People often ask VCs: What is the most important thing to look for in new investments? It’s a simple enough question, but the answer is actually pretty complicated. We look for disruption, and we look for impact. We look for teams and companies that are solving problems and challenging the status quo. More than anything, we look for the right people—for entrepreneurs who have a certain spark about them. Very rarely, the stars align so that all of those factors—the team, technology, and market opportunity—are in sync. And when you think you’ve found that, you don’t just walk toward it—you RUN.
Few technologies have the disruptive power of artificial intelligence, and we’ve seen some remarkable AI applications that supercharge and automate elements of home, work, and play to make devices smarter and businesses more efficient. We’ve also seen brilliant teams struggle to properly apply AI to meaningful solutions based on available data. Although the trajectory of AI tells us it will someday be built into every product or service we use, we won’t get there by focusing on futuristic, hard to fathom applications. Unlocking the potential of AI starts with real-life, right-now solutions that demonstrate tangible value. Enter Forethought.
I first met Deon Nicholas through my investment in data-driven intelligence company, Instabase, where we tried to hire him. He was a distinguished student out of Waterloo and even competed in the ‘Olympics of Computer Programming,’ finishing 1st in Canada. Even though he didn’t end up joining the company, there was something extraordinary and memorable about Deon. I told him I’d love to work with him one day, and I made it a point to stay in touch.
In a job where one tends to meet a lot of high-achieving computer science graduates, Deon immediately stood out from the pack—here was an excellent student from an excellent university who had a 13th place finish in the 2015 International Collegiate Programming Contest (also known as the ACM world finals) under his belt! And Deon’s interest in AI wasn’t sparked by growing up in Silicon Valley or another hub for youth engineering talent; he grew up in the inner city of Toronto and first learned AI programming by developing a program to do his history homework so that he could spend more time playing basketball! Let that sink in. This teenager was so brilliant and inventive that he was able to teach himself advanced programming skills and apply them to achieve a simple, focused solution.
A Pass and a Pivot
It is this engineering ingenuity that eventually led Deon to start his own AI-based company. Because we’d stayed in touch, I had the opportunity to invest in his startup, which was initially focused on reading and summarizing textbooks. I regretfully passed because the size of the market just didn’t seem big enough, but I found Deon as impressive as ever.
Some months later, I heard from Deon again. He, along with his talented co-founders Sami Ghoche and Colm Doyle, had pivoted from textbooks to focus on customer support and enterprise search. This time, I invested without hesitation.
In hindsight, I should have backed him the first time despite my reservations about the application. The intelligence, grit and talent of an entrepreneur are always key factors in making an investment, and Deon is everything you look for and more. I should have known he was the kind of entrepreneur who would figure it out—the good ones always do.
A Powerful Solution
Forethought applies AI to enterprise search to make it easy to retrieve information for knowledge workers from diverse data sets. In terms of what VCs look for, this is it: cutting edge technology using available data to make a real-life impact.
Enterprise search is a huge category, and a notoriously challenging one--38% of knowledge worker time is wasted finding and aggregating information across disparate systems. Forethought aims to transform enterprise search with its AI engine, starting with customer support.
The company is off to an explosive start. Forethought’s technology incorporates AI for information retrieval embedded into employee workflows. Their initial application, Agatha, helps customer support agents respond to tickets more efficiently; Agatha can decrease reps’ mean time to resolution (MTTR) on average by 30%, and increase the number of 1-touch tickets by 10%, providing a 10x customer ROI.
These impressive customer support results will serve as a jumping off point for Forethought to expand into a larger platform company. At the core of Forethought’s IP is their machine learning model that figures out a user’s intent and surfaces relevant enterprise knowledge, which can be applied to impact sales workflows, internal search, and support for ITSM, making the company a complete horizontal platform for enterprise search.
Forethought’s resourceful and valuable real-life application of AI is underscored by impressive velocity of adoption, high ASP and short sales cycles. Seamless integration with existing systems enables knowledge workers to access the benefits of Agatha without requiring a change in platform. Customers can turn on the Forethought solution with very little upfront work because the hard work of integrating with Salesforce and Zendesk has already been done.
Forethought will be able to tap into some of the largest enterprise software budgets. The service and contact center segments of the customer support software market were a combined $10.5B worldwide in 2013 according to IDC. Additionally, Operations Management is a $10B market and Enterprise Service Management is a $25B market. Although the space is crowded, it represents a massive opportunity (i.e. what VCs look for), and Forethought has the potential to be the breakout winner.
Partner sales channels represent a significant opportunity for Forethought, as dominant B2B software companies have emulated the App Store strategy and trended towards building out platforms to take advantage of the innovations bubbling up from younger companies. Already Forethought integrates into Salesforce, Zendesk, Front, and most recently, the Freshworks platform, which represents access to a signifant number of global customers. Just as the App Store unleashed billion dollar companies such as Instagram, Lyft, and Whatsapp, dominant B2B companies are positioning themselves as enablers of value creation by lowering customer acquisition frictions for new innovators on their platform. At a time when nearly every pitch deck is touting solutions that are AI-enabled, AI-powered, and AI-driven, it can be tough to cut through the noise. What Forethought brings to the table is a tangible solution, proven to improve customer support performance—an impressive first step in building a full-fledged enterprise search platform at a time when no frontrunner in this race exists. This, combined with a uniquely talented entrepreneur and founding team, is the precise combination of factors that investors look for often, but seldom find. I’m grateful to have had a second chance to invest in this incredibly talented entrepreneur and thrilled to be partnering with Deon and the team on their journey to become a leader in enterprise search.