Todd Graham Joins with Focus on Cybersecurity and Infrastructure
For over 40 years, Venrock has been committed to diversified, early stage investing – supporting entrepreneurs who will run through walls to create new products and services, surmounting obstacles that most think impossible. The Venrock team consists of individuals with diverse backgrounds and passions, but all share a collaborative approach to investing and supporting companies with a performance driven, long-term view. Ethan Batraski, who invests in frontier tech and enterprise software, and Racquel Bracken, who invests in biotechnology and creates new companies on behalf of Venrock, reflect the firm’s unique approach. We are thrilled to announce that they have both been promoted to Partner.
Ethan joined Venrock’s technology team in 2017, after 15 years as
a product executive, founder, and angel investor, with leadership positions at
Facebook, Box, and Yahoo!. Since joining Venrock, Ethan has led our investments
across space, autonomy, and frontier technologies, including Skyryse, an
autonomy company focused on VTOL aircraft, Atom Computing, a neutral atoms
based quantum computing company, as well as three additional companies that
have not been publicly announced. He also holds 16 patents. Ethan is a
passionate early adopter, space geek, and competitive athlete.
Racquel has been a member of Venrock’s healthcare investment team
since 2016. She led the Series B round for Cyteir, an oncology start-up focused
on DNA damage repair, as well as the formation and seed funding of Federation
Bio, a microbial cell therapy company for intractable disease. Since its
founding, she has also served as the CEO of Federation Bio in addition to her
Venrock investment activities. Prior to Venrock, Racquel was one of the first employees
at Clovis Oncology and helped the company from inception through approval of its
first product, with responsibilities in business development and
commercialization over 7 years. Racquel is an avid outdoorswoman, backcountry
skier, mountain biker, and board game lover.
We are also happy to welcome Todd Graham to the technology team as a Vice President in Palo Alto. Building on Venrock’s history in the security and infrastructure space – including CloudFlare, Shape Security and CheckPoint Software –Todd is excited about the future of digital transformation, human-based cyber-threats, disruptive go-to-market, and the consumerization of the enterprise experience. Todd joins Venrock from Cisco, where he led corporate strategy for the security and collaboration businesses. Todd was also an early employee at Tablus, a Data Loss Prevention company that was acquired by EMC’s security division, RSA.
We are honored to recognize Racquel, Ethan
and Todd’s accomplishments and look forward to their continued partnership and
future successes, joining forces with early stage leaders to build substantial,
durable businesses that improve lives across the globe.
In 1969, Venrock was one of the first investors in a crazy, misfit group of inventors building a company to reinvent ‘computers’. They named it Intel and what ensued kicked off the most innovative period in modern history. Fast forward to today, we are excited to announce our investment into Atom Computing, the most tractable and pragmatic approach to building a scalable Quantum Computer. This is a completely and radically different paradigm in computing that could define the next 50 years of global innovation.
The foundation of the Quantum Computer was introduced broadly by Nobel laureate Richard Feynman, who believed that because quantum computers would use quantum physics to emulate the physical world, we could solve problems that classical computers would never have the power to tackle. Quantum Computing uses the laws of quantum physics to synthetically entangle atoms into a quantum state for long enough to use them to run computations. Unlike a classical computer that use physical transistors and logic gates to represent a binary 0 or 1 output in a sequential architecture, a quantum bit, known as a qubit, can represent a 0 or 1 at the same time, and operate all possible permutations of a calculation simultaneously.
To put the difference into perspective, let’s compare the power of a single bit. In a classical computer, adding a single bit provides an incremental gain in power, going from 8 bits to 9 bits will incrementally improve processing power by 1 bit. In a quantum computer, adding a single qubit doubles the total power of the quantum computer (2^n factor), e.g. 3 qubits = 8 classical bits, 10 qubits = 1024 classical bits, 20 qubits = 1M classical bits, and 300 qubits = more classical bits than atoms in the known universe (the number is 91 digits long). A 300 qubit quantum computer may have more compute power than all supercomputers on earth, combined.
The promise of Quantum Computers will unlock a new dimension of computing capabilities that are not possible today with classical computers, regardless of the size, compute power, or parallelization. We will unlock new insights into our universe (the large hadron collider at CERN captures 5 trillion bits of data, per second), enable high fidelity simulations of weather patterns that will allow us to precisely predict and understand developing hurricanes weeks earlier, and unlock new capabilities in deep learning and AI, allowing for more creative and complex modeling, with less known data across autonomous cars, image recognition, and complex decision making.
