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Yasu and I had the pleasure of interviewing Hilarie Koplow-McAdams, Venture Partner at NEA.  Hilarie has had the rare opportunity to work closely with software industry icons Larry Ellison (Oracle), Scott Cook (Intuit) and Marc Benioff (Salesforce) over her 30-year career.  In turn, Hilarie has imparted her deep operational expertise and leadership skills to Yasu, who worked with her at Salesforce, allowing Japan Cloud and our partners to also benefit from her wisdom.

Currently, at NEA, Hilarie mentors founders of the world’s most exciting enterprise cloud companies.  Hilarie’s generosity is felt among many up-and-coming cloud leaders.  Her insights on entering Japan and navigating the current economic environment are sure to inspire.  Enjoy!

The interview has been edited for clarity.

The Long Game

Aruna: If you could give us some background on NEA and how the firm is different from other VC firms, that would be great.  We can then go into the questions we’ve prepared.

Hilarie: Going over the questions you shared with me about Japan was like a walk down memory lane with Yasu, so thank you for putting them together.

NEA is a global venture capital firm with decades of expertise investing in companies across multiple sectors, stages and geographies.  As one of the founding firms of the venture capital industry, NEA was started on both coasts of the United States and currently has offices in the San Francisco Bay Area, Washington, D.C., New York and Europe.

We focus on investments spanning enterprise and consumer technology as well as healthcare, in particular the Life Sciences, MedTech and Digital Health.

Our team is composed of a unique balance of investors, operators, and experts, and we pride ourselves on a team approach to company-building where entrepreneurs don’t just have access to a single partner, but to our entire firm and external network of resources.

We bring complementary skill sets⁠.  I was an operations leader for 30 years and bring company scaling and go-to-market experience in enterprise and consumer tech.  We come together as a team and look at all of these amazing, early stage and growth stage companies and decide where to invest and how to best support our portfolio.

Another key differentiator is that we play a long game.  The companies we invest in are often on their journeys for 10-plus years.  We play as a team and think about long-term outcomes for the company.  If you’ve built a business before, you know it takes an enormous amount of time and expertise across many different functions to build a successful company.  We develop long-term relationships with founders to help their companies grow and succeed.

We do this by focusing on partnering with the best and brightest founders and adding as much value as possible to help them succeed.

I joined NEA for the firm’s values: teamwork, trust, and excellence.  I’m able to see these principles in action on a daily basis across our team and with our companies.

AI Everywhere

Aruna: What companies do you find interesting in the enterprise cloud space in particular?

Hilarie: The enterprise market has become more exciting with the mainstreaming of AI and machine learning.  The past 10 to 20 years were about computing and ingesting data.  Now it’s about leveraging that data to extract insights.

We’re seeing companies transform the way enterprises store and compute data, build application infrastructure and leverage data to strengthen security, increase productivity and connect with customers more deeply.

As the cloud becomes the de facto standard to support computing infrastructure, there has been remarkable innovation in how we manage infrastructure as well as leverage it to deliver purpose-built ML and AI platforms.

NEA has partnered with infrastructure companies like Databricks, which helps companies get more out of their data by applying ML and AI into their Data Lake; Pulumi, which helps businesses elegantly manage their infrastructure on any cloud and in any language; Plaid, which allows banks and financial technology companies to build applications that securely communicate with customer accounts,

As data strategies have matured so too has our approach to managing companies’ workflows as evidenced by the success of the RPA (Robotic Process Automation) company, Automation Anywhere, and the energy around our recent investment in predictive procurement orchestration platform, Arkestro, and ML and data orchestration platform, Union.ai.

In the customer service space, I sit on the board of a company called Uniphore, which helps power large call centers with the efficiency of conversational AI, enabling call center agents to have more insight into what’s happening with customers.  Call centers were, of course, a huge growth area during the pandemic.

Tackling similar customer support issues with a human-centered AI Approach is Forethought, which partners with enterprises and nimble tech companies alike through an AI-powered platform. 

Assembled is another recent investment in the customer service space.  Customers of Assembled are deploying better workforce management strategies for their call centers to drive customer satisfaction and productivity up.

Security also represents a large and ever-growing opportunity around the globe.  We’ve all known security is important but now we’re waking up realizing that fortifying our security posture requires continuous work.

NEA partnered with security and performance company Cloudflare more than a decade ago to help make the internet secure, private, fast, and reliable.  Cloudflare is already in Japan, and in fact nearly 20 percent of the world’s internet properties are powered by Cloudflare.

We’ve also invested in a security company called Beyond Identity that’s developed a passwordless approach which removes the need to have passwords to authenticate your identity, reducing breach risk dramatically.

Another great example with a unique business model is HackerOne, which engages security researchers to try to penetrate their customers’ infrastructure. If they’re successful, the customer pays a reward.  Customers invite them to break in so they can design an extra-secure architecture around their perimeters.  They have a lot of potential in Japan.

Observability is also an interesting category.  As companies adopt the cloud and receive software updates daily, they need solutions that give them visibility into where the errors are in the software experience.  Companies like Sentry, Datadog and New Relic, which of course is a Japan Cloud company, occupy this space.

I can go on forever talking about these companies, but I’ll stop there.
That concludes Part 1 of our interview with Hilarie Koplow-McAdams of NEA.  Please stay tuned for Part 2 coming up shortly.

The Number Two Market in the World

Yasu: Are these companies thinking about going global or entering Japan?

Hilarie: Everybody wants to be a global powerhouse.  And people recognize that Japan is the third largest GDP economy in the globe and home to some of the largest companies in the world including automotive manufacturers.  Everybody would love to enter Japan and be successful there.  But they often don’t know how.

