This past week I was inducted to serve on the board of directors for the National Venture Capital Association (NVCA), the largest and most influential professional organization for the venture capital community whose membership comprises over 90% of professional VC firms in the US. It’s an honor and privilege to have been selected by my peers but also a tremendous responsibility, and one that I thought long and hard about before taking on. It’s a four-year commitment, requiring the same level of attention and caring as any private company board. I wanted to share my thinking on the decision, some initial impressions and also ask for your feedback on what you believe are the most important issues facing the entrepreneurial community that I can address during my tenure.

The NVCA operates out of the limelight, mostly behind the scenes in Washington as a sort of archangel for the venture community and the entrepreneurs  we serve. Having just attended my first board meeting, I was blown away with the level of professionalism and insight of the organization in understanding the dynamics in Washington and how to direct efforts in the service of entrepreneurial innovation and job growth—the two tenants of the NVCA and our industry. The organization has built an incredible and trusted brand in Washington by practicing a conscientious, informed and pragmatic approach over many decades, rather than just throwing money at high-paid lobbyists. As a result, the NVCA actually can make a difference.

I liken our entrepreneurial ecosystem to a fragile, diverse and beautiful coral reef. The NVCA acts to protect the reef and its inhabitants from the inevitable unintended consequences of broader legislation and over-regulation. As a small industry, we are rarely given center stage, but we certainly feel the effects of collateral damage. For example, legislation such as Sarbanes-Oxley has had devastating impacts on the ability of young companies to go public over the last decade. An overburdened FDA has drastically reduced the rate of innovation in our health care system. Immigration restrictions have sapped our access to talented human capital required to scale our companies. Together, these and many other issues can create significant deleterious impacts on our entrepreneurial ecosystem and thus stifle the rate of innovation and job growth in our economy. The NVCA tackles these challenges, among many others, and has made significant progress on a number of fronts.

Recently, the organization played center stage in legislation to reduce the negative impact of Sarbanes-Oxley on young, growing companies with the successful passage of the JOBS Act of 2012. This effort was spearheaded by NVCA Board members (notably Kate Mitchell from Scale) and the amazing staff of the NVCA (notably Jennifer Dowling), and it will save young growing companies from spending hundreds of millions of dollars in resources to comply with overly burdensome accounting and regulatory compliance measures designed for much larger companies. I must admit that I was pretty skeptical of getting anything done in Washington, but the passage of this bill gave me great hope. I’m now very optimistic that, with guidance from the staff at NVCA and a determined effort, we really can make a difference.

As an investment firm, making great investments is, of course, paramount to our success. However, supporting a healthy ecosystem that protects and supports entrepreneurship is the most critical component in the longer term. I am excited to have an opportunity to make a difference for the broader entrepreneurial ecosystem and to reduce the friction for great entrepreneurs blazing the trail of innovation. I would love your feedback and thoughts on how to maximize the impact during my tenure.

Early-stage CEOs need to be good at lots of things.   In our view, the most important is setting a vision for the company –- and then translating that vision into tangible objectives for the rest of the team.

For this to be done well, a CEO must be able to simplify all of this in a way that everyone in the company can understand and act on.  This is hard work.  As DaVinci said, “Simplicity is the ultimate sophistication.”

One tool that we’ve seen CEOs use to make it easier to communicate vision and objectives is Mark Benioff’s V2MOM.  In his book Behind the Cloud, Mark tells the story of how he’s used V2MOM since Salesforce.com’s inception to focus the company on what matters.  V2MOM requires a company to outline five things (and refresh them periodically as the business evolves):

• Vision – What you want to accomplish
• Values – What’s important about your vision
• Methods – What you need to do to deliver on the vision
• Obstacles – What might stand in the way
• Measurement – How you will know you’ve met your goals

Seems simple enough, right?  Well, it’s not always easy to get each of these things boiled down in a way that everyone can agree upon and process.  This is where the CEO’s talents come into play.

We’ve seen the V2MOM process work exceptionally well in several of our portfolio companies (both early and growth stage).  If you’d like to do a better job of getting your team aligned around your vision –- and equipping them to deliver on it — it’s definitely worth integrating V2MOM into your company.

