Tag: Seattle Start-ups

Our Investment In Strike Graph

Cyber security is no longer a “nice to have,” it is table stakes. Today, we are excited to announce our investment in Strike Graph. Strike Graph is building an intelligent platform to help B2B companies manage the difficult challenge of setting up their cyber security controls and then passing and maintaining the strict annual cyber security certifications necessary to build their business.

In today’s world of data-driven companies, a business’s greatest asset is less and less often related to any particular physical object and more often related to the data it collects from its users and customers. This data, which comprises myriad inputs, is a foundation that leads to insights, competitive advantages, and strong business models. However, it rarely sits in a silo. Bits and pieces must flow through and work with other businesses in order to be most effective. Consider how some companies upload their contracts to DocuSign, entrusting DocuSign with a specific task (e.g., getting multiple parties to sign on the dotted line) but also entrusting that DocuSign does its part to keep that contract private and secure, and only accessible to those who are supposed to see it.

Many data flows like this are common and necessary nowadays, and it is each company’s responsibility to maintain strong cyber security practices to securely manage that data. To do this, companies are being required to undergo strict cyber security audits for a variety of certifications including SOC2, ISO 27001, FedRAMP, and others. These annual audits are incredibly intensive and time consuming but achieving and maintaining certification has become a crucial requirement by these companies’ customers and partners.

Strike Graph was founded with a vision of helping B2B companies improve their internal processes that sit at the heart of this cyber security – and ultimately, sales – issue. Strike Graph has built an intelligent application that helps SMBs and Enterprises walk through the process of identifying their risks, choosing the appropriate controls, and automating evidence and testing – all with an end-to-end platform that helps them prepare for and achieve these annual cyber security certifications.

We met CEO and co-founder Justin Beals when he was incubating the idea for Strike Graph at Madrona Venture Labs. Justin is a top-notch product creator and technology leader. Most recently he was CTO at Koru leading up to its acquisition by Cappfinity. With the support of the MVL team, he was able to prove out the concept for Strike Graph, build a working alpha version of the product, and recruit co-founder Brian Bero. We were delighted when Justin and Brian joined forces, as Brian has deep domain knowledge both from his time as co-founder at Apptio and his own venture, Greytwist. Together they have rapidly built and launched the product and have onboarded a staggering number of pilot customers since their formation at the beginning of 2020.

This team is going after a large and significantly growing opportunity to serve a sharp pain point for B2B businesses. Strike Graph defines what we call an intelligent application, one that is using smart technologies to define the workflows and risks, and then automating the tracking and collection of evidence to support the ever changing environments. We are excited for Justin, Brian, and the team for their success ahead. And we are just getting started.

Applying Machine Learning to Finding Great Talent – SeekOut

I’m excited to welcome SeekOut to our portfolio. SeekOut is a game-changing solution for recruiters and hiring managers to identify and connect with high performers who have a demonstrated track record of solving problems that are relevant to their needs.

In our capacity as the Talent Team at Madrona, Matt Witt and I help our portfolio companies – and the ecosystem at large in greater Seattle – uncover, attract, select and retain a diverse workforce of high performing individuals. We need great tools to do this work. Once every couple of decades a game-changing recruiting tool like SeekOut comes along to provide an order of magnitude advantage over previous solutions. Matt and I took SeekOut out for a spin last year to give feedback to Soma on the capabilities of the product. It didn’t take long for SeekOut to become an extension of our brains and our sourcing platform of choice. We now use it daily and recommend SeekOut to our portfolio companies as one of the most important tools they need for candidate discovery and engagement.

S. Somasegar (Soma) led our investment in SeekOut and he along with the founders, Anoop Gupta and Aravind Bala, know firsthand the pain of recruiting engineers from their days at Microsoft leading teams of engineers on projects with huge scopes. But since Anoop and Arvind were not recruiters by profession they spent a lot of time with their customers and that has paid off with a rich feature set that works for recruiters across a broad set of industries. They have applied the tools they used as engineering leaders on massive computational projects to the problem of matching data on people with the needs of companies that are trying to grow both quickly and intelligently.

