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All of us come from all varying backgrounds. And I would say that DNA kind of flows in somewhat automatically. You want to roll up your sleeves even to help the companies to the extent they need, right. We’re not enforcing this. And I would say that combined with I would say, yeah, to some extent, and midwest primarily them in building these businesses. I do think that differentiates.
Jay Clouse 0:20
The startup investment landscape is changing. and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them. Welcome to Upside.
Hello, hello. Hello, and welcome back to the upside podcast, the first podcast finding upside outside of Silicon Valley. I’m Jay Clouse, and I’m accompanied by my co host, mister money mustache himself Eric Hornung.
Eric Hornung 1:00
Unfortunately, Jay, maybe you can’t see it through this pop filter, but the mustache is no longer.
Jay Clouse 1:06
It’s a little stubbly.
Eric Hornung 1:08
Yeah, it’s a little stubbly it’s, it’s my, it’ll be my first full shave. Since I got rid of the mustache. I did the first two months of quarantine with the beard and the mustache. I was doing my best Jay Clouse. And then I said, You know what, I’m just not a beard guy. It’s not. It’s itchy. It’s, um, I think I’ve described it previously on the podcast as pube.
Jay Clouse 1:32
And I cringe every time you say the word pube on the podcast.
Eric Hornung 1:34
Yeah, it’s I’ve probably said it too many times on the podcast, I would say, yeah, once you get rid of once you get rid of the beard, and you’re looking yourself in the mirror and you say, Can I pull this off? If I walk out of this bathroom? Will my fiance kill me? And you just go for it. It’s a magical moment. Jay. When there’s a there’s a shriek and then an acceptance of this is who I am now. I’m a moustache guy.
Jay Clouse 1:59
You sent me the photo and I was like, Oh, I’m so glad that you shaved it in this order and took the time to get a photo of this before it’s gone. And then it stuck around six weeks.
Eric Hornung 2:09
Jay Clouse 2:10
Was it really there for six weeks?
Eric Hornung 2:11
It might have been five weeks but yeah, something like that.
Jay Clouse 2:13
Wow. And and Colleen was okay with it.
Eric Hornung 2:17
I think she liked it better than the beard.
Jay Clouse 2:20
Eric Hornung 2:21
Yeah. So it was a nice mustache. I won’t lie we got trimmed it up. I gave it a little bit of love. It’s just you know it the mustache life is tough, Jay because you drink a little bit of milk. Yeah, mustache in your milk, milk in your mustache. Whatever is it.
Jay Clouse 2:34
I actually don’t experience many of the mustache pains myself because my mustache is the weakest part of my beard.
Eric Hornung 2:39
Jay Clouse 2:40
So yeah, I go on enumerate on the number of moose mustache problems.
Eric Hornung 2:45
Yeah, yeah, very eating a hot wing with a mustache. You got hot wing for the next four hours because it’s not leaving your mustache. Anyway, yeah. So the mustache the whole That whole that whole phases is behind me, Jay, but it lives on in memoriam.
Jay Clouse 3:05
Well, I’m glad that you made the jump into not only trying the beard but trying a mustache. And speaking of jump, today we are talking with Saurabh Sharma. He is a partner at Jump Capital, a thesis led sector focused and operating centric venture capital firm specializing in series A and B in growth stage investments, Jump Capital invest in data driven technology companies within the FinTech, B2B SaaS, IT data infrastructure and media sectors. They’re based in both Chicago and New York. Eric, how do we find them capital,
Eric Hornung 3:43
I got connected with Jump Capital, indirectly, I think two years ago, maybe it was via Twitter or via an email or something. And so I don’t exactly remember how it happened. But I’ve been in contact via email with a few of the partners there just because I really like the way that they are structured and set up and what they focus on. And they’re very explicit about what they do, which I find to be refreshing in the venture capital space. And we wanted to have a conversation with them. And you know, we got to have one today.
Jay Clouse 4:13
Jump Capital has invested in a previous Pod Co Balto, they’ve invested in Personal Capital, just to name a couple of companies that you’ve heard of also Lisnr in Cincinnati. He talked about them being explicit and what they actually invest in. They also say on their website that they invest $1 to $10 million in their first investment, when companies have a $1 to $5 million revenue run rate. And typically, less than $10 million of investment so far today, so yeah, very explicit on their website in terms of industry, what types of companies are looking for, even at what stage? You know, the investment, the investment terms are?
