What's 🔥 in Enterprise IT/VC #172

Still just the second inning for enterprise tech

We co-hosted a CIO/CTO dinner in NYC with our friends at FirstMark Capital. The topic was the future of development and data in the enterprise. It was amazing to have such forward thinking IT leaders from some of the top investment banks, insurance, and retail companies in attendance, all actively engaged and sharing what was top of mind. Lots of discussions on APIs, just type in "developer.nameyourfortune500.com” and you’ll see, developer productivity, cloud configuration, and still trying to unlock value of all of the data infrastructure investment already made.

Despite the fact that now everyone is an “enterprise investor” I truly believe we have an amazing opportunity still ahead of us as the move to cloud and agile is still in the second inning for many of these firms. Net net, the world has changed and many of the progressive tech leaders at the Fortune 500 are willing to partner with earlier and earlier stage companies, the future is bright for sure, put on your 😎

Next weekend, I’ll be in SF pre-RSA for a retreat with portfolio company Hypr and several Fortune 500 CISOs to learn more about their pain points and areas of investment for 2020.

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Scaling Startups

  1. Mike Volpi from Index Ventures nails it on what a board/CEO relationship should be like - find balance to be supportive but also be transparent and candid about state of the company. I remember Jerry Colonna once told me that “boards are never responsible for the success of a company, but certainly have been for the demise.” For all founders and investors, I encourage you to read this article to learn to find balance in your approach working with the board. There are so many nuances and I find, personally, that I’m only just scratching the surface of how I can be most effective as a board member.

  2. If you don’t get funded right off the bat, remember this:

  3. Great to see the larger tech cos embracing more remote work and the challenges of scaling in San Francisco. We all know Haschicorp and Gitlab are fully or mostly distributed and now Twitter’s Jack Dorsey:

    The tech talent in the Bay Area is undeniable. But with cloud infrastructure, faster internet speeds in more remote areas and a new generation of communications and collaboration tools, more companies are finding it advantageous to hire elsewhere. Online lender LendingClub slashed its San Francisco workforce last year and moved jobs to Utah, and Stripe announced in May that it was hiring over 100 remote engineers in 2019.

    One of the unspoken downsides of scaling startups remotely in that the worst of times, i.e., acquihires, etc, many large companies will force remote teams to move to one location. As larger acquirers embrace this remote first movement, this should make it easier for acquihires in the future.


Enterprise Tech

  1. Martin Casado from Andreessen Horowitz lays out what GTM metrics he likes to see at board meetings. I encourage you to click through and read the whole thread.

  2. Lest we forget that every Fortune 500 is a tech company - great read from CNBC on how Goldman Sachs is going head to head with Silicon Valley for top tech talent - already 10,000 developer, yes, 10,000 at Goldman, which makes up 1/4 of their workforce.

  3. More on the above as Hired released it’s State of Software Engineers

    Demand for frontend and backend engineers grew steadily by 17%, which shows that all companies — not just Silicon Valley tech giants — are evolving into being tech companies.

    and also why the need for distributed teams as highlighted above

    While pay for most Americans has grown between 3 - 3.5%, top engineering roles in San Francisco and New York have seen salaries grow at double that rate: 6% and 7%, respectively.

  4. Twilio board deck from 10 years ago shared by founder/CEO Jeff Lawson!


Markets

  1. another Chetanism

  2. Wow, Shopify

    For the fourth quarter, Shopify reported earnings of 43 cents per share, exceeding consensus estimates of 24 cents per share. Revenue jumped 47% year over year to $505.2 million, which was higher than analysts’ estimated $482.1 million.

    Shopify’s 2020 full-year outlook topped analysts’ expectations. For the year, Shopify said it expects revenue to range from $2.13 billion to $2.16 billion, compared with consensus estimates of $2.11 billion.

    The company reported higher holiday sales in its results. Shopify said it saw worldwide sales of over $2.9 billion between Black Friday and Cyber Monday, up about 61% from the same period in 2018.

