A chat with Monica Desai Weiss & Bucky Moore, Investors at Kleiner Perkins
Firm's legacy as a forcing function, where computing and fintech infra collide, long arc of connectivity in software, historically fringe ideas, changing nature of work, lagging areas of innovation
Sar : Livongo, Segment and Desktop Metal — They are all Kleiner Perkins portfolio companies that have exited in the past few months! One of the principles behind funding innovation is what the insiders call power law. The idea is that the winners make up for all the losing bets. The winners create a halo effect around the firm and the people that work there. Success stories beget soon-to-be-success stories. People being wrong the vast majority of the time is such a predictable reality and a forgone conclusion that it is often not even acknowledged in discussions about venture capital. In any other business, your career would be at risk for being so wrong all the time! How does having the storied legacy of Kleiner Perkins amplify everything you do and say impact your decision making? I'm always impressed by people who manage to be extremely skeptical of their own beliefs because when you are representing a storied firm, it is easy to seduce yourself into thinking you can predict and sell better than the next intelligent person.
Bucky : Our firm is fortunate to have been involved with each of the three companies you mention. Investing from a platform like KP is an undeniable source of advantage for us as investors for the reasons you described. We do not take this for granted, and carry a fierce belief in the need to continuously expand our viewpoints and reinvent ourselves to stay relevant to the next generation of entrepreneurs. This requires approaching the venture business with a growth mindset, and seeking out new opportunities to learn whenever they present themselves. The investors who manage to adhere to this approach, even after they have achieved initial success, seem to be those who go on to have long and meaningful careers in this industry. I aspire to be one of these investors.
Monica : It’s a lot to live up to, and I won’t even pretend I start to do so quite yet 😉. As you mentioned, this job is so humbling because every day you see something work that you hadn’t expected, and you have to reevaluate your priors while still trying to keep a beginner’s mindset. We’re lucky to have that legacy and expertise to learn from, but I also think VC is about constantly reinventing yourself and your viewpoints so you can never rest on your laurels too much!
Sar : My impression is that Bucky focuses on how companies deploy software and make sense of data collected from software usage efficiently, securely and reliably. Monica, on the other hand, is focused on financial health, workplace experience and changing nature of work in broad strokes. Would that be a fair assessment?
Bucky: I am fascinated by the ongoing opportunity to use software and data to unlock new efficiencies in the workplace. Whether it’s a matter of improving an application developer’s productivity, enabling an analyst to get the answer they need from their data faster, or automating a tedious compliance process that a security engineer was previously forced to carry out manually, I am looking to partner with founders who share my passion for solving these foundational problems that exist across nearly every industry and size of business. My time at Cisco as a member of their corporate development team illuminated just how outsized an impact these types of products had on the companies and services we rely on as consumers to live our lives. The population of end-users they address pales in comparison to that of any B2C product, but their impact on society is underestimated by most. For example, what good is a bank if they can’t guarantee your account is secure? Banks spend billions each year on products that help them with this.
Monica: I’ve spent a lot of time thinking through consumer trends — from financial services to community creation to workplace engagement. The nature of work is the most recent addition, which seemed particularly pressing as folks went remote so suddenly — feels like Zoom, Slack, Airtable, Figma etc have solved much of the productivity piece, but there’s still a lot of white space in the softer aspects. What keeps you engaged at your job, and motivated? How do you build relationships with folks outside your team, your “weak ties” that expose you to more cross-functional opportunities? How can we use this moment to make the workforce more inclusive, and ensure more equal access to mentoring and coaching?
Sar : So, Monica focuses on relatable ideas while Bucky focuses on the under-the-hood ideas. Both areas are incredibly impactful! The core difference between those two sets of ideas is the level of legibility to a large number of regular human beings. It is far easier to relate with a product that helps immigrants get credit cards in the US than a product that helps a few engineers write code together.
