14 Oct 13Ben Graham
Joining Kleiner as a general partner in 2011, Mike Abbott leads the firm’s unit focusing on big data and infrastructure startups. He previously helped Twitter scale its architecture to support the 250m daily tweets it now sees and co-founded social branding firm Passenger. Here, he talks about changes in the space and emerging tech hubs.
¤ What areas are you interested in?
I spend time around infrastructure and big data and am interested in both consumer and enterprise applications that are built around big data because I have built and shipped those products in the consumer enterprise space. I look at companies in both.
¤ What kind of changes have you seen in big data over the past year?
Over a year or two ago the focus was on just the storage layer. There's still a lot going on in storage and infrastructure with companies like Cloudera or Hortonworks, but in the last year we've seen more companies looking at the analytics sphere.
In the analytics layer there are still some unique opportunities and that's where a lot of the investment dollars have gone in the last year. The next phase will be smart applications that are built around big data. Part of the interesting opportunity there is if you’ve got data and you've got to turn it into information how do you create knowledge. There's been some interesting advantages there already, specifically in the area called ‘deep learning’ that I think will enable some interesting applications of big data to emerge. That's the next wave and that's definitely an area I’m going to be spending time on and I would love to find companies to invest in.
¤ Are there any areas that you think might be over funded or overhyped?
There are areas that are very promising but I hope that the marketing doesn't get ahead of the technology adaption. There's great promise in the virtualisation of the network, and I actually believe in that. However, I think that various efforts like Open Float are just earlier than the market understands them to be. I don't think they are necessarily overhyped, I just worry that people see the acquisition by Nicera and get really excited. It’s a great outcome for the company and for the investors, but that outcome doesn't mean that the market is there today.
¤ Kleiner Perkins is based in Silicon Valley, but do you see other tech hubs that are starting to compete?
The majority of the companies that we look at do happen to be here. That said we are starting to see more interesting companies coming out of New York and in Europe there are some interesting companies coming out of London, Berlin and Istanbul. But I'm not going to lie, the majority of companies are out here in the Bay Area.
There are two reasons for that. The first is just a natural, there is a lot of talent here. You've got a lot of engineers and designers, so you combine that with access to capital and you get this natural eco-system for companies to develop in. Over time though we're going to see more and more areas pop up and maybe not compete, but emerge as players. This is primarily because the cost of starting a company is continuing to drop and there’s no reason to believe that it won’t continue to drop. Between Amazon services and distribution on platforms like iOS there are things that just did not exist 10 years ago, so the capital requirements are less. If you take the capital out of the equation and there are obviously talented engineers in many parts of the world.
¤ What does it take for a big data company to stand out for Kleiner Perkins?
First and foremost is the team and their background and how those backgrounds enable them to build products that are unique and haven't been built before. Or how their background gives them a unique insight or understanding of the market. The second thing is - are they different from where the market is at today? It's a very crowded market in certain areas and so having a team that has a product or a vision can really stand out. I think more importantly or at least as important, it has to address a customer pain point. The simple was to describe it is if a company is building a painkiller, that's more interesting than if they are providing a vitamin.
¤ Of the companies you’ve invested in which do you think will be the most successful?
It’s really too early to tell because I focus on investing in Series A companies. These are companies that have just launched or are in the process of launching so there are a lot of promising things going on and there is interesting demand and growth but it’s too early to tell. Having started a company myself I know. We built that company for 12 years and then Cisco just recently bought it, so it can take a long time.
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