Co-authored with Nick Giometti

We have known Kurt Mackey and his team at Fly.io for many years and witnessed how they have built a strong contender to the major cloud providers and content delivery network (CDNs). Going up against these incumbents is an ambitious task, but the developer enthusiasm and exponential user growth speaks to the massive need Fly is filling in the market. That is why when Geodesic Capital had the opportunity to invest in the Series C, we were more than excited to participate.

Arguably the biggest shift in web application development over the last 10 years has centered around figuring out how front-end developers should access data. Distributed systems make development for the web slow; CDNs largely solve accessing static content, but modern, cloud-native applications involving read/write operations need back-end infrastructure that can handle dynamic processes whose compute scales with usage. Major cloud providers are region locked, with only a small percentage of users running applications in multiple regions simultaneously. The large cloud providers such as AWS, Azure and GCP target traditional enterprises who have historically run their own data centers, and their services optimize for what users deploy into a single datacenter.

Investing in Fly was ultimately an opinionated bet on the future of cloud computing, one that represented a continuation of the supercycle of shifting workloads from on-prem to the cloud. Moving workloads to highly-local cloud infrastructure benefits multiple stakeholders through low-latency, highly scalable, and consistently reliable applications. Cloud service providers (CSPs), CDNs, and application platforms each have significant drawbacks that prevent developers from opting for multi-region capabilities as default, all of which Fly is optimized to solve for. CSPs primarily rely on multi-region deployment to support redundancy incase of a software or hardware failure and CDNs are limited to short-runtimes and Javascript-based applications to deliver web content quickly.

What Fly is building is becoming foundational technology. Developers want the ability to simultaneously deploy applications closest to the end user across multiple regions globally. Fly made the bet that you have to own your server infrastructure to service this need at an attractive cost, and that bet is paying off. They service 33 regions to date with more coming at a rapid pace. And with the rise of generative AI applications, there has been a wave of demand for running machine models close to end users. The team at Fly has started to offer GPUs to meet this need. This is just one example of the team’s constant focus on evolving its product to build the ultimate cloud product that developers love, and we at Geodesic think the future for Fly is bright.

We’re Divya Sudhakar and Nick Giometti, members of the investment team at Geodesic Capital. We’d love to hear from you and discuss anything early or growth stage technology, venture capital, or investing related. Please don’t hesitate to get in touch with either of us via LinkedIn at /dsudhakar and /nicolas-giometti.

Fly.io: A Leader of the Cloud Rebel Alliance was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Geodesic Forum 2023: a Look Past the Headlines and Into the Dynamism of Silicon Valley

Stock prices are down from their peaks in late 2021. Unprecedented layoffs continue each week at Facebook, Google, Microsoft, Salesforce, and many many startups. Silicon Valley Bank has gone bankrupt! From the outside, it certainly may seem that Silicon Valley is wavering, but if there is one thing that the history of technology has made clear, these are precisely the times of greatest opportunity. And while the media tends to focus on negative events visible from the surface, they mostly miss the dynamic changes happening beneath.

SV’s dynamism is rooted in technical disruption as new startups constantly challenge older established firms. But SV’s dynamism extends beyond just technical competition to drive a broader culture of reacting quickly to all kinds of external change including changes in consumer preference, the political and geopolitical landscapes, shareholder expectations, and financial and regulatory environments.

Currently, there is no shortage of change in the world and SV is responding accordingly. While this can be disorienting we can be sure that the deliberate actions being taken by large, small, and new technology companies will surely lead the world in finding solutions to the challenges we face and of course, continue to create an incredible amount of value in the process. As digital transformation professionals, therefore it is critical now more than ever to be engaged, to be precise with our analysis regarding what exactly is happening so that we can come to confident conclusions and act accordingly.

From February 20–22 2023, we at Geodesic had the opportunity to bring 14 of SV’s top tech startups’ CEOs to Tokyo as part of our annual flagship event, Geodesic Forum. Over 3 days roughly 700 people attended our Tech Conference, Ambassador’s residence executive networking event, and over 80 one on one meetings with Japanese companies.

As always when trying to understand SV, the best thing to do is to speak directly to startups, especially founders and CEOs. For three days we met with these companies, listened to them speak, learned about their technologies, and discussed their plans for Japan. It was an amazing event for all who attended and we learned a lot from them individually but also about the overall state of the Valley. Below are few of the key takeaways.

Many companies in SV are struggling, but many are doing extremely well. What is the difference?

Many technology start-ups are in fact struggling. Especially those with “moonshot” technologies (highly advanced and ambitious but new and unproven — web3, autonomous driving, flying taxis, etc.) Moonshots by definition are high-risk high-reward propositions so as a category they always present unique challenges, but with rising interest rates and a renewed focus on revenue and profitability, those challenges are being compounded. Nevertheless, moonshot companies also are adapting in interesting ways which we will discuss later.

On the other side of the spectrum, many companies in SV are also doing incredibly well. We don’t hear about these companies as much because the media likes to focus more on the negative, but the current uncertainty has really focused purchasers of technology on products and services that produce measurable short-term results either because they can drive revenue, or they can help lower costs.

Many of the SV companies that attended the Geodesic Forum fall in this category. Unlike “moonshot” companies, these companies can be described as “IT infrastructure”: data (analytics, machine learning, BI, etc.) cyber security, automation, product adoption, UI/UX design, and developer productivity. These companies are doing well for the following reasons:

1. As stated above they generate an immediate positive impact for the customer either through increasing revenue or through cost-cutting/efficiencies, or they fulfill some other urgent or strategic need (remote work, etc.).
2. Many companies have paused their more ambitious but less certain projects to focus on what can drive that immediate impact.
3. Companies now realize that whatever the future brings (generative AI, Web3, AR/VR, etc.) if they want to capitalize on these or other new trends yet to be discovered, they must first master the basics. We can all see the future coming, but are we prepared to receive it? Moving to the cloud, capturing, organizing and monetizing data, ensuring digital assets and people are secure, increasing productivity through automation, and increasing developer productivity by adopting the right software development tools — these are all foundational IT skills that will provide companies with the agility to take advantage of the next big wave of innovation whatever it is.

So vendors that provide these products and services continue to grow and do very well even in this tough environment. Here is a list of the B2B software vendors that attended Forum:

• Chronosphere: next-gen observability solution (cloud native)
• Edge Delta: next gen. observability solution (cloud and edge computing hybrid)
• Fly.io: back-end development (next-generation public cloud)
• Orca: multi-cloud security
• Pendo: product analytics, product adoption, Product UI/UX
• Pindrop: voice authentication (optimization)
• Sourcegraph: AI-enabled code search and developer productivity
• Vercel: front end development
• Tanium: endpoint management
• Transmit Security: password-less authentication and identity management
• Weights & Biases: AI (developer first machine learning development platform)

These are all incredible companies which continue to innovate and grow and are looking to proactively enter Japan and other markets globally.

So what about the “Moonshots”? Are they dead?

Prior to Forum 2023, the last Forum we did was in February 2020 three years ago just before the COVID shutdowns. At that time, there was an intense interest in mobility so we had CEOs from three of SV’s most exciting mobility-related startups attend as speakers at our Tech Conference including Chris Urmson, CEO of autonomous driving start-up Aurora. Aurora is a Geodesic portfolio company and we were excited to have a stake in such a transformative category. Back then the autonomous driving movement had much bigger more general ambitions. But through COVID and recent financial market turmoil, many high-profile companies have divested or shut down their autonomous driving programs. Here are a few data points:

• Ride-sharing companies Uber and Lyft both sold their autonomous driving units in 2020. Uber to Aurora and Lyft to Woven Planet.
• In October 2022 Ford and Volkswagen shut down their autonomous driving startup Argo AI which was once valued at $12B. (Ford invested $1B into Argo AI in 2017 and Volkswagen invested $2.8B.) The company had over 2,000 employees and was considered one of the most promising AV startups.
• On March 3, 2023 Embark Trucks a public company (via SPAC in 2021) and leading developer of autonomous truck technologies announced they were cutting 70% of their workforce and looking to close the company.