  3. Don’t forget the SMB!

What's 🔥 in Enterprise IT/VC #171

who knew you could make money selling to developers?🤷🏼‍♂️

I’m back from a few days in Europe, and the energy and excitement for enterprise startups was simply awesome. Being there partly reminded me of NYC enterprise just 5 years ago as now there a number of high profile companies like Dataiku, Datadog, and UIPath, plenty of local funding, and VCs from Silicon Valley moving earlier and earlier in funding stage. Like NYC, it’s still hard to find key, super experienced hires in roles like product marketing and management and over time, you’ll see more and more European companies building their GTM motion in the states.

In other news, lots of great advice for scaling startups along with a number of articles on developer tooling and infrastructure.

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Scaling Startups

  1. 👇🏼💯

  2. Sales math as startups scale - click on for full thread and comments…

  3. Anna Miura-Ko nails it on her post about what true product market fit is, a minimum viable company.

  4. Mathilde Collin from Front (a boldstart portfolio co) shares her Series C deck for round led by enterprise CEOs from Qualtrics, Zoom, Atlassian with Sequoia


Enterprise Tech

  1. With so many open source projects and tech, it’s quite hard for a back end developer to keep track - take a look at this roadmap for the backend developer on everything they need to know which means they will always be learning and barely shipping 😃

    🔎Julia Evans🔍@b0rk
    I liked this backend developer roadmap by @kamranahmedse
    roadmap.sh/backend -- it's impossible to build a list like this that everyone agrees on but it's a good starting point
  2. My colleague @ShomikGhosh21 shares a must read on dev tooling market

  3. Phil Venables (ex-CISO Goldman Sachs, current board member) shares his thoughts on how startups can cut through the noise with so many vendors banging on a CISO/CIO’s door - what I ❤️ most is this from him

  4. On the application side, WSJ VC Pro highlights the VC search for the next Zoom or Slack - great to have portfolio cos Superhuman and Front covered! To be clear the barriers to entry are much lower for these next gen companies and having founders who understand the GTM motion becomes super important.

  5. Tomasz Tunguz writes about Cloud Prem. This is what Replicated (a portfolio co) calls Modern On-Prem. It’s great that Tomasz lays this out as many in Silicon Valley believe the cloud is the only way to go but those who are close to the Fortune 500 customers knows that it will still take another 10 years or more for this full transition and for some industries it may never happen.

  6. All about the JAMstack - Javascript, APIs, Markup - what many believe is the future of web development. Great post on how Cloudflare workers is enabling this - “workers has given JavaScript developers a platform to enable building high-performance applications with automatic scaling.” 🎩 @ShomikGhosh21

  7. Snowflake is now worth over $12 billion with new investment from Dragoneer and Salesforce - as for why are they worth so much…

    He said Snowflake has probably taken 2,500 customers from Amazon Web Services’ Redshift data warehousing service. They include Adobe, Instacart, Deliveroo and Strava, he said.

    “We wouldn’t even exist as a company if we didn’t do that every day of the week,” Slootman said. AWS declined to comment.

  8. Hashicorp in infrastructure automation space at $100mm run rate as end of last year

    This success has lead to a $100 million annual run rate as of last year, according to the company, and McJannet predicts HashiCorp will continue to scale up quickly to meet demand. "We're now at 900 plus employees and will hire another 500 at least this year, because the market is pulling us so quickly," he said.

  9. No comment needed 🤖


Markets

  1. Wow - devs just getting started - $1 billion revenue mark for Twilio

    Furthermore…

  2. Google Cloud revenue finally revealed (chart from the Information) - like Microsoft, it includes application revenue from GSuite while Microsoft has Office 365

What's 🔥 in Enterprise IT/VC #170

🌥️🌥️🌥️📈

✈️ to Europe this upcoming week to catch up with portfolio companies and to spend more time in the ecosystem. As a trend, I’m seeing more and more interesting companies come from Europe and frankly I ❤️ companies where engineering can scale in less competitive markets while another co-founder moves to the states to ramp up GTM.

Top of mind this past week was cloud growth from AWS and Azure. AWS revenue grew 34% in the quarter over a year ago and ended at $9.95 billion. Azure area 62% to $12.5 billion but that also includes office, etc. What’s key is the growth rate of Azure. While it’s on a smaller base, I do hear the larger enterprises migrating more and more in that direction. Finally IBM’s long time CEO, Ginny Rometty, steps down as Arvind Krishna, head of cloud becomes CEO. From my conversations with IBM, focus in on open stack and multi-cloud, winning back developers, and leveraging Red Hat’s incredible presence. We shall see!

