Advising a startup can be an incredible experience for any executive, but we found this to be increasingly true for chief information officers (CIO). Today’s CIOs are often tasked with more than being the organization’s go-to for technology solutions, they are at the front-line of understanding industry disruption — and keeping their companies ahead of that disruption.

Today’s CIOs are the change makers, the innovators, and, at times, the designated startup whisperers.

As startups, CIOs can be not only a source of wisdom but also a partner, a coach, and a long-term industry ally.

For CIOs, becoming an advisor is an opportunity to give back. You can work directly with the next generation of startup executives on innovative ideas.

Based on the results from Sapphire’s CIO Innovation Index, we found that more than half of CIOs are currently advising startups, and they have taken on this role for a variety of reasons, including executive career development. Of the CIOs currently involved with startups, we found over 50% of them said they are advising in order to build expertise on rapid scaling a startup so they could learn about agile and innovative processes that could be used inside their organizations.

As Ralph Loura, CIO of Lumentum (and former CIO of Clorox), put it “I have found that serving as an advisor to startups can be a uniquely rewarding experience. The CIO benefits from the opportunity to help shape emerging technology and business model disruptors as they toil to bring early-stage work to the market; and startup leaders benefit from having a seasoned mentor on not only the market and product roadmaps, but on the people and culture aspects of defining a brand and building an organization as well.”

In this post, we’ll discuss how CIOs are embracing the startup mentality in order to develop more efficient go-to-market strategies, and, at the same time, gain access to other leadership opportunities.

1. Startups can often innovate at greater speed

According to CB Insights, 84.9% of corporate strategists surveyed said that innovation is very important. However, 78% of respondents actually focus on incremental changes—and separately, 60% said it takes their company a year or longer to create new products.

Because of their install base, large incumbent companies can be perceived as lagging startups in tech innovation. Implementation of new technologies can be slow due to lengthy reviews and approval, a multitude of stakeholders, and the need to work with the existing tech infrastructure. On the other hand, startups are known to be starting with new technology, often resulting in a more agile, faster time to market for the latest solutions.

CIOs recognize that to stay ahead of the industry disruption, it’s important for large companies to simultaneously manage current operations and future opportunities for growth. In short, CIOs must keep their company’s innovation engine running.

According to Steve Coley, a director emeritus in McKinsey’s Chicago office, maturing companies face several horizons of growth, and they have to remain vigilant about emerging opportunities and pilot programs—all while maintaining day-to-day operations of the core business.

But it’s a difficult balancing act, and that’s one reason we believe we’re seeing more CIOs advising startups: they’re looking for ways to keep their large companies nimble.

Advising a startup allows the CIO to step away from their corner office for a change. They can see what it’s like to move ideas forward without the processes and bureaucracy they’re used to.

Lessons learned from the CIO’s advisory involvement can place them at the forefront of competitive strategy and leading edge technology.

2. Getting insight into new technological domains

Increasing internal efficiency in a large organization is easier said than done. Large budgets often come with lengthy timelines, operational duties, and oversight which can limit the time available for CIOs to discover and test new ideas.

For many CIOs, tapping the startup community can provide opportunities to expand their knowledge. They can partner with external teams and work on breakthrough ideas outside of the existing constraints of their organization.

In this way, startup advising is as much a win for the CIO and their company, as it is to the startup. Think of it as a fast track to innovation. CIOs who advise startups build hands-on experience with the latest technology and can often become their company’s point person for identifying and implementing emerging technologies.

CIOs already recognize the importance startups will play in the future of their enterprise with their spending. Sapphire’s CIO Innovation Index shows that startups today consume a median 10% of IT budgets—and are estimated to grow by 50% over the next 12 months.

This means that large enterprises are seeking innovative solutions from the startup community. Becoming an advisor to one of these startups gives CIOs an inside look at the technology and how start-ups operate — potentially giving CIOs valuable insights on how to best engage startups.

Insights from your direct involvement with startups can help strengthen the CIO’s case for new technologies or partnerships when meeting with the internal CFO, COO, or CEO.

“When you can prove the tech is going to do something amazing for customers or in differentiating your [corporate] performance, you have to tell that story,” said Chris Laping, former CIO and senior vice president of business transformation at Red Robin Gourmet Burgers.

Laping explained in a CIO Magazine interview that he’s always pitching ideas on new technologies and partnerships with the company’s CEO.

