1. Library
  2. Podcasts
  3. Venture Confidential
  4. Ep. #23, Counseling Founders with Jonathan Heiliger of Vertex Ventures
Venture Confidential
45 MIN

Ep. #23, Counseling Founders with Jonathan Heiliger of Vertex Ventures

light mode
about the episode

In episode 23 of Venture Confidential, Heavybit’s Jesse Robbins interviews Jonathan Heiliger of Vertex Ventures on counseling founders and making big infrastructure bets.

Jonathan Heiliger is a General Partner at Vertex Ventures, a boutique fund that invests in enterprising founders. Early in his career, he co-founded and was CTO of GlobalCenter, and later founded Global Crossing’s venture capital group. Jonathan also previously led Facebook‘s infrastructure team from 2007 until 2012.


Jesse Robbins: Hi, this is Jesse Robbins. Today I'm joined by Jonathan Heiliger, founding partner at Vertex Ventures. Hey, Jonathan.

Jonathan Heiliger: Hey, Jesse. How you doing?

Jesse: Good. For those that don't know Jonathan, he's got a very long history, both building, leading, investing in and seeing big exits in basically every part of the infrastructure and dev tools space.

He has been involved in leading some of the largest infrastructure teams and doing some of the fastest scale outs that anyone has ever seen and one of the few investors who has just an incredible breadth and depth of technology experience. How's that for framing?

Jonathan: Yeah, thanks. You make me sound way more impressive than I actually am. That's a good start.

Jesse: Why don't you give everyone a quick summary of your background now that I've lifted you up a little bit?

Jonathan: Yes, thanks. Briefly, I was fortunate to grow up with parents who are artists and therefore using computers was me rebelling against my parents.

I started my first company when I was 19, it was a business called ISI, and it was also my first foray into venture capital.

It was backed by Mike Moritz of Sequoia, a nd that company was part of my global center, which was one of the first web hosting companies.

Global Center was acquired by Frontier Communications, who was in turn acquired by Global Crossing, all in a three year span or something crazy like that.

But I fell in love with the internet and I fell in love with being a backstage tech hand, if you will, and making the magic happen behind the curtain rather than in front of the curtain.

From there, I actually started a corporate venture fund for Global Crossing in '99, which depending on which side of the razor you fell on in '99 it was an awful time or an awesome time to be a venture investor.

Jesse: I think people sometimes say that's "An interesting time."

Jonathan: Yeah, that's the nice way of putting it.

There was a lot of people who made a lot of money, kind of like today in the Covid times, and there's people that unfortunately didn't fare as well.

We were fortunate to fare pretty well. We were series B investors, which in today's parlance it probably looks more like a series C, so it's the fast-moving, high-growth companies.

But I was 23, wasn't ready to have two breakfasts, two lunches, two dinners to really network and schmooze, and I decided I wanted to go back and operate some more.

I met Ben Horowitz, Marc Andreessen, In Sik Rhee and Tim Howes, the four founders of Opsware.

I became their first hire, I was the services guy, or basically they would say I was "The guy gullible enough to carry a beeper for some software folks."

And for those of you who don't know what a beeper is, Jesse and I have both-- We actually still have beepers in our nightstand drawers.

There's little devices that just have a ten digit alphanumeric display on them, and you have to send little codes using the ten digits available to you.

Jesse: Right. PagerDuty didn't invent the concept of the beeper or pager, they just took the term.

Jonathan: Exactly. Anyway, fast-forwarding there, I ran product and engineering for Opsware for three years, went from 0-600 employees then back down to 100 and then even lower.

We raised hundreds of millions of dollars, took the company public, and then almost got delisted. Then we wrote a book about it, so there's that.

Jesse: And you were you were COO of that company?

Jonathan: I was COO of Opsware, I ran a product and engineering, which was about half the company or so. It was a really unique experience.

I've definitely been blessed in my career that while I've been an operations person and an engineering person, I've also been the product rather than the ancillary support function.

Funny enough, my next job was that ancillary support function.

I worked at Wal-Mart and I worked in IT for the online store, and my thesis for joining Wal-Mart was I wanted to see what life was like in retail and multi-billion dollar scale.