Eric Hornung 4:51
Yeah, they have a operating partner model which is much more like private equity than it is a lot of the venture capital firms. We talked to the platform model almost. So when you’re very specific about the types of companies that you’re going to invest in, I think that operating model becomes stronger because you can get the best people to do the specific thing that needs to be done in these four focus areas in that very specific space where its product market fit has been met and it is growth time.
Jay Clouse 5:21
All right. Well, we’d love to hear your thoughts on this episode with Saurabh as we go through, you can tweet at us @UpsideFM or email us Hello@upside.FM. And we’ll get into that interview right after this. This episode of upside is sponsored by Tresta. Tresta is an app for iPhone and Android that lets you do business calling and texting from anywhere with no hardware. Just a smartphone you’re already using. Tresta is the best business phone app on the market. Whether you’re a founder or freelancer, just starting your business or you’re already established. Growing your network and your business is all about communication. You’ve got to be available no matter where you are. Tresta offers the call management features that empower you to communicate smarter and more efficiently, like auto attendance, call recording, user groups and more. And you don’t need any special equipment, just the smartphone you’re already using. Tresta is easy to configure. So you can set everything up yourself all online. Tresta’s virtual phone system makes it easier and more affordable than ever to set up a fully functioning mobile office. It’s just $15 per user per month with no contract. So start your free 30 day trial today at www.tresta.com/upside. That’s www.tresta.com/upside. Saurabh welcome to the show.
Saurabh Sharma 6:08
Thank you folks. Great to be here.
Eric Hornung 6:47
Let’s take it on a rocket ship. How did you get to Jump Capital.
Saurabh Sharma 6:51
Yeah, I mean it’s a kind of an unconventional path. I don’t think I was looking misery your venture capitalist. From a career perspective. I think it’s a three organic way down. Journey has been a little bit all over the place, which I think bodes well to venture frankly, just kind of amalgamation of a bunch of things. But you know, I’m fundamentally I’m an engineer by training and science, grew up in India in engineering there, got a scholarship to Apollo undergrad in France. Finish that became a computer science researcher in France, in the National Research Labs, got an opportunity to come to my masters and possibly a PhD at Cornell, where they’re in just kind of got brainwashed of Academia, by Wall Street, being brothers and all the banks that just go to campus and hire quantum computer science guys, so I just finished my Master’s in Cornell, join Lehman Quanta Algo trading desk was there, you know, the hay days and just perfect time as they’re even open to await the peak of Lehman. And so you know, phenomenal times, obviously, ranging from fairly very large scale architectures for competition trading in New York, London, and some phenomenal desks in the Ritz trading. Bring meeting go face. Solid tobacco was there almost to the end not exactly to the end I had an opportunity to apply for business schools which I had been pushing off and I thought really good time. After 07, there are some signs they might be weaker and then I got my admit I got took some time off and moved to India back to this small snippet of equity for business school, but I didn’t know it was gonna go up. It kind of blew up premier the first week I started my business school in Chicago booths. So the next year was kind of experimenting, starting my own company a bunch of my friends. And then you know, I’m preparing to started doing them for them and post that went back to Wall Street a little bit works on capitals with Bob Lehman at the time realized probably wasn’t for me back Michael was the chief quite a bit to join early stage uncle life Bank of Chicago Southern by April kowski Radke local mountain nurse in the region funded that a startup that I was involved in earlier. And then it allowed us to spend some time with light bank, Eric ended up being the Groupon CEO asked me to come along during some times to kind of turn around the story. And so another kind of run at pretty phenomenal setup of interesting projects of turning around the business. I was involved in an internal data science team run mobile relevant strategy, and then Mary Barra fashion conference in New York. So running operations and marketing for that, for that business in an intersection folks a jump and it was kind of good amalgamation a jump, as we will talk about more it has some relevance to so creating groups, very computational focus. So that can all put it together. You know, I’m actually in background I’ve been venture, I’ve been in tech and to join the joint jump for about four and a half years ago. So again, somewhat unconventional but but took me multiple paths. But I think all that is super helpful, both from being an operator and investor and then venture.
Eric Hornung 8:29
Leaving Lehman in ’07-08, And they say you can’t time the market.
Saurabh Sharma 10:02
Yeah. Oh, wait, that’s true that that probably was, you know, it’s interesting. And you know, I was probably going to be . Lehman was going to pay for my business school. So that’s the only opportunity cost wise became quite a bit but yeah, I can I can complaint I was in middle school in September ’08.
