SaaStr 064: Why Now Is A Really Good Time For SaaS Startups To Raise, How SaaS Startups Can Innovate Their Business Models & The Biggest Takeaways From Working With John Doerr @ Kleiner Perkins with Matt Murphy, Managing Director @ Menlo Ventures

**Harry Stebbings** (0:00)
Hello, and welcome back to another week in the wonderful world of SaaStr with your host, Harry Stebbings, at H Stebbings on Snapchat, and brought to you by the main man, Jason Lemkin at JasonLK on Twitter. Now, do not forget, if you'd like to join me and Jason for a Mojito or 10 at the world's greatest SaaS conference, SaaStr Annual, then all you have to do is enter the promo code DrinksWithHarry. Those three words, DrinksWithHarry. Still can't believe Jason agreed to that promotional code. And not only will you get 20% off the ticket price, but you'll also get a free happy hour of Mojitos with me and Jason, courtesy of the kind bank of Mr. Lemkin. But to the show today, and I'm so thrilled to welcome Matt Murphy. Now, Matt is a managing director at Menlo Ventures, where he focuses on multi-stage investments across cloud infrastructure and AI for SaaS applications. Since joining Menlo, Matt has led investments in Heap Analytics, Usermind and Veriflow. And previously, Matt was a general partner at Kleiner Perkins for over 15 years. In addition to this, Matt was also an observer at Google from initial investment to IPO.
He also launched the iFund in 2008, which was a collaborative initiative with Apple to build the defining applications on the iOS platform. And he also led Kleiner Perkins investments in AutoNavi and AeroHive networks. Before joining Kleiner, Matt worked at semiconductor startup NetBoost, which was acquired by Intel, where he led product management. And prior to that, he was at Sun Microsystems, where he led business development for the network systems group and was a product line manager for networking platforms. I also have to give a huge hand to Jason Lemkin for making the introduction to Matt today, without which the interview could not have happened. However, enough from me, so without further ado, I'm delighted to welcome Matt Murphy, Managing Director at Menlo Ventures.
Good, that's perfect.

**Matt Murphy** (1:40)
Okay, I think we're warmed up.

**Harry Stebbings** (1:42)
Matt, so fantastic to have you on The Official SaaStr Podcast today. Firstly, huge thanks to Jason at SaaStr for the intro, but Matt, thank you so much for joining me today.

**Matt Murphy** (1:51)
Thrilled to be here. Jason's a good friend, really respect everything that he and you have done in the world of SaaS, which is pretty fantastic right now.

**Harry Stebbings** (1:58)
What a great start to the show, thank you so much. But let's kick off today with how you made your way into the world of SaaS VC first and how that came about for you.

**Matt Murphy** (2:07)
You know, my path to venture, basically I was a technical undergrad, went to Stanford Business School, went to Sun Microsystems in its heyday and then joined a small startup that some folks had started. And then within a little over a year, we got acquired by Intel.
This is back in 1999 in the glory days of venture. And then John Doerr was looking for a new associate. And so I got that call and decided to leave Intel shortly after the acquisition to get into venture. And for me, it was just being in Silicon Valley and being early in my career, it just seemed like a fantastic way to explore and see a bunch of different technology areas, try and think about what the future might hold and meet amazing and wonderful people, both executives and entrepreneurs. So that's kind of where I got to my starting point.

**Harry Stebbings** (2:59)
Interesting question here. Did you automatically specialize in terms of vertical towards SaaS or was it kind of a developmental phase?

**Matt Murphy** (3:06)
SaaS for me has really been more like the past four or five years. So when I got into venture back in 99, SaaS didn't even exist, as you know.
So that was back kind of in the e-commerce and the telecom infrastructure networking were some of the biggest areas in venture back then. And then, you know, enterprise software had a really rough go of it in the early 2000s. Kind of look back on that period and say what was to be learned from that? And I think if you're in an environment where IT budgets are shrinking and large companies don't want to buy anything from anybody who doesn't have a strong balance sheet, well, investing in enterprise companies and ventures probably not going to be that good of a business. And I think that pretty much was true back in that timeframe. But we started to come out of that in 2007 And I think we really found that obviously with the Salesforce kicking off this SaaS revolution and in parallel with that, a lot of the incumbents who starved their R&D efforts or who were all on-premise started to really feel long in the tooth and stale in their product lines. So it gave a lot of opportunity for new companies to come along.