The Large Hadron Collider at CERN captures 5 billion bits of data, per second
With such a transformational technology theoretically feasible, we spent the last few years investigating how far we have progressed on the scientific and theoretical discovery curve: What were the emerging approaches? What would be the challenges to scale? Who would be the most likely team to lead us to a truly tractable approach? We went deep into the various approaches, from superconducting Josephson junctions to ion traps, and spinning electrons, we racked our minds with the wonders of what the world could look like if these attempts could become realities.
The sober reality was that we were still in the invention stage, the equivalence of the pre-transistor, vacuum tube ENIAC digital computer. They were unreliable, couldn’t maintain computational states, and were very inefficient. Teams were trying to invent the technological equivalent of the transistor and integrated circuit to solve the reliability and scale problem. And as we saw in the semiconductor industry in the 1960s, the first team to solve this would become the market makers for the technology.
The ENIAC, one of the earliest electronic general-purpose computers built, was limited by the physical resources and wires required for every additional bit of computing power
Understanding that we were still in the theoretical discovery phase helped us develop a clear thesis as to what we thought it would take to become a tractable problem, and came up with the following criteria:
An architectural approach that could scale to a large number of individually controlled and maintained qubits.
Could demonstrate long coherence times in order to maintain and feedback on the quantum entangled state for long enough to complete calculations.
Designed to have limited sensitivities to environmental noise and thus simplify the problem of maintaining quantum states.
Could scale up the number of qubits without needing to scale up the physical resources (i.e. cold lines, physical wires, isolation methods) required to control every incremental qubit.
Could scale up qubits in both proximity and volume in a single architecture to eventually support a million qubits.
Could scale up without requiring new manufacturing techniques, material fabrication, or yet to be invented technologies.
Lastly, the system could be error corrected at scale with a path to sufficient fault tolerance in order to sustain logical qubits to compute and validate the outputs.
Without solving all of the above, the problem would still be one of scientific exploration and invention, not a tractable engineering problem.
That’s until we met Ben and the Atom Computing team.
Turning Quantum Computing into a tractable engineering problem
As one of the world’s leading researchers in atomic clocks and neutral atoms, Ben built the world’s fastest atomic clock, and at the time of publication, considered the most precise and accurate measurement ever performed. Through that effort and his Ph.D., Ben showed that neutral atoms could be more scalable, and that it is possible, to build a stable solution to create and maintain controlled quantum states. He used his expertise to lead efforts at Intel on their 10nm semiconductor chip, and then to lead research and development of the first cloud-accessible quantum computer at Rigetti.
Ben soon realized that neutral atoms could be a more attractive building block to create a large-scale quantum system, and left to start Atom Computing.
As we went deep into Ben and team’s approach, we found the most pragmatic and tractable approach to building and scaling a quantum computer to eventually millions of qubits. An approach that did not rely on new fabrication or materials, was built on 40+ years of research and the principles behind it (1)(2)(3)(4)(5), and connected by a deep history and expertise in the secret sauce designed by the team. As a result, a system designed around wireless qubits, with long coherent times, and significant individual control at scale, could meaningfully scale to over a million qubits, and deliver on the real promise of an error-corrected quantum system.
What we realized was Ben and team turned what we had widely believed to be a pursuit of scientific discovery, into potentially a tractable engineering problem. In classical Silicon Valley parlance, every technology we build we want to ‘change the world.’ However, when it comes to quantum, this can reshape our world.
As a result, we had the privilege of leading their seed round in August and couldn’t be more excited to join and support Ben and team in this audacious journey to bringing a true, error-corrected, long coherence time, scalable quantum computer to the masses. Creating a new paradigm for computational power is a world-changing idea, and much like the qubits we’ll build, we couldn’t be more excited* to join him in this mission.
On June 5th Venrock co-hosted an event with Plato called Product Unplugged, an off the record session providing mentorship for early stage startups on all things product. We had over 85 applications for the event, but space for only 40 attendees, so we’ve decided to share some of the insight from the event to a broader audience in a series of posts my colleague Tom Willerer and I will author.
We’re going to use the fireside chat interview Tom conducted with Sami Inkinen, co-founder of Trulia and founder of Virta Health, as a guide for sharing some of the insights unearthed at the event, and for this post focus on the following topic:
How do I get to Product/Market Fit?