Eric Hornung 10:19
What’s the difference between doing business specifically private equity style business in India versus doing it in the United States?
Saurabh Sharma 10:26
Yeah, I mean, you know, product in India is very different. It’s a by design, it’s a high growth market, right? It’s not a country as a whole is growing fast. So there’s no real LDOs. There is not a levered market. Everything is growth equity in itself, even private equity where you do majority purchases, still all equity. That’s one piece. Second, I think the ticket sizes are small. I mean, you know, you don’t have many, many multi billion dollar businesses in India. All the larger ones are many of them are family run businesses, to smaller clips. I think the third is I think it’s just a different cowork culture governance cultural, so you have to be just comfortable navigating that promoter aspect and how to deal with people who are used to doing businesses in Indian way is probably a third aspect of it. So all those things, I would say it’s very structurally different. And also you innovate you financially can structure those from actually somewhat different as long years of sophisticated market, of course, has, you know, obviously been short over many, many years. So they’re just a, you know, any ecosystem play, you play with the debt guys, the lenders equity guy that, you know, just kind of machine that that sense on the entry point, the exit side. So I think it’s very different from that, where he was, you know, kind of translating that adventure of adventure just, you know, wanted to put them real opposite from private equity. I think there’s some relevance is that growing markets, but you know, here you’re solving for technology disruption, the most cutting edge things out there, you know, changing the status quo. And so it’s a good parallel to growth, I would say good Palo Alto in terms of like technology because a lot of stuff in private equity is kind of you look a lot of outsource businesses and IT services kind of businesses, it kind of works well in venture. But other than that, I mean, you know, venture is going already taking a very long term view, and then really build up right versus necessarily focus on cash flow and vision, so forth, of course, want to do that. But that’s probably a kind of second part of business skills.
Jay Clouse 12:18
You were at Groupon in Chicago, which is one of the more storied startup companies in Chicago. And you were working on the you were the head of relevant strategy personalization for these products. I would love to hear what the nature of some of the problems you’re trying to solve were, in any of the lessons learned doing that in terms of search and personalization, because I have to think it was kind of a frontier effort. That is probably more commonplace in products today.
Saurabh Sharma 12:46
Yeah, I mean, you know, think about Groupon story, right? It’s one of the first big hyper local stories, right? This is a time that you talk about solo mono social, local, mobile, and everyone was talking about that a group I’m with you You know, just really robbing that feeds. And when you talk about the hyperlocal concept, one model is the centerpiece of it just because you’re carrying your phone and it’s all about key, how can do I present you the most relevant piece our deal to you as we walk by the pizza store in a hair salon, or anything. So you’re like, that product that I was involved with is very the center of it, of solving that relevance problem is solving that recommendation problem. And it’s very different from traditional recommendations of, hey, you buy this product, or you buy this product as well, which is, you know, not easy, but you know, it’s somewhat of a, I would say, vanilla in terms of versus wanting something in real time and relevance. So I mean it’s as a combination, large data science effort, collecting tons of terrabytes of data, and then solving for that in real time in optimizing on that right and that was that was the centerpiece of driving revenue for the least a local business school for Groupon. Groupon has a good business and travel business and but local is was the biggest and it was pretty cool to that and and I was very specifically focused on the mobile piece, because the female piece that you all know, you’re known for sending tons of emails, which is more so static, and this is more dynamic. So for now, you know, one, it was normal experience, mostly because at that time to be able to work with such scale of data is exciting itself is that good that data? As we all know, solving for data science machine learning problems, the more data, the more interesting work you can do with it. So it does a second piece. So I was I was kind of on the more on the product side and working pretty closely with the business teams on one end, right with delivering these products. And another side of our core data center human beings are kind of building optimizing the models and we’re basically solving for optimization rates and feedback on both sides. Either the data part is not correct, or that if you get the modeling results, and how do you then present the right deals, and then source those deals, according to the feedback loop on getting the right kind of build some kind of this customers.
Eric Hornung 14:56
We hear so much about how data science has been accelerating the last few years. What were the limitations you’re running into at Groupon when it came to data and data science.
