The Value of a Thesis & A Look Into Ours

by Eric Tobias - Partner

Investors are rewarded by being great at one thing — choosing. When it comes to choosing, however, it can be a complicated mechanic that has a lot to do with opportunity and timing. One of the things that helps the best in the business make solid choices is a keen focus and a vision of the future — which is often referred to as a “thesis.”

Theses are hard to come by and a well articulated one that can genuinely influence the independent investment decisions made is extremely rare. Some of the most successful VCs have had iconic theses as well — Andreessen Horowitz had “Software is Eating The World” as an example.

At High Alpha, we’ve been spending a great deal of time developing our individual and collective investment theses. In fact, we’ve been exploring a number of them with the new companies we are creating and investing in. One of the theses we’ve really gotten behind is the idea that the future of enterprise software will be built around “coaching networks”. This concept was first formalized and presented to us by our friend and business partner, Gordon Ritter, General Partner at Emergence Capital.

Let’s unpack what we mean by coaching networks and why we believe they’ll be central to the next wave of software.

The Coaching Network — The 3rd Wave of Software

When thinking about software, it’s helpful to contextualize the evolution of the industry in terms of “eras” or “waves.”

The first wave of software was obvious — entrepreneurs simply attempted to digitize business processes that were previously non-digital. This happened with some really low-hanging fruits like financial systems, accounting software, ERPs, etc.

The second wave occurred around data automation and forms-based computing. A great example of this would be employees creating workflows for a computer to automate certain tasks. This is still a fairly prevalent version of software and was really pushed forward by Salesforce.

The third wave is about taking these automations and improving the experience of individuals who come in contact with them. With the advances and accessibility of AI and Machine Learning, we are starting to see this pop up currently. Most of the use cases of technology right now, however, fall on the user side of the equation. We think the largest opportunities exist in creating better employee experiences. Software that actively “coaches” individuals to become better at their jobs—regardless of the role or function — a “coaching network.”

Ten Years of Exploring Coaching Networks

When I first heard the idea of a “Coaching Network” from Gordon at Emergence—you can see a similar presentation he gave on “The Rise of Coaching Networks” at our May 2017 Speaker Series here—it was a radically new way to think about the future of enterprise software. The idea that the next wave of great software companies will help employees become better versions of themselves is inspiring. And the idea that the next wave of software will be less about entering data into a form and more about contextual assistance when you need it is incredibly exciting!

This particular thesis also struck a personal cord. In a way, iGoDigital (the last company I founded and ran) was a coaching network for consumers and retailers. One of the key ingredients of a coaching network is a feedback loop — the ability to know if the coaching is working so that system becomes smarter over time. We built a feedback loop between retailers and consumers for the purpose of increasing conversion rates and average order sizes. Our software was a “coach” — both for the consumer to discover new products they otherwise may have missed but also for the retailer to better understand why their customers were making their buying choices. In a way, I’ve been pursuing the thesis of a coaching network for over 10 years now. And just like iGoDigital helped retailers improve their business and helped consumers increase their shopping satisfaction, coaching networks can have a similar impact across many, many different business verticals.

High Alpha and the Coaching Network

The coaching networks thesis has already worked it’s way into our thinking at High Alpha. A great example of this is Quantifi.

Quantifi could be contextualized as simply a marketing experimentation platform in the vein of programmatic advertising, however, we see it more as a platform that coaches marketers how to take advantage of emerging audience types, content streams, and platforms. The advantage of this manifests itself in the design of the actual product (we’ve built in features around chat bots, actionable tips, and post-campaign insights) as well as the overall marketing of the product — rather than being potentially invasive on marketers’ jobs, it can be a helpful product to make the marketer more productive.

The “Coaching Network” has been a part of the High Alpha DNA for a while now. In addition to Quantifi, a “Coaching Network” is also the centerpiece of two new High Alpha companies that have yet to be announced. It’s also helping us form powerful future visions for our existing portfolio companies. A thesis is important. And I believe this one is actively helping us create more compelling companies.

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