What’s fascinating to me is how and where both of your focus areas converge in terms of impact. Effective software can be sneaky in how it shapes behaviors of a group of people over time. Well designed software is opinionated. It takes a stance on how something should or shouldn't work. Recurring small interactions with good software shapes how we think, live, work. How do guys think about where your focus areas intersect? The second order effects of ideas are often more powerful than the direct impact.
Monica : It’s a great point. We’re definitely in a place of abundance in fintech in particular — it has never been easier to build a fintech product or company, and new infrastructure companies are getting funded every week to further lower that barrier. This is the natural cycle of technology, but it's critical to understand where we are in it, and what trends will enable further barriers to break down. So much of Bucky’s world underpins what will allow the next innovator to come up even faster than the last, and thus relates to how I think about defensibility and moats. Banking as a Service is such a great example of this exact question — these players are acting as intermediaries, connecting fast moving startups or companies with other focus areas to the banking infrastructure that enables new products. That is critical since each side of that marketplace speaks different languages: different tech stacks, different comfort with payment rails, different needs in compliance. How much will those tech stacks change and converge over time? Will we see more data standardization and connectivity, such that they could start to speak directly? These are really interdisciplinary questions we’re trying to answer.
Bucky : Monica articulated it perfectly. It’s been fascinating to watch the reinvention of financial infrastructure to a “developer-friendly” set of building blocks unfold over the past few years. A company like Plaid appears to have more overlap with companies like Twilio and Stripe than it does with a neobank. I find this super interesting, and not limited to Plaid in this new landscape. Does this make it an API infrastructure company, or a fintech company? While the answer is certainly “both,” the example was meant to speak to the way Monica and I’s world’s have been colliding as of late. Much of the innovation I see here is ultimately software and APIs that enable core financial services to be delivered through digital products. However, building such products requires deep expertise in non-engineering disciplines like credit underwriting, compliance, and risk management. It’s rare to find developers with experience in these areas, so you end up seeing different founding team DNA here than you do in general purpose computing infrastructure.
Sar : I loved how Monica’s thinking backed into Bucky’s domain. This idea of middleware as translators in tech stacks is universally applicable across problems. I would imagine this is where the edge from investing as a group really comes in.
The parallels you drew between fintech infrastructure and computing infrastructure and the variance in associated skill sets is how I think about open source and social media. Those two worlds are a lot similar than it seems at first look. You are designing primitives, you are anticipating the needs of the next layer of developers (or content creators), you are growing a massive user base, you are thinking through communities, you are monetizing a fraction of the user base, etc
One common thread in the long arc of innovation in financial services, workplace experience and computing infrastructure is everything is getting more connected over time. The default assumption in how it is all being designed is shifting from solo experience to a multiplayer experience. I think the pace of this change is the slowest in financial services as of today. I think the consequences of that are far more powerful than what gets conveyed in the collaboration memes. Ultimately, connecting everything means harnessing the power of collectives, for better or worse. What do you guys think about the long term implications? Feel free to use examples to make it concrete.
Monica : Two thoughts here; 1) connectivity is the backbone of remote work, which is super exciting in that it enables new forms of flexibility for people, and it serves to unlock talent in places and chunks (modular work) that were not possible prior. The double edged sword seems to be that this further untethers workers from their employers, as we saw in past shifts like the gig economy. Tenure goes down. The new employee experience — benefits, career progression, mentorship — comes into question. Ultimately, I still think this shift is for the better, but I think there are really important relationships that are worth addressing sooner rather than later. 2) Financial services have absolutely lagged this shift, which as you point out, may be the most pressing opportunity today. This ties into the idea of automated finances, which feel essential as the infrastructure to launch new products keeps improving (BaaS, APIs, a healthy ecosystem) and reducing barriers to entry. I think the future here feels particularly bright - household finances which can be more inclusive of multi-generation households, pathways for young people to build credit faster. It will be a healthy reset in what financial wellness means, when it comes to your employer’s responsibility.