Saurabh Sharma 15:06
Aggregation is always a challenge, right? You know, lucky, Groupon was early enough in building a very nice infrastructure in the aggregation side. But the you can still solve the aggregation trying to bigger challenge come as they are not version of cleaning. And you will hear from anyone I’ve got working with in the field, you know, people talk about the analytics at the end. You know, I don’t want to diminish analytics, of course, and that’s, that’s core, but you can’t do analytics unless you have the analysis mirror is huge effort on normalization data cleaning harmonization, and then find the right data, to build the models and optimization, create a feedback loop. And I would say that I don’t I can’t say that the challenge has been really solved even today, it’s probably better. But then more more sorts of data now come into the mix in then when you start mixing structured and unstructured data, with blob data, object data, all of that because create more poses more challenges, so infrastructure, It solves that is pretty critical. How to talk about the challenges you’re facing all the time. I mean, the second challenge is we’re always about, you know, accuracy. And I would say real time nature of some of the work that I was doing was also really hard. Because it’s when you go for real time, you’re kind of somewhat scoping out the amount of data that you have to work with to produce a result because it picks up signals. And so that’s, that’s another set of problem, right? It’s kind of like solving for real time streaming data challenges.
Eric Hornung 16:29
So often we see venture capitalists kind of have this association with what they want to invest in versus what they have historically been involved in. So when we look at your background, and it’s Lehman and finance and then Groupon, I would think, okay, you’re gonna be really heavily involved in the consumer space, the FinTech space, and then you look at your resume and its cloud infrastructure and enterprise software. How did how did when you met Jump, you said, I want to go in and focus on these two things.
Saurabh Sharma 17:00
Cloud infrastructure lackey pretty relevant to my background, I’m a computer science major undergrad, master’s, my earlier research was in power computing and compiler optimization. So pretty deeply technical and as has our please get in all my work at demon was all quantitative algorithmic trading, saying, and that is all about building. It’s not really financial calculations. It’s really building large scale architecture and solving for modeling and so forth. So I will say up to that point, it’s actually super relevant to what I do. And you know, financial services is one of the biggest buyers of all the deep end. Probably the best buyers of infrastructure. So, that part of the deal typically are you living Groupon itself? Right? Again, I was in, you know, a data science modeling mobile relevance team. So again, very relevant to what I invest in. I just love being analytics here. All that stuff’s in Yo, yo, no large competition marketing stack for econ business. Have you thought at Groupon. So, you know, really evaluating tons of martech there and the operation software, you know, the consumer PC right and bought, including my bank, which I you know, as I would say at that time at least was very consumer heavy, especially, you have an open route background and DuPont story and then go buy for itself. I don’t think you preclude consumer as such, I just think they are significantly more enterprise software heavy. I would say if it’s a pure consumer deal with a jump I probably would take a front seat and evaluating that and we do look at that. I think consumer in general is hard. And econ is even harder in the era of Amazon and Walmart now actually pretty good job. I just mean, other econ businessess, this harder batch for us to spend time on and there’s so much other technology stuff go after.
Jay Clouse 18:47
What makes Jump a better capital partner for an entrepreneur entrepreneur than other capital partners?
Saurabh Sharma 18:55
I’m gonna just steal a phrase from my partner who said “You always say there are only so many permutations on venture”. You know, I think I think we keep it simple. Of course, we are a financial partner. And I would say there are some benefits on that side of how you’re structured, you have this benefit of having a small LP base, which allows us to structure our fund in a very flexible way, maybe we could be very patient capital in and continue invest along the lifecycle of the company from our investment point to all the way to the stages of the business, right. And there’s someone that’s restricted in to structurally, the fund is around some of the artificial or not of the real constraints of funder on timelines. So that’s probably one structural benefit, right? Do the extended comes to play in sometimes. The other is I think, I think the operating unit of the team, right? That’s probably the number one element here. More all of us come from operating backgrounds. And I would say that DNA kind of flows in somewhat automatically you want to roll up your sleeves, you’ve got to help the companies to the extent they need right, we’re not enforcing this. And I would say that combined with I would say, yeah, to some extent and Midwest primarily them in building these businesses. I do think that differentiates not to take away the growth and the aggressive mentality there, but I think you’re always balancing the two acts, and not just get lost in the bravado, what’s happening in the tech ecosystem. We have some unique, institutional resources. I believe on the operating side. I’ll bring partners team, which help companies very specifically on finance, sales compared and somewhat of a unique resource. We have our own r&d lab as part of our computer science forum called jump labs, and discuss structure these projects are proposed companies with professors and postdocs and capacitive benefit to working for the company. And I would say that that r&d mode cannot deep domain knowledge. And that is somewhat unique in the venture ecosystem. But again, that’s an I think to the end we want to be extremely entrepreneur friendly. We want to provide as much help you can and just going to stay humble and and not warm only just be ready whenever they need us.
