Wow, what a week. Top of mind for everyone personally is the Coronavirus. I hope all of my readers are first and foremost healthy. While I’m no expert on this, I have been through a few bubbles in my 24 years as a VC, and while the sky is not falling, I do believe it’s a great time to rethink your models for the year.
I shared my two cents for enterprise software startups on Thursday morning so please click through the thread.
Sequoia Capital who has way more reach and influence than I shared their thoughts late Thursday as well. Bottom line, we don’t know where this will go but it is time to relook at your whole business, you likely won’t hit Q1, and there will be longer lasting ramifications down the line - i.e., events canceled so no leads for top down sales models, etc. If there is ever a time to speed up product development to go self service or remote install for your enterprise offering, now is the time. Onsite POCS, high friction sales are slowing.
Final point, if there is a time to start a new company, now is it. Keeping your heads down for the next 6-12 months, building product and you’ll be ready for long term. While the short term impact of Coronavirus is unknown, Douglas Merritt, CEO of Splunk, believes digital usage will only go up and if this is new normal, then there will be even more opportunity for infrastructure, keeping lights, on, etc.
As always, please share and retweet.
Martin Casado has been pumping out some great content lately and his reflections on “Bringing in an External CEO” is a must read for technical founders thinking about their future. There are so many nuances to the question and timing is also part of it.
I like to tell most founders after your first couple sales hires, bring in someone on the customer success side as happy customers become the lifeblood of your business. To that end Brian LaFaille has created the Customer Success Field Guide sharing his lessons from building the CS department of Looker to support over 2k enterprise customers with over $200mm in ARR. I suggest reading on to learn from one of the best.
Remote work is top of mind for everyone and luckily we’ve been investing in fully distributed companies for the last 5 years. Gary Poster who is VP Eng at Manifold, one of our boldstart portfolio cos, shares some of the lessons learned from Heroku and now Manifold on how to build a remote first culture and operate at high efficiency. Listen in on “What's it like to see Remote Work from the very beginning?” Also I’d read Sid Sibrandji from Gitlab book guide to Remote work.
What’s in store for cybersecurity in 2020? Read Phil Venables (ex-CISO Goldman Sachs and current board member) views. Number 1 on his list is incorporating as early as possible in the design phase - so glad everyone is pushing this now as always better to catch earlier than after in production - also great news for portfolio co Snyk
Software reliability and security. Security goals should be encoded in software, made available to developers as APIs, libraries, toolkits, or design patterns. This should be pushed as early in the design lifecycle as possible.
Honeywell comes out of nowhere saying “it will soon launch the world’s most powerful quantum computer” using trapped ions and 100% agree on fact of quit quality vs. total number
Khan, whose company provides software tools for quantum computing and was one of the first to work with Honeywell on this project, also noted that the focus on the ion trap is giving Honeywell a bit of an advantage. “I think that the choice of the ion trap approach by Honeywell is a reflection of a very deliberate focus on the quality of qubit rather than the number of qubits, which I think is fairly sophisticated,” he said. “Until recently, the headline was always growth, the number of qubits running.”
👇🏼 💯 - we’ve just invested in companies in London, Paris, Germany, Tel Aviv - all enterprise and looking to tap into our 73 Fortune 500 companies
So much can go wrong with high scale distributed systems - Robinhood was down on one of the biggest drops in stock market history and customers could not trade. This is why SRE and incident analysis is so 🔥 these days - every second down is revenue and customer happiness. If interested in this area, I suggest checking out the Learning from Incidents community.
Pricing a product or service is definitely an art. Manifold has a great post related to dev pricing with the key theme being don’t race to the bottom.
In short, some developers will complain all day long about the prices you charge. But they'll do that no matter what your pricing structure is. Some developers even complain when a product is free. Don't let the fear that you've set prices too high get in the way of doing the things that bring true value to your product.
As you know I’m a big believer in email with investments in Superhuman and Front in their first rounds. I view SH as the best email platform for single player mode while Front goes after the collaborative space. Mathilde Collin and Laurent Perrin from Front share their story with Alex Konrad of Forbes on how they’ve scaled to $32 million of revenue with their approach.
Is Hyperautomation the new term for RPA? In my mind RPA is about tasks and processes need orchestration or as Gartner says the ability to stitch together 6 or 7 different services. Nice quote from Sean Chou who is CEO of Catalytic (a portfolio co)
RPA software has grown quickly because it allows business experts and front-line workers with minimal or even no coding skills to automate low-level digital work tasks. However, robotic process automation's rapid adoption and ability to streamline rote tasks notwithstanding, only about 13% of enterprises have executed a scalable RPA strategy. For more enterprises to scale RPA, enterprises will need to combine multiple automation and AI technologies that today are considered separately, which requires they get their heads around the concept of hyperautomation.
"Hyperautomation is not just RPA. It is six or seven different categories of technologies," said Frances Karamouzis, an analyst at Gartner focused on hyperautomation.
New Relic, once a darling of the infrastructure monitoring space, has taken a huge hit over the last 8 months dropping 40% in value. Datadog definitely has something to do with that. I suggest reading Steve Auger’s piece on what’s ahead for New Relic and it’s attempt to become a Platform-as-a-Service. As you can see the net expansion rate is decreasing rapidly and annual sales growth has dropped from a 5 year average of 50% to 28%.
Zoom is one of the few companies that has had a positive impact from the health crisis as it’s stock has been up 86% over the year and it’s doing its part by offering free service and question will be whether the company can convert free to paying.