David Schwab
Founder and Managing Director
I began my career studying engineering as an undergrad at UC San Diego and would later earn two graduate degrees in Aerospace Engineering at Stanford. My thesis at Stanford concerned the stability and control of a large space antenna. I have a picture of that antenna; my wife won’t let me hang it anywhere.
I was a practicing engineer for five years at Lockheed Missiles and Space Company (now Lockheed-Martin), where I worked on various guidance and control systems. I spent five years working full-time and while getting those two degrees at Stanford. I didn’t do anything else. One significant aspect of my role at Lockheed was that I saw my work through to actual installation on a vehicle. As such, I put my designs through a battery of environmental tests – shock, vibration, temperature, EMP, and others. If you ever get a chance to be in a room with a shaker table, do it.
I didn’t see myself at Lockheed long term, and I was very interested in the business side of engineering. I applied to multiple business schools and was very fortunate to be accepted at the Harvard Business School. It was a great two-year experience, and Boston was a great place to live. I graduated in 1986: Section A. While most of my class was accepting jobs in consulting and investment banking, I was still interested in the intersection of engineering and business. I decided to take a sales job at Sun Microsystems, where I eventually became a sales manager responsible for a territory in the Bay Area. This role helped me identify
Life Lesson #1
The power of a salesperson in love with the product they sell.
I was a CAD engineer, selling CAD computers to CAD customers. It was a dream job, and I did very well, I think because my enthusiasm for Sun products came through every day.
I was fortunate (again) to meet many great people at Sun, and I co-founded a software company with a Sun colleague and three others. The company, named Scopus Technology, was one of the first companies in the field of CRM. In 1991, using software to automate sales and customer service, not just accounting and finance, was a new idea. We didn’t realize that we were standing on this giant wave. We soon understood, which led me to
Life Lesson # 2
It is good to be lucky, but you need to be smart enough to see it.
Scopus was highly successful, going from startup to IPO in seven years and then a sale to Siebel Systems for 1/3 of Siebel’s market cap at the time. An excellent result for all involved, and many thanks to my Scopus co-founders for a fantastic journey.
Following Scopus, I entered the venture capital industry taking a partner role at Sierra Ventures focused primarily on early-stage enterprise technologies. My first investment was Micromuse, which sold software for network management, automating the millions of SNMP events that flow from the network and compute infrastructure in a large enterprise. Micromuse scaled to $200M of revenue, went public, and sold to IBM for $800M. During my tenure at Sierra, I created the Sierra CIO Advisory Board. The premise was that if you were going to be an investor in enterprise technology, you should be around the CIO’s of the Fortune 500 consistently and systematically. It turned out to be a bright idea, and I ended up spending quality time with dozens of CIOs.
About seven years ago, I heard a whisper from these CIOs, and this whisper turned into a roar. These CIOs were frustrated with buying horizontal technologies that didn’t solve their business problems. I had CIO’s explaining they had spent $2M on Salesforce and $8M on Deloitte, and two years and $10M later, they still didn’t have CRM for their business. This dynamic was true for CRM, BI, AI&ML, almost every platform technology. And each industry needed a “verticalized” version of the platform. I also discovered that CIOs were shifting budget dollars away from horizontal and towards vertical, which seemed like an excellent opportunity for a venture fund: focus on companies dedicated to solving problems in one industry and solving 100% of the problem. Vertical Venture Partners was born on this premise.