“We see a lot of recruiting related solutions focused on the talent market. What made SeekOut stand out was the team’s pursuit of the solution, customer focus and perseverance which has paid off with the incredible customer adoption we have seen this year since the launch of the product,” commented Soma.

SeekOut recognized there is significant room to go beyond the open web or LinkedIn in terms of both data sources and ML/AI and with that, provide better insights on candidates in competitive markets. SeekOut leverages self-reported data from platforms like LinkedIn (what individuals say they’ve done) and performance data like GitHub and Patents/Publications databases (what they’ve actually done) and who they actually are (pedigree, work history, geography and specific demographics including diversity and contact information). The result is a massive, dynamic database that is constantly being updated to more effectively reach out to highly relevant candidates. We recently published our investment themes and SeekOut is a perfect example of our intelligent app category – they are taking a huge amount of raw data, organizing it and applying intelligence to it to deliver better outcomes for users.

Anoop and Aravind also found that SeekOut made it possible for non-technical recruiters to gauge the relative merits of engineering candidates based on the quality of their work products. Gauging engineering talent is something most non-engineers find impossible to do and is a constant source of frustration between engineering leaders and tech recruiters. SeekOut’s advanced features help recruiters dissect keywords to their root and suggests derivatives and alternatives while simultaneously learning about use cases and teaching recruiters what the terms actually mean. This gives recruiters the ability to go fast and compete more successfully.

As recruiters on the front lines, we can tell you that no other tool does this combination of things as well as SeekOut. Another recruiter told me “I was able to access hundreds of candidates through SeekOut that I hadn’t ever seen before on LinkedIn. It has been powerful specifically searching for female engineering managers. I’ve recently started looking at Data Science as well, and it feels like I’ve found a gold mine!”

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 Micah Baldwin

(Pictured Micah Baldwin, S. Somasegar, Scott Jacobson)

I am excited to announce that Micah Baldwin has joined us as Executive Director of the founder-focused innovation center we will be opening later this summer. In the spring, we shared that Madrona signed a ten-year lease for the 33rd floor of our building (directly below the Madrona offices) that will be dedicated to supporting tech founders and the startup ecosystem in Seattle. A key ingredient to the success of such an endeavor is a leader with equal parts vision and ability to execute, and we found our leader in Micah. Micah brings more than twenty years of startup experience as a serial founder, mentor and ecosystem supporter. While steeped in all things startup, Micah joins us from Amazon Web Services, where he developed and operated the AWS Connections program, which helps enterprises identify and collaborate with tech startups.

In the innovation center he will be doing that and much more for great Seattle founders and founding teams. Micah has an expansive vision for new and additive ways to create value for founders in our region and help to grow the next generation of world class technology companies in Seattle. We are looking forward to getting started and could not be more enthusiastic about Micah joining us in this endeavor.

We will have a lot more to share in the coming weeks. Welcome Micah!

And get in touch [email protected] if you are interested in exploring membership or space in the innovation space!

Why Madrona Invested in Pulumi

Today I am very excited to announce our investment in Pulumi.

Pulumi aims to fundamentally improve the way people build, manage, and interact with cloud-native applications, services, and infrastructure.

There is a massive movement to the cloud among enterprise customers around the world. As that trend continues to gather and gain momentum, new and transformative techniques are required as customers truly begin to take advantage of cloud-native capabilities. This transformation grows leaps and bounds with serverless computing starting to emerge as the next frontier to enable truly distributed applications and services that are powered by microservices and event-driven functions.

Recent cloud infrastructure breakthroughs include serverless, containers and hosted cloud infrastructure. Containers are great for complex stateful systems, often taking existing codebases and moving them to the cloud. Serverless functions are perfect for ultra-low-cost event- and API-oriented systems. Hosted infrastructure lets you focus on your application-specific requirements, instead of reinventing the wheel by manually hosting something that your cloud provider can do better and cheaper. Arguably, each is “serverless” in its own way because infrastructure and servers fade into the background.

“This disruptive sea change is enabling Pulumi to deliver a single platform and tools suite that allow developers to build and ship code to the cloud in the easiest and fastest way.”

