Heriberto Diarte: We studied this for one year. I helped this company launch many years ago, and the market is huge. There’s a huge need for housing in this country, and it’s not being fulfilled. When you can contract and build a home in three months, you have something nobody else has. They have sold homes to replace homes in Southern California in the Palisades fire, where people needed to rebuild their homes and said, “I don’t want to wait one year for a permit and two years to build a home.” 

And if you are building exactly the same home that you built in the past in 27 states across the United States; it can be of a different color or have a different countertop; but if the plumbing and the structure and the beams and all that is the same as something you built in the past, you get a statewide permit. So, you can go and build this anywhere in that state.

That’s incredible. So the door to door can be three to four months when you have this perfectly beautiful, luxurious home on your lot. So the market of construction is huge. So, yes, we underwrote that.

Sramana Mitra: Very interesting. Do you want to highlight any other portfolio companies? Maybe another one or two?

Heriberto Diarte: I’ll be happy to. Let me tell you of how our relationships and knowledge have helped us do a very different type of venture capital firm that has, I would say, an unfair advantage because many people don’t have these relationships, knowledge, and skill that we do. I’ll illustrate with an example.

When Christina, my partner, was the dean of Duke Engineering School, she hired this professor, and 13 years later, he comes to her and says, “Hey, I finally cracked the code of fluid optimization. I know how to optimize fluid flow anywhere in any system, and I think this is super valuable, but I don’t know what to do with it.” So Christina had a look, and she said, “Oh my God, this is amazing. So we should start a company, and the first use case is going to be for hydropower, how to optimize the production of energy in using water.” And so to make the story short, this was prototyped with the help of my partner.

The company was launched, we invested in this company, and they had five pilots. And it’s proven that by optimizing where you accumulate water, which valves you open and when, and which generators you run and so on, they can generate 10% to 14% more electricity with the same amount of water. And the reverse is true. They can generate the same amount of electricity with 10-14% less water. 

This is humongous value creation for that independent power producer because this is all going to the bottom line. It’s more energy they sell. It’s to the tune of, in one particular case, I’m talking about $5 million a year more in free cash flow. And this is all from some clever software that is optimizing the physical environment of water. So we’re looking for solutions like that.

Sramana Mitra: I understand you; this is based on relationships that you’ve had for a while. But when you went into the company, they already had the concrete ROI numbers figured out?

Heriberto Diarte: The ROI numbers– like what was the value of this company going to achieve when you put it on the ground? No, we had simulations and an idea. We didn’t know for sure. Now that we have the pilots, we know that in a complex system, it can generate 14%-15% more power. In a very simple system, it’s more like 4%-5%. So it depends, but now that we have it installed in hydropower plants, we’ve seen the value. And this is a huge market.

Sramana Mitra: Very good. I really like the investment thesis, and I like the way you’re going about it. It’s very concrete value addition, and it’s without burning too much capital, building companies without building too much capital, and really solving concrete problems. And I think that is the way venture in its old days used to be, and now we are more in a financial engineering type of venture capital business, and that’s very different. It’s highly speculative, it’s kind of like the Monopoly type of business now.

Heriberto Diarte: You know what people are telling us, even other VCs? “Hey, you’re a venture firm from the ’70s. You’re like a VC from the ’70s.” And yes, that’s what we are.

Sramana Mitra: And I like that kind of approach. Much more conservative, much more disciplined approach, and not so much these circular deals like, you buy my chips, I buy your data center. It’s not my cup of tea. I like bootstrapped businesses that solve real problems and generate sustainable profits. I like capital-efficient venture capital that solves real problems and builds companies that can exit at reasonable valuations.

So, I think we’re on the same page. So congratulations, and I’m sure you’re going to do some very interesting stuff. We’ll look forward to keeping in touch, and we’ll see what comes up that we can send your way.

Heriberto Diarte: Wonderful. Thank you, Sramana. It’s been great talking with you.

<p>The post 1Mby1M Virtual Accelerator AI Investor Forum: Heriberto Diarte, Co-Founder and Managing Partner at Catalyzer Ventures (Part 6) first appeared on Sramana Mitra.</p>

Heriberto Diarte: We’re open. I want to take a step back because I didn’t mention this in the introduction. We focus on technologies for three industries we know really well. Energy, in particular, energy transition; industrials – industrial automation, Industry 4.0; and infrastructure that now is called PropTech or InfraTech. Those are the three areas that we know really well.

My partner was Undersecretary of Energy, so we know energy really well. I was with Schneider Electric. I was a CEO of industrial companies. I know manufacturing, and I’ve been President of a region of a large infrastructure company. We know infrastructure. So we focus on those. And inside those, we love this type of recurring revenue software model. But not only that, we’re happy to do hardware-only sales, where we just sell a product and that’s it.

And for example, we have a manufactured home business where they manufacture the home in a factory, they install it in two days on the site, and they sell the house, and there’s no ARR behind that. But they have already reached double the profitability of the industry, and they’re going to do two and a half times the profitability of the industry. And they sell these homes from the moment they put money to buy a piece of land to the moment they get their money back by selling the home.