Should a small team of developers serve businesses around the world?  Business Freemium companies are often global from inception.  This is an important part of the story for how the Business Freemium Model is disrupting SaaS and Enterprise Software.   We have been studying Global Business Freemium for a couple of years.  We would like to share some of what we have learned to help entrepreneurs and executives to create a Going Global Strategy.

Emergence Capital is pleased to be investors in Business Freemium leaders that include Yammer, Box, YouSendIt, and echosign (Adobe).  We’ve been actively framing and executing on Emergence Capital’s Business Freemium strategy since 2009.  See this presentation for an overview of how the model is disrupting SaaS and Enterprise Software: http://www.youtube.com/watch?v=9MfhXq_KCGg.

One of the recurring themes from our conversations with Business Freemium entrepreneurs and executives was whether and how to service and market to the high percentage of their free users that were actively using their application outside of the United States.  These companies often reported strong absolute and relative usage in emerging countries, which traditionally have not been served by SaaS or Enterprise Software because it was not profitable to do so.   This made us think of Clayton Christensen’s The Innovator’s Dilemma.  He wrote that new leaders with new models generally start by serving markets that were hard for incumbents to service profitably.  Less than ten employee companies are hard for SaaS sales organizations to profitably sell to and Business Freemium took root in that segment.  Global is another important dimension to the disruption.

The founders and CEOs of the pioneers in the Business Freemium market made courageous decisions to accelerate the growth of their global free and paid users years ahead of when leaders in prior software models had done so and often when the companies were small in terms of revenue and or people.  SurveyMonkey’s CEO, Dave Goldberg, and VP International, Minna King, have built an exceptional global business and company in part by investing in a global strategy years ago. http://blog.surveymonkey.com/2011/02/13_languages/.   Yammer has a large percentage of their users outside of the US and translated the service into many languages starting in 2010:  http://blog.yammer.com/blog/2010/11/yammer-in-translation.html.  Last week I spoke with an entrepreneur with millions of users, the majority of which are outside the US.  He translated his application into multiple languages when the company had little revenue.  LinkedIn, one of the first public Business Freemium companies, reports that 60% of their members are outside of the US as of December 2011 and that 33% of their revenue for the quarter ended September 2011 was outside the US.  Their international revenue grew 183% year to year in that quarter, much faster than the rest of the company.

We listened to these leaders and many entrepreneurs and developed a framework for creating and executing a Global Strategy for companies with a Business Freemium Model.  We hosted a forum on Going Global for the Emergence portfolio and friends of the firm in 2011.  Dave Goldberg, CEO of SurveyMonkey, keynoted the event.   There was a lot of discourse, agreement and dissent.  The presentations and conversations made it clear that the Business Freemium Going Global Strategy and execution is different than how SaaS and Enterprise Software companies grew around the world.

Our recommendations to Business Freemium entrepreneurs are the following.  Choose to be the global leader in your market, or not.  Design global into your product from inception even if you expose the capabilities later.  Implement languages early.  Think carefully about how you will accept and manage global payments, especially in auto-convert businesses.  Identify the executive you will send to lead new global markets well before they need to go and do it.   Accelerate the auto-convert business in other geographies with an inside sales and or field sales model.    Choose venture investors with experience in Global Business Freemium who can help you craft your strategy and execution plan in more detail.

Global Business Freemium is exciting for customers, entrepreneurs, executives, employees, and investors.  Business users around the world can access exceptional products that are easy to use years before they might have otherwise.  The model opens up new markets in company size and geographies and accelerates global revenue while consuming less capital and time.  Companies and investors should consider developing global capabilities and leveraging global resources much earlier in the company lifecycle.  Let us know how we can help.

The answer: Focus.

When we founded Emergence in 2003, we realized that to do something as crazy as starting a new venture firm in Silicon Valley, we would have to do things differently than other firms.  And so, we decided to focus on an area that was completely misunderstood by the venture community: technology-enabled services.  We also made a commitment to limit the size of our portfolio so that we would have time to focus on the entrepreneurs we would back.  We even decided to locate our offices in San Mateo to be closer to the software community rather than being near most other VCs on Sand Hill Road.