3. Advising is a flexible, low-risk way to engage

CIOs are trusted for their deep technological and leadership experience. And given the fast pace of innovation, CIOs are in a unique position to advise startups, not only on the technology, but also how to effectively engage corporate IT decision makers in the sales process.

Advising can be a fulfilling experience—a chance to give back– but it doesn’t have to come with the high risk and time commitment of formally joining a startup.

CIOs can choose to engage with startups in a variety of ways—for example, by becoming an informal advisor or officially joining the board. Generally, advisors and board members both help companies stay ahead of the competition and ultimately grow shareholder value.

However, the main difference between the two roles is that an advisory role is usually informal—often selected by an executive team or board of directors, and CIOs may or may not be financially compensated for their participation.

Independent board directors at startups, on the other hand, are often selected and appointed by the CEO and existing board members (who are typically investors into the startup).

Once elected by shareholders, board members have a fiduciary duty to act in the best interest of the organization. Joining a board brings both a legal and an ethical responsibility to oversee management decisions. And if board members fail to act in good judgment, they can be held liable for the actions of the corporation.

Here are some key distinctions between being an advisor and being a board member:

Advisors

• Informally hand-picked by CEO and management team
• Can serve for as long as needed and are easy to replace
• May be compensated through equity interest in company, or not compensated at all
• No voting rights in the organization, or power make management or product decisions
• No legal duty to prioritize the needs of shareholders
• Not held personally liable for the mistakes or misjudgments in connection to their advisory duties

Board of Directors

• Formally nominated by a nominating committee, ballot, or petition
• Most have term limits, and the removal process depends on company bylaws (impeachment, majority vote, etc.)
• Usually compensated in cash and stock awards
• Voting rights in the organization, with power to remove CEO or make changes in the executive team
• Has a legal duty to place the needs of shareholders before employees, which includes the CEO and management team
• Held personally liable for the mistakes or misjudgments in connection to their board duties

As technology becomes embedded in nearly every facet of a business, seasoned IT executives and CIOs are still missing at the highest levels of corporate leadership—the boardroom. We found that institutional investors are pushing for diversity in many forms, including functional expertise.

However, serving on a board can require a great time commitment (even in a startup). It also comes with legal and corporate governance standards. Conversely, advisory duties are generally more loose, allowing for greater risk-taking and creativity.

Speaking at our 2019 CIO Summit, Patty Morrison, former CIO of Cardinal Health, said, “Being on a board is not a minor commitment. Four directorships can equal a full-time job—and during major events, such as activist bid or merger (which often happens during a 10-year tenure), this can go up considerably.”

4. You can accelerate your career from CIO to innovation catalyst

Software is eating the world. Businesses are getting more and more complicated, and they’re adopting new technologies to meet the needs of savvy consumers.

In fact, more than 70% of the CIOs surveyed in Sapphire’s CIO Innovation Index are investing in emerging technologies, such as artificial intelligence, machine learning, cybersecurity, and data management. And more than 50% are choosing to work with startups over established vendors in those top emerging tech categories.

The CIO is well versed in technology, and they can be a valuable asset during strategic corporate shifts, or even when engaging with startups.

And, over time, CIOs who advise startups can learn skills and gain perspective that can make them great candidates for the top spot.

According to Bask Iyer, CIO and Chief Digital Transformation Officer at VMware, the CIO role has become one of the most complicated in the C-suite, but it also involves preparing IT executives to serve as presidents, general managers, and CEOs.

Becoming an advisor to a startup in a totally different industry is an opportunity to build a diverse resume. Advising startups, CIOs can be on the forefront of change and become technology leaders.

They can also become more exposed to the business decisions of startup companies. They can learn the ins and outs of finance, operations, and product management—all from the perspective of an IT guru.

As Iyer says, “CIOs know how to take a trend, change a culture, change a process, hire the right people, hit the numbers, and achieve delivery—what else could you want from your CEO?”

But accelerating your career takes time. As the CIO, you must be alert for new opportunities but know that building your story and credibility in the industry doesn’t happen overnight.

For example, Wendy M. Pfeiffer, CIO of Nutanix, found that her technological skills were relatable to both her CIO role and her board member role at Qualys, another cloud-computing startup. “Be open to everything,” she says. “Take time to develop and practice your narrative.”

CIOS can also use their time as a startup advisor to remain active during career gaps. Life events, corporate restructuring, or industry shifts shouldn’t deter you from your career goals.

Becoming a startup advisor provides a flexible opportunity to stay ahead of innovation while you transition back to the corporate world—and perhaps open new doors in your leadership journey.