But despite the troubles mentioned above, autonomous driving is certainly not dead. Actually, now, more than ever there is more focus and clarity. Large tech companies, startups, and automotive OEMs all seem to have finally settled in on their respective strategies and are backing specific groups with laser focus on completing technology development and bringing products to market in the most efficient manner possible. Some of these companies are startups like Aurora (backed by Uber, Toyota, Amazon, Volvo, Pacar, FedEx, etc.) and Cruise (backed by GM, Honda, Softbank and Microsoft), some tech companies like Google (Waymo) and Amazon (ZOOX) and of course the OEMs like Tesla and Toyota (via its subsidiary Woven ). So here is the most important question, “is autonomous driving a more promising technology now than it was three years ago at the peak of the hype?” I would argue, it depends. Certainly starting a new autonomous driving startup in this environment would be challenging. But for those at the front of the race who have survived the difficulties of the last few years, they now have more mature technologies with focused business plans (many around logistics and ride-sharing) fewer competitors, committed partners, and better access to engineering talent. While it is impossible to say whether autonomous driving will ever live up to expectations, certainly it seems those who are left have a much clearer shot at success.

I am not trying to promote autonomous driving specifically. Autonomous driving is just an example of what is happening more broadly. Similar dynamics are playing out in spaces like SaaS, the sharing economy, and fintech, where looking past the headlines into the details of what is happening can uncover companies that have done more than their peers to adjust to the new environment and are better positioned technically, strategically, and organizationally to succeed — perhaps even accelerate once conditions improve. The overabundance of capital over the past 10 years and especially through the first two years of COVID caused massive inefficiencies and the appearance of success even for companies that were not well run. Now, as capital has once again become more scarce, we have more clarity. It doesn’t mean there isn’t risk but there are certainly pockets of opportunity that seem more attractive now than at any time in the last three years.

Conclusion

While capital markets experience turmoil, innovation never stops. Even while tech companies fire hundreds of thousands of workers, they are still making huge investments in the future. Microsoft invested $10B into Open AI earlier this year. Facebook is still investing billions of dollars every quarter into the Metaverse (perhaps the biggest moonshot project currently in Silicon Valley), Adobe announced one of the largest acquisitions of a private B2B software company last year with its $20B offer to buy design and prototyping platform Figma (still awaiting regulatory approval as of the writing of this article), Elon Musk spent $44B to buy Twitter. Technology is very dynamic. While it sometimes changes direction, it is ALWAYS moving forward. So success with DX requires strong fundamentals (data, cyber security, software development, design, etc.) access to good information, and agility. Now is a time of change, which means a time of opportunity for those positioned properly, with the ability to look beyond the shallow musings of the media and with the courage to act.

I’m Marcus Otsuji of Geodesic Japan. My team and I in Tokyo help Geodesic Captial portfolio companies to develop and execute winning strategies as they enter and compete in Japan. If you’re thinking about Japan and would like to chat, send us a note via LinkedIn!

Geodesic Forum 2023: a Look Past the Headlines and Into the Dynamism of in Silicon Valley was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Key Takeaways From this Piece (TLDR):

• Despite numerous evolutions, RPA systems still face several limitations to implementation and reaching end-to-end process automation
• Pre-trained LLM models dramatically lower the barrier to entry for process automation
• Generative AI will solve issues around discovering and optimizing the most disruptive workflows by partnering process mining capabilities with autonomous code generation
• Orchestrating multiple models and prompt engineering will empower end-to-end fully-autonomous agents
• Model reinforcement will allow bots to become smarter over time and even mimic individual-level problem solving
• Could your position be entirely eliminated by artificial intelligence? It could be one of the 300 million jobs at risk of being completely replaced by Generative AI, a shift predicted in a Goldman Sachs Research report released last month.

Could your position be entirely eliminated by artificial intelligence? It could be one of the 300 million jobs at risk of being completely replaced by Generative AI, a shift predicted in a Goldman Sachs Research report released last month.

This isn’t the first time we’ve been promised a world where machines do all the work for us. McKinsey’s 2017 report foretold an astounding 800 million jobs would be replaced by 2030, driven predominately by swift advances in Robotic Process Automation (RPA). RPA has seen massive enterprise adoption, but has decelerated with major players in recent years. Those speculations about enterprise-wide automation by McKinsey and others have fallen flat. Even still, with the near vertical pace of innovation now pushed forward by Large Language Models (LLMs), it is hard not to get swept back into the hype.

Although enterprises have begun to test the waters of standalone Generative AI products, we’ve yet to see mass adoption due to concerns around security, explainability, and hallucination (generating confidently incorrect answers when it doesn’t understand the question). Given enterprises’ long history of engagement with RPA and its adjacent solutions, adding GenAI to battle-tested software might offer the right wedge to gain trust. It also has the potential to address the shortcomings of previous automation efforts to exponentially accelerate our pace to a Fully Automated Enterprise. Let’s explore how enterprises have evolved from RPA to Intelligent Process Automation, where these evolutions still fall short, and how GenAI will potentially fill these gaps.

The Evolution of Enterprise Automation

RPA emerged in the late 1990s / early 2000s to prompt computers to replicate, coordinate, and replace highly repetitive tasks that were low-skill but high-cost. Synchronizing information into database systems and generating reports were ideal tasks for bots. In the decades since, step-changes in augmentation have made RPA easier to adopt for more complex tasks.

1. Cognitive RPA: Early 2000s

In the beginning of the 2000s, linking data from an employee’s expense report to the HR department’s accounting system looked like progress. However, data captured in the system wasn’t recorded, and it couldn’t be moved from one system to another. This led to the development of screen scraping abilities that were powered by an early AI model called Optical Character Recognition (OCR). Data was scraped, stored, and then transferred to the next critical application, and each step was wholly coordinated.

RPA’s Biggest Flaw:

• Implementation: Enterprises interested in implementing present-day RPA still often rely on consultants to take that leap. Systems integration consultants require months to map out coordinated processes, build connections between those systems, and train business leaders to maintain the systems with as little human intervention as possible. Consultants are integral in determining which processes and providers are best aligned with the scope of the project, and what technical resources are needed that the enterprise may or may not have.

How Will GenAI Solve This? Generative Process Mining:

Process Mining is already used by enterprises today looking to accelerate their time to value with enterprise automation. In its current state, it offers a view into the world of machine-generated data, allowing enterprises to identify where the biggest pains and potential gains in productivity live. Rather than rely on an outside-in perspective, process mining gives data-driven evidence of where enterprises are losing money or leaving it on the table because of broken processes. However, once these inefficient processes are identified, they still require implementation consultants or RPA solutions to write the code to automate them further adding to the time to value.

The next critical step is to combine Process Mining with Large Language Models. This will generate code snippets ad hoc, or design new processes from scratch so machine-driven insights come to life. Generative Process Mining would first identify inefficient patterns in user behavior at scale, then map optimizations, outline potential edge cases, preempt process breaks, and perform significant predictive maintenance.

Companies like Orby.ai are already combining process mining, GenAI, and RPA to bypass the need for implementation consultants. Orby observes worker behaviors to mine for the most repetitive tasks. Without the need to hire implementation consultants or allocate internal developer resources, Orby designs and orchestrates automation scripts to immediately augment or replace mundane processes.

2. APIs and Integration Platforms Go Mainstream: 2010s

In the 2010s, metadata management and logs became standard to software infrastructure. This combined with universal APIs enabled applications to read and write to each other. Integration platforms (IPaaS) like Workato, Zapier, and Tray.io popped up, and RPA’s capabilities cultivated even more connections and multi-step automations.

Integration Platforms’ Biggest Flaw:

• Intelligent Routing: Automations from integration platform players are dependent on the triggers (when this happens, do that), primitives (action types, i.e. copy data, create new account, send notification), and connections (which programs can communicate natively) within scope. While this can handle highly repeatable tasks with predictable behavior, mapping complex workflows with shifting contexts becomes time consuming and computationally expensive. Rather than spending time to map out every possible permutation of expected behavior, a better solution would be intelligent systems capable of adapting on the fly.

How Will GenAI Solve This? Self-driving Software

If you’ve had the unfortunate experience of building macros in Excel, you’re familiar with the record button. Once clicked, Excel will record each action taken by the user and systematically convert each step into code. While you might not know how to program in Visual Basic, messing around with the record button and attempting different tasks will quickly give you an idea of the syntax to be replicated or modified for different outcomes. Sadly, the record button only exists in Excel, but foundational models like Adept AI’s ACT-1 and fully autonomous open-source agents like Auto-GPT are teaching machines to replicate human behavior like this in software interfaces.

While the “Turing Test” has previously been limited to judging an AI’s ability to pass for a human through conversational intelligence, Generative AI is quickly gaining the ability to navigate software like any digitally-native knowledge worker. Responding to highly contextual tasks with human-level accuracy has been out of reach for RPA. Currently RPA uses computer vision and machine learning to handle repetitive tasks like filling out forms or generating reports. But Universal AI collaborators open up higher order intelligence tasks that require dynamic, sequential processes such as flagging, escalating, and remediating fraudulent claims.

