What's 🔥 in Enterprise IT/VC #187

Narratives/Playbooks from enterprise sales transcripts

Not all cloud stocks are going up and to the right. While, I’m far from an expert on our current crisis, I strongly believe that there is more bad news to come and despite many enterprise companies crushing their Q1 numbers, I still worry about a softer Q2 and a constant on and off economy for 2021. Given that, if I were an enterprise founder, I’d track what the largest public companies are reporting and saying as they are great signals for what lies ahead. Also many of these CEOs are great storytellers and listening to their narratives, perhaps, can help you shape yours.

Salesforce announced its Q1 numbers and while up 30% YOY, they opted to lower guidance for the year. I think this quote from Yun Kim, analyst at Rosenblatt, sums it up well.

“We believe that when the enterprise IT spending environment returns, the pace of large-scale business application deployments is likely to lag other initiatives with higher priority,” Kim wrote. “Our most recent checks indicate that many of these SFDC initiatives have been pushed out indefinitely or have been downsized significantly.”

Interestingly despite this growth, Tableau (owned by Salesforce), which is on-prem BI software, is lower year over year. Not sure if it is just the product or market, but in a cloud first world, on-prem is much harder to sell and get up and running.

Tableau, which gets much of its revenue from software implementations taking place in on-premise (rather than cloud) environments, was a weak spot. Its April quarter subscription/support revenue of $273 million was below reported calendar Q1 2019 revenue of $282.5 million.

Along those lines, Aneel Bhusri, CEO of Workday, recently said during his Q1 earnings call:

“But I’ve talked to lots of CIOs who said, ‘I wish I had everything in the cloud right now. I’m struggling with my on-premise both because of the labor required and people required to be on-site and because of systems that are really not very agile or flexible…’

So how does an enterprise software company navigate? What’s the playbook? If you are into earnings and transcripts, then I highly suggest reading Aaron Levie from Box’s earnings call. He’s been a thought leader on work from home and digital transformation and lays out a compelling narrative to the public. Of course it also helps that Box was born in the cloud from day one. Pretty straightforward but it is working for them: focus on existing customers and seat expansion, add on product strategy, larger enterprises driving new logos vs. SMB where there is softness…

As always, thanks for reading and please share any ideas and tips and of course, the newsletter!

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Scaling Startups

  1. For those SaaS founders looking for a better Excel operating model, Kenn So from Shasta shares his with a nice balance between detail and flexibility

  2. For those founders worried about raising their seed round, check out this thread from Kate Clark at the Information. Lots of comments on what is and isn’t getting done now.

  1. 👇🏼💯Sales - don’t overcomplicate it

  2. Difference between “all remote” and “partially remote” from Sid at Gitlab

  3. Another gem from Dan Rose who used to head up Partnerships under Zuck at Facebook and now at Coatue - punchline - “Sometimes it takes an outsider to change the rules of the game”


Enterprise Tech

  1. Can Docker get its groove back? It’s going back to its roots as a developer first company with a successful Dockercon this past week. As we all know, Docker still has a huge developer community and it is a great way for other developer startups to partner and leverage that reach. To that end, Scott Johnson, CEO of Docker, recently said that “Docker only succeeds if the ecosystem succeeds.”

    Along those lines, here’s an interview from DockerCon with Scott and Peter McKay (CEO of Snyk, a portfolio co) talking about their partnership, how Snyk will be integrated into the CLI, and the importance of developers and digital transformation.

  2. I find it fascinating how even large Fortune 500s like Goldman Sachs, Capital One and the Pentagon are embedding product management in their tech teams. This is an ongoing trend which will only accelerate as companies invest more in delivering software faster. This will be a HUGE opportunity for all of the collaborative product startups like Figma and Loom and Cycle (a portfolio co) and others to spread into large scale enterprises from startups.

    Goldman's recent hires also provide some clues to how it thinks about technology and how it plans to position itself in front of clients. For example, Casey's role of head of product is not one commonly found at a bank.

    "A lot of banks have been very internally focused with software for many years," Argenti said. "Now as you actually start building the financial cloud, start to build products that are targeted to external developers, targeted to end consumers, etc., those product management skills are absolutely necessary and absolutely crucial."

    "The technologists feel that they are in the front seat and our message has been that developers are in the front seat," Argenti said. "They are absolutely at the center of our strategy."

    The firm's tech-first ideology is one that's been echoed by CEO David Solomon since he took the helm in 2018

    Capital One is also a thought leader when it comes to large enterprises and embedding designers and product managers with engineers is one of their key initiatives as well.

    At the same time, empowering engineers “to build great products for our customers” has involved “people and culture,” Hansen said. “We have been building a culture of continued learning and development. We’ve been reimagining our operating model,” Hansen said. “We want to have designers, engineers, product managers and business partners. They all work together,” Hansen said. “We’re trying to continue to create the shared experience across the board and shared responsibility and accountability. Because, ultimately we’re all in this together, trying to create a better customer experience.”

    And the Pentagon is thinking the same

    Mulchandani said it is now the only organization in the Pentagon to have product managers and an AI product development approach reminiscent of Silicon Valley startups and enterprise sales teams.

  3. Stack Overflow is out with its annual developer survey, completed pre-COVID in February. All the data is here but of note, DevOps and SREs (site reliabilty engineers) get paid the most, automation scripting software from Puppet and Chef amongst the most dreaded frameworks, and Github, Slack and Jira still dominate how devs get work done. BTW, there is a new resurgence of investments in tools to help SREs/DevOps do more faster and many are trying to replace Jira like Clubhouse and Linear .

  4. Thoughtworks has its annual Technology Radar out which highlights trends and tools and techniques in the developer community. This year themes are around infrastructure as code becoming more mainstream, data meshes, and kubernetes as a platform. It’s well laid out and worth a read. 🎩 Gareth Rushgrove who writes DevOps Weekly

  5. Francois Chollet, creator of Keras and head of deeplearning at Google has a great thread on challenges with AI (click through for full thread) - “But now, we're at a stage in the development of AI where generalization has become, inevitably, the bottleneck to skill acquisition.” So it really comes down to unsupervised vs. supervised learning.

  6. Wow! That’s an impressive ARR per employee ratio!

  7. Voice as an interface for computing has a long way to go and James Cham highlights the difference between Google and Apple

  8. Another tech company announces permanent work from home, Walmart! All kidding aside, they do have 10,000 tech employees

    “We believe the way of working in the future, particularly in tech, will be fundamentally different than it was before,” he wrote in the email. “We believe it will be one in which working virtually will be the new normal, at least for most of the work we lead.”

  9. Who are the next billion startups? Some enterprise companies like Tray.io, Cockroach Labs, Gong, and Moveworks. Also huge congrats to portfolio co Superhuman!


Markets

  1. Resiliency matters! Cisco buys ThousandEyes, network performance monitoring for applications running on cloud providers, for a reported $1 billion

  2. Not a shocker as ZScaler which replaces VPNs with cloud based access control beat its Q1 but more importantly to note is how larger tech cos are playing the consolidation game to capture more budget and what that means for startups of course!

  3. What’s ahead for real estate