tutors, WorldRemit 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/.

Media Contact:
Newsela
Kristen Marion 
623-308-2638 
210900@email4pr.com 

Katja Gagen
TCV
415-690-6689
kgagen@tcv.com

SOURCE Newsela

Related Links

http://www.newsela.com

Factory Software from Wine Country

It began over dinner. Nancy and Randy Flamm, who worked for competing suppliers of materials to small manufacturing companies, were out with a shared customer who wished that his factory had the kind of MRP and ERP software that large manufacturers had. Randy sensed opportunity: As production manager at a small manufacturer in the early 1980s, he had written his own software for inventory and scheduling. In short order the Flamms quit their jobs, took a second mortgage on their house in Los Angeles, and launched IQMS.

They had 100 customers within a year.

The innovations came quickly. Randy converted his software to the newly introduced Windows platform, creating one of the first Oracle-based client-server programs for small manufacturers. Then he connected the application to factory equipment so that the machines automatically sent operating information to a data warehouse. Next, he linked the warehouse to back-office financial and human resource systems for the industry’s first end-to-end solution. He changed the whole game by delivering comprehensive views of factory performance in real time.

Now IQMS enabled small factories to do what the big ones did: monitor operations moment by moment around the clock, adopt lean principles, organize just-in-time supply chains, cut downtime with proactive maintenance, and determine production cycles and unit costs within minutes and cents.

Growth and Challenges

With growth came both challenges and opportunities. The Flamms had moved IQMS to Paso Robles, a wine region midway between Los Angeles and San Francisco, which made them one of the handful of high-tech companies near mid-state universities such as California Polytechnic University (“Cal Poly”). But then Silicon Valley began attracting talent from those schools, and the Flamms had to get creative with their recruiting. One tactic was doing interviews on local talk radio, encouraging parents and grandparents to tell college-age kids that Paso Robles had its own high-tech employer.

Meanwhile Randy was the company’s CEO, CTO, and software designer, and nearly everybody in the company reported to him. Nancy, the controller, pulled in her brother and his wife to run sales and marketing. When the Flamm’s babysitter Shannon Holloway showed interest in IQMS, they discovered she had management talent and hired her, too.

At the 20-year mark, IQMS had annual revenue of $35 million, no debt, a strong competitive position – and the Flamms were turning down dozens of investor inquiries each year. When they decided to recapitalize in 2014, one company stood out. “TCV was heads above everybody else,” Randy Flamm says. “We spoke the same language, and everything they ever said was exactly what happened.”

Strong Partnership

“IQMS caught our attention well before we invested, because of our experience with other founders who achieved the same kind of technological and competitive breakthrough,” explains Jake Reynolds, general partner at TCV who led the investment with fellow general partner Kapil Venkatachalam. “We weren’t worried that they had taken little or no outside investment, because that meant they were going to judge us based on what we could do for their business, not the size of our check.”

TCV presented a roadmap for moving IQMS toward cloud-based, SaaS solutions that generated revenue from subscriptions rather than licenses. TCV also advocated for tools to surround the company’s customer-focused products with stronger support and professional services, and for increasing speed by building out the software architecture to a true multi-tenant solution. Significant investments in all these areas would take several years to accomplish but prove decisive for scaling the company.

Just as importantly, TCV had abundant experience with transitioning founder-led, family-run companies to experienced manage teams. That’s why everyone was delighted when Gary Nemmers, formerly COO of HighJump Software, agreed to become IQMS’ new CEO in 2015. Nemmers was a veteran of other founder-led businesses, and he had helped grow and scale multiple businesses and prepare companies like HighJump for its successful exit via acquisition. “The first time I met Randy and Nancy, we clicked, and I knew it in my gut that the time of the transition was right,” Nemmers recalls, and that was the beginning of IQMS’ next phase of rapid and sustainable growth.

Smooth Management Transition

Respectful of IQMS’s close-knit culture, Nemmers worked closely with TCV and brought in seasoned veterans to take leadership positions the company had never staffed before, including Matt Ouska as CFO, Dan Radunz as CTO, and Cheri Williams as SVP of professional services. Under Nemmers’ leadership, the team formalized and aligned the company’s core business processes so they could accelerate product management and development, serve more customers, and scale more efficiently than in the past. They also established an office near San Francisco to increase the company’s accessible pool of software talent.

“Our mantra was ‘people, processes, playbook’,” says Nemmers of his first year leading IQMS. “Once we added a few key people, we could bring in strong processes across the entire firm and establish playbooks to do things in a consistent, repeatable way.” As for working with private equity, his advice to other CEOs is equally clear. “You listen to and align with your board and your investors. At the same time, you follow what has made you successful in the past because that’s why they hired you to run the company.”

New Growth

IQMS flourished and significantly increased its customer base. Growth was not always smooth, but TCV had Nemmers’ back. “License revenue is inherently lumpy,” he points out, “so sometimes revenue was a rollercoaster. We’d crush our plan one quarter and miss the next, but we had a plan and knew how to execute. The board was super helpful in thinking long-term and strategically versus focusing on quarter-to-quarter swings. They were great sounding boards.”

With a broader and deeper solution set plugged into a professional marketing engine, IQMS emerged as one of the top software providers for small and medium-sized manufacturers around the world. The company naturally started attracting attention from the strategic players in the ecosystem. “We knew that IQMS offered the best route for enterprise software providers who wanted to expand into the SMB space,” Nemmers points out, “so we played from strength. It wasn’t just the enterprise players evaluating IQMS, it was also us looking for an ideal fit.”

Strategic Exit

Dassault Systèmes of France stood out for exactly that reason, and Nemmers seized an opportunity to kickstart the conversation. During a visit to Europe, he picked up the phone and called Philippe Charles, SVP of manufacturing and supply chain for Dassault. “I told him I was in Zurich and a whole day had opened up on my calendar,” Nemmers recounts. “He said ‘Give me five minutes.’ Then he called back with an invitation to meet him and his team in Paris, and that was the beginning of the great relationship we built with Dassault over the next year and a half that led to the merger.”

Nemmers and his team had carefully and strategically grown the business and poured energy into building relationships with customers, serving 1,000 manufacturers located primarily in the U.S. whose 2,000 manufacturing facilities in 20 countries produce for the automotive, industrial equipment, medical device, consumer goods, and consumer packaged goods industries. The core MES and ERP platform could be expanded with more than 20 additional modules including CRM and payroll, all integrated in a single database.

“Dassault is a strategic vendor for enterprise manufacturers and was looking for a way to get into the SMB segment,” explains Venkatachalam. “Initially we talked about channel partnerships, but we had a feeling the discussion would pivot toward something more strategic.” Nemmers worked with TCV to conduct a robust M&A process that included more than 20 strategic vendors and investment firms. Dassault won the deal and completed the acquisition in early 2019.

