Tag: Investment

Our Investment in Trade Coffee – The Leading Coffee Marketplace

In Seattle, we love our coffee. And as much as Seattle is the land of Starbucks, it is also home to some amazing craft coffee roasters. Caffe Vita, a short walk from the Madrona offices, is one of my favorites. The craft coffee movement, much like movements we have seen in categories like beer and chocolate, is having its moment. There are thousands of independent coffee roasters all over the country, perfecting their craft, and happily serving local clientele. And craft coffee, consumed both in local cafes and at home, is the fastest growing segment of a nearly $100 billion annual category.

The challenge for independent coffee roasters is building their brands and their business beyond a local audience. Enter Trade Coffee. Trade Coffee is a marketplace that enables the best independent roasters to reach new customers across the country. For consumers, Trade Coffee matches coffee drinkers’ personal tastes and preferences to the 400+ blends on their marketplace, bringing customers a variety of the highest quality and freshest blends that best meet their needs.

We started getting to know Mike Lackman and the Trade Coffee team in January 2019, when the company was just beginning to scale its subscription service. Fast forward to the middle of 2020, and Trade Coffee has shipped more than a million bags of coffee to customers, while serving as an invaluable partner to the roasters it works with, many of whose local consumer and wholesale businesses have been severely impacted by the global pandemic. We love two-sided marketplaces like Trade Coffee that provide as valuable a service to the businesses they work with as the consumers to whom they supply world class coffee.

In a world in which much of the working American population spends multiple days per week working from home, access to a variety of fresh, high quality coffees (beans and ground) to be consumed at home is that much more important. And the growing at home coffee market can be there for the thousands of incredible coffee roasters facing headwinds in their cafe and wholesale businesses. We are excited to be working with the team at Trade Coffee to build the premier brand and marketplace for specialty coffee.

Our Investment In Fauna, The Data API For Client-Serverless Applications

Today we are announcing our investment in Fauna.

We believe that the next generation of applications will be serverless. Those applications can be completely new, “greenfield” applications – like a dynamic Jamstack web application, or they can be new functionality that is added to an existing application or service but leverages a rich mobile or web client with a serverless back end. We think of this model of development as the “Client-Serverless” model, and this represents the 4th generation of application architectures.

Fauna helps developers to simplify code, reduce (development and operational) costs and ship faster by replacing their data infrastructure with a single serverless API that is easy to use, maintenance-free, yet full-featured. Fauna is the data API for Client-Serverless applications.

As computing platforms evolve, new opportunities for developer and application platform products are created. Some patterns (like the client/server era) were brought about by new technologies (Windows, SQL Server and the Windows hardware ecosystem) while others were as existing technologies aligned against important use cases (such as the LAMP stack for web applications) and just became “the best way to do it”. At any layer of the platform stack, if you can align with (or better yet create) one of these rising tides it can help you scale more efficiently. Changes in infrastructure also create opportunity, such as what we’ve seen in the Data Warehouse market where Snowflake’s forward-looking bet on exploiting elasticity and scale of cloud infrastructure have enabled them to disrupt a large and existing market.

The database market is massive and there are always opportunities for new platforms to emerge and differentiate. However, this has proven difficult as it is expensive to build a new database and even more expensive to sell one. Nowadays, decisions around infrastructure are more and more driven by developers and so any new platform needs to win the hearts and minds of developers first and foremost. Without this, the only way to land new customers is going to be through a deep technical sales process. You can argue that most of the NoSQL era (Mongo for example) came about via more effectively targeting developers – via Open Source and having more approachable platforms that were on trend for where applications were headed.

So, it is somewhat of a straightforward formula for success in the database market: build a database and latch on to the most important trends and developer technologies. This is what Fauna has done and why they are so well positioned.

Developers are moving en masse to serverless architectures for new applications, marking the dawn of serverless as the next tool chain for building global, hyperscale apps. FaunaDB plugs in seamlessly into this new ecosystem and uniquely extends the serverless experience all the way to the database. This developer journey began with the move to the cloud, but Fauna has correctly identified serverless as the next frontier for cloud and has succeeded in building the database of choice for this new era.

FaunaDB is unique in the market combining the following attributes into a single data API:

  1. Focus on developer productivity: Web-native API with GraphQL, custom business logic and integration with serverless ecosystem for any framework
  2. Modern, no-compromise programmable platform: Underlying globally distributed storage and compute engine that is fast, consistent and reliable, with a modern security infrastructure
  3. No database operations: Total freedom from database operations at any scale

Consequently, Fauna has seen its developer community grow quickly to over 25,000 users over the past year and has developed one of the strongest brands within the serverless and Jamstack ecosystem.

While it is great to identify a massive opportunity with a differentiated product, the most important part of investing in a company is the team.

The two co-founders, Evan Weaver and Matt Freels are amazing engineering and product leaders who were instrumental in building a scalable, distributed system at Twitter, where they witnessed the signs of where the world was moving and went on to build Fauna to fulfill their vision. They built Fauna as a 100% remote team from day 1 with the right focus of communication and collaboration to enable a high performing team aligned on a common vision. With a lot of the tech industry talking about working remotely currently, Evan and Matt have been leaders in adopting the “future of work” and setting up a strong culture for success as the team continues to scale in the new post COVID-19 era.

Eric Berg, who recently joined Fauna as the CEO is somebody that I have worked with at Microsoft in the past, was a key leader at one of Madrona’s portfolio companies (Apptio) and most recently the Chief Product Officer at Okta. During his eight-year Okta experience, he took a pre-Series A company through IPO, developing an identity product no one was sure they needed into a huge success.

