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OnDeck, a Lender to Small Businesses, Raises $230 Million in I.P.O.


Today, RRE Ventures portfolio company, OnDeck, completed their initial public offering on the NYSE. It is the largest venture backed tech IPO by market cap in NYC history. 

Congratulations to Noah Breslow and the entire OnDeck team. We’re incredibly proud of them!

Launched in 2007, OnDeck is the technology powered Main Street lender that has fundamentally changed how small businesses access capital.
OnDeck’s innovative technology platform leverages electronic information including online banking and merchant processing data to identify the creditworthiness of small businesses in minutes, while traditional lenders typically take days or even weeks.
To date, OnDeck has deployed more than $1.5 billion in capital to tens of thousands of businesses across 700 different industries. The company was recently named #11 on Forbes’ 100 Most Promising Companies in America list and was listed on the Inc. 500/5000 for a third year in a row. 

The Dangerous and Rewarding Path to Building Deep Value Relationships with Investors



Here’s a simple, functional topology of entrepreneur-investor relationships: 

  • First — and worst: The Wasteful Relationship. Such a relationship is time-consuming, degrading, and distracting. 
  • Second: The Neutral Relationship. You get capital, and not much else.
  • Third: The Minor Value Relationship. You get capital and occasional help on specific issues.
  • Fourth: The Deep Value Relationship. The inspiring partnerships that truly move the lever for you as an entrepreneur and for your company.

As an entrepreneur, you should aggressively avoid Wasteful Relationships, turn Neutral Relationships into Minor Value Relationships, optimize your Minor Value Relationships, and use Deep Value Relationships to catapult you up and to the right. 

Optimizing your Minor Value Relationships means getting the help you actually need when you need it, without wasting anyone’s time. Every reasonable investor will happily provide specific support (recruiting, intros, strategy, UX reviews, etc) when asked. Skill-in-action here looks like diligence, shamelessness, and specificity in the asking. It also means (gently) holding your investors accountable for the things you ask of them and they promise to deliver. Pretty straightforward; do it. 

Building Deep Value Relationships with your investors is a more difficult and important attainment. Cultivating such a partnership means expanding Minor Value Relationships and also, counterintuitively, flirting with the dreaded Wasteful Relationship. A dangerous path. 

Why is this? Because deep value cannot be created without confronting the really hard, mission-critical questions; it’s in this confrontation that you arrive at your most ambitious visions, and solve your company’s most fundamental strategic dilemmas. And while working through those questions with an investor can be amazing, it can also easily degrade. To use a Buddhist metaphor: extreme waste is, ironically, the near enemy of extreme support.

My advice: Risk the danger. Find at least one or two investors who are up to the task of engaging with you on the most fundamental and most difficult questions. 

When you’re running a company—no matter how gutsy and transparent you are—you are often subtly sheltered from these questions or incentivized not to ask them head-on. This challenge is present for entrepreneurs fast-tracking to failure, catapulting over the Green Monster with runners on all bases, and everything in between. A person you can trust as a collaborator on these questions in ways that are actually helpful and not just pestering, egoically-charged, or strategically banal is pure gold. 

And for the investor, engaging with entrepreneurs around their mission-critical questions is not only the best way to make good on their investment but, I imagine (this is an entrepreneur’s conjecture), also the most fulfilling aspect of the work. It’s the tangible, grounding, hands-dirty antidote to the peculiarly passenger-nature of the job. 

So, entrepreneurs and investors alike should aspire to turn their relationship into a sort of on-demand resource for action-focused, 100% relevant, deeply respectful, relentlessly realistic dialogue.


So, what—from an entrepreneur’s real-deal, in-it, let’s skip the bullshit perspective—do the fundamental questions that generate such dialogue look like? 

The short answer is: it completely depends on the company. So, in lieu of a thorough list, I’m going to share a series of questions that I’ve recently seen generating rich, fruitful dialogue in conversations with early-stage tech companies. These questions are largely extensible across company stage, industry, etc. 


  • Do people really love your product or do they just like it a lot? Nearly every failed startup is liked by tons of people. If you are still in the “like” stage, are you 100% focused on relentlessly iterating towards something that so decisively solves a market need or human longing that your product becomes truly beloved? 
  • Is your product development process (ideation, design, data management and analysis, roadmapping, engineering, testing, etc.) humming? In a shocking number of companies, product development is a nest of dysfunction. This isn’t necessarily a deal breaker, but when you nail your processes you unlock huge productivity.