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Scaling Startups

  1. Speed of deal closing for First Round compressing from 90 days to 9. While I get the competitive market, before entering a long term marriage, both founders and investors need to ensure meaningful time spent with one another.

  2. From my friend Bucky Moore at Kleiner. 💯👇🏼

  3. Being in NYC, the more this message spreads, the better as Mark Zuckerberg says he wouldn’t start a new company in Silicon Valley.

    "I think the world is in a different place now," Zuckerberg said. "I think the infrastructure exists for people to do stuff like this in more places."

    Furthermore, he said that it's not only easier to go outside Silicon Valley, but that there are now upsides to doing so.

    "There's a lot of advantages to building a company that is not in such a monoculture," he said, adding that "Silicon Valley being an all-tech town there's not as much diversity of how people think about things as you'd like, in a lot of ways." 


Enterprise Tech

  1. What’s next in cloud revolution? Is it Managed Infrastructure as Code? Read Ohad Maislish from Env0 (full disclosure a portfolio co of boldstart) on what’s next.

  2. Okta’s Business at Work annual survey is out and under fastest growing apps interesting to see infrastructure services like Snowflake, Opsgenie and Splunk up there. Zoom has been on this list 4 years in a row.

    My colleague Shomik Ghosh breaks down further:

  3. Regarding Kevin Kwok’s post on the Arc of Collaboration, Julian Lehr has an interesting one where he believes “Instead of Slack, I believe that email – and more importantly Superhuman – will return to become the center of gravity for productivity.” In particular, “At the moment, Superhuman commands are limited to typical email actions (snooze, send later, etc), but the obvious next step, in my opinion, is to add commands that work across different apps.” His argument is Slack only notifies you but one still needs to get work done.

  4. Snyk SecDevOps (in collaboration with Puppet) report is out - one of key stats as per Guy Podjarny (founder of Snyk) - finding the balance between shifting security left and delivering software quickly is a constant struggle

  5. With respect to cloud, here’s a fun exchange I had with Jeff Richards from GGV on twitter

  6. Enterprise companies aren’t immune to layoffs either and when it comes to open source and competing with AWS and Azure it can be quite tough. Rosalie Chan covers the new focus on developer love and cloud offerings as the company had reduced its headcount in sales engineering and sales.

    DataStax builds software using Apache Cassandra, a popular open source database that was originally started at Facebook. Internally, some DataStax employees believe the company was too slow to offer versions of its software that were optimized to run on cloud platforms like Amazon Web Services or Microsoft Azure, and that it was struggling to compete with those tech titans, who offer their own database products, four sources said. 

  7. While Facebook is not an enterprise company, here is an interesting fact from it’s earnings where expenses grew 52% year over year.

    Headcount grew 26% year-over-year to 44,942, and Facebook now has over 1000 engineers working on privacy.

    Yes, 1000 engineers working on privacy - astonishing.

  8. Glad to see this is becoming a reality! From Gigabit Magazine on Snyk’s $150mm funding round

    In 2018, Ed Sim, founder of investor Boldstart Ventures, said: "Open source software powers most of the Fortune 500 applications today. Securing these open source packages during the development cycle becomes paramount, especially with the movement towards a more agile and continuous release cycle.”


Markets

  1. Microsoft crushes earnings, cloud grows to 62% to $12.5 billion in quarter

  2. AWS similarly outperforms growing at 34% on a much larger base of pure play cloud infra at $9.95 billion

  3. IBM’s CEO Ginny Rometty steps down as Arvind Krishna, head of cloud and the architect of the Red Hat acquisition step up. Multi cloud software and services will pave the way for the new IBM

    Prior to IBM adopting its hybrid multi-cloud strategy, the company had a walled-garden approach to cloud computing, largely focusing on its own services. Krishna spearheaded IBM’s shift toward hybrid, prompting the company to work with rival providers rather than compete against them, Rana said. “His openness and ability to work with everybody, from that point, this is very good for IBM.