And of course, I am very excited to have the opportunity to work together with Bob Muglia again as the Chairman of the Board at Fauna. I have had the opportunity to work together with Bob over the decades, initially at Microsoft and more recently at Snowflake and am thrilled to be able to work with him again here. Bob and I share a common vision of Client-Serverless being the next generation application model – applications are composed of Internet connected services using standard REST and GraphQL APIs, the Jamstack and the browser being the universal client and a globally distributed database as a cornerstone of this ecosystem.

With such a stellar team, a great product and a massive potential opportunity, it is a no-brainer for me to want to be a part of this journey and that’s one of the main reasons we decided to invest in Fauna. Looking forward to this journey!

Welcoming Zeitworks To The Madrona Family!

Today, we are thrilled to announce a $4.5 million seed financing in Zeitworks, a company incubated at Madrona Venture Labs, that is automating process discovery, mapping and measurement. We are also excited to partner again with Ryan Windham – who previously was the CEO of Cedexis in our portfolio – and welcome our new co-investors JAZZ Venture Partners, and entrepreneur Spencer Rascoff, founder of Zillow.

Most investments we make at Madrona follow the time-tested model in which an entrepreneur pitches us his/her vision of how to change the world and we end up partnering because we believe that is the right team taking on an important market opportunity for which the time has come. And we also need to believe that we can directly contribute to their success. Occasionally, we have bent that model and incubated a company at Madrona via Madrona Venture Labs, that has a full fledged incubation program. Zeitworks is the outcome of one such collaboration in a space that we have a deep conviction in.

Intelligent applications have been at the core of our investing strategy for years. The proliferation of data, and the ability to process it and derive insights has changed both consumer facing and enterprise facing experiences. In the last couple of years we have seen this extend to automating tasks and we have become more involved with companies looking to change how work gets done, as evidenced by our investment in UiPath, the leader in RPA. But understanding the work and the process is a required element to actually automating.

Businesses in every industry execute hundreds of repetitive business processes for wide-ranging use cases such as claims processing, employee onboarding, order processing, returns management, etc. to name just a few. The success of such processes, and in turn of the businesses executing those, critically depend on the efficiency of those processes and the ability to improve their efficiencies. However, in an overwhelming majority of cases, the processes are not documented – or, at least poorly documented – and not measured accurately enough. As a result, businesses struggle to understand the true costs of their processes, identify the bottlenecks and make improvements that would have the highest ROI.

Traditionally, process discovery and modeling has been largely manual – serviced by consulting firms such as Accenture, Deloitte, PWC, etc. – and as a result, costly and time-consuming. However, with every business undergoing digital transformation, automated discovery and measurement of processes is increasingly becoming key to success.

Zeitworks is building a process discovery/mining product to automatically map, measure, and improve business processes across all applications, without IT integrations, consultants, interviews, or workshops. The operative word here is “automatically:” Zeitworks collects data on user activity and events via desktop sensors, applies Machine Learning to automatically discover and map processes, and analyzes and measures those processes to understand, optimize and automate those.

While process discovery and mining is not new, what makes Zeitworks possible today is the convergence of three macro trends – (a) the availability of “infinite” compute thanks to cloud computing, (b) the ability to collect large volumes of high-fidelity data, and (c) the maturity of ML/AI techniques to identify patterns and extract unique insights. Capitalizing on advanced ML algorithms and the computing ability to process vast amounts of data, Zeitworks can help identify repetitive processes and provide insights into how they are being accomplished now and how they can be completed more efficiently. Equally importantly, Zeitworks requires no deep technology integrations, enabling teams to deploy the software and realize value in a matter of hours.

From a market need standpoint, the focus on digital transformation and increasing efficiencies is driving business users’ awareness of the benefits of analyzing and understanding their own processes. We believe that Zeitworks will be a key enabler in that inevitable digital transformation of enterprises.

At Madrona Venture Labs (MVL), the founders Ryan Windham, Ben Elowitz and Matthew Holloway tested the idea behind Zeitworks extensively, with input from hundreds of prospective customers and us, while assembling a world-class team of product and technology leaders to go execute that vision. MVL continues to be core to our work with early stage founders – the MVL process includes both ideating and testing as well as partnering with a wide variety of technical and business founders – and Zeitworks is a great example of a world-class founding team taking on a market opportunity we have a deep conviction in.

We could not be more excited to partner with Ryan and team and we look forward to helping them build the next billion-dollar business in enterprise software!

 

 

 

Embracing the Intersections of Innovation: Our Investment in Nautilus Biotechnology

(Sujal Patel and Parag Mallick, co-founders of Nautilus)

The code of life, biology and chemistry, have been constantly evolving for millions of years. The code of computing has functioned for less than 100 years. Today, those domains are coming together to transform the ways we understand and improve life and health. The biological and chemical sciences are intersecting with the computer and data sciences in precision medicine, digital pathology, proteomics and more. At Madrona, we believe these intersections of innovation will be at the forefront of major breakthroughs in research, analysis, diagnostics, clinical processes, preventions and cures. While our 25-year history has primarily been focused on transformations in information technology sectors including cloud computing, applied ML/AL, Software as a Service and Internet/e-commerce, we have more recently embraced opportunities where biotech meets infotech.