I learned the term "Basis points" that now I use all the time, and I sound really smart rather than " .5% is 50 bits," and you just sound really cool.

But at Wal-Mart IT was just that, it was a cost center.

We put forth different "Innovative ideas."

"Let's not use Teradata, let's use some new data warehouse technology. We'll save literally $100 million dollars a year."

The answer we got back was "No, someone just signed this big deal with Teradata. You should just use that. It doesn't matter that we could save $100 million dollars or get some new insights, all we want you to do is instead of being seventeen bits of revenue, go down to fourteen bits of revenue but do the same things."

And you could see how Amazon really dominated the online retail landscape, because Amazon was a very serious player.

They actually had a platform, and this was pre-AWS, that hosted Target and other large retailers on their site.

And Wal-Mart considered using them as well, but ultimately decided to build their own.

Anyway, I didn't really enjoy being the back end guy that was treated like the back end guy, I much preferred being the product.

I left Wal-Mart and joined Sequoia Capital, I was there for a couple of years as a technology adviser, I worked with any number of partners and portfolio companies on engineering and product strategy and hiring, architectural.

All kinds of different things. It was basically a really long job interview for Sequoia.

Jesse: Jonathan, didn't you end up starting a CDN or something right before the next job you got? Can you talk a little bit about that?

Jonathan: Yeah, absolutely. I was at a funny point in my life, I didn't know what I wanted to do.

I'd been hanging out at Sequoia for a couple off years and I wasn't sure if I was going to go the venture route or be a Renaissance man or something else.

I saw this interesting opportunity inn CDN and content distribution as a market that has always had a lot of price fluctuations really based around the cost of bandwidth and transit, and in early 2007 I built a pitch deck, as everyone does,, and was fortunate to raise a little bit of seed capital from Sequoia and North Bridge.

They were two venture firms I was hanging out with at the time and II spent several months working with a co-founder, vetting the business idea, and my idea was basically to take all this excess unused capacity-- We pay for things on peak rates, we pay for 10 gig line and 100 gig line, etc.

But we have some diurnal traffic pattern there and my idea was, "Could you collaboratively shift that load so you could take Schlab.com and put it next to Yahoo.com?"

The two peaks of their traffic would be a different times of day, and they'd be able too somehow share compute resources or balance resources.

Anyway, that's a high level idea and I didn't get much further than that, butt ultimately I concluded that there was going to be massive deflation in the CDNN business because there's a lot of bandwidth.

So instead of continuing, I return the capital and said "Thank you very much."

Just like literally the same week I returned the capital, Matt Kholer and Mark Zuckerberg from Facebook called and said, "Remember us? We had a conversation a year ago. We'd really like to talk to you again."

And long story short, I convinced them, they convinced me, and I joined the company in thee summer of 2007.

Jesse: I guess that startup worked out?

Jonathan: Yeah, that startup worked out emotionally, financially, and it worked out in a lot of ways.

I'm very, very fortunate to work for Mark and work at the company for five years building the infrastructure team.

I got to hire a lot of great people and work with a lot of other terrific people, many of whom are still at the company and many of whom have left and gone on to do other things, like investing and founding other businesses themselves or becoming real estate investors and hanging out on the beach.

Those are all admirable career paths.

Jesse: You've got to work with some other notable "Marks," Marc Andreessen and then Ben Horowitz at Opsware.

What were they like back then before they were the people we know now?

Jonathan: Mark and Ben were definitely different characters back then, but I think who they are as people hasn't fundamentally changed.

Marc was really a part time chairman of Loudcloud, which became Opsware, and was a combination of his star power to build the team and to attract capital.

That was really his functional role there for most of that time and arguably to think about strategy and things like that.

Hey, Marc. And Ben, he was the most interesting perspective for me, because Ben grew up as a product manager at Netscape.

So for him, product was everything and user experience was everything.

This was 1999, mind you, and not many people were talking about those things.

So it was very unusual for Ben as a CEO to really emphasize that and highlight that, and as a leader how that translated was Ben was always thinking about customer first and how we could solve customer problems in unique ways, whether that was performance, whether it was cost, whatever that that might be.