Jay Clouse 20:54
You’ve been a quantitative trader and now a venture capitalist and I can’t think of two financial professions that have more different feedback loop lengths. How do you think about and adopt to the long feedback loop? Coming from a quantitative background and trading background.
Saurabh Sharma 21:11
It’s a question of how do you allocate the timeframes in your head, right? You’re solving for different things, right? In venture you’re solving for building, right? And so you have to be in this business with that build mentality based in tracklist to return. Otherwise, you will be frustrated pretty early on venture by design is minority investment. So you can’t really force outcomes and has been now learning you can’t control so much macro. You can do everything right. And then Coronavirus sets and then you know, all of your plans change. So that’s I think there’s there’s a build mentality unity. It’s a combination of coming from computer science background, actually building a lot of systems myself early on. I think that was there as a natural. You know, trading is about data, aggregation. And then and then producing results pretty quickly and getting enough good output. Right? I think you could argue media was probably not the lifelong career otherwise I would have never left. And maybe there’s a you know, there are people who just, you know, slip for that thrill. Yeah, I don’t think so they would survive in venture for the reason you’re asking that question. And I probably wasn’t the person. And as I moved on, I think also I was not the guy in the sales, creating pit limb for the trail and kind of shouting, I was the guy building systems, the back end, let the machine do its job. So there is an aspect of building there in you know, to be honest, be work to be a lot of long term stuff there. So I would say there was, to the extent possible that you said that could be different. Yes, they are different, but there is some semblance of closeness of the exact scope I was on. I think I’m enjoying this, this part of it as well.
Eric Hornung 22:27
I want to dive a little bit into Cloud infrastructure. It’s something we haven’t covered much if at all on this podcast. So maybe we can take this a little high level first, what is a cloud infrastructure company? What do they provide? Who are they selling to? How do they make money? Just can you kind of maybe lay this out? Explain it like we’re 18.
Saurabh Sharma 23:15
Yeah, just super man, right? I mean, I think at the lowest level we’re all used to using our personal computers right and and enterprises, maybe an enterprise CPUs, then you’re using CPUs to the extent to go the level below at you know, people are using data centers and the companies or companies have their own physical facilities, which is providing all that compute power and storage power to run your enterprise system. So that’s kind of going from question device to device to then enterprise level, physical infrastructure setup. As I talked to that there are obvious scaling challenges has become obvious, right? It’s physical data centers, physical facilities in the world when you are one ramping up pretty quickly, but in times like this, you’re ramping down pretty quickly, you are now dealing with significant complex issues and and more importantly, constraints and how to even do that, then I can just throw me out of terms, complex functionality, or virtual machines, and so forth, and subs coming into play with all all that really means that you just want insane amount of flexibility, to be able to move fast, in order to see a competitive ecosystem. Cloud as a concept is relatively obvious. The underlying of it is the concept of distributed systems, which you can deploy on prem, which I think we are kind of coming back to that now. But when it started with the idea of distributed there, of how can you pull the resources in one aggregation way, and then get that benefit to multiple people? And then can you scale that and that’s what you know, folks like it for us now as your cloud has done, where it gives the companies the ability to rent the compute facility instead of their own physical data centers. And Melissa rent by design. There’s a variable aspect of it and Alaska city aspect of it where you can scale up and down as you need without ever having to worry about buying anything. And then but that happens very well getting them set up. So that’s, you know, in fundamentally nebulous cloud, it’s stuff that sits somewhere else, you’re pulling someone else you don’t know. And then it scales elastically.
Eric Hornung 25:20
So when you’re looking at investments, are you primarily looking at? Okay, these companies are competing head to head with AWS or AWS or as your or are you looking at applications above that? What is interesting in cloud right now?