  4. ServiceNow on a tear as well growing 35% year over year to almost $900 million of subscription revenue

What's 🔥 in Enterprise IT/VC #169

If you think venture capital is overcapitalized, think again - amazing data from Cambridge Associates

Public market stocks in the product led growth category got a huge lift as Atlassian crushed its numbers with revenue up 37% to $400mm. This shows continuing strength in bottoms up, land and expand and the power of selling to developers and small teams. Tomasz has a breakdown of best in class payback periods for SaaS stocks and no surprise that Atlassian is amongst the best. Open source got a boost as well at IBM’s Red Hat grew 24%.

If you think venture capital is overcapitalized, you should read Cambridge Associates report from my friends Maureen Austin and David Thurston, “Venture Capital Positively Disrupts Intergenerational Investing.” Their paper lays out a story to allocate up to 40% in private investments with half or 20% going to VC. Returns for the top two quartiles (pick managers wisely) has outperformed all of the benchmark equity indices. Their paper lays out more allocation to venture, opportunities for new managers, and relative size at $.34 trillion versus $85.3 trillion in global equities. ROIChristie has further breakdown on twitter.

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

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Scaling Startups

  1. Startup line is not easy and nor is it for everyone. In honor of the late Clayton Christensen, professor and author of must read The Innovator’s Dilemma, I’ve shared a seminal article on How will you measure your life” so you can have a framework and roadmap for thinking about happiness in career and home.

    One of the theories that gives great insight on the first question—how to be sure we find happiness in our careers—is from Frederick Herzberg, who asserts that the powerful motivator in our lives isn’t money; it’s the opportunity to learn, grow in responsibilities, contribute to others, and be recognized for achievements.

  2. For founders, raising more money is almost always better than less. However, think again…

  3. I call this Gitops and it’s a thing…

  4. definitive thread on what favorite tools are for distributed teams - besides right process, lots of Zoom, Slack, Google Docs


Enterprise Tech

  1. Stephen O’Grady from analyst firm RedMonk lays out a strategy to compete against AWS sharing historical examples of attacking where one is weak versus head on and then laying out where AWS is potentially weak. Does Azure have a chance - insertion point via Github and encompassing full developer experience is one that Steve lays out.

    Its developer experience has never been top of class; its success has come because of its leading services and their first-to-market nature. 

    The center of its gravity, meanwhile, is clearly post-deployment. While it’s had a presence in markets from pipelines to version control for years, AWS is known first as a deployment target. Its developer toolset is a distant second, with narrow exceptions as in its AI category.

    The strength of AWS’ product portfolio is counterintuitively also a liability in certain scenarios. Service sprawl is so acute that even hand-selected AWS customers are often not aware of the availability of new or existing AWS services.

  2. Congrats Snyk (a boldstart portfolio co) on it’s $150m raise led by Stripes Group and including Coatue and Tiger. It’s just the beginning for dev-first security, amazing product led growth with 400k developers leading to enterprise sales and 400% year over year growth

  3. Speaking of product led growth, Tomasz Tunguz shares what “Best in Class Payback Period” is for a software company in 2020. Product led growth or bottoms up seems to be key:

    Zoom is at the top with a payback period of just over 3 months. DataDog, Slack, Crowdstrike, and Twilio round out the top 5 at 7 months or less.

    Those are exceptionally efficient businesses. It bears noting that 4 of the top 5 started out as bottoms up businesses, which have grown to support enterprise customers as they've matured. Zoom, DataDog, Slack, and Twilio all share this pattern.

  4. Great data and post from Shin Kim who is Chief of Staff for Elad Gill showing us that most SaaS companies are super capital efficient at IPO

  5. Phil Venables, ex-CISO of Goldman Sachs and currently on board, shares the importance of operational resilience:

    Operational Resilience is the ability of firms and the financial system as a whole to absorb and adapt to shocks, rather than contribute to them

    In a world of interconnectedness and cloud, one can understand why looking at the business and not just the technical risks are extremely important.

  6. Congrats to Front (a boldstart portfolio co) on it’s $59m raise led by CEOs of several tech companies like Zoom, Qualtrics, Atalssian, and Okta along with Sequoia. Semil has the round up…


Markets

  1. Atlassian crushes earnings showing land and expand/product led growth can work - look at customer growth below tied to 37% revenue growth to $400mm this quarter. More from the earnings call transcript.