Ready to become a CIO startup advisor?

Startup advisory roles can be a perfect match for CIOs. It provides the opportunity to be directly engaged with more agile organizations that are constantly innovating.

And, in doing so, advisors don’t face the same legal constraints and governance standards that board members experience. They have more freedom to be creative with their startup counterparts, and, contrary to serving on a board, they have more time to balance advisory work with a full-time CIO job.

This is an opportunity to not only stay current with innovations but also exercise your leadership skills to make the industry better as a whole. We’ve seen that collaboration between startups and CIOs from large organizations end up delivering faster technological solutions.

Having startup experience can place the CIO at the center of this industry evolution.

 

A request by a customer for a Proof of Concept (POC) can strike fear into the heart of even the most seasoned go-to-market team at an enterprise technology startup.  

The truth is, a POC—a trial period of your product with a potential enterprise customer—elongates the sales cycle, can be expensive, and doesn’t always lead to a final sale. Over 78% of the IT executives from the Global 2,000 companies we surveyed in our recent CIO Innovation Index said that less than half of the POCs they participate in result in production deployments.

To make matters worse, a poorly executed POC can be the bane of a sales team—placing deals in purgatory and leaving leads in a state of indecision. Yet, if deployed correctly, these experiments can squash concerns enterprise buyers have about adopting new technology and getting deals over the finish line.

But it’s no simple feat. We recently hosted a Revenue Roundtable for over 25 of our portfolio CROs that featured Trevor Schulze, SVP and CIO of RingCentral and Seann Gardiner, SVP of Business Development at ThoughtSpot to discuss strategies to executing a successful POC. This piece outlines insights from that dinner and five essential steps to successfully execute a POC and set your sales team up for long-term success with enterprise customers.

1. Proceed with Caution

Not every enterprise sales cycle should utilize POCs; they should be leveraged judiciously. POCs have a high opportunity cost, meaning they take up time and resources your company could use to pursue other deals. If a POC doesn’t add significant new information to the buyer’s journey , then it’s most likely not worth the time or trouble. In those cases you should utilize demos, customer references, and system documentation in lieu of conducting a POC.

You should clearly identify with your sales teams when it’s appropriate to use a POC. For example, POCs can be a valuable sales tool if you have a blended GTM motion that caters not only to technical users but also to executive buyers and/or serves particular enterprise categories (e.g., cybersecurity, data and analytics). In scenarios where you are leading with an enterprise sales motion focused on c-level executives and targeting multi-year contracts the threshold for proving your product’s efficacy and value goes up. For example, DocuSign—a company with a successful inbound GTM channel, also built an enterprise sales team that strategically leveraged POCs to win large enterprise-wide six-figure contracts.  POCs that have the right commitment and executive alignment are a valuable tool to validate your company’s point of view, elevate your product above the competitive noise, and position your solution from being labeled as a point solution to an enabler of digital transformation.

In this case, a POC can help sales teams achieve high-touch engagement with decision makers. Oftentimes enterprise buyers who are facing new technologies will be hesitant to take the plunge on a perceived unknown. In these situations, POCs can serve as a gateway for customer adoption and close this trust gap. In fact, 58% of IT executives that we surveyed said they always use POCs as a key evaluation tool for startups. By engaging in a POC, the customer can understand the nuances of your solution in order to make the right technical and business decision while instilling confidence in their buying journey.

Finally, be sure to identify what your key performance indicators will be, such as the ratio of pipeline opportunities to active POCs, their average length, the conversion rate, and the annual contract value of POCs that you convert. These indicators will help track and refine your process over time.

2. Zero In On Your Value

A POC serves a very different purpose from a demo and should be structured around showing how your product addresses a specific problem.

A demo is open-ended and showcases your product’s features, capabilities, and performance, while a POC should demonstrate how you can tailor your solution to deliver value for that specific customer in their unique environment.

Emerging technology vendors should clearly outline upfront what value their customers should achieve upon completion of their POC. Focusing on value will align you with the customer’s business goals from the start and help rationalize their investment. You have to demonstrate the value of your product early on, but you don’t want to overpromise.

To avoid getting ahead of yourself, make sure you focus the solution on a specific piece of your customer’s value chain where you have a strong chance of winning them over. Trying to solve all of the customer’s problems will lead to POCs running over schedule and over budget and will most likely not result in a desirable outcome.