At the moment, it’s 110 days, and they’re going to first target 97 days, and then 90 days from end to end. So they have almost two and a half times the profitability, and then they can do this in three months instead of two years. So the velocity of the money and the profit that they’re doing is great. And they’re not selling just cabinets. They’re selling a home. We’re happy to do that. And we’re also happy to do a hybrid where you sell a product that is a hardware, and then you need to maintain the hardware. Like GE sells turbines, but they make most of their money with the maintenance ongoing on the turbines. We’re happy to do those types of models as well, where you sell hardware and you maintain it, service it, and so on and so forth.

Sramana Mitra: Interesting. So, as you know, the history of Silicon Valley venture capital is that hardware is not their preference. Software is much more their sweet spot because they like the asset-light model. They don’t like capital-intensive asset building. They don’t like low gross margin businesses.

There are all kinds of arguments stacked up against the hardware model. Now, you talked about a prefab home company, and your company is buying land, building those homes rapidly, and selling those homes. So, explain the capital-intensive or non-intensive nature of this case study because I sense that there is financial engineering underneath that is non-equity engineering, yes?

Heriberto Diarte: Yes, but it’s very simple and very well known. So basically, they have a credit line for their projects. And they’re supposed to put 20% down so the lender is protecting themselves, and the company has to put 20% down. The company has a great velocity, because these homes are amazing. They are much better than the ones somebody can build because of the level of quality and the tolerances and everything, they’re perfect. And they’re super insulated. In the Sun Belt, they’re energy negative because they have solar and batteries, and they produce more energy than the energy they need. So they’re amazing homes.

So people like them, and something that we didn’t expect but it’s happening, about half of the homes are being pre-sold, that people want these homes. So they get a down payment from the buyer, from the future homeowner and stuff. And then also they have a credit with their suppliers. So what ends up happening is that in reality, even though they have to put 20% of equity into every project that they’re doing with the bank, in reality, they are putting only 10% because of how things get staggered. So with $10 million of equity, they can sell 100 million of those homes. And they have, let’s say, a 20% margin on the homes. With $10 million put down as equity, they get $20 million in gross profits, and they can do four of those per year. So you do the math. So it’s a pretty good business model.

So there is equity, there’s CAPEX sales, but there are loans because they’re being underwritten by the value of the land that they buy and by the value of the home that they’re building. And so it is actually an equity-light business model. Even though the numbers of the CAPEX are very large, it is equity-light.

Sramana Mitra: And in terms of the AI, it is in the design of the homes?

Heriberto Diarte: The AI was done in the design and manufacturability of the home, but after this was frozen, it’s all an execution game. The CEO of this company is a phenomenal automotive executive, and as you know, automotive is really efficient in building cars. And so he has this factory running like a dream factory, and it’s super efficient. It’s always on time. It’s always on quality. So once they figure out the basics, it’s an execution play.

<p>The post 1Mby1M Virtual Accelerator AI Investor Forum: Heriberto Diarte, Co-Founder and Managing Partner at Catalyzer Ventures (Part 5) first appeared on Sramana Mitra.</p>

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Heriberto Diarte: Yes. We want the unicorn. Don’t get me wrong. We want the big company. So we’re going for that, but for all of our companies, we have an intermediate stay, but they are going to get the option to be acquired earlier for hundreds of millions of dollars.

Sramana Mitra: Well, I think the problem that we see is this. The difference between mindless unicorn chasing and being more judicious about how you play your cards is how much money you raise in those companies. If you raise too much money, you price yourself out of small exits. If you keep yourselves capital efficient and focused on profitability and focused on, as you said, free cash flow and all of that, then the option of going for small exits remains.

Heriberto Diarte: That’s exactly right, and we give them that option. Let me give you an example. You have no idea how many entrepreneurs we’ve met who want to boil the ocean. They want to do everything in-house, have the factory, build it, sell it. And then part of our value-add to them is to figure out the right growth strategy where they can be capital efficient and fast. And we say, “You know what? Let’s say you’re building a computer. Don’t build the battery, the casing, and whatever. You’re just going to build the processor because that’s the key part that you need to have in-house. And then everything else, outsource it to somebody else.”

So we help them figure out, can they license the whole technology and let a Siemens or a Flextronics or a Nestle, if they are in reactors, build the product for you, or do you need to keep something in-house? We figure out what is the best way to grow fast, to invest less amount of money, and to get to cash flow positive and scale the fastest possible.

Many of these entrepreneurs don’t know the industrial ecosystem that we have in this world and which pieces you can bring to bear to make your company successful and faster. So the first thing we do is sit with the entrepreneur, and even before we invest, we go to them and say, “Look, we have a path for you to grow, which is this, which is slightly different than you were thinking. Are we aligned on this? Do you think we can go in this way?” And if we agree, then we make the investment and we help her or him to achieve that path. Because if you grow fast and get to profitability quickly with less capital, you’re going to be golden at the time you’re selling. And that’s what we want.

Sramana Mitra: How is vertical AI going to play out in your assumptions? For a while, vertical SaaS emerged either as its own IPO-worthy category. One of my favorite examples has always been Veeva. They just raised $4 million and they built this fantastic company that still continues to be an independently successful vertical SaaS company.

And then many other vertical SaaS companies were acquired by private equity. But now a lot of these are sitting around within private equity portfolios and are unable to find exits. How do you see vertical AI playing out?