 

Eric Rudder, Joe Duffy and Luke Hoban are a world-class team to deliver such transformative experiences in a cloud-native world. They have decades of experience in platforms, tools, and programming models. Eric Rudder was one of the most senior executives at Microsoft, including running the $10B+ Server and Tools business, serving as a Technical Advisor to Bill Gates, and most recently as the EVP for Advanced Technology before leaving Microsoft. Joe Duffy was a senior technical engineering leader at Microsoft and was a critical part of the early team that built .NET and C#. Most recently, he was Director of Engineering and Developer Tools Strategy and, in that role, was instrumental in open sourcing .NET and taking it cross-platform to Linux and Mac. Luke has held a variety of product and engineering roles at Amazon and Microsoft. While at Microsoft, Luke co-founded TypeScript and developed Go support for Visual Studio Code.

I have had the privilege and the fortune to have worked with Eric, Joe and Luke closely over the years, and their passion to solve hard problems for developers and enterprise customers is unparalleled. I am personally very excited for the opportunity to work with this very talented group of people. We are confident that this kind of a world-class team is what is going to help drive a breakthrough as cloud-native becomes fundamental to enterprise software today and in the future.

We are doubly excited to partner with Pulumi given it is a Seattle-based early-stage start-up focused on native-cloud environment with a world-class founding team.

Please join me in welcoming Eric, Joe, Luke and the Pulumi team to the Madrona family!

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.

The Riveter – The Time is Now for this Co-Working and Digital Space

Today we are very excited to welcome The Riveter into the Madrona family. Founded by Amy Nelson just 10 months ago, The Riveter has quickly grown into a premier female forward work and community space.

The Riveter has their first two locations up and running in Seattle, but they are not stopping there. They are expanding to other cities – Los Angeles is next. An important part of their appeal is that they complement the space with programming for their members, and soon will be launching a digital platform to help connect their members even when they are not in the physical spaces.

When we evaluate companies, we look at the entrepreneur, the business model, and the market. The first time that we met Amy, we were incredibly impressed with The Riveter across all of these dimensions. There is an amazing “founder-product fit” between Amy and her company, as well as all of her early learnings on building a great community-driven business.

Amy is everything we look for in an entrepreneur. She is passionate about her business, her customers, and her team. She has a vision and mission rooted in her own experience, and she is building a product that she would want to use. She has built her own path and is now on a mission to help other women do the same thing.

Amy started her career in the corporate world but eventually decided to depart and quickly saw a market need and opportunity that resonated – building workspaces and community for professional women. The Riveter embodies the cultural movement to actively support women pursing their passions, stepping up, and succeeding in whatever they put their minds to, and it is clear that this is resonating, not just here, but around the country and the world.

That brings us to their market and business model. The Riveter creates workspaces that are female forward and different than other coworking spaces. They have more open space, programming focused on the issues women face in business, and some quiet spaces and mothers’ rooms. They don’t have onsite daycare, they don’t have pink furniture, and they don’t have ping pong tables and kegs. These are inclusive, professional environments for meeting and working designed with women in mind.

Women start businesses at a rate five times that of men, and their businesses often look quite different than the companies that occupy other coworking spaces. Their working patterns are often more flexible, as they fit a lot of competing priorities in their day. The Riveter has been able to hone in on this market and design a business model with great economics focused on professional women by offering things like part-time memberships and locations closer to people’s homes. Because of these different dynamics, The Riveter is maximizing their space differently than other co-working locations.

Our investment in The Riveter comes at an interesting time for Madrona as well. Recognizing the need for more innovation space in our region, we leased the floor below us to build out such a space. In that space we will be hosting early technology oriented companies, enterprises looking to see the latest tech being developed and will have a programming schedule that supports the companies and the community. It is very different from The Riveter in the market and goals and shows that there is space for all kinds of co-working spaces in cities around the country.

As we spoke to members of The Riveter in our diligence process, the theme we heard again and again was “I love this place, and I love this community,” and now we are incredibly excited to support The Riveter in their next phase of growth. Please join us in congratulating Amy and her team on their funding and success!

Welcome Unearth to Madrona!

Pictured in photo: From left to right, Nate Miller, S. Somasegar, Brian Saab & Amy Hutchins.

Welcome Unearth to Madrona!

