 Trying to get back to the basics of great products power comes from sharing information. I try to convince people to slow down Hello everyone, welcome back to the soaked by slush podcast My name is William from that ball and with me in the studio is is a crowd. Hi, sir. Hi, William I almost looked at the camera almost close. Let's go Today we have a an interesting guest once again as we usually tend to have on this show So welcome to the soak by slush podcast, Philippe Botteeri Thank you my pleasure to be here great to great to have you do you want to tell listeners Who you are and what you currently do Sure, so I'm a partner with Excel. So we are a global venture firm So we started about 35 years ago in Silicon Valley. So this is where we have our roots and culture Doing early-stage investments in technology companies in Silicon Valley and over time we realized that Silicon Valley did not did not have the monopoly of innovation. So we opened an office in London 2000 so 21 years ago. So we've been on the ground here You know for more than 20 years and we also have an office in India So today, we are one of the very few early-stage You know venture platform with a truly global Network and coverage and this is is that network that we give to our portfolio company and hopefully give them a strong competitive advantage and You know from a stage 10 point So the core of the business is you know kind of seed series a early-stage investments over time We also have added gross capabilities So we have a global girls fund which can you know invest At a later stage in the business. So anything from you know, 40 50 million dollar up to a hundred hundred and fifty million dollars And the three key areas where we are investing overall is anything around digital consumer anything around fintech and online payments and anything around You know cloud computing sass and analytics and security, which is what we're gonna Talk about today. So so we've evolved into a full-stack platform So we anything from seed to to late-stage and and we do that on the global basis Yes, can I also ask what is your background? What do you do? Yeah? So I joined and that I think ties nicely to do this this discussion So I joined Excel 10 years ago You know before that I spent about a bit less than 10 years in the valleys So I was with another firm called Bessemer Venture Partners And before that I was with you know with McKenzie both in their power to office and I started my career in With them in Europe as you can guess from my accent and from the other side of the channels I was born and raised in France But I think what so the you know, the question is like why did I move back from second body to to London in? you know in 2011 and So I was Kind of lucky to start in venture 15 years ago. So I was in 2006 Basically, which was at the the beginning of cloud and sass like when I was starting in When I started venture and in the valley I think the world what the question was like is sass and cloud the fad or Is that is that really gonna gonna last and I think I wrote my first blog post Which is you know why I disagree with Tony Zingali who was like a you know, well-known CEO It was CEO of Mercury interactive at the time and basically he was doing a keynote at a conference saying that basically sass, you know would disappear And so maybe I wrote my first blog post in one now. I think sass and cloud is actually the future Of software so from 2006 to 2011 You know at Bessemer I helped build, you know, their cloud practice You know investing in genuine sass companies that cornerstone demand a loco intact And in 2010 investing in a company called Criteo Which was kind of the first picked it up play around kind of online advertising around retargeting And it kind of opened my eyes about what was happening in Europe. I saw this great company out of France They were growing from 5 to 15 million In a year and no one was repaying attention to it because no one was really looking at Europe And then a year later, I just got the call from Excel and I was like, wow something seems to be happening in Europe like We're seeing stuff there that that you know shows that it's it's starting to happen I wanted to be on a global platform. So I thought you know You know if you want to build global businesses you need to be global ourselves So that was very important to me and I really like the team there So I made this the you know the move back back my bag Lately in London me 2011 and then at the time I was like well a lot of what I did in Convally was around, you know cloud computing and sass but at the time like 2011 2012-13 and 14 a lot of the action in Europe was around the kind of the first generation marketplaces and consumer services, but not much was happening on On the cloud front. So for the first three years, I invested in companies like, you know Like our and fiber on the marketplace side And I was still looking for these cloud companies and the first one I found was people doc in 2014 and then in 2015 I invested in you know, Algolia and and Dr. Leave and started to see that a new generation of founders was you know building these great cloud companies and then looking back in 2016 like Seven out of ten of our last most recent deal that Excel was actually cloud company I was like wow