Many think that USV is a consumer web investor. We don’t think of ourselves that way. We invest in networks and for most of our short history, that has meant investing in networks of individuals connecting with each other. Thus the consumer web investor moniker.
But if you go back over the past four years and analyze the roughly thirty investments we have made in that time period, you will see that a good portion, maybe a third, have been in networks where enterprises participate.
I like to think that our first foray into this kind of network was 10gen, the company behind MongoDB. MongoDB is an open source datastore for web scale applications. The first users were developers who wanted a simple, easy to get started datastore. It was perfect for hackathons and such where the developer needed to get something up quickly. This post I read yesterday does a good job of explaining why MongoDB took off. These developers became a network of users and contributors to the open source project. Many of them worked in enterprises and brought MongoDB into their teams. Soon enough 10gen started getting calls from executives saying something like “I just learned that we have 50 instances of MongoDB in production and I’m eager to get a support contract”. That’s where the enterprises joined the network.
A year later we invested in Twilio. It’s a similar story. Twilio build a dead simple API and cloud service that allowed developers to quickly connect their apps to the world of telephony and SMS. The early users were the same kinds of developers who adopted MongoDB. The classic Twilio story is where the two founders of Groupme built the initial version of their app at the TechCrunch hackathon using Twilio. But again, these developers became a network and the adoption spread into the enterprise.
When an enterprise plugs into a network of developers and tools built in this way they get more than functionality. They get a platform that a lot of engineers know how to use and is becoming a standard in the market. There is tremendous value to the enterprise in these networks over time.
A year later we invested in WorkMarket. WorkMarket built a platform that allows enterprises to take their freelance workforces and put them onto an open shared network. But of course, once a bunch of enterprises do this there becomes a large supply of freelance workers on the platform that can be shared amoung the various enterprises. When an enterprise joins WorkMarket, they don’t just get functionality. They get access to skilled workers. Lots of them.
Around the time we invested in WorkMarket, we also invested in Edmodo. Edmodo is a platform that allows teachers and students to connect to each other and communicate, share reading assignments, homework, practice tests, and such. Edmodo currently connects 9.3mm students and teachers worldwide.The Edmodo platform was adopted initially by teachers looking for a better solution to communicate with their students. But like the 10gen story, Edmodo started getting calls from Principals and School Systems looking to deploy the Edmodo platform across their entire enterprise.
One of our favorite kind of networks are marketplaces. And a particularly interesting category of marketplaces are lending marketplaces. We have invested in one called Funding Circle that connects enteprises, mostly small businesses, in the UK with a network of lenders. The more lenders that come into Funding Circle, the more attractive it is to borrowers. And the more high quality lending opportunities that come into Funding Circle, the more attractive it is to lenders. A classic network effect that drives value for small business borrowers.
Our two most recent investments, one of which is unannouced, are networks where enterprises play a big role. The one I can talk about, Behance, is a network of creative professionals, many of whom work in enterprises like agencies. Behance started out as a place where creative professionals could come and showcase their work. But quickly organizations like schools, publications, associations and the like asked Behance to power their networks. These enterprises plugged into the Behance network and created a network of networks.
Sometimes consumer networks can get pulled into the enterprise. A good example of that is Disqus, which started out as a network of bloggers and commenters talking to each other. But a year or so into its life, Disqus started hearing from big media companies who wanted to deploy the Disqus comment system. So slowly but surely Disqus has built a large user base among commercial publishers. And these commericial publishers get way more than functionality when they plug into the Disqus network. They get access to hundreds of millions of monthly viewers and the engagement they create.
We also occaionally invest in data networks in addition to networks of people. I’ve been involved in one of those for over a decade. It is called Return Path and I invested in it at both Flatiron Partners and Union Square Ventures, the only company that has that distinction. Return Path has constructed a very large data network where all the various participants in the email ecosystem (mailers, intermidiaries, recievers, consumers) contribute data to their system. That data is used to power a bunch of value added products that all go toward making sure the right mail gets to the right person and spam and related bad stuff don’t. Every time a new participant in the ecosystem joins the Return Path data network, their systems and tools get smarter, making the service more valuable for everyone. That’s a classic network effect and it is very powerful.
This post has gone on longer than I would normally like. And I am certain that I’ve left out a number of USV portfolio companies that are building networks where the enterprise is a participant. I am sorry if I failed to mention your business in this post.
My uber goal of writing this post is to explain that the wired and mobile internet is a global network and it powers all sorts of smaller networks to get built on top of it. These networks can often include small and large enterprises in them. And we like to invest in networks regardless of whether the enterprise is engaged or not. Increasingly it seems we like to invest in ones where the enterprise is part of the story.