It is always a happy occasion to welcome a family member back into the household.

With Madrona’s investment in Unearth Technologies, we are excited to be working again with Brian Saab (CEO/Co-Founder) who we had previously worked with as the co-founder of buuteeq (a former Madrona portfolio company that was acquired by Booking Holdings, formerly Priceline). Brian co-founded Unearth with two other buuteeq & Booking Holdings employees, Amy Hutchins, Chief Product Officer and Nate Miller, Chief Design Officer. buuteeq spurred a lot of entrepreneurial spirit as we have also backed Pixvana – started by another co-founder of buuteeq, Forest Key.

Brian went back to his family roots as he began thinking of his next company. Brian grew up in a multigenerational construction company – a business he, as a technology executive, noticed hadn’t really changed that much despite cloud technologies, aerial imagery, and the plethora of tablets and laptops. He and his co-founders did some field testing and realized they could change that with their skills.

The construction industry has long been plagued by both low digitization and low productivity from its workforce. A $1.5T annual industry in the US alone and a $10T opportunity globally, the construction industry is projected to keep growing as new infrastructure is required to keep up with the global economy.

Because of the low productivity, the construction industry suffers from large amounts of waste and lost opportunity. For example, 98% of construction projects face cost overruns or delays with the average project delayed by 20 months and 80% more expensive than planned. In the US, this waste equates to approximately $500B lost per year. This is especially evident in large commercial and civic projects that require large teams and extensive communication between the field and office. This is the problem that Unearth is tackling.

Unearth has built a cloud-native collaboration and communication platform, called OnePlace, for construction and architecture teams to track the progress of their projects in real time. By giving all parties (including project owners and project managers) access to the Unearth platform, everyone is informed every step of the way of the progress of the construction. OnePlace is specifically built to seamlessly handle different data types aerial imagery, 360 images, traditional pictures, plans, and surveys.These are all integrated into the software platform which creates one view available to both office and field teams. After a year in beta and in use on major civic construction projects, OnePlace is open today for sign up at www.unearthlabs.com.

The construction industry is at an inflection point of digitization and software adoption and Unearth is well-positioned to provide a compelling solution for its customers.

Please join me in welcoming Brian, Amy, Nate and the Unearth team to the Madrona family.

Saykara – Out of Stealth, Alexa for Physicians

At Madrona, we like to invest in the best entrepreneurs in the Pacific NW attacking the biggest technology markets in the world. Beyond this, we love when we find a founding team that understands and is addressing an acute customer pain point in a way that aligns with our key investment themes. Few times in the last decade have we found a company and a team that meets all of these criteria better than Saykara.

Madrona led the Series Seed in Saykara in 2016, and we are excited for the company to now emerge from stealth mode. Saykara provides an AI-powered, voice-activated virtual scribe for physicians. Think of it as an Alexa for doctors. Thematically, this aligns very well with several of our key investment themes: (1) voice and natural language as a key UI for applications and (2) ML/AI applied to vertical markets.

From a customer perspective, we talked to many physicians and health systems during due diligence and the pain point they have with laboriously filling out the electronic health record (EHR) is incredibly high. Physicians today face a dilemma: (a) type away in the EMR during an exam and thus disrupt and de-personalize the physician-patient interaction or (b) spend hours at night dictating or entering information and losing control of their personal lives. Health systems also have a dilemma. They can provide an in-person (human) scribe who follows the physician around and enters notes into the EHR, but this is generally cost prohibitive for all but the highest revenue generating physicians and specialties.

Creating further pressure for health systems, offering human scribes is becoming a competitive factor in determining which health system a physician decides to join or stay. Nevertheless, most physicians still use the old-fashioned approach of after-hours dictation, an $18B market. Not only is this time-consuming, the resulting EHR entry is the equivalent of an appended Word document – unstructured data that is difficult to search and analyze. There are other newer options using specialized equipment such as Google Glass for capturing the full recording audio/video of the patient visit, which is transcribed overseas. This is also an expensive option, and typically results with output data that has similar challenges to traditional transcription. The end result for health systems is not only overworked and frustrated physicians, but an EMR that is insufficiently populated and lacking in structured data that enables the type of patient-outcome improving and cost-saving analytics that were the original promise of the EMR.