The two companies already share around 600 customers, who use both IQMS solutions and Dassault’s SolidWorks platform to run their factories. From this foundation, IQMS can market to over 55,000 SolidWorks customers and Dassault can now address the world’s estimated 250,000 SMB manufacturers. Even the timing is perfect, because so many SMB manufacturers are now replacing legacy software that is reaching end-of-life. Randy and Nancy Flamm are happily ensconced on their ranch near the Pacific coast, while Nemmers guides his team and IQMS through its integration with Dassault and onward toward even greater success.

###


NVCA Member Spotlight: TCV

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.

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, 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 “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.

Share this:


A Founder’s Perspective: The Journey on the Private Equity Highway

Glenn McCarty and his partners built an innovative software company that transformed the quality standards movement. Glenn recently sat down with TCV General Partner Kapil Venkatachalam to talk about the early days of the company and deciding to sell it 25 years later. He also shares advice for founder CEOs of technology companies looking to scale their business and what to expect if they decide to go down the private equity path. Key topics include:

  • ETQ’s origins and early pivots
  • How to assess your buyout options and find the right partners
  • Preparing for success in the due diligence process
  • How to bring your team on board

The Early Days…

Kapil Venkatachalam: How would you describe what ETQ does?

Glenn McCarty: Most people today know ETQ as a provider of a quality management software platform that automates the process of organizing operating data for managing compliance and quality improvement across a variety of industries, including automotive, healthcare, pharma, energy, food and beverage, and chemicals. It’s designed to layer onto a company’s existing processes while opening up much better visibility into opportunities for increasing quality and competitive advantage.

Kapil Venkatachalam: I’d love to hear more about the roots of the company…the cocktail-napkin story. As I understand it, you were a consultant rather than a technologist when you launched ETQ.

Glenn McCarty: Technically, I was an auditor. In the 1980s the U.S. had gotten behind the curve for manufacturing quality. The rest of the world was pushing ahead with ISO 9000, an international standard for improving manufacturing processes, as a way to improve product quality. It was becoming hard for U.S. companies to sell products in Europe and Asia that didn’t come from factories with ISO 9000 certification.

Kapil Venkatachalam: How did this lead to the formation of ETQ?

Glenn McCarty: I was working as a quality engineer for Underwriters Laboratories in the U.S., and I was getting bored with testing hairdryers. ISO 9000 was the big international trend in manufacturing at the time. So I joined a group that was doing ISO 9000 audits.

We were giving failing grades to tons of manufacturers, because their processes just didn’t measure up to the standard. We would get together with other auditors after work and feel terrible. I was a 20-something quality auditor sitting in a boardroom of a large company and telling the executive team all the quality issues they faced.

Kapil Venkatachalam: Did you see the vision for ETQ given the demand and had it figured out from that point on?

Glenn McCarty: Not even close. We started a consulting firm, because we saw that the big accounting/consulting firms did not offer services to address ISO 9000. So we pioneered that market. The thing is, we were able to help a lot of companies achieve ISO 9000 certification, but then they struggled to maintain it. American manufacturing was heavily oriented toward inspections and testing, while ISO 9000 focuses much more on process management with continuous improvement.

Pivoting to Software

Kapil Venkatachalam:  What led you to pivot from consulting to software?

Glenn McCarty:  Two things. First, we knew from our auditing and consulting experience that every company was different. They really valued the processes they had developed to become successful, but there was so much variation from company to company. While consulting was a great business that filled a need, it was not scalable — we had to start over with every company to learn their business. The other issue was that to maintain ISO 9000, U.S. companies had to collect tons more information about their processes than they were ever used to and capable of. It was a serious data management problem.

Kapil Venkatachalam: And this was decades before what we now call the “digital factory.”

Glenn McCarty:  Exactly. No one was offering software focused in this area.

Kapil Venkatachalam: What did you initially envision for the product?

Glenn McCarty: We knew there was a need for something more versatile than the document management systems of the time, which had some nascent workflow capabilities. Companies needed real workflow-based systems to lead their operating personnel through the process, track/capture their process data, to capture their decisions. So we decided to develop technology to track everything:  all the training records, audit findings, document approvals and revisions, different corrective actions or non-conformances that went on in a factory.

When we made the software, the first epiphany was that we had to develop software that could be configurable, not customizable. And it all came from our auditing/consulting days, knowing that companies have distinct processes. They had to be able to layer the software over their own processes.

Assessing the Private Equity Route

Kapil Venkatachalam: When did you start thinking about an exit? What drove that decision? 

Glenn McCarty: Things were going well for us, growth was high, and the profits were great relatively speaking to where we came from – we started in a basement. And we said, “Let’s continue growing this, we can do this.” We kept our heads down and kept hitting our targets. As a founder, you think there are no limits to growth. And while I still believe that’s true, I began to realize that home-grown leadership had its limitations. That’s simply reality. I began to wonder what was out there.

Kapil Venkatachalam:  How did you put that realization into action? 

Glenn McCarty:  The truth is, we used to get letters from various companies saying they were interested in investing in us or acquiring us. We didn’t even respond to them. Then one of our competitors was bought by a large company. I called that company up and said, “Hey, why did you buy our competitor? We’re stronger than them, we’re bigger than them, we’re better than them.” They said, “Well, you wouldn’t talk to us.” That’s when we started to explore our options to bring on a partner.

Kapil Venkatachalam: Did you have a framework to evaluate partners?

Glenn McCarty: We didn’t have much of a framework, but we did have some goals. The main goal was to maximize the value and the potential of the business. That, for us, meant we wanted two things in our partner. One was keeping ETQ intact as a business. We had seen scenarios where competitors were bought by a platform company and integrated into another model. We didn’t want that. The other key aspect for the partner was to bring a lot more than money. To maximize the value and potential of the business, we needed a partner with domain expertise, someone who could understand what we built and take it to the next level.

Kapil Venkatachalam: What about a good fit in terms of culture?

Glenn McCarty: Really important. Working with like-minded people, who see things the way you do, makes everything easier. That realization came quickly, after we began meeting with potential investors. A lot of them had their standard approach, and we were supposed to just fit into it. For example, there were the folks that said, “When we buy you, we’ll keep you folks as the executive management team. We want to come to board meetings and have you report to us on how great you’re doing.”

Kapil Venkatachalam: Was that appealing?

Glenn McCarty:  When we asked, “How are you going to help us with our products, with sales and marketing?” they said, “Well, we know people.” And I said, “No, that’s not going to work.” Then we had other people say, “We’re going to send you back to “school.” You’re going to have to do this our way.”