We felt that a reasonable fund size would allow us to execute our focused approach best.  We think everyone should have capital constraints.  It forces us to be clear about our priorities and truly selective about the investments we make.  It also allows us to spend more time with a few entrepreneurs rather than a little time with a lot of entrepreneurs.  We’ve raised billion dollar funds prior to forming Emergence and have found that more capital doesn’t always yield better results.

Focus has paid off for us.  We’ve had the pleasure of seeing many of our portfolio companies blossom into industry leaders.  We have attracted world-class base of institutional limited partners.  We’ve developed a reputation for being the leading venture firm focused on tech-enabled services — the most-meaningful technology trend that we’ve seen in our careers.  And, along the way, we’ve built a great firm culture that’s focused on collaboration and having fun.

So when it came time to raise our third fund, there was no question that we’d limit the fund size to enable us to execute our focused, disciplined approach to venture capital investing.  We’ve never been a firm that follows the pack and we don’t see any point in changing now.

With the completion of its purchase of SuccessFactors, SAP has planted its SaaS flag just 4 miles from Oracle’s world headquarters and less than 2 miles from Salesforce’s San Mateo cloud incubator.

Everyone thought it was cute, when Salesforce.com first hoisted its logo onto Tom Siebel’s original building in San Mateo.  But we have seen that it was no joke to Marc Benioff, CEO of Salesforce, who is publicly defying Larry Ellison to challenge him as the undisputed global leader of SaaS.  While Salesforce is building a new urban campus in San Francisco, it continues to fly its flag defiantly in Oracle’s hometown.

But, there is a new challenger in clouds above San Mateo.  SAP needs to become a global SaaS leader quickly or it will be irrelevant in the cloud. It is ready to fight and by buying SuccessFactors, the world’s second most valuable SaaS company, the Germans are signaling that they will bring the battle right to Oracle’s doorstep.

Across town, Larry Ellison is also preparing for combat.  He is assembling a vast arsenal, including Oracle On Demand, the former Siebel business, now a SaaS offering, and recent SaaS acquisitions, Taleo and RightNow.  Meanwhile, Oracle’s kid SaaS step-brother, NetSuite is guarding the mountain pass along Highway 92 to the West.

The leading business application vendors are lining up for the prizefight of the century – global leadership of the business cloud.  The showdown is coming, and the fight will occur on the streets of San Mateo.

But the cloud is equidistant from every company on Earth.  It touches every country, every city and every company.  It connects the largest companies on Earth with end-users across the world. It gives the ultimate geographic flexibility, connecting workers from disparate locations to collaborate as if they worked in the next cubicle.  The cloud is everywhere, and it is nowhere.  So, why does SAP need to set up camp in Oracle’s neighborhood?

Because SAP has learned that this war can not be won from Germany.  After promoting and then firing one German executive after another to build a viable SaaS business, they are empowering a Danish entrepreneur based in San Mateo to take on the other leading business application companies and to lead SAP into the cloud.

SAP has learned the hard way that in the cloud, location matters.  The global leaders in SaaS are choosing San Mateo, because among all the places on the terrestrial Earth, it has the best workforce to develop, sell and support cloud applications.  Software is effectively pure intellectual property, without any input other than human creativity and effort.  On the cloud battleground, the victors must compete and thrive in the best labor market in the world if they hope to best their strongest competitors. The global cloud leaders have to win in San Mateo, the Mecca of SaaS.

Ironically, San Mateo’s rise to the nerve center of the cloud started in 1989, when Oracle built its new headquarters in nearby Redwood Shores.  Oracle has recruited and educated more business software experts than any other company on Earth.  The entrepreneurial forces of Silicon Valley have led these executives to found and build an ecosystem of business application companies and workers that is unparalleled anywhere else on Earth.  Startups that are thriving in the area include SuccessFactors, NetSuite, Marketo Admob, Coupa, Doximity and many more. The “San Mateo Cloudopolis” draws developers from San Francisco to the north, Palo Alto and Stanford University to the south and the East Bay via the San Mateo Bridge.