3. No-Code Orchestration: 2015–2020

More recently, the need to handle even more complex processes without the additional developer resources prompted the rise of low-code and no-code orchestration platforms like Instabase who developed drag-and-drop visual interfaces that mapped applications end-to-end.

No-Code’s Biggest Flaw:

• Low-code Requiring Code: Similar to IPaaS, No-Code players have defined actions and triggers. As soon as a new connection or task is introduced, that either requires the vendor to build that functionality natively into the solution, or rely on internal resources to build glue code (code that connects systems together) to fill gaps.

How Will GenAI Solve This? No-Code + Copilot = “Co-Code”

Companies like Hyperscience and Instabase offer process automation solutions through composable blocks of models, actions, triggers and user interfaces. No-code workflow orchestration was designed to address the hurdles for implementing and updating process automation without the need for systems integrators or significant developer upkeep. Although these preconfigured components do lower the barrier to entry for automation and increase time to value, they still suffer from issues with extensibility (i.e. how can you expand a process if there is no pre-configured block to handle it). Building out new connectors for new data sources or linking multiple processes together for additional scope requires a custom buildout from the vendor’s own business services, and prevents them from truly becoming self-serve solutions.

An already feasible Generative AI approach to workflow mapping could be done with simple language interfaces. While they still require some tweaking, Copilots (AI assistants that sit adjacent to existing workflows) fluently generate code snippets. Constructing a recipe for a novel process would be limited to knowing how to properly engineer the prompt. Moving forward, GPT-4’s ability to understand images makes it easy to see a world in which an internal process designer lays out an event-model system in a charting tool like Miro, then converts the connections to code that executes tasks either via plugins trained on LLMs or existing APIs.

To improve the scope of their automations, existing no-code solutions should introduce Copilots alongside their orchestrators. No-code still provides a level of visual specificity that language interfaces cannot. A real-life example of this is something we’ve all undoubtedly faced: teaching our parents new technology that they cannot understand so we have to either draw it out for them or just do it ourselves. In the future, designing and orchestrating application workflows will resemble today’s conversations between product managers and developers, but with far faster iteration cycles and likely far less frustration between both parties.

4. Intelligent Process Automation: 2020-Present

While “generalist” RPA solutions had strong performance on prescriptive tasks that did not require human reasoning, its performance was limited on more specialized and domain specific processes. For example, while a horizontal RPA solution could transcribe a bank customer’s loan repayment history it could not compute a credit score or predict a probability of default. Prediction required specially trained models that inherently became vertically focused. Companies like Inscribe, which addresses document fraud, and Ikarus, which manages accounts payable, emerged to offer better performance within niche markets.

Intelligent Process Automation’s Biggest Flaw:

• General vs. Specific Intelligence: Tasks break when intelligent systems lack sufficient context to handle task complexity. Humans are brought in to share their training and experience to manage workflows that are out of model.

How Will GenAI Solve This? The Second Brain and the Personal Digital Twin

We’ve been experimenting with creating digital versions of ourselves for quite some time. In 2013, A Verizon employee outsourced his entire job to a Chinese consulting firm before ultimately being discovered and fired. Generative AI is already edging closer to bringing your brain to bytes. Companies like Character.ai have already created convincing clones of both fictional and actual people to answer questions and generate novel perspectives.

AI hackers and avid note takers have already begun using GenAI-powered knowledge bases like Mem.ai to act as their second brain. While computers are much better at certain tasks out of the box, like reading the entire library of Congress, without training it would not be able to answer highly subjective, nuanced questions like, “What are your personal thoughts on the politics and law of the Second Amendment?”

VC and AI hacker Yohei Nakajima created a personalized chatbot “Mini Yohei’’ to answer a vast number of potential questions from companies that might pitch him, portfolio companies looking for support, or LPs asking for clarity in a volatile market. Companies like Personal.ai are already building individualized baby GPTs for each user. Imagine a world where instead of pointing an “Out of Office” auto-response to your personal cell number, you let your digital avatar triage any after hours emails directly. Go ahead and have that extra margarita on your vacation. Your digital twin will agree you deserve it.

The Fully Automated Enterprise

Generative AI presents the most compelling case for systemic automation and solves many of the biggest current bottlenecks by giving bots the ability to optimize, replicate, and most importantly, reason. Systems that previously took significant time and expense to implement will use pre-trained, API-accessible models to become increasingly self-service. Tasks that were limited in scope or scalability will see exponential productivity gains as software learns how to orchestrate itself, handle out of model exceptions, rapidly switch contexts, and improve via feedback-driven reinforcement. To summarize:

• RPA companies should combine Generative AI and process mining to not only identify where the biggest productivity gains live, but also proactively create code to replace tasks without human intervention
• Workflow automation and integration platforms dependent on APIs should leverage task-driven agent approaches to minimize human-dependent triage and maintenance
• No-Code orchestrators should allow text-based Copilots to extend capabilities
• Leveraging knowledge bases will enrich intelligent process automation with deeper contextual problem solving

Whether you’re an upstart or an incumbent, if you’re looking to augment or replace human processes, designing your future product roadmap squarely around GenAI is imperative.

I’m Nick Giometti, a VP on Geodesic Capital’s investment team. Reach out to discuss the future of data and all things infrastructure. If you are a founder looking to take your business international, I’d love to hear from you.

@nickgiometti |LinkedIn

The Next Generation of Productivity: Generative Process Automation was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Environmental issues such as global warming, water pollution and deforestation are continuing to affect all communities around the world. In order to address these challenges, policy and business leaders are beginning to adopt and promote Green Transformation (GX) — a framework in which societies can leverage technology to address climate change issues. Because the concept of GX is relatively nascent, if you are a startup founder, you may not even know that your company falls within the GX category or be aware of how profound of an impact your company can have on helping advance GX. In this article, we will discuss what GX is, examples of GX verticals and the push from governments for green transformation.

What is GX?

In 2015, the United Nations adopted the Paris Climate Accords to reduce the impact of climate change by having countries agree to scale down emissions, thereby building resilience to the adverse effects of environmental change and promoting regional and international cooperation. Another example of climate related policy is the Kigali Amendment to the Montreal Protocol. 148 countries signed this international agreement, which aims to decrease the consumption of hydrofluorocarbon (a greenhouse gas). With the implementation of global frameworks such as the Kigali Amendment and the Paris Climate Accords, there now exists an exciting opportunity for GX startups to proactively address the various needs of green transformation stakeholders.

Core physical assets aside, ultimately, we at Geodesic believe GX will be driven by technology — SaaS and data startups that are advancing the climate goals of businesses, governments and societies.

These SaaS tools offer digital platforms that promote collaboration amongst various stakeholders, enabling businesses, consumers and government organizations to align on common climate goals. GX is more than just about government organizations promoting green initiatives. These technologies help businesses become less reliant on traditional forms of energy and identify more sustainable ways of managing operations. GX is driven by strong private sector demand and interest in green initiatives, which has fueled the growth of startups in the space that are addressing the needs of the modern day enterprise and consumers looking to adopt green initiatives. In 2021, climate startups raised $40B in private funding.

What are different forms of GX?

GX startups will play a prominent role in promoting sustainable ways of living. Climate Tech VC defines seven climate verticals: energy, food and land use, transportation, built environment, carbon, climate management, and industrial.

Of these spaces, the carbon vertical has seen a substantial uptick in funding. According to CTVC, carbon companies raised ~$1.5B in H1’22. The number of carbon deals in H1’22 doubled versus H1’21 and funding in this category spiked 8x year over year. Recent innovations in this space include companies that are providing carbon tracking and accounting, carbon offsetting tools and carbon removal technologies.

One example of a startup that sits at the intersection of carbon and climate management is ComboCurve. ComboCurve is a next-generation, cloud-based greenhouse gas (GHG) energy analytics and operating platform that was founded in 2017. The company helps decision-makers value assets, de-risk decisions and plan for net-zero. Its carbon accounting solution (ComboCarbon) enables users to integrate GHG emissions into the planning and development process of facilities. This provides businesses with an understanding of how the creation of each division within a facility impacts emissions, costs and reduction targets. This technology is being leveraged to drive tangible cost savings and business efficiency, helping not just advance business’ green goals, but operational and strategic ones as well. Companies such as ComboCurve are examples of the many GX businesses that are transforming how businesses reevaluate their energy consumption and execute on net-zero planning.