I’m an engineer and went to many years of school before I graduated. The last thing I wanted was to change everything we had built and stood for. What we were hearing was either status quo or a reeducation program, but our main goal was to maximize value and potential.  We recognized that we needed a partner who offered value creation via a true partnership.  Once that came into focus our next steps became clear.  I would advise founders to seek a partner who can think about your business and your goals the way you do and bring in improvement and new sources of value. Because you’re going to be talking about that value, and working on that, side by side, for months to come.

Kapil Venkatachalam: Once you knew what type of partner could offer the right fit in terms of your objectives and culture, you headed into the private equity journey. In hindsight, what lessons would you offer to other people who are thinking about taking this journey?

Glenn McCarty: In retrospect, the most important thing is to prepare. Like everything else in life, luck favors the people who are ready for it. You have to think ahead about what buyers want, so you don’t wind up doing fire drills down the line because you weren’t prepared. You want to show them a smooth-running business with a ton of potential.

Kapil Venkatachalam: What are the keys to good preparation?

Glenn McCarty:  I would say there are two things. First, surround yourself with good advisors. You are not in the business of selling companies, so get people who are experienced. Your cousin, your sole proprietary accountant or lawyer, the people on your softball team might say he or she can advise you, but it’s unlikely. The reason it’s unlikely is, if they were experts in buying and selling companies then they would be doing that for a living. You don’t ask your CFO to write code, because that’s not what she/he does.

Kapil Venkatachalam: Also, no one expert or firm is going to be the best at everything.

Glenn McCarty:  That’s right, you want experts in each area of financials, taxes, legal, and so on. And this gets us to the other big thing about preparation: you have to get your management team ready. In most cases, they are going to be the ones working with your expert advisors, and then with the experts from the acquiring company. As the CEO you are relying on your management team to raise the bar to meet the due diligence level. You need to make sure that the right people on your team are aware of what’s coming their way and connect them with the right coaches, so they can be prepared in terms of their time, their systems, and whatever information they are going to have to present.

Kapil Venkatachalam: What are some of the points you might use to differentiate buyers?

Glenn McCarty:  You want to know how many founder-owned companies the potential partner has acquired in the past. How many of those companies did the buyer scale up successfully? What is their expertise in sales and marketing or product development? How many other companies in their portfolio could become customers or business partners for you? You want to know all these things, because the potential buyers are doing exactly the same analysis of your company.

Kapil Venkatachalam: Let’s dig a little deeper here and talk through the different areas of preparation for the due diligence process.

Glenn McCarty:  The first thing to realize is that it’s going to be time-consuming. It’s easy to think that you already have your house in order, because your business is humming along. But the buyers have a completely different perspective. They will require you to participate in a due diligence process to demonstrate your companies past and future potential.

Kapil Venkatachalam: Explain why financial systems matter, along with the numbers.

Glenn McCarty:  In hindsight, while you might think the world of your business and its strategic value, at the end of the day the objective measures of success are financial. If you think you are headed for private equity, you may want to invest in better financial systems first. If you do not have a CFO, you might want to seriously consider bringing one on even though you only have one to three years to go before exiting.  One of the benefits is that your financial advisors won’t have to work so hard to explain your financials. They are going to spend some time at this no matter what, but better systems speed it up.

Kapil Venkatachalam: Many founders are aware of the need for strong financials, but they are surprised by the amount of purely legal work that also has to get done.

Glenn McCarty:  We had not realized that our contracts with customers and suppliers would be scrutinized. You have to prepare an amazing number of documents for a transaction. So yes, you need good legal advice and some leverage for document creation, and it should be from a firm that specializes in the type of transaction you are doing. Even with support from an outside legal firm, your General Counsel will be spending a huge amount of time on a transaction, so you have to make plans for them to continue with the business operations while the transaction process is in play.

Kapil Venkatachalam: So now you have your advisors lined up. They’re all experts. But the people on your team may not be experienced in the process ahead. What do you tell them? How do you prepare them?

Glenn McCarty:  First, it’s important to understand the implications of what you are asking. In our case, we had a lot of long-term employees who had worked their way into senior management, so they had never seen this process somewhere else. In that situation, you have to ease them into the whole idea, bring them into your thinking, and get them aligned before you start explaining what they’re going to have to do.

Kapil Venkatachalam: Is this an area where you can get advisors involved?

Glenn McCarty:  I think you have to get them involved, because they know the drill and probably most of your team doesn’t. They can provide education about the process before it starts and coaching all the way through it. You need this because the same employees you are asking to help you sell the company are also running it. No matter how you look at it, this is an ask that is an additional task to their day job. The danger of distraction is there. You need your team to be on top of the due diligence process, while also making sure the ship doesn’t lose speed or direction.

Kapil Venkatachalam: That’s great, thanks, Glenn. My final question is about the takeaways for founders who may be looking at these options. What’s your advice in a nutshell?

Glenn McCarty:  Private equity firms provide an interesting alternative to help you maximize the potential of what you have already built. That said, you have to take the time to find the right firm for you – whose values, experience, and vision are aligned with yours. As we discussed earlier, you have to prepare your team for the journey before you lead them on it. And finally, recognize the value of good advisors. They are worth the money because they bring you the right partners and prepare you for a successful partnership. Selling your business is both exhausting and exhilarating, and I am grateful for all the support I received.

Kapil Venkatachalam: Thanks so much, Glenn.

###

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. TCV has not verified the accuracy of any statements by the speakers and disclaims any responsibility therefor. 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/


TCV Makes $200 Million Investment in Unified Retail Planning Pioneer RELEX Solutions

HELSINKI & MENLO PARK, Calif.–RELEX Solutions, a leading provider of unified retail planning solutions, today announced that TCV has made a $200 million minority investment in the company. TCV is one of the largest providers of capital to growth-stage private and public companies in the technology industry and has backed industry-leading companies, including Airbnb, Facebook, Netflix, Splunk, Spotify, WorldRemit and Zillow.

RELEX provides an end-to-end retail planning solution enabling companies to improve their competitiveness through accurate forecasting and replenishment, localized assortments, profitable use of space and optimized workforce planning. RELEX has consistently achieved 50 percent year on year growth and attracted leading brands across the globe including Coop Denmark, Franprix, MediaMarkt, Morrisons, PartyCity, Rossmann and WHSmith.

RELEX will use the funding to continue to fuel its successful growth. The company’s three founders, Mikko Kärkkäinen, Johanna Småros and Michael Falck, see the additional funding as a means of fulfilling their vision of changing the world of retail planning. The founders will stay in their senior management roles, remain significant shareholders and will continue to set the strategy and direction for the Company. RELEX’s existing investor Summit Partners will retain an equity stake in the business and will continue to hold a seat on the RELEX board of directors.

“The development of retail and supply chain planning has been held back by siloed organizations and limitations in how technologies integrate,” comments RELEX’s CEO Mikko Kärkkäinen. “Our vision is to change how the field works by driving a more responsive unified planning process. We are already off to a good start — now we will increase our speed by accelerating our product development ambitions, hiring more tech talent and investing further into the development of our organization as well as further expanding our retail-specific machine learning and AI capabilities that complement our core data processing platform.”

