mike volpi of Index Ventures

During much of the previous decade, Mike Volpi was rumored to be CEO-in-waiting at Cisco Systems. But when it became clear John Chambers wasn’t going anywhere, Volpi left the networking giant where he’d spent more than a dozen years; these days, he’s a tech investor at Index Ventures.

And while his portfolio understandably leans toward enterprise software companies like Pure Storage and Zuora, he’s also got some interesting consumer companies in his portfolio. In this week’s Elevator Pitch, Volpi looks back on his time at Cisco and weighs in on the future of the mobile industry — including a possible divorce between Google and Samsung.

Q How’d you get into this racket?

A I’ve been at Index for a little over four years. I’d had a very longstanding relationship with the firm, which was founded by one of my classmates who roped me in as an advisor when I was still in my Cisco days.

When I left Cisco in 2007, I became CEO of a startup called Joost, which was funded by Index and Sequoia Capital. When that journey ended, I liked enough what Index had done for me, and I respected their approach to doing venture enough, that I felt this was a firm I’d like to be part of. I spent two years in London to get to know the firm’s culture, then two years ago I opened a California office along with my partner, Danny Rimer.

Q What do you like about VC?

A In my early days at Cisco, I managed corporate development, and we invested a fund. I got a taste of it and liked it. What’s wonderful about the VC role, compared to an executive role in a larger company, is you get to see a huge diversity of businesses and sectors; you see the forest and connect the dots. Obviously relationships matter a great deal, and your ability to predict how technologies & business will interact is at the heart of this job. It’s sort of like chess, and you get to do it in multiple sectors and areas.

Venture capital as an industry has changed — it used to be a leisurely, play-golf-and-drink-martinis-at-lunch business. Now it’s super competitive.

Q What kinds of pitches are you looking for now?

A I generally concentrate on early stage stuff and enterprise technologies — everything from my old stomping ground of networking to storage technologies, cloud computing, big data, etc. And increasingly, SaaS and cloud services are the areas I principally focus on. I’ll do a few things that are consumer oriented; I have the pleasure of being on the boards of Sonos and SoundCloud. Music is one of my personal passions, and thankfully both of those investments are doing pretty well.

There’s two principal reasons I do both consumer and enterprise. One is that, at Index, one of the things that really matter is our relationship with the entrepreneurs. I knew John MacFarlane at Sonos when he was in the enterprise side; he’s an amazing entrepreneur, and I just wanted to work with him.

The other reason is that being in the consumer business shows us what the latest and greatest enterprise technologies are. For example, we recently invested in a company called Elasticsearch, because Sonos was using it all the time.

Q What’s the next big thing going to be?

A There isn’t one thing that’s going to be big. There are multiple areas that are going to be interesting, but there are certain fundamental themes that are impacting almost every industry we’re in right now. In the enterprise space, the two big, pervasive themes are mobile and cloud; I still think the cloudification of the enterprise is in its early stages. As consumers, we use Dropbox, but enterprises have not really adopted that.

The other is data. In the e-commerce business, you can serve your customers better because you have data about them. Right now, we just think of that as insight – “I noticed a lot of my customers are buying a certain flavor of toothpaste, so I’ll order more.” But the whole notion of data-driven enterprises is an enormous theme that were just scratching the surface of.

Q What’s the biggest mistake entrepreneurs make?

A It’s hard to boil down to one bucket. You have entrepreneurs who are 45 years old and are amazing, and you have ones who are 17 years old and are amazing. They all bring in their life experience and perspectives, and they all make their own mistakes.

The one thing I’d encourage entrepreneurs to think about is the length of the process they’re undertaking. Building a company is a six, seven, eight-year journey. People think, “I’ll start this thing, and I’ll exit for $3 billion in six months.” That may happen. But you have to hope for the extraordinary outcome and plan for the middle of the road. Who to hire, who to partner with, how much money to raise, a lot of people make those choices in a very short-term context.

Q You were on the board of Ericsson until last year. Any thoughts on the consolidation we’re seeing in the handset industry, with Motorola and Nokia changing hands?

A Particularly on the device side, currently there’s two real ecosystems: Apple at the high end of the market, and on the other pole, the Google Android thing. Operating systems are only as good as the applications that are sitting on top of them, and if you’re Palm or Microsoft, if you don’t have the applications everyone’s talking about, you’re just not in the game.

The Apple thing pretty much works on its own, but the Android ecosystem is interesting. It’s not a one-to-many relationship; right now it’s a one-to-one relationship between Google and Samsung, which has such a dominant share on the hardware side. The way to think about that industry right now is Windows and Intel, which unfortunately puts Motorola, Nokia and others into single-digit market share, not really shaping the future.

So then the question becomes, what’s going to happen in that bilateral relationship between Samsung and Google? Having one dominant player in the hardware department wasn’t Google’s original hope, I don’t think. And for Samsung, not having any ability to control the software it packages is also an uncomfortable place. At some point, it’s going to change; exactly how is very hard to predict.

Q You were once rumored to be the next CEO of Cisco. Are you having more fun as a VC?

A Look, I love what I’m doing. I’m on 10 boards and it keeps me hopping. I love the fact that I can work with young, early stage companies and really help them develop. I joined Cisco when it was a small company, and that was the most fun I had there.

I still think of it as my alma mater, but what the company developed into in its later years, a much more established company, wasn’t my sweet spot. I think every professional should ask themselves, “What’s my sweet spot?” Big-company management is just not that for me.

Peter Delevett Peter Delevett (184 Posts)

Peter Delevett covers startups and venture capital for the San Jose Mercury News. He's been a journalist in Silicon Valley since the dot-com daze.