Steve Singh wants to find the next Concur.
The longtime tech executive is joining Madrona Venture Group as a managing director, where he’ll help lead investments at one of Seattle’s most active venture capital firms.
Singh was previously chairman, CEO, and co-founder of Concur, the Bellevue, Wash.-based travel expense giant that sold to SAP for $8.3 billion in 2014. He was an executive board member at SAP before joining container-based software startup Docker, leading the San Francisco company for two years as CEO before stepping down this past May.
Singh first joined Madrona as a strategic director in 2015, but now he’s doubling down with the early-stage investment firm as one of nine managing directors. He’s also betting big on Seattle.
“In the next ten years, there’s no reason why you can’t have another 5-to-10 companies like Concur and Tableau being built in the Pacific Northwest,” Singh told GeekWire this week.
Founded in 1995, Madrona raised $300 million for its seventh fund in 2018 and manages approximately $1.8 billion. It also raised $100 million last year for its “Acceleration Fund,” or an investment vehicle for later stage companies both in and out of the Pacific Northwest.
The firm is a key part of a bubbling Seattle startup ecosystem that just broke a record for venture capital dollars raised in 2019, though the city still ranks far behind other metros such as Silicon Valley and New York.
Singh is the third person to join Madrona’s managing director ranks in the past four years. It promoted former Microsoft exec “Soma” Somasegar in 2017 and did the same with former King Digital CFO Hope Cochran in 2019.
We caught up with Singh to learn more about his investment approach; his optimism for Seattle’s tech scene; and his advice to entrepreneurs. In addition to his new role at Madrona, Singh is a board member at Modumetal, Center ID, DocuSign, Talend, WaFd Bank, and Clari. He’s also helping with the Singh Family Foundation, which donates to charities and runs a girls school in India.
This interview was edited for clarity and brevity.
GeekWire: Thanks for chatting with us, Steve. Why did you decide to join Madrona as managing director?
Steve Singh: It’s a couple things. I’ve had a really fortunate career, a chance to learn from a bunch of amazing executives in their own right — people like former Apple exec Bill Campbell and former American Express chairman Ed Gilligan.
A lot of the things I’ve been fortunate enough to be apart of in my life were driven by the fact that I had mentors and advisors who really helped me scale my business. Part of what’s important to me is being able to give that level of assistance back to others.
We all have certain areas of expertise; for me it’s in helping build software businesses. The opportunity to really help contribute to the next generation of companies was really exciting.
Then it really just came down to where. I had the opportunity to look at a number of firms, everything from seed stage to late stage. The No. 1 priority to me was Seattle. It’s not only home for me, but more importantly this is an incredible epicenter of innovation.
There’s a reason why, outside of the clouds in the sky, it’s called Cloud City. As you think about cloud computing and what it is enabling, a lot of the innovation we will see with infrastructure, enterprise applications, machine learning, and more — it will be driven by this move to the cloud.
Seattle is an amazingly well-situated market for the next generation of technology companies. And with Madrona, it’s the premier venture capital firm here. I’m lucky to be a part of it.
GW: Talk about your investment thesis at Madrona and some of the opportunities you see with enterprise technology.
Singh: Over the next ten years, the big enterprise application companies will be really rooted in micro-services architecture that captures the capacity to innovate with machine learning. It’s taking machine learning and applying it toward things like procurement and budgeting. It’s the next generation of Concur, the next generation of customer management.
We invested in Clari this past October. It’s a phenomenal company that helps drive revenue operations. This business is doubling year-over-year. What’s amazing about Clari is that it uses machine learning to really anticipate and understand the behavior of every single sales rep, sales manager, and head of sales — and the interactions they have with prospects. It’s as accurate or more accurate than any human being in predicting whether or not a deal is going to close.
Things like Clari are going to become the next generation of applications that will sit on top of existing tech stacks like SAP or Salesforce, or in other cases they will replace them. There are going to be 50, 60, 70 companies built off the next generation micro-services architecture.
GW: What’s your outlook on Seattle right now?
Singh: There’s a lot of really good things happening in Seattle. First of all, an amazing amount of talent in this area — engineering talent, product management talent, go-to-market talent. It’s an incredible community.
We’re starting to see a maturing of that community, or a critical mass. Go back 10, 15 years and that was certainly not the case. Today, it’s a really robust ecosystem of talent in every area that you need to build a company.
Amazing companies typically form around big tenant tech companies. We saw that in the Valley with Apple, Intel, Oracle — you saw the next generation of companies form with talent that came out of those organizations, and with capital available in that geography.
You’re seeing that today in Seattle. You’ve got Microsoft and Amazon, as well as other major tech companies that have secondary offices here. Then you’ve got a bunch of companies like the Concur’s of the world entering their next phase and becoming mature. You start to see people leave and go start other companies.
One thing I love is that there are five CEOs that have come out of Concur. Then there’s literally 30 or 40 executives that have gone and run other businesses at the C-level. To me, that’s an example of the maturing of a region. It’s an example of how you’re seeing not just more talent in a region, but that talent spreading its wings and running other businesses.
The capital is here; the talent is here. There’s a business-friendly environment that encourages taking calculated risk. Those are the elements you need.
When you mix it all together, it’s hard not to be bullish on Seattle.
GW: Some people in Seattle — including folks at Madrona’s startup studio — theorize that the tech giants are sucking up would-be entrepreneurs, and ultimately hurting the region’s startup ecosystem. How do you get more of those folks leaving big companies and making the startup leap?
Singh: A few things have to come together. Is there a support infrastructure for these companies to be built? Part of that is capital. Madrona is focused on that and is the market leader in the Pacific Northwest.
The other part is being able to help entrepreneurs deal with business challenges from Day 1, all the way through the course of building a business. It’s what Madrona calls “for the long run.”
That’s the support side of it. The other part is that entrepreneurs will find a different stage or different point in their life where they say, now is the time for me to take that risk. Sometimes it’s a family issue or comfort in their jobs. Other times it’s really just not the right phase of their life from a development perspective on when they want to take a risk.
But our job isn’t to go pluck engineers or executives out of companies to go start businesses. Our job is to make sure we have the support infrastructure for those who are wiling to take that risk, to go build these great businesses with the help of others who have done this before.
Once companies get rolling, we are absolutely committed to invest aggressively in helping bring executives who have a fair bit of experience into these young startup companies that have already gotten off the ground with the original founding team.
GW: Any advice to entrepreneurs as we embark on 2020?
Singh: Two things, and they are applicable at any period in life, whether you are in a high growth environment, a slow growth environment, a good economy, a bad economy. Sometimes we lose sight of these things.
First: Do you really understand the unit economics of your business? Do you really understand how to drive profitability? I’m not pushing the companies I invest in to be profitable, but I want them to make sure they understand what it takes to scale the business while being very capital efficient. That is going to become more important in 2020 as the capital environment becomes more normalized.
Second: This is really a universal truth. You have to find leaders who you can learn from or get advice from. There is always a new set of challenges that emerge in every generation of companies. Having people who have gone through various cycles, who have dealt with companies at the early and later stages, is immensely valuable. It’s about being objective and understanding your business.
If you get those two things right, the chance of success goes up radically. They are the biggest drivers in improving your opportunity for success.