Even with the breadth of companies and questions, one key question continued to reverberate with every group and discussion, and is one we hear consistently from founders, “how do I find product/market fit”?
So who better to ask than Sami, who co-founded Trulia and led them through their acquisition by Zillow for $3.5 billion. See the video clip below and our take on his great answers:
Sami summarizes the most critical elements in building at the early stages into (3) areas, which we’ve added additional commentary to:
1. First focus on team, people, culture, and values. If you have product/market fit but don’t have the people to scale it, all else will fall apart.
Building the right team around you is one of, if not the, most important thing you can be doing as a founder. Product/Market fit is everyone’s job, from finding it, maintaining it, to growing it. The pursuit of product/market fit is a sobering journey challenging the agility and grit of your team as you test your hypotheses and execution, the markets willingness to pay, and your ability to focus on the right things. This isn’t for the faint of heart, and most often takes a village to accomplish.
This is why Sami emphasizes his points on culture and values, two critical aspects of building a high performance team that are often mistaken for ‘do you have lunch and have beer on tap’ and ‘do you have inspirational statements posted on the wall somewhere’. Culture and values are the representations of how a team makes decisions, it’s operating model, and type of behaviors that are rewarded and rejected. There are many dimensions that go into creating your culture, such as:
How are decisions made? by consensus, democracy, autocracy, benevolent dictatorship, meritocracy, holacracy, etc.
How are top and poor performers managed?
How freely does information flow?
How are priorities and goals defined and communicated?
How engaged is the team in important decisions?
How is true accountability and ownership maintained?
What behaviors are rewarded and promoted? What are rejected and corrected?
What are the qualities of the best people on your team?
How is feedback given and received?
In the journey of attaining product/market fit, having an empowered, feedback-rich, open, and accountable culture can significantly change the probability of success. As Sami says, product/market fit without the team to capture it is like not having product/market fit at all.
2. When you have product/market fit, you know it. It goes above and beyond what your customers expect, it’s the moment the market realizes you have something very special and the market starts to demand it. It’s the moment where you have created so much value that the switching cost is too painful, and your customers don’t want to be without your product/service. And there is no single metric or moment that defines it.
Sami is right, there is no single metric or moment that represents product/market fit, it is an interconnected set of signals that show you have it, and vary between markets, segments, and your products/services. Most of the time when you have product/market fit, you know. And when you don’t have product/market fit, you know. But it usually always involves solving a hair on fire problem in a way that your customers love and want more of. Here is a simple way to think about it:
Product/Market Fit = when people (e.g. the market) who want your product become happy customers and engaged users and lead to new customers knocking down your door (market pull) to use your product/service.
As a founder, it’s the stage when you have more customers knocking than you know what to do with, all wanting to solve a consistent problem with your solution. As investors, it’s when runaway growth occurs, when the output begins to exceed the efforts and inputs to generate it, and market push switches to market pull.
3. Product/market fit is not a one and done. You can hit it and lose it; customers become less engaged, competition leap frogs your offering, market shifts, technology or platform changes, or consumer demands shift. Product/market fit is hard to find and is hard or even harder to keep. It should be constantly worked on to refine, strengthen, and expand.
As mentioned above, product/market fit is when your solution solves a hair on fire problem in a way the market begins to pull for, but as your product continues to evolve, so does the market, and that hair on fire problem today may no longer be important in the future.
A market problem is only a problem because of the context around it; the availability of alternative solutions or options, the level of continued pain, and the cost of solving that pain. Any of those dynamics can change and taking with it your product/market fit if you don’t continue to evolve and change with it. Here are (3) ways a market can shift on you:
A new solution may come to market that either solves the pain in a better way, or offers the same solution for cheaper, causing the market shifts to the new solution.
Netflix dethroned Blockbuster into a faint memory after it’s dominance for over a decade with an alternative experience that changed the dynamics of the market: they got rid of the late fees by letting you hold on to your DVDs as long as you wanted, gave you access to a broader catalog of content, removed the need to drive to the store, and offered it all at a low flat fee that was equivalent to renting two DVDs a month or ½ the cost of one DVD and 4 days of late fees. Blockbuster at its peak was a $5B revenue company with 60,000 employees and 9,000 stores worldwide, and today has a single store in the US remaining, in Bend, Oregon.
Venrock portfolio, Dollar Shave Club, is another example of leveraging the power of customer convenience and value first, leveraging a direct-to-consumer relationship and asymmetric marketing to scale, shifted the market to their solution They grew to own over 15% of the U.S. men’s razor cartridge market before they were acquired by Unilever for $1B. See this great write up by my partner, David Pakman, on how Dollar Shave Club changed the US Razor market dynamics.