But I'd say the Ben I'm still close to today hasn't changed a whole heck of a lot. As I said, they're both still who they are as people.

I think as an investor, Ben brings a massive dumptruck worth of experience and real hand-to-hand combat in the trenches from building a business and rescuing a business from the jaws of defeat.

But like everyone who has a story to tell in Silicon Valley, the person who tells the story gets to highlight the attributes that they want to highlight.

Jesse: Over the years I have gone to you for advice constantly, both as an infrastructure peer as well as a founder and entrepreneur.

How have you found that your actual experience in the industry and as an investor helps you and helps the companies that you work with?

What unique advantages does it give you?

Jonathan: I appreciate that, and I would say that I've also come to you both for advice as a fellow infrastructure Freemason and also on a lot of hardware projects, too.

So let me start with this, which is I think venture is great for people who are curious, people who like to be a mile wide and an inch deep, at least people coming out of technology roles.

But that said, there's some challenges. I'm a doer by nature and I like to tinker, I like to build things and I still play with Lego.

Both my wife and I like to design and build homes or offices, it's a passion.

We don't do it for profit, we do it for ourselves.

So I give you that context because I'm still adapting to what is fundamentally being a waterboy with founders, which is the role of a venture capitalist.

Having to influence the council to cajole is very different than "I want to go North. We're going to go there, and here's the five reasons why. We're all going to be insanely rich and make a dent in the world by doing this."And as an entrepreneur, you get to go do that. As a venture investor, I don't think you really do.

I think you get to, like I said, be a cheerleader on the side, be a water boy on the side to help nurture and to point out flaws and to point out potholes.

I think that our collective experience is not just my own, but those of my partners.

We think investing is engaging in these multi round, multi dimensional strategy games with other brilliant people, and that's sort of true whether or not we decide to be in business together with the founder or not, or a founder decides to be in business with us.

There's plenty of founders I've met over the last now seven or eight years who we're not in business with, but who have become great friends and just like you, advisors and mentors and confidants.

It is what it is in terms of the funding dynamic and the partnership dynamic, but I think the friendship and the knowledge transfer outlives that.

How we've decided to practice venture, and again this is me and my partners, is we're direct.

We will tell you what we think on day one and day one hundred , we'll tell you why we're excited and where those risks are.

Again, where there's potholes. Our mission is to give the CEO or the founders all the data and the perspective, but then it's up to him or her to make that decision.

You, the founder, are often very focused on building your team, your company, your product. Y

ou don't have the same mile wide, inch deep perspective that we might have on the industry or that we have from twenty years of bumps and bruises.

Now that cuts both ways, there's a lot of things that I've said no to or said yes to because of my past experiences that I've regretted, because I'm like, "I saw this pattern 100 times before. Here's how it's going to play out."

And the 101st time I was wrong, or time changes. What may have worked in 2005 doesn't work in 2020, but something else does.

So where that experience actually hurts is that you have to have almost child like eyes and a certain naivete.

Jesse: Interesting. Do you find yourself giving founders technical advice, technical suggestions based on your experience, or are you a little more removed from that??

Jonathan: No, I am definitely removed from that at this point in time.

I would say I am the best editor of keynotes, Google slides and PowerPoint. Not editing Go code in EMAX or Eclipse.

I can't even think of the name of the modern IDEs, that shows you how far out of it I am.

Jesse: So, important question actually. VI or EMAX?

Jonathan: VI all the way.

Jesse: OK, yeah. I was worried. This is actually how I can check to make sure you're not an impostor.

And for those that are wondering why that answer is so unambiguously correct for infrastructure people, it's because it is unambiguously correct.

I'm not even going to try to explain why it might be wrong to choose some other stranger editor.

But if you're writing code every day, you can get your foot pedals and your EMAX key bindings all set up.

Jonathan: Exactly. There's those who know, and then there's those who don't know. And if you don't know--

Jesse: Then you don't know.

Jonathan: I'm sorry. There's not much we can do for you.

Jesse: So, tell me about some downsides to having the considerable experience that you have in terms of your investing and other pieces like it.

Where does knowing so much about the industry and the history of trial and error in it not serve you well?