Can Lars Dalgaard, CEO of SuccessFactors succeed, where others have failed?  SAP is betting over $3 billion that he can, because he has already built a leading SaaS company right in Oracle’s backyard.  He chose to build SuccessFactors in San Mateo, not a protected geographic market, because he knew that in order to win global leadership, he had to hire better, code better and sell better in the strongest, most competitive labor market in world.  He is competing head-on and winning.

Emergence Capital is proud to have been investors in several of today’s leading cloud companies.  We are watching the cloud war from our front row seats in San Mateo.

This article originally appeared in Forbes.

The rapid rise of the iPhone, iPad and other mobile devices has fueled a mad rush of venture funding into consumer-facing mobile companies. During the 2011 first half, according to Rutberg & Co., venture capitalists invested $3 billion into 358 mobile companies – with $960 million going to the “media and applications” sector, defined as social networks, mobile games, mobile advertising, app platforms, news aggregation, photo sharing and group messaging.

VC investment in enterprise mobile companies has been more tepid. According to Rutberg, VCs invested just $254 million into “enterprise IT” mobile companies over the same span.

As global organizations race to transition legacy systems to the cloud – and enable mobile workers to access applications and services wherever they are, from any device – the mobile enterprise sector clearly presents an untapped opportunity for venture investors. But it’s not enough to simply shut off the funding tap to consumer mobile companies and start funding enterprise mobile startups en masse. Not all mobile enterprise companies are created equal.

The startups with the greatest potential to generate outsized returns are those creating “mobile-first enterprise applications” – those that leverage the unique capabilities of mobile devices to enable the creation of new categories of enterprise applications. These applications are very different from mobile-enabled versions of traditional enterprise software such as Salesforce.com andWorkday. True “mobile-first enterprise applications” are built for mobile platforms initially or exclusively and enable a worker or business to do things that simply were not possible before the proliferation of advanced connected devices.

Some examples of mobile-first enterprise applications include Doximity, a mobile app that enables physicians to collaborate and communicate more effectively in which my firm is invested; Square, which allows many small businesses to accept credit cards for the first time; and Gigwalk, an app that enables businesses to turn smartphone users into an “instant mobile workforce”. These companies are among the first to truly leverage the power of mobile to create unique business-focused value propositions.

Much of the mad rush to sink millions into consumer mobile startups parallels the dot-com boom. The late ’90s funding craze was focused almost entirely on consumer Internet companies – and the painful bust that followed was a consequence of over-investment into consumer startups and under-investment into enterprise Internet companies. What rose from the ashes of the dot-com bust, however, was Web-enabled services and cloud computing – a wealth of innovative enterprise software companies applying Internet technologies to business processes.

Investment in the mobile sector is evolving in much the same way, but at a faster rate. Right now, mobile-first enterprise companies are vastly underfunded, while those consumer mobile start ups are vastly over-funded. Only a handful of these consumer-focused start ups will gain the critical mass needed to succeed; after all, there are only so many mobile games, social networks and apps consumers are willing to buy.

However, just like in the dot-com bust, the demise of many of today’s amply-funded consumer mobile upstarts will eventually benefit the mobile enterprise sector. Popular consumer mobile technologies will eventually become core components of business-driven apps – bringing the mobile craze into the office in much the same way the Internet fully arrived at work only after the dot-com bubble burst.

Yesterday, the Cloudbeat audience got a real treat: a world-class panel of pioneers in Business Freemium talking candidly about how they conceived their businesses, how they evolved over time and how they scaled explosively.  Of course, everyone at the conference opted for the premium version of the panel, paying a pretty penny for the privilege of seeing the panelists live and asking whatever questions came to mind.  Here I hope to offer a very limited free version of the panel for those who can’t travel to Silicon Valley or can’t justify the expense of attending live.

YouSendIt, Yammer and Echosign are among the largest and fastest growing freemium services available to business users today.  Having started well before the business model became popular, these companies were navigating in unknown territory. Today, they serve more endusers than any other company in their markets, and many of their business practices have been emulated by other Business Freemium providers.

