Emergence Capital's Jason Green on today's big growth sectors

Profile picture for user pwainewright By Phil Wainewright November 22, 2016
Summary:
Jason Green at Emergence Capital was an early backer of ServiceMax, which GE Digital just bought for $1 billion. He told me the 4 areas he's backing today

Jason Green Emergence Capital
When GE Digital revealed last week that it is buying cloud-based service management vendor ServiceMax for $1 billion, I spoke to Jason Green, founding partner of Emergence Capital, who made the first venture capital investment in ServiceMax back in 2008. In view of his foresight in picking out this opportunity eight years ago, I thought I'd take the opportunity to ask him what he believes are the big growth opportunities today. Here are the four areas where he's making bets.

1. The remote mobile enabled worker

This is the sector ServiceMax operates in — using connected digital technology to empower field workers. Green foresees a lot of growth in this sector.

ServiceMax in some ways is the first major billion-dollar acquisition in what I call the remote mobile-enabled worker.

There's more professionals in the field than there are at the desk. We see this as being one of the first salvoes in that major opportunity.

Smartphones and mobile broadband have opened up communication channels to workers that traditionally don't have desks. Messaging platform Zinc (formerly known as Cotap) is another Emergence investment that targets this area.

2. Industry cloud

Another area that Emergence has successfully invested in is the vertical industry cloud. The firm was an early investor in Veeva, which pioneered the concept of tailoring a Salesforce-native cloud solution to a vertical market, earning a 300-fold return when Veeva had its IPO. Green's colleague Gordon Ritter is a champion of this model.

Green told me that Emergence sees similar opportunities to Veeva in fields as diverse as real estate, automotive and travel.

3. Hardware-enabled technologies

New hardware technologies are enabling a new generation of platforms, says Green. These include virtual reality (VR) apps and drones, and presumably also 3D printing and other innovations. It's early days yet for these opportunities but any new platform presents the chance to get in on the ground floor and build a significant business in an emerging field.

These are very early and not widespread yet, but we think in specific verticals we'll get significant traction.

AI and machine learning

The final area consists of next-generation applications enabled by artificial intelligence (AI) and machine learning. These technologies are fundamentally changing the way software applications work, says Green. Traditional software drives workflow by using forms to collect information from the user. AI makes it possible to pre-emptively collect or contextualize a lot of that information by using input sensors on the network. The AI can then offer options to the human user about what to do next.

That changes the whole model of software. It's software systems collecting information in real time and proactively launching suggestions that make people more productive.

In functions such as sales and recruiting, these applications are able to create "orders of magnitude more value for users" says Green. The ability to concentrate data adds to the potential value companies can reach, says Green, citing LinkedIn as an example of a company that was able to command a high valuation because of the size of its network.

There's supernetwork effects for those companies, because he who controls the data controls the value. The next generation of enterprise companies could be even more valuable.

My take

There's no doubt these are all areas where we're seeing innovative companies growing fast as they meet hitherto unmet needs. AI and machine learning in particular is an area of great potential, although inevitably with any new technology area it's always difficult to separate the successful use cases from the purely experimental.

Most intriguing — because it's least mature — is the hardware-enabled technologies area. It's easy to conceive that this will generate significant new business opportunities — but hugely difficult to identify where precisely those opportunities will prove mosst lucrative. But of course that's the whole point of the venture capital industry — to identify where the next success stories will spring up, and then to seek out the ones with the best chance of success.

That's something Emergence seems to have been quite good at over the years.