Jonathan: Is this the point of the podcast where I'm supposed to talk about how I'm right all the time, and Twitter just makes me look bad? Is that--?

Jesse: I mean, that would be fine.

Jonathan: No, in all seriousness, I do think that that experience cuts both ways.

I think an important thing when meeting people for the first time or evaluating businesses for the first time is that childlike sense of wonder, of imagining what if and what happens when and what will be?

The downside of having 20+ years of experience building a lot of the infrastructure and software is we've seen a lot of generations.

We've seen these design patterns come time and time again, containers are not new.

Virtualization is not is not new, but it's a new implementation.

It's a new way of doing things, and I think honestly where it's probably most important to remain open-minded as a venture investor is around both the technical approach that's being taken by the founders, who when we generally are backing deeply technical founders who have opinions on VI versus EMAX versus Google Slides versus Keynote, but also the messaging that they're taking to the market.

That's why I think we're-- Just to flip it around again to do a positive, where I think experience matters more than anything .

Because from experience, and this is experience I wish I had 20 years of experience going to cocktail parties, but I really don't.

I have 20 years of experience of sitting in data centers and basements and machine rooms and boardrooms explaining how technology works and fixing technology, and those relationships that you build, that's founding the real crucible and the pressure cooker of an organization.

So to have a texting relationship with CIOs and CTOs and their direct reports, because these are all people we worked with, that is the sort of special sauce where I think we, especially Vertex the team, can uniquely help a founder figure out "This message works, this doesn't. This feature works, this doesn't. Here's how we can then convince people to adopt something that maybe they're unfamiliar with, or that they haven't yet thought of before."

Jesse: Interesting. So, this is the injecting things into people's brains portion of this show that I'm hoping for.

So, we call this Venture Confidential and one of the things that I spend a lot of my time at Heavybit coaching founders on is dos and don'ts in pitches.

Everyone has a list, everyone has their pet peeves, their frustrations, their other stuff.

I would love to hear a couple of your pro tips for pitching Vertex or pitching Jonathan and In Sik on hard infrastructure problems.

So, let's start with the don't to-dos because those are more fun. So, what is a pet peeve? What is the thing that you absolutely hate that founders do when they're pitching that you would like them to know they shouldn't do? And then we'll get to how to hack Jonathan Heiliger's brain.

Jonathan: Got it. Can I actually talk about pet peeves that the Vertex team do with founders who are pitching us?

Jesse: Absolutely.

Jonathan: Vertex US primarily invests in seed and series A companies. About half of our time and dollars go into Nouveau infrastructure, and the balance is split up in a couple of markets, but predominantly business SaaS use or productivity software tools, things that non-IT buyers would buy.

Then we spent some time in other markets like manufacturing with our investment in desktop metal, or construction and things like that where I've spent time.

So I think this perspective is predominantly oriented towards founders that are building the next generation infrastructure software, and for me one of the most important things to talk about early on is "Why is the problem valuable, but not just hard?"

Especially with all of the water rushing towards the cloud providers and increasingly so, there are a whole lot of very hard infrastructure problems to solve, whether they be storage or compute optimization or monitoring, or many other things.

Jesse: Configuration management.

Jonathan: Configuration management, absolutely right. Some of those are not actually valuable problems, they are very hard computer science problems and they are perfect papers to present at your favorite IEEE or ACM conference, but they don't actually make for a good business because of how enterprise buyers are increasingly buying.

They've shifted their dollars from buying from the PC makers, the HP, Dell and IBMs of the world to now the new names are Amazon, Google, Microsoft.

But their buying pattern is largely the same, which is if the suite--

And I guess we should probably include VMware and Pivotal in there as well, if the suite of products is good enough most buyers will be happy with the suite of products rather than a whole bunch of specialist tools.

So one thing I see missing from a lot of early stage founders pitches is a narrative about why the problem they're working on is valuable either today, or will be over time, versus a really interesting hard problem to solve.

But by the way, we, the Vertex US team, also get ourselves into trouble here because we like to engage people in product debates and we often spend a lot of time debating the merits of Java versus Java 11, or how do you do garbage collection in PHP?