TCV’s General Partner John Doran says: “We seek to partner with businesses and management teams that are poised to grow to dominate global markets in their sectors. We are impressed by RELEX’s modern, highly flexible and cloud-based software, as well as its exceptional data processing performance. RELEX has very high customer satisfaction with customers benefitting from inventory and waste reduction, improved stock availability, more efficient goods handling and less time spent on ordering. We are aligned with the founders’ vision for RELEX and look forward to supporting the management team.”

“With a robust product and a keen focus on delivering ROI to customers, RELEX has built a significant customer base across numerous retail segments and geographies. We are thrilled to continue our partnership with RELEX and delighted to welcome TCV,” adds Han Sikkens, a Managing Director with Summit Partners.

About RELEX

RELEX Solutions is dedicated to helping retail businesses improve their competitiveness through localized assortments, profitable use of retail space, accurate forecasting and replenishment, and optimized workforce planning. Our SaaS solutions deliver quick return on investment and can be used independently or jointly for unified retail planning, enabling cross-functional optimization of retail’s core processes: merchandising, supply chain and store operations. RELEX Solutions is trusted by leading brands including WHSmith, Morrisons, AO.com, Coop Denmark and Rossmann, and has offices across North America and Europe. For more information go to: www.relexsolutions.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. TCV’s investments include Airbnb, Altiris, AxiomSL, Believe, Dollar Shave Club, EmbanetCompass, EtQ, ExactTarget, Expedia, Facebook, Fandango, GoDaddy, HomeAway, LinkedIn, Netflix, OSIsoft, Rent the Runway, Sitecore, Splunk, Sportradar, Spotify, TourRadar, Varsity Tutors, WorldRemit 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

Alexandra Sevelius
Head of Marketing and Communications, RELEX Solutions
Phone: +358 45 674 4949
Email: alexandra.sevelius@relexsolutions.com

Katja Gagen
Head of Marketing, TCV
Phone: +1415 690 6689
Email: kgagen@tcv.com


From Startup to Global Scale: Securing and Building the Company’s Culture Are Keys to Success of Tech Leaders

The days when technology chiefs could focus simply on hardware and software are gone. For technology leaders, aligning IT with long-term strategy and attracting and nurturing a winning team has become key in a world where customer expectations are growing, and the pace of change continues to accelerate.

Today’s technology businesses need to think strategically at the local, national, and global level. Many companies run business online or mobile first and are getting creative and competitive advantages from collecting and analyzing consumer data. This provides both opportunities and challenges: on one hand, companies can get access to global customers fast, yet they are also facing competitors both at home and abroad, not to mention threat actors who could be located anywhere and can come at you with sophisticated attacks. It’s your talent against theirs – with your enterprise and your customers in the middle.

At TCV, we’ve been focused on talent and culture as critical success factors for more than 20 years. Many of our investments have turned on building or sustaining successful cultures and nurturing them with the right people. For this year’s invitation only CTO/CIO Summit we decided to look at talent and culture together with the challenges of globalizing and securing the enterprise. We brought together over 40 technology executives, including founders, product leaders, TCV partners, and — of course — CTOs and CIOs, in Half Moon Bay, CA, for an opportunity to build peer relationships, learn from shared experiences, and discuss top-of-mind issues facing these leaders. We also mixed up the “talent” for the event itself, drawing not only on working CTOs and CIOs but also career IT experts with consulting and investing experience across multiple industries.

For us, the most important part of the two-day event was gaining a deeper understanding of both the challenges and opportunities technology executives need to balance, including:

  • Winning the Talent Wars and Creating a Winning Culture
  • Building a Globally Distributed Organization
  • Privacy and Identity Initiatives and Securing the Enterprise
  • Our agenda centered around best practices in scaling a global organization. Other topics we discussed included how to integrate acquisitions and best practices in managing a global workforce.

Here are the highlights:

Over dinner, Zillow CTO Dave Beitel spoke about how technology has transformed the real estate industry. Dave joined Zillow in 2005 and has seen the company grow, both organically and with 13 acquisitions in the last 12 years. Dave explained the importance of creating a strong culture across multiple locations and laying out paths to career development to motivate teams as organizations scale. He also provided advice on a common challenge that many growing companies face, particularly how to integrate offshore teams and make them an extension of existing efforts rather than adjacent resources. He also discussed with the group how to achieve success in scale with multiple office locations and different cultural identities.

Tim McAdam led the next day’s first panel with Victoria Schillinger, VP of HR at Alarm.com; Caroline Horn, Partner at Andreessen Horowitz; Michael Morell, Managing Partner at Riviera Partners; and Jonathan Schoonmaker, SVP of HR at FinancialForce. Their topic: winning the talent wars against today’s tech giants. The practical tips flowed freely, starting with university recruiting. Pick a few schools and work them, including both Ivy League schools and state colleges. Build relationships with influential faculty. Introduce your brand to younger students, not just seniors. When they become interns, give them meat to work on, not crumbs – having an impact is what they value most. If they turn down an offer, wait 2-3 years and call again – they may not be having the impact they expected at that big company they chose. Retaining key talent has to be proactive. Sit people down and map out how they will develop themselves and increase their impact by staying with you. Give them management opportunities so they can imagine themselves as leaders. Don’t expect diversity to walk in the door — look for talented, highly motivated people who come from completely different fields such as law or the military. And finally, the 90 days after a new hire starts are more important than the 90 days spent hiring them. Set them up for quick wins, build in plenty of touch-points, and make sure they’re comfortable in the culture.

Ted Coons continued the conversation with a focus on talent and culture, talking with Kameron Kordestani, a partner at McKinsey & Company, and Otto Berkes, CTO of CA Technologies, about building a globally distributed company. Both speakers separated the “artifacts” of culture – posters, slogans, logos – from its essence: ways of working that make the organization succeed. People who embody those essentials should be made ambassadors to new acquisitions or newly built development centers, so that people new to your culture can experience it live. When new team members absorb it, they should be given broader responsibilities in the combined company – this leverages their talent and inspires their original team. Particularly after M&A, the acquired team needs to understand its role and contribution to the combined entity; this should happen quickly and positively. Pay for travel if you can; people in far-flung organizations form bonds faster when they meet in person. Both Otto and Kam warned against sticking too closely to integration playbooks, particularly when the acquired technology is new or different. Sometimes a talent-rich team should not be integrated rapidly. Don’t compromise on security or safety but take time to observe how they work before you impose on a new team – the last thing you want to do is spoil an acquisition by how you integrate it.