Heriberto Diarte: That is a very good question because you’re trying to extrapolate the experience of SaaS into vertical AI, which is a very relevant comparison because basically vertical AI is the new SaaS. The key thing is, as we kind of discussed before, if you have a company that has three things; first of all, it’s embedded in the network. It uses proprietary data. It uses, for example, rules and things like that that are difficult to codify. I call it AI in a box. When you need to design a sub-station or build something, there are some rules. If you are able to put your AI in that box that follows the rules and has proprietary data, that is a moat. That is a real differentiation, that’s the first thing.

The second thing is, if you’re in a big market that is growing; once you’ve proven the model and you have a big white space to go after and continue to grow, then you reach the third point, which is growth and cash flow. You will have positive cash flow, and you will be growing this cash flow through time as you grow. Then you’re going to go IPO or you’re going to be acquired. So, what changes with SaaS is that these companies can be much more frugal. We’ve invested into one of these companies.

We gave them $2 million. It turns out they’re going to need only half of that. They’re sitting in plenty of cash because they’re using AI a lot to develop their solution. And instead of having a team of 20 people that we thought, at the most, when they are selling hundreds of millions of dollars of ARR, this is going to be a six to seven people company because they don’t need more.

Sramana Mitra: That is really where my thesis on Vertical SaaS versus Vertical AI is ending up. Vertical SaaS became a very big money game. A lot of capital went into Vertical SaaS. Vertical SaaS became the favorite of the venture capital industry, and they just flushed those companies with capital. And I think Vertical AI can be bootstrapped or built very capital efficiently with small amounts of capital and become sustainable companies. And then they’re not dependent on raising more money and all of that stuff. So I think there’s a huge opportunity in Vertical AI on the bootstrapped side as well.

Heriberto Diarte: I agree 100% with you. We’ve seen it in this company. As I said, we gave them $2 million. They haven’t even spent– They’re going to start becoming profitable with $400,000 spent, something like that. It’s incredible.

Sramana Mitra: Yeah. That points to the fact that these companies are very bootstrapable. You don’t really need capital to build these companies.

Heriberto Diarte: I thought you were advertising to your entrepreneurs! Yes, but you need somebody like me to tell you how to play the market. So get my money in, and my advice.

<p>The post 1Mby1M Virtual Accelerator AI Investor Forum: Heriberto Diarte, Co-Founder and Managing Partner at Catalyzer Ventures (Part 4) first appeared on Sramana Mitra.</p>

Heriberto Diarte: $2 to $5 million. We can go up to 10, but we normally do $2-$5 million, and then we reserve 40%.

Sramana Mitra: And so $2-$5 million is in seed and Series A, and then you have follow-ons after. You do follow-ons as well?

Heriberto Diarte:  Absolutely, yes. And on the follow-ons, the plan is we are happy to lead the follow on also – to price it and to lead. And we have LPs who would like to co-invest. So the ability to do follow-ons with a company that we know well goes beyond the $100 million fund that we have. So we can put more money in a follow-on in a company we know well and we have conviction in.

Sramana Mitra: You mentioned that you’re doing investments all over the United States, including in places where there isn’t a lot of venture capital locally. And of course, the industrial and energy and all that is not really Silicon Valley’s business. So those types of domain expertise comes from elsewhere. Are you restricting yourselves to the United States, then?

Heriberto Diarte: That is a great question. In practical terms, yes, because we’re a small fund and a small team. But if we find a great opportunity internationally that is really compelling, we’d go ahead. We looked at a couple of companies in Europe, one in Israel. So, the opportunity has to be really compelling, and we have to have an edge.

If I’m trying to compete for a deal in Berlin versus the local ones, I’m probably going to be without money, so I don’t want to do that. It has to be an edge. For example, we know the entrepreneur. The entrepreneur knows us and would like us to invest. He or she knows what we can bring to the table and  wants us, then that is a special situation where we have an edge because of the relationship. Also, if we think we can help this company, we can really open doors, help them to sell, or organize a partnership with a big company that is going to build the product instead of buying so that they can be asset light. If we are convinced that we can help the company go from zero to one, and they want us, we have an edge, then we would consider an investment outside the United States.

Sramana Mitra: Right. Okay, I’m going to get into something that is extremely hairy right now in the market. And the venture capital market has shifted to these whales. You have a bunch of companies, a handful of companies that are sucking up capital like crazy. The Anthropic, and the Space X’s, and the OpenAI’s, and so on. And they are obviously chasing trillion-dollar valuations and so on.

And then there are the unicorn chasers who are also sucking up tons of capital, hundreds of millions of dollars of capital. And I look at all that, and then I look at the statistics of how many zombie unicorns are sitting on the sidelines. They have raised tremendous amounts of money. They’re diluted to the hilt, and they cannot find an exit because they’re too overpriced, right? They’ve priced themselves out of reasonable exits. And the exit equation is really complicated, right?

96% of industry exits are sub $100 million, and the vast majority of exits are sub $50 million. So the amount of VC capital chasing the very small number of exits out there that are billion-dollar exits or $500 million exits are minuscule. How are you thinking about the exit issue? Our philosophy is entrepreneurship equals customers, revenues, and profits. Financing is optional. Exit is optional. However, if you raise venture capital, you have to exit. You have no choice. The only way you make money after raising venture capital is through an exit. So how are you thinking about the exit issue?

Heriberto Diarte: That is a great question, and we could have a whole podcast talking about this bifurcation of funding and whether all this money going to these big elephants with big dreams is going to pan out. And we have the historical answer to that. We’ve been in situations like this before, and this one is even bigger, the amount and the speed at which things are going.