Saurabh Sharma 25:37
Our remit is pretty broad. So I spend, you know, time on enterprise IP and data infrastructure, which includes everything that you just said, including developer tools, you know, quoting tools and analytic tools, and then also enterprise general enterprise software. Right. So obviously, we spend equal time on application software versus cookie for secure software on the it infosec software side is at risk. from companies are not necessarily competing with, you know, Amazon Web Services or Google Cloud, because those guys are fundamentally platform players, where they provide you that compute layer, as we talked about, right? So and their goal in business is to basically make that layer almost exist everywhere. And and so this, this whole thing, the scalability challenges, and then all the all the tooling to make that very easily accessible and scalable. But as you access that layer, there is so much other aspects of running your applications on layer. And I think we spend a lot of time at that level, which deals with things around application deployment teams, were monitoring the performance of your application, things like security, of running that stuff. And obviously, having context of cloud but obviously we talked about the same stuff on premise. And then now, a lot of world is talking about hybrid because not every company is going to be able to move to cloud 100% of their workloads, by design. So if you think about IT manager he has not managed two different environments, one on cloud one on prem, and then probably have to move workloads every Monday, not all the time. And so there’s ton of complexity and all that. So if you play across all those layers, fundamentally, but I don’t see some feel necessarily missing anything, which is directly competing in growing cloud services, your sum was one coming up before we got to rescale, which is providing that cloud fundamental cloud layer very focused on high performance computing. So think about supercomputers and cream machines and GPUs. And that’s somewhat of a niche, in some sense, a segment of the cloud compute for very critical or high end tasks, like industrial design, simulation, you know, genetic computing and so forth. So I would say that for one company that may reach it may be somewhat competitive. But I think it’s also very good partner to all of them because again, those guys are not solving for business challenges of running those workloads and solving for the all the middleware layer and that what have scaled us at the back end actually partnered with all the cloud providers.
Jay Clouse 28:04
By being this thesis led sector focused investing firm, do you find that you face less competition than some of your venture peers? Because you are more specific and thesis driven? Or because you are more specific that those deals themselves are more competitive?
Saurabh Sharma 28:22
Good question. I would say it is a differentiating element to the extent, you know, you’re doing tough working work around this and then and then actually be going super deep on that. I think it’s hard to be only thesis lead only thesis focused. I think they’re kind of we play on sort of both sides. But I think a lot of our internal thinking. It’s hard to be just, you know, not having any focus and just be running around looking for technology companies, and more importantly, all of us our strengths and our passion areas. And that drive the work the meeting notices and our team does great work of my team members, a lot of time thinking about scenarios. Well, the assets and do, I can’t really speak to, you know, how, how does the proper position of winning the deals because I’m sure other folks are spending time. But I do think it gives us a seat on the table a lot of credibility, because of conversations that we have with the entrepreneurs are, have been pulled out, well researched, and more importantly, than automatically building some value proposition for those guys as a result of our work that have been done. Right. I think also the pieces that aspect is important, because when you talk to these entrepreneurs, and then you have these conversations, there is an aspect of kind of network effects because you’re able to touch a wide segment in a sector. And so if you’re appointed, there’s some inbound aspect to that, and just people cannot, you know, the content is perpetual these days, right. So there’s a long lasting impact, but you might be thinking about something that may become significantly more relevant two years from now. And that obviously plays first world benefit. I think it’s differentiating for us. I think it necessarily puts us a little bit of a in a better spot to have this conversations. Venture is competitive. I would say there’s no such thing. A sub sector which is not competitive, but you could have strong, more stronger conviction in certain areas than others and that’s how you would set up your report.
Jay Clouse 30:09
Well, to follow up on that. I’m interested to hear when you’re meeting with these entrepreneurs, and they’re considering taking investment from Jump Capital, how often is it that you’re, you’re operating partnership or your r&d lab? How often is that the swing versus kind of a pleasant surprise after they’ve been working with you guys for a little bit?
Saurabh Sharma 30:27
I would say it’s a pretty again, depending on the company trait, I think it’s a it’s a factor for sure. You know, we, our core entry points are C,Ds, and B, right. And if it ever sees a company, who’s offering resources are actually very helpful. I think it’s less for CDC company to kind of scaled up but we have a senior management team and they don’t necessarily feel the need to have some advice around sales and marketing and so forth. I say, you know, this is a young entrepreneur who’s kind of got product market fit and he’s kind of looking for, you know, advice and you can get advice you General from other entrepreneurs, but then when you’re in that who your own investor with a skin in the game of the money, the table is gonna provide you a very, very relevant, and then obviously then follow up with action because advise on its own. It’s tough. I mean, there’s so much content out there, I could just read everything but it’s a workout. So the tactical rolling the sleeves in and then almost repeating the playbook because you’ve seen so much of this is I think it’s pretty helpful and I do think a lot of folks listen to that. We offer you know, introductions to a portfolio companies who have gone through this in that part of the process automatically that I think steps up in making a decision. Same goes for some stuff in the r&d side, right infrastructure companies. I think that is that is that is unique, because if you think about even you have the most cutting edge team solving for something, you’re gonna solve a very short term needs your six month nine month plan. And not only that’s all the time you have, you can’t be thinking about an r&d project of what this could be catapulting to next level in 12 months and you can afford that and more points. Can’t afford the talent of the best professor in the best area, you know, the top university. So to be able to give them that scope and say, why don’t you let us kind of work on a project that comes out of something amazing at the end of it, and then you’ll get it, you know, for at no cost. And if it works out, then you can productize it, which is great that sort of think about the r&d angle is just huge for any infrastructure company.