Bucky : Connectivity lays the foundation for communities to form. Not only does it provide the necessary communication backbone for like-minded people to organize and share ideas, but it also enables them to work together without the “tax” that stems from the inability to communicate efficiently. The net of this is that we will continue to see the success of more companies and industries be driven by the strength of their user, peer, and customer communities. This is illustrated by Github. Before the rise of git, collaborating on code was an arduous process. Github democratized access to the benefits of git, which arguably paved the way to the renaissance period we have been in the midst of for years in the world of software development. Another interesting consequence of Github’s success lies in the way they have helped open-source projects and their maintainers thrive. The tools they build have made it more economical and feasible to deliver open-source software to the world, which in turn has dramatically increased both the quality and quantity of open-source software available to developers. The more abstract conclusion I draw from this example is that seamless collaboration being interwoven into the products we use will lead to higher overall productivity, more equal access to opportunity, and a more interesting world in general :)
Sar : What are some fairly mainstream ideas in your respective areas that were fringe just five years ago?
Monica : Hmm...all of crypto😉? As a baseline, the idea that institutional funds, Robinhood and governments alike would be frequent BTC buyers would have seemed crazy more than five years ago. DeFi would have basically been SciFi. Automated and embedded fintech would have seemed completely unnecessary, as most people were still focused on retail banking. The shift to digital payments was on the horizon, but felt far away — it wasn’t until this April that Square saw cashless merchants jump from 8 to 31%. Finally, alternative forms of underwriting were just getting started — now you have folks like Affirm and Nova Credit that are pioneering a whole new model there. And of course, remote first companies were considered fringe as recently as February!
Bucky : Cloud data warehouses. At some point over the course of ‘14-’15, I lost count of how many large companies told me they did not see their data warehouse ever moving to the cloud. All one has to do is look at Snowflake’s market cap to know whether that proved true or not. Another idea that was certainly “fringe” in ‘15 is serverless computing. AWS released its Lambda service at the end of the prior year. Lastly, VCs were still arguing over whether or not many valuable companies would be built around the notion of serving developers as end-users. The other pattern amongst the three examples I shared is that the rate at which each became mainstream would have been far more obvious had one used the framing of “is this more convenient for the user.” I believe “convenience” is perennially undervalued by most when handicapping the success of a new idea or startup in computing infrastructure, and often lost amidst a sea of technical, security, or cost benefits. It tends to win out over these attributes, almost uniformly. Lastly, I would be remiss not to mention this is one of my favorite questions in that it reinforces just how much it really “pays” to be an optimist.
Sar : What ideas or ways of thinking are helpful to draw from the other person’s focus? What do you find exciting about each other’s domains?
Monica : I love learning about the ethos and practices around community building for developer-oriented companies — you’ve seen the likes of Stripe & Netlify set the gold standard of a consistent community strategy, content and tone. Those are playbooks which I think consumer companies could benefit from. Community is such an amorphous concept, but I believe connecting new audiences around specific wedges will be core to the next wave of consumer cos — we’ve seen the first wave of that with companies like Propel and Pillar. I’m also seeing the business models converge, as open source and APIs became the keys to unlock the next wave of innovation.
Bucky : As I mentioned, fintech founders tend to be multi-disciplinary given the nature of their business sits at the intersection of software and finance, two fields that are nearly orthogonal to one another. I’ve found that multi-disciplinary founders tend to have a uniquely holistic understanding of their business, and operate very effectively as a result. What I’ve learned here is to be intentional about seeking out founders that possess this kind of “dynamic range.”
Sar : What do you wish was mainstream today? What needs to happen to get there anytime soon?
Monica : First, we’ve been stuck on the same payment rails (ACH, debit, credit) for too long, and that has benefitted a few outsized winners but has stymied innovation. We saw those downsides early in Covid with many stimulus application and delivery hiccups, as I wrote about in Fintech for All. Real time payments (RTP) have to become real soon — for now we’re just leveraging an ultra-low rate environment to approximate RTP, but that won’t (hopefully) last forever. Instead, we need an actual low cost, standardized, universal option — and ideally it would be programmable. That is to say, one day you could get paid in micro-increments as you work, and pay others as you consume their work online (media, music, commerce, etc). Crypto is certainly one viable path here, but we still need to find a scalable solution and make the space more approachable from a product & design perspective.
