I had the pleasure of interviewing Santi Subotovksy, who is a General Partner with Emergence Capital, a leading Venture firm that invests in people that are changing the way the world works. Before joining Emergence, Santi founded AXG Tecnonexo, a SaaS e-learning company in Argentina. He expanded the company to 150+ employees with operations across Latin America and the U.S.
Jean: Can you share your story about how you got into the VC space? I’m a native of Argentina. I lived and worked there until 2002. In 1999, I founded AXG Tecnonexo, a SaaS e-learning company, that I grew to 150+ employees with operations across Latin America and the US. Through my work at Tecnonexo I was selected to be an entrepreneur with Endeavor, an incredible organization that helps build and support entrepreneurial ecosystems outside the U.S. In 2006, Endeavor invited me to join a group of entrepreneurs visiting Silicon Valley, and there I was exposed for the first time to VC. That’s when I realized I had to move to Silicon Valley, join a VC firm, learn how investors made decisions and then leave to start another company. I moved to Silicon Valley without a job and started meeting a lot of people. It wasn’t easy as I didn’t have a strong network and my football (soccer) was different than the football everyone was talking about… That’s how I met the team at Emergence. Originally, my master plan was to be in VC for 2 years and almost 8 years later I can say I successfully failed… I’m still in VC and I love it!
Jean: What kinds of startups do you typically work with? At Emergence we typically invest in early stage startups because it allows us to partner with innovative entrepreneurs who are changing the way people work. Investing in early stage companies also allows us to build lasting partnerships with our entrepreneurs as they lead their companies through to acquisitions, IPOs and beyond. We are focused on thematic investing — one of our thematic investments is in an area we call Coaching Networks. Those companies are using artificial intelligence as an asset to help unlock our full potential in the workplace. Another area is the Deskless Workforce, a theme that focuses on technology to help the 80% of the global workforce that doesn’t sit at a desk to do their job. A third is Industry Cloud, a sector in which vertical cloud applications are used to solve the challenges in an industry more effectively than is possible using horizontal software.
Jean: What do you look for in the management team of your investment companies?
I’m looking for individuals and teams that want to start a company for the right reasons. Many people create a startup because they think it’s a cool idea or they want to see if they like being an entrepreneur. I want to invest in someone with a strong belief–an obsession even — that they are working on an important problem they are convinced needs to be solved. It’s really hard work to found and grow a company, so I look for teams that will relentlessly pursue their goal to fix that problem. When teams have that relentless desire, they will run thru walls to overcome any obstacles in their way and that’s what it really takes to succeed.
Jean: Can you share a story of a successful Angel or VC investment? What were some of the highlights? When I joined Emergence in 2010 we started looking at next generation collaboration technology. Given that I had friends and family in Latin America I struggled to find effective and efficient communication tools and I knew there had to be a better way. We talked to several companies in that space that were all doing well but didn’t have anything special, then we came across Zoom Video Communications, a video conferencing and collaboration platform. We reached out to Eric Yuan, its founder and CEO to arrange a meeting — I still remember it well. We are both immigrants (Eric immigrated to the U.S. from China) and both faced challenges because of that. We bonded over that fact, along with a love for soccer and deep belief in the importance of family. What most impressed me though was Eric’s absolute conviction that he could create the industry’s best video communications platform and make people happy!
I started using Zoom to communicate with friends and family in Latin America and I became a believer! Zoom has really great video and audio quality and it’s very easy to use. I followed up with Eric to see if he’d like to meet with the Emergence team, but he said he wasn’t interested in raising money for his company. Nonetheless, we extended the invite. When he did meet with us, instead of pitching us on investing in Zoom, he tried to sell us a subscription to the platform! In fact, he had all of us download the product and try it during our meeting — we were all able to get on a call right away — but it was a brave move that could easily have backfired if the Zoom platform wasn’t so solid. After that meeting, we continued talking for six months or so, not even discussing business that much. Over that time, we developed a genuine bond and decided to partner. Now we think of each other more as family than business partners, which is exactly the kind of committed relationship I strive for in every investment I make. Zoom is now a six-year-old company valued at over $1B, its platform is used by 58% of the Fortune 1000 and its growing leaps and bounds. Eric was just named Entrepreneur of the Year by Ernst & Young and Glassdoor’s #1 CEO! I’m thrilled to have him as my friend and partner.
