form its second fund to support outside venture firms. The plan is to provide longer-term backing for these venture funds in the United States, Europe, and Israel.
Although SAP may derive some strategic benefits as well as investment returns from its relationship with Sapphire, Marakovic says the venture capital firm sets its sights on financial gains alone. It makes 90 percent of its investments in products and services aimed at businesses rather than at consumers, he says. While wildly successful consumer startups such as Facebook arise “once in a blue moon,” enterprise startups more consistently hit “second and third base rather than huge home runs,” he says.
But some of the most interesting startups are hybrid companies that involve both consumers and businesses, Marakovic says. Facebook qualifies as one of these hybrids, he says. Facebook’s masses of users don’t yield revenues, but they generate data that’s useful to its enterprise customers. The same can be said of two companies Sapphire has backed: LinkedIn, which sells information from users’ professional profiles to recruiters, and the user-focused compensation database PayScale. Seattle-based PayScale allows job hunters to enter their educational backgrounds, work experience, and current positions. It then finds comparable workers and their pay rates, which may help users negotiate for better compensation. Using that aggregate data, PayScale can sell reports on current market conditions to employers.
Marakovic sees certain frontier technologies on the horizon that could generate another wave of disruption in both consumer and business uses—-virtual reality, machine learning, and the pairing of voice recognition and artificial intelligence.
“Business processes will be transformed and automated,” Marakovic says—-and he’s not just talking about customer service phone bots. “Even knowledge work will be more automated.”
