What's 🔥 in Enterprise IT/VC #158

Just came back from spending the week on the west coast and attended 2 great events, the Battery Open Cloud Summit and the Lightspeed Enterprise Scale event. Both had amazing speakers and when it comes to scale, building the right culture came up many times. In other news, Microsoft entered the RPA game with PowerAutomate with a end-user driven approach and Github came out with it’s state of the Octoverse report (40m devs, up 10m from 2019). Wining hearts and minds of developers to win enterprise deals will only get stronger in the years to come.

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Scaling Startups

  1. Dharmesh Thakker and the Battery team share their views on how to build a world class open cloud company. One of my faves was their 90/90/90 one when it comes to focusing on Time to Value.

  2. Euny Hong shares The Korean Secret to Happiness and Success called nunchi. It’s kind of like a Korean equivalent of EIQ and something all of us may want to understand.

    One of the first I learned was “nunchi”— literally translated, “eye-measure.” Nunchi is the art of sensing what people are thinking and feeling, and responding appropriately.

  3. Ryan Floyd from Storm Ventures breaks down why managing churn is so important for SaaS companies


Enterprise Tech

  1. Microsoft enters RPA game with low code, no code approach, renaming Microsoft Flow to Power Automate. Reminds me of how Microsoft Teams entered well after Slack had been well established. In this case, it’s behind UIPath and Automation Anywhere and others but with its huge user base of analysts, this makes a ton of sense. IMO, I’d keep a close eye on what they are doing. One of our boldstart portfolio companies, FortressIQ, is a launch partner and will help customers “automate the automation.”

  2. While numbers likely overstated, directionally this is powerful! Win ❤️and 🧠of developers and win enterprise customers.

    Matt Asay@mjasay
    Some numbers that are somewhat shocking in @github's 2019 State of the Octoverse (
    octoverse.github.com) - 40M developers (up *10M* in 2019) - 44% more developers created their first repository in 2019 than in 2018 (Accelerating innovation?) - 80% of developers outside the US*The State of the OctoverseThe State of the Octoverse celebrates a year of building across teams, time zones, and millions of merged pull requests.octoverse.github.com

  3. How to build a $100 billion SaaS company, not a $1 billion one. Excellent post by Jason Lemkin of SaaStr

    Today, there is 1 $100B+ SaaS Company, Salesforce.  Just one.  We could add older companies like Adobe, Microsoft, etc. but they aren’t pure SaaS plays.  Salesforce is the “only” $100b+ pure-play SaaS company.

    Power of customer success - 73% of revenue from installed base, expansion and upsells

  4. Thought provoking framework from Sam Lessin of Slow Ventures on the Future of Work. I like his layered approach with fundamental tech on the bottom of the stack with an importance on mapping out business processes and then measuring before automating.


Markets

Are we mad asks Ray Dalio, founder of hedge fund Bridgewater Associates? Point is money is free for those who have wealth and inaccessible for those who don’t. In addition, this money is being put into investments driving up asset prices across the board and reducing returns. Below remind you of anyone?

There is now so much money wanting to buy these dreams that in some cases venture capital investors are pushing money onto startups that don’t want more money because they already have more than enough; but the investors are threatening to harm these companies by providing enormous support to their startup competitors if they don’t take the money. This pushing of money onto investors is understandable because these investment managers, especially venture capital and private equity investment managers, now have large piles of committed and uninvested cash that they need to invest in order to meet their promises to their clients and collect their fees.

What's 🔥 in Enterprise IT/VC #157

Ed Sim's weekly readings and notes on VC, software, and scaling startups

Greetings from London. Top of news is the continued discussion here and in the states on the dichotomy between public and private enterprise valuations. Public markets seem to have much different viewpoints than private investors as companies like Slack are coming back to earth. Question is if we still have a good long run ahead or will this public market correction filter down to the private markets despite all of the growth funds chasing the largest TAMs (total addressable markets) and paying forward. I’ll be sure to keep tracking this over the upcoming newsletters.

Finally, if you like the new format or content, please share and ❤️ above!

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Scaling Startups

  1. Results from my Twitter poll. The majority chose for the seed-funded startup to focus on new product versus the other choices. Great suggestion as that is exactly what Forestry.io chose to do when launching TinaCMS with great fanfare to the open source and developer community. It’s not an easy decision to make as it can be “betting the company” on what’s next but for the founders it was quite clear.