As Eric Tan, VP of Business Services and IT at Coupa, eloquently said at our annual GTM Summit for emerging technology companies, “Aim small, miss small. Pick an area or a problem that you are trying to solve that is very, very specific. Don’t try to solve the large problem or critical areas . . . because chances are we’re not going to buy [that grander vision].”

For example, Eric said, if you are going to solve the entire single sign-on (SSO) authentication business, chances are he won’t buy-in because he already uses an identity and access management platform. So, you have to identify a very specific use case for your solution — perhaps one that aims to solve employee off-boarding because it’s something that complements what the customer may already have.

3. Keep It Short

As we mentioned earlier, POCs require significant time and resources. To create a more efficient POC process, agree to a clear deadline with your customer, and implement a system to make sure you stay on track to your commitments — on both sides.

After all, a POC that runs for a long time can undermine many of the perceived advantages that customers have of emerging technology vendors. Relative to larger, more established companies, startups are expected to provide customers with ease of use and fast time to value. 55% of startup customers cited a faster pace of product delivery as one of the greatest values to their organization when working with startups.

How long is too long? Most of our surveyed enterprises said 60% of their POCs run longer than three months. That number is concerning, because the CIO Innovation Index research also showed that POCs that last less than three months are 3 times more likely to result in successful commercial implementation. They don’t drain as many resources, and teams are able to quickly show how their product or service would drive business results for their customer. Shorter POCs helps to maintain sales momentum and results in better commercial conversion rates.

As Trevor Schulze, SVP and Global CIO of RingCentral said at Sapphire’s recent Revenue Roundtable, “Speed is everything we want to move fast. I need to show my business partners and board fast time to market on IT projects.”

4. Get Some Skin in the Game

Running a POC requires significant resources, so to get the most out of your POC, consider requesting a similar financial commitment from your prospective customer.

While it may seem bold to ask for a financial commitment before actually making a sale, if a customer agrees, the financial aspect can signify genuine intent and help focus your customer’s time and energy on the project for a greater chance of success.

You can also ask for other, non-financial investments from the customer during a POC, such as executive sponsorship who have the ability advocate internally on your behalf. This top-down buy-in can help move the POC to completion, and hopefully eventually into full production.

“I actually like the idea of paying for a POC, as the buyer, because it will help me leverage my [team] to actually focus their time and energy on getting it done,” said Mark Settle, Okta’s former CIO at Sapphire’s 2018 GTM Summit. “If it’s just a free exercise, every other distraction in the world will come along, and people will just say, ‘Yeah, can we put that off for two more weeks?’”

On the flip side, be wary of innovation or digital teams within enterprises that have budgets to run POCs but have no authority or executive visibility to put your solution in production. This can be a red herring for your sales team.

If the customer is wavering, you can offer to take the POC cost off of the commercial agreement. Many IT departments within large enterprises even have budgets specifically set up for POCs. At Coupa, for example, the team sets up an experimentation budget every year so that they can run POCs to identify new technologies.

5. Set Clear Expectations, and Document Them

Once you have a financial commitment and sponsorship, it’s best to clearly document what a successful POC will look like with your customer.

Jointly identify the deliverables, the business objectives you will support, and the ways, exactly, you will add value and be measured. Taking the time to identify these expectations upfront will not only make sure everyone is on the same page, but it helps to make sure you have buy-in to the overall process.

Another benefit of outlining these expectations before you start deployment is that it provides a common reference metrics during the POC—they’ll be the basis for regular check-ins with your executive sponsors.

With a clearly documented POC at hand, your team can build a solid business case that executive sponsors can use to rationalize the move to a production environment.

Advantages of a Successful POC

A successfully executed POC can be your golden ticket to landing a large, complex enterprise customer.

You’ll create internal product advocates and loyalists—users who start using your product and will put up a fight if it isn’t put into production. They also are a path to executive buy-in, where leaders are confident that they know what to expect and exactly what business issues you’re going to help them solve.

With an affinity for your product among its technical users, and value alignment among your executive buyers, you set yourself up for long-term success.

We would love to hear your thoughts and feedback in the comments or on Twitter @RicoMallozzi.

 

Serving on a corporate board means wearing many hats. You are a canary in a coal mine, as Homa Bahrami, senior lecturer & distinguished teaching fellow at UC Berkeley’s Haas School of Business, points out. You are someone who might bring a contrarian or otherwise unique perspective. You are a mentor, an educator, a coach.