Another example of a GX startup is ClimateAI, which offers a climate management SaaS platform. The company raised its $12M Series A round in May 2021. ClimateAI leverages artificial intelligence to help businesses predict the risk of climate change on company assets. With this information, businesses are able to adapt their supply chain operations as necessary to drive cost savings and growth. ClimateAI’s predictive data is 25–50% more accurate than historical averages of climate change data. Several of ClimateAI’s customers include Ocean Spray, Driscoll’s and Advanta. With the help of ClimateAI, retailers are able to place the appropriate products in the right geography and at the correct time. Pacific Seeds (a ClimateAI customer) is one of Australia’s leading seed providers. In 2020, ClimateAI forecasted a rainfall event in one of Pacific Seed’s critical growing regions in Northern New South Wales. Pacific Seeds then leveraged this data and moved additional inventory into this region, which boosted sales by 5–10%. Predictive modeling platforms such as ClimateAI’s are driving top line growth for businesses and becoming an imperative tool within the modern day enterprise’s data stack.

How do countries around the world view GX?

Green transformation is top of mind for country leaders around the globe as nations consider the societal, economical and environmental impacts of adopting a more green strategy. Countries such as the United Kingdom, Iceland and the Netherlands are promoting innovative technology to help lower carbon emissions and transform current processes that are negatively contributing to the environment.

Let’s take a deeper dive into how Japan is promoting GX

Japan has limited natural resources and depends heavily on imported raw materials and energy. In 2021, the country ranked as the second largest importer of natural gas. Given these circumstances, exploring alternative energy sources and adopting green transformation are top priorities for the Japanese government. Green transformation represents an exciting opportunity for Japan to be more politically and environmentally self-reliant by being less dependent on other countries’ resources.

Japan’s Prime Minister Kishida and the Japanese Green Transformation Implementation Council see GX as a multi-year strategy that will affect all parts of society, the economy and business industries with the ultimate goal to reach carbon neutrality. During Japan’s GX Implementation Council meeting in July of 2022, Prime Minister Kishida underscored the importance of shifting away from traditional forms of energy in today’s climate and highlighted the role technology, government and social involvement will play in driving sustainable energy usage in the future.

In the medium and long term, Japan’s GX rollout strategy is a three-pronged approach:

1) The first initiative is to introduce renewable energy, storage batteries and energy-saving efforts while also restarting nuclear power plants to ensure there is a stable supply of electricity and gas.

2) The second initiative is to raise public awareness as to how the measures will help the country advance its GX goals.

3) The third initiative is to further discussions on policy initiatives in the GX roadmap.

Since July of 2022, the Japanese government has made meaningful strides in advancing GX. In February 2023, the Japanese Cabinet approved the Basic Plan for the GX: Green Transformation Policy, a ten-year roadmap of Japan’s decarbonization plan that introduces a voluntary emission baseline-and-credit system, a mandatory emissions trading system (ETS) and a carbon levy.

Key Takeaways

• Policy leaders across the globe are embracing and promoting GX given the current state of energy consumption. GX is a top priority for societies around the world.
• Across all verticals (energy, food and land use, transportation, built environment, carbon, climate management and industrial) startups are capitalizing on the unique business opportunity presented by GX and are serving as catalysts for GX innovation. Whether it be helping businesses monitor ESG standards or holding various stakeholders accountable for carbon emissions, startups are spearheading innovation within green transformation.
• GX is in early innings and there are various verticals such as energy, carbon and climate management that are ripe for disruption. While the GX category has yet to mature, funding in emerging sub verticals such as carbon (which includes use cases such as carbon removal and storage as well as carbon utilization) continues to increase, which underscores the importance and need of these tools.

What’s next?

GX startups will continue to play an important role in promoting a more green and sustainable future. Business demand for startup tools to help with GHG emissions reporting and green transformation will continue to grow, providing a large addressable market for startups in this space to scale. We are excited to monitor the role GX plays in shaping the way we as a society live more sustainably. If you are a founder of a GX SaaS business and are thinking of international expansion to APAC, please do not hesitate to reach out as we would love to chat.

I’m Justin, an investor at Geodesic Capital. If you are interested in discussing anything related to startups or venture capital, I would love for you to get in touch via LinkedIn.

Green Transformation: How it’s Leveraging Technology to Address the Impacts of Climate Change was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

A Decade in Review — Laying the Foundation for the Next Decade of Venture Investing

Part I: Setting The Stage

We’re kicking off 2023 and some would argue perhaps it’s an odd time to pen thoughts on the promise of the next decade, but I beg to differ. We are in a pivotal year. We are coming off the back of a slow but sure post-pandemic economic recovery, all while global central banks attempt to rein in inflation which inadvertently slays growth in the economy as well as employment. Then you add to it a global geopolitical hotpot, with polarization all but clear and closer to home, the venture and growth capital practitioners have been bombarded with hubris of financing over the past two years. To top it all off, despite the gloomy macro-environment, there is record-breaking venture capital dry powder that everyone is talking about.

It begs the question — so what now? Where do we go from here? The article is a proverbial attempt at taking a bird’s eye view and exploring my thoughts over a series of articles on how a few interconnected themes will play out over the next decade. We will find ourselves as an industry rallied to backing founders and companies within these themes, for a variety of reasons — call it cyclicality, contrarian theses, a ripe setting for innovation, or simply a human and climate existential crisis.

In this article, I will attempt to keep it plain and introspective — assessing where we have come, so we can look to the future of where we’re going. Perhaps, worthwhile inspecting some of the mundane but critical underlying technologies that evade us and the multi-faceted implications they had.

Where Are We Now?

We are in the early innings of digital transformation. The last decade is well understood to have been an era of mobile-led applications (e.g. social media, gaming); cloud-led applications; decentralization; as well as the blossoming of biology-driven healthcare and climate technologies. For instance, in 2010 there were 970M social media users, which ballooned to 3.9B by 2020 (and growing!). In terms of cloud penetration, 2020 was the first year where enterprise cloud infrastructure spending surpassed on-premise spending. Cloud penetration has enabled the SaaS software market to grow from 3% (2010) to 25% (2019). These were the key innovation milestones that brought us to where we are today:

Mobile-led Applications

• 4G — This offered a 10x speed improvement over 3G, greatly improving users’ mobile experience. It led to a dramatic increase in time spent on mobile devices from 32 mins in 2010 to 132 mins in 2019. Its innovation enabled the social media, sharing economy, and gaming industries to thrive.
• GPU (Graphical Processing Unit) — While 1999 was the first year that the GPU was introduced to accelerate the rendering of 3D graphics, the commercial applications in computing and gaming didn’t greatly improve until the mid-2010s with the introduction of a new chip design by the company AMD and a competing chip by Intel. This enhanced the ability to compute on mobile devices. However, it was AMD’s later chip innovation in 2016 that dawned the age of mobile gaming ushered in by advances in reducing power consumption, making gaming on mobile devices viable.
• Data creation and processing — the acceleration of data generation and processing has led to better consumer/enterprise-facing applications; the increase in “eyeballs” has lured advertising dollars to search and social content platforms that have become giant walled gardens. These platforms in turn have become aggregators of information (and disinformation). Given the amount of first-party and third-party aggregated data these mega-platforms have on us, the average consumer has also awakened to the notion of privacy concerns.

Cloud-led Applications

• Centralized cloud infrastructure — I label AWS/Azure/GCP, “the three Cloud-musketeers” as they have led the charge on powering enterprises to begin using cost-efficient and on-demand cloud infrastructure for data. Public cloud storage has gained 20% to 30% market share over the nine-year period from 2010 to 2019. Even so, there is still a lot of untapped potential given the uneven market penetration across industries.
• Such infrastructure at a distributed level has enabled enterprises to shift massive data workloads to the cloud. Abstraction of software into the cloud has truly enabled software to “eat the world” with cost-effective and broad distribution. It has enabled AI/ML at scale and supported the “remote work” and “future of work” movements. More data in public clouds has also given rise to the prevalence of developer tools to create, deploy, control, monitor, analyze and secure workloads and applications.