A company that embodies this emerging theme is Nautilus Biotechnology. Madrona has helped shape the company for almost four years, working together with founders Sujal Patel and Parag Mallick from day one. We provided office space and support for the company in the early days. We co-invested in the Series A with Andreessen Horowitz’s Bio-fund a few years back. And, today, Nautilus announced their $76 million Series B round with new investors including Vulcan Capital, Perceptive Advisors, Bezos Expeditions and Defy.vc.

What has drawn us to this investment theme in general and to Nautilus in particular? It is a combination of the expansive opportunities for scientific discovery, the scale, speed and agility enabled by modern compute and automation, and the continuous improvement in patient and disease understanding enabled by machine and deep learning. But, more importantly, it is a combination of founders in Sujal Patel who we have worked with for almost 20 years – first as the founder and CEO of Isilon Systems (and Madrona Strategic Director), and Parag Mallick who is a Stanford Professor with a focus on proteomics and systems biology with a background in biochemistry and computer science.

Nautilus’s Approach to Innovative Thinking

Biological sciences have been transformed over the past twenty years first by sequencing the full human genome and then by the “commoditization” of genomic sequencing (Illumina, 10X Genomics). Yet, a human’s approximately 3.2 billion nucleotides and 25,000 genes are just the beginning. The DNA functions as a set of instructions, a static view of what might happen, that needs to be transcribed and translated into the tens of thousands of proteins that drive all life — selective expression of proteins drive cell differentiation, metabolic reactions, stimulus response and, importantly, disease. Those proteins act dynamically to determine how our body functions (and malfunctions) which creates substantial measurement challenges.

From the beginning of Nautilus, Parag and Sujal set out to think differently. The core challenge they were trying to tackle: how do we make the proteome as accessible and impactful as possible by overcoming the limitations (coverage, throughput, ease-of-use) of existing protein analyses approaches. By reimagining proteomics as the foundation for improving the health of millions of people, Nautilus strives to enable new horizons in basic science research while transforming drug discovery and personalized/precision medicine.

Nautilus approaches the challenge of mapping the proteome differently at every stage of their automated and re-imagined process. That starts with the biochemical steps for how samples are prepared on the front end and continues through to the cloud computing, data science and machine learning techniques used continuously on massive datasets throughout the process. They leverage a robust understanding of biochemistry and the abundant technological resources that are only now available in scalable ways through cloud computing. There is so much more for the Nautilus team to share, but we defer to them on how and when to tell their story more fully!

Madrona’s Three Key Intersections of Innovation Concepts

Madrona’s investment in Nautilus and their approach to re-imagining the ability to leverage proteomics is just one area where biological sciences are intersecting with computer and data sciences. In the past several years we have increasingly seen the growing interdependence of these disciplines and the ability they have to change lives.

There are many more categories where the intersections of innovation apply. Digital pathology is developing models for image-based tumor detection, cancer research is applying machine learning to identify genetic or immune system biomarkers, and CRISPR screening techniques are helping to rapidly understand the mechanisms of action underpinning disease. Three key concepts span these intersection areas – discovery, automation and continuous learning.

  1. Discovery: The more we know about human (and non-human) biology, the more we realize there is so much more to learn. The pursuit of basic science research and the curiosity to explore new areas of discovery are central to the breakthroughs that lie ahead. Take the relatively new learnings about how bacteria’s immune system fights viruses by turning the virus’s DNA against itself through CRISPR-associated proteins (Cas) and guide RNA. In just the past decade, the natural function of the CRISPR-Cas systems has been harnessed intro powerful molecular biology tools to edit the genome, to the point that we can now edit at the base level. Modern information technologies will facilitate the front-end research and leverage discoveries, but the opportunities start with new biological insights.
  2. Automation: Biology was historically the world of wet labs filled with samples, test tubes and pipettes. Today, wet labs are combined with dry labs where computer modelling, simulations and in silico analysis occur. And, increasingly the processes of these two lab environments are automated and digitized. New approaches to sample prep and handling, to “seeing” and measuring the impact of reagents and then gathering massive amounts of data to rapidly analyze are emerging. The automation of preparing inputs, running experimental processes and analyzing outputs has the potential to mirror the journey of semiconductor technology from bespoke workflows to highly digitized, specialized and scalable processes. This automation, combined with massive computing resources, can lead to both broad scale breakthroughs and cost-effective precision medicines over time.
  3. Continuous Learning: Digitized data, across a mix of data types and formats, can increasingly be combined and normalized to transform information into insights. There are massive amounts of data to be captured through increasingly sophisticated techniques like high throughput sequencing and screening and cryo-electron microscopy. Elements of data management, modelling and machine/deep learning can then be leveraged to deepen the insights. In fact, operationalized data models can continuously improve our understanding of a mutation, antigen, biomarker or general disease state. In time, this should lead to curative approaches to most cancers, gene editing that prevents diseases and even rapid detection and containment of viruses.

The Road Ahead

The Madrona team is energized by our journey to continuously learn and support companies at the intersections of innovation. In addition to Nautilus, we have made substantial investments in Ovation.io, TwinStrand Biosciences, Accolade and Terray Therapeutics. And, we have seed-stage investments in a few early-stage companies within this investment theme. But today we especially want to celebrate the news about Nautilus’ Series B round and the potential for this outstanding team and company to positively impact the world by providing affordable and accessible proteomic information and insights to all those who may benefit from them.

Our Investment In Esper To Enable The Dev-Ops Of Smart Devices

Today, Madrona Venture Group announced that we’ve led the $7.6M Series A investment in Esper, an investment that Tim Porter and I spearheaded for the firm. Esper is a devops platform for Android IOT devices.