  2. wow, IBM and Red Hat still lives and growing

What's 🔥 in Enterprise IT/VC #168

Enterprise tech raised more than consumer for first time in five years - why?

The headline from Bloomberg says it all, “Everyone Wants a Piece of Enterprise Tech Companies: Last year enterprise tech startups raised more cash than consumer tech companies for the first time in at least five years.”

And then you have WSJ writing about Sequoia financing more enterprise software companies from it’s growth fund. Having been investing in enterprise for 24 years now, my fear radar spikes as it’s becoming way to 🔥. While I am long term bullish on enterprise IT spend and the idea that every company is a software company, I also fear when too much 💰 chases a sector as valuations go up and returns go down. 

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

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Scaling Startups

  1. Rahul (Superhuman, a portfolio co) crushed his talk at the a16z Summit this past November - really interesting how he brings in video game concepts into software, more around psychology versus gamification, sparking joy for end users

  2. VCs are just tired” says Danny Crichton from Techcrunch - while title does sound like it comes from the Onion, Danny does drive home one point - post seed, VCs are becoming more data driven as everyone has same information and harder to build long term relationships leading to these compressed and intense fundraising cycles.”

    “Ironically, the “tired” line was something I used to hear from seed investors, who constantly had to churn through dozens of under-hearted startups to find the gold. Now, I’ve heard this language more and more from later-stage VCs, where the Excel spreadsheet drives the valuation more than a relationship with a founder — and everyone can read the gridiron of SaaS metrics.”

  3. Startups should rethink what the meaning of a “launch” is - such an amazing thread…


Enterprise Tech

  1. This Gartner chart says it all - 10.5% growth for enterprise software to $503 billion

  2. Privacy of our health data is a human right - this will be a battleground to pay attention to in 2020 and will also determine some of the winners in the cloud wars. Read on for a full expose on what Google is capturing and how they are using our health data. Epic Systems, one of the largest medical records vendors, just also announced it will stop working with Google Cloud likely because of data ownership.

    On its website, Google’s cloud computing division until recently listed as a customer the large nonprofit health system Kaiser Permanente, something hospital representatives say isn’t accurate. Google removed the listing after inquiries from the Journal. 

    “We are not actively doing anything today with Google,” says Kaiser Permanente vice president Elizabeth McGlynn. “We have to be very clear about who shares our values about protecting patient privacy. Not every tech company can satisfy that standard, and a lot of them come with baggage they have earned.”

  3. Pretty awesome profile in WSJ CIO Journal on Manjit Singh, Toyota North America CIO, in how he is working with earlier stage startups and firms like boldstart where he just joined our advisory board. As a FYI, we are seeing this across the board in enterprise tech land. The pace of change is accelerating in software and it has become incredibly difficult for large enterprises to keep track of what’s happening. Combined with the fact that it’s difficult to hire the best of the best engineers means that they are looking more towards VC firms to help filter the signal from the noise.

    In the past, enterprises favored services from established vendors. “There was always some level of hesitancy about engaging with startups,” said Manjit Singh, group vice president and chief information officer of Toyota's North American unit.

    But in recent years, Toyota has become more interested in working with startups, in part because consumers are demanding that the company innovate faster than ever before. Within the past year, the company has been more willing to take bets in partnering with startups that have only landed their first or second round of funding.

  4. What happens when your application goes from monolith to microservices in terms of APM and Observability? How do you rethink this to go from tracking each service with lots of small pictures and no big picture? Ben Seligman of Lightstep nails it in this thread…also good read to understand

  5. Merci Victoria Grace from Lightspeed nails it with her market map on Workplace Collaboration Startups. Great to have 3 of our portfolio companies on there as well; Superhuman, Front, and Cycle.


Markets

  1. New Relic CTO and CRO both resigned this past week as the company cut its forecast for the year back from $600mm to $586 - $593 million. I’m sure they are feeling pressure from Datadog and others in the market.

  2. Will be interesting to see how Slack holds up as Microsoft goes on an aggressive advertising campaign starting this weekend during the NFL playoffs…

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