Decentralization

• Ethereum — introduced in 2015, Ethereum has quickly become the backbone of decentralized application development. There are a few reasons why Ethereum’s intrinsic value has increased over time. Specifically, they are — 1) the ability to execute programmatic smart contracts that power decentralized applications (DApps) like decentralized finance (DeFi) and non-fungible tokens (NFTs); 2) a robust developer network working to build Ethereum as core blockchain infrastructure; 3) an energy-efficient “proof-of-stake” consensus model; 4) the evolving ability to scale and execute transactions speedily.
• While decentralization through blockchain has a much longer runway to achieve broader enterprise and daily-life applications, it has honed in on cryptocurrencies as a proxy to showcase its potential use cases, primarily targeted at consumers as a medium of value exchange. Bitcoin’s value grew 9M% between 2010–2019 and associatively the crypto-universe has seen a lot of speculative movements. Though more recently, consumer, institutional and regulatory trust in the crypto-universe has been shaken and has demonstrated the interconnectedness of market participants. A reflection of this is Bitcoin’s drop in value from a height of $61,000+ in Oct’21 to as low as $16,000+ in Dec’22. But this is not the end of cryptocurrencies, though perhaps decentralized control needs some form of centralized oversight — just a contrarian thought.
• A lot of venture capital dollars over the last decade have gone into making the user experience better for these largely consumer-facing financial applications of blockchain (cryptocurrencies). These include investments in: better on-/off-ramps for crypto; avenues to buy, store, and trade; as well as infrastructure for anti-money laundering (AML), know-your-consumer (KYC) and AML guidelines to secure the ecosystem from bad actors and to build much-needed stability and trust in the alternative financial system.

Biology-driven healthcare

• Genomics — Genomics, a study of the whole or part of the genome and its interactions to influence downstream biological products has become available in a cost-effective manner for venture-backed companies. The cost of genome sequencing has dropped from $50,000 (2010) to <$600 (2019) enabled by innovations in sequencing methods and machines. In combination with cloud infrastructure, the last decade has shown us glimpses of how genomic data can be parsed and recombined with traditional methods of drug discovery to bring new drugs into the clinic. More importantly, it has enabled the exploration of remedies for rare and/or poorly understood health conditions.

Climate technologies

• Climate-tech has certainly gained traction over the last decade. The technologies are innumerable and approaches have ranged from electrification, to operationalizing massive renewable grids, to new materials, synthetic biology, as well as better telemetry that captures industrial and household data helping conserve energy and lower greenhouse emissions.
• (As a note: personally, I am alarmed and yet intrigued by the scope of work left to be done in agri-food. In 2019, 31% of global carbon emissions were attributable to agrifood systems. For example, there have been early attempts of leveraging cloud infrastructure to improve seed genetics; and IoT to improve supply chains but it is barely scratching the surface.)

Where Do We Go From Here?

As described at the beginning, the decade from here on is a complex one. The venture builders and funders will have to adopt a design thinking lens in solving the needs of customers, enterprises, and the planet. A simple example of reframing the builder/funder lens takes us back to 2007 when Nokia and Apple were vying for being the top consumer mobile device. The fundamentally different questions they asked, led to different consequences:

• Nokia: “What other features can I put into this Qwerty Keyboard phone?
• Apple: “Do customers want a hand-held computer that can make phone calls?

Behind the launch of the iPhone and the dawn of the mobile computing paradigm, was a complex evaluation and cost-benefit analyses (CBA) of features, functionalities, and form factors that met the north star of superior consumer experience that built longitudinal brand loyalty to Apple. A similar CBA will need to be applied by us as venture builders and backers as we evaluate for opportunities and challenges in industries and in addressing the needs of varying stakeholders — some with a voice (e.g. enterprises/ small and medium enterprises/consumers) and some without (e.g. the planet, the human body).

As I sat down to imagine the next decade and what my work could look like, I emerged with excitement for the immense opportunities to uncover companies and nurture relationships with founders building solutions at the interface of the themes you will get to read about in the following articles. But a taste of these exciting opportunities includes technologies such as 5G, low-power silicon, and connectivity infrastructure, which would move cloud to the edge, offering benefits like autonomous decision-making independent of bandwidth speed, data compliance, and data security.

In the next part of this series, I look forward to discussing four themes 1) unbundling and rebundling of the Enterprise; 2) small and medium enterprises — the backbone of nations; 3) software goes…vertical; 4) re-imagining engineering. It’s important to look back at the decade of innovations that have set us up for a complex yet exciting future ahead.

I’m Arvind Ayyala, Partner on Geodesic Capital’s investment team. Having invested across enterprise software/fintech/health and climate-tech, I am eager to collaborate with founders, practitioners and fellow investors. Please do not hesitate to reach me via LinkedIn.

A Decade in Review — Laying the Foundation for the Next Decade of Venture Investing. was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Co-authored with Divya Sudhakar

Observability has become a ubiquitous buzzword in today’s market, and for good reason. It is critical to have deep visibility into the behavior of internal systems to rapidly triage issues, optimize performance, and maintain reliability. To repurpose the words of management pioneer Peter Drucker, “if you can’t measure it, you can’t manage it.” However, observability in technology is not a novel concept, with a history dating back to the early days of computing. One of the earliest forms of observability was the use of log files which recorded the events and activities of a system, allowing engineers to review the logs and identify any issues that may have occurred.

As computing systems became more complex and distributed over time, the need for sophisticated observability tools arose and with them came new observability telemetry including metrics and traces. This led to the development of monitoring tools, such as network performance monitoring (NPM) and application performance monitoring (APM), which allowed engineers to observe the performance and behavior of systems in real-time. Vendors that emerged to provide this tooling include the likes of AppDynamics, Dynatrace, New Relic, SignalFX, NetScout, ThousandEyes, and Datadog.

However, as the quantity and cardinality of data generated has skyrocketed and companies increasingly shift workloads to modern cloud-native architectures built with microservices and containers, legacy observability tooling has failed to evolve commensurately. Not architected for the cloud-native world we live in today, many of these solutions prove costly and unable to perform adequately at immense scale — yielding outages, query latency, inefficient storage / ingest, and ultimately noise without signal. This is an intolerable issue for modern enterprises when security, reliability, and customer satisfaction are more critical and more in focus than ever before.

That is why today we are thrilled to announce our investment in Chronosphere, a disruptor in the observability space created to serve the next generation of cloud-native companies with the world’s most scalable, reliable, and customizable cloud monitoring solution. Founded in 2019, the company’s technology is built on the popular open source project M3 which was spun out of Uber where it was created by Chronosphere’s founders, Martin Mao and Rob Skillington. M3 was purposefully designed from the ground up to process vast quantities of metrics data with scalability, reliability, efficiency, and lower cost. Chronosphere builds upon the underlying M3 infrastructure, abstracting away the complexity of managing the open source product by providing an end-to-end solution including rate limiting, resource management, security, access controls, alerting, and root cause analysis among other capabilities.

Martin and Rob epitomize founder-market-fit, having dealt with the challenges of legacy observability tooling firsthand at Uber, and have assembled one of the best engineering teams we have seen of late. Customers love the product and unanimously describe Chronosphere as a must have to keep their complex infrastructure running. With rocketship growth and an aggressive roadmap, we have no doubt Chronosphere will empower companies around the world with the next wave of observability innovation and we cannot wait to see where this team goes!

We’re Will Horyn and Divya Sudhakar, members of the investment team at Geodesic Capital. We’d love to hear from you and discuss anything early stage technology, venture capital, or investing related. Please don’t hesitate to get in touch with either of us via LinkedIn at /williamhoryn and /dsudhakar.

Our Investment in Chronosphere: Powering the Future of Observability was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Despite the attention and acclaim the startup ecosystem has commanded over the past decade, many corporations have been slow to tap into this movement. Of those that do lean into the promise startups offer, many are unsure of the potential playbooks or mishandle the relationship based on startup maturity and focus, a pitfall we’ll dig into later. As the pace of innovation accelerates and technology continues to permeate every aspect of how we live, work, and play, it’s more important than ever for corporations to establish and maintain an active strategy of startup engagement. In this post, we’ll examine how this has changed over time and consider a few ways in which corporates can work with startups to drive mutually beneficial outcomes.

A Brief Historical Perspective

Though Silicon Valley didn’t earn notoriety until the end of the 20th century, there was a subset of forward-thinking corporations who embraced partnering with early-stage ventures before it was cool. Going as far back as 1914, DuPont — the long-standing chemical and plastics manufacturer — was an early investor and strategic partner of a budding startup at the cutting edge of the automotive revolution called General Motors. Over time, DuPont invested more and fostered an increasingly tight partnership with GM, betting that the startup’s success would drive additional sales of DuPont’s products (such as artificial leather, plastics, and paints) as well as generate a handsome return on investment. Though DuPont was a first-mover, others soon followed suit including the likes of 3M, Alcoa, and General Electric. These conglomerates sought to diversify their product offerings and revenue streams, putting excess cash to work outside of their core business models.

As technological breakthroughs began to accelerate throughout the back half of the 20th century, startup formation and corporate engagement followed suit. The advent of the personal computer ushered in the second wave of corporate-startup engagement, as many organizations realized the power of new technological advancements and the need to capitalize on them. Key players in this era included Cisco, SAP, Xerox, Microsoft, Intel, IBM, and others, who sought to partner with Silicon Valley innovators. (Members of the Geodesic investment team bring experience from the corporate venture arms of Intel and Cisco, and have seen successful partnerships firsthand.)

