In this episode of Coffee + Commerce, Tim Guleri joins our CEO Faisal Masud to discuss Sierra Ventures’ investment in Fabric.
Tim joined Sierra Ventures as managing director in 2002 and built two successful software infrastructure companies before this. Most recently, Tim spearheaded Sierra’s investment in Fabric, helping us raise a $43M series A.
Faisal met Tim while he was running global shipping at eBay. Before eBay, Faisal built AmazonBasics for Amazon and was the CTO at Staples. He was also the COO for Project Wing, a Google moonshot company. Together, Faisal and Tim have a laundry list of tech and e-commerce knowledge.
To learn more about Sierra Ventures’ investment in Fabric, listen to this Coffee + Commerce episode and get key takeaways from the blog post below. You can also read more on Tim’s blog post.
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[1:10] How did Tim and Faisal meet?
[2:45] What is Fabric?
[3:20] How do Fabric’s microservices compare to traditional commerce services and platforms?
[4:10] What made Fabric an interesting investment to Tim and the Sierra Ventures team?
[5:50] What was the biggest challenge in searching for an e-commerce platform to invest in?
[7:30] What is Fabric doing with the $43M?
[9:35] What can we expect from Fabric in the short and long term?
Hello, everyone. This is Rob from Fabric. And in this episode of Coffee & Commerce, we’re talking about Sierra Ventures Investment in Fabric with Tim Guleri and Faisal Masud.
Tim joined Sierra Ventures as Managing Director in 2002 and built two successful software infrastructure companies before this. Most recently, he spearheaded Sierra’s investment in Fabric, helping us raise a $43 million Series A.
Faisal is our CEO at Fabric and met Tim while he was running global shipping at eBay. Before eBay, Faisal built AmazonBasics for Amazon, and was later the CTO at Staples and COO at Project Wing, a Google moonshot company.
If, after listening to this episode, you want to learn more about Sierra’s investment in Fabric, Google “Why Sierra Invested in Fabric” to read Tim’s blog post. And now, to the show.
Tim, I’m interested: you talked about in your blog post how you and Faisal met. Could you rehash that here for us?
So Faisal and I met in 2011. I’d invested in a company called RUNA, which was an e-commerce personalization company. And RUNA had a design partner, very important design partner, which was eBay at the time. And Faisal was running eBay shipping and he was the big honcho at eBay that was directing this company’s features and products. So when I invested, I met Faisal at a customer advisory board meeting of RUNA.
And in life, I’ve learned that when you meet people, you have a first reaction. And the second day you meet them, that reaction gets confirmed.
And my first reaction, the second reaction was, I like this guy. I would love to build a friendship even outside of work. And that’s how it ended up being.
And as far as it went from eBay to Groupon, Staples, and Google, that friendship just grew. And as an investor, every single e-commerce deal, good or bad, I used to send to Faisal to get his reaction.
All along I used to joke and tell him, hey, you got to get a real job. Because you meet those of you that have had the pleasure of meeting Faisal, he’s a live [inaudible 00:02:23], he’s all [inaudible 00:02:25].
And I thought he could be even more effective as an entrepreneurial CEO that he was at these very large jobs through this journey. And that time it came to be a decade later on was that I got Fabric in 2020.
So Faisal, can you just give an overview of what Fabric is for people who don’t know?
Yeah, Rob. Fabric is a headless commerce platform that is really built for the mid-market. Our biggest competency in the space is the fact that we separate the front end, the presentation layer that the customers see from the back end, which is all of the the plumbing behind running an e-commerce business, which is your product item, catalog, your item, your pricing, your promos, et cetera, and giving the flexibility of being able to configure the way you want to present your site in any way possible and scale your business. And we are the anti-monolith.
And then where does the replatforming come into that? Because I know at Fabric, we talk a lot about microservices. So how does that compare to traditional commerce platforms?
Yeah, traditional commerce platforms, A, were built a long time ago, back pre-cloud, pre the world of APIs. And Amazon is really the first introduction of that to this universe.
And where we’re different is that we’re able to go into existing environments and set on top of platforms that are already in place through an integration that we do through Fabric fusion, which is our middleware.
Essentially, in the old school ways, we used to say the service bus, where the integrations would lie. So we integrate with a bunch of third party platforms today. And we actually do not want to have a lot of replatforms because we believe that’s a real burden on a business.
And then, Tim, so based on that, what made Fabric an interesting investment to you in the Sierra team?
I think, look, I’ve been doing [inaudible 00:04:19] and been here at Sierra for almost 18 years. And one of the first lessons you learn as a venture capitalist is that you’ve got to time the market correctly, because if you’re too early, it’s painful, if it’s too late, there’s going to be no product, investment is not going to go anywhere.
So what got me going on the ecommerce space in general is that about a year and a half ago when we started talking to a lot of our CIOs, and Sierra’s got a very large advisory board, they were all starting to complain about the volume of e-commerce transactions starting to accelerate. And this is pre-COVID. And the fact that their infrastructure will grow, could not keep up, changes were hard to do.
So as a tech investor, pain is music to your ears, because you know there’s a problem to be solved. So I started digging into the area. And obviously, it’s no surprise when you look at the size of the market, the $3.9 trillion, which is the number today for global e-commerce, which, by the way, compared to $87.7 trillion world GDP, is still only 4.4 percent, so still a small part over this entire market could go.
So big market clip being that the customers will fail fixing. And I believe that large companies are built in large markets. So that set us on the path to look for an investment target.
And we got introduced to Fabric through Faisal, who was a adviser for the company and started meeting them early in 2020 and did the investment in the summer of 2020.
