What's 🔥 in Enterprise IT/VC #307

🙏🏼 Hope springs eternal in SaaS land...but only a rare, few like Figma

🙏🏼 Adobe for its $20 BILLION acquisition of Figma and for bringing hope to the beaten down masses of enterprise founders whose valuations have been on a downward 📉 spiral.

While this gives hope to the few who can build a killer product, execute like mad, and scare the living daylights out of an incumbent, the reality is that these prices are reserved for a select few. Let’s recap, $200M ARR, forecasted to end year with $400M ARR and with 150% Net $ Retention and cash flow positive! How many companies at that scale have growth and retention like that? Yes, very very few.

Ed Sim @edsim

😲 No IPO market, no big deal... Just get an incumbent getting rocked by fast growth from a 🦄 and pay 2x last round price at height of market Who's next? All kidding aside, smart move for Adobe at 100x trailing and 50x this year ending ARR - will preserve their future

Here’s the slide deck from the Adobe call with Wall Street.

Using Iconiq Growth’s most recent SaaS benchmark report which you can find here, Figma is off the charts with Net $ Retention of 150% and ARR growth of a smaller company at 100% (h/t @modic123).

Here’s more from from the founder…

Dylan Field @zoink

THREAD: This morning we’re announcing that @figma has entered into an agreement to be acquired by @Adobe ! More information here: figma.com/blog/a-new-col… (1/9)

figma.comA New Collaboration with AdobeToday, we’re announcing the exciting news that Figma has entered into an agreement to be acquired by Adobe.

and from the buyer.

scott belsky @scottbelsky

today is a big day for both @Adobe and @figma. our teams are excited by the new possibilities and recognize both the opportunity and responsibility as we share our intent to come together. 🧵

BTW, Scott was founder and CEO of Behance prior to this and now CPO so it takes a startup founder to understand how disruptive startups can be to an incumbent. While he did not do this himself, I can surely bet that Scott led the charge.

scott belsky @scottbelsky

remembering the deluge of doubts in 2012 when we shared @Behance's acquisition, 10yrs later, platform grew 30x, product stronger than ever, brand intact, still free, high growth, and continued pipeline of goodness. but it takes work + principles. like all bold moves, show > tell.

And no, this doesn’t mean VCs will return to paying 100x TTM ARR or 50x NTM ARR. This also does not mean that the M&A floodgates will open either as how many public companies will pay 12% of its market cap to admit defeat in one of its core businesses and pay multiples that are way higher than the highest public comps trading in the 20X range. In fact, this was not well received by Wall Street as the stock traded down 16.8% after the news erasing $29B of market cap from Adobe or more that the price it is paying for Figma. That being said, technology can be brutal and if a company misses a product cycle, it can lead to a death spiral and frankly this is an insanely smart bet that will pay off in the future.

Finally, here’s a great 🧵 on building in real-time collaboration from day one versus trying to retrofit it into a product.

Amal Dorai @amaldorai

I'm not surprised that Adobe is acquiring Figma for $20B, nor that Wall Street doesn't understand it and $ADBE stock is down more than $20B today. It's a smart move for Adobe because it's nearly impossible to make legacy software applications multi-user collaborative. Thread: 🧵

Which is also why I’m so 🔥 up about LiveBlocks, a boldstart portfolio co, an API for adding multi-player collaboration.

Liveblocks @liveblocks

📝 Introducing our open-source collaborative block text editor! Interested in building a multiplayer note-based app? We've built the foundations to make your project a reality. Add multiple types of blocks, and see them shared in real-time ✨ 🔗 liveblocks.io/examples/block… Info 👇

Thanks again to Adobe and Figma as it seemed to put a smile on everyone’s faces this week. Hope does spring eternal, and as always, 🙏🏼 for reading and please share with your friends and colleagues.

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Scaling Startups

1. My quick take on what I look for in founders, startups, and what the early signs of success are from day one…thanks to Tanya Dua for hosting me on VC Wednesdays on LinkedIn News

   🚨 Welcome back to VC Wednesdays. This week, we're joined by boldstart ventures' Ed Sim. Read on for more. 🚨
   
   ✒️The biggest thing you look for when investing in a startup?
   This is for highly technical enterprise and infrastructure founders, but why you start a company is just as important as what you're building. What's your unique insight that allows you to build this thing 10 times better than what exists?
   