Jay Clouse 32:22
Do you find that the majority of your portfolio companies, the entrepreneurs that you’re looking at even in the deal flow stages? Are they usually steeped in industry knowledge and experience? And that leads them to come with these innovations? Are they coming from outside of the space and kind of looking at it with a new lens?
Saurabh Sharma 32:38
Are you talking about the CEOs that we look up?
Jay Clouse 32:41
Yeah, or the founders generally.
Saurabh Sharma 32:42
I think the domain knowledge is the most powerful thing. You know, you look for an entrepreneur and, you know, not not to diminish the hustle and and obviously, the entrepreneurial nature, and I think they go kind of hand in hand. But like, I would say, technical companies. I think that’s a almost a must you just can’t build a technical company or an infrastructure company or, you know, somewhat core computer science or engineering company without having a domain knowledge. So for us, that’s, that’s almost a must to be given? You know, I think it’s, I think it would be very uncomfortable for the whole resources and kind of build a company around it in application companies. Again, I think, to the extent domain knowledge, I think that just goes a long way and setting you apart because you save so much time that you’re going to do an aggregating the knowledge from your own work, isn’t it? You can’t replace that learning in any way of putting that on. But but you can definitely accelerate it if you’ve already started to and we have a company in Chicago called Logic Gate where the founders come from the GRC ecosystem. And I would say, you know, it’s pretty visible, how they are able to move significantly faster almost own that space, versus building a general purpose platform just because they spent so many years kind of giving advice and data won’t give you exactly what to do. The roadmap was so clear, we’re says waiting for the customer feedback because they’ve already gotten that feedback many, many times over the last couple years of experience.
Eric Hornung 34:11
How important is technical diligence, then when you’re looking at a company? Like are you guys going through code bases and saying, this is a very technically sound product? Or are you kind of relying more on the entrepreneur and their roadmap?
Saurabh Sharma 34:26
I would say pretty important, I don’t think so we go to the extent of, you know, reviewing the code, and the code bases, and it’s, to some extent, a combination of a little bit of knowledge, including me, we do have access to some phenomenal resources to jump in jump ecosystem of the highest and caliber that you can imagine computer science and so we generally look those domain specific people in and you know, the conversations automatically, it’s, you know, sort of showcase the depth of the product. You know, this is not again, this is maybe comparing to private equity when combined, maybe not the most cutting edge company built on old school tech, are you worried about, you know, snoop go in and vulnerabilities and so forth, right? These are newer stacks by design because these are newer companies. So you know, when you talk to the entrepreneur, you talk to the background, I think you get comfortable with the quality of the code they’re producing. It’s all about how they’re thinking about the product. What architectural problems are they solving the reader thinking where your design is probably more tenets heavy focus on and I think those conversations really go pretty deep in when you find the right guys to have conversations in and I just think we have to have conviction on the best we make on the space.
Eric Hornung 35:41
To wrap up this interview. How would you summarize Jump’s thesis.
Saurabh Sharma 35:45
It’s really kind of pushing on headline right your pieces lead, operational centric focus on and our core pieces that you have been very focused on finding companies which are solving for the future. They have some core competition of domain knowledge or IP, at the backdrop of which of the building these things, and they have the hustle to improve the time that they have and to take for the Walker. The ultimate practicality is the entrepreneurs report. I think that’s somewhat different than many other funds. And that’s important to us. Because I think this is a long game. And you can’t begin the long game unless you have the ability to kind of stomach the ups and downs of comes with it and the practicalities of which one you’re going to like.
Jay Clouse 36:32
Awesome. Saurabh, thanks so much for joining us. If people want to learn more about Jump Capital or get in touch their team after the show, where should they go?
Saurabh Sharma 36:39
You should come to jumpcap.com I am happy to share my email addresses which is my first name @junkcap.com. I’m on LinkedIn. And so all my team members so feel free to reach us on Twitter, LinkedIn, send messages for your hope that you’re listening to all the entrepreneurs and I will say listen, I you know, we are one of the few forms who one play at the state that you play. also spend a lot of time in enterprise software, ultimately people who will do deep technical investing in investment contracts, because there many firms who spend time on that, and I don’t want to be traveling too far. So I would love to find companies closer to us. So anyone who’s building companies around around the region, please reach out.