As everything around us becomes smart and connected, developers of devices have many new challenges. We are no longer just designing a single piece of hardware – but developing a full solution spanning many cooperating devices and supporting cloud software. During development, we have a variety of deployment, testing, and versioning requirements. Once deployed, we need to support device maintenance and updates on both hardware and software through a variety of complex deployment variations, while also supporting that rare remote debugging session. We have regular security updates to the firmware, OS, and apps to manage. We need to integrate device signals with CRM systems, billing systems, and more. Like we’ve come to think about a “dev-ops” process for cloud services, we now need to think about a dev-ops process for our smart devices.

For non-phone devices which require a user experience, Android has become the most popular platform due to the free price, broad silicon support, and broad software framework support. Amazon Echos, Peloton Bikes, and many home televisions all run a version of Android. When it comes to managing these devices, there are many options available for corporate IT to manage personal Android phones — but there’s no great solution for devices where a developer needs to manage these endpoints into the dev-ops process of their overall solution.

This is the challenge which the co-founders of Esper lived through as they worked in their prior roles. Yadhu Gopalan, CEO of Esper, most recently led the development and deployment of all the smart devices in the Amazon Go retail stores. Shiv Sundar, COO of Esper, most recently helped lead the Cyanogen Android device ecosystem. Prior to those roles, I worked with Yadhu and Shiv on the development of the Windows embedded operating system. It’s fun to be working with these great engineers once again!

After introducing their solution late last year, Esper quickly started serving many impressive customers across over 50,000 devices. Each customer we talked with discussed how they had tried to use a mobile device management solution designed for personal devices, but it had failed to meet their dev-ops needs. We’re excited to work with the Esper team to scale their solution, delighting developers all over the world as they enable billions of smart devices to do amazing things.

It’s been great to partner with Tim Porter on this investment. His experience with other developer focused investments like Heptio will be invaluable in Esper reaching its full potential.

This blog post was also posted on Terry’s LinkedIn page.

Our Investment in TwinStrand Biosciences, Leveraging Big Data And The Cloud To Improve Genome Sequencing Accuracy By 10,000x

Today, we’re excited to announce that Madrona has led the $16M Series A investment in TwinStrand Biosciences, a Seattle genomics company with the potential to profoundly impact all of us. TwinStrand’s technology will help detect cancer earlier when it can be most effectively treated, will help identify the most effective personalized therapies, and will help to recognize carcinogens quickly thereby lowering the development cost and time-to-market of powerful new drugs. We’ve previously discussed the incredible intersection of life sciences and computer science in our region – and TwinStrand is at the forefront of this amazing innovation opportunity.

When I first met Jesse, the founder and CEO of TwinStrand, he was discussing the technology in exclusively life science terms. However, as I listened, it was incredible how so many of the concepts had direct analogs to my experience with high scale software. TwinStrand’s “Duplex Sequencing” technology uniquely tags each strand of billions of individual DNA molecules with a chemical GUID. The DNA is then replicated to enable sequencing on a standard genome sequencer – resulting in up to 6 TB of data per run – then imported to the TwinStrand cloud where error correction algorithms are employed. The result is a high-resolution reading of the DNA sequence, 10,000x more accurate than standard sequencing. Duplex Sequencing reduces today’s DNA sequencing error rate of ~1% to below 0.0001%. This biochemical error correction approach reminded me of error correction techniques employed in high scale storage arrays in cloud datacenters.

Researchers are actively exploring how to use this level of precision to detect DNA mutations caused by chemicals (a market known as “genetic toxicology”). Today it can take more than 2 years to determine if a chemical is a carcinogen, as large tumors need to be given time to develop in lab animals. With Duplex Sequencing’s breakthrough accuracy, the resulting mutations can be detected as very small tumors within weeks – saving time, money, and the number of animals required. This testing is a critical step in the drug development process, but also is used to test the safety of agricultural chemicals, food contaminants, and even to examine the effect of space radiation.

When I talked with leaders in the clinical cancer community, a common response I heard was that this level of precision was amazing and insightful – but that today’s diagnostics don’t need that level of accuracy. This response reminded me of so many of the skeptics of 64-bit computing 15 years ago – who would ever need that much memory on any computer? With our investment, we are making the bet that new diagnostics, therapies and even information storage technologies will be developed to leverage this new precision, just like software has always found great new ways to leverage new system performance. It’s very exciting to see the future through the eyes of the TwinStrand team and invest in making it possible.

Jesse created Duplex Sequencing through his MD/PhD research with colleagues at the University of Washington. The TwinStrand team consists of half biochemists, and half software developers and bioinformaticians. Together, they have built an incredible foundation—contributing to more than 15 peer-reviewed scientific articles leveraging Duplex Sequencing and developing a portfolio of over 50 patents. To learn more, I’d suggest these three great recent articles:

TwinStrand’s product will be launching soon, and I look forward to seeing what scientists all over the world will create with it.

-Terry

P.S. Out of humility, Jesse doesn’t often share that he is the grandson of Jonas Salk, the scientist who discovered the vaccine for polio, definitively changing our world for the better. It’s pretty incredible to think that TwinStrand may have the same potential.

Standing Ovation – Cloud Based Clinical Informatics

Pictured l-r S. Somasegar, Ted Kummert, Chris Picardo, Barry Wark (seated) Winston Brasor

We are excited to announce today our investment in Ovation.io, a company that is building the next-generation suite of cloud-based clinical informatics tools for the genomic and molecular testing industry. The company was founded by Barry Wark and Winston Brasor, building off of software that Barry originally built while a graduate student at the University of Washington in Seattle. Ovation’s mission is to provide modern tools to molecular testing labs, allowing them to automate their operations and workflow while simultaneously unlocking the opportunity within their data.

