Aug
11
2020
--

Emergence’s Jason Green still sees plenty of opportunities for enterprise SaaS startups

Jason Green, co-founder and partner at Emergence, has made some solid enterprise SaaS bets over the years, long before it was fashionable to do so. He invested early in companies like Box, ServiceMax, Yammer, SteelBrick and SuccessFactors.

Just those companies alone would be a pretty good track record, but his firm also invested in Salesforce, Zoom, Veeva and Bill.com. One consistent thread runs through Emergence’s portfolio: They focus on the cloud and enterprise, a thesis that has paid off big time. What’s more, every one of those previously mentioned companies had a great founding team and successful exit via either IPO or acquisition.

I spoke with Green in June about his investment performance with enterprise SaaS to get a sense of the secret of his long-term success. We also asked a few of those portfolio company CEOs about what it has been like to work with him over time.

All in on SaaS

Green and his co-founders saw something when it came to the emerging enterprise SaaS market in the early 2000s that a lot of firms missed. Salesforce co-founder and CEO Marc Benioff told a story in 2018 about his early attempts at getting funding for his company — and how every single Silicon Valley firm he talked to turned him down.

Green’s partner, Gordon Ritter, eventually invested in Salesforce as one of the company’s earliest investments because the partners saw something in the SaaS approach, even before the term entered the industry lexicon.

Aug
03
2020
--

Amid pandemic, returning to offices remains an open question for tech leaders

As COVID-19 infections surge in parts of the U.S., many workplaces remain empty or are operating with skeleton crews.

Most agree that the decision to return to the office should involve a combination of business, government and medical officials and scientists who have a deep understanding of COVID-19 and infectious disease in general. The exact timing will depend on many factors, including the government’s willingness to open up, the experts’ view of current conditions, business leadership’s tolerance for risk (or how reasonable it is to run the business remotely), where your business happens to be and the current conditions there.

That doesn’t mean every business that can open will, but if and when they get a green light, they can at least begin bringing some percentage of employees back. But what that could look like is clouded in great uncertainty around commutes, office population density and distancing, the use of elevators, how much you can reasonably deep clean, what it could mean to have a mask on for eight hours a day, and many other factors.

To get a sense of how tech companies are looking at this, we spoke to a number of executives to get their perspective. Most couldn’t see returning to the office beyond a small percentage of employees this year. But to get a more complete picture, we also spoke to a physician specializing in infectious diseases and a government official to get their perspectives on the matter.

Taking it slowly

While there are some guidelines out there to help companies, most of the executives we spoke to found that while they missed in-person interactions, they were happy to take things slow and were more worried about putting staff at risk than being in a hurry to return to normal operations.

Iman Abuzeid, CEO and co-founder at Incredible Health, a startup that helps hospitals find and hire nurses, said her company was half-remote even before COVID-19 hit, but since then, the team is now completely remote. Whenever San Francisco’s mayor gives the go-ahead, she says she will reopen the office, but the company’s 30 employees will have the option to keep working remotely.

She points out that for some employees, working at home has proven very challenging. “I do want to highlight two groups that are pretty important that need to be highlighted in this narrative. First, we have employees with very young kids, and the schools are closed so working at home forever or even for the rest of this year is not really an option, and then the second group is employees who are in smaller apartments, and they’ve got roommates and it’s not comfortable to work at home,” Abuzeid explained.

Those folks will need to go to the office whenever that’s allowed, she said. For Lindsay Grenawalt, chief people officer at Cockroach Labs, an 80-person database startup in NYC, said there has to be a highly compelling reason to bring people back to the office at this point.

Jul
31
2020
--

Even as cloud infrastructure growth slows, revenue rises over $30B for quarter

The cloud market is coming into its own during the pandemic as the novel coronavirus forced many companies to accelerate plans to move to the cloud, even while the market was beginning to mature on its own.

This week, the big three cloud infrastructure vendors — Amazon, Microsoft and Google — all reported their earnings, and while the numbers showed that growth was beginning to slow down, revenue continued to increase at an impressive rate, surpassing $30 billion for a quarter for the first time, according to Synergy Research Group numbers.

Jul
10
2020
--

Operator Collective brings diversity and inclusion to enterprise investing

When Mallun Yen started Operator Collective last year, she wanted to build an investment firm for people who didn’t have a voice in Silicon Valley. That meant connecting women and people of color with operators who have been intimately involved in building companies from the ground up, then providing early-stage investment.

She then brought in Leyla Seka as a partner. Seka helped build the AppExchange at Salesforce into a powerful marketplace for companies built on top of the Salesforce platform, or that plugged into the platform in some meaningful way to sell their offerings directly to Salesforce customers. Through that role, she met a lot of people in the startup world, and she saw a lot of inequities.

Yen, whose background includes eight years as a VP at Cisco, and co-founder of Saastr with Jason Lemkin, wanted to build a different kind of firm, one that connected these operators — women like herself and Seka, who had walked the walk of running substantial businesses — with people who didn’t typically get heard in the corridors of VC firms.