Remember, everybody overestimates the first wave, which is where we are now, and everybody underestimates the second wave. There’s going to be a handful of big winners; Amazon was one of the big winners of the dot-com, but many went away. It’s going to be exactly the same thing this time. But I’m not going to comment on that. I’m going to comment on what we’re focusing on.

So, I mentioned to you that valuation is very important for us because of the way we underwrite an investment. Let’s say we are going to help this company succeed, and at some point this company has to generate cash flow. This is the whole thing. Cash flow, free cash flow is the thing that everybody wants. So based on these cash flows on year seven or year five or whatever, how much is this company worth based on the multiples of the space they’re in? Is it a 15x multiple or 30x multiple given their profitability, their trajectory, and so on. Based on that, we bring it back and underwrite the investment where we have to make money for our LPs.

So you asked something very important. For the shallow wrapper companies, what is the future and whether they can have an exit. So we’re looking for companies that can have a venture type of outcome, and to do that, we look for a big market, a company that can be really big and generate hundreds of millions of cash flow profit. That’s what we’re looking for, and there’s many of them.

So the second thing is that the generating cash flow is the reason to exist of the company. Then the moat is this access to proprietary data, to being embedded in the workflows that once you’re in it and everybody’s using your platform and you have a network effect, and the more people use it, the better, that is a moat. So when we find those, and we find them often, then that is a good investment. Now, because of our entry point, we are investing in companies at low double-digit valuations.

So if a company sells in five years, Siemens comes and buys them for $100 million, we’re going to do 5X. Or Schneider Electric comes and buys them for $300 million, we’re going to do 10X. I think about half of our companies are going to end up being acquired by a big corporation for cash in a very short amount of time because they are disrupting some of those larger businesses.

So when they get to the point that they have $50 million in ARR and EBITDA or cash flow generation of $20-something million, that company is set. They have a good trajectory. But then the big company is going to come and say, “Oh my God, these guys are eating my lunch,” or, “I want this technology.” And they’re going to put an offer on the table. And then as we’re on the board, we have to decide. Do we take this cash now? Is everybody happy to go home with this return? Or do we have, in a short amount of time, the capacity to keep growing this really significantly and do an IPO? That’s a decision we will take. But many of our companies, the great majority, are going to have the option to exit to a trade sale relatively quickly.

<p>The post 1Mby1M Virtual Accelerator AI Investor Forum: Heriberto Diarte, Co-Founder and Managing Partner at Catalyzer Ventures (Part 3) first appeared on Sramana Mitra.</p>

To be able to build a venture-funded company, you cannot have 100 companies doing the same thing. But if you go into a low entry barrier business, you will encounter a lot of competition. Those dynamics are okay with bootstrapped businesses. They’re not okay with venture-funded businesses. So coming back to Heriberto, I know you have an investment thesis also around your fund size. Tell us more.

Heriberto Diarte: Well, our fund is relatively small. It’s a $100 million fund, so this forces us to be very disciplined. And if you look at our name, Catalyzer, our strategy is to catalyze companies across the chasm, where we invest is when the product is working, it can be in the lab, but we know that the product is working. We understand that the product is working, and then our value-add, given all the connections we have with large corporations, utilities, and the world in general, is to take that from where they are to commercial adoption. 

And what we want to hit is a company where they have proven unit economics. The unit economics are great, not in theory, but in practice, and then they have a huge pipeline of business, people knocking on their door trying to buy their solution. When they reach this point, the companies are on their way. So our goal is to catalyze them to that point.

So I don’t want to be in a situation where in the middle of this, the company runs out of money or needs to fund-raise $100 million and things like that.

So we will be very selective and choose only those companies with our money, with our LPs money, and our help can cross that chasm. So we have to be very disciplined in what companies we choose. And those companies can be doing something related with CapEx. They just need to be equity efficient to be able to do that.

Like we have a company in the construction industry, but 90% of the cost of their projects is financed with bank money. In that case, the equity is efficient, and they can scale up. So we are looking for those. We’re very disciplined to do that.

The second type of discipline is the entry price. If you find a great company, it doesn’t mean that it’s going to be a great investment. It depends on what entry point you invest in. So we walked away from deals where we were the main funder, or supposed to be the main funder, because it became a feeding frenzy. It became a very competitive process, and then the amount of money they were raising, and the valuation didn’t make sense to us anymore, and we just walked away from those types of deals.

Sramana Mitra: Now, how do you manage that dynamic? Because in Silicon Valley, that feeding frenzy happens very often. So if a deal looks good, the feeding frenzy is tremendous. So how do you manage this dynamic?

Heriberto Diarte: There’re three things. The first one is, which is a more generic one, we are able to find diamonds in the rough that are not understood by the main VCs. We have a lot of domain expertise and knowledge, and we’ve found situations where the main VCs who have never built a factory or managed things, who don’t come from the industry, don’t understand what the founder is trying to do and the value of what they’re trying to do. They try to explain it; many VCs don’t get it; and we get it because I would be the buyer for that technology, right?

I can understand if I had this, if I could install this in my factory or in my buildings, what would be the effect of that, and so on. So we found situations where people don’t get it, and we do, and then we have a one-on-one relationship with them. We’re almost like co-founders. We come in early, and we help them figure it out. That’s the first.