TCV EIR Jonathan Shottan, Manmeet Singh, Co-founder and CEO of Dataguise and Pablo Jensen, CTO of Sportradar pulled back the curtain on Europe’s General Data Protection Regulation (GDPR) and California’s new privacy laws. Simply put, GPDR is about What, Where and Why: What private data do you have? Where is private data stored? Why do you need to process that private data? Both the compliance challenge and market opportunity of the new regulations are huge and what unites them is the challenge of identifying the vulnerabilities. Many companies mistakenly believe they are compliant, because they encrypt and segregate various types of customer data physically or in the cloud; but when they bring data types together for analysis, they create “PII” – personally identifiable information. The new laws also require companies to delete data if customers demand it, but that’s likely to create havoc with legacy database applications built on relational technology. And how do you delete older data stored on physical media? Enter data masking, at production scale, to stand in for deletion and encryption. First movers — with enough IT spend on decoupling, segregating, and masking data — may even competitively enhance their brands as “more secure” than others.

After lunch, Ted Coons and Charles Beadnall, CTO of GoDaddy, delved into the transformation of GoDaddy’s culture, a process that started back in 2013. Engineers loved the company’s mission of providing small businesses with a home on the internet, but deterrents included fly-over geography, aging facilities and sensationalist marketing. With a new CEO – and marketing campaign – GoDaddy began recruiting heavily. The challenge was forming a new culture that welcomed both existing employees and a flood of new developers in ways that produced better products, faster. Charles employed a version of the 80/20 rule: if he could populate 20% of a department with more diverse people who modeled the right behaviors, they would tip over the rest. The company hired people based on referrals, recruited many female graduates from local universities and placed experienced diverse hires in senior IT roles. Charles also drew in Ph.D.s from MIT and spent time with teams around the globe to transform a culture while keeping the company focused on growth.

Matt Robinson led the day’s final session on securing the enterprise with Amir Ben-Efraim, co-founder and CEO of Menlo Security; Rob Fry, VP of Engineering at JASK; Robert West, Managing Director at Deloitte LLP; and Christian McCarrick, VP of Engineering at Auth0. Matt first asked the panel how CIOs and CTOs should differentiate among today’s legions of security providers. Recommendations included assessing your vulnerabilities so you’re asking the right questions, getting referrals from peers, and anticipating the inevitable consolidation among security providers. Not every company needs an industry giant – those companies were startups once, and today’s upstarts may have superior technology. The panel then discussed prioritizing among today’s proliferating threats. Getting governance in place is critical – if no one fully owns the security portfolio, priorities will be set for the wrong reasons. If the role falls to you as CTO or CIO, you must be (or become) a good storyteller to convey the threats to your company and build consensus on addressing them. It’s also vital to recognize that malware will get inside your systems, but it won’t be the end of the world if you’re prepared. Ultimately the biggest weakness of all security systems is the human element. Education and training are essential and need to be on the agenda regularly. In addition, Amir argued that companies should hold vendors to a higher standard, aiming to receive 100% efficacy to keep companies protected.

We are grateful for all the valuable insights our speakers shared with attendees and the TCV community we strive to create. We look forward to exploring new topics and connections during our next TCV event.

###

 

The views and opinions expressed are those of the CTO/CIO Summit speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”).  This summary 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.  Not all companies discussed above are TCV portfolio companies.  Any TCV portfolio companies discussed 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 document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.

 


TCV Promotes Nari Ansari to General Partner

We are delighted to announce the promotion of Nari Ansari to General Partner.

Nari joined TCV in 2006 and has played an integral role in the firm’s B2B investing practices and our collective efforts to accelerate growth at our portfolio companies. Since our inception in 1995, we have been committed to helping entrepreneurs become market leaders, and Nari’s deep understanding of technology, his connections with category leaders, and his ability to uncover exceptional opportunities and partner with talented management teams reflect the value the TCV team strives to bring to CEOs.

Nari Ansari

Nari focuses on investments in the software, fintech, healthcare IT, and tech/data-enabled services sectors. He currently serves on the board of directors at HireVue, OneSource Virtual, and Watermark and also works closely with Avalara (NYSE: AVLR), AxiomSLPayoneer, and Varsity Tutors. Prior investments include EmbanetCompass (acquired by Pearson) and Merkle (acquired by Dentsu). Before TCV, Nari was with McKinsey & Company in the San Francisco office, where he focused on assisting clients in the software, storage, and semiconductor sectors. Nari received his M.S. and B.S. in Management Science & Engineering (MS&E) from Stanford University’s School of Engineering.

We are delighted to acknowledge Nari’s outstanding contributions to the firm to date and we look forward to his continued success at TCV for many years to come. Congratulations to Nari on his promotion.

The General Partners of TCV

###

 

The 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 http://www.tcv.com/portfolio-list/. For additional important disclaimers regarding this post, please see “Informational Purposes Only” in the Terms of Use for TCV’s website.


Making Mobile Magical = Selling Without Sales Reps

When the world flipped from desktop to mobile, consumer brands made an often painful, but highly profitable pivot. It stood to reason that high-velocity B2B software companies could likewise take advantage of the big shift to mobile. Platform trends make for disruptive go-to-market models, right?

Many tried, but few have succeeded. SafetyCulture is one of the few that thrived. At TCV’s annual growth offsite, David Yuan, GP at TCV, caught up with Luke Anear, CEO and founder of SafetyCulture, to talk through his path. Luke is not only building a disruptive mobile-SaaS company. He’s also one of the most interesting entrepreneurs. Over dinner, he shared his career as a private investigator, nearly losing his shirt as a spec boxing match promoter and working as a videographer for Tony Robbins.

For an inside story on how SafetyCulture reached high-level scale and a compelling market position on the back of a mobile-first product, settle back and click play.

 

Dave Yuan: I’m a general partner at TCV. I’ve been passionate about this conversion between consumer, internet and enterprise software go-to-market models. We’ve been exploring this intersection for the past decade. This past Summer I had Luke, the founder and CEO of SafteyCulture, join us at our offsite and talk through mobile first. SafetyCulture’s reached a high-level scale, great growth, and a really interesting market position on the back of a mobile-first product, monetization, and go-to-market strategy. Hey, Luke. Thanks for joining us today. Good to have you this Summer.

Luke Anear: Thanks, David. Yeah. Nice to be chatting to you.

David Yuan: Well, I know the topic for today is mobile, but before we jump into it, give us a snapshot in SafetyCulture.

Luke Anear: SafetyCulture created the checklist app that allowed teams to be able to do inspections and take photos and build workflow around maintaining standards in the workplace. And originally, it was based on purely safety and helping people go home at the end of the day, but today it’s across quality and really anywhere that teams are trying to maintain a high standard in the work they do. I think it collects about 400 million responses a year now through the app, and we’ve built a pretty interesting database now which allows us to benchmark and understand how well teams are managing risk and also how they can improve performance.

