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Mike Volpi, General Partner at VC Firm Index, Aims for More Enterprise Deals in 2015 (Q&A)

This will be the year that companies start really learning from big data, Index partner Mike Volpi says.

Index Ventures

Investments in enterprise startups have been good for venture capital firm Index Ventures. Late last year, Hortonworks, which helps firms manage large troves of corporate data using open-source software Hadoop, became the latest in a string of companies in its portfolio to go public, following Zendesk and Arista Networks.

And there may be more IPOs coming: Candidates in the Index portfolio for 2015 offerings include Pure Storage, Lookout.

Index intends to keep up the pace in 2015, says Mike Volpi, a general partner and former chief security officer of networking giant Cisco Systems. This morning, Index announced it led a $20 million Series B in Interana, a Menlo Park, Calif.-based startup that builds software to help sort and visualize patterns in corporate data.

The startup already has customers including Jive, Sony and Tinder, and Jerry Yang’s AME Cloud has also invested in this round.

The investment represents the kinds of opportunities Volpi sees for the year ahead. In a lengthy blog post on Tuesday, Volpi wrote, “2015 will be the year we truly figure out how to use big data, visualize it, and mine it for customer insights.” That seemed like a good opening for a sit-down with Re/code. Below is an edited transcript of our conversation.

Re/code: The timing of your investment in Interana comes a day after you published a detailed blog post about how you see the enterprise market evolving and where you intend to invest in the next year. You basically laid out three areas where you see opportunities: Data insights, storage and security. Where does Interana fit?
Mike Volpi: The timing of the post and the investment in Interana is really just a coincidence. The name means interactive analytics. They are in the business of providing a visualization product that takes very large amounts of data and helps you visualize it, but also lets you to ask questions about it. They have some secret sauce that we think is unique.

It reminded me of New Relic and perhaps a few other companies in the data visualization space. How is it different?

In the case of New Relic, you drop some code into your software and it collects data on how it’s running. And then you can identify bottlenecks in the software and make it run better. It’s largely aimed at developers who want to do a better job at building and publishing their applications. Interana can collect information of a wider variety — network log files or how a user moves through an application. Interana would more likely be compared to someone like Mixpanel or Tableau Software.

So how does it fit within your thesis for investments for the coming year?

Our thesis is that for the last few years, many companies have been collecting a lot of the information that they once put into separate silos, and it’s now being poured into a single place. That’s what companies are doing with Hadoop, which is commonly thought of as one of the dominant technologies for storing data. It’s cheap to store, and you can organize it later. Our belief is that for the next few years, enterprise users are going to be trying to get their arms around their information and then try to gain some genuine business insight from it [that] they can act on.

What kind of insight?

They might make changes in their Web app, or they might make changes in how they price their products, or they might discover something interesting in the medical field. It’s not that different with the investment that we made in ElasticSearch. The idea is similar. You take your data and try to make sense [from] it. ElasticSearch comes at it from the search point of view. Interana comes at it graphically. We think people will be able to get some deep business value from all the data they’ve been collecting.

Do you think you’ll be more active in 2015 than before?

We’ve been really busy. The last three years have been a blur, really. Last year was our record year for IPOs: Both Zendesk and Arista went public. It feels like it’s a continuation of what came before. There are a few areas we’re really excited about. And there are a few places in the enterprise where the technology that had been used in the past is being shifted out for something new. We’re in the business of investing when those transitions happen.

Aside from data insight the three areas you mention as important to you for 2015 are storage and security. What opportunities do you see there?

When you look at storage, it’s one of those transitions, and it’s not rocket science to understand. You’re shifting from storing data on rotating media — hard drives — to flash memory. There’s a lot of skeptics who say it will never be a cost-effective alternative to hard drives. But to us it sure feels like a giant shift is taking place, and it seems like the people at Pure Storage can pull it off.

And what about security?

I can rattle off the names of the top 25 companies who have been hacked. Most of these hacks have been like burglaries. Someone gets in and takes some credit card numbers. But if you look at the Sony attack, that was about tearing a company down. The level of risk and threat that companies are facing is unprecedented. Right now the security space is extraordinarily tumultuous and interesting.

Do you think the market for enterprise investments is overheated?

You can sit there and argue whether we’re in a bubble or not, but I don’t care. I’ve been in the enterprise business for 30 years and what’s happening right now is so transformative it’s unprecedented. As a venture partner, there’s only so many investments we can make. But right now I’d say the level of interest we have right now is very very high.

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