For the past couple years, Madrona has been thinking deeply about the intersection of the life sciences and computer science. We believe that there is a significant amount of innovation waiting to be realized when modern cloud infrastructure and data analytics capabilities meet the vast amount of data and research within the life science and biotech industries. In parallel, significant innovation in the speed and cost of genome sequencing technology has allowed researchers to acquire vast amounts of valuable data and use this to greatly accelerate research and drug development. Existing areas such as diagnostics and new areas such as precision medicine are both rapidly developing due to the proliferation and increasing usability of clinical and genomic data. Activities such as clinical trial recruitment, collecting real world data (“real world evidence” in FDA phrasing), and understanding exogenous health factors are also being re-conceived because of the huge amount of data being generated by the healthcare system. And at the end of the day, easing friction on these activities via modern software will lead to much better health outcomes for patients and data collection and management is at the heart of this process.

One of Ovation’s most important observations was that medical testing labs (and molecular labs in specific) are underserved by modern software. These labs are responsible for conducting the vast amount of tests that care providers order while treating patients. Large names such as Quest and LabCorp may be familiar but there are many independent testing labs taking on the bulk of this workload. Furthermore, independent labs also conduct the majority of molecular and genetic testing for patient diagnosis. Yet many of these labs are still run on legacy software systems that are cumbersome and inefficient and exist as a major point of friction in lab operations.

Ovation has built a modern SaaS solution targeted directly at the needs of these labs. Their product is a modern cloud-based clinical informatics system that handles all major functions: from patient registry, to managing sample workflows, to storing and organizing the data, and finally to managing the revenue and billing process. By implementing true vertical software, labs are much more efficient in their operations and can quickly measure and analyze their workflows and internal data to provide better services and care to patients. And most importantly, Ovation software offers labs the ability to utilize their clinical and genomic data to improve patient diagnostics and long term outcomes. Ovation is also continuing to build intelligence into their software – learning from workflows in order to continuously help automate the testing process for labs. At Madrona we call these types of software “intelligent applications” and Ovation is a prime example in a vertical that needs modern SaaS options.

We met Barry here in Seattle through Mike Self, of StagedotO, a new seed stage venture partnership and were delighted to find some of the themes we had been discussing internally to be at the crux of Ovation’s business. We could not be more excited to be partnering with Barry and Winston for the next step of the Ovation journey and we are thrilled to help them achieve their vision of unlocking genomic data and clinical informatics in the medical world.

Our Investment in Knock

We are excited to announce today our investment in Knock, a company that is building a modern marketing cloud for the multifamily property market. The company was founded by Tom Petry and Demetri Themelis, Seattle natives and University of Washington graduates who moved to New York to work in finance just as the ’08-’09 financial crisis began. They survived and thrived in those turbulent times, and returned to Seattle five years later to start a company together.

Like many founders who start a company to scratch their own itch, Tom and Demetri, who had rented apartments throughout their working lives, saw an opportunity to vastly improve the apartment rental experience. They mapped the customer journey and identified the major pain points; from finding buildings that fit a renter’s needs, to touring available units at these properties, to the leasing process. Their very first product was an Open Table-like booking engine for apartment tours that made it faster and easier for renters to find the perfect apartment.

Also like many founders, Tom and Demetri have taken a non-linear journey to this point. While they began by focusing on the renter experience, they discovered a similar, if not greater, customer pain as they got to know property managers at the buildings they worked with. Property managers lacked the tools to they needed to effectively attract, close and retain tenants; everything from allocating marketing dollars across channels to attract tenant leads, nurturing prospective tenants from tour to lease, and communicating effectively with existing tenants to improve satisfaction and increase the likelihood that they renew.

By focusing on these pain points, Knock grew from a booking widget for prospective tenants to a comprehensive CRM that property management companies can use to manage communication and customer relationships throughout their journey. By listening to customers and deeply understanding the pain points and friction (a behavior we see in all great founding teams), the Knock team has built the best CRM system for multi-family property managers and are just getting started in their ambition to build a comprehensive, modern marketing cloud for the industry.

And this is a very compelling industry in which intelligent applications like Knock are badly needed. There are 18 million multi-family (apartment) units in the U.S., with a vacancy rate of about 5% annually. With average monthly rents pushing $1,400 per month, that 5% vacancy translates to nearly $15 billion in rental income per year that multi-family property managers and owners are leaving on the table. Property managers who want to close that vacancy gap need modern CRM tools to find, sign, and retain the best tenants, and that’s where Knock comes in. There are large, legacy software vendors to this industry who offer CRM as part of a suite, but in most cases, it’s an after-thought bolted onto software born out of a different era.

Knock’s software was designed to be intelligent from the beginning, and while it is still very early in the team’s journey, the quality of their product and their ability to serve customers is reflected in the customer roster Knock has assembled and the thousands of buildings and hundreds of thousands of units they’ve on-boarded to the Knock platform. In particular, the enthusiasm we heard from Knock’s customers for both the product and team really got our attention and got us excited about the opportunity to work together. Knock fits squarely into our intelligent applications investment theme, and we look forward to helping Tom, Demetri and the whole knock team to achieve their vision of building the marketing cloud for multi-family.

Welcoming Polly to the Madrona Family

Today, we are thrilled to announce our Series A investment in Polly, a company we believe is going to significantly impact how enterprises get work done and measure success. We led this $7 million round and were joined with the existing seed investors Amplify Partners, Fathom Capital, and the Slack Fund.