  2. In fun and wise department, Andy Weissman from Union Square Ventures shares “Everything about Venture Capital…you can learn from music lyrics”

  3. Well said - many first time founders I know believe hustle and doing everything is the best way to grow and don’t focus enough on bringing the best talent and learning to let go.

    4. Rust and Elixir programming languages on the rise. Rust, in particular, is one to pay attention to with “by its uptake within the infrastructure and networking data plane space — for example, Habitat and Linkerd 2.0. The language is also emerging as a natural partner for WebAssembly, which is helping drive awareness. In addition we note that Facebook has chosen to implement its Libra cryptocurrency using Rust.”

    5. More on Gartner Top 10 trends from Peter High of Metis Strategy


Enterprise Tech

  1. Rory O’Driscoll from Scale Venture Partners breaks down historical enterprise cloud multiples and why they aren’t sustainable moving forward. He also outlines 3 winning strategies for startups.

    Solid thinking from Rory and just provides more reasoning about valuation at all time highs. However as an investor, where we get paid as VCs is to go after incumbents. After 10-15 years of domination, these public cos have technical debt and can't keep innovating at the current pace. Companies like Kustomer in our portfolio are taking this exact approach going after Zendesk and Service Cloud. I also believe he’s missing a huge growth opportunity in the developer first and bottom up markets and overplaying the role of AI. AI is table stakes.

  2. Even 🦄 need to focus on spend and getting to profitability. Daniel Dines, founder and CEO of UIPath, pens an open letter about why the company laid off 10% of staff. Once again, this points back to the ever important balance between growth and spend vs. growth at all costs.

    “However, growth alone is not the sole objective of a great company. Through the waves of our recent hiring, we have worried that we could become less agile and responsive to customers. There is nothing more important than the success of each and every customer and partner. Success we know is enabling and ensuring our customers can rapidly scale their RPA operations and deliver real, tangible business outcomes. We are 100% committed to this goal.”

  3. Congrats to IOpipe (a portfolio co), one of the leaders in serverless monitoring which was just purchased by New Relic this week. Here’s the news from Techcrunch and New Relic. Bigger vision is to help modern software teams build better software and near term it’s about the increased growth of serverless at companies like Morningstar and others.


Markets

  1. Twilio stock down 17% after beating revenue targets with $295.1mm but with net expansion lower than expected at 132% vs expectations of 138%.

  2. Shopify hits 1 million merchants supported - insane numbers and stats from Tobi Lutke - $183 billion contributed in global economic activity from Shopify merchants with Shopify merchant growth of 59% vs 22% for industry

What's 🔥 in Enterprise IT/VC #156

Ed Sim's weekly readings and notes on VC, software, and scaling startups

Trying a new format with publishing platform Substack. Given how more and more of my time is spent collating news and thoughts from tweets, this provides a more flexible platform for sharing and conversing.

So much this week has been written about WeWork and the WeMess. All I can say is, no, the sky is not falling for everyone, especially enterprise tech. I won’t go into the details of WeWork, but I do have one concern. The enterprise market has become too 🔥 and private multiples are on the super high end of the range making me wonder how long this can and will last. On the flip side, the replatforming of IT is so massive that I strongly believe there is lots more market share to capture.

On the sad side, RIP Don Valentine, founder of Sequoia Capital. He was a legend and inspired so many in the tech community: “The key to making great investments is to assume that the past is wrong, and to do something that’s not part of the past, to do something entirely differently.”

Finally, if you like the new format or content, please share and ❤️ above!

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Scaling Startups

  1. from Christopher McQuarrie, screenwriter, producer of Mission Impossible, Edge of Tomorrow, Top Gun - so applicable to founders, click to read the whole thread!

  2. Nuggets of wisdom from memos written for internal audiences. Sriram Krishnan shares some of the best he’s collected over the years from Bill Gates (Internet Tidal Wave) to Jeff Raikes to Warren Buffet on how to value Microsoft. Here’s our first check memo/investment for Superhuman.

  3. 👇🏼💯


Enterprise

  1. Europe has some amazing enterprise tech companies as summarized by Accel in its 2019 Euroscape. Excited to have boldstart portfolio cos Snyk, BigID, and Front on the list. We’ve always viewed NYC as a great bridge between Europe/Israel and the west coast. Of note, more SaaS companies valued above $5 billion and time to $100mm ARR faster and faster.