David Yuan: Awesome. Can you give us a sense of size? You know, customers or whatnot. Just so folks know the level of scale you’ve reached because it’s been impressive to watch you grow.

Luke Anear: Sure. We service about 70,000 organizations, and the team– we’ve got about 280 people on our team and we’re in most of the developed countries around the world. And people use us across all sorts of different industries from transport and logistics, to hotels, to Starbucks stores making sure they’re clean and look good every day. It’s a pretty broad spectrum of customers that we interact with.

David Yuan: That’s impressive. Okay. Well, the topic is mobile. On the consumer internet side, obviously, over the past 5, 10 years, we’ve gone through this often times painful pivot from desktop to mobile. But generally, that’s where the world is on the consumer side. Mobile is everything at this point, or at least for right now. Why hasn’t that happened in the enterprise software market?

Luke Anear: I think the people who buy software are typically still taking directives from management and it makes sense that they want to be able to get certainty from what they buy and so that’s based on traditional sales processes, people promising a lot with their software and then quite often they’re not quite coming to fruition over an extended period of time. We’re really empowering more operations and field-based people to do their jobs better and once they get traction with that, then it’s hard to stop. So I think we’re seeing more and more examples of that, but there’s still a long way to go. Enterprise is slow to adopt things. There’s a lot of stakeholders and so, I guess, companies like SafetyCulture being able to Trojan Horse our way in and then navigate through that process without having to be negotiating and trying to sell software to anyone. It’s a pretty fun time.

David Yuan: Absolutely. You’re obviously successful now but when you were getting going, when you were getting started, why do you think Mobile First would work as an approach for your product?

Luke Anear: I think you go back to around 2011-2012 when we started looking at this. It was really the point where everyday workers now had this computer in the pocket.  We heard the term before but when you think back, the iPhone came out in ’07, and it took three or four years really for people who weren’t sitting in front of computers to get that level of penetration. It was around 2011 that we went, “I think the timing is right for us to provide a tool that everyday people can pick up and build a workflow and start implementing”. The hypothesis was would these people be comfortable enough to even download software.  It turns out most of them, because they had never been involved in buying software and they didn’t know the rules about buying software and using software. And so they just would do it and other people would tell each other that that’s what they’re using and so word had spread. It’s worked well for us.

David Yuan: That’s great. I imagine when you were getting started that the first step was getting individual use, so getting that download. And we have seen quite a bit of that level of traction. But very few companies get the broad adoption that SafetyCulture has achieved within a company or organization. How did you do it? Was it intentional? Was it organic or a mix of both?

Luke Anear: Probably a little bit of luck in there as well. We focused pretty much on solving a specific problem for the workers out in the field trying to do their job, trying to manage risks so, it’s kind of like the field manager, is probably the person we targeted. And, essentially, they became our champions. They were our salesforce in a sense where they would all of a sudden feel that they’ve got this new superpower, and they can share that across and up and down through their business and that one thing would lead to another. Because they were able to articulate the benefits so well internally, they could steamroll over the top of IT policies or any of the normal barriers. We’re not going to stop using this. You guys are going to figure out how to make it work because we love it.

That was really the secret to our growth, that we were empowering those people. They had asked us for slide decks to present to their management. We still get asked that all the time from people like what materials can I use to present? It’s a marketer’s dream where you’ve got people who are your customers, who are working hard for us to roll it out because it makes their lives better. And that was really quite something I hadn’t seen before, when we saw that happening.

David Yuan: So I understand it, people are looking for help from SafetyCulture to present to the internal procurement folks or help to actually present the work that they’ve created in SafetyCulture to be consumed by upper levels?

Luke Anear: Interestingly, from a growth point of view, they’re pitching our software to their internal management. They’re literally doing pitches. They’ve got the decks up and they’re saying, “Here’s the company. Here’s how many users they have. These are the companies that use it. These are the use cases.” And then they bring their own use case in and “this is how we’re using it. We want everyone here to be using it.” It’s just a phenomenal thing to kind of watch. You kind of pinch yourself and think: How did ever even happen? Because we never had salespeople and, yet, these people were using our products and selling it for us.

David Yuan: Absolutely. I played around with your product a little bit. It strikes me, that there’s that elegance to it. The product really works well for an individual user, but it feels like the more people on SafetyCulture in my organization, the greater the power. And so how do you incent that team adoption?

Luke Anear: The path to getting them to adopt it across their team gets accelerated when we get more people doing it, particularly early on. That’s been an area that we were focused on in terms of onboarding and getting people up to speed as quickly they can, inviting other people on their team. That’s when things start to move. Frankly, if they’re a three- or a four-person team, they’re never going to experience incredible benefits from it compared to 1,000-person team. We want to help them get to 1,000.

David Yuan: That’s where you set the paywall.

Luke Anear: Yes, we move around the paywall and look at different things. You see churn come down once it gets stickier once more people are using it, and that’s when the value increases for them. So we focus on getting them to that point.

David Yuan: Are there other elements of the paywall? One, obviously, is users, which we describe, where the trade-off is monetization and adoption and churn, like you just walked through, but are there other elements of the paywall that you either experimented with or currently employ now?

Luke Anear: We’ve tried usage limits and things like that. We still have a usage limit for users in terms of how much they can collect and store, but I always try and push the free line out on that. And we’ve played around with a certain number of inspections and things like that and then you hit a paywall. But I try not to put shackles on the experience as much as possible. There are companies that try and extract money at every opportunity, and then there are companies that want to see you do well, firstly, and then we’ll give you opportunities to pay for more. And I think we take that seriously. It’s not something that we kind of sit back and say, “Let’s get at every dollar we possibly can.” We always leave quite a bit on the table from that point of view because we value that experience more than we value getting every dollar that we can.

David Yuan: Absolutely. Can we double-click a little bit on that because I think a lot of companies aspire to have that customer intimacy and insight but as you scale, it can be quite difficult to capture those voices in a way that cuts through at all. Are there specific things that you guys do to make sure you stay close to the customer voice on this like paywall on product and other aspects?

Luke Anear: Yeah. Like engagement metrics are probably the strongest signal on that. And you want to see at what points do people get their real sort of aha moments or wow moments. And building the experience towards those moments, that’s kind of key, and so understanding and breaking down what are the points where people achieve a certain level of interaction so that we can either accelerate the time to that moment or increase the peak of that moment. People remember the peaks of the experience and that’s what brings them back. And sometimes it’s simple things. It’s often not necessarily what we value. It could be a PDF report, for example, that’s got photos in it. That’s the most basic thing from a tech point of view. But from our customer’s point of view, they used to take photos on their phone and then type stuff up in Microsoft Word and then put it all in. And now magically, it kind of happens.