We have known Samir and Bilal, the co-founders of Polly, since the 2016 Seattle TechStars class, when we had them into our offices to give a practice demo run. We were excited about them then and have followed the progress as the company has graduated from delivering chatbots into the rich world of enterprise collaboration. Samir and Bilal have built a great team here in Seattle and they are passionate about delivering a quality experience to their customers – these customers, from individual developers to large enterprises are focused on being more successful and understanding their workflows better. Polly’s success over the last year has been impressive and we are excited that they have decided to partner with us for the journey ahead.

Our investment in Polly follows from our core thesis that, enterprise workflows, for the most part, will move away from legacy systems and email to modern online collaborations platforms like Slack, Teams and Mattermost. While these platforms started their lives as messaging tools, they now have the opportunity to become the “operating system” for modern enterprise workflows. That is already happening. Forward-looking organizations are creating Slack teams whose mandate is to adopt and/or build applications to enable enterprise workflows on Slack.

This is driven by the following.

First, due to technology and societal changes, the nature of engagement between an enterprise and its key constituents (customers, employees and other stakeholders) is becoming more open, bi-directional and frequent.

Second, decision-making in a modern enterprise is becoming far more decentralized. Employees at every level are empowered to directly collect and analyze data in order to make decisions and be far more responsive than it was ever possible before.

Third, as a result, the collaboration tools are where enterprise work happens. We are already seeing early evidence of that with workflows such as IT support, employee on-boarding, site reliability engineering, cyber security operations, etc. moving to Slack/Teams and multiple startups building specific products for each.

As enterprise workflows move to collaboration tools, measuring the effectiveness of those workflows — so that those could be analyzed and further improved — becomes critically important. That is exactly what Polly enables. Polly enables organizations to collect and understand feedback from key constituents so that enterprises can measure and optimize their workflows and thereby, deliver a much better experience.

The early signs have been extremely encouraging! The adoption of the free Polly product, which enables simple surveys within Slack and Teams, has grown consistently over the last couple of years and Polly tripled their user base in 2018. More interestingly, the team has seen incredible ramps in use at large enterprises and the adoption of Polly’s Enterprise product just since launch in in the fall of 2018 has been very strong. The company already has hundreds of paying enterprise customers with many others in the pipeline. The combination of the rapid organic adoption of the free product, strong inbound demand of its enterprise product and a team passionate about helping their customers, fuels our belief that Polly is poised to become the go to product for modern enterprises.

We are excited and buckled up for the fun ride ahead!

Welcome Eclypsium – Creating and Leading the Next Major Security Market – Firmware Protection

At Madrona, we look for exceptional founders attacking big markets. Today, we are thrilled to announce our Series A investment in Eclypsium, the industry’s first enterprise firmware and hardware security platform. We couldn’t be more excited to lead another investment in a phenomenal Oregon-based team and join forces with returning investors Andreessen Horowitz and Intel Capital. Our investment in security has been enterprise focused – with Tigera, ExtraHop and the recently acquired Icebrg – and we are always on the lookout for unique approaches to this ongoing issue in modern computing.

Firmware is in every device in the modern enterprise – from end-user devices like mobile phones and laptops, to the servers, switches, and networking infrastructure that power data centers and networks globally. Exploits at the firmware or hardware level can have the worst possible consequences: attackers can “own” the machine and wiping/re-imaging may not get rid of the threat. Historically, the sophistication required to implement this type of attack made them relatively rare. In recent years, however, organized cybercrime and nation-states have provided the necessary funding and talent to make hardware exploits a reality. More recently, firmware attacks have become pervasive and persistent for certain industries; and they have the ability to permeate and compromise entire data centers, remaining undetected on thousands of devices. A wave of new attacks like the recent supply chain compromises or the LoJax UEFI exploit have clearly shown that organizations can no longer afford to rely on “security by obscurity” when it comes to their hardware. While the alleged Super Micro brouhaha is a bit of a different beast (and we were already well into discussions with Eclypsium when the story broke), it still illustrates the high-stakes nature of hardware and firmware-related exploits.

We were fortunate to be introduced to Eclypsium’s co-founder and CEO Yuriy Bulygin in the summer of 2017 by Will Peteroy from Icebrg (Madrona portfolio company acquired by Gigamon) and Drew Smith from the Oregon Venture Fund. We were instantly impressed by Yuriy’s deep firmware security expertise, passion for solving some of the hardest security problems and ability to build a world-class team of experts. We knew that the market for endpoint and data center security is massive with over $15B in spending combined, with hundreds of vendors offing a variety of solutions. All of the existing solutions, however, address risks at the software level from the operating system up to the applications. We hadn’t seen any companies focused on the attack surface from firmware down to hardware, arguably an equally large and significant attack vector. While the need for more effective security solutions is obvious, finding original security ideas addressing large new markets is very rare. Eclypsium represents both.

In getting to know the Eclypsium founders, Yuriy Bulygin and Alex Bazhaniuk, we quickly realized they were not only creating a potentially huge new market, they were conceivably the best team in the world to do it. Before founding Eclypsium, they had spent years at Intel’s Advanced Threat Research and McAfee on the front lines of discovering new threats and analyzing the world’s most sophisticated hardware and firmware attackers. There they created the open source project, CHIPSEC, a framework for analyzing the security of PC platforms including hardware, system firmware (BIOS/UEFI), and platform component, which has garnered participation from many of the leading hardware manufacturers and cloud providers. They bring together a truly unique collection of talent and experience in firmware threat research and real-world mitigation. Eclypsium’s mission is to find, stop and remove such attacks, which threaten the heart of every enterprise and organization today. They protect organizations from the foundation of their computing infrastructure upward, controlling the risk and stopping threats inside firmware of laptops, servers, and networking infrastructure.