something's changing now and and we just need to You know, we just need to tell it, you know, let's tell that to the world Let's show that Europe can actually be a greater persistent for for cloud company And that was the burst of the Excel Euro scape. So we did the first version in 2016 Which was kind of this overview of where? You know the state of the cloud for for Europe And you know, we kind of added You know, including the list of what we think where you know kind of the top hundred cloud companies out of Europe at the time and You know when you compare the number of where we were in 2016 and where you are today. It is just night and day, right? I mean and just show how much the ecosystem has accelerated Just I mean just give you a couple of stats. I mean in 2016 there was like around like a billion dollar Invested in the entire cloud ecosystem in Europe for the year, right? in 2021 the largest round which was Silonis was in Europe was a billion dollar So, you know in basically five years went to all the money investing the entire ecosystem to just one deal And the one billion became like 30 billion, you know, you're today in 2021. So, yeah Difference isn't inflation Yeah, I mean it was been a steep inflation All right. Yeah, but you mentioned the Axel Euro scape It's a report or whatever you want to call it like a like an overview of a lot of this sort of data and and and related to these these things and you've just actually released the 2021 version of this Axel Euro scape on the 19th of October. It's it's available online I think we're gonna put the link somewhere in the description so people the listeners can go read it, but Yeah, should we go through it? There's a lot of interesting stuff in in the in the text here Yeah, and maybe just to give some You know some background around the acceleration that we're seeing certainly Around, you know cloud I think in Europe, but also globally and then we'll we'll compare Later in the discussion, you know, how's Europe perform against the US but overall I mean if you think about the market, there is roughly, you know half a trillion dollar or a bit more of software spans and And you could say that, you know, barely get less than probably one-third of that today as Migrated to the cloud So there's still, you know, if you look at the this migration from on-prem software to to cloud we're still at still the very early innings of that of that transformation So this trend is not something where we're saying well, you know We are the top of the S curve and most of the the workload have moved to the cloud No We're still at the very beginning and I think that's why you're seeing this, you know, this very long trend like very deep trend Steel, you know pushing a lot of this public and private company Overall, I think if you look at the the public side, I think what's interesting is that today You have basically 10 software companies that are worse north of a hundred billion dollar in Market cap and out of this 10 company, I mean together There were around four billion slightly more than four billion dollar and more than half of this, you know 2.2 billion just one company. It's Microsoft. Sorry. Do we might do in four trillion? I think he's Yeah, four trillion. Yeah. Yes trillion dollar. Yeah, it's correct And Microsoft is, you know, it's 2.2 so slightly more than half of that in just one company and Microsoft as added in market cap $600 billion in the past year This is more than the nine other companies combined So clearly Microsoft has been the big winner of you know, this Migration to to the cloud and that's what explained their success because in the past You know with when Satya, you know to the help of Microsoft you really refocus the company On Azure and Office 365 to really push all their workload to the cloud and the numbers out there You know to prove that it was clearly right and then on the other end If you look at the only company in this 10 company with market cap as declined in the past year That's ACP and why because I mean you can argue that you know That cloud migration has been totally unclear, right? And they haven't really been able to capitalize on this core trend that we're seeing in the software ecosystem Yeah, exactly. No, I'm one happy Microsoft investor myself, but it's it's very true It seems like since this has been happening quite quite for a long time already And it's easy also to kind of draw parallels between cloud computing and and the whole, you know growth of the internet and and platform economies and everything Related to that It seems like this has been going on for a long time that we should be finished by now There should be no gas left But as you said, there's there's so many companies that still haven't made a transition and there's so many countries Still coming online in the coming years It seems like this will be a massive advantage also for for your for instance now that is According at least to your report It seems to to be catching up quite quite well Actually one question I had Before we dive deeper into the report you had Europe and Israel kind of pooled together as one one area and then comparing that to the to the US. Is there some Some specific reasons for for pooling Europe and Israel into like kind of one one market or what's the logic behind