Or some random other shit that is actually distracting from, "My goodness. You're four people and you've created this new thing and this new thing has adoption and usage? Let's understand that."

Jesse: So tell me about some things that you're seeing in pitches these days that it's just the protip, the thing not to pitch the Vertex venture team on.

Jonathan: I think the thing that we see a lot of founders missing is conveying the value of their solution and why it is ultimately valuable to a customer, versus, "This is a really interesting and hard problem that I've chosen to work on."

Jesse: Interesting. Jonathan, a thing that you and I both share is we love really big and really hard problems, almost so much that we'd rather engage on those.

When you see founders that are coming to you and they're pitching or they're trying to get you involved or interested, what are the things that you'd like to see them talking about in addition to "Here is this hard CS problem, here is this hard infrastructure problem."

What do you want them to come prepared to a first meeting with?

Jonathan: That's a great question, Jesse.

I think that one thing we often find that's missing from pitches or conversations, whether that's a pre-seed company which I would define as a couple of people and a slide deck, to see where they might have some validation, to even a series A company where they've got customers is really conveying the problem statement in a way that is framed from the customer's point of view.

Rather than the founder's point of view , of "I've built this thing and here's what it does. It's a dessert topping and a cheese grater," whatever it is.

Jesse: So are you looking these days for founders, even at the early stage, to be able to describe enterprise buying patterns and behaviors? Like, is that the new series A skill?

Jonathan: I think, for a founder to successfully raise a series A and having a sense of how they're going to sell their product is critical, whether or not that's a top down enterprise sales or bottom up selling, right build, build love and momentum to a community.

Whether that's open source or not is a separate whole business model conversation, but absolutely, they have to have a perspective.

I think they have to have a perspective, and where I think a lot of folks get tripped up is they might come in saying "W e have these three opportunities to these four opportunities," and if there's no repeatability across those three it's a negative signal.

Because while it shows in one sense hustle and moxie, like "Founder Sarah went out and got these opportunities, she's qualified them and maybe even converted them to be customers."

But if they're not repeatable, then I'm wondering "When are we going to get there?"

And that becomes the next challenge, if you will, to overcome.

I think that one of the things that's often also misunderstood about venture is that very rarely is there a black and white answer. It's a whole series of shades of grey, and this is like greyscale on steroids.

You, Jesse, may have one approach and Sarah may have a different approach.

They're both totally valid and totally work, but you've essentially committed to one and what we're looking for now in the investment process is a matching.

We're looking for, "Do Jesse and Jonathan match from a philosophical standpoint of how to build a company and how to go to market? Or do Jonathan and Sarah match?"

That's not to say that one is worse or better than the other.

Jesse: I think on that point, one of our favorite Heavybit portfolio companies is also a joint Vertex company is LaunchDarkly.

One of the things that Edith, who's the founder and CEO of LaunchDarkly, impressed us with from the very beginning was a real focus on that repeatability in her customer acquisition cycle, where it was like, "Not only is she going to be able to go and close using her special founder energy the first five major customers, but you could see her building a machine that was just quickly capturing more and more and providing more and more value."

Certainly within the Heavybit portfolio, we try to help our companies when we're preparing them for a series A, have a repeatability story and preferably some demonstration.

That's an area that we see founders missing a lot of the time, because I think the experience that we have for those of us that have been through the cycle a few times is that it's not your ability to get one customer or "A customer," you need to have a pipeline and the ability to show a market that you can go after.

Do you find that, at least in your experience, that's something that early stage founders and CEOs sort of know or figure out early?

Or do you spend a lot of time coaching them on that sort of enterprise early sales motion, or large customer early account motion?

Jonathan: I think you're right to point out LaunchDarkly and Edith Harbaugh, who's the founder and CEO.

Edith is, I think, in a league of her own in that she is a talented salesperson but also a very extremely talented product manager and product visionary.

It's that combination of skills that make her uniquely good as the early sales person.

She could sell the vision, she can use that founder magic like you said, but yet she's also thinking the whole time "How do I build a system to obsolete myself in this process?"

And whatever that system is and whoever those people are, they ought to be better than me on day one and then ten times better and 100 times better very soon thereafter.