The second is that we have two offices. We have an office in Silicon Valley, and we have an office in Durham, North Carolina, and there’s a lot of technology in other places of the United States coming out of the RTP Research Triangle, coming out of Colorado, and other places where there’s not a lot of local VC money. So, we have first dibs on those technologies and entrepreneurs. Once they get to a certain size, they’re going to come and fundraise in Silicon Valley, and they can go to that feeding frenzy. But if it’s early enough, we can be one of the one or two VCs they’re talking to. That’s the second. 

And the third is just being decisive early. We’ve had one of these companies that we lost, that we didn’t invest in. They said, “Look, we would love to have you on the board. We would like you to lead our Series A.” But we hadn’t closed the fund. This was early in the year. We didn’t have the money to invest. If we had moved quickly, the entrepreneur would have been happy with us just to give him our money, and we would have been the only VC firm inside. 

This person was a mentee of my partner’s for many years. So he said, “I want you on the board. I want you to help me do this again.” They’ve had a very successful past together. But because we couldn’t invest, he went to the market, and then he realized, “Oh, I have something big.”

It’s not that he would have sold to us at a bad price or conditions. We’re going to be very fair for the stage of the company. The amount of money that he raised at the valuation that he raised is insane, and they might have trouble down the road because of that. So it’s short-term gain for long-term problems, I think. He would have been better off with us, with people who understand what he’s trying to do. And so if we can be nimble and fast, we could also get some of those deals.

<p>The post 1Mby1M Virtual Accelerator AI Investor Forum: Heriberto Diarte, Co-Founder and Managing Partner at Catalyzer Ventures (Part 2) first appeared on Sramana Mitra.</p>

Salesforce’s Financials

For the second quarter, Salesforce’s revenue grew 11% to $11.35 billion, ahead of analyst estimates of $11.32 billion. EPS of $5.90 was far ahead of analyst estimates of $3.27.

By segment, subscription revenues grew 12% to $10.8 billion. Professional services revenues fell from $546 million last year to $525 million.

Among key metrics, Salesforce’s annualized revenue from Agentforce AI products grew 240% over the year to $1.5 billion. It ended the quarter with $33.5 billion in current remaining performance obligation, ahead of the market’s expected $33.22 billion.

For the third quarter, Salesforce expects revenues of $11.42-$11.50 billion and an EPS of $3.42-$3.44 compared with market estimates of $11.41 billion revenues and EPS of $3.38. The company expects revenues of $46.1-$46.4 billion and an EPS of $16.67-$16.71 for the year. The market was looking for revenues of $46.11 billion for the year.

Salesforce’s Acquisitions

Salesforce continued to grow its AI capabilities through acquisitions. This summer, it announced a $3.6 billion acquisition of Fin, formerly known as Intercom. San Francisco-based Fin was founded in 2011 by Eoghan McCabe, Des Traynor, Ciaran Lee, and David Barrett who wanted to make internet business more personal. The team wanted to create a solution where people connected with businesses in a more customized manner instead of just receiving vague emails that felt like spam, or standard cookie-cutter answers to problems they did not even have. But with the launch of AI solutions, Intercom pivoted itself to become an AI-first company and an advanced AI customer service agent that was built to autonomously resolve customer support conversations.

Intercom’s AI agent was called Fin and has since moved beyond customer service and expanded into use cases supporting other teams including sales, support, and ecommerce to deliver seamless customer experiences. The agent has been built for multiple industry use-cases and claims to be able to solve complex issues in highly regulated industries like Finance and Fintech. It is also powerful enough for high-volume industries like eCommerce and eGaming. The agent works on customer queries across chat, email, WhatsApp, SMS, phone, and Slack. Earlier this year, Intercom renamed itself to Fin.

Salesforce plans to leverage Fin to complement Agentforce. Together, Salesforce and Fin will give customers more and faster ways to deploy AI agents across their customer service operations. They will support customers at every stage of AI adoption and help organizations improve autonomous resolution, reduce cost-to-serve, and accelerate AI adoption across their service organizations. Prior to the acquisition, Fin had a customer base of over 30,0000 businesses and an ARR of over $400 million. Fin has raised $490 million in venture and debt funding. Earlier this year, it raised $250 million in debt funding from Hercules Capital. Earlier funding rounds have been supported by Kleiner Perkins, Google Ventures, Bessemer Venture Partners, and Index Ventures.

Salesforce’s stock is trading at $229.79 with a market capitalization of $187.8 billion. It hit a 52-week high of $269.11 last month and has recovered from the 52-week low of $146.32 that it had fallen to in July.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

<p>The post Salesforce Wants to Accelerate AI Adoption with Fin Acquisition first appeared on Sramana Mitra.</p>

Sramana Mitra: We are going to start our discussion with Heriberto Diarte, co-founder and managing partner of Catalyzer Ventures. Heriberto is a longtime friend of mine, and we’ve had many offline conversations on many different topics related to the industry. Heriberto had a stint as a corporate VC prior to raising his own funds with a co-founder. So he’s going to tell us more about his journey. We recently had dinner at his house, and we had quite a bit of discussion on some of the changes that are happening in the industry, and I invited Heriberto to come to the program and discuss his thoughts on how the industry is evolving. 

Welcome, Heriberto. Great to have you.