I think the live audience would agree that the panelists were remarkably insightful and transparent on how they think about building Freemium companies that target business users.  I’m afraid that I’ll only be able to scratch the surface for the free users, but then, you get what you pay for.

• Ivan Koon, CEO of YouSendIt, talked about how freemium companies must prioritize value delivery over value extraction.  The product or service must be so compelling that users want to share with their colleagues.  While free users don’t pay, they provide value by exposing a large number of other users.

• David Sacks, founder and CEO of Yammer, commented that freemium services tend to work when there are two types of users, free and paid, and when the population of free users enhances the value to those who pay.  Of course, this works best when there is strong viral coefficient, which may be the most important lever for cost-efficient growth.

• Jason Lemkin, founder and CEO of Echosign, believes that true freemium must have a conversion rate (free to paid) of less than 2%, because a greater rate implies that users are really just using the free service as a free trial.  Having recently been acquired and integrated into Adobe, Echosign is now seeing an explosion of traffic and the resulting paid conversion.

I’ll share one insight that was not discussed in the premium/live panel: these pioneering business leaders all share some common characteristics that probably align with the critical factors that lead to Business Freemium success.

• They are really smart. It was very clear that each of our panelists could think on their feet, mentally model business drivers and abstract specific learnings to apply them more broadly.  Because Freemium companies have multi-stage conversion processes, it takes a sharp mind to understand how to manage and grow in a complex business model in a dynamic environment.

• They are metrics-oriented. Every panelist had key business metrics in their head.  They commented on how they tweaked and testing to make small improvements that compounded over time.  This orientation is critical to Business Freemium success.  Freemium communities are dynamic systems, and these companies get extra leverage by measuring, testing, iterating and learning.

• They are product focused. These executives spend a lot time with their product teams. They understand that for Freemium companies, the product is the value proposition, it’s the sales person, it’s the lead gen process, it’s the customer support rep and much, much more.

This is just a tiny taste of our discussion on Business Freemium.  If you liked the free version, then you should consider upgrading to the premium version next time.

I need to start this list of the business applications I use every day with a confession. Even though I’m a venture capitalist who spends most of his time investing in startups that develop business applications, I am not a super early adopter of such apps. Many of my colleagues love to be the first to try out new programs, testing them as soon as they read about it. Not me. Not only do I lack the temperament, I also lack the time. I call myself a lagging early-adopter, inquiring about apps that seem to have the potential to add productivity my workday, and making them part of my routine only after I’ve heard a couple times that they’ve actually proven themselves.

This might seem like a problem for someone in my profession. Actually, I think my fast follower status is an asset as I decide on which startups to invest in. In Silicon Valley, we’re surrounded by tech buffs and early adopters enamored with the latest buzz. That buzz soon fades, but what remains are the apps that deliver real business value and productivity. In fact, most people are a lot like me, happy to use something if it really helps them get their job done, but unwilling to spend time with something simply because of good PR or a fancy award.

Now that you understand my show-me attitude, here are the programs that are either on my browser bookmarks bar or on page one of my iPhone. Not only do I use all of them pretty much every day, I can’t imagine doing my job without them.  I believe all these tools will not only get mainstream adoption, and as a result, have the potential to become very big companies.

Full disclosure. Several of these apps we at Emergence have an investment in. While this list may sound self-serving, as a firm we focus 100% on investing in game changing business applications, so it’s no surprise there is a lot of overlap. I’m an active user of all of them and I have no connection with several of the apps below… except for being an enthusiastic user.

Yammer. The elevator pitch is “Facebook for business.” Our small company installed it, and it quickly became our virtual water cooler. Not only has it reduced our internal “FYI” email traffic, which in and of itself is a huge benefit, but it’s dramatically increased the amount of sharing that occurs across our organization. Anything that can increase the flow of information while saving me time is, as far as I’m concerned, a big deal. Yammer is the thing I check most during the day, other than email. Maybe that’s why over 150,000 organizations globally and millions of users have already adopted it. The only disadvantage is that you need a critical mass of users in any company for it to have real value. So get on Yammer, and invite your colleagues! It’s completely free for end users until the company decides to purchase it to get administration benefits. This “freemium” model which was invested in the consumer internet space has caught on in the enterprise as well.