She has exceptionally high standards and knows how to get there from a process and machine driven point of view, so I think that we spend a lot of time coaching founders, especially technical founders, on the importance of figuring out really the customer pain early on.

Another company I was involved with as an angel investor called Thousand Eyes was founded by Mohit Lad and Ricardo Oliveira out of their grad work at UCLA, and they were just acquired by Cisco for about a billion dollars, which was a phenomenal journey for them over about 10 years.

But one of the things that impressed me the most about Mohit, is he hand to hand sold the first about a million and a half dollars of revenue at the company and was just steadfastly against hiring a sales executive until he could really show this pattern of repeatability.

I think along those lines, I was actually having this conversation with a founder just an hour ago, we're not invested in his company and we're just getting to know each other.

He's like, I've got half a dozen POCs and I think I'm going to hire a sales leader in the next quarter.

My advice to him was like, "Hang on a minute. Go turn those POCs into customers. Don't just stop at six, but get 10 more or 20 more to really understand and have a good data set before you bring on a sales leader, or even hire an account manager or an account executive so that the CEO doesn't have to do everything from opening the door to closing the sale."

But before you hire a sales leader, especially as a technical founder, I think it's tantamount to really understanding the sales process and the customer journey or customer point of view.

Jesse: Over a long career as an investor, you said you've gotten a lot better at editing Keynote and Google Drive docs.

What are some absolute don'ts that founders should know about pitching?

Certainly early stage, what would you like to eradicate from the pitch process, if you could?

Jonathan: Honestly, I'd say the main thing I'd love to eradicate from the pitch process is the pressure that everybody with venture dollars puts on founders, myself included.

I've had a lot of conversations with peer investors about this, especially people who have been founders and become venture VCs.

My money is the same color as Martin Cassavas money at A-16Z. He and I talk about this all the time, that the differentiation is really the person.

I think it's very personal when a founder says "No" to a venture investor, and it's mostly personal as well when a venture investor says "No" to a founder.

So, I wish there was a way of "Let's actually get to know each other before we decide whether or not we want to be in business together for the next decade."

Because, by the way, the one person the founder cannot fire is their investor.

The founder can fire the executives they hire, a founder can fire even the independent board members she hires.

Founders can fire the customers, everything. The one person they cannot fire are their investors.

It's very painful, very difficult, very messy.

But in terms of pitching, I think especially for first time founders, people who are pitching for me for the first time or raising their seed or series A for the first time, a lot of times people give bad advice to do this.

We're raising not razing situation, and/or having a conversation with an investor, at least I'd like to say someone like myself who's a good person and might be able to help in ways other than just lining the bank accounts of the company is not just around the fundraising moment, but it's about the journey of building a relationship.

So the two things I hear from founders often is, "We're not raising we don't need to talk to VCs."

All right. "Maybe I can give you a customer or two. Maybe I can help you think about a problem or two. Maybe I can help you hire a person or two,"completely outside of fundraising.

I'd actually like to do that because it shows that we can work together versus just take my $10 million dollars and run for the hills type thing.

Because the other reality of this sort of process, especially in early stages, 99% of companies fail.

We spend all of our time ogling the 1% of companies that succeed in a small way or in a big way, and it dominates Twitter, it dominates Techmeme, it dominates all the tech press.

I think that leads to a really bad, dark place for a lot of founders and investors.

Jesse: It's an interesting perspective.

I can say that over the years I've actually seen you do that repeatedly, where you have been really an advocate and a resource for companies.

Whether or not you're getting involved with them more seriously you're one of the few people that I actually send, particularly early stage founders, to talk to get ideas and feedback.

Both because I think that you have something to contribute and I think you mean it when you want to help them.

I'll tell you that at least in my experience, it's not universal, that it's safe if you're not ready to raise to talk to series A and series B investors.

Inside of Heavybit, we spend a lot of time telling our portfolio founders and our CEOs, "Don't take a meeting and don't set up a meeting until you're actually ready to raise, predominantly because people are going to form an opinion of you."

Where, if particularly in larger firms, people don't have experience with the difficult early days of figuring out product market fit and other stuff, that you end up in their CRM and that CRM follows a funnel. If you're not already a high growth, super exciting company, you actually burned yourself on a cycle, even though the meeting should have been safe.

