Not sure how to start this week’s newsletter except to say that I hope first and foremost, everyone is safe and healthy. These are the times to remind yourself you should always prioritize your loved ones and family over work. That being said, this quote from JFK quite resonated with me for the times we are experiencing.
Examples like Eric Yuan of Zoom giving away video tools to any k-12 schools for free are prevalent. Add Dropbox, Box, and Docusign amongst many others to the mix. Several of our portfolio companies like Kustomer are also giving away some of their services as work moves to remote first. If you have a product/service that can help others as they transition to work from home, consider what you can offer during this time of need (bonus: building goodwill is also great for your company).
As you can imagine, I spent much of my week working with existing portfolio companies on updating 2020 plans. Last week I was not so sure of what the impact of COVID-19 would be but it’s increasingly becoming clear that it’s going to have a massive ripple effect personally and economically. So here’s some advice I started sharing earlier in the week and as you can see by mid-week the advice shifted to extending runway for at least 2-3 quarters and plan accordingly.
On the positive side, I do believe companies can get stronger and better operationally and product wise during these trying times. First, if you are starting a company, it’s the perfect time to keep your head down and focused building and iterating on product without many distractions and you can come up for air in 6-12 months and be ready to roll when we hopefully are on the back end of this. As you can imagine we at boldstart ventures as many of our brethren have our checkbooks 💵 open and for us particularly, this is a great time to be investing in pre-product founders. Secondly, for those top down enterprise companies, time to rethink the need to visit sales prospects to close deals, start POCs, and install product.
Finally for those flush with cash remember the best defense is a great offense. Here’s an article from the WSJ VC Pro titled “Some VCs Urge Startups to Jump on Opportunities Amid Downturn.” As you can guess, I’m one of the VCs quoted in the article along with Peter McKay CEO of Snyk, one of our portfolio companies who goes on to say:
Snyk Ltd., a cybersecurity startup that recently raised $150 million in new funding, is accelerating the hiring of engineers and designers to invest more in product development now, said Chief Executive Peter McKay.
The company had plans to add about 100 people in those roles this year, but will bring them onboard in the first two quarters instead, he said. That way the startup hopes to be ready with new features and products next year, when the market might be back in full gear, he said. Now is also a chance to hire top talent, the CEO said. “It’s not going to be as competitive to find really good talent,” compared with a few months ago, Mr. McKay said. Meantime, Snyk is slowing hiring in sales and marketing.
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Some of best companies built during toughest times!
One area of spend that will not diminish will be infrastructure and keeping the lights on.Shout out to all the operations teams globally that are keeping servers running, security humming, and network performing right now. This might be the defining moment for the cloud.
Let’s hope Zoom continue to operate at scale and I feel bad for the folks at Robinhood and their customers as they were down several times as the market melted.Billions of valuation are at stake due to software reliability – the first time is maybe excusable, but this has to mean that corners have been in cut in core infrastructure
TechCrunch @TechCrunchThe Robinhood app is down again as stocks get routed on Wall St. https://t.co/czykhAa1u5 by @jshieber https://t.co/ATWCQMOtYK
Some great data on what large enterprises are spending on and what they find challenging - MuleSoft Connectivity Benchmark report surveying over 800 IT Leaders on state of digital transformation (see below on what it is)
The average organization surveyed runs on nearly 900 systems so you can imagine there are some serious integration challenges and many orgs adopting an API first approach.
Supply chain efficiency and visibility is another area that will see spend to solve problems. Rob Bailey who is founder of BackboneAI identified one many months ago when we incubated the company with him. Namely that:
Bailey says that he spent 18 months talking to companies before he built the product. “What we found is that every company we talked to was, in some way or another, concerned about an absolute flood of data from all these different applications and from all the companies that they’re working with externally,” he explained.
The BackboneAI platform aims to solve a number of problems related to this. For starters, it automates the acquisition of this data, usually from third parties like suppliers, customers, regulatory agencies and so forth. Then it handles ingestion of the data, and finally it takes care of a lot of actual processing from external sources, while mapping it to internal systems like the company ERP system.
Congrats to Rob and the BackboneAI team as they announced their $4.7mm round of funding this past week.
VMware “unleashes its Kubernetes strategy.” Key is its new Tanzu container platform and the integration of the orchestrator into the original vSphere virtualization platform. Goal is to offer true hybrid and multi-cloud infrastructure management and while directionally correct, it still fits best in a world loaded with virtual machines.
5 key insights from RSA Security conference from Alex Yampolskiy, CEO of SecurityScorecard (full disclosure: a portfolio co). Despite the massive amounts of funding for cybersecurity companies, the takeaway that stood out the most is this:
Consolidation of vendors: CISOs are increasingly interested in doing business with fewer companies.
Full data dump on “The “Shift Left” Market Opportunity for DevOps Security Tools from Pitchbook
Slack, like Zoom, has been adding free users by the truckload - however the stock still fell as much as 20% as questions arise about whether or not it can convert to paying. To be fair, it grew 49% year over year but what spooked investors was lighter guidance for revenue in the upcoming quarter, one in which you would think it would be stronger. Microsoft Teams may also have something to do with this. Zach Weinberg, co-founder of Flatiron Health , shares some of his thoughts on Slack’s positioning and it’s a must read so please click through 👇🏼
Amazing revenue growth from a top down enterprise model - Workday!