Market & Growth

  • Is the market that loves your product (not the market that just likes or is intrigued by it) really big enough to build a great business? 
  • Of your near-term and long-term growth strategies, which are real and proven, which are experimental and hopeful, and which are slightly (if excusably…we all need to dream) delusional? How are you determining and killing what’s delusional? Are you taking enough growth risks?
  • What are your true LTV / CAC dynamics? Unit economics so often seem straightforward on the pretty ROI slide, but become extremely complex when you drill a few layers down (actuals v projected // segmenting by channel and demo // two-sided marketplace and long-terms SaaS complexities // changes in viral dynamics over time // percentage-based v absolute growth metrics // churn prediction algorithms // cohort-based changes including seasonality and other variants // etc.)
  • Are you genuinely differentiated? Incremental improvements on an existing product, no matter how huge the market, usually mean that you are commoditizing something and fast tracking to price reduction, fiercely expensive competition, and a long slog. It can work, but it’s tough. (I bear this scar.) How are you cultivating in yourself hunger for radical differentiation (in product but also in growth strategy, company culture, etc.), despite the fears such independence and risk naturally inspire?

Execution & Team

  • Are you spending enough time on branding, story, and vision — both internally and externally? When you really understand your brand (which is usually just an emotionally and strategically intelligent articulation of your vision) you have added to your army a drummer boy, a flag bearer, a cartographer, and a fortune teller. Seems obvious, but even in really successful companies it can be very hard to really know, feel, and stay maniacally focused on the truly important single thing you are building.
  • Do you have a clear sense of where you have pure execution risk and where you face more fundamental creative risks? Examples of creative risks include having not yet found true product-market-fit, a scalable growth strategy, a scalable sales model, or effective monetization tactics. Almost every company has both types of risks, and each type calls for a very different approach; so understanding what’s what, tackling your risks accordingly, and not putting the cart before the horse is essential.
  • Do you have a complete, intuitive, nearly paranoid understanding of all critical data inside your company?
  • Do you have A+ talent where you need it? Are you properly prioritizing the task of finding the very best people? Are you ready to fire the people who are mediocre or detractive? Are you staying open (i.e. confident) enough to seek out the help you need to become a top 1% leader (yes, every leadership team needs help to fulfill their calling)? Are you doing what you need for yourself to sustain the drive it’s going to take to go all the way? And, perhaps most importantly, do you truly believe in what you are making?

…and so on, you get the idea. I imagine that as I spend more time on the investor side of the table (I just recently began at RRE) my questions will evolve. What I’m sure won’t change is my conviction that it is deeply valuable for every entrepreneur to consistently talk through the really hard, mission-critical questions with people who are rooting for but not beholden to them. 

Find me @schildkrout 

The Container Wars have Started and We Should be Paying Close Attention


On Monday, the guys at CoreOS announced Rocket, a command-line tool for working with App Container, the company's own container image format, runtime and discovery mechanism. It was the first major competitive blow levied against Docker. The news within the news was that Rocket’s format and runtime promises to be completely open, which is in contrast to the approach Docker has taken, having shown consternation around publishing or agreeing on a spec /standard around their container technology.

Docker co-founder and CTO, Solomon Hykes, responded with a Tweetstorm, ending with this tweet:

Docker, Inc. finds itself in the always thorny position of a company balancing its responsibilities as the steward of an open source project and as a profit-making entity. Invariably as Docker guides the community towards its one version of a universal truth and builds out a fully-featured enterprise management stack, some devs will get left behind – that’s simply the cost of doing business for a company behind an open source project as opposed to one that’s commercializing a foundation-led project, say like Cloudera has done with Hadoop or Red Hat with Linux. Clearly, CoreOS saw an opportunity to pounce, and I’m sure we’ll see more vendors come to market with competing container technologies.

If we’re to chart out how this evolves, the closest analog is the virtualization market. VMware was the clear winner as it was first to successfully commercialize its hypervisor technology, taking the ESX – which actually had its roots in open source – and building a full management stack around it which became vSphere. VMware came to dominate the market with Xen (Citrix), KVM and Microsoft picking up relative scraps.

The hypervisor helped commoditize the OS and physical infrastructure, giving way to the cloud-based architectures we have today. Similarly now, we’re in the midst of another platform shift. Docker offers a higher level of abstraction, taking the OS, virtual machine, physical machine and infrastructure provider, and commoditizing it all. The difference this time around is that in concert with a platform shift (VMs to containers), we're also seeing an architectural shift in the way applications are built (evolving from monoliths to systems that are distributed, highly available and modular). Martin Fowler provides a fantastic overview of distributed systems and micro-services architecture here.