For Wendy M. Pfeiffer, chief information officer (CIO) of Nutanix, serving on a board was about using her 25 years of industry experience to help other business leaders make more informed decisions about the future of their enterprise. As a fervent technologist, it was important to Wendy that other companies be prepared to meet the demands of the next generation of consumers. And she felt ready for a new challenge.

But making it to the board of cloud security company Qualys didn’t come easy for Wendy.

Just 22% of people on corporate boards in America are women. And according to a Deloitte study, just 5% of S&P 500 companies have technologists on their boards.

Wendy defied these odds, using her background as a tech and business leader, working her network and using Sapphire’s Board Readiness workshops to help her articulate her differentiating value as a leader.

In this Q&A, Wendy walks us through all of the work that went into landing her a spot on the board.

Q: Why did you decide to look for a board seat?

After a 25-year career in technology, including roles at Cisco, Yahoo, and most recently as the CIO at Nutanix, I felt it was time to give back.

I wanted to bring my expertise into a boardroom to help business leaders make more informed decisions about the future of their enterprise.

At the same time, I was looking for a challenge.

While I have a strong foundation in business, with my B.S. in business administration, I was excited to become fluent in the language of corporate boards and learn from my peers in a new setting.

Finally, I believe it’s essential to get more technologists on boards. No company on earth today is not part of a tech ecosystem, and keen product-market discernment is how the best companies will thrive in the coming decades.

According to the U.S. Department of Labor, by 2020, Gen Z will comprise [more than] one-third of the global workforce, and we have to be ready to meet their demands or else risk falling behind. I knew I needed to walk the walk, not just talk the talk.

Q: Once you made the decision, what was your action plan to find the right fit?

First, I crafted my board bio to articulate my differentiated value.

A board bio should demonstrate your leadership experience, business competence, and industry knowledge.

For example, I’m an operator who has deep experience bringing technology products to market and then running them at scale. At Yahoo!, I was responsible for the world’s largest commercial private network, and at Cisco Systems, I delivered the company’s first ecommerce platform, CCO.

Next, I activated my network. I knew connecting broadly and personally would be critical to success. Sometimes, board appointments happen through personal networking, word of mouth, shareholder suggestions, and other informal channels.

I let different active board directors know I was looking for a board seat and asked for their advice and referrals.

I also attended seminars like Sapphire Ventures’ Board Readiness Workshop in order to build skills and further extend my network.

Finally, I reminded myself that this process, as with my career as a whole, was not a race. Every experience along the way was going to be valuable to the final outcome, and I should take as much time as I needed to focus and find the right fit.

Q: What, specifically, helped you find your role on the Qualys board?

I did a lot of preparation before I began actively searching. I made sure my board file was ready to go at a moment’s notice, did my homework to understand what, exactly, boards were looking for and how I could add value, and I identified and filled my own knowledge gaps so I’d be prepared to interview.

In addition, I was passionate about wanting to learn about a new arena, and I think that excitement was apparent in my conversations and interviews.

Lastly, understanding Qualys’ product was also helpful during the search process. Philippe Courtot, chairman of the board, was looking for a board member who truly understood how their product worked. Both Nutanix and Qualys provide cloud-based solutions, so the required technological skills were relatable to both the CIO role and the board member role.

My favorite memory of the search process is sitting at a tiny cafe in Hayward, California, getting a demo of Qualys’ product from Philippe and feeling a genuine connection with him as both a maker and a leader. I honestly didn’t expect to feel this way about a board director position, but I did, and I still do.

Q: What are you most excited about in your new role?

I’m most excited about the opportunity to apply both my technological background and my financial background as a member of the Qualys board.

In addition to this being my first board role, Philippe has asked me to serve on Qualys’ audit committee. At first, I couldn’t believe that my contribution, as a technologist, would be that valuable.

But in addition to giving me an opportunity to reconnect with my B.S. in business administration, serving on the committee has given me a view into how the company handles risk—including cyber risk.

Who knew that the indecision and stops and starts at the beginning of my career journey would result in this harmonious outcome 25 years later!

I’m also excited to define this position for myself and make it my own. The exciting thing about being one of the few female CIOs and board members in Silicon Valley is that I get to take advantage of a moment when no one knows exactly what to expect.

Qualys’ board is also an exception to the norm: we already have gender parity! Serving on a diverse and inclusive board in my first outing is an incredible opportunity to experience a level playing field from the beginning. I have to say, this is unique in my professional career.

Q: For other technologists seeking board positions at public or private companies, what other advice do you have?