Jay Clouse 37:19
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Eric Hornung 37:58
Alright, Jay, we just spoke with Jump Capital, and it was my, like I’ve read about cloud computing and infrastructure. And maybe it’s just because it’s one of those spaces, you need a little bit more experience in. And I was really happy we did this interview. I don’t know a lot about that space from a first principles level.
Jay Clouse 38:20
Saurabh is obviously deeply knowledgeable about all of these industries. They talked about dating back to his experience with Groupon in 2013. You know, we kind of kick this off talking about if you are leading personalization at Groupon, as Groupon is becoming a unicorn within Chicago. That’s going to give you a lot of really unique perspective when it comes to machine learning and infrastructure because I think scaled very, very quickly and was really a forerunner in this deals category. So you know, something that sticks out to me and I said this to sorry about the end of the interview. A lot of venture capital firms will talk about how they really want to be a partner with their portfolio. companies and play more of a role than just money. And that kind of comes off as lip service to me a lot of the time. But with the partners that are involved at gem capital, like Saurabh, who have this operating experience at companies like Groupon, I just get a sense that there’s some real weight to their words, and that they back up that claim up.
Eric Hornung 39:22
I think you can also see that when you just scroll through the individuals on their Meet the Team page, where it’s a lot of operating partners, a lot of people who are probably working in their portfolio companies and with their portfolio companies versus Investment Partners where they’re making an investment in steping back.
Jay Clouse 39:40
And looking at Saurabh’s LinkedIn. He also has more companies listed, where he is a venture, venture investor and board observer than any investor you’ve had on the show. And that’s, you know, that could just be to say that he’s really great at LinkedIn and really updates you know, the companies that he’s involved in, but To me that really underscores how many companies value his insight in the spaces that Jump invest in.
Eric Hornung 40:14
I think this is going to be one of those interviews that when we have IT infrastructure companies on the podcast or enterprise software companies on the podcast, we’re going to be referencing back to a lot. It’s one of those podcast episodes that lays a foundation for us to be better hosts going forward.
Jay Clouse 40:26
I feel smarter.
Eric Hornung 40:27
Well, that’s not that hard Jay.
Jay Clouse 40:29
Speak for yourself. You don’t know my brain.
Eric Hornung 40:31
I have. I think I have a pretty good indication of what’s going on up there.
Jay Clouse 40:38
Alright, guys, we’ll keep this one short and sweet. If you had thoughts on this interview with Saurabh, please tweet at us @upsideFM or email us Hello@upside.FM. We’d love to talk to more thesis driven venture capitalists. So if you have anyone in your network that you’d like to hear from, please let us know firstname.lastname@example.org and we’ll talk to you next week. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest. So shoot us an email at email@example.com or find us on Twitter at Upside FM. We’ll be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you or someone you know would make a good guest for our show, please email us or find us on Twitter and let us know. And if you love our show, please leave us a review on iTunes. It goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there are a couple things we wanted to share with you at the end of the podcast. And so here we go. Eric Hornung and Jay Clouse are the founding parties of the Upside podcast. At the time of this recording. We do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinions of Duffin Phelps LLC and its affiliates on your collective LLC and its affiliates or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as it basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on this show. Thanks for listening and we’ll talk to you next week.
Interview begins: 6:08
Debrief begins: 37:58
Today we are talking with Saurabh Sharma He is a partner at Jump Capital, a thesis led sector-focused and operating centric venture capital firm specializing in series A and B in growth-stage investments, Jump Capital invest in data-driven technology companies within the FinTech, B2B SaaS, IT data infrastructure and media sectors.
Saurabh has a diverse background in investing, operations & product management and leads Jump’s efforts in Enterprise Software and IT Infrastructure, his career as a High-Performance Computing researcher at French National Institute for Scientific Research where he focused on Compiler Optimization for mission-critical computing.
- Private equity style in India. (10:19)
- Working for Groupon (12:18)
- Limitations when it comes to data science (14:56)
- What makes Jump Capital different? (18:47)
Learn more about Jump Capital: https://jumpcap.com
Follow Saurabh Sharma on Linkedin: https://www.linkedin.com/in/saurabh-sharma-6ba69a1/
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