I was at Oracle when the company made a very early investment in Japan.  They proved that Japan could be a major market.  IBM entered Japan before them, so obviously there was a legacy of big tech investment in Japan.

The success of companies like Salesforce in Japan helped grow awareness around Japanese companies as global innovators that were willing to embrace new technology.

One of our companies, Tulip, has partnered with the machine tools company DMG Mori Seiki in Japan to become the modern MES (Manufacturing Execution System) standard in the global manufacturing space.

Overall, there’s an appreciation for the strength of the Japanese market, though I think people often are intimidated about how to enter Japan.  They look at other companies that have successfully entered the market and try to mirror their models.

What growing companies may struggle to understand is how to find the right people to lead their organization, how to adjust corporate values within Japan and how to engage with the local culture.  They may bring very Western approaches to entering Japan that can actually hurt them and their reputation, which can be very difficult to overcome.

It goes beyond mirroring someone else’s model—success comes from creating a holistic strategy.   And that’s where I think firms like Japan Cloud can be extremely helpful, especially in the early days of an entry strategy where companies have to think about brand and where to target their resources.

Who are the most important companies to target in Japan?  What does customer success look like in Japan?  What are the expectations of the Japanese buyer?

As you know, it’s critical to get access to the right leadership in Japan and to partner with experts who know how to do this, who have one foot in the Japanese market and one foot in the culture of a company’s headquarters.  This is extremely difficult.  It’s definitely a skill.

On-mission

Aruna: Given the current market pullback, what advice do you give founders about going global?

Hilarie: The truth is that we just don’t know what will happen and when it will happen.  The economy should not hold younger companies back if they believe going global is the right next step for them, but they need to proceed with caution.  They need to start small and grow appropriately.

What we advise companies to do is to take a close look at their mission and really understand what they’re trying to do, and to maintain focus but perhaps with focus on efficiency. A year ago efficiency may not even have been a concern or a conversation.  Now, there’s much more focus on expectations around payback periods and the most efficient mechanism to enter and grow a market.

I think the situation now stimulates much more innovative thinking than a boom market because in a boom market companies tend to follow each other.  The current situation forces companies to think out-of-the-box.  How can we do things differently?  How can we do it less expensively?  This leads to new and innovative approaches.

Moments of Clarity

Aruna: What is the number one topic that comes up in board conversations in the current economic environment?

Hilarie: Again, it would be about getting back to basics and asking ourselves what our mission is.  Are we on-mission or have we invested in areas that are off-mission?  How do we constrain ourselves to the core mission and take the business to the next level?  These conversations drive a lot of innovation in how we think about our business model, the release of a new product and how we serve customers.  These are times that lead to great moments of clarity.  Necessity really is the mother of invention.  In many board discussions, necessity is driving innovation.

There’s a certain recognition that some customers are going to be more vulnerable than others. We saw this during COVID.  The hospitality sector was hit very hard, but they’re coming back. They’re having a great summer.

So what are the industries that require the most attention now?  What do your customers need?  How can you help them?  Salesforce reached a new level of growth during the downturn in 2008 by asking these questions.

This is part of what we talk about in the board meetings.

Among Giants

Yasu: You are one of the few executives who’s worked closely with executives like Larry Ellison, Scott Cook and Marc Benioff.  What did you learn from them?  And how do you apply those learnings when mentoring the CEOs of your portfolio companies?

Hilarie: That’s a great question.  And you know, I was incredibly lucky early in my career to work closely with Larry and Marc.  I worked with Marc at Oracle and again at Salesforce.  I worked with Scott Cook at Intuit as well.

From Larry I learned about the art of disruption and the power of redefining a category in such a way that your competition couldn’t touch you.  Once a market is disrupted, customers will never go back to the old way of doing things.

At Oracle I also learned the importance of execution, how you have to execute in a maniacal way to build a high-growth company.  Marc and I were both at Oracle at the same time so this was ingrained in us.

From Scott I learned how product experiences need to be designed for ease of use.  Intuit’s products are used by small businesses and consumers.  Usability is vital.

And, what I learned from Marc at Salesforce was the utmost importance of focusing on customers’ needs above all else.

Marc’s inspiration for building Salesforce came from this customer-centricity.  He asked the question: why should enterprise software be so difficult to use?  Why isn’t it as easy to use as buying a book on Amazon?  And that’s what Salesforce focused on.  Customers did not have to install or implement software.  They just logged on and Salesforce did the rest.  We made sure customers stayed logged on by committing to a customer success model that kept the customer at the center of our business.

Marc was also particularly good at moving people around.  He built a culture that valued mobility and rotational experiences as a way to grow the business.   This is how we built the company by deploying successful leaders to new roles and new geographies where they were empowered to build various aspects of the business.  It became a core formula for growth.  We valued people and their ever-growing wisdom.

Driving Innovation with Japanese Companies

Aruna: One final question: what message would you like to send companies looking to enter Japan?

Hilarie: Sure.  I’d like them to know that Japan is an incredibly important market for entrepreneurs to explore.  What I learned at Oracle and Salesforce was the focus on innovation in Japan and the opportunity for US tech companies to partner with Japanese companies to drive innovation.  I saw the power of this first hand and am proud of all the work we have done in partnership with Japanese customers.

Scott Cook, the founder of Intuit shared the lesson he learned in Japan as he studied Kaizen techniques at Toyota and how the idea of continuous improvement might be applied to software companies.  He made sure that Intuit’s leadership understood the power and benefit of this approach.

I feel incredibly lucky and am humbled that I had first-hand experience with such renowned software industry leaders, all of whom saw the market value and power of innovation in Japan.

I’m confident this innovation will continue into the foreseeable future.