For an experienced CIO, attaining a board of director role is 90% preparation and 10% luck.

Be ready to put yourself out there. Take time to develop and practice your narrative. Articulating your story in a way that’s authentic and meaningful is essential to finding the right fit.

Also, be open to everything, and say yes whenever you are asked to explore a potential board role. Entry and exit points to board service are not obvious, nor are they consistent. As my mom used to say, “You have to kiss a lot of frogs before you meet your handsome prince.” So, stay in the pond!

Expand your industry network

Networking played a key role in Wendy’s rise to becoming a board member. At Sapphire’s Board Readiness Workshop, she connected with Qualys’ CFO Melissa Fisher, who then introduced her to the chairman of the board later that day. The timing was perfect, Wendy says. While the connection happened quickly, Wendy’s acute preparation paid off. She had her bio ready and articulated how she could add value to a board.

Now it’s time to showcase your leadership skills. Sapphire Ventures leverages a diverse talent network to share expertise and help our companies scale. The next Board Readiness Workshop will help facilitate introductions to top industry talent.

 

I’m proud to announce that Sapphire Ventures has raised more than $1.4 billion in new capital commitments, bringing our total assets under management (AUM) to almost $4 billion. You can read the full announcement here.

This larger capital commitment gives us the flexibility to support more entrepreneurs who are building what we call Companies of Consequence: visionary companies that seek to change the way we work and live. We believe the added capital enables Sapphire to: 

• Differentiate even more effectively in an increasingly competitive market for high-quality investments such as those we’ve made most recently in Brightfield, Clari, Highspot, monday.com and Moveworks (1)
• Create an optimal fund structure with a main investment vehicle that can invest as little as $5-10M in an initial check for expansion-stage companies, combined with a new opportunity fund that can co-invest at a combined level of up to $100M per company in later-stage businesses
• Continue to scale our Portfolio Growth team to deliver critical, value-added services to help our portfolio companies grow their revenues, partners and talent base, and
• Diversify our base of limited partners (LPs) who can help provide access for our portfolio companies to Global 2000 customers.

The Evolution of the Venture Capital Industry

This capital infusion is another step toward Sapphire’s goal of developing the highest-quality investment platform we can for both entrepreneurs and LPs. We continue to evolve what a venture capital firm can be as we adapt to a changing market and industry. Once a niche profession, venture investing today is rapidly institutionalizing as more capital flows into the VC asset class (with approximately $100B committed across 2018 and 2019)(a) and as start-ups stay private longer. To succeed in today’s later-stage market, we believe VC firms need to be able to move quickly, write larger checks and bring more value to the table than just capital.

Here at Sapphire, we’ve long known that venture investing is about more than showing up with a checkbook and generalized best practices – hence our creation of the Portfolio Growth team in 2014 and our deep focus on enterprise IT. As we enter our 10th year as an independent venture firm, this additional $1.4 billion in capital enables Sapphire to double down on our differentiation by giving us the scale to:

• Staff up a larger, more global and more specialized value-added support team, including new talent leaders, a European business-development presence and additional go-to-market resources
• Expand and continue to introduce diversity across our organization and investment team at all levels, with a particular focus on the senior-most levels. 
• Focus on building processes and systems to ensure that we remain agile and operationally excellent at everything we do — from submitting term sheets and closing financings, to helping entrepreneurs and reporting results to our LPs.

We have been refining our platform to deliver value to entrepreneurs and LPs since our inception and the results speak for themselves. One of our stretch goals is to achieve 100% CEO referenceability, and to that end, in 2019 we:

• Provided our portfolio with 300+ introductions to potential Global 2000 customers or partners
• Made 250+ talent introductions to fill key executive roles 
• Hosted and curated 75+ innovation events and executive briefings to showcase our portfolio companies to Global 2000 customers
• Created and produced our first annual Cloud Go-to-Market Summit
• Held our 5th annual highly successful CIO Summit, and
• Launched an industry-first Women in Board Leadership workshop series to help identify and train the next generation of diverse board members.

We invest in these types of activities because we are committed to helping our entrepreneurs build Companies of Consequence. As part of our new capital raise, we will be further enhancing our Portfolio Growth services to help our companies with activities such as international expansion and sales optimization. Stay tuned for more information in the coming months.

Keeping the porridge just right

While we believe that expansion- and later-stage venture firms need greater scale to back the best companies, we also try to be thoughtful about keeping our organization at just the right size: big enough to expand the scope and depth of our services, but small enough to still be nimble and entrepreneurial ourselves. 