Despite this searing pain point, this problem is a tough nut to crack. The technology is non-trivial, to say the least, and healthcare can be a difficult industry. It takes founders and a team who know both the tech and the market intimately. Co-founders Harjinder Sandhu (CEO) and Kulmeet Singh (board member) fit this bill perfectly. Harjinder and Kulmeet are pioneers in this space, founding the first automated medical transcription company (MedRemote) acquired by Nuance. From getting into the business with MedRemote, Nuance Healthcare has grown into a multi-hundred-billion-dollar business, and Harjinder was the VP/Chief Technologist of R&D for 5 years. Earlier in his career, Harjinder was a CS professor at York specializing in distributed computing.

Not only do we love the problem space and founding team, we think Saykara is building a better mousetrap underpinned with AI and ML technologies that are tuned just for this market. Saykara uses a Siri- or Alexa-like hotword (“OK Kara”) or physical tap on their smartphone to start and stop voice capture. The physician can then talk to the patient as they normally would. The Saykara system accurately transcribes the audio to text, parses the information into structured data, and intelligently inserts the structured data into the correct fields in the EHR. They are building ML that comes into play in two general areas: (1) specialized voice-to-text for natural language and medical vocabulary that accurately captures a physician’s natural verbal interaction with a patient and (2) intelligent parsing of the transcribed information and insertion into the correct field in the EHR.

Thus far the reception has been tremendous. Physicians love it because they can interact with patients in the natural way they always have, without using special equipment, typing, or after-hours dictation. Patients love it because they actually hear what and when the physician is capturing in their medical record. Health systems love it because it improves physician satisfaction, is significantly less expensive than a human scribe or other alternatives, and they end up with EHR data that (over time) can be analyzed to improve clinical decision support.

It is also important to note that Saykara’s ML-driven approach leveraging existing smartphone technology enables a price point that is accessible for all doctors, including family doctors for whom other options are generally price prohibitive.

We are excited to see Saykara come out of stealth and continue to help them in their mission to give ALL physicians back control of their lives and address this important pain point for the healthcare industry.

The Epitome of a Day One Entrepreneur

(Jason LeeKeenan and Russell Wilson of TraceMe)

At Madrona we meet many outstanding entrepreneurs and innovators. Sometimes we meet them when they are starting a company, like Sujal Patel from Isilon or Jesse Rothstein from Extrahop. Other times, like Aaron Easterly from Rover or David Shim from Placed, we got to know them as “rising stars” at prior Madrona companies before they became an entrepreneur. But, this year we got to know someone who for so many of us we feel like we already knew. Over the months of working with him and investing in TraceMe, we have discovered how much more there was to learn about this amazing Day One entrepreneur and the company he started.

The entrepreneur is Russell Wilson and the company he founded is TraceMe. You likely know him best as the All-Pro, Super Bowl Champion, starting quarterback for the Seattle Seahawks. And, attributes that have contributed to Russell’s success in pro football are among those that make him the epitome of a Day One entrepreneur. He is customer-centric, passionate about the opportunity, focused, determined and an attractor of complementary talent.

TraceMe Product Showcase. Russell Wislon, Ask Me Anything.

On the talent front, Russell worked with our friends at Pioneer Square Labs to incubate TraceMe and recruited an amazing star in Jason LeeKeenan to be CEO. Jason’s background includes key roles at Hulu in the early years and Zulily. And, while he is warming up to the Seattle Seahawks as a life-long Patriots fan, he deeply understands the TraceMe opportunity and how to build a sustainable company through innovative content. Jason and Russell are building a world class team of software engineers, video producers and content editors at TraceMe to attack this challenge. Madrona is delighted to be partnering with them as the lead investor in TraceMe’s $9 million Series A financing closed in the spring and announced this week.

At the heart of TraceMe is the idea that celebrities and their loyal fans want more direct and engaging ways to interact. We all see clues about this interest in social media experiences that go beyond current channels in platforms including Twitch for gamers and YouTube for live video bloggers. TraceMe is building a platform tuned specifically for celebrities like Russell and their super fans. TraceMe will create meaningful experiences for fans with compelling content, products and experiences.

