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| Home - Venture Profile - Mar 03 Issue |
Venture Spotlight: Bob Davoli, Sigma Partners
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Angel Mehta: Well…word on the street is that you’re sort of a diehard liberal…and that you’re somewhat in opposition to some of the elements of our economic system, at least philosophically. Which is strange considering that venture guys came to be so representative of capitalism in the 90’s.
Bob Davoli: I’m a complete diehard liberal. There’s only one thing that Republicans care about that and that is lowering taxes. No matter what they did, if the Republican Party said tomorrow, “We’re going to do everything we normally do except we want to raise taxes,” everybody would leave. That’s all these people care about. We pay fewer taxes then any other western nation in the world. We should be paying higher taxes so we can take care of the disenfranchised…The people who have no houses, no clothing, no food, no health insurance…If we took care of them, our violence rate would go way down like in the rest of Western Europe. But instead we pay the lowest taxes, and put people in destitute conditions. So yeah, we pay the lowest taxes but they’re going to shoot us if the disparity between the haves and have-nots continues to widen!
Angel Mehta: Did you see ‘Bowling for Columbine?’ [laughing…]
Bob Davoli: No, but it sounds like something I’d like. You know there was something written that was incredible to me. It was in the New York Times. The theme was why do middle class people vote like the rich? And the main thesis was - and I could never understand it - But the reason they do it is they have aspirations to be rich. They did a poll from the 2000 election …they asked people if they were in the top 1% of wage earners in the country. Nineteen percent said, ‘yes’ and another 20% said ‘no’ - but the 20% that said no said they WILL be in the top 1% in the future! So 39% percent of people think they’re in the Top 1% of wealth, or that they will be. They’re voting based on their aspirations!
Angel Mehta: Do you think of yourself, then, as a contradiction? I mean, does it ever bother you that you’ve become such a central spoke in the wheel of free enterprise?
Bob Davoli: There’s nothing wrong with free enterprise. All I’m saying is that we should be doing more. Bill Gates, as an example, is a guy that does good things…he gives billions of dollars away. But some venture guys; they don’t give a nickel away. I mean, it’s incredibly myopic that’s all I can say.
Angel Mehta: Let’s get back to your approach to venture investing…how do you find an interesting idea?
Bob Davoli: Put it this way: When a venture a guy says, “I’m going to go analyze the supply chain or storage markets”, the problem is it’s too late. Unless you’re out in the real world and you’re working in some market, the entrepreneur is going to see the problem first - no venture capitalist is going to see the problem until somebody tells him about it. That’s why you’ve got to invest in people. To say, ‘We’re focused on supply chain’ or ‘we’re focused on CRM’…that’s ridiculous. I don’t know anything about anything. I mean, I’m too far removed. I used to be a fair database designer but I know nothing about what’s going on because I’ve been a venture capitalist for 7 years. Seriously.
I’ll give you an example of a company that I recently invested in - I don’t want to say the name. The guy used to work for me 15 years ago… he called me up. I said, “Well what do you do?” He told me and I said, “I don’t know what you’re talking about”. He tells me they have three customers, but only $1.4 million in angel money, friends of the family. They got $2 million in revenue and were profitable. I called up three references they all said, “We have multimillion, multi-year contracts.” All three customers tell me they save a hundred grand a month, so you know what? THAT’S IT – I’m done. I was like, ‘Where do I sign?” I invested in the guy but I never heard of the space.
Angel Mehta: [Laughing]…Ok…so any thoughts on when to expect a recovery?
Bob Davoli: No clue. I have no idea how the market works. It does what it does; it’s run by fear and greed. We know there are cycles of fear and cycles of greed. We just went through a greed cycle, it busted, and now we’re in fear. All I know is that the numbers say when a market hit its high, say NASDAQ 5,000? If it doesn’t hit that high again a year later then the time it takes to get to that high again, in this case 5,000, is anywhere between 2 and 22 years. If you want my opinion, I’d say we have another 10 years but what the hell do I know?!
Angel Mehta: Let’s go back to the topic of investing in people because ‘Get the best people’ has become incredibly cliché…can you be more specific? Who is the best CEO you’ve ever seen?
Bob Davoli: I couldn’t answer that Angel - that would be unfair because I’ve seen a lot of good ones. But I mean, I can tell you what their make-up is.
Angel Mehta: That’s what I’m trying to get at absolutely.
Bob Davoli: First of all, they have a passion. They have unbelievable integrity, they create a culture that is maniacal. Of course, there has to be great technology in a large market; however, I believe that the passion and the culture is just as important – if not more important. Family comes second to the job. Everyone single CEO that’s been great always puts the company first in terms of time…if their kid got run over by a truck I think they’d probably take some time off work and go to the hospital for a day but still, it’s maniacal intensity-focused, passionate and culture creation and thinking on your feet. Non-political and just result-oriented. When the politics creeps in it’s dead. None of the good guys ever let politics creep in.
Bob Davoli joined Sigma Partners as a Managing Director in 1995. Most recently he was President & CEO of Epoch Systems, which he sold in 1993 to EMC for $141 million. Previously, he was the Founder, President and CEO of SQL Solutions, a leading purveyor of services and tools for the relational database market, which he later sold to Sybase. Bob has a B.A. in History from Ricker College and studied computer science at Northeastern University for two years. To send feedback to Bob, email: acm@sigmapartners.com
Angel Mehta is a Managing Director at Sterling-Hoffman, a retained executive search firm focused exclusively on CEO, VP Sales, and VP Marketing searches for enterprise software companies. He can be reached via email at: amehta@sterlinghoffman.net
 
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