We believe the Eclypsium team has the opportunity to create one of the next very large security companies and be the number one player in the evolving firmware security landscape. We look forward to working closely with Yuriy, Alex and team to build another leading technology company here in the Pacific Northwest.

You can learn more about Eclypsium and firmware security here:

Why We Are Doubling Down On Shyft

We are excited to announce today our Series A investment in Shyft.

Since investing in Shyft’s seed round nearly two years ago, we have watched Brett Patrontasch (CEO) and team continue to make impressive progress against their goal of reinventing the way hourly workers manage their shifts and the way national employers both manage and support their workforce.

We originally met Brett through our involvement and support of the TechStars program. Shyft taps into our love of supporting scrappy entrepreneurs using technology to change people’s lives for the better. Through a mobile cloud connected application, Shyft enables a workforce that has little control over their schedule to take control by easily swapping shifts. Shyft started as a ground up platform that appealed to workers at Starbucks and many other retail chains, and, over the past two years, managers have taken note.

Shyft has responded by creating an enterprise software solution that enables retail outlets to manage their workforce while providing the flexibility that employees value.

This all comes at a crucial time in how the expectations of the modern workforce are changing and along with that, the move to create rules that protect this growing workforce. Cities and legislatures around the country are taking a close look via Secure Scheduling (also known as Predictive Scheduling) at how these hourly workers are scheduled – and creating protections that require some stability of schedule. This is a great thing, and as companies are required to support these regulations they need solutions like Shyft.

The proof is in the customers – and Gap has adopted the Shyft platform as their workforce management platform for all of their brands – Old Navy, Banana Republic, Althleta. Companies such as the Gap are adopting Shyft because the app creates real collaboration amongst employees which helps with productivity and general satisfaction.

We are investing alongside Ignition Partners for this round and it is great to work with them again.

The team’s relentless focus on product and end user experience is inspiring and is winning them new customers every day. Brett and his team are extremely passionate about the market and their product and we believe that they’ve created a game changing company poised for continued success.

Announcing our Investment in Crowd Cow

I am excited to announce our Series A investment in Crowd Cow, a curated online marketplace for high quality craft meats sourced from independent farmers. This is our third collaboration with Joe Heitzeberg and Ethan Lowry, the co-founders of Crowd Cow. Both Joe and Ethan worked on Poppy, their 3D camera startup, as entrepreneurs in residence at Madrona, after which Joe co-led Madrona Venture Labs. We have always respected and admired Joe and Ethan as entrepreneurs, tinkerers and company-builders, and finally found an opportunity to invest in one of their companies.

Crowd Cow was inspired by an engineer’s passion for farm-sourced meat, and Joe and Ethan’s realization that: 1.) farm-sourced meat is significantly better and more flavorful than the meat available at your local grocery store, and 2.) buying a 1/4 ‘cowshare’, the principal way people buy meat directly from the farm, is not a mainstream buying activity (in part because a 1/4 share is about 125 pounds of meat). Instead of selling 1/4 shares, Crowd Cow lets customers pick and choose the cuts they want in any quantity, with orders delivered directly to their front door.

It became clear from early on that consumers love the quality and flavor of meat sourced directly from farms, and that they care where their meat comes from and how the animals are raised, cared for, and fed. As the Crowd Cow team searched the nation (and later the globe) for the best farmers producing the best product, they learned that the diversity of ‘breeds and feeds’ from these independent farms produced a wonderful diversity of textures and flavors; and they found that this is as true with chicken, turkey, and pork, as it is with beef. This great diversity is documented in Craft Beef, Joe and Ethan’s #1 bestselling book on Amazon.

The Crowd Cow team is now on a mission to bring the great quality and diversity of farm-sourced meat, from across the country and the globe, directly to consumers. In doing so, Crowd Cow has become an invaluable resource to independent farmers, enabling them to share their craft and build their brand with consumers through the Crowd Cow platform. In a market controlled by a small number of corporate conglomerates, giving independent producers a more direct path to their customers is a very good thing.

We could not be more enthusiastic about Joe and Ethan’s vision for where they plan to take Crowd Cow, and we welcome the Crowd Cow team to the Madrona family. Whether grass-finished or grain-finished is your cup of tea, or you have a hankering for pasture-raised chicken or heritage pork, Crowd Cow has something for everyone; including super premium A5 Wagyu from Kagoshima, Japan, and the ultra-rare Olive Beef. We look forward to partnering with Joe, Ethan and team to bring the best craft meats sourced from independent producers to consumers across the country and the globe.

Rep the Squad, the Latest Madrona Labs Spinout

Bringing innovation to the $18B sports apparel market

After a year in development at Madrona Labs, our fifth company, Rep the Squad, launched yesterday. The response was enthusiastic (ESPN, USA Today, Geekwire) – as the company aims to power sports passion throughout the country and build community in every city. The latest Madrona Labs spinout follows in the footsteps of companies where Madrona partnered from Day One with the founders (Rover, Redfin).