Evernote. Throw anything you want into it — typed notes, web pages, screen shots, PowerPoint slides. EverNote keeps it all on one place, totally searchable and available on just about any device you can imagine. I use it to take notes during company presentations, board meetings and partner sessions; for personal correspondence, too. I especially love taking screenshots of PowerPoint slides, and then writing notes around them. My dream is an Evernote iPad app that will allow you to write notes directly onto PowerPoint slides, and then have them saved, transcribed and searchable. Evernote isn’t all business, either. I love good wine, and have a habit of snapping a photo of the label of a bottle I like, and then saving it to Evernote. The program then transcribes the label, so I can search for it later on when I want to buy the wine again. Cool, very cool.

YouSendIt. Email hasn’t been keeping up with technology in terms of file size. Most of us now have PowerPoint decks in the hundreds of megabytes, and videos in the gigabytes. If you have ever tried to attach one of those files with Outlook or in webmail, you understand the problem that YouSendIt solves. If you want to be assured that those huge email attachments get to their intended recipient, then YouSendIt is your savior. Nothing is more frustrating with a big meeting or conference call coming up to not be able to get your materials to people participating and make sure it gets there. While I use it less frequently than Yammer, when I do, it works flawlessly. If you send large files as a part of your daily job, YouSendIt is invaluable. The company also is a poster child for the freemium business model and is free to use for sending up to 5 files. Try it you’ll love it.

Salesforce.com. We at Emergence Capital are a service business; for us, everything revolves around relationships. Salesforce is our relationship database of record, and it should be the “guts” of every relationship-based business. We use Salesforce to track our deal flow, investor relationships and portfolio company contacts. Marc Benioff was the first person to fully recognize the power of the software as a service approach, where programs run in the cloud, relatively cheap and hassle-free. This is the future of software. It’s no accident Emergence grounded its entire investment approach on this historic transition underway to the cloud.

Box. The sharing, synching and collaboration tool also known as Box.net. The name change reflects the company’s new emphasis on the enterprise, and the new capabilities it’s added for collaboration. What I like about Box is the way it solves a familiar problem: I use different computers, at home and in the office, and don’t want to keep emailing myself and my coworkers the PowerPoint deck I’m working on as I move from place to place. Box lets you store files in the cloud, and synchs those up with what you have on your desktop. Mobile platforms are supported too, of course. Dropbox is another great app for synching your personal files but for sharing in a corporate setting, Box is more secure and better tuned to an enterprise solution.

EchoSign. Sales contracts, employment agreements, NDAs, investment documents, leases, etc… you or your customers can now “sign” documents on the web without needing to print them out, grab a pen and find a fax machine. In the world of e-signatures, you do so by entering your email address and clicking “e-sign”. It’s that easy. The end result is just as safe and legally binding as the traditional John Hancock. I believe we will look back in a few years and see 2011 as the year that e-signature went mainstream. The other day I signed a legal document while on a train on my iPhone. How cool is that? Here’s another benefit, when multiple people need to sign a document you can schedule multiple people in a sequence. And I don’t need to ever again worry about where I filed a document, since EchoSign keeps track of all of them in one place for me. Probably not something I use daily, but I love it when I need it. Also a “freemium” business model… Notice a trend here?

LinkedIn. Most of us know LinkedIn as the biggest searchable resume book on the planet. For me, it’s much more than just a giant collection of resumes to be used in recruiting. It’s becoming an amazing tool for identifying off list references, business development contacts for our portfolio companies — or doing some down and dirty due diligence and competitive analysis. If you haven’t spent time boning up your LinkedIn profile you should. It’s become the defacto business record in the cloud. The Linkedin mobile app also has some interesting features, including a way of exchanging contact info that is so quick that it pretty much eliminates the need for business cards. The time you spend getting to better know LinkedIn will almost certainly pay off very quickly.