it? Well, I mean we could call it the kind of Mediterranean region so extent I don't know. I mean, I think we're including it because Israel has always been a very active market in terms of venture Overall and and says always for us be part of that our, you know, same ecosystem And there are a lot of ties between the Israeli in European and US ecosystem So that's why I think we're you know, we're including them in in this In the same bucket Yeah, exactly, but yeah, if we if we go back now to to 2016 You mentioned the funding round or the funding size of private money coming in That has grown massively the market caps Seem to be growing. What other stats do you feel like are the most relevant to point out that? Europe is is indeed catching up now to the to the US in in terms of cloud computing Well, I mean, I think when we look at the progress that Europe has made in the past five years I think the main question that you know, I think the ecosystem has earned the right to ask is You know, are Europe and Israel on paths to global dominance? Historically Europe and Israel have always been considered in the shadow of kind of the the US venture ecosystem and you know, if you look back, you know, 10 years It was all about the kind of the Copycat and and and Europe trying to look at what were the successful internet or marketplaces You know in the US and try to copy that in Europe. I mean, that's was a playbook of rocket internet, for example So it was not about innovation. It was really about, you know, let's try to copy and adapt to the local market What someone in the US is done now, and I think today we're very far from that. I think today Europe has really shown that it can create Category leaders, it can really innovate and not just copy what what where what was happening in the US And if you look at some of You know a few facts here, if you take the largest cloud IPO in 2021 That was actually UI path Which was a company company out of Romania So Europe at the level of the global economy So Europe at the largest cloud IPO This year, I mean, this is something like if we have told if we have said like four five years ago in 2016 Like Europe is going to generate in five years from now the largest cloud IPO You know, no one would have believed it like it was just not meant to happen and it is actually happening If you look at, you know, the fastest Company to get to unicorn status The number one is whiz, which is a cloud security company out of Israel The number one is hoping which is a virtual event company out of London. So two of the top three fastest cloud unicorns You know and just coming from our region right in Europe and Israel And if you look at the the top three funding round I mean, it's certainly Europe has always been behind in terms of the size of the round, etc And and today actually, yes, I mean out of the top three us as to And you know, the largest round was in that data breaks at 1.6 billion and the largest in Europe was still nice at 1 billion but Overall like we're really catching up like we're talking about billion dollar round like okay It was 1.6 1 but it's still like it's massive round and when you look at on average Kind of the top rounds happening in the region. It's not that there is like a big a big difference So you start looking at these data and you say wow, you know a lot of very interesting things are Actually happening in in Europe now The question is the quantity, right? So if you look at the the total amount of Of, you know, that has been invested basically. Yes, you're the US is still Still larger than than Europe Europe is, you know around 30 billion and it's about two-third the US about 46 billion So we're still doing a bit less. I think if you look at The number of IPOs as well, I mean there's was 21 IPO in the US 11 in Europe For this year on the platform. So overall, I think in volume the US is still Larger but comparable is not that they're you know, 10x larger which was the case in 2016 now, you know, we're kind of two-third Of the US But what's most important to me is basically the quality of You know of the outcome, right? And so if you look at the number of IPO, there are more IPOs in the US than coming from Europe and Israel, but Actually, that number is going much faster because you know, if you look at You know, last year the 21 is a 30% increase in number of IPO for the US versus 11 is actually close to 100% increase For for Europe and Israel. So, you know, it's growing faster The amount raised in IPO is similar the average market cap at IPO is similar and the average Brought new multiple of this company going public is also similar If you want to listen or if you want to Look at the report at the same time while you're which part should you be looking at right now on the report? Yeah So right now we are, you know, I'm you know, most specifically on the section about Europe and Israel and are they on the past to global? I mean, I'm sorry slide 29 and so I would just you know, just saying that yeah in terms of volume You are still in front but in terms of quality of these public companies that are coming out of Europe They are actually very very similar and and if you look at the You know the private side and the unicorn Basically, the you know, it's the same story So there are 43 new