223. Crisis Coverage w/ Byron Deeter - Why This is the Seminal Moment for Cloud and Lessons from 19 Unicorn Investments

**Nick Moran** (0:03)
Welcome to the podcast about Investing in Startups, where existing investors can learn how to get the best deal possible. And those that have never before invested in startups can learn the keys to success from the venture experts.
Your host is Nick Moran, and this is The Full Ratchet.

**Nick Moran** (0:23)
Byron Deeter joins us today from Atherton, California. Byron is partner at Bessemer Ventures and a leading investor in SaaS and Cloud. To date, he has 19 unicorn investments, including 10 IPOs.
Before joining Bessemer, Byron was CEO and co-founder at Trego Technologies, one of the first global SaaS companies, which was acquired by IBM in 2004 Byron, welcome to the show.

**Byron Deeter** (0:47)
Thanks, Nick. Awesome to teleport in and join you and your crew today.

**Nick Moran** (0:51)
You as well. Yeah, so talk us through your story. What was your background and path to Bessemer?

**Byron Deeter** (0:57)
Well, probably most relevant for this audience, I was an entrepreneur in the early cloud days. I had worked at McKinsey and TA Associates for a few years, got a taste for business and tech, but very much got the startup bug and jumped out in 2000 to found an early software as a service business.
What at the time was referred to as the ASP model, but very much single instance, multi-tenant cloud delivery, became completely convinced that that was the future. As we had some good fortune, scaled up the business despite the craziness of two recessions ago and the dot-com collapse, we built that up to a fairly large scale, profitability and global platform. We're getting ready to go public. When IBM stepped in and bought us, I had been able to work with Bessemer and a number of other top-tier venture firms through that experience and so I rolled over in 5 and returned to the venture world, joined Bessemer and have been extremely active in the cloud world and in all things hyper growth tech ever since.

**Nick Moran** (1:58)
Any notable names that the audience might know from the TA days or the early days that were mentors for you?

**Byron Deeter** (2:06)
Well, on the personal side, I've got to say there were several of the partners there that I owe a huge debt of gratitude for just mapping out what the venture world should be like. So Kurt Jaggers, Jeff Chambers, Ben Ball, a number of those early managing directors and partners did venture right and, mind you, TA would invest one day in a mattress company, one day in a software company, and one day in some equipment company. So it wasn't all tech and it was much later stage than my true passion. But in terms of just understanding things like founder liquidity, they were one of the early firms that said, it's okay to give founders some cash. You don't need to hold them captive until the very end.
In fact, if you take some pressure off, let them buy a house, let them pay for their kids to go to a private school or care for an ill parent, in some cases, people even push back on, they actually could perform better. That's something that I think is a positive element of the venture world now. Mind you, it's gone too far in some cases, as most things do.
But in terms of an early exposure to tech, Silicon Valley, and the venture world, I really appreciate what those partners did. Then they were gracious in also being early seed investors in my company when I jumped out, so it made it a lot easier to attract other investors when your prior bosses are supporting you and writing checks the day you leave.

**Nick Moran** (3:27)
Love the motivation there. I find myself, it's strange, but I find myself, we have so many spendthrift Midwest companies that we've backed, and I just find myself encouraging our founders to take some salary, finally, because they'll raise venture rounds and they're still taking like 60K a year. And it's like, guys, you know, I get it that it's a crisis, but you can at least, you know, not be eating ramen and feeding your family a little bit.

**Byron Deeter** (3:56)
Absolutely. There's this frugality that of course is critical and many of our founders like Jeff Lawson talks very eloquently about it, but the balance is you don't want it to create pressures that cause a natural decisions. And of course, the worst one is this dynamic where there's pressure to sell because 99.9% of your net worth is tied up in this thing.
And the first person that comes around with a shiny offer becomes seductive and overly compelling. And so I absolutely believe that that's the role that a board and advisors can help play is just making sure that they walk the balance. And there's benefits to Larry Page taking a dollar a year salary.