We hope that fans will download the TraceMe app this week and give it a try. The app is in beta so your feedback will be helpful as the TraceMe team prioritizes new features and content. Similar to how we have gotten to know Russell Wilson better, we hope you will feel closer to him and the things he is passionate about. These include faith, family, football and finding ways as an entrepreneur to help fans more personally connect with celebrities. As opening week of the regular NFL football season kicks off, we look forward to partnering with the great Day One entrepreneurs at TraceMe to help them win big!

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?!

Why We Invested in GawkBox … in Three Charts and One Photo

Pictured in the Photo – L-R Andrew Allison, CRO; Hope Cochran, Venture Partner Madrona, Daniel Li, Senior Associate; Chris Brownridge, CEO; Tony Chong, CTO

Today we are excited to announce our investment in GawkBox. Over the last few years, we have closely followed the macro trends in live streaming, digital marketing, gaming, and eSports, and we are thrilled to be partnering with the GawkBox team to build a company at the center of this ecosystem.

GawkBox is a platform for the live streaming market that lets fans send sponsored “tips” to their favorite streamers by downloading and completing actions in specific games or apps. Fans can make donations to streamers without direct credit card purchases, and advertisers can engage fans of live streamers with targeted and measurable marketing campaigns.

GawkBox’s users, creators, and advertisers all love the platform because it solves the problem of monetization in the live video market, creating a win-win-win for everyone. Obviously, they have a great product, but why else are we excited about this? Here’s why in three charts:

Live Streaming and Online Video is the Future of Media

Over the last 5 years, the average daily viewership of Twitch has increased 10x to an average of nearly 800,000 viewers per day. In the same time period, Disney has lost over half of its key demographic of kids age 2-11. (For an additional point of comparison, the average daily viewership of CNN is ~700-800K and ESPN is ~800-900K viewers). While Twitch and other online video channels continue to grow, traditional broadcast and cable viewership is shrinking.

Why? Online streaming video is accessible anywhere, on-demand, and interactive. The unique combination of social and broadcast media on sites like Twitch or Facebook also makes live streaming incredibly sticky because of the ability to interact in real time with the people creating the content. Live, online video will redefine media, and we’re not the only ones who think so – Mark Zuckerberg is “obsessed” with live streaming too.

We’re excited about this because GawkBox is building a platform that helps more content creators earn money and build careers in live streaming and online video. By solving a key monetization problem, GawkBox is going to accelerate the growth of the industry.

Digital marketing is growing rapidly as advertisers see positive ROI

It’s not a coincidence that two of the largest companies in the world today are digital marketing platforms focused on measurability and performance. Marketers and advertisers spend a lot of money on ads if they can measure a positive return on investment. (If you want to learn more about performance marketing from an advertiser’s perspective, I highly recommend this video with Gabe Heydon, the CEO of MachineZone, on what the future of marketing will look like).

Over the last century, newspaper advertising revenue reached a peak of $49B across all newspapers. Alphabet surpassed that in just 15 years because they were the first company to offer a performance marketing solution at scale. Facebook is growing just as quickly because it offers a straightforward way to market products and acquire users while allowing advertisers to measure their return on marketing spend.

Today, as a marketer, it’s very hard to deploy dollars into the live streaming market because it is not scalable to sign many deals with individual streamers, it is difficult to measure installs from impressions, and the live streaming format does not lend itself to traditional display, banner, or video ads. GawkBox is the first company that allows marketers to access the live streaming market with a performance marketing solution, and their ad ‘unit’ is a fun, endemic way to engage with fans.

Gaming and eSports are massive, early-adopter markets

The media loves to cover eSports, especially tournaments with big prize pools, billionaires spending tens of millions of dollars to purchase teams, and young players who earn millions of dollars playing video games. However, the other topic that gets covered less is the pure entertainment value of gaming. Big gaming companies (and small indie game studios as well) have experienced massive growth over the last 5 years, and we’re willing to bet more kids in the US have played Minecraft than football, baseball, or soccer. In fact, there are 2.6 billion gamers around the world in 2017, compared to 100 million in 1995, according to Mary Meeker.

