What's 🔥 in Enterprise IT/VC #219

Talent, not capital is a rate limiting factor to scale, importance of wiring recruiting/retention on day one

Let’s take a bye on this week and say 2021 starts Monday.

With that, the enterprise market continues to be on 🔥 with a number of 🦄 funding announcements right out of the gate starting with Laceworks and it’s $525 million round which is like a next-gen SIEM for cloud infra built on top of Snowflake and Dremio in the data infra space. Expect this furious pace of announcements to continue until the end of January as much is a holdover from the end of 2020. That being said, I can say that despite the insanity of this past week in the States, deal pacing has picked right back up.

With all of that 💰 flowing like a🚰, I keep thinking about some of my board meetings this past week and how much time we spent on hiring and how companies can institutionalize hiring. In fact, one technical founder told me he spent 40% of his time on recruiting and hiring. Imagine if a good portion of that was offloaded and his time could only be focused on interviewing?

Institutionalizing hiring must start on day one with the founders and be built into the culture. When evaluating founding teams, all of whom are technical, one of the key ingredients that gets us excited about investing besides the obvious product and market, is the team’s ability to attract talent. Through reference checks, it’s easy to see how founders sourced, managed and retained talent, and if they were excellent in their prior roles, they will likely have 3-5 engineers and other product folks ready to join upon funding. In fact, the best founders come to us needing cash because they already have 3-4 key engineers or product folks they want to hire and are signed up and ready to go. That’s momentum right out of the gate which is so huge to evolve from idea to product.

The less experienced folks think it’s just about the idea and once they raise the cash, they can go about hiring. Fact is that building a product that people want is job #1a and attracting the best talent is job #1b.

While bringing in key folks from existing networks is always the way to go in the early days, having a broader sourcing engine becomes extremely important as you want to bring in diversity of race, sex, and thought to your team early. Once you get past employee 10 and that’s not built into your team and culture, it becomes harder and harder to do so. That’s why having a former Head of People like Natalie Ledbetter as our Operating Partner has been so important for our portfolio companies to expand their horizons past the first few hires.

I’ll have Natalie riff on this more in the future, but suffice to say that money is becoming less of a problem, and it’s all about building an engine for people.

As always, 🙏🏼 for reading and please share with your friends and colleagues.

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Scaling Startups

  1. Must read 🧵 - hire believers, focus on who building for…

  2. ❤️ Mission driven founders playing the long game…and 🙏🏼 Rob for letting me be there on day one!

    Founders, listen and learn from Rob, he created a new industry for live chat customer support, was one of first pure play SaaS players ever (was called ASP model back in day), weathered multiple storms and a stock price once at $.08 per share, yes 8 cents, and now at $61 and $4 billion market cap, and still CEO on the original and same mission.

  3. Always…give before you get - must read 🧵


Enterprise Tech

  1. Many folks back to work early this week and Slack down again for a few hours…as I’ve said before, look for a huge uptick in investments in resilency engineering, incident analysis, and more in 2021…

  2. Pendulum constantly swings in computing, will monoliths come back asks Matt Asay?

    In early 2020, Hightower suggested that "monoliths are the future." The problem, he pointed out, is that developers haven't been building microservices so much as building distributed monolithic applications: "Now you went from writing bad code to building bad infrastructure that you deploy the bad code on top of." It's garbage code (and microservices sprawl) all the way down.

  3. Acquisitions in infrastructure announced this week include RedHat buying StackRox in the kubernetes security market and F5 buying Volterra for $500mm in app security/networking space.

    FWIW, RedHat is becoming much more aggressive on the partnership and acquisition front especially as most of the best talent in infra land is going to start their own companies rather than work for IBM/RedHat. Expect many more acquisitions to come in 2021.

  4. Enterprise blockchain is back but focused on what its core use case really is, an amazing platform for payments

  5. great to see Olivier from Datadog discussing the importance of security shifting ⬅️ and a big area of importance for customers in the future

  6. I’d say yes and no on points below but a great 🧵 on data infra nonetheless

    Frankly, every week we see another 2-3 data infra startups and the slicing and dicing of entry points for tools for data engineers is becoming narrower and narrower. Combine that with the fact that finding technical talent to join all of these startups will become next to impossible leaving many orphaned data infra companies. Which goes back to my point in the beginning, those who build a hiring culture, treat it like a product with engineering blogs and attracting folks who want to solve hard problems, will end up winning.

    IMHO, sharing, collaborating and operationalizing data is what’s next and why I’m excited about Harbr and Cape Privacy

  7. Interesting 🧵 on Notion and speed

    Lots of technical debt there…

  8. Scale of hacks only getting bigger…click through and scroll down to get true understanding of scale over last 10 years

  9. I couldn’t resist…


Markets

  1. Goldman Sachs buy rating for security stocks (PING, VRNT, CRWD, TENB, RPD, SAIL) but more importantly security by design becomes even more important along with 3rd party vendor analysis from cos like Security Scorecard (a portfolio co)

    “2020 was the worst year on record for cyber threats,” he wrote. “Fueled in part by the pandemic, elections, and a sudden shift to remote working environments, this record had already been achieved by the end of the second quarter. As a result, security remained the priority of CIOs through the year.”

    He added that as the fallout from the Sunburst attack continues to become clear, more enterprise victims are likely to emerge. “We also anticipate greater scrutiny over how vendors develop, distribute and maintain their software as the scope of security extends beyond vendors themselves to customers that rely on the integrity of their platforms,” he wrote.

  2. Dharmesh Thakker from Battery Ventures shares his views on the robust exit environment to come in 2021