283. The Future of Cloud, Business Model Transitions from Subscription to Consumption, and The Shift from Technology-first to End-User Value (Dharmesh Thakker)

**SPEAKER_1** (0:02)
Welcome to the podcast about Venture Capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is The Full Ratchet.

**Nick Moran** (0:18)
Dharmesh Thakker joins us today from Menlo Park. He's general partner at Battery Ventures, a global technology focused investment firm. Prior to Battery, he was managing director at Intel Capital, where he led the firm's global cloud and big data practice, and made early and late stage investments. Dharmesh, welcome to the show.

**Dharmesh Thakker** (0:35)
Nick, it's great to be here. Thank you so much for inviting me.
I'm a big fan of The Full Ratchet, and it's great to be with you here talking one-on-one.

**Nick Moran** (0:44)
Absolutely. Great to reconnect and chat.
My little intro doesn't do it justice, but can you talk a bit about your background and your path to VC?

**Dharmesh Thakker** (0:53)
Absolutely, Nick. I'm an engineer by training. I got my undergrad in electrical engineering with chip design focus, believe it or not. Back in the late 90s, I spent some summers at Intel working on Pentium 2 and designing chips and fabs, and very quickly realized that I enjoyed interacting with humans more than I did interacting with chips and wafers. Post-graduation, I spent most of my operating career in product management and entrepreneurship.
I did a couple of startups, joined a public company, had some early success selling my startups to other companies and security and Cloud infrastructure. In post-business school, I was looking to do my third startup, and we had our first child, and it became a tough choice to do another startup, which is having a full-time baby or take care of the baby at home.
I'm still married, which means I made the choice of not doing a startup and thinking the next best thing I could do, which is join Venture Capital. It's amazingly stimulating intellectually, and it's great to be involved with so many passionate entrepreneurs and be able to give back learning from my experiences as an entrepreneur. And so that's what I've been doing the last 10 years as a VC. First, at an early stage venture fund called Advanced Technology Ventures, then Intel Capital, and then joined Battery about six years ago. But all that time spent in the area, I think I know well, which is IT infrastructure and cloud software.

**Nick Moran** (2:27)
Very good. And I think most of the listeners know Battery, but can you give us the overview of the thesis?

**Dharmesh Thakker** (2:35)
Absolutely. So most of you know Battery. We've been around for 35 plus years, managed roughly 9 billion assets under management. We do not invest in batteries, even though every week I get an intro from somebody from Asia Pacific on LinkedIn asking me about a new battery formulation. So we started on Battery Street in Boston in the mid 80s. And the one thing that has been true to our thesis and our strategy is we focus on doing a few things well. In our business, it's about, we think it's about doing one or two things really well and becoming subject matter experts. And for Battery, that's B2B software, almost 90% of what we do is business-to-business software.
And we try to find the best companies across the world, and really at any stage, but as long as the focus is business-to-business software. Half of it is on the infrastructure side, selling cloud, data, security software to an IT buyer. The other half is on the application software side, where you might sell to a CMO, a CFO, a chief revenue officer, but it's all software. And we're very excited. It feels like software is still in the early innings. Technology as an industry and software only been around for a couple of decades, whereas most of the companies that have been here for a couple of centuries are finally adopting it. So we're pretty bullish about the adoption of software and the market segment around software expanding from one to five trillion over time. And still feel very excited by doing that. The one thing we have updated our strategy around is going global.
Back in the 80s, when a lot of tech entrepreneurship used to be in Boston, then expanded to San Francisco.
Over the last couple of decades, we've seen amazing entrepreneurs spring up over Israel, over Europe, increasingly in India and the B2B software space. And so with that, we expand our presence to be where the entrepreneurs are. So our 10 general partners are spread across New York, Boston, San Francisco, London, Israel, and we kind of spent some time looking at the Indian ecosystem as well, trying to find the best companies wherever they are and help them from the early stages.