unicorn out of Europe versus 74 in the US But the median value of this unicorn is very similar the median capital raised is similar The number of unicorns that I've raised big rounds of $250 million is the same And the time it takes on average to become a unicorn is similar So thinking what we are saying here is both on the public and the private side things are very Comparable in terms of the quality of the company the access to funding etc. And so to me I think that is the most Important point because at the end of the day, it's all about creating this category leaders That's interesting. Yeah, there's a lot of it's fun because we've had this discussion this conversation On this podcast before about Europe and the ecosystem and everything. So it's nice to have Interesting concrete data here to actually demonstrate the trends that we've been discussing in previous episodes but actually to follow up on what Will William asked about the the choice of sampling still like I think about Europe and Israel now Okay, first of all, I understand that Europe is in a country whereas Israel is a country So there might be some differences there But I guess the interesting follow-up to Williams question would then be like is is Israel making Europe look significantly better Compared to the US or what is how do you think about that? That's that's a good question. So yeah, I mean to me, it's interesting to put Israel in in in context, right because What happened in this ecosystem like if we look at, you know, 2000 when we started in Europe I think a lot of most of our investments were either in the UK, so in London or they were in Israel intelligently so the Israeli ecosystem has been here for You know very long time and I think what we've seen in the past 20 years is that Europe has moved from You know kind of being bipolar around this two ecosystem to now being a combination of You know 20 plus hubs and cities where we're seeing great great innovation I mean again, you know five years ago if you had said that Bucharest would generate the biggest Cloud IPO of 2021 like, you know, people who has erased their hybros, right? But it actually happened and it showed that really innovation can come from anywhere in the region and so basically what happened in the past 10 20 years that you know all these types of evolved in In Europe, but Israel, you know has continued to evolve as well And has been doing very well, right? I think you know, you'll see Basically a slide in the report saying that Israel is emerging as you know, the unicorn cloud factory of the region And it's true that if you look at the roughly 80 unicorn that we have in Europe in Israel, Israel is one third of it And it's also one third of the new unicorn that that we're seeing That we saw in in the past year And and we look at an interesting statistic shot. I don't know how meaningful it is, but it's kind of interesting Which is to look at the unicorns per million people in the country And by far like Israel is like super high at you know kind of 2.9 Versus, you know, most European countries from the Nordic France or Germany are like, you know, 0.1, 0.2, 0.3 So it's kind of an interesting stat to see to show that actually Israel it's kind of And and normally some extent In kind of the unique unicorn creation World but the question is so what what is happening in Israel? Like what what is this? the case To me, this is a combination of different things, right? I think the first one is that Israel as You know some very a lot of great talents and the the source of these talents is one The army and the 8200 units. So they're very strong But if you just like you think about the army as kind of sea, you know lands Uh And air and they have like a fourth branch which is kind of this digital cyber intelligence Etc. So this is a great source of talent. The only thing that happened is that Given that the Israeli ecosystem has been around for a long time has been great at you know, you know Especially in the security space and the software cloud space. There's been a lot of acquisition there So all pretty much all the big US technology company have made acquisitions In israel and therefore these acquisitions have evolved, you know in the past 10 15 years Into kind of full-fledged R&D and product center And that's also a great source of talents So that's I think the first the first thing that I put in is a great pool of talents in israel The second thing is that this talents Have the right skills You know, they have skills which really match The big and the big trends that we're seeing in in tech like all this secular trend around You know cloud computing around security around infrastructure around payments. These are all expertise are very strong in israel So when you combine these talents With uh, you know, there's circular shifts and the great match. I think it's um, you know, it's very powerful Um combination And then the third thing is that, you know, you have a lot of local seed funds Um, you know that have been willing to make like pretty big seeds And so you can see Company out of israel's raising like five 10 20 million dollar seeds So from the get go, they have, you know, very strong team with access to a lot of capital Um, and then of course you have, you know, all the kind of the global funds