One of the benefits of having been in the venture business for 20 years – along with Sapphire’s President Jai Das and our other founding partners – is the experience to know how to right-size the platform so as not to overfund companies, or become paralyzed or risk averse by having too many decision-makers on the investment team. We’re certainly not perfect, but we strive every day to learn, grow and be better in providing entrepreneurs the right amount of capital and resources to succeed.

As a team, we’ve been through a couple of difficult economic cycles and learned a lot by backing Companies of Consequence through to exit such as Livongo that IPO’d earlier this year. Our history of 100+ total investments, 55+ exits(2), and $100B+ in enterprise value(3) we’ve helped create tells one story for sure.  But the team you see below, almost 50 Sapphires strong, is equally excited about the story we’ll be writing in the coming years as we put this new $1.4 billion in capital to work to build the next generation of Companies of Consequence.

(a) Source:  https://nvca.org/wp-content/uploads/2019/10/3Q_2019_PitchBook_NVCA_Venture_Monitor-1.pdf

 

(1) Companies mentioned in this article are a representative sample of portfolio companies in which Sapphire Ventures has invested in which the author believes such companies fit the objective criteria stated in commentary, which do not reflect all investments made by Sapphire. A complete alphabetical list of Sapphire’s investments made by its direct growth investing funds is available here.

(2) Exit figures represent all Sapphire Venture direct investments that had an exit by IPO during the time period of January 2011 to November 2019.

(3) “Enterprise Value” represent the company’s total value, often called the takeover value. This calculation is based on the company’s value: either the value at the time of the company’s acquisition, or the calculated Enterprise Value of publicly traded companies as of January 1, 2019. Sapphire Ventures was not solely responsible for the economic value created and no inference shall be made otherwise.

Technology is a powerful differentiator for enterprise companies today. Innovative tools can quickly set teams apart from their peers and sustain them in an increasingly complex and competitive environment. Cyber risk, digitization and innovation continually threaten to disrupt long established companies in favor of teams with more modern systems.

So it’s a surprise that as technology becomes embedded in nearly every facet of a business, seasoned IT executives and chief information officers (CIOs) are still missing at the highest levels of corporate leadership — the boardroom. According to a recent Deloitte study, just 5% of S&P 500 companies appointed a technologist to an open board seat (despite the fact that high-performing S&P 500 companies were 31% more likely to have a tech-savvy board director).

Why the gap? That was one of the topics we explored at Sapphire Ventures’ 2019 CIO Summit where we dug into the topic of CIOs on boards through presentations, panel discussions, and informal conversations. We discussed the perceptual barriers that CIOs often face when seeking public- or private-company director roles and brainstormed ways that CIOs can showcase their differentiated value as independent directors, nail the interview, and position a company at the front lines of innovation. Read on for five key takeaways.

1. Understand how boards have changed — and what they’re looking for today.

Corporate boards have the reputation of being homogenous and traditional with their business practices, yet that’s changing today. As Tuck Rickards, managing director at Russell Reynolds Associates and leader of the firm’s Digital Transformation Practice, described at the Summit:

“Boards no longer seek members who look like them and are from similar backgrounds. Today, a board is looking more like an agile scrum.”

(For those unfamiliar with the term, Atlassian defines a scrum as a framework for “diverse teams learning through experiences, self-organizing while working on a problem, and reflecting on their wins and losses to continuously improve.”)

Boards today understand that bringing leaders together from different professional and personal backgrounds leads to a richer decision-making process, a stronger reputation among the company’s customers and employees, and even, according to recent data from McKinsey, better financial returns. In addition, institutional investors are pushing for diversity in many forms, including functional expertise.

As a transformational leader and CIO, it’s an excellent time to align with a find a board that is seeking fluency in emerging and innovative technology.

2. Identify and fill your knowledge gaps.

Despite demand, as a CIO looking for a board seat, it’s not enough to be an expert on business software. As Patty Morrison (former CIO, Cardinal Health, and five-time public-company director) noted at the CIO Summit, tech leaders must bring a lot more business savvy to the table — from understanding revenue recognition standards (if they serve on the audit committee) to managing risk to meeting shareholder demands and even acting swiftly and effectively during a major event (e.g., bankruptcy, merger, or IPO) — to secure their position.