Jean: What is one piece of advice you would give a startup? Stay focused! It’s easy to get pulled in a million different directions when you’re a founder or executive at a startup. You’ll see so many things that you think need to be done, but you simply can’t do everything well all at once. Instead, be great at one thing, focus on solving one problem and doing it really well; that will earn you the right to do more.
Jean: Do you have a favorite book that made a deep impact on your life? Can you share a story? Yes! Candide by Voltaire is a favorite of mine. The main character in the story faces adversity in the most unimaginable ways, but always come out of it feeling optimistic, and seeing the glass half full. The story has had a huge impact on me because our lives as entrepreneurs are full of adversity. I found it particularly meaningful when I first moved to Silicon Valley and wanted to get into the venture capital industry. People turned me down for some of the most absurd reasons. For example, I was told that because I was Latino that I wouldn’t do well in venture. I honestly don’t understand what being Latino has to do with becoming accomplished in the venture industry — is there something in a Latino’s DNA that prevents success in venture capital? When I pressed a few people for more specific reasons, they told me that since I followed soccer — rather than American football — I wouldn’t have anything to talk to prospects about. Rather than feeling dejected, I continued networking, and considered the time I spent not just as an opportunity to meet interesting people, but also as a chance to better understand relationships. After all, whatever affects me negatively will impact other people as well. I re-read the book every now and then to give me perspective.
Jean: What are your “5 Things I Wish Founders Knew Before They Pitched Me” and why. Please share a story or example for each.
1.) That I think of venture capital investing as a relationship not a transaction. Today’s popular dating apps offer a good analogy: I’m an eHarmony person; not a Tinder person.
2.) That I’m obsessed with the future of work. I keep a running list of problems people face at work and I am obsessed with finding new ways to solve future-of-work problems. Whenever I get frustrated with something work-related — for example when I encounter a problem with customer support, forget my access card to get into the office, or forget my password for something — I add that issue to the list. That obsession drives my investing decision-making process. If I cannot relate to a specific problem, then it’s hard to capture my interest. I still get pitched by startups creating consumer technology; and there’s definitely an important place in the world for consumer tech, but it’s just not what I’m looking for. Of course, I don’t mind taking the time to hear someone’s consumer pitch, I just know that founders have very limited time and don’t want them to devote that time to pitching someone whose interests lie elsewhere.
3.) That every member of the Emergence Capital team invests in and works with the entrepreneurs in our portfolio. We are extremely collaborative, so the fact that entrepreneurs are going to meet everyone on the team is a good thing, not a bad thing. We want everyone at the firm to know the teams we invest in, because we make all our investment decisions together and, once we partner with a team, everyone at Emergence will be helping the company reach its goals. We call it “unanimous enthusiasm”. All our partners are experts in the technologies we invest in, and all can add value to vetting, guiding and growing startups we partner with. Entrepreneurs sometimes misconstrue the fact that they’re meeting with multiple partners–often several times — as a tactic we’re using to stall for time or an effort to pass someone off to another partner because the first partner wasn’t interested. That’s the furthest thing from the truth.
4.) All our partners want to share their expertise across all segments of the companies we invest in. We are not only trying to help the CEOs on a team, we want to help the entire executive team. Our goal is to lend a hand and share best practices in all areas — sales, marketing, finance and so on. It’s more about our network and community and extending our expertise across the entire team.
5.) We don’t believe in taking short-cuts and want to work with teams and executives that ascribe to the same philosophy. We believe that winning big in the long run is what matters. For example, it’s important to build the right technology before going to market. By doing things properly from the start — even if you appear to be slower early on — you’ll be able to catch up and then be in a position to scale a lot faster because you won’t be taking time to fix bugs that never should have been in the product to start with. When we are working with companies, we push them to do the right thing, even if that means they’re delayed and miss an important trade show or other event. We feel that doing the right things, building the right team, and building the right technology from the beginning is essential.
Jean: Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? I would love to have breakfast or lunch with my parents. They both passed away when I was very young. I’d love a chance to share my journey, and to let them know that I’m happy and making a difference in this world.