When a platform or technology shift occurs and the level of the pain is substantially lower, and your solution can become less relevant or no longer worth the price point.
Desktop to mobile, blackberry to the iPhone, usb sticks to cloud storage, on-prem data centers to AWS. And we can expect this to continue in the future as we usher in autonomous mobility, increased ubiquity of voice interfaces, electrification of ground and aviation based powertrains, new modalities for interaction and communication through AR/VR, breakthrough speeds in computing power, decentralized microservices, and more.
A user behavior shift occurs, your customer/user base no longer want/need to continue the activity and such no longer have the pain, and no longer need your solution.
User behavior shifts are fundamental expectation shifts in performing a task; I used to do it one way, and as soon as a new and better way introduced itself, it became the new norm, and re-anchored my expectation. Uber introduced a simpler and more convenient way to call a black car, and snowballed into a significant shift in the expectations and behaviors of the market, from picking up the phone and waiting 15 – 20 min, to instant access almost anywhere in the world. Our kids may remember yellow taxis the same way we remembered horse buggies… when was the last time you called for a taxi? This expanded the market and led them to offer UberX, UberPool, UberSUV, and now UberBike (?) and more.
Amazon did this in ecommerce with the everything store, Trulia for real estate, YouTube and Netflix for streaming content, iOS and Android with the app stores, Dollar Shave Club and Casper for digitally native vertical commerce, and the list goes on. Much of these behavioral shifts are unscored by the ability to do more of my offline activities now online, with a more personalized, intimate, and convenient experience. Understanding a users expectations and if a behavioral shift is near requires you to look at the norms and expectations of that user; much of which come from the current products and services they use, the technologies they’ve adopted, and depth of their usage.
Keeping product/market fit means always being ahead of the market; deeply understand your customer, the market, and their problems, anticipating what the competition or alternatives will do, being agile to consumer or user behavior changes, and continuing to take advantage of powerful technology or platform capabilities to further deepen your value.
I hope the insights we are sharing from the Product Unplugged event are helpful! Please drop us a comment with your advice for finding product/market fit or with your questions. And have a read of Tom’s post where he dives into Sami’s take on “What advice do you have for first time founders?”.
Stay tuned for these future topics:
When is the right time to define and cultivate a unique culture?
Venrock has a legacy of investing in innovative and disruptive companies, but we are always thinking of the future. Forbes takes an in-depth look at our business, our portfolio and our people in this story about reinvention. Forbes speaks with our investors and portfolio company CEOs to weave a story about our rich past, current successes, and bright future.
Wondering what’s been going on at Venrock? 2012 has been a remarkable year, with many exciting portfolio developments. You can catch up with the latest happening at at the firm in the 2012 Venrock Newsletter. Check it out for highlights from the past year, including a brief Q&A with Dollar Shave Club founder, Mike Dubin.
It is no surprise that American universities foster entrepreneurial spirit and talent. The University Entrepreneurship Project recently did a study that tracked investments in student-run startups over the last five years across six universities. Overall, Venrock is the leader in investments in student entrepreneurs, with an astounding 31 deals made over the course of the study. Venrock is excited to continue working with the next generation of innovators! Read more about the study on PE Hub.
The Wall Street Journal has announced their annual Innovation Award winners, and Venrock companies Nest Labs and CloudFlare won their categories, energy and network and internet technologies, respectively. Congratulations to all of the winners! The Wall Street Journal received 536 applications from over two dozen countries. From that pool, the judges chose a total of 37 winners and runners-up in 18 categories. See the full list on the Wall Street Journal.
Welcome to the Venrock family, Nest Labs! This amazing team is focused on making technology that’s simple, fresh and helpful, like the world’s first learning thermostat. Users who install the thermostat in their homes can save an average of $173 annually on their home heating and cooling bills. Read more about this news on greentechmedia.
We’re all looking for the next great investment. What does it take to make it big? The Wall Street Journal published it’s “Next Big Thing 2012” list today, ranking the top 50 U.S. companies backed by venture capital. Congratulations to all the companies who made the list, including Venrock portfolio companies Genband (#1), Appia (#22) , Achaogen (#35), Quantenna (#36), Acceleron (#48) and Neoconix (#50). Read more about the underlying investment strategies on the Wall Street Journal.