The growth in gaming can be attributed to many factors, including the ease of marketing and distribution across platforms like Steam, Xbox Live, and app stores, the gaming industry’s ability and willingness to innovate on their products, and a larger trend towards more interactive forms of entertainment.

Many of GawkBox’s earliest partners are gaming publishers, gamers, and other people in the gaming ecosystem, and we think this is a fantastic initial market. We’ve seen before that many innovations in gaming like online networking, graphics computation, secondary markets, messaging, and free to use/play business models quickly make their way to other industries and use cases, so there is a lot of room for GawkBox to expand into other types of customers after this initial early adopter audience.

We are big believers in this team and their ability to build a big business

Chris, Andrew, and Tony, the cofounders of GawkBox, worked together as early employees of Vungle, where they pioneered the concept of rewarded video ads and built a $300+ million revenue business. Since our first meeting, we have been consistently impressed with their ability to lead, execute, and envision the future of this market.

At Madrona, our philosophy is to partner early with the best entrepreneurs in the Pacific Northwest, and we have been lucky enough to work with many of our most successful companies from day one. After working with this team, we are absolutely convinced they are going to be doing big things, and we are very excited to be leading their Series A.

Finally, here is a link to the GawkBox website. I highly recommend checking it out and telling your favorite streamer about it!

  • If you’re a fan, you will love this product because you can support your favorite streamers without having to make actual credit card purchases. Just play games or download apps from the top publishers and earn tips for your streamers.
  • If you’re a streamer, you will love this product because it is a simple way for your fans to support you, and other streamers are doubling their monthly income after partnering with GawkBox.
  • Finally, if you’re an advertiser, you will love this product because you will be able to engage with the live streaming audience in a fun, unique, and native way. And you’ll be able to measure your return on advertising spend on a granular level and encourage users to reengage with your game or app after the initial install.

We are thrilled to be invested in this amazing Seattle-based team who has big plans for how they are going to change the world of live streaming, marketing, and gaming. It’s early days for this industry, and we are excited to be building the future together!

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!

Investing in Suplari – Madrona’s Latest Investment in Intelligent Applications

Suplari, which announced their $3.1 million funding round today, is our newest investment in an area we helped define – Intelligent Applications. Intelligent Apps combine data and machine learning to provide real-time, actionable insight into business and consumer applications. Going back 4-5 years, we were investing in more horizontal machine learning platforms like Dato/Turi, Algorithmia and MightyAI to help companies combine the talents of their business users, data scientists and programmers to design, text and build intelligent apps. More recently we have been focusing on building vertical or functionally focused intelligent applications including Amperity, Saykara, and Placed.com.
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Xnor.ai – Bringing Deep Learning AI to the Devices at the Edge of the Network

Photo – The Xnor.ai Team

Today we announced our funding of Xnor.ai. We are excited to be working with Ali Farhadi, Mohammad Rastegari and their team on this new company. We are also looking forward to working with Paul Allen’s team at the Allen Institute for AI and in particular our good friend and CEO of AI2, Dr. Oren Etzioni who is joining the board of Xnor.ai. Machine Learning and AI have been a key investment theme for us for the past several years and bringing deep learning capabilities such as image and speech recognition to small devices is a huge challenge.

Mohammad and Ali and their team have developed a platform that enables low resource devices to perform tasks that usually require large farms of GPUs in cloud environments. This, we believe, has the opportunity to change how we think about certain types of deep learning use cases as they get extended from the core to the edge. Image and voice recognition are great examples. These are broad areas of use cases out in the world – usually with a mobile device, but right now they require the device to be connected to the internet so those large farms of GPUs can process all the information your device is capturing/sending and having the core transmit back the answer. If you could do that on your phone (while preserving battery life) it opens up a new world of options.

It is just these kinds of inventions that put the greater Seattle area at the center of the revolution in machine learning and AI that is upon us. Xnor.ai came out of the outstanding work the team was doing at the Allen Institute for Artificial Intelligence (AI2.) and Ali is a professor at the University of Washington. Between Microsoft, Amazon, the University of Washington and research institutes such as AI2, our region is leading the way as new types of intelligent applications takes shape. Madrona is energized to play our role as company builder and support for these amazing inventors and founders.