The 1990’s subsequently spawned mainstream adoption of the internet, leading to breakout disruptors such as Google, Amazon, and Salesforce. Having been high-growth startups themselves, these pioneers understood the importance of tapping into the early-stage technology ecosystem and established a proactive stance more quickly than their predecessors with a focus on R&D benefits. And today, this trend has continued but with a notable expansion to include industries outside of traditional Silicon Valley incumbents as technology indiscriminately reshapes all companies and markets. Businesses such as Shell, General Mills, Pfizer, and Schneider Electric have all leaned into startup engagement to position themselves for the next 5, 10, and 20+ years, recognizing that the failure to do so risks falling behind at best and obsolescence at worst.

The Importance of Startup Innovation for Corporations and Ways to Work Together

There are multiple reasons why a corporation may choose to engage in the startup ecosystem. From our experience, some of the top ones include:

• Diversification into new markets, from both a product and a geographic perspective: Partnering with startups can represent a quick path into a new geography or market segment not currently served by a corporation’s portfolio. In addition to broadening the product offering in the near-term, this can yield valuable insights and inform a potential organic strategy in the medium/long-term.
• Accelerate Product Roadmap: Startups have the benefit of being agile, with the ability to quickly iterate a targeted product set based on real-time customer feedback. For better or worse, established corporations don’t always have the same luxury given processes and guidelines that have been put in place. It’s also understandably challenging for a large corporation to focus on incubating an entirely new product/market when existing products are generating substantial sums of revenue. Engaging with a startup operating in a similar or adjacent category can speed up a corporation’s own roadmap, providing access to otherwise inaccessible market intel.
• Improve Competitive Positioning: Ultimately, startup engagement offers the potential for substantial competitive advantage. This can be in the form of having access to the latest technology, market intel, new GTM motions, and new geographic access, among others.

To make this topic a bit more tangible, we’ll discuss some practical ways to realize value from startup engagement including examples, some of which members of our team were directly involved with during their time at Intel and Cisco:

Go-to-Market:

GTM partnerships are a key and common way to work with emerging companies. They represent an opportunity to mutually realize synergies without necessarily over-committing resources or product roadmap on either side. They can take many forms, but two common approaches include:

• Co-Sell: Co-selling arrangements generally involve a collaborative selling motion, with one party amplifying the distribution of another product and receiving a share of the sale proceeds as an incentive. Given that corporations typically have established platforms, they are usually the party that promotes a startup’s solution. The incentives are aligned: the startup benefits with additional distribution and sales, while the corporation collects a portion of the sale and strengthens the attractiveness of their platform.

An example of this is the AWS Marketplace. AWS enables many enterprise software vendors to be listed on their Marketplace, thereby creating additional distribution for these vendors. When software is sold through the Marketplace, AWS receives a share of the spend. In fact, AWS sellers are able to be compensated based on sales made through the Marketplace, creating a strong incentive to encourage Marketplace sales.

• Original Equipment Manufacturer (OEM): An OEM relationship requires deeper alignment between parties, as there is often a meaningful technical integration and only one seller. Typically, the corporation will sell a startup’s software under their own brand or a new brand created for the specific solution. As with the co-sell motion, there is a bookings share and the startup benefits from greater distribution. However, because the software has been rebranded there is less market awareness for the underlying vendor, and as a result they may negotiate a greater share of the sale proceeds. In addition to partaking in the deal economics, the corporation benefits by leveraging the OEM arrangement to quickly gain presence in a new market or segment rather than increasing sales of their core products as is often the case with a co-sell agreement. It’s worth noting, though, that the seller often bears the brunt of related support costs in these types of partnerships.

An example would be Cisco’s partnership with Turbonomic, in which the two companies announced an application performance solution — Cisco Workload Optimization Manager — that was powered by Turbonomic’s software under the hood.

Product Partnerships:

A product-oriented relationship (as opposed to a GTM-driven one) is another way for corporations to engage with startups for mutual benefit. This can manifest in different ways, including:

• Product Integration: Create a “better together” story. In the late 2010s, Mobileye was a leader in mapping and self-driving technology, while Moovit was known for its comprehensive urban mobility application. When the two companies joined forces in 2020, they sought to unite their individual core competencies and together bring to market a new foundation for the future of mobility.
• Product Enhancement: Better suit customer needs. In response to changing infrastructure and increasing regulatory demands on Financial Services Industry (FSI) businesses, Fortanix — a Silicon-Valley based enterprise security vendor — developed a security solution (SDKMS) to offer a single point of management for data security across the enterprise. However, Fortanix did not go it alone — their new platform is underpinned by Intel’s SGX solution, a secure hardware foundation that boosts the security of application code and data for cloud deployments. By working together Fortanix and Intel were able to produce a new FSI-friendly security paradigm enabling digital transformation while also protecting sensitive data.

Acquisition:

Lastly, with enough conviction on both sides, an acquisition can serve as an effective means for corporates to benefit from startup innovation. This yields full control over the product roadmap and GTM motion, while driving deep alignment to corporate strategy and accelerating time to market for any new solutions. There are of course numerous examples of this, such as Cisco’s acquisition of Opsani or Intel’s acquisition of Nervana Systems.

How to Create a Successful Partnership with Startups

As tempting as it may be to launch into GTM or product partnership discussions with promising startups, many corporations misjudge these opportunities, resulting in wasted resources and poor outcomes for all parties. The below graphic depicts a framework intended to inform the decision-making process when engaging with startups:

It is critical that any initiative strikes an appropriate balance of startup stage and level of engagement. Ideally, the startup: A) is at a stage where they can maintain the integrity of their product roadmap, and B) recognizes the benefit of working with a corporate and is willing to invest in the relationship accordingly. This is the “Zone of Success” that all corporates and startups should seek to operate in when working together. The absence of this balance risks a waste of time and money in the case of the two left quadrants (resources that are particularly vital for the startup), and an unsatisfactory outcome in the case of the upper right quadrant wherein the startup and corporate never achieve the ambitions initially sought after by both parties.

To ensure any engagement is on track for the Zone of Success, key factors to consider include:

• The corporation needs an internal sponsor(s) owning the relationship to ensure accountability and continuity
• Clarity on goals and a roadmap, with measurable milestones or KPIs
• Open communication to establish and maintain alignment

Bringing it All Together

It’s no secret that startups are driving the bulk of technological innovation and transforming every aspect of how we live, work, and play. While it can be overwhelming, this trend represents substantial opportunity for corporates who are willing to lean in and find constructive ways to engage with the startup ecosystem. This has already become a competitive differentiator, and if executed carefully can yield profound outcomes for all parties involved. With that said, not all startups are created equal and it will be key for corporates to ensure they are getting access to the most promising innovators. This can be achieved through a variety of means such as developing brand presence as an active and collaborative participant in the startup ecosystem (e.g. events, thought leadership, founder-friendly initiatives) or leveraging the expertise of established investors to source and promote the best companies (e.g. partner with VCs). Regardless of the chosen path, these are exciting times and we at Geodesic encourage corporates to welcome the potential that startup engagement offers!

— — —

Sources:

• https://www.intel.com/content/www/us/en/financial-services-it/article/fortanix-2020.html
• https://newsroom.intel.com/news-releases/intel-may-2020-acquisition/#gs.gx6ej1
• https://moovit.com/blog/robotaxi-mobileye-moovit/
• https://blogs.cisco.com/datacenter/cisco-and-turbonomic-deliver-autonomic-it
• https://www.cbinsights.com/research/report/corporate-venture-capital-history/

I’m Will Horyn, a member of the investment team at Geodesic Capital. I’d love to hear from you and discuss anything early stage technology, venture capital, or investing related. Please don’t hesitate to get in touch via LinkedIn.

Collaborating with Startups from a Corporate Viewpoint was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

For years, Geodesic Capital has been following the meteoric rise of Web3 technologies. Despite recent volatility in digital asset prices, we believe that use cases such as cross-border transactions, smart contracts, and creator commerce represent massive opportunities to create value for enterprises and consumers for decades to come. And as an investment firm dedicated to finding the best software companies bent on becoming globally dominant, we’ve seen far-reaching adoption of Web3 technologies abroad.

However, as both the number of digital assets and their use cases rapidly expand, so does the need for better governance to ensure their safety. And, as widespread Web3 adoption matures from crypto-native businesses to traditional financial institutions and government organizations, tools that enable compliance with evolving regulatory frameworks and will play critical roles in redefining transparency, security, and trust in a digital world. Enter TRM Labs.