  1. Gartner IT Symposium - Top 10 Tech Trends sounds like Gartner is trying way too hard! What is hyperautomation, multiexperience, deomcrotization of expertise and practical blockchain? Sounds like ridiculous buzzwords to me - more here.

  2. RPA 🔥 and not so 🔥 - Instabase raised at $1 billion valuation while UIPath fired 400. IMO, UIPath is absolutely crushing it and this is standard par for course as they overhired sales and churning through less productive folks and pruning for profitability. All in all, market is growing super fast and I wouldn’t be overly concerned on the downsizing of UIPath. On Instabase, it certainly has a huge vision and positions as much more intelligent than existing solutions. And please please, don’t compare UIPath to WeWork. Reminds me of my prediction from end of year and being sick of the news sensationalizing stories.

  3. Every Fortune 500 is a tech co - Nike hires ServiceNow CEO as its new CEO

    What Donahoe does understand is technology, something Nike has been investing in heavily. Last year it acquired the data-analytics firm Zodiac. This year it bought Celect, a company specializing in predictive analytics. They’re part of Nike’s strategy of using customer data to be “more personal at scale,” as Parker has previously put it.

  4. UI matters even for infrastructure companies

  5. Ever heard of chaos engineering? It’s the idea of injecting failure in software systems to see what breaks, to learn more about unknown unknowns and popularized by Netflix. In laymen’s terms, it’s not that dissimilar from getting a flu vaccine. It’s building momentum in the dev ops and SRE world and Nora Jones (Slack, Netflix) lays out what you need before you run a chaos experiment.


Markets

  1. Next twelve months multiples over time - coming back to earth

  2. 💯 and according to Mike D. Kail that’s less than what Softbank invested in WeWork

  3. Venture funding slowed in Q3 according to PWC and CB Insights Money Tree report

  4. Big Idea - $278mm of funding for Pensado Systems with Cisco’s John Chambers as Chairman

    Pensando's execs say they are taking on cloud giant Amazon Web Services with this tech by helping AWS's competitors make their clouds faster for the next wave of apps. But they also mentioned another type of competitor in their press release: "eliminating multiple legacy appliances."

What's Hot in Enterprise IT/VC - Issue #155

Trying a new format with new publishing platform Substack. Given how more and more of my time is spent sharing news and thoughts from tweets, this provides a more flexible platform for sharing and conversing. Hit ❤️above if you like this format and style and thanks for subscribing.

Scaling Startups

Is Amazon Unstoppable from the New Yorker

Amazon is special not because of any asset or technology but because of its culture—its Leadership Principles and internal habits. Bezos refers to the company’s management style as Day One Thinking: a willingness to treat every morning as if it were the first day of business, to constantly reëxamine even the most closely held beliefs.

Ben Horowitz from a16z shares why effective CEOs run towards their fear

New approach to designing business applications - must listen from Rahul Vohra (Superhuman, a boldstart portfolio co) on why he creates software to spark joy


Enterprise Tech

🤖Big week in automation world as UIPath hosts first big user conference and unveils vision for automation as an application, for all business users in an enterprise

💵What is the new capitalism? Important in today’s day and age not to maximize for just profits. Read an excerpt from Marc Benioff’s new book on how a “company’s values create value.”

“I would say that capitalism, as we know it, is dead. And that businesses have to move to a new capitalism: a more equal, fair, and sustainable way of doing business—one that values all stakeholders as well as shareholders. … But the new capitalism is one where we value all of our stakeholders: our customers and our employees, our public schools, our planet, as well as our shareholders. And going forward, this stakeholder return is as important as the shareholder return.”

👩🏼‍💼Why I love enterprise startups! Nicely said from Chetan at Benchmark

🌥️Cloud is the rage but still 65% of enterprise workloads will be in private data centers says McKinsey in a 2018 survey.

💻Low Code No Code has been hot lately and here’s my breakout on the 3 different target audiences and why one size does not fit all. Click tweetstorm for more.

Recap of serverless conference in NYC - IMO, this has not caught on in the enterprise as much as we thought a few years ago

JAMstack conference recap by Astasia Myers at Redpoint

👮🏼‍♂️Former CISO of Goldman Sachs Phil Venables tweetstorm on what risk management really is.