Awesome. So you were searching for an infrastructure as a service company, it seems, for e-commerce since around 2019. What was the biggest challenge of that search for an e-commerce platform that was equipped to handle the needs of current businesses and businesses like 1-2 years ago?
I think the biggest challenge was, and we must have guessed at least 100 frogs in the space before settling on Fabric, was that the reference architecture that a lot of these companies had was, for the most part, rooted in prior architectural constructs.
The cloud obviously got started in the late 2008, 2010 timeframe and really came to be a platform in the 2015 timeframe. And it’s only after that companies that use that as an underpinning to their architecture start to think about microservices and effectively fungible and easily decomposable architectures.
And so what we found in going through meeting many entrepreneurial teams and many companies was that their architectural rooted in pre-cloud era and pre-cloud era thinking. And that immediately disqualifies you, because with that thinking, an architectural reference point comes burden, which is exactly the burden of customers are trying to shed.
So that cut 85 percent of the candidates we looked at out of the picture. And the rest of them, you actually have to look at now at the team, and the DNA of the team, and what’s the likelihood of this team to succeed amongst the many that are going to try to build a large company here.
And when you look at those two qualifiers, Fabric one by a mile, in our opinion.
Yeah, so what do we do with all this money now, Faisal? It seems like we’re hiring some really cool people. Just to name a few, so Rachana from Twilio, she was the Director of Engineering at Twilio. And now she’s leading engineering at Fabric. Faisal, who else have we hired?
Yeah, we’ve hired some real rock stars, including Rachana. We’ve hired Morgan Dollard. He’s a Googler and the the early founding team at Stadia as well, very talented product leader who has joined the team as well.
And then we recently hired our EVP of Revenue, Mike Hann, who joins us from an app commerce company called Poq based out of UK. And we’re continuing to develop our engineering chops along the way.
So it’s rare that you get to see startups at our stage attract the talent that we’ve attracted, because when you meet startups, you typically have other startups folks. It’s hard to get the pedigree that have come and seen very large scale outside.
So I feel like we’ve been very fortunate in that. But part of that is you have to have a mafia and you have to have this track record of knowing people and delivering for those people in the past who can trust that whatever mission you’re going down, they’re in it for the long haul.
And I find myself to be very fortunate in that, that when we make the phone call, the people end up joining. So sometimes they’re a bit expensive, but now they know the value of coming to Fabric is going to pay the dividend. So, yeah, we’ve been very fortunate now. We’re going to build up the team. That’s where the money is going to go.
So a majority of it was there was no sales team, just Ryan and I. So we’re going to build out the sales and sales operations and delivery organisation.
There was no BD partnerships team, but actually hired Krupa Shah as our General Counsel and Head of Partnerships. So that’s also achieved. She’s also ex-Groupon. And the rest of it is all software development.
And it’s an industry with negative unemployment and a constant thorn in my side, because it’s very hard to hire. And actually, Tim knows how hard it is. He’s invested in a few of these and we’re hoping we can make some real progress.
Are there any trends, either of you are seeing in e-commerce that you want to highlight or that Faisal, you think we want to go after, or that Tim, you want to invest in?
Somebody I was talking to recently and the like, well, what are you going to do next? What’s next for Fabric? And my answer was, we have a lot on our plate right now, so there’s no next. Let’s just do what we’re doing first, which is what’s on hand. So narrow and deep is the way we want to go with Fabric with our [inaudible 00:10:01] where they are.
So there are real immediate need to expand that, but there’s also this other thing, where they ask you, what’s after Fabric? And frankly, there’s no after. There is no Plan B.
And usually I’ve always had a plan B and a plan C. This is the first time I would say in my career that there’s been no Plan B. So I would say short term, mid-term, really hard in our APIs, get our product to be world class, have operational excellence, build out a rock star team.
And the market is just, you’ve seen this, Rob, the the demand for this is so high, because 90 percent of enterprise infrastructure is still on-prem. And that makes me think, holy crap, either of this is worth three trillion.
So let’s wait for that spin off. But the fact that you’ve got so much on-prem in front today, despite how big AWS, Azure, and VCP are, think about how much runway there is.
And so I think we have to stay very focused. Our clients are those mid-markets and enterprises and B2Bs. We’re just to be going heads down on that for the next couple of years.
Yeah, so it seems like building a ton of features would be stepping too far ahead. The infrastructure for commerce has to be built out first, and then all that cool stuff can follow.
Sorry, I just wanted to comment on the team question that you asked. I’ve seen a few of these companies attempt to run into big markets. And I feel that one of the fascinating things that I’ve seen in the short time that Faisal has been on board is that the bar for coming to Fabric and becoming a Fabric bar raiser, that’s the word that Faisal uses all the time, is both a combination of the fact that you believe in the vision of the company, which, by the way, is the most sustainable attribute that you can breathe and live and feel, but you also have to have the joy of working on that particular job that you are coming into the company to do.
So I’ve seen this really interesting trait in these senior managers. And I can assume every single employee has the same trait that they are extremely competent at what they are, the function they’re supposed to do, and the great people that believe in the vision and want to be doing and get real joy out of being part of the Fabric journey.
And I can tell you that it is the most fun board. I mean, it doesn’t feel like it’s a board meeting, because we’re doing a lot of work, but it’s really a joy to be in the same room with Faisal and Alex and Scott.
And I think you look back a decade from today or two decades from today and really reflect on the journey, which apart from being part of the team that built this massive company, it’s how much fun was had while building the company. And that’s, I think, the sustainable value we can talk about over time. But it’s it’s really fascinating to watch.
Thanks for listening to this episode of Coffee & Commerce. In our next episode, we continue this conversation with Tim and Faisal.
We’ll talk about headless commerce technology and the opportunities it opens up for augmented reality and embedded commerce and platforms like Netflix.
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