TRM Labs is a digital asset compliance and risk management software company whose platform enables organizations to prevent illicit activity from occurring on their platforms — such as sanctions evasion or money laundering. Simply put, TRM Labs makes Web3 safer for individuals and institutions to transact and easier for investigators to identify, prevent, and bring justice to financial crimes.

We have conviction that TRM Labs is the best tool for catching illicit Web3 behavior for several reasons:

Cross-Chain Infrastructure:

• From the beginning TRM was built with the thesis that Web3 will exist outside of the most mainstream digital assets, Bitcoin and Ethereum. While boons to innovation, new digital assets emerging in the ecosystem represent new vectors for increasingly complex money laundering techniques. As such, TRM’s crypto compliance platform is built on top of a proprietary cross-chain analytics infrastructure that, with over 25 blockchains and over a million digital assets supported, offers the broadest coverage in the industry. Rather than having to open multiple single-asset maps and manually link them, TRM allows a single pane of glass to track transactions as they move across digital currencies, creating a seamless user experience.

Best-in-class Product:

• Beyond cross-chain analytics, TRM substantially reduces the time to investigate cyber-crimes for organizations through its cloud-native UI/UX, advanced market-leading attribution, and highly configurable risk engine that decreases false positives and enables its users to collaborate both internally and with other ecosystem partners and law enforcement agencies. Identifying and rectifying complex financial crimes is critically time sensitive; reducing errors and improving collaboration is essential to reclaiming assets lost through hacks or preventing financing illicit activities.

The Right Team for the Job:

• While conducting due diligence, customers praised TRM’s leadership team as “humble, high-integrity, execution-focused, and long-term oriented.” Our experience with CEO Esteban Castaño, CTO Rahul Raina, and the rest of their leadership team has been entirely the same. We first met Esteban in October 2021 and have been floored by his team’s ability to set lofty goals and wildly exceed them. Since October, TRM has added impressive depth to their bench, through senior financial crimes investigators like Ari Redbord, to help guide government institutions in their digital asset adoption journeys.

For all these reasons and more we are thrilled to welcome TRM Labs into the Geodesic family as our first bet on a Web3 future. We believe TRM Labs will play a critical role in intuitional digital asset adoption through its virtuous flywheel of accuracy, transparency, and collaboration. We cannot wait to see where Esteban and his team will go!

I’m Nick Giometti, a VP on Geodesic Capital’s investment team. Reach out to discuss the future of data and all things infrastructure. If you are a founder looking to take your business international, I’d love to hear from you.

@nickgiometti |LinkedIn

Announcing Our Investment in TRM Labs was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Succeeding in Japan: Japan Entry GTM

Note from the author:

This is the cornerstone of the “Succeeding in Japan” series and we’re finally going to dive into the details of a Japan entry GTM. While this is by no means a comprehensive document, we did want it to function as a useful guide for companies embarking on their Japan journey. As such it may be a bit long as we wanted to prioritize utility rather than readability. Also, while this document can and should be helpful on its own, I hope you have read the first three articles in this series as they do provide important context and perspective.

Introduction:

In October 2004 I joined web analytics startup Omniture Inc as the first Japan based employee. Over the next 7 years we grew the business to 70 people and $30M in ARR. By today’s standards perhaps not particularly remarkable, but back then as one of the pioneering SaaS businesses it was a noteworthy effort and an important part of the overall success of the company. Japan was roughly 10% of organic revenue globally, but just as important, our strong local presence was a key differentiator in winning many global contracts as none of the other web analytics vendors were able to establish a Japan presence of any significance.

All these successes aside though, truth be told the Omniture Japan journey was a rough ride. The first two years were particularly punishing as the local team and HQ alike struggled to adapt to realities in Japan that were very different from other geographies. We did some things right, but we also made many unforced errors. In both cases we learned a lot and those experiences informed the Japan entry model outlined in this article. Over the past six years since founding Geodesic we have used this model (and refined it along the way) as we’ve supported over 20 of our portfolio companies on their Japan journeys. As I have stated in previous articles, there is no one-size-fits-all model for Japan entry, but there are core principles which if followed can help to avoid common pitfalls and greatly increase the probability of success.

This article, therefore, seeks to 1) present a general framework for thinking through Japan entry GTM strategy and 2) cover tactical best practices for each of the primary functional areas. Success in Japan is after all a company wide effort and so we hope this document will help leaders to not only articulate a clear vision for Japan but also facilitate internal discussions with functional leaders regarding their specific roles and responsibilities.

Note: this article’s recommendations will assume a B2B enterprise software company entering Japan with little or no revenue and no employees. However, we hope some of the principles will be applicable more broadly.

The two biggest causes of Japan entry failure:

Let’s jump right in by calling out the two biggest causes of Japan market entry frustration and failure:

1. Treating Japan as an extension of your US GTM: As we discussed in article 1, if you’re thinking about Japan most likely your US GTM is working meaning you have a model where inputs today (marketing spend, AE hires, etc.) produce predictable outputs (leads, bookings, etc.) within a known time frame. Applying these same expectations as you enter Japan is one of the biggest sources of frustration and failure.
2. Hiring the wrong county manager: it goes without saying, regardless of your product or strategy, if you have the wrong leader in Japan, your business will not reach its potential.

This article will address the first point above regarding how to think about your GTM as you first enter Japan. We will tackle the topic of hiring a country manager in a future article.

Why your US GTM will fail:

Your global GTM (or something close to it) is actually supremely important and implementing it in Japan is the ultimate goal, just not during the 18–24 month entry phase. Here is why: with some marketing and PR, it is actually easy enough to secure meetings with prospects and build pipeline at a reasonable rate. Even POCs are not too difficult to come by if your technology is compelling. At this stage, the problem comes with conversion. Specifically, pipeline (even POCs) will not convert at the same speed or consistency as they do in other regions because of the time and sustained effort required to first establish individual relationships of trust and broader market credibility (I go into this in depth in article 2). Accounts that do convert will often start with small contracts representing much less than a full commitment to your product. It goes without saying that the ROI on these types of engagements look horrible and a sustainable business model based on these early engagements will not be apparent. In the critical entry phase if CROs are held to the same standard in Japan as in other regions regarding sales productivity they will never invest incremental discretionary dollars into Japan. This is how the downward spiral of perceived underperformance and underinvestment/divestment gains momentum inevitably leading to failed outcomes if the proper corrections are not made. Faced with this situation some companies try to supercharge their GTM with more marketing and pipeline building, which also ends poorly as leads only get placed into the same leaky funnel and again, fail to convert.

A framework for success: “entry” phase GTM strategy and tactical best practices

Since leads will not convert predictably or in a way that is scalable in the beginning, rather than broadly spreading your message and generating lots of leads to build pipeline, which will only tie up your entry team’s limited resources, the better strategy is to instead be laser focused on deep early adopter engagements. Even if early contract sizes are small, working with credible early adopters is critical in order to:

1) identify and publish compelling local use cases and

2) make necessary enhancements to your product and support offering to meet the unique needs of Japanese customers (if any.)

Compelling local case studies and a “localized” product are two of the most important signals of credibility customers look for. They signal that the company cares enough about Japan to modify the product to meet the unique needs of Japanese customers (if necessary) and that the company has been able to not only sell their product, but deliver the promised value to Japanese customers. Without these two pieces of the puzzle in place, predictable and scalable sales is almost impossible. So making a focused effort to get these two done to clear the way for a scalable GTM is the primary goal of the “entry phase.”

Here is a further breakdown of critical steps and operational focus by functional area to align and support the execution of the goal above:

Legal: establish a local entity. This is a prerequisite to hiring and also an important signal of commitment to the market.

HR: Hire a local team starting with a talented country manager. This can start with as few as 2–3 people (country manager, account executive, pre/post technical resource) and scale from there based on budget and results. Hiring the best possible country manager is the single most important step to navigating the entry period successfully. We’ll be dedicating a whole future article to this mission critical step.