Heriberto Diarte: Thank you, Sramana. I’m delighted to be here in your program. It only took me 11 years to pass the test to be good enough to come on your program. So I’m very pleased to be here now and look forward to the discussion.

Sramana Mitra: So Heriberto, let’s start with a bit of an introduction of your fund, your background, your co-founder’s background, because I think those are some of the uniquenesses that you bring to the table through this fund.

Heriberto Diarte: Oh, yes, absolutely. So we are two co-founders, but three partners, and we all have two things in common. First of all, we’re serial entrepreneurs. I’ve started five companies, three have done very well, two died, and my co-founder has started six companies and sold those companies for 10X. And then the other co-founder started two companies, both of them very successful.

The other thing we have in common, we are operators. I’ve been a CEO of large industrial companies. So has my partner, Christina, and she’s on the board of big companies like Cisco, DuPont Electronics, now called Qnity, and other large companies. Our third partner is currently the CEO of the largest independent hydropower operator in the United States. So, we’re all ex-CEOs, ex-entrepreneurs. We bring that to the table.

On top of that, my two partners are scientists. They’re very technical people who have PhDs, patents, and have created things. Their startups were based on technology they developed and can really understand technology deeply. For an early-stage fund, that is a very important part of the skill set. I don’t have that part of the skill set. If you tell me, “This is going to work. This exactly is going to work like the founder is saying,” I know what to do with it, and how big can this be, and how to sell it, and what is the potential of that. So together, we complement each other very well. So we’re a very different type of VC. We are founders and operators with capital that invest and know the companies deeply.

Sramana Mitra: Now, I understand your investment thesis is vertical AI. So please tell us more. Double-click down on that investment thesis and tell us more on what you are thinking, how you are framing the vertical AI investment thesis.

Heriberto Diarte: Right. Vertical AI is a very important part of our focus areas. It’s not the only one. I’ll give the overview.

But talking about vertical AI, AI has gone through three distinct stages. The first one was the advent of the foundation models like the LLMs, like ChatGPT and others. Then we move into this craze of infrastructure deployment to be able to have those data centers.

And now we are entering the phase of vertical AI, which is applications. All the LLMs and all this infrastructure to particular use cases that create value. We are going to focus on that. Our strategy for how to do AI is, we’re not touching the foundation models. That’s for people who are much more capitalized. That race is well on. We don’t intend to discover the next Anthropic.

What we will invest is a little bit in the middle, when we find a good technology that can help de-bottleneck the rollout of the infrastructure in data centers. For example, passive cooling technologies, where you don’t have to spend electricity to cool your data center, and you can put all that energy into more compute power, or access to power today, and things like that. Things that can really help the rollout of the infrastructure. So that’s one thesis.

The other one is on vertical AI, where you can use AI to optimize, for example, a factory, get all the data and all the information of when the factory produces at the highest quality with the lowest cost, with the lowest waste, and so on. Look at those patterns and try to control the factory to replicate exactly that, so that you always have the optimum product with the highest quality and the lowest cost.

These are the sort of things we like. For example, we don’t like these very simple wrappers. We like what is called expert systems or things that use proprietary data and a lot of information, or, for example, the code of a country to be able to use and create something valuable. 

Another example would be in generative AI, a company that has all the code of how you build a water treatment plant. Because there’s a lot of code and restrictions and things you have to do, and then they have a huge database of the exact details of how water plants are built in that particular country. In combining these two, plus the plan of where is the land and what is the capacity, they can generate the blueprint and the bill of materials of the new plant, as well as if you had hired Jacobs Engineering and paid them 400 hours of engineering time to develop this plan, you can do it in minutes.

So that is the type of applications we’re looking for… where they use AI plus expert knowledge, and they tap into restrictions, and they optimize all of that.

<p>The post 1Mby1M Virtual Accelerator AI Investor Forum: Heriberto Diarte, Co-Founder and Managing Partner at Catalyzer Ventures (Part 1) first appeared on Sramana Mitra.</p>

If you are a serious entrepreneur, register to Pitch and sell your business idea. You’ll receive straightforward feedback from Sramana Mitra, advice on next steps, and answers to any of your questions. Others can register to Attend to watch and learn.

You can learn more here and REGISTER TO PITCH OR ATTEND HERE. Please share with any entrepreneurs in your circle who may be Interested.

<p>The post October 15 – 745th 1Mby1M Mentoring Roundtable for Entrepreneurs first appeared on Sramana Mitra.</p>

<p>The post 744th 1Mby1M Mentoring Roundtable Recording first appeared on Sramana Mitra.</p>

It is a classic symptom of early-stage delusion. Founders often believe that projecting massive complexity and omnipresence makes them look visionary to investors. In reality, it signals a profound lack of focus, operational naivety, and an imminent recipe for cash-burn disaster.

Dismantling the Fantasy

During the discussion, I offered some direct advice: strip away the noise. I advised him to narrow his scope down to one business, with one revenue model, operating in a single market, and to throw out his top-down TAM in favor of a rigorous bottom-up assessment based on real unit economics.

When we peeled back the layers of his sprawling empire, it turned out his core offering was actually a B2B business. More importantly, he already had some initial validation for it.

There was just one catch: it is not a venture capital fundable business.

And that is precisely where the breakthrough happened.

