Magdalena Yesil is the founder of Broadway Angels and the founding board member and first investor in Salesforce. She also recently joined the Zuora board of directors. Magdalena has been active in Silicon Valley for three decades. Most recently, she spent eight years as a general partner at the venture capital firm US Venture Partners (USVP), making investments in a broad spectrum of technology startups. She has been an early investor in over 30 companies. Prior to her investing career, Magdalena was a serial entrepreneur, founding two successful electronic commerce companies, CyberCash and MarketPay. She has a book coming out this October – Power Up: How Smart Women Win in the New Economy
We talk to Magdalena about the early days of the internet, investing in Salesforce, diversity in tech, and the future of the Subscription Economy.
On being a pioneer of the commercialization of the Internet in its early days
It was pretty easy to see as far as I was concerned. I was a graduate student at Stanford in the early ’80s and worked as the computer center advisor at nights. And what I saw was people playing computer games over the university’s computer, and not only were they playing with each other, they were playing with other students at MIT and other high-level educational institutes. But, when they graduated and went to companies, they didn’t have internet access to the same extent like they did at school. So I knew that there was demand. I knew that there were a lot of fun things you could do on the internet. It just was not available in corporations. So my first startup was focused on one thing and one thing only and that was to bring internet access to corporations.
On being the founding investor, first investor, and the founding board member of Salesforce
When I first talked to Marc Benioff about the concept, there was no Salesforce, there was no company, there was no founding team. I was instrumental in having Parker Harris and his group join the effort. The commitment that I made to Salesforce was on day minus one over lunch with Marc.
The reason why I made that commitment was because I was at this point in my career – a Venture Capitalist at U.S. Venture Partners, and I had been watching the enterprise software space, realizing that a lot of enterprise software actually went unused. It just was not what people wanted. It was a lot more than what people wanted and needed because they wanted to charge the one million plus enterprise software license fee. And then there were all these integration folks and consultants that came in and made another million dollars, at least, in getting the software that a company had just paid a million dollars for to work. It was pretty ridiculous.
With Salesforce, the whole idea was: What can we do that is going to give the customer 80% of the functionality with 20% of the effort? The idea was to make our customers successful with as small a footprint as possible with as small a price point as possible, to give you only 20% of functionality but it’s what you really use 80% of the time or more. So very incredibly pragmatic, incredibly simplistic.
On Diversity in Tech
What I truly believe in is allowing people to speak. Allowing people to share their opinions is, in fact, the very basis of diversity. When you don’t allow people to share their opinions in a polite way, in a respectful way, you actually are not really an agent of change.
I do believe that change comes when we hear each other, when we allow each other to voice opinions that we might not necessarily agree with, but to create that comfort that, yes, you will be heard.
That is what I am a proponent of, and I have seen it work in my own personal life. I really do hope that in this conversation of diversity and promoting diversity, that we ourselves don’t move away from diversity. When you say you want diversity, how can you not allow diverse opinion if the opinion does not agree with you?
On the diversity gaps in the VC community
I do believe that the VC community strictly looks at returns and does not really look very deeply into the ethics of corporations that companies that we invest in. I think that actually is something that limited partners who give this money to the venture firms to invest need to pressure and put as high priority. So it shouldn’t just be: I give you a dollar, you give me back $10, and now you’ve done a good job. We need to question: Are those companies doing it in an ethical way? And I think that the ethics discussion hasn’t really taken place in the venture community. Ultimately, the money isn’t the venture capitalists even though they’re the ones who are waving around the checks. The money really is coming from the limited partners, so I think it is the limited partners that need to hold the VCs, the general partners who invest this money to a high standard.
On the Subscription Economy
I think we’ve had the early adopter phase. But, that there are a lot of companies that haven’t yet implemented and haven’t taken advantage of the efficiencies of the service model of subscription economy. We are just getting started. I think momentum is on our side, and we still have a long way to go.