Wunderlist. This is a simple “to-do list” desktop and mobile app that finally solved my task management problem. I’ve been looking for a good, simple and quick to-do list manager for years, and breathed a sigh of relief when I found Wunderlist recently. Wunderlist lets you create a new task in literally seconds, far faster that you can using the iPhone’s built-in calendar program and easily share that list with others. You can easily send yourself a task reminder by email. A freemium product that so far has been great until Apple does their own.

“Cool” apps I rarely use:

Twitter. A VC is on thin ice when he admits he doesn’t faithfully send out tweets. It isn’t that I don’t “get” social, it’s that I don’t find any personal satisfaction in the medium. I’m at my best in a two-way conversation, in person and face-to-face. I like human contact, and believe a strength of mine is the ability to read people’s body language — which communicates more than any tweet. Albert Mehrabian, Professor of psychology at UCLA, best known for his publications on human communication showed that over 93% of communication is based upon physical and verbal tone and only 7% based upon the actual verbiage of your communication. Another problem I have with Twitter is that I’ve never been comfortable broadcasting my immediate thoughts to the world. I guess my perspective is anything worth saying to the world is worth sleeping on.

Facebook. Nothing against it. A company for the ages. But personally I spend more time on LinkedIn and Yammer. I’ll check out Facebook occasionally, to get a quick update on friends on the periphery of my social network. But I prefer having fewer but deeper relationships. I’ve always had a small, core group of close friends, and I work hard to spend quality time with them … rather than spending my evenings “friending” and “updating” people I’ll rarely if ever see. Those with hundreds of friends on Facebook should think hard about which friends will show up when you really need them. Facebook will be the biggest advertising network on the planet in a few years no doubt but for me it’s on the periphery.

FourSquare: My idea of a “check-in” is at a nice hotel for the weekend with my wife. I know lots of people are supposedly using services like these, but I frankly don’t quite understand the attraction.

“Uncool” apps I still use:

I use Mac Mail with Exchange on the backend. I’ve been waiting patiently for Gmail to match the offline capabilities of Exchange for my email and my shared calendar, and I look forward to the day I can jettison Microsoft on the back end. At least I’m back to using a Mac laptop and iPad. I started my computing life on an Apple Mac and IIe and have always been passionate about Apple products, so I’m glad they are now legit again in the corporate world. Macmail isn’t fancy in terms of features but as with most Mac products is clean and visibly appealing which makes pouring through my hundreds of emails every day less taxing.

And finally, something I wish was using:

A personal goal management/time allocation app. I’m big fan of setting goals, both personally and professionally. Once I set a goal, I do my best to stay focused on the things that matter. But invariably, I get sucked into the day-to-day reactivity of responding to the constant information flow, and the non-stop requests for my time. I have a hard time saying no to those asking for help, and that tends to get me into trouble. I try prioritizing the things that really matter by sitting down at the beginning of the year, month and week and writing up a list of key priorities. I’d love an app to help me analyze how I use my time relative to those priorities — a kind of a Mint.com analytics for calendar management. When my time allocation gets out of whack, it would suggest ways to get me back on track. Entrepreneurs and developers out there, let me know if you figure this one out!

What business apps do you love? Love to hear the ones I missed in your opinion.

At Emergence we work exclusively with cloud-based companies that primarily serve business customers. Consumer internet companies have always been good at harnessing behavioral data from their customers to serve their customers better (and help themselves in the process). Many enterprise cloud companies have the same opportunity but have not focused on the importance of this data. Maybe it is because there is not the direct correlation between product changes and resulting advertising monetization. Or that the scale of user interactions seems too small to warrant focusing on it. Whatever the reason, the value of using aggregated customer data to help avoid churn, increase upsell and ultimately create a more strategic relationship with your customers is at stake.