While your tech experience will be a valuable asset in all of these discussions, it’s important to educate yourself broadly in areas of business where you’re less comfortable. At Sapphire Ventures we’ve started compiling a range of resources to help CIOs become board-ready. For example, our ongoing event series brings together career coaches and recruiters, current and former CIOs, and public- and private-company board members to help support, inform, and connect technology leaders as they take the next step into board service.

Attending events like this and seeking other forms of continuing education will help you understand the right questions to ask and will teach you how to speak the language of corporate boards. Being able to clearly describe issues like technical debt or a botched data migration and then suggest solutions through the lens of ROI, revenue and churn metrics, valuation multiples, and risk will showcase your strengths.

3. Let people know you’re looking for a board seat.

Half of board appointments go through global executive search firms, and another 50% happen through friends and family, so it is critical to communicate your interest. Are you answering calls from retained search firms? Are you activating your network?

To ensure that you’re top of mind as boards plan for succession, reach out to specialized retained search firms like Russell Reynolds Associates (public boards), as well as heads of talent at VC firms (for venture-backed, privately held company boards). If you work within a specific industry, such as health care, do your research to figure out which firms specialize in your field (e.g., Oxeon Partners). Affinity groups like Beyond Board, Him for Her, or the Athena Alliance (for women) can also support you and provide greater visibility. In addition, don’t be shy about connecting with CEOs, mentors, and with current directors in your network. “Boarded up” directors who don’t have room for another board commitment may be open to referring you when they are approached.

Finally, make sure your board bio represents your highest level of impact as a technically savvy, confident, and networked steward of your business. Candidates who reach the interview stage will have extensive management and industry experience; however, to make the final cut, you need to convey emotional intelligence, unshakeable ethics, and the ability to work effectively in a team. Tuck Rickards reminded the CIO Summit audience to “steer clear of signaling that you’re a single-issue director.” Instead, show how you can participate and debate at multiple levels to make the entire board stronger.

4. Tell your unique, authentic story.

As Juergen Mueller, CTO and executive board member, SAP, noted at the CIO Summit:

CIOs must be change agents. While they should be proud of keeping the IT machine running, they also need to expand and pursue partnerships with other division heads, such as HR. Successful CIOs will ensure they’re relevant in the future.

For CIOs looking to level-up their career, being able to clearly articulate how they transform companies — instead of maintain the status quo — is essential. In a prior Sapphire Ventures event on board readiness, executive coach and multi-time CMO Ben Kiker shared how to:

• Express your superpower (a talent that’s all your own). This might be, “I consistently reduce cyber risk in an increasingly dangerous environment by bringing in cost-effective and easy-to-implement threat detection tools.” Once you identify your superpower, lead with it.
• Articulate your process (how you bring your superpower to life). For an IT leader, this could be through creating a balanced vendor portfolio to support your in-house team or identifying and working with startups that deliver greater ROI. Articulating your process in an action-focused way will help a board understand how you will close gaps at their company.
• Name your active ingredient (your essence or core nature). Each of us has an active ingredient — but it will not be the same for everyone. For a CIO this might be explaining technical concepts to nontechnical teammates. When you find a company that values your active ingredient, you (and the entire company) will thrive.

Including specific anecdotes, success metrics, and professional references in your story will make it even more substantial — and actionable for those who interview you.

5. Know when to say no.

In the end, you won’t be a successful corporate director if you can’t devote the time to it. As Patty Morrison reminded us:

Being on a board is not a minor commitment. Four directorships can equal a full-time job — and during major events, such as activist bid or merger (which often happens during a 10-year tenure), this can go up considerably.

Because of these requirements, it’s also important to be passionate about a company’s product before you dive in. You won’t be motivated to serve on subcommittees, dig in on strategic issues, and work closely with other board members and executives if your heart isn’t in it.

So be honest with yourself about your capacity and your compensation requirements (especially if you’re currently working full time), be wise about your offers, and don’t rush into service unless it’s a good fit.

Take the Next Step

Barriers remain — yet it’s an excellent time for CIOs to take their career (and company) to the next level. One of the key findings from Sapphire Ventures 2019 CIO Innovation Index — first released at Sapphire’s 2019 CIO Summit — is that CIOs and IT executives are already increasing their engagement with corporate boards, specifically with regard to emerging technologies. As new tools and ways of working become increasingly central to corporate strategy, boards will need more support in making decisions on complex issues like cybersecurity, data privacy, and digital transformation. Today nearly three-quarters of CIOs are engaging their company’s board on these issues on at least a quarterly basis. The next step is full representation — and Sapphire is here to support CIOs in making the move.