I’ve known angel investor, advisor and entrepreneur Larry Augustin since his days as CEO of SugarCRM, and have had him as part of this series a couple times (2011 and 2016). SugarCRM grew from $10M in annual revenue and a $15M loss to $100M in revenue and $7.5M in EBITDA. Accel-KKR acquired SugarCRM in August 2018. And after nearly a decade as Sugar’s CEO, Larry spent a couple of years at Amazon Web Services (AWS) as vice president responsible for their applications services businesses – including their contact center offerings.
Currently, Larry is focusing on angel investing and advising a number tech startups. And with his varied experiences and background, my CRM Playaz co-host Paul Greenberg and I were excited to catch up with Larry for a long overdue LinkedIn live conversation. Below is an edited transcript of a portion of a conversation. Click on the embedded SoundCloud player to hear the full conversation.
Thoughts on Amazon before working there
Brent Leary: Larry, I don’t know if you remember the conversation we had over a decade ago. We talked about should Amazon, or potentially, Amazon buy either FedEx or UPS because it just felt like they were going to have to do something on their own when it comes to shipping. You remember that conversation?
Larry Augustin: Oh, absolutely. Are you kidding? We were having that discussion about Amazon becoming… where do they go next? And my argument was that they had to become vertically integrated. And if you think about Amazon, that’s one of the strategies of Amazon. What is it that Jeff Bezos says, “your margin is my opportunity,” right?
If you think about that, every step of the way where they can take over someone else’s gross margin dollars, they’re good at it. And when it comes to logistics delivery, that was what Amazon was built on. And taking that to the next mile, all the way to the house and first of all, they get all that gross margin but then they get the end-to-end control.
The thing I didn’t understand at the time is that Amazon would rather reinvent the business process and the ability from scratch to do it in a new way, with new technology; And make it better than buy something that exists that may already have a lot of the infrastructure in place but which was designed and built on technologies 50 years ago, 40 years ago, decades ago.
So, you see ultimately they’re doing it themselves. They’ve built out all the tools, the fleet, their goals to go all electric, in terms of delivery fee fleet. The idea that the delivery is there, you get a picture of exactly where the box is when it’s delivered but that reinventing that and owning that end-to-end supply chain.
No, I remember that conversation as I watched them move down that path. My first thought was that they would acquire it but again, they’re willing to invest for the long term and own it.
Small Business CEO vs. Huge Business Exec
Brent Leary: You spent roughly a decade as a CEO of a small software company, SugarCRM, and then you took a little time off and then you jumped in and you became a VP level at a behemoth with AWS. Can you compare and contrast what it was like to go from being the CEO of a small company to being a VP level at a huge company? What adjustments did you have to make? And then which one do you prefer?
Larry Augustin: They’re both great experiences. I’ve been really lucky in my career to be able to do both and do all those things. I give this, I don’t know, this great career advice for people but I give it to people which is; do things you enjoy and do things you learn from. For me, I tend to do different things at different stages in my career because I like learning new things. I love the challenge of something new and I like learning from it.
Part of the reason I went to AWS was I wanted to learn about that organization and understand, they’re just fantastic at things. And if you’re in the tech world today, you’re probably building on AWS infrastructure. It has fueled a great, great part of the entrepreneurial development of new technologies today and new companies. So I wanted to get inside that and I really enjoyed seeing the… And being able to operate at that scale.
That was one of the things that was fun and interesting in the smaller company you have. It’s this interesting contrast. A smaller company, you can tend to have control of everything, which is, “hey, we’re going to do a product.” I can decide we’re going to do a product. We’re going to go launch it. I can drive that across the whole organization. I can happen from sales to marketing, to engineering, to do it and you can pull all that together but you don’t necessarily have the reach to do and the scale to do everything you want at a place like AWS at Amazon.
Okay. You’re in a bigger company. You have more infrastructure and constraints around you. There are expectations because you’re building an AWS product. There are various things you have to plug into. So you’re a little bit more constrained in terms of flexibility about doing all those things. Although I will say Amazon is a great place for pushing people to just have the flexibility and get things done but you still have to fit within. The structure of the organization but you have immense resources to pull up, right?
We go to 50 of the largest companies in the world and talk to them about product ideas. How can we be helpful? What can we bring to you? We’ve got this new thing where we want to bring out to market this new idea. I have the instant access to do that and have the reach and have the scale to make some of those things happen. So it’s different. They are both fun. They are both interesting.
The Sales Challenge
I find personally that one of the big challenges in bringing new technology out to the world today is sales and marketing, which is interesting, because I’m an engineer by training. I think it’s actually getting easier to build the technology. I think it’s gotten harder to get it in the hands of customers. I like to get my hands very deep on the sales and marketing side because reaching customers is actually, I think the biggest problem in bringing out a new technology today. And so in spite of the reach of a big company, I find sometimes that it’s harder for big companies to do that because they have so much installed base. They have so much weight behind existing products. it’s fascinating.
One of the things I like about the smaller company is in many ways, I think, you have more of an opportunity to put all the weight behind some new ideas. So it’s really fascinating contrast between the two.
Angel Investment Strategy
Paul Greenberg: How do you even determine this? How do you pick, how do you think about it? I honestly couldn’t find a pattern in anything.
Larry Augustin: I look for people that are excited about what they do; all in with it and solving an interesting problem where people know they have a problem. And there are some common things there. For example, I’ve got this business, I’m working with people that do the virtual agent for IT and HR help desks. And a lot of that ties to my experience with call center, customer experience, that space because it’s really about helping employees get information. It’s also AI. What I call an AI native company, which is re-imagining an application built from the ground, up around AI. That’s a theme I like.
I’m doing another one. Another company I’ve spent time with open DB, completely different space if you’re familiar with the Bloomberg Terminal.
Paul Greenberg: Yeah.
Larry Augustin: There are 300,000 users of Bloomberg Terminals today. Bloomberg Terminals are $20,000 plus per year thing. But what’s happened in recent years, retail investing has gone big. Retail investors now drive markets. And there are tens of millions of people doing stock picking, investing as individuals. What’s the Bloomberg Terminal for them. They don’t have access to that. And the thing that these guys are doing with open VB is democratizing access to financial information, making it available.
Imagine tens of millions of users with access to something that used to be really expensive that only a few people had. I love those… Drive the price way down and go abroad with things. It’s a little bit, if you remember the computer…
But as the price goes down, the market gets big. I love that concept. In businesses where you take something that only a few people could afford or benefit but then you really lower the price and now you make it available to mass numbers of people and you hugely grow the market. I love businesses like that. Because I think they make life better for everyone because you’ve taken something that used to be the domain of a few and you’ve now enabled many people to have it. I think they make life better for everyone. I think they’re a fun place to be because of that. And I like businesses like that. So if you see me doing some things that feel a little consumer retail, it’s probably something like that.
One of the ones I also told you I’m doing is this company recently invested in that does flywheel batteries for residential, where’d that come from?
Well today, if you wanted to do battery backup for your home, you’re buying expensive lithium batteries. It’s again, not a technology that can go mass market. This flywheel battery technology can go mass market. It’s a 10th of price and it’s something that you could imagine every small home in the world having one of these things and significantly improving their carbon footprint and improving their access to energy and costs because you could put one of these things in. So those are fun places to be.
This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it’s an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.