Here are the three steps I encourage all our companies to take as they transform from being “tools” companies to thinking of themselves as “insight” companies:

1. Embed your employee insights into your offering. Start by getting your key product, marketing and sales teams in a room and ask a simple question: “What’s the most important piece of advice that we tell our customers every day about how to get more value out of our service?” It could be a common wisdom that your customer success people mention every day when they talk with customers. It could be the little secret that diligent customers find buried in your FAQs. In my experience every company has these little gems. The key is to embed the insight directly in your service and to use this “black art” to begin to build your data strategy. At Salesforce.com, they saw early-on that customers who forecast their sales pipeline were much more likely to stay as customers and add seats. Armed with this insight, the product team focused attention on making forecasting easier and encouraged sales reps to predict what a sales opportunity might be worth in the future. This little insight about the value of forecasting, led to a dramatic decrease in churn for Salesforce.com. I bet your company has 5 or 10 of these same insights today but you have not codified them into changes in your offering. Instead you continue to communicate these insights either verbally or in text form.
2. Automated benchmark reports bundled with enhanced versions. Next, gather aggregate behavioral data from your customers and create reports that quantify how your customers are doing compared to other customers. This is commonly called “benchmarking”, but for a cloud app the data is much more rich and proprietary because it is more granular. In the old days, software companies might have reported on the number of modules a customer was using compared with their peers. Today, cloud companies can report on detailed data about precise usage patterns and the correlation between those patterns and customer success with the product. At Lithium Technologies, their depth of knowledge on how to build successful customer and marketing communities led to a “Community Health Index” (CHI). A customer’s CHI score is based on a range of detailed usage patterns and is highly predictive about whether a community will succeed or fail. Once you have automated the creation of these reports, bundle them with more expensive versions of your service as a way to begin to monetize this valuable data.
3. “The Death of McKinsey”: C-level recognition that only your company has the data-driven insights. The end goal for your data strategy is to continuously derive so many insights from customer usage patterns correlated with success metrics, that you can help predict more about their success than your customers can. This will lead to higher competitive advantage and productivity for your customers, and far higher ASPs and lower churn for your company. The reason I call this final stage “The Death of McKinsey” is because you may already have what a strategic consulting firm uses to come up with their CEO-level advice. Typically, a consulting firm  will start their project by interviewing employees and gathering data from a client’s IT systems, and then look for patterns to support some strategic change. In your particular domain, you may already have the employee or end-customer usage patterns and be able to provide the insights that a consulting firm charges hundreds of thousands of dollars for. Getting to this final stage will take some time for a young company, but know that some of the largest public cloud venders are starting to think of themselves as “insight-engines” for their customers. And Fortune 500 CEOs are changing how they look at certain cloud vendors.

Whatever industry domain you are in, you have the opportunity to be the best provider of insights for your customers. Take the first step to break the “tools” mindset in your company.

We are proud to announce that we are co-leading a Series A investment in Doximity alongside InterWest.

Doximity has developed a compelling mobile-centric service that makes it easy for physicians to connect and communicate with one another.  Their aim is to streamline the many collaboration-centric activities that physicians engage in.  In doing so, Doximity aims to make doctors’ lives easier — and to improve patient care.

We think of Doximity as a combination of LinkedIn and Yammer for doctors.  Their service contains a professional social network that allows physicians to easily search for other doctors (useful if, for example, they need to find someone to refer a patient to).  Additionally, Doximity includes a HIPAA compliant text messaging solution that enables physicians to securely communicate with one another.

In our portfolio, we have seen first hand that professional collaboration tools can drive significant productivity improvements.  Companies such as Yammer, YouSendIt, EchoSign, and Box.net have built fast-growing businesses by rethinking outdated ways of communication and workflow.  We can’t imagine any industry that is in more need of improved collaboration than healthcare.  So far, doctors seem to agree.  In a few short months, Doximity has attracted over 7,000 doctors to its solution.

Leading the charge at Doximity is Jeff Tangney, one of the founders of Epocrates.  Jeff was instrumental in building Epocrates from concept to a publicly-traded company with one of the most successful mobile applications in the healthcare space.  Jeff’s background, along with his effusive passion for crafting a product that customers love, caused us to quickly realize we needed to find a way to work with him.

We couldn’t be more excited about helping Jeff and the rest of the Doximity team as they build what we know will be a very successful company.