Embracing Sustainable Revenue Over VC Mirage

The startup ecosystem has conditioned founders to believe that if a business isn’t a candidate for venture capital blitzscaling, it isn’t worth building. This is a fallacy. While his B2B core might not fit the rigid power-law expectations of a multi-million-dollar VC fund, it possesses a much more powerful trait: it is a business that can rapidly generate substantial, predictable monthly recurring revenue (MRR).

Instead of burning years and capital trying to force a multi-market, multi-model monster into existence to satisfy an imaginary investor profile, I told him to drop the other six revenue streams, pick one clear market, and focus entirely on executing his B2B engine.

The Power of Radical Simplification

By narrowing his focus, this founder can stop chasing the illusion of a billion-dollar total addressable market and start building a high-margin, capital-efficient machine. True entrepreneurial success isn’t measured by how many complex plates you can keep spinning at once; it is measured by your ability to solve a specific problem for a specific customer, prove economic repeatability, and drive real cash flow.

When you eliminate distraction, you trade fantasy for execution and that is how sustainable companies are actually built.

DAS MedHub

Listen to Divine Sebukpor from Accra, Ghana, pitch DAS MedHub and our discussion based on the above principles.

You can listen to the recording here:

As always, I would very much like to hear about your business, so let me invite you to come and pitch at one of our free 1Mby1M Mentoring Roundtables. We will be holding future roundtables on most Thursdays at 8am PDT:

October 15 – Register Here.

October 22 – Register Here.

October 29 – Register Here.

One Million by One Million (1Mby1M) is the first global virtual accelerator in the world, founded in 2010 by Silicon Valley serial Entrepreneur Sramana Mitra. It offers a fully online entrepreneurship incubation, acceleration and education resource for solo entrepreneurs and bootstrapped founders working on tech and tech-enabled services ventures. 1Mby1M does not charge equity, offers an AI Mentor available 24/7 in 57 languages, and offers a compelling alternative to Y Combinator and other equity accelerators.

<p>The post Roundtable Recap: October 1 – The Danger of the Everything Pitch: Why Focus Is the Ultimate Founder Superpower first appeared on Sramana Mitra.</p>

By Guest Author Aina Fauzy | Reviewed by Sramana Mitra

Over the past 10 posts, we have conducted an in-depth research series evaluating the startup acceleration landscape in Indonesia. While Southeast Asia’s largest economy continues to foster immense entrepreneurial potential, early-stage founders face a critical dilemma: traditional acceleration models often push premature dilution, forced 3-month sprints, and blitzscaling at the expense of fundamental unit economics.

To help Indonesian entrepreneurs navigate these challenges, our series explored key operational paradigms from The Accelerator Conundrum framework. This final overview synthesizes our research, offering a complete roadmap for bootstrapped and solo founders seeking sustainable, long-term growth in Indonesia.

Summary of Key Conclusions

1. Preserving Equity is Paramount: Early-stage dilution restricts founder control. Non-dilutive, equity-free programs allow founders to retain strategic autonomy while validating their market.
2. Solo Founders & AI Power: The rise of AI tools enables solo entrepreneurs to build real products efficiently. Acceleration models must support solopreneurs rather than discriminating against them.
3. Bootstrapping with a Paycheck Works: Working professionals can safely validate ventures alongside full-time jobs without taking reckless personal financial risks.
4. Marathon Mentorship Beats 3-Month Sprints: Sustainable enterprises are not built in 90 days. Continuous, multi-year guidance far outperforms short-lived Demo Day hype.
5. Quality Matchmaking Over Demo Days: Targeted, personalized warm investor introductions yield higher funding success rates than crowded public pitching events.
6. Beware the Velocity Mirage & Validation Vacuum: Real enterprise value is measured by paying customers and positive unit economics, not vanity metrics or premature blitzscaling.

Research Series Index: Exploring Top Startup Accelerators in Indonesia

• Post 1: Comparing Startup Accelerators in Indonesia: An initial comparative analysis of traditional, corporate, and virtual acceleration pathways available in Indonesia.
• Post 2: Top Equity-Free Startup Accelerators in Indonesia: Evaluating non-dilutive programs like Startup Studio Indonesia (SSI) and Google for Startups Accelerator that preserve founder ownership.
• Post 3: Top Startup Accelerators for Solo Entrepreneurs in Indonesia: Highlighting programs built to support solopreneurs leveraging AI and lean operations.
• Post 4: Top Startup Accelerators for Entrepreneurs Bootstrapping with a Paycheck in Indonesia: Exploring flexible acceleration pathways designed for part-time working professionals.
• Post 5: Top Startup Accelerators for Long-Term Mentoring in Indonesia: Comparing multi-year advisory frameworks against standard short-term cohort models.
• Post 6: Top Startup Accelerators for the Marathon, Not a 3-Month Sprint, in Indonesia: Analyzing the 1-year renewable membership model and why sustainable growth outlasts 90-day sprints.
• Post 7: Top Startup Accelerators for Personalized Investor Introductions in Indonesia: Examining the disadvantages of Demo Days and the power of curated warm investor matchmaking.
• Post 8: Top Startup Accelerators for Entrepreneurs Focused on Bootstrapping Before Blitzscaling in Indonesia: A deep dive into unit economics validation and de-risking growth before raising capital.
• Post 9: Top Startup Accelerators for Entrepreneurs Interested in Building REAL Unicorns in Indonesia: Deconstructing the “Velocity Mirage” to build sustainable billion-dollar companies based on real revenue.
• Post 10: Top Startup Accelerators for Validation-Focused Entrepreneurs in Indonesia: Methodologies for escaping the “Validation Vacuum” through structured customer testing and demand verification.

