Cassie Ann Hodges

by & filed under Building Better, NVCA Blog.

Welcome to the NVCA Blog series, Building Better, where we celebrate the dynamic relationship between our VC members and their innovative portfolio companies around the nation. For today’s Building Better, we spoke with Bruce Cleveland, Founding Partner at Wildcat Venture Partners, and with Pete Sinclair, CEO of Obo, a Wildcat portfolio company. Learn about their partnership in the Q&A below!

Wildcat Venture Partners: Bruce Cleveland, Founding Partner

 

Give us some background on Wildcat Venture Partners: How did the firm start, what is your mission and how does the firm strive to meet its goals?

Wildcat Venture Partners is a venture firm that invests in early stage technology startups. Founded in 2015, our primary focus is on B2B and B2B2C startups leveraging key technologies such as Machine Learning/AI, IoT, and Cloud & Mobility in the following markets: Digital Health, EdTech, Enterprise SaaS and FinTech. Each founding Wildcat general partner (GP) has been a founder, founding investor or a member of a founding team that has scaled one or more startups to a $B+ outcome. As venture investors, together one out of every four early stage startups our team has invested in over the course of our careers has scaled to a $B+ valuation.

Wildcat’s mission is to help 21st century Wildcatters (tech entrepreneurs) identify trapped value and monetize digital oil to become the next market disruptors and category leaders. Trapped value resides in many forms, including:

• Decades-old, stagnant business models prime for disruption;
• Out-of-date commercial data which can be replaced with dynamic, real-time data that is far more valuable;
• Static pools of capital that can be repurposed to generate higher returns;
• Human capital agency models that can be redesigned by incorporating cost-efficient computing resources; and
• Global instantaneous communication that reduces business overhead.

Digital oil is simply the data generated through consumer and business transactions which can be captured and monetized through next-generation systems of engagement and intelligence. Trapped value and digital oil are foundational to Wildcat’s investment thesis and strategy. This is how we think about investment opportunities and what we look for in the entrepreneurs we back.

What does Wildcat Venture Partners look for in a partner when choosing to invest in a portfolio company? What does Wildcat Venture Partners value? What do you value in the Obo team?

We have developed an early stage investment decision model called the Traction Gap Framework®. This framework features four architectural pillars (Product, Revenue, Team and Systems) and metrics associated with key stages in a startup’s early life. We use the Traction Gap Framework to assess a company’s maturity, market opportunity, and team capabilities. It also allows us to better understand what the team will need to accomplish and the capital it will require to scale.

Almost every team we meet with has great product engineering skills. Unfortunately, product engineering alone isn’t what separates the startups that succeed from those that fail. Almost universally, the teams that become market leaders possess both great product engineering and “market engineering” skills.

Market engineering is a term we coined to connote skills such as: category creation/redefinition, thought leadership, value propositions, messaging and other elements that we describe in detail in Traversing the Traction Gap, the book we recently released based on the Traction Gap Framework.

What we value most in the Obo executive team is that every member is a tried, tested and proven product entrepreneur who recognizes the value of market engineering. They have each been product executives in market leading companies where market engineering played a role in the company’s success. They know what it takes to convert an idea into a market-leading company.

 

How does Wildcat Venture Partners support its portfolio companies? How does it help entrepreneurs grow and advance the VC industry?

We have operationalized the Traction Gap Framework to provide our portfolio companies with significant assistance during the murky go-to-market phase.

Shortly after we make an investment, we meet with our early stage teams after each team member has had an opportunity to fill out a Traction Gap Assessment. This process produces a heat map that we use to analyze and identify areas of deficiency in the four Traction Gap Framework architectural pillars.

Subsequently, we hold a workshop, led by Geoffrey Moore – a Wildcat venture partner and the author of Crossing the Chasm. These workshops help bring the team – and Wildcat – into alignment regarding what specific actions are required to reach the next Traction Gap value inflection point and prepare to scale.

Through the use of our Traction Gap Framework and workshops, we help our portfolio companies by providing them with the principles they can use and access to successful entrepreneurs who can help to guide them to success.

We lecture on the Traction Gap Framework principles at a variety of universities such as Stanford, Columbia, University of Chicago – Booth, and Babson College. In fact, Babson has created an entire course based upon the Traction Gap Framework.

Obo: Pete Sinclair, CEO

What is the mission of your company and how did you start? How has your partnership with Wildcat Venture Partners helped you fulfill your mission?

Obo’s mission is to enable product teams to make better, faster, more data-driven decisions so they create products the market wants. More than 70 percent of all products fail. We created Obo to address that problem, by building a product decision system that validates input from both internal and external sources before you commit resources. We were fortunate to have Bruce Cleveland and the Wildcat team in our court from the get-go, and Bruce is a co-founder. With his extensive experience as both a product leader and investor, he’s had a front-row seat in the theater of product drama and understands the scope and scale of the problem. Wildcat did extensive research to uncover the key reasons for product failure, which helped enormously in planning how Obo would work and what kind of company we’d be. Bruce and Wildcat know what it takes for a startup to be successful, and they have supported us not only in building the product, but also in building the team we need to succeed.

Where and how is your company looking to grow into the next 5 years?

We are targeting product leaders and teams in midsize and enterprise companies, where product success depends on prioritizing and building the right things. Most companies have more ideas and features under consideration than they can build – the challenge is prioritizing and building the right ones. There are tools that help product managers with things like visual roadmaps, but those tools may just enable you to build the wrong product faster. We believe that companies need to focus on validating their ideas and features with the market before they build, to increase their chances of product success. One of our early customers, Zimperium, said it best: “The value of Obo lies in having data to back up your product release plan — that you can then share with peers and executives. Your conversations are much easier when they’re based on data rather than potentially competing opinions.”

What problem is your company trying to solve for?

We are addressing the enormous problem of product failure. Our research, conducted with Wildcat, discovered that most products fail due to three primary reasons:
1. Weak market input (lack of market need)
2. Ad hoc product processes
3. Communication and collaboration breakdowns

Obo addresses all three of these issues. We have created a system that allows customers to align their product planning with their business and product objectives, as well as with what existing customers and the market want. Obo has built-in on-demand surveys with templates designed to validate what goes into product plans and roadmaps. Customers can conduct fast, focused research with internal stakeholders, customers, and the market to better understand the value and potential impact of features they’re considering. They use Obo to create and compare “what if” plan scenarios, using data that shows different perspectives so they can evaluate the impact of trade-offs. With Obo, the entire product team has a shared view of the “what” and “why” behind product plans and roadmaps. And with a validated product plan, they increase the odds that they will put their best products forward.

How has Wildcat Venture Partners impacted your company’s future for the better?

For Obo, Wildcat is more than an investor. Bruce is one of our co-founders as well. We benefit tremendously from the Wildcat team’s experience and expertise both working for and investing in companies focused on building enterprise applications that solve complicated problems. Wildcat has also been an early investor in hugely successful enterprise software companies like Coupa, Marketo and Workday. Bruce literally wrote the book on what it takes for a startup company or product to be successful: Traversing the Traction Gap. At Obo, we’re following the market engineering principles outlined in that book and focusing on gaining market traction by working closely with early customers, and building our product plans to address both their needs and broader market requirements. We continue to get great support from Wildcat as we progress our go-to-market plans. We meet regularly and track our progress against the Traction Gap framework — and the Wildcat team provides thoughtful input and ideas that help us make decisions. We’ve gone through many of the growing pains that startups face, from product hiccups to finding the right team members and leaders. Wildcat has been there with us every step of the way, and helps us stay on track.