Emmet B. Keeffe III is a Venture Partner at Insight Venture Partners. He leads Insight Ignite, a networking program that delivers thought-leadership and innovation intelligence to global IT leaders who are focused on digital transformation. Insight Ignite also connects Insight’s portfolio companies with the solution needs of enterprises. In this blog post, Emmet discusses innovation outside of Silicon Valley and how Fortune 2000 CIOs should use Insight Ignite to access this innovation.
Silicon Valley has an incomparable large venture capital community that attracts, encourages and supports early-stage startups and business innovators. Enterprise software valley-successes are pervasive, with the likes of SalesForce, Slack and Workday as prime examples. As far as anyone knows, though, there’s nothing in the water in Santa Clara County that makes someone more intelligent or entrepreneurial, or a better investor.
Nonetheless, the reputation of Silicon Valley as fertile soil for unmatched technology and digital innovation has drawn the gaze of global 2000 CIOs, eager to deploy technology solutions that will accelerate digital transformation.
There’s nothing wrong with looking for innovative technology companies in Silicon Valley. However, if you’re CIO of a large enterprise, taking one or two trips to Santa Clara County each year may not get you exactly what you need. Here’s why.
You need solutions for the here and now.
There’s a common element among companies getting the most attention in Silicon Valley: they’re ahead of the market — many times by five years or more. A CIO who wants to accelerate digital transformation in the next year needs tech solutions that transform here and now — not five years from now. Silicon Valley drives the hype cycle for potential breakthroughs that will fuel the future. Most of this is not yet applicable to the needs of a large enterprise. As examples, today, we have practical applications for IoT (compared to two years ago), while machine learning (ML) and artificial intelligence (AI) are in testing and development.
Many Silicon Valley companies aren’t ready to scale.
The second reason to expand the search for innovation beyond a single county is that many of the companies in the Valley — especially those with some of the best hype — are too early in their development. They may have plenty of buzz and capital, but this doesn’t mean they’re ready to scale. Their investors are betting that, in time, those companies will perfect their products or the market will catch up to their solutions. The reality is that many companies, even the most talked about ones, won’t survive. Five years is a long time in the life of a startup that may not have mastered product-market fit, customer acquisition and implementation. These companies aren’t able to meet the demands of large global buyers.
Innovative companies come from unexpected places.
Finally, talent, ideas, innovation and capital don’t reside exclusively in Silicon Valley, and often, the scarcity of support and resources in other locales yields companies that are resilient and innovative. CIOs who only look in one place for digital solutions will miss plenty of remarkable opportunities.
Three examples from Insight’s portfolio illustrate this: Tricentis, a scaled next-generation continuous testing business for DevOps, is based out of Vienna, Austria. LogTrust, a time-series data analytics platform for massive data volume was founded in Madrid, Spain. Smartsheet’s enterprise platform for team collaboration and project workflow automation is homegrown in Seattle, Washington. Innovation can come from anywhere.
Finding Deployable Innovation
If the typical Silicon Valley software company is too early and not yet ready to meet the demands of enterprise buyers, how do IT leaders find innovation?
The answer: with difficulty.
The buzz machine in Silicon Valley can be confusing, even to those who know the place well. No one has the time, attention, and experience it takes to make deep assessments about every new startup in the Bay Area. Some CIOs deploy a strategy of partnering with early-stage venture capital firms who can provide a filter to access the best emerging companies. However, partnering with a late-stage investment firm has a higher likelihood of producing innovative companies that are already enterprise-ready. Later stage firms that focus on growth investing have already scoured the market for companies that are further along in their development, more diverse and more mature in their ability to support large global companies.
Let’s illustrate this via the example of software delivery solutions: many large global companies are focused on DevOps to accelerate software delivery given that traditional development is an impediment to digital transformation.
Someone looking for solutions to this very real problem won't find many, perhaps any, in Northern California. By contrast, Insight Venture Partners has reviewed and filtered thousands of scaled companies working on DevOps solutions, choosing a handful to invest in — Tricentis (Vienna), SonarSource (Geneva), QASymphony (Vietnam), Checkmarx (Tel Aviv), Skytap (Seattle); only Docker is in Silicon Valley.
These companies are evolved, late-stage companies already serving hundreds, even thousands of clients — and they're well resourced. For CIOs seeking guidance and access to innovation, Insight Venture Partners has developed Insight Ignite to provide this access. Insight Ignite hosts Innovation Roundtables with industry thought leaders for learning, networking with peers and engaging with emerging software market leaders. Ignite’s Innovation Briefings provide an efficient way for Fortune 2000 companies to hear from scaled companies on a topic of choice, among others MarTech, cybersecurity, DevOps, and AI. These are two-hour webinars — a lot less expensive than a trip to California. For executives who are interested in contributing in an advisory role, Insight Ignite offers positions on Growth Advisory Boards.
There are multiple ways to access innovation with Insight Ignite. Since Insight invests in high growth companies, with proven solutions and significant potential, we’ve done the research that CIOs don’t have the time to do.
As a start: reach out and tell us the four biggest problems you’re trying to solve with respect to your digital strategy — we’ll see how we can help you move the needle. Contact us to learn more.