Markets

Microsoft acquisition recap for 2019 - 20 deals and $9.1 billion of value headlined by Github

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What's Hot in Enterprise IT/VC - Issue #154

This week feels a bit like Chicken Little “The Sky is Falling” as headlines like this “A Hard Lesson in Silicon Valley: Profits Matter” have been reverberating in the twitter echochamber. My thoughts having been in this for over 20 years is let’s not be sensationalist but use common sense! Yes, businesses need high gross margins and for those readers here, enterprise software should cover that. Also nothing is ever so good or so bad - ignore the headlines and keep building product and selling product. More below…

Scaling Startups

Ed Sim

@edsim

Founders, keep ur heads down + keep building -why is everything always either so great or terrible? As I said end of 2018, 2019 is all about balanced growth vs growth at all costs https://t.co/ZWBmYVVtA6 vs. A Hard Lesson in Silicon Valley: Profits Matter https://t.co/86k6OhjMis https://t.co/Pf5qsGsDi8

8:43 AM - 9 Oct 2019

Priceless advice from friend Tom Mendoza (Chairman NetApp) on Richard Bliss LinkedIn (video interview here) - “Tom pointed out there are two types of salespeople…those who sell some stuff to a lot of people and those who sell a lot of stuff to a few people.

Selling in the Enterprise is the second category. It is where Tom built his career and he identifies that it is the relationships built over time that make a salesperson effective.”

Marc Benioff (Salesforce) shares The Lesson I Learned from Steve Jobs

inspirational…“Steve helped me understand that no great innovation in business ever happens in a vacuum. They’re all built on the backs of hundreds of smaller breakthroughs and insights—which can come from literally anywhere. AppExchange now has more than 5,000 apps, ranging from sales engagement and project management tools to collaboration aids. Building an ecosystem is about acknowledging that the next game-changing innovation may come from a brilliant technologist and mentor based in Silicon Valley, or it may come from a novice programmer based halfway around the world. A company seeking to achieve true scale needs to seek innovation beyond its own four walls and tap into the entire universe of knowledge and creativity out there.”

www.wsj.comShare

Ed Sim

@edsim

Reimagining enterprise is hard esp. when just an idea, try this hack, work backwards, show a mockup of dashboard or product, value is much clearer, u can then discuss what’s under hood, 4 investors + customers, worked well 4 @pchowdhry @fortressiq @rahulvohra @Superhuman on day 1

8:40 AM - 12 Oct 2019

Enterprise Tech

Open Source: From Community to Commercialization

great overview of Open Source from Peter Levine at Andreessen Horowitz, how to turn projects into businesses - “one common pitfall that I want to note is that sometimes an OSS product can be too good. The product-market fit may be phenomenally good, such that there is no need for value-market fit, meaning there is no natural extension to drive revenue. As a result, while you are driving organic adoption, you and your community should consider carefully what you may expect to commercialize in the future.”

a16z.comShare

Ditch Chef, Puppet, Splunk and Snyk for GitLab?

the age old philosophical debate of all-in-one platform vs. best of breed, my biased thought (investor in Snyk) is today’s world of API and integrations is so much easier to have best of breed

www.theregister.co.ukShare

There's an Automation Crisis Underway Right Now, It's Just Mostly Invisible

it’s important to acknowledge that with automation jobs will go away - Instead, automation increases the likelihood that workers will be driven away from their previous jobs at the companies—whether they’re fired, or moved to less rewarding tasks, or quit—and causes a long-term loss of wages for the employee.

gizmodo.comShare

The secret to HashiCorp's "overnight" DevOps success

Hashi was far from an overnight success - great read on how it cracked the code on what it takes to build great DevOps tooling

www.techrepublic.comShare

Markets

SAP's New CEOs Must Keep Chairman and Activist Investor Happy

Bill McDermott out and co-CEOs Christian Klein and Jennifer Morgan are in - there will be more SaaS acquisitions to come from SAP - It’s time for SAP to capitalize on its acquisitions and prove to clients it’s got its cloud strategy together.

www.bloomberg.comShare

By Ed Sim

Ed Sim's weekly readings and notes on VC, software, and scaling startups - #enterprise #seed #DeveloperFirst #IntelligentAutomation #DataInfra #CloudNative #Cybersecurity

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