I’m also hoping that the next wave of fintech addresses the complexity of the world we live in today. No one has quite cracked it within the fintech community, even though finances are a deeply defining part of our lives. We need products that allow for information sharing, community and de-stigmatization of everyday things like student debt. We also need products that make it easier to invest responsibly, including better gateways to fractional ownership. That’s recently revolutionized trading 🎉 but I’d love to see more options around alternative assets and homes. Here, the biggest issues are around education / approachability and liquidity — the ability to build a real secondary market around these assets. That will require regulatory changes, distribution hacks like leveraging existing pools of money (ETFs, retirement, etc) and new data services to create a mark-to-market for these assets.
Finally, as I’ve mentioned, I believe remote work is firmly here to stay (in some hybrid sense, perhaps). I’d like to see remote work live up to the promise around flexibility and access, and really make it as easy to build a company in Mumbai as it is in Montreal as it is in the Bay Area. Same for getting hired. I’m hopeful that a mix of software and process will enable work to be modularized — now is the time as we form new processes around performance expectations, async communication and handoffs. That would enable people to get trained on the job and caregivers to work part time. And everyone needs a place to bond still, so – who will build Fortnite for work?
Bucky : There are three “big ideas” in computing and data infrastructure that are most exciting to me at the moment. First, I believe that as “companies” increasingly become “software companies,” the rhythm of their operations will be closely tethered to their software delivery pipeline. What this means is that more and more of the business must be re-written as code that can be versioned, tested, automated, and collaborated on in a similar vein. This has already happened with how infrastructure is provisioned (Hashicorp Terraform), as well as how business analytics are produced (DBT). Now that almost every business process is being orchestrated by software, I believe this concept will become increasingly pervasive, and lead to the rise of many valuable new companies. For example, you can imagine workflows, like how a new customer lead is captured and processed, or how compliance is enforced following a similar pattern. I’m excited about this because it requires large existing product categories to be re-architected to enable this new paradigm, presenting all kinds of interesting new opportunities for startups.
The second big idea I am excited about is the shift toward capturing, processing and analyzing business data in real-time. Consumer products like Tiktok, Instagram, and Facebook have conditioned us to expect access to the benefits of the data we create and share with them, immediately. This is far from the case in the workplace today. The internal dashboards we rely on to make decisions are typically refreshed on an hourly basis at best. The systems of record we use such as Salesforce or SAP still produce analytics on a batch basis. Why is this? Because building real-time data pipelines remains prohibitively difficult and expensive, and the volume of data we want to process this way continues to grow in size. While there is no shortage of exciting work underway to change this, I believe the rate at which we evolve toward real-time remains underestimated. The key to unlocking this will be re-thinking conventional approaches to data processing to incorporate the reality that modern business data is more dynamic than ever before. This requires the ability to understand how the answer to a specific question changes as new data is generated on a continuous basis, rather than being able to ask many different questions of the same, static data set. If I had to guess, I see this capability being delivered by startups rather than existing players, who are wed to technical approaches that did not take this “need” into account.
Finally, the third idea is this future in which developers can program “the cloud” as if it is one single computer. The simplicity this unlocks is hard to overstate, particularly when you think about how much complexity a developer must wrangle with today when working with the various cloud platforms. First, we need to make it easier for developers to access computing infrastructure and applications securely, anywhere. Then, we will need to standardize the way these applications are deployed and ultimately run. This is unfolding quickly, and coincides with the rise of Kubernetes as the predominant way that applications are being managed in the cloud-native era. The end result will be an industry landscape that cedes less power to the three major cloud providers, leaving the players whose software overlays and abstracts away this complexity in the most strategic position. This future is far more appealing to me as an investor than one where the three cloud providers have full control over how developers work.
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