which are kind of Coming as well to to um to invest the big ground. So all these combinations, um, you know, together I think have led to really, uh Great things for for israel Yeah, exactly. That makes makes sense What about in terms of founders and operators? You you mentioned that there's kind of a new generation building companies Is the is it the same founders still building as in 2016 or Has the morning porridge changed along the way? What's different with with this batch of companies? Well, I mean, I think the first thing is is quantity, right? I think you have a lot more people coming out of um, in europe, it's always add, you know, some very strong, um, universities, especially around, um, you know, Coding i mean computer science, but also around the data and algorithm, which is, you know, Which are great skills in the current world Uh, but I think what we have thing also is a shift of Motiety and and now if you look at the number of students coming out of these schools who are interested into the startup world I mean, it is now becoming the, you know, a dominance, uh, majority, right? Because people You know, they're less excited about working in, you know, in banking or consulting or some of the big industrial group Like they're more excited by, you know, working for, um, you know for startups or actually starting their their own startup Um, so I think that's one thing around the talent pool is that, you know, it's really, uh, it's really been growing exponentially um, and the second thing is that the level of ambition now I think, um Is, uh, you know, it's really unprecedented like all, um all the founders They want to be they want to be global. Um, you know, they want to build category leaders Uh, and so it's, um, you know, I think for me That's been it's been very exciting to be in this ecosystem and be able to meet every day several of these founders and to see their Uh, their energy and commitments through to creating, um, these great companies exactly Do you think it's uh, you mentioned in your report that the The, um, the world is or the world of cloud at least is now, uh, flat So you think we are already at the point that it's You have a similar chance of succeeding regardless of where you're based In terms of being based in in in the us or in in europe or israel Um, correct. I mean, I think the, um Well, one thing which is, uh What is clear is that at some point if you want to be if you're selling into enterprise um software like selling to Enterprise company You um, you probably you know, your your largest market is going to be the u.s. Because for a dollar spending software 50 cents Is actually spent in the u.s. Um, so you need you only at some point to develop your go to market there, but in terms of engineering and products I think europe and israel are very attractive places Because to some extent there is, you know, less competition for talent than in see I mean everything is really right everybody Every entrepreneur speak to will will tell you that hiring is hard But I would say that, you know, look at See from the value in the concentration around san francisco when you look at europe where you have actually 20 different hubs Um, you know, you can you have access to actually a broad uh pool of talent And it's probably easier to build that great product team in europe Today for for all of these reasons So now at some point you need to go and build your go to market in the u.s But from a product and insurance standpoint, it's very interesting and that's why also we're seeing a lot of u.s. Companies, you know making acquisition in You know in europe to actually have access to to this talent pool and then there's uh I guess the final part of your your escape 2021 Maps out six Future trends we don't have to go through all of them if you don't Feel like it right now, but like what would you highlight? Which ones would you highlight from this? this trend A list of trends here that you see in 2022 and onwards I mean, I think to me if um, you know, I wanted to um, you know to flag three of them I would say that you know the thing the the number one and this one we flagged in in last year as well, but it's really the importance of automation for for the enterprise and what we're seeing right now is that With ai becoming more performance the number of use cases that you can automate increases because with ai you can automate a lot, you know workflow that are a lot more sophisticated And so what's been very interesting is that with time you're seeing that the potential To automate processes in the enterprise actually growing and I think this is a trend and it will keep growing You know for a long time. I think because it just feels that we are at the very early innings So you see company, you know, like, you know, ui pass and and silo nis Genesis like all the this new generation of companies which help automate this enterprise Tasks and workflow are becoming more and more efficient and and that is You know, very exciting Now if you look at, you know, the second trend that I wanted to to to flag here, it's security focusing on like cloud security feels like it's a very Long lasting and exciting trends and why is that? I mean, I think Um, historically, uh, all the workloads And a lot of the workload are still