David Yuan: That’s great. If the broader topic is mobile, it leads us down a line of thinking, which is providing discreet value or utility value or great experience through individual user. As we talked about, as you deploy more broadly into organizations, you start bringing teams online. When you think about the features or the product experiences that really drive joy for an organization, are they different than the specific user experiences or are things like analytics or benchmarking?  Do they become more central? How do you think about the overall organizational experience to complement the user experience?

Luke Anear: I think collecting data for the sake of it is no one’s outcome. And so it’s about, what are the decisions we can make with this data? How do we get the insights? Or how does this make us more intelligent or smarter? That’s ultimately the goal. And the more that we can do that proactively and the less burden that we place on the organization to have to understand the data and make sense of it, the easier it is for them to be able to adopt it and share it. For us, collecting, having an incredible front-end user experience, is part of it. That makes it easy to collect information. But then how do you take a position on what information is important? And I think we’ve seen a lot of BI tools and stuff, where people can pivot and do all sorts of stuff with their data, but I don’t think that’s enough anymore. And for us, it’s about understanding our customers, so that we take a position on what data is going to be most valuable to them. And then we shape the experience around that and really serve up those decisions for them on a platter. They essentially want to know, our customers want to know, what’s working well across their teams today? What’s not working well?

And importantly, what do we do about that? Understanding just those three basic questions drives a lot of the decision-making for us around how do we present this information back? And how do we make it easy for them to get the insights that help them run their business? And make it easy for your customers to get value from that data and those insights. That takes a deep understanding of the customer to do that. And also, when you do it well, it increases the competitive barrier for other people to come in, because a lot of them just take the easy way out and go, “Let’s just allow everybody to pivot, however they want to pivot the data.” And that just creates work for our customers. They’re like, “Don’t create work for me. Make it easy for me.”

David Yuan: I love it. The same intensive focus on consumer experience at the individual user level extending into the team level and ultimately the enterprise level. That makes a lot of sense. And do you see that progression as SafetyCulture is adopted in your customer? Do you see that progression naturally mirroring monetization? Is there a certain point in which that you realize that experiences gone from the individual now to the team, now to the organization, where it does make more sense to consider different paywalls or different levels of monetization?

Luke Anear: Yes. And it also gives you opportunities to add value layers on top of that. We can mix that data with other data sets. We now do IoT and sensor-based hardware as well, which collects data that we layer in on top. When you sit back and take a position on what’s valuable, you’re then in a great place to decide what else is relevant, and what else can we provide that’s going to be helpful? A lot of thought goes into that, and our customers have got other data that’s valuable. And we’ve mixed data with customer satisfaction data, and we can see uplifts in CSAT when people are doing regular checks and inspections. It becomes multi-dimensional.

David Yuan: We’ve talked about being super intentional about the user experience from individual users to team to organizations. We’ve talked about monetization along those same dynamics. Let’s shift gears a little bit to go-to-market. So, initially, most bottoms-up premium models are all marketing and, primarily, organic marketing. When did you get the conviction to start really leaning into paid marketing, if you have, and when did you start thinking through hiring that next layer of expense, those inside sales reps? You’re moving from a very organic business to more a traditional software model over time, so when did you know that it was time to start putting some money to work?

Luke Anear: I think we’re still getting there actually. We haven’t spent a lot on acquisition and that. We do a little bit on content and things, but I think we’re still at the beginning of that journey. I probably can’t offer much in that sort of area, but in terms of inside sales, we have in the last 12 months, had people who are now focused on our existing customers and helping them get more value and expand and accelerate their path to value. We now will pick up the phone and chat with people. We never used to do that. I think for about the first 40,000 organizations, we never picked up the phone and spoke to them unless they specifically wanted to talk to us about something.

Because we’re a fairly low price point, it doesn’t make sense for us to try and have someone closing every sale. We’ve always got to sort of separate that out and make sure that our organic growth engine is strong. And that makes everything else easier. If you’ve got a product that sells itself and that can be adopted and self-served, then when you come to talk to a customer they’ve already got their own case study. We’re very conscious of that. We never want to be just saying, “Well, let’s just build out massive amount of salespeople,” and that becomes your growth engine. For us, it’s all about the organic adoption and then expanding that adoption and making sure that they’re getting maximum value from it. That’s a conscious choice and something we’re continuing to find a balance on.

David Yuan: You’re the envy of probably 90% of the software world, to be a product-led go-to-market, that’s fantastic. In terms of your customer success and customer support, it sounds like you think about those heads or that expense on a return-on-investment basis. But my guess is you aren’t actually compensating them on sales. Are you assigning quota to your customer success reps or is it purely organic?

Luke Anear: Not for the most part. There are a couple now of account execs, two or three or something. But all the rest are just focused on helping the customer and doing what they do. So yeah, there’s probably a place for it, I think, as we continue to grow. And talking particulars, we never actually sold a big, upfront deal, in terms of 1,000 seats or something, until just probably seven months ago was the first time we’d even done 500-seat deal. It was always only just one user and then they expanded up to thousands. And now that we’ve got companies that come to us and say, “Look, we want to start with 2,000 users.” That’s where the account execs can have that conversation and it makes sense to have a quota for them. But that’s a new area for us.

David Yuan: The beauty of your business, and as we talk through it becomes more and more explicit, is that SafetyCulture is following a different playbook. It’s a different software business model. As you think about the mobile opportunity and the bottoms-up opportunity, do those apply to traditional application software companies? Are there things that a traditional app company can learn from SafetyCulture, or is it really a grounds-up business model and grounds-up product model?

Luke Anear: That’s a good question. What we’re seeing from a lot of the established desktop or legacy players is that they’re trying to extend their software to mobile. And I think at best all they’re going to do is sort of keep their current customer because their current customer wants them on mobile. You’ve got a lot of luxuries on desktop. There’s more real estate. You have typically people who sit in front of a computer for at least a good part of their day. Those luxuries don’t exist with mobile. People are on the move. They’re out and about.

Where we see companies struggle is when they’re simply extending the functionality, or even a reduced functionality, of their desktop experience. You need to be able to step back and think about that user as a different customer. You’ve got to break down what they do in their day, what their outcomes are, and how can we do that. And that may be an extension of some of our software. Or it could be a completely different experience.

We want to get them out of our app as fast as we can with the outcome they want. Whereas a lot of the time, people think about trying to keep people in their software for longer. We’re trying to help them get on with the things they need to do, and that means get them in and get them out so that they can get on with their day.

David Yuan: Absolutely. If it is a truly generational shift and it’s a new category of application companies, who else is doing this well? Who else besides SafetyCulture do you look to, do you admire, that inspires you from a mobile product standpoint?