So, I guess it's interesting because I think the thing you want, which is more of those conversations, is unique to a very small subset of investors in the dev tools space.

In part because the space has gotten so hot, and so when you and I started out going back to when I started Chef, the types of people that were founding companies like ours were rare.

I think about both my financing process for Chef for our series A, which was in a very difficult time, and Arthur Bergman's series A financing for Fastly.

Which I mean, it's amazing to watch that company continue to just grow and grow, and yet no one understood what we were doing. In fact, earlier meetings were bad.

So I guess my reaction to that is it may be true for you, but I wouldn't want people to believe that's true generally, specifically because mostly people are looking for--

What we find, at least I find that so many investors are looking for an efficient process and not that long term relationship building.

That seems a little different, that's more commentary than interview.

Jonathan: But no, I think you do make a good point.

I'll just react to it briefly, which is that you're right in that I think everyone wants an efficient process.

But at the same time I use a lot of dating analogies in these conversations, which may or may not be appropriate.

So I apologize to the PG-13 ears out there, but I'm not married.

I didn't go from a first date to marrying my wife and I think that a lot of founders have that attitude about their venture investors, which is "I'm going to do one meeting with a half dozen, dozen, two dozen-- It doesn't matter how many folks.

Then I'm going to pick from whoever shows interest in me and whoever I am interested in, and I'm going to ask them for a term sheet.

In a week or two they're going to bring me into a partner meeting, they're going to have done some diligence, and they're going to make me an offer."

That works. Sure, some of the time. I have friends, I'm sure people listening to this have friends as well that have met their significant others on a blind date or at a bar.

That totally works, but that's pretty rare. We have a phrase, it was actually given to me by a summer intern that we spent time with, and her phrase was--

She's a collegiate tennis athlete. She was like, "You need to get reps in. It's all about reps."

I was like, "It's just an interesting way of thinking about it."

Which is, if you're training for something, if you're practicing, it's all about practice.

You're getting in reps. You're doing five sets, ten sets, twenty sets.

Now, I'm not saying the founders and investors should have twenty meetings with each other, but for example for the first investment we made during Covid, my partner In Sik made, we had one rep with the founders individually, one rep with the founders over video.

The final rep was, In Sik got together with the founder and they went for a hike, and it was a pivotal hike, both for my partner In Sik who said he got to know the founder on a personal level and much more intimately than he would over video.

And also for the founder who said "I was about to go with the venture firm with a much bigger brand than yours, but I couldn't meet them and I couldn't get a sense for who they actually were.

I really wanted to know who was going to be on my board, because that's important to me, and by virtue of getting to go on a hike with In Sik for three hours I really got to know him as a person."

So I think that reps matter, and in that sense I've done plenty of job interviews and venture interviews on a bike, because I'm a cyclist, or on a hike.

It's fun and it's different, you don't have to sit in a room and pitch people and have that sort of back and forth that is very common.

Jesse: Interesting. You mentioned Covid, I'm curious how Covid is affecting your portfolio right now.

Jonathan: By and large, Covid has had a very negative impact on enterprise buying.

A lot of purchases have been postponed by one to three quarters as the enterprise buyers have their budgets frozen, there have been a few cases in LaunchDarkly, for example, our mutual portfolio company is a beneficiary of this, where budgets were actually pulled forward because people--

The enterprise buyers are saying, "I absolutely need LaunchDarkly to improve efficiency, to deploy faster, to get features out there."

Another portfolio company, Perimeter X, saw some interesting benefits from Covid as they sell to a lot of e-commerce providers, and retail shifted from offline to online.

We signed a pretty big deal with a major retailer on the same day that they announced some terrible news, and that shows the power of, in their case, security and attack mitigation and the importance of that on retail.

But unfortunately, I would say that the big takeaways are that purchase process has slowed considerably and that most of our portfolio companies that say the average or the median is basically a planned revision, are down about 20% for the year.

Like I said, there's a few companies who are being planned and exceeding, but if you look at our basket of about 30 portfolio companies, they forecasted down for the year.