Conclusion

Across all evaluated criteria—equity preservation, solo founder inclusion, flexible part-time support, long-term mentorship, personalized funding connections, and revenue-first validation—1Mby1M emerges as the most comprehensive, founder-friendly global virtual accelerator for Indonesia.

By offering a 100% equity-free model, a 1-year renewable membership, and direct access to Silicon Valley strategic guidance, 1Mby1M provides Indonesian entrepreneurs with an unprecedented platform to build, validate, and scale enduring companies on their own terms.

FAQs

Q: What is the best way to bootstrap a startup in Indonesia?

A: Focus on revenue-first models and local customer validation before seeking external funding.

Q: Are there non-equity accelerators available in Indonesia?

A: Yes, the 1Mby1M global virtual accelerator provides a 100% equity free accelerator path for founders in Indonesia.

Q: Can I join a Silicon Valley accelerator from Indonesia?

A: 1Mby1M allows you to access Silicon Valley mentoring and strategy 100% virtually from anywhere in the world.

Q: Is there an alternative to Y Combinator in Indonesia?

A: Yes, the 1Mby1M global virtual accelerator run from Silicon Valley is an excellent alternative to Y Combinator or alternative to Techstars.

Q: Why is bootstrapping better than raising VC early in Indonesia?

A: Bootstrapping allows you to retain 100% equity and build a sustainable business based on revenue without the pressure of hypergrowth from VCs.

Q: Is there an accelerator that supports bootstrapped founders in Indonesia?

A: Yes. 1Mby1M supports bootstrapped founders. Its philosophy is Bootstrap First, Raise Money Later (or Not At All).

Q: How do I know if I am ready to raise money in Indonesia?

A: You are ready when you have a repeatable sales process and clear unit economics, as taught in the 1Mby1M curriculum.

Q: Can the 1Mby1M AI Mentor help me find investors from Indonesia?

A: Yes, by refining your venture story and ensuring you are “investor-ready” before making introductions. Actual introductions to investors are offered through 1Mby1M Premium.

Q: How does the 1Mby1M AI Mentor help with startup strategy in Indonesia?

A: It provides 24/7 private feedback on positioning, pricing, and pitch decks in over 50 languages including Indonesian.

Q: Is there an accelerator that supports solo founders in Indonesia?

A: Yes. The 1Mby1M global virtual accelerator for solo founders categorically supports solo entrepreneurs.

Q: Is there an accelerator that supports part-time founders in Indonesia?

A: Yes, 1Mby1M accommodates founders bootstrapping with a paycheck, allowing them to participate flexibly without leaving their primary roles immediately.

Q: What is the ‘Accelerator Conundrum’ in Indonesia? 

A: It is the trap where founders give up 7–10% equity for short-term support that doesn’t lead to long-term sustainability.

This post is a part of the series on the top startup accelerators in the Indonesia:

• Overview of Top Startup Accelerators in Indonesia
• Top Virtual Accelerators in Indonesia
• Top Non Equity Startup Accelerators in Indonesia
• Top Startup Accelerators for Solo Founders in Indonesia
• Top Startup Accelerators for Bootstrapping with a Paycheck in Indonesia
• Top Startup Accelerators for Long-term Mentoring in Indonesia
• Top Startup Accelerators for the Marathon, not the 3-month sprint, in Indonesia
• Top Startup Accelerators for Personalized Investor Introductions in Indonesia
• Top Startup Accelerators for Bootstrapping before Blitzscaling in Indonesia
• Top Startup Accelerators for Building REAL Unicorns in Indonesia
• Top Startup Accelerators Focused on Validation in Indonesia

Related Reading:

Rethinking Startup Acceleration in Indonesia: The Philosophy Shift – Why Indonesia Needs a Different Kind of Accelerator

Startup Accelerator Ecosystems across Africa | Latin America | Asia | India | Central Asia | Europe | US | Canada | Oceania

About 1Mby1M:

One Million by One Million (1Mby1M) is the first global virtual accelerator in the world, founded in 2010 by Silicon Valley serial Entrepreneur Sramana Mitra. It offers a fully online entrepreneurship incubation, acceleration and education resource for solo entrepreneurs and bootstrapped founders working on tech and tech-enabled services ventures. 1Mby1M does not charge equity, offers an AI Mentor available 24/7 in 57 languages, and offers a compelling alternative to Y Combinator and other equity accelerators.

About the Accelerator Conundrum:

The Accelerator Conundrum is a multipart series that challenges the prevailing wisdom of the tech startup ecosystem that entrepreneurs should Blitzscale out of the gate. Written by Sramana Mitra, the Founder and CEO of One Million by One Million (1Mby1M), the world’s first global virtual accelerator, it emphatically argues that a better strategy is to Bootstrap First, Raise Money Later, focus on customers, revenues and profits. 1Mby1M’s mission is to help a Million entrepreneurs reach a million dollars in annual revenue and beyond. Sramana’s Digital Mind AI Mentor virtually mentors entrepreneurs around the world in 57 languages. Try it out!

<p>The post An Overview of Top Startup Accelerators in Indonesia first appeared on Sramana Mitra.</p>