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March, 2019 Volume 25

Impacting Our Community

Our impact at Vestigo is centered in Cambridge just blocks from MIT’s campus.  We have a chance every day to meet entrepreneurs and learn about their business ideas.  We review the data coming from XPLR that reveals new companies that are going viral in FinTech.  But our reach can also be global as we saw from the recent visit to Davos by part of our team.

We share more stories of Davos this month with you as the event was so rich in experience and learnings.  We also share what we learned from an HR conference that Mike attended to flush out more of our thinking on worksite businesses.  And Frazer attended an MIT FinTech event that was filled with local startups and those that support them like FinTech Sandbox, other VC’s and Mass Challenge.  We give back in many of these events by making connections to find new companies for the portfolio or to share insights with those that need it on FinTech. We also moved officially to an office that is a bit bigger and just around the corner in building 200.  Here’s a photo of B-2101.  Please come by and say hello. —Mark & Dave

 

Data, AI & the Future of Work from the WEF

Big Data and AI insights with Vestigo Advisor and Cogo Labs CEO Mira Wilczek from her talk at Davos.

Xs and Os at Qualtrics X4 Summit

I had the good fortune to attend the Qualtrics X4 Summit in Salt Lake City last week.  The Summit had an amazing star-studded list of Speakers, including:

  • President Barack Obama: powerful discussion on the dedication to the mission of his cabinet and the team he assembled, coupled with the absence of individual advancement by the people he surrounded himself with over eight years in the White House.
  • Sir Richard Branson: a humble visionary, who attacks the problems he has experienced firsthand while also looking to do the impossible.  A simple, but powerful take-away was his statement (paraphrasing): “startups can only excel if the CEO / Founder is willing to delegate daily responsibilities and trust the team they are assembling.”
  • Oprah Winfrey: if there were ever a better motivational speaker, please let me know; despite all the challenges she has faced from the earliest days in her childhood, she has continued to succeed and give back to society.  It was refreshing to hear someone so successful reiterate the mantra to “be true to yourself and you will achieve success” and reminding people to not make decisions purely for money, as that will not lead to long-term success or achieving your goals.
  • Bill McDermott: as the CEO of SAP (~$150.0 billion market cap) he spoke with pride of his entrepreneurial beginnings, at 16 years old he bought a local deli and built a business designed for the local high school kids who were “looking to play arcade games and get good food”, in turn his little corner store took all the business from his local rival, 1970s behemoth 7-11.
  • Ashton Kutcher: I have to admit an ignorance to the workload of actors/actresses and models, and the pleasant surprise to hear Ashton extoll the benefits of working hard and that no job is beneath you.  In evolving from a laborer to a model to an actor to an investor, most importantly his energy is being used as an activist to save children from exploitation and human trafficking.
  • Dan Reynolds: as the lead singer of Imagine Dragons, he has seen the trials and tribulations of an unsigned band and the heights of multiple platinum albums.  In an era where every song being released seems to have an Explicit Warning on it, Dan and his band are steadfastly focused on clean music and in response they are the drawing amazing crowds of both young (children) and old (parents) all the while traveling the world on what seems to be a perpetual tour.  Dan does an amazing job educating his audiences on the need to bring awareness and acceptance to depression, anxiety and the value of therapists.

In addition to the opportunity to hear the stories from these amazing people, there was an extensive discussion on the powerful combination of X (experience) and O (operational) data, as illustrated by the $8.0 billion acquisition of Qualtrics by SAP.  Qualtrics software focuses on experience management related to: (1) brand, (2) customer, (3) product and the most recent addition (4) employee.  These four areas provide a continuous feedback loop related to all aspects of a company and take the concept of customer development well beyond product market fit and simple product iteration.  This is a growing market and already gaining incredible traction.  SAP on the other hand is already everywhere; take into consideration that 77% of all transactions globally are run on SAP software, they have cornered the market on operation data.

The combined entity (SAP + Qualtrics) gives us a view into how every company (start-up or established) needs to truly embrace data and eliminate bias in their business decisions.  Human nature is to make excuses for negative outliers and criticize the data that does not conform to their opinion.  If we want our companies to be truly successful, we need to align with the mission of the company, trust in our team, not chase the dollar rather the goal, and embrace the ground truth provided by both X (experience) and O (operational) data, no matter how difficult it may be to accept. By the way, if you ever need some to break up the tediousness of your conference, I would highly recommend Dr. Peter Lovatt, Dance Psychologist.  It is amazing how quickly he can get an 11,000-person audience engaged and raise the level of energy in only a few minutes.  This is definitely worth a watch: Dr. Peter Lovatt, Dance Psychologist Talent Summit 2018 (skip forward to the 7m00s mark) —Mike Nugent, Managing Director

MIT FinTech Conference

This month, I attended MIT’s annual FinTech conference in Boston’s Seaport district. The event was a tremendous success, bringing together an accomplished group of entrepreneurs, technologists, VCs and financial services executives. Panelists discussed topics ranging from the rise of challenger banks, the next generation of digital governance to VC perspectives on the opportunities in FinTech today.

Of course, I was most interested in the founder mythology. Rashmi Melgiri (Co-Founder of CoverWallet) captivated the audience with the story of how her team has revolutionized small business insurance.  Her ability to articulate the parallels between small business insurance today and airline tickets before Expedia, coupled with her ninja product development (she visited dozens of local insurance agents in Brooklyn with her co-founder posing as potential customers) was intoxicating founder-talk for a VC like myself. If only we’d had XPLR in 2016! We also had the pleasure of hearing perspectives from multiple established FinTech VCs.  Adam Valkin, GP at General Catalyst, shared 20 years of invaluable wisdom from launching companies to making successful investments with his present firm.  Two themes that resonated with me are the common qualities in successful founding TEAMS (intentional caps lock) and how to think about the macro of venture capital.  Today, great technology has almost* become table stakes for venture funding. There is a temptation to spend all your time comparing trees instead of looking to see whether the forest is next to a paper mill or set to grow and thrive in the coming years. Needless to say, the day was time well spent and I would encourage all of our readers to put next year’s event on your calendar! —Frazer Anderson, Investment Analyst

Portfolio Updates

Exciting Developments for LifeYield

The team at LifeYield continues to find new sources of “tax alpha” for their customers.  We are proud of the company’s role in making tax optimization ubiquitous, empowering investors to earn higher returns without increasing risk.

Relief for Crypto Investors

I had the pleasure of supporting Vestigo portfolio company FRST at an Ethereum meetup in Chicago a couple of weeks ago.  While of course FRST’s technology shined, perhaps the most impactful speaker was Andrew Gordon (a Chicago tax attorney). He presented on the many myths surrounding how to calculate and pay taxes on digital assets.

The audience was horrified (clearly none of them were using ZenLedger). Fortunately, Andrew is also a ZenLedger advisor and we both shared the company’s story to the palpable relief of the entire room. The crypto world is quickly waking up to the importance of tax compliance. —Frazer Anderson, Investment Analyst

Interesting News

“Modern?” Money

Regardless of your stance on the crypto protocols of today.  Opportunities for innovation in the global monetary system abound.

Digital Banking Disruption

Vestigo is excited by the collision between technology and banking.  As investors, while it would be great to fund the “iPhone of mobile banking,” we see fantastic promise for incumbents of all sizes to partner with B2B FinTechs and start delighting their customers.

A Decade in Review

Crunchbase provides a fascinating and empirical look-back on how the VC landscape has changed over the past 10 years. We look forward to seeing “data = alpha” in the 2029 decade in review.

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