Jesse: What do you think the next dev tools, infrastructure, hot topic or hot space is going to be?

What are you excited about? Not something that we're seeing right now, but that you think is about to be a big deal?

Jonathan: Yeah, I think it's honestly, Jesse, it's an area where you and I have a lot of shared history and time together.

The area where we have spent the last several months really digging deep, surveying the landscape, surveying companies is SRE tooling.

Jesse: We don't have shared experience, we've got shared trauma.

Jonathan: Exactly.

Jesse: OK, keep going.

Jonathan: SRE is this notion that site reliability engineers, I think one of the many misnomers about this function is that site reliability is actually a product feature, just like performance is a product feature.

If it's not a product feature, it's not going to get dealt with.

But as a result of it becoming a product feature for, I think, many fast growing internet companies, enterprises have started paying attention to this as well.

Especially as enterprises shift more and more online and more and more to the cloud, and so I think it's an area where we see tremendous growth because just like data scientists and data engineers called it 10 years ago as Cloudera and Hadoop were entering the scene and everyone needed a data link, now all of a sudden it's "How do we actually improve the efficiency and performance and scalability of our applications?

We need these SREs, and these SREs are really hard to find and hard to hire."

If we can't create thousands of them overnight or tens of thousands of them overnight, maybe there's an opportunity for tooling to turn SREs into super SREs.

So, the thing that I see coming down the pipe here is super SREs and what are the tools that they need to really be effective?

Not just where one person can do the job of ten people, but also really scale up the amount of infrastructure and the complexity of infrastructure that they're managing.

Jesse: So, do you think that that's an evolution of the toolchain and knowledge space?

We've had PagerDuty and now other companies like Victor Ops and others that are sort of emerging there, we're starting to see companies like Gremlin that has been focusing on game day and failure injection.

Is this the next evolution of SaaS platforms for operating at scale?

Is this the arrival of an entirely new role, or is it simply enterprises now adopting and adapting to a job that they all now have to do because the jobs continue to change?

Jonathan: Yeah, I think it's a good question and those are some great companies you mentioned as well.

I think, quite frankly, one of the big risks here is that we have this Cambrian explosion of tools and we actually make life harder and worse for the engineers that are working on these problems.

To me, as both a practitioner and investor, the Holy Grail is "I want that super SRE. I want the super architect engineer. I want that as a tool."

And I don't know if that's possible because there's so much prediction and nuance in understanding a running system, but just to briefly pause to think about the day in the life of an SRE, it's very similar to a data scientist or a security engineer.

They have 3-6 monitors in front of them with graphs and database log ins at terminal windows and presentations, and all those kinds of things. They're furiously copy and pasting data between the systems to understand what's actually happening inside of their engine, inside of whatever is running their website.

So to me, the Holy Grail is "Can we take that and package that up into a tool, into a piece of automation that is predictable and doesn't get irritated when it doesn't get coffee and doesn't need to be fed a steady diet of McCallan in the evenings?"

I don't know that that's possible, but what I do believe is possible is that with tools like Gremlin or LaunchDarkly or service catalogs or new ways of monitoring systems, like distributed tracing, is that all of a sudden that engineer's job gets a whole lot easier.

Because they have a lot more visibility and they can actually reduce the surface area of the number of tools that interact with every day to troubleshoot things, and what that ultimately leads to is a more highly available system and a much more easily troubleshooted system.

I think the changes you're talking about in the enterprise space are happening because enterprises are going from Java monolith to Java--

Maybe less monolith to maybe micro services, and those new platforms bring with them all kinds of new tooling and service needs.

Jesse: Jonathan, this has, as always, been an absolute pleasure.

I really appreciate the time and perspective, this has been a lot of fun.

For those that want to reach out and get in touch, what is the best way to find you, reach you and share the next big idea?

Jonathan: Yeah, man. Thanks so much for having me on this inaugural episode that you're hosting.

I've had a blast. To find out more about Vertex Ventures US, you can go to our website, VertexVentures.com.

You can also email me, Jonathan, directly. My email is AJH@VertexVentures.com.

Jesse: Awesome. Thank you so much, and I look forward to talking again soon.