on-prem, right? But when when your workload is on-prem, you have a specific set of security parameter, right because you control You know, you have your your hardware and then you install your app and you need to configure it But it is a Some extent more simple environments When you move to cloud, suddenly everything becomes virtual and your infrastructure becomes code, right? Because it's all about how you code the different instances on on aws and and start this application, etc And so as your infrastructure becomes code The level and the number of vulnerabilities and the challenge of securing that infrastructure are very different And and you need to do it with a focus on code, but you need to do it also with a focus on configurations um, and so We're as more and more workloads are migrating to the cloud. We're seeing actually, you know, that's super increasing number um of uh, you know of challenges and You know, leading to the rise of the next generation of Cloud security company like, you know, we mentioned whiz and snake and a few others So that's I think the the third one and and the fourth one Which is also quite Exciting for me and this is something which is new in the urscape this year Is we have added, uh, you know a section in our top hundred around crypto Uh, and why is that because I think this year we have really reached the tipping point Tipping point for crypto where basically we are seeing it being starting to be part of the financial um infrastructure Uh, and we're seeing all the, you know asset custodian or the banks etc getting You know, I mean to provide their customer the ability to, you know, buy and hold and trade these crypto currencies And uh, and they're building so you you have a need for a new infrastructure layer For all this financials institution to be able to operate uh cryptocurrency Uh, and to me that's super interesting because it's like, you know, I described crypto today as probably as I would say the internet uh in the early 90s Uh, so this is just I think the the the beginning Um, and there is a real need for all this, you know core building block for the crypto infrastructure You know chanalysis is one of them on on the the compliance side and kind of you have fire blocks on the custodian side and Nansen on the data side. So It's been very interesting to see, um, this ecosystem developed in in the past year This is music to your ears. Really? Yes, no, but I agree. It's uh, it's definitely a trend to to watch out and it's very very early Uh, I think it's good to compare it to the early internet, but the only thing Uh, the difference is the amount of users at the same point in time, which is where crypto is is way ahead of the The internet at the same stage in the uh, or in the same at the same stage in the adoption curve So if the pace will be will be the same for for the coming years. It's going to be a very very interesting trend to watch for sure Thank you. Yeah, uh, it looks like from your smile that you uh, you've been holding A video for crypto as well. Yes. Yes Yes, but let's not dive into that too much But we maybe we'll have some some crypto episodes in the future as well But it's uh, it's very interesting to hear that many of the vcs We talked to are also looking at that much more than maybe a few three four years ago So it's it's becoming it's becoming more and more mainstream In in that sense. So it's it's interesting to see And also the the automation part is is something we discussed. We've discussed as well. It's The possibilities there to automate basically Anything in terms of content creation also is is going to change. I think many companies Quite a lot in the coming coming years Yeah, no, I mean, it's it's super exciting time to be a cloud investor Uh in europe right now. I mean, I think meaning every day all these founders and Seeing all that energy and seeing all the great products that are I mean Hopefully a lot of them building on the trend are described, but there's so many other things that are happening right now That we didn't have the time to to to talk about So I can't wait to see what's going to happen in in the next year I mean, it's going to be very interesting to see how You know europe is gonna You know catch up in terms of volume Uh, you know compared to to the u.s on the ipo from but also on on the funding side And um, yeah, we'll we'll be interesting to see what's coming next, but I can't be more excited about it Yeah, for sure. It's it's going to be really interesting to to see and Yeah, check out the report. We'll we'll link to to to that in the episode description There's a lot of interesting data points and it's a very positive story for once about About europe and its outlooks in in in terms of entrepreneurship and startup. So it's it's a good read in that sense as well So absolutely. Thank you. Thank you. Accel 2021 euroscape on the path to global dominance I like that little subtitle there a very cinematic subtitle Yes, very good. So thanks so much for taking the time to to run through it with us Well, thank you. Uh, william. Thank you. Zach was a great big great being here today Thanks. Thank you. Thank you so much. And thanks to everyone who tuned in see you in the in the next one And until then stay healthy and safe. See you. Bye. Bye. See you. Bye. Bye