   ✒️What separates successful entrepreneurs from the rest?
   We partner with founders on day one, which means there's no product. So the earliest indication of success for us is a velocity. Product velocity: How quickly can you get something out of the door, iterate on it, and test it. Hiring velocity: I love it when founders have a core team from day one. And learning velocity: How quickly can you test a hypothesis, design experiments around it, and adapt based on what you learn.
   
   ✒️The emerging tech you're betting your money on?
   The rise of developer-first startups, which are impacting every industry. In security, we're investors in Snyk and Jit. Cybersecurity and crypto infrastructure is also interesting. The folks selling the picks and shovels during the gold rush is who we love funding. The more technical…

2. 👇🏼

delian @zebulgar

if you can only remember one piece of startup advice, remember this: "the team you build is the company you build" - @vkhosla the rest will follow from there...

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Enterprise Tech

1. Speaking of PLG, super excited about dope.security (a boldstart portfolio co) - reimagining a secure web gateway w/a fly direct approach, delightful end user experience, + new architecture built for ↑ speed + reliability - here’s more on why we invested and also the TechCrunch article

   Ed Sim @edsim

   Here's more on why we are 🔥 up about @dopesecurity, why a fly direct SWG with a radically improved customer experience is needed now. 🙏🏼 to @farooq_abbasi @preaceventures for the initial intro + great to have friends at @tribecap as co-investors medium.com/boldstart-vent…

   

   medium.comdope.security, the fly direct secure web gateway — welcome to boldstartAt boldstart, we ❤️ to partner on day one with technical founders creating new categories in infrastructure and SaaS. However, there are…

2. Collaboration on 🔥 as both Canva and Zoom going after Google Docs and Microsoft Office

3. Reminder that no matter where you start your GTM initially, all cos end up becoming an enterprise software co and need to then manage multiple sales motions for multiple customer types - Dev, CEO of MongoDB, from the Goldman Sachs tech conference this week

   Dev Ittycheria

   Yes, so because we're going out to such a big market, we quickly realized early on that you can't just have one mode of going to market the typical ways, hire a bunch of field salespeople, try and cover as much territory as possible, scale them as fast as possible. But we knew that didn't make sense because of how large this market is. So we have not only just an enterprise sales organization, we have a mid-market team that's predominately inside sales. And then, we have a self-service business and we also have a partner organization. And the partner organization works with both like large partners like our hyperscale partners, as well as SIs and ISVs because this market is so big, and it's a very large ecosystem. So I think we've been very innovative in terms of thinking through how to go-to-market, not everything started day one. We've listened to customers, we've also changed the way we engage with customers with our cloud business. The classic enterprise software motion is to get someone to sign up for big commitment up front. But in the cloud business, when the customers don't even know how large or how much their app is going to grow. It's very hard to get them to commit out early and realize, given the high retention rates that we have, and that databases and data platforms are so sticky, let's just get them on the platform. And that's paid huge dividends for us, as evidenced by Allison's growth the last few years.

4. eBPF rising - great article from Redmonk on why you should care - also here’s a tweet from a couple weeks ago related to eBPF use cases

   Ed Sim @edsim

   Future is bright for eBPF - also seeing a number of security cos using it for cloud security...

   

   Brendan Gregg @brendangregg

   New startups are developing eBPF as a "zero instrumentation" observability/APM solution. Trace plaintext HTTP/gRPC/etc. across your site calls without code changes (zero added instrumentation). Currently via uprobe hacking. 1/n

5. Congrats to Bruno from Magna on his seed round and launch of Magna which is building token distribution software that makes it easier for protocols, decentralized autonomous organizations (DAO) and crypto funds to send and receive tokens, a process that has so far lacked automation and has been prone to error.

   Bruno Ferrari Faviero @Bfaviero

   Couldn't be more thrilled to announce our $15M seed round led by Tiger and @tuskventures, with amazing backers like @circle_ventures, @galaxyhq, @GumiCryptos, @0xPolygon, @SolanaVentures, @avalabsofficial, @ycombinator, @shimacapital, and more! coindesk.com/business/2022/…