Monthly Archives: February 2014

Congratulations, Coverity!

Posted by Paul Holland

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Congrats, Coverity!

By Paul Holland

Nearly 10 years ago, I received a call from a former colleague, Netflix CEO Reed Hastings, with exciting news.  John Hennessy, now president of Stanford University, had discovered at Stanford four incredibly bright computer science students and their professor, who had invented a new way to find errors and security vulnerabilities in complex source code.

Reed made introductions, and soon I was hearing about the product – Coverity Prevent – straight from the group’s leader, Seth Hallem.

Our network of relationships further affirmed just how exciting Coverity’s work was when Aki Fujimura,  another friend of Foundation Capital and early board member at Coverity, also introduced my partner Mike Schuh to the company.

It was clear early on that Seth and his team had a fantastic product – one poised to usher in a fundamentally new generation of software development technology.

In 2006, Coverity invited Foundation Capital to lead its Series A investment, and I joined the Board of Directors. Bruce Dunlevie from Benchmark Capital took an observer seat, and his  insight proved invaluable in helping to scale the company. In just a few years, Coverity’s client list grew to include 7 of the top 10 aerospace and defense companies, 9 of the top 10 technology hardware companies, and hundreds of Global 2000 companies who have come to rely on the Coverity platform to protect their brands and their bottom lines from software failures.

What began in a Stanford computer lab with four college students and their professor has grown to become the trusted standard when it comes to developing a secure infrastructure for the modern global economy. And today, we are excited to announce that Coverity has been acquired by Synopsys.

This is more than a monumental day for the company and a vote of confidence in the work of CEO Anthony Bettencourt and his team – it also represents a strong statement by Synopsys. In the development testing business, Coverity is second to none. And together, the two make an  extremely powerful combination.

Our relationship with Coverity has been more about an investment of time, energy, and support than actual dollars. To help Coverity commercialize and grow its client list, Foundation helped recruit the entire management team, introduced them to key strategic partners and customers, and also connected Coverity to the significant players at large financial institutions. In doing so, we leveraged longstanding relationships and institutional knowledge developed over years of helping companies go from being nascent to being dominant.

Coverity’s success is an affirmation of Foundation Capital’s commitment to seeking out the best ideas being generated at educational institutions like Stanford, and to building the lasting  relationships that can turn those innovative ideas into world changing companies.
Our investment in Coverity is one in a long line of successful ventures that began in university environments – including Financial Engines, Atheros Communications, EnerNOC, and others.

Foundation’s Young Entrepreners Program, whereby graduate students think and act like VCs on campuses across America, is also in service of our commitment educational institutions. The program gives students a chance to identify promising ideas, provide analysis, pitch ventures, and develop relationships with the entrepreneurs who are dreaming up tomorrow’s game-changing technologies.

So while Coverity is unique, I strongly believe its path to success is not. In the coming years, we’re going to hear more and more success stories like theirs.

In the meantime, we at Foundation offer our heartiest congratulations to Anthony and the team at Coverity as they embark on this new chapter.

Welcome Localytics!

Posted by Ashu Garg

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In 2011, I stopped drinking the HTML 5 Kool-Aid and came to accept that apps were with us to stay. And since that time, I’ve been actively looking for marketing automation companies who were building products for the mobile-centric world.  In 2013, I was fortunate enough to find myself in a meeting with a group of entrepreneurs from Localytics who shared the same world-view.  And they were laser focused on giving mobile app creators the data analysis tools they needed to capitalize in a fast-moving space.  I soon realized that my scheduled one-hour chat with Localytics’ passionate, visionary co-founders Raj Aggarwal and Henry Cipolla simply would not suffice. I ended up spending the entire day with them.

Today, I am excited to welcome Localytics to the Foundation family.  And I’m particularly excited about what they have in store when it comes to marketing automation – a space that has undergone a dramatic evolution in a few short years.

With the shift from dial up to broadband, consumers went from “snacking” to “always consuming” – integrating the Internet into almost everything we do in our daily lives. Recently, smartphones have driven a similarly profound shift from “always on” to “in the moment” – giving consumers the ability to connect and transact anytime, anywhere.

Consider one telling fact:  PepsiCo’s HR team recently found that 90 percent of the people who clicked on their job-related emails did so from mobile phones.  And job applicants wanted to be able to apply from their mobile devices, too!   Whether it’s a job application or house hunting or recipe research, consumers expect to be able to do it – whatever “it” is – on the go.

Companies must find ways to respond to this challenge, and Foundation Capital has a long and successful history of investing in companies that help CMOs make sense of the world – from Responsys to Tea Leaf to Aggregate Knowledge.

Over the last 18 months, my partners and I have studied the impact of the mobile Internet on the marketing automation tool set, and we believe that mobile will change everything yet again. Cookies are becoming less relevant.  Globally, there are more mobile users than Internet users.  And – especially with the coming of age of the mobile first generation – marketers need to re-think everything about their model for consumer engagement – both on the web and at the storefront.

Given the profound shift underway, we have been looking to invest in companies that have the vision to drive this transformation, and the team that is up to the task of realizing that vision. If they have some customer traction in this quickly moving market, that’s icing.

Localytics has these qualities in droves  – which is exactly what made me want to give up all my other meetings that day I met with Raj and Henry.  If venture investing is like getting married, this was definitely love at first sight.

Raj had already built the go-to analytics product that 5,000 companies – including eBay, ESPN, and Microsoft – relied on.  And I saw that his vision was not limited to analytics.  Raj knew immediately that first-generation mobile marketers would want to respond in the moment, and he was already enabling them to use real-time data to drive closed-loop, highly personalized campaigns.

In short, Localytics was perfectly positioned to develop a full suite of mobile marketing tools.

Raj and Henry are more than passionate and visionary entrepreneurs. They want to build a substantial company and were not fazed by the prospect of competing with the likes of Omniture.  In fact, they had attracted very talented executives – including COO Duncan McCallum. Duncan is a seasoned entrepreneur who had been a CEO of several ventures, so it meant a lot that he chose to work with Raj.

Most importantly, I quickly learned that customers love Localytics. I spoke to several large companies who had also used other analytics tools, and they raved about how much better the Localytics product was. Some of the largest players in e-commerce, media, technology and travel were already customers, and as a result, the company had strong momentum on most metrics that matter.

I couldn’t be more excited about Foundation Capital’s investment in Localytics.  I’m eager to join the board and to play a small role in helping Raj, Henry and their teams realize their dream of transforming the marketing automation stack.