Those operators themselves tend to be underrepresented at investment shops. The firm today consists of 130 operator LPs, 90% of whom are women and 40% people of color (which includes Asians). One way that the company can do this is by removing rigid buy-in requirements. LPs can contribute as little as $10,000, all the way up to millions of dollars, depending on their means, and that makes for a much more diverse pool of LPs.

While Seka admits they are far from perfect, she says they are fighting the good fight. So far, the company has invested in 18 startups with a more diverse set of founders and executives than you find at most firms that invest in enterprise startups. That means that 67% of their investments include people of color (which breaks down to 44% Asian, 17% Latinx and 6% Black), 56% include a female founder, 56% have an immigrant founder and 33% have a female CEO.

I sat down with Yen and Seka to discuss their thinking about enterprise investing. While they have a far more inclusive philosophy than most, their general approach to enterprise investing isn’t all that different than what we’ve seen in previous surveys with enterprise investors.

Which trends are you most excited about in the enterprise from an investing perspective?

Jul
10
2020
--

What do investors bidding up tech shares know that the rest of us don’t?

The biggest story to come out of the post-March stock market boom has been explosive growth in the value of technology shares. Software companies in particular have seen their fortunes recover; since March lows, public software companies’ valuations have more than doubled, according to one basket of SaaS and cloud stocks compiled by a Silicon Valley venture capital firm.

Such gains are good news for startups of all sizes. For later-stage upstarts, software share appreciation helps provide a welcoming public market for exits. And, strong public valuations can help guide private dollars into related startups, keeping the capital flowing.


The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, and now you can receive it in your inbox. Sign up for The Exchange newsletter, which drops every Friday starting July 24.


For software-focused startup companies, especially those pursuing recurring revenue models like SaaS, it’s a surprisingly good time to be alive.

Indeed, after COVID-19 hit the United States, layoffs and rising software sales churn were key, worrying indicators coming out of startup-land. Since then, the data has turned around.

As TechCrunch reported in June, startup layoffs have declined and software churn has recovered to the point that business and enterprise-focused SaaS companies are on the bounce.

But instead of merely recovering to near pre-COVID levels, software stocks have continued to rise. Indeed, the Bessemer Cloud Index (EMCLOUD), which tracks SaaS firms, has set an array of all-time highs in recent weeks.

There’s some logic to the rally. After speaking to venture capitalists over the past few weeks, notes from EQT VenturesAlastair Mitchell, Sapphire’s Jai Das, and Shomik Ghosh from Boldstart Ventures paint the picture of a possibly accelerating digital transformation for some software companies, nudged forward by COVID-19 and its related impacts.

The result of the trend may be that the total addressable market (TAM) for software itself is larger than previously anticipated. Larger TAM could mean bigger future sales for and more substantial future cash flows for some software companies. This argument helps explain part of the market’s present-day enthusiasm for public tech equities, and especially the shares of software companies.

We won’t be able explain every point that Nasdaq has gained. But the TAM argument is worth understanding if we want to grok a good portion of the optimism that is helping drive tech valuations, both private and public.

Jul
01
2020
--

Unpacking how Dell’s debt load and VMware stake could come together

Last week, we discussed the possibility that Dell could be exploring a sale of VMware as a way to deal with its hefty debt load, a weight that continues to linger since its $67 billion acquisition of EMC in 2016. VMware was the most valuable asset in the EMC family of companies, and it remains central to Dell’s hybrid cloud strategy today.

As CNBC pointed out last week, VMware is a far more valuable company than Dell itself, with a market cap of almost $62 billion. Dell, on the other hand, has a market cap of around $39 billion.

How is Dell, which owns 81% of VMware, worth less than the company it controls? We believe it’s related to that debt, and if we’re right, Dell could unlock lots of its own value by reducing its indebtedness. In that light, the sale, partial or otherwise, of VMware starts to look like a no-brainer from a financial perspective.

At the end of its most recent quarter, Dell had $8.4 billion in short-term debt and long-term debts totaling $48.4 billion. That’s a lot, but Dell has the ability to pay down a significant portion of that by leveraging the value locked inside its stake in VMware.

Yes, but …

Nothing is ever as simple as it seems. As Holger Mueller from Constellation Research pointed out in our article last week, VMware is the one piece of the Dell family that is really continuing to innovate. Meanwhile, Dell and EMC are stuck in hardware hell at a time when companies are moving faster than ever expected to the cloud due to the pandemic.

Dell is essentially being handicapped by a core business that involves selling computers, storage and the like to in-house data centers. While it’s also looking to modernize that approach by trying to be the hybrid link between on-premise and the cloud, the economy is also working against it. The pandemic has made the difficult prospect of large enterprise selling even more challenging without large conferences, golf outings and business lunches to grease the skids of commerce.

Jul
01
2020
--

Minneapolis-based VC shop Bread & Butter focuses on its own backyard

While many investors say sheltering in place has broadened their appetite for funding companies located outside major hubs, one firm is doubling down on backing startups in America’s heartland.

Launched in 2016 by Brett Brohl, The Syndicate Fund rebranded to Bread & Butter Ventures earlier this month (a reference to one of Minnesota’s many nicknames). Along with the rebrand, longtime Google executive and Revolution partner Mary