The thing is, building, running and scaling distributed applications is HARD and wholly requires a re-thinking of the tools and systems we’ve had in the place for the last decade, with underlying container technology serving as the modular component for others to build on. We are now re-answering questions like how do you manage networking, persistence, storage in these highly distributed environments? And hence why we’re seeing the emergence of new platforms and tools like Mesos, Kubernetes, etcd, Weave, Flocker, etc.

So what’s really at stake isn’t just domination in one portion of the stack – the underlying container technology – but rather a whole a new stack in and of itself: an integrated offering to manage all aspects of running and building containers in a cluster. And that’s why announcements like yesterday’s really really matter.

The Developer-Driven Economy


How the Developer has become the Organization's Most Influential Power Broker

[Last Tuesday RRE made public our investment in Bowery, a company that we believe is doing to developer environments what Dropbox did to file storage and sync. When I joined RRE I promised to blog about some themes, trends and companies I’m most excited about, so I figured given last week’s announcement, now would be as good a time as ever to get the first one out, so here goes…]

In 2003 Nicholas Carr published a piece in the Harvard Business Review which famously promulgated IT doesn’t matter. Carr predicted that as we leave a world defined by scarcity of IT resources and enter one where “the core functions of IT – data storage, data processing, and data transport – have become available and affordable to all,” technology will cease being a source of competitive advantage for businesses altogether. Many at the time believed Carr was forecasting the death of IT in the enterprise.

Sure enough, it took maybe 5-7 years to get to Carr’s dystopian reality as cloud, open source and mobile crushed barriers to innovation, distribution and adoption of IT. However, a funny thing has happened: instead of IT ceasing to matter it has become table stakes. With ubiquitous access to infrastructure, software and software development tools in particular, we’re seeing software eat the world.

As technology has shifted from enabler of business process, to enabler of product or service, to the very product or service itself, we’ve seen IT transform from a cost center that is adjunct to core business to a profit center that is its lifeblood.

It was during this transformation that the power dynamic within the workplace flipped from the c-suite to the basement; from the employees clad in Armani suits with tie clips to those wearing hoodies with sandals. Consequently, we’ve seen the developer become the most prized resource in the modern organization, and it is this trend that lends itself to an enormous investment opportunity.

Devs as the Go-to-Market

Developers are your innovators and early adopters; they are the gatekeepers for new technologies and often decide which new tech succeeds and which fails either directly or indirectly (look no further than iOS and Windows – win the developer, win the platform war). Appropriately they have become the most powerful distribution channel for IT in the enterprise.

Devs often become catalysts for social communities which help spread new products and technologies organically, and their API-driven tools create the potential for powerful two-sided platforms. There are network effects to be taken advantage of here.

Moreover, the trend towards DevOps (and now BizDevOps) – characterized by the convergence of software development cycles and IT operations (and all business activities) – has effectively blurred the line between developer and sysadmin (and pretty much every other employee). Those tools which shrink developer time-to-value (aka time-to-code written) and offer frictionless onboarding, often multiply through the organization. From Splunk and Logentries, to Puppet and Chef, to New Relic, to Mongo, to Datadog, we’re seeing the emergence of companies at every layer of the stack who succeed by winning the heart and mind of the developer.

Devs as the End-Market

There’s been a lot of talk about a renaissance in the dev tool market and it makes perfect sense: as dev teams become an organizational profit center the tools that make them more productive become that much more valuable.

The dev tool market is constantly evolving, but ultimately can be broken down into three categories which delineate the development lifecycle: writing code, testing code and running code. Within each of these segments we’re seeing companies who are fundamentally changing the way applications are built and shipped.

Tools from vendors like GitHub, Slack and upstarts like Bowery are helping devs write, manage and collaborate around code. Trends around continuous delivery and integration have compressed release cycles and made companies more agile and responsive to customers thanks to companies like CircleCI, Rainforest, and CodeClimate. Finally, the toolkit to ship and run code at scale is being reconstructed with the developer in mind. Infrastructure is becoming more open, more programmable and thus more developer-friendly. Products and platforms such as Docker and Digital Ocean are rethinking operations and infrastructure altogether with the developer at the center. Companies like Flynn are even further on the bleeding edge, trying to wholly productize the role of ops teams.  All of this implies that devs don’t have to mess with config files or worry about provisioning servers and databases and can just focus on their code, knowing their app will run and scale in any environment.

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We’ve heard incessantly for the last several years about how the enterprise is being consumerized; how business apps are all about beautiful UX/UI, how BYOD and BYOA have broken down the corporate perimeter and how the procurer of IT is the end-user. What we haven’t heard much about is how the developer has become the biggest power broker in this new paradigm.