Rep the Squad is a new subscription service that provides fans unprecedented access to a wide variety of licensed sports jerseys for a monthly membership fee. We believe the company speaks directly to the modern passionate fan who is interested in “access over ownership.” These engaged fans number in the tens of millions and they spend thousands of dollars every year supporting the teams and players they love. Rep the Squad empowers them to rep multiple players, jersey styles, and avoid the pitfalls of player trades or even a child’s growth spurt.

We could not be more proud to partner with co-founders Brian Watkins and Alex Berg. They exemplify the best of what we look for in Madrona Labs spinout founders — passion for the market (sports), deep domain experience (ecommerce), and the proven grit and resilience needed to take an early stage startup to the next level. Brian and Alex worked together at both Ritani and Blue Nile and have brought together an exceptional team of ecommerce veterans.

Together, we have been able to assemble a uniquely Seattle startup team across the board. Local venture capital firms Madrona and Maveron were the first to commit to the $1.5M funding round. Seahawks Pro Bowler Doug Baldwin and Mariners legend Edgar Martinez, who’s number 11 jersey was retired earlier this month at Safeco Field, personally invested. Seahawks All-Pro Richard Sherman, who is a big-time jersey collector and swapper himself, signed on as the Rep the Squad brand ambassador.

One of the advantages of operating a startup studio out of a venture capital firm is benefiting from the broader team and ecosystem. Ryan Metzger, a die-hard Seattle sports fan and Madrona’s director of growth marketing, not only came up with the jersey rental concept, but he also worked with Aaron Wilson and others from our team in the early days to validate the idea and introduced us to CEO Brian Watkins, who he had worked with over a decade ago at Blue Nile. Our process consisted of market sizing, competitive analysis, hundreds of in-person interviews, ad-driven customer acquisition testing, and an in-season Seattle Seahawks minimally viable product (MVP) to test unit economics and operational assumptions. The project benefited from Madrona’s existing relationship with Seahawks players and connections to the NFL Players Association, in which Scott Jacobson serves on their OneTeam Collective board of directors.

One of the advantages of operating a startup studio out of a venture capital firm is benefiting from the broader team and ecosystem.

We are thrilled to be a part of the early days of Rep the Squad and invite you to join us. To get started simply choose your favorite jersey and sign up. NFL season kick-off is just one week away, so what are you waiting for?!

IOpipe – A Cloud Native Company

As the cloud increases its footprint in the enterprise, and ‘cloud native’ (aka serverless) development scales up, Madrona is continuing to uncover opportunities that make it easier to innovate and work in this new environment. Today we are proud to announce our seed investment in IOpipe. We co- led this round and teamed up with our colleagues at NEA and Underscore VC to fund the growth of this innovative company. IOpipe has moved its headquarters to Seattle to be near the center of gravity of the public cloud and the company will add team members in the area to support the company’s growth.

We first met Adam Johnson, the founder and CEO of IOpipe, at AWS re:Invent last fall– at TWO different events. After a quick follow-up pitch at the airport, we were hooked. IOpipe is providing important insight into how serverless applications run – and uses that info to diagnose what isn’t going right. AWS Lambda is a strategically important cloud service focused on this market and it has grown substantially into a major piece of how these applications area created. Developers embed IOpipe into their application and can see how functions are performing in realtime via the IOpipe dashboard.

For both developers and operations engineers, this is crucial information that will enable more organizations to develop cloud native serverless applications. IOpipe has already helped analyze and monitor over a billion events from users to date.

IOpipe is also an example of how accelerators are helping drive technology innovation and business. The company was a graduate of NYC Techstars – the founders moved to NYC for the program – which helped them flesh out their ideas, build a product and secure customers. We are supporter of Techstars through the Seattle chapter and love the chance to work with companies early on as they build and find their product market fit.

Welcome SmartAssist To The Madrona Family

It is exciting for me to announce our investment in SmartAssist and to welcome the team to our Madrona family. SmartAssist is applying AI to the business of customer support and is already assisting customers of brands you know including MailChimp and Twilio.

Application development and applications the last 10 years were primarily defined by movement to the cloud, SaaS delivery and touch as an interface. Looking ahead, we strongly believe that applications are going to be defined as intelligent applications with a broader set of natural user interfaces including voice/speech and vision. In our opinion, any application of consequence that is getting built now is an intelligent application. What differentiates the intelligent applications is the use of ML/AI and other techniques to apply on the ever-increasing data sets that enable applications to continuously learn and deliver more relevant and appropriate experience for the customers.

Applying ML/AI to intelligently automate use cases and workflows in enterprises is an area where we see a tremendous amount of opportunity and some of our recent investments reflect that investment thesis. As we think about beachhead use cases of ML/AI within enterprises, customer support stands out as one of the most tangible areas that could be fundamentally disrupted through technology.

By using intelligent routing, automated responses, and predictive modeling, SmartAssist helps enterprises significantly increase the efficiency and quality of services while decreasing customer service costs. The company is based on the platform developed by Wise.io which was acquired by GE in 2016. The team of Pradeep Rathinam and Prashant Luthra had a passion for this business and are taking that core business and building it into SmartAssist. Already they have secured some name brand customers. GE has an interest in the company and we expect to work with them as the company grows.

Another big reason for why we are excited about this investment is the entrepreneurial strength of the founding team. Both Pradeep and Prashant have led and been a part of successful start-ups in the past. Their focus and passion to make a difference in this space makes it a delight to partner with them.

We are thrilled to back the compelling vision of this leadership team and be part of a Seattle area start-up that is focused on driving customer success using ML/AI. All of us at Madrona are jazzed at the potential of what is possible here.

Looking forward to helping realize the potential with the SmartAssist team!