Sales: It is primarily the sales team’s responsibility to drive the strategy outlined above which means high growth, profitability and scale will have to wait as the company first focuses on identifying and securing a critical mass of early adopters (perhaps 15–20) and compelling case studies (perhaps 3–5) with reputable local companies. Some of these engagements may be created through marketing lead generation efforts, but the core of the strategy should be centered on a carefully curated named account list followed by rigorous account planning and execution. This will focus limited resources on accounts that really matter and that will have the highest probability of converting. This is due to either their propensity to adopt technologies early, personal relationships with the entry team members or because the nature of their business makes them a good fit for your technology. To confirm: during the entry phase, qualified POCs (those with an executive sponsor, clear use case and budget) are more important than pipeline coverage, new logos from the named account list are more important than ACV, and the generation of compelling use cases is more important than ARR. That is not to say that pipeline, ACV, ARR etc. are not important. They are and should always be a part of the entry plan. However, executives should know in advance that during the entry phase such metrics are not the only ones that matter and may not be the best measure of the health of the business so focusing on them exclusively can be frustrating and misleading. Also normal GTM activities that drive these metrics will not generate predictable results or scale well and so investments should be calibrated accordingly.

Channel: IT departments in Japan depend much more on systems integrators, consultants and agencies than their counter parts in the US. As such, partnering with companies that have the right relationships with target customers and the technical skill to implement and support your technology is an important part of the overall sales strategy. Moreover, if reputable SIs and distributors carry your product it can be another positive signal of credibility to the market.

Customer success (including implementation, technical support, consulting, etc.): Once new logos are landed by the sales team, it is the responsibility of the customer success team to ensure that the product is properly and quickly installed and that the promised value is delivered.

As companies who have already entered Japan know, Japanese customers expect issues to be resolved quickly and generally demand a higher level of support than in other markets. This is often a challenge to customer success and product teams back at HQ so securing the support of relevant HQ leaders as part of the Japan entry plan is critical. The Japanese B2B software market is hyper concentrated in one city (Tokyo) and word of mouth has a much bigger impact on reputation and sales than marketing so ensuring that early customers become fans (of your technology and your company) is critical even if the immediate economics don’t justify it.

One common “worst practice” to avoid is routing Japanese customers to English speaking support reps either via phone or email. This is perhaps one of the biggest red flags for the Japanese and will impede adoption of your product within your customer base. Having a capable and enabled local support team who can handle all inquiries and communications with Japanese customers (supported by staff back at HQ) is a definite prerequisite to broad adoption of your technology.

Marketing: Marketing is simultaneously one of the most important functions when entering Japan and also the place where companies make the biggest errors. It goes without saying that during the entry period marketing needs to be maniacally focused on helping the sales team to execute their strategy of landing early adopters. Practically speaking here is an overview of best practices to consider and common pitfalls to avoid:

Best practices —

Create a strong online presence: when potential customers find out about your company, they will almost always search the internet for useful information in Japanese and share relevant links with colleagues. So this should be one of the top priorities as you enter Japan including the following:

• Create a 100% Japanese website (the website can be a small subset of your English website -even just a single page to start), but it is supremely important that it is thoughtfully created and 100% Japanese with no stray English text (unless intentional) and no links to English content unless clearly marked as such).
• Build up your SEO/SEM to ensure your Japanese website is easy to find on Japanese search engines.
• Publish a Japanese press release soon after your country manager is hired to announce Japan entry.
• Secure coverage in relevant local media including blogs and social media.

Thought leadership: you can start with your standard global messaging but often the messaging that moves the market in Japan will be slightly different. If you find something that resonates better in Japan, have the flexibility to change.

Sales / partner enablement: partner with sales to identify high value materials such as sales decks, technical white papers, case studies, etc. and localize accordingly.

Pitfalls to avoid:

• Lead generation: Overspending on lead generation in an attempt to build pipeline ala the US GTM is one of the biggest mistakes companies make when entering Japan. Since the sales strategy is more about account planning with specific named accounts, creating too many leads with companies that may be low impact or unlikely to convert can be counter productive. If resources are available some lead generation and nurturing can of course be helpful but start conservatively and modify thoughtfully based on results.
• Launch event: During COVID these were mostly paused or moved online, but if done correctly can be very effective. The big mistake companies make here is to do the event too early. We usually recommend that companies wait until the end of or just after the entry period before they do a launch event so that they have a compelling local story (customer case studies, localized product, etc.) to tell and also the infrastructure (sales team, partners, etc) to capture the interest it will generate.

Product: The main goal here is to work with early adopters to quickly determine the MVP for Japan and deliver accordingly. This could include new features, integrations with local ISVs, multibyte (Japanese) character handling, compliance with local regulations, retraining algorithms on Japanese data sets, translation of the interface and/documentation into Japanese, timing of scheduled maintenance (so as not to occur during Japanese business hours), setting up a local data center, etc. There is no need to deliver all requests at once of course, but quickly determining what the MVP for Japan is and delivering accordingly is a necessary prerequisite for crossing the chasm and sends a very powerful statement of commitment to the broader market. To be sure, for many companies the MVP for Japan is already met with the product as is (especially if you sell to IT or your users are developers or engineers). However, even in these cases, listening to customers and delivering new features, fixing bugs expeditiously, etc. even if not mission critical will build an incredible amount of good will quickly.

Summarizing the entry stage:

To be sure, the entry phase for Japan is one of investment and should be temporary (typically 18–24 months if starting from scratch). It is a lot of work, but at the end you should have built a solid foundation upon which you can start to scale including the following:

1. A local entity
2. A well trained and talented team with a strong leader
3. Partners that have been on boarded
4. A localized website and other sales collateral including meaningful mentions in relevant industry media
5. A localized product
6. 20 or so key customers with 3–5 compelling local case studies

The result of a successfully executed entry is that when more conservative “early majority” companies encounter your company, assuming they find your technology compelling, they will also see all of the things that give them the confidence to move forward with a POC or purchase. From a GTM perspective, this means that your pipeline will start to convert more consistently and average contract size should also increase so you will be able to implement something closer to your global GTM. All of the inertia that initially worked against you, will start to work in your favor as positive market sentiment will start to coalesce around your company. The beauty of Japan is not only its scale (2nd largest B2B software market in the world) but also that it can be accessed through a single city (Tokyo). So, early investments produce great leverage for those that do it right and if your competition has not made similar investments they will be at a significant disadvantage as they try to compete.

Closing comments and next steps:

Although this article explicitly focused on B2B enterprise software companies there are notable gaps that were not addressed including DevOps/OSS companies and PLG (product lead growth) companies both of which often start in Japan already with customers and employ a significantly different sales motion as compared to the traditional high touch model which was assumed for this article.

Moreover, while the best practices above should be helpful directionally, they do not cover the next layer of details that need to be addressed: which systems integrators or agencies should we partner with and how do we contact, pitch to and negotiate with them? How do we avoid channel conflict between channel partners and our direct sales team? How many people should we hire as part of our entry team and what roles? How much localization does our product require? Should Japan report to APAC or direct to HQ? Etc. etc. Again, the devil is in the details and a successful Japan entry requires getting as many of these things as right as possible. However, as each company is different the correct answers for your company will most likely come as part of an interactive dialogue with key stakeholders as you lean in towards your Japan entry — and these are exactly the kinds of conversations we at Geodesic have with our portfolio companies every day as we help them plan and execute their entry strategies for Japan. If you have a question regarding your entry strategy, please let us know and we’ll be glad to set up a time to talk. Arigatou gozaimasu!

Next article: The next article in this series will focus on how to hire a great country manager. Stay tuned!

Previous Articles in the Succeeding In Japan Series:

• When to Expand to the Japanese Market
• Demystifying the Cultural Divide

I’m Marcus Otsuji of Geodesic Japan. My team and I in Tokyo help Geodesic Captial portfolio companies to develop and execute winning strategies as they enter and compete in Japan. If you’re thinking about Japan and would like to chat, send us a note via LinkedIn!

Succeeding in Japan Series Part 4: Japan Entry GTM was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Forbes just released their 2022 Cloud 100 list, the definitive ranking of the world’s top 100 private cloud companies. We’re excited to share that our current Fund I portfolio includes 10 of the current 100 companies (7 of the top 50!). Congratulations to our founders and their teams!

Our goal at Geodesic is to help founders build globally dominant companies, and we help them enter and grow their businesses in Asia, starting with Japan. Through the success of our portfolio companies, we see our strategy working: 90% of our current C100 companies have Japanese operations, representing over 250+ employees and significant revenues. Throughout our C100 companies’ international expansion efforts, we have assisted with key personnel hires, customer introductions, and a myriad of other GTM initiatives. This infographic highlights the impact of our partnership.

We look forward to partnering with future classes of C100 companies and to the continued success of this year’s class.

I’m Jon Rezneck, a Partner and Head of the Investment Team at Geodesic Capital. I’d love to hear from you and discuss anything venture capital, investing or Japan related. Please don’t hesitate to get in touch via LinkedIn.

Geodesic Portfolio Companies on the 2022 Cloud 100 was originally published in Geodesic Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.