Luke Anear: I think for enterprise software to do well, you’ve got to solve a particular problem. There’s an Aussie company, Canva for Work, which is a design experience for teams. They’re doing great. There are obvious ones like Intercom, where I can now see what customers are saying and how we’re interacting with them. I can deal with stuff. And then you’ve got other guys, Trello, which is part of Atlassian now. I think there’s a mix. But I think the key thing is not necessarily to follow some of these others. Canva for Work is very different to us, as is Slack and Intercom, and so while there might be similarities in some of the functionality, the outcome that they deliver, those peaks and those moments for customers are completely different. There’s a few around that we looked at. But I think that the biggest clues will come from your customer base and understanding that more than admiring what other mobile-first companies have achieved or mobile experiences are on offer.

David Yuan: Good point. You’re a global business. SafetyCulture is a global business, but you were founded in Australia and as we look at product-led software companies, a preponderance of them are actually coming out of Australia and New Zealand. What’s going on? Is there something in the water? Is there something foundational going on in your neck of the woods that make for these beautiful UI product-led business models?

Luke Anear: I think the simple answer is probably we never had the money that you guys had in the U.S. and so we just had to figure it out. And we didn’t have that kind of luxury of time and great investors that would just be backing us from the beginning. We had to really get traction and prove out a business model before people would even take any notice of us. I think that’s played a part for a while. And then there’s a couple of other factors as well. We never had the experience or the talent, really, in Australia. No one really had the belief on how you could scale a company from your garage. You’d hear about it, but it was always in the U.S. Now there are more examples, people are starting to realize what’s possible. And we’re also seeing a lot more talent coming back to Australia that had left. There’s 24,000 Australians working in the Bay Area. You’re seeing more and more of those come home. And then we’re seeing other people from all around the world realizing that there’s now a pretty healthy tech community, and it’s like doubling every couple of years. Sydney’s got at least twice as much talent as it had two years ago and we’re seeing that continue. It’s a number of factors all coagulating together to make it a better outcome for us all, but we’re still going to work hard. And as much as people think we’re out surfing at the beach all day, we’re doing some long days and hard work to get it done.

David Yuan: Absolutely. The good news is, the market certainly has noticed and I’ve been taking that 14-hour flight for the past five years looking for companies like yours, so the world has noticed. And congratulations to that whole ecosystem. This has been awesome, Luke. Really appreciate all the great thoughts.

Maybe stepping back from business a little bit, you lived a super interesting life in addition to being a successful entrepreneur. Taking a step back from SafetyCulture, what are you most interested in the business world or even outside of the business world?

Luke Anear: Well, a couple of things. I think travel is so accessible now to everyone fortunately, compared to previous generations, that your ability to go and experience different culture or different part of the world is greater than ever. I think that’s super exciting. I have a very curious mind, I love learning from different people, and cultures, and stuff. So anytime I can get exposed to the way other people doing things, that’s something I always look for. In terms of a broader business world, I think it’s great to see the amount of wealth that individuals are amassing, Bezos and different people, and even what we saw Warren Buffet doing with Bill Gates. I think to see them now harnessing that and channeling it towards solving really complex and big problems around the world that perhaps governments in the past would take responsibility for but just can’t anymore. I think to see that and these examples being set for everyone that’s following, is something that I look up to and think that’s making the world a better place. I think the more social conscious we become and the deep desire for people to want to improve the world around them, and make life better for other people, I think more of that that’s happening, the better. It’s just a great time to be alive.

David Yuan: Absolutely. 100%. Luke, thank you so much for your time and your thoughts. This is fantastic and congrats on all your successes at SafetyCulture.

Luke Anear: Thanks, David. Much appreciated.

 

###

The statements, 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 interview 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, 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, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.


Congratulations to the entire Avalara team on their IPO!

Avalara Announces Pricing of Initial Public Offering

The shares are expected to begin trading on the New York Stock Exchange on June 15, 2018, under the symbol “AVLR,” and the offering is expected to close on June 19, 2018, subject to customary closing conditions. Avalara has granted the underwriters a 30-day option to purchase up to an additional 1,125,000 shares of common stock to cover over-allotments, if any.

Goldman Sachs & Co. LLC, J.P. Morgan, and BofA Merrill Lynch are acting as book-running managers for the offering. JMP Securities, KeyBanc Capital Markets, and Stifel are acting as co-managers.

The offering is being made only by means of a prospectus. Copies of the final prospectus related to the offering, when available, may be obtained from Goldman Sachs & Co. LLC, Prospectus Department, 200 West Street, New York, NY 10282, or by telephone at 866-471-2526, or by email at prospectus-ny@ny.email.gs.com, or from J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, or by telephone at 866-803-9204, or email at prospectus-eq_fi@jpmchase.com. A registration statement relating to these securities has been filed with, and declared effective by, the Securities and Exchange Commission. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

View source version on businesswire.comhttps://www.businesswire.com/news/home/20180614006357/en/

Investor Contact
ICR, LLC
Kevin Faulkner, 206-641-2425
investor@avalara.com
or
Media Contact
Avalara
Jesse Hamlin, 518-281-0631
media@avalara.com

Source: Avalara, Inc.


Watermark and TCV Close on Strategic Investment to Accelerate 2018 Growth

NEW YORKApril 17, 2018 /PRNewswire/ — Watermark, the largest provider of assessment software for higher education institutions worldwide, has announced the close of its agreement with TCV to acquire a controlling interest in the company. TCV is one of the largest providers of capital to growth-stage private and public companies in the technology industry and has backed industry-leading technology companies, including Airbnb, Capella Education, EA, EmbanetCompass, ExactTarget, HomeAway, Netflix, Spotify, and Zillow. In addition, Quad Partners and Watermark’s management team have reinvested alongside TCV and are joined by new investor Exceed Capital Partners.

Watermark provides educational intelligence systems to over 1,100 higher education institutions worldwide, including a majority of the top 200 U.S. News & World Report colleges. Watermark continues to grow rapidly, with over 50 institutions joining the Watermark community or expanding their use of Watermark across the institution so far this year, including top universities such as Syracuse UniversityPrinceton UniversityMichigan State University, and Prince Sattam Bin Abdulaziz University in Saudi Arabia. With over 300 employees supporting these partner institutions, Watermark will use TCV’s investment to continue its growth trajectory as well as accelerate development of its innovative educational intelligence platform.

“We’re excited to have TCV as a financial partner. With a deep understanding of and experience in the education technology and software/SaaS markets, TCV will help us to welcome more clients to our community and to continue building solutions these institutions need to drive meaningful improvements in institutional effectiveness, program quality, and student learning,” said Watermark CEO Kevin Michielsen.

Assisting in the close, global independent investment banking firm Evercore advised Quad Partners, and investment banking firm Tyton Partners advised TCV on the transaction.

About Watermark
Watermark’s mission is to put better data into the hands of administrators, educators, 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 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, 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:
Victoria Guzzo
Director of Corporate Communications
708.588.1735
vguzzo@watermarkinsights.com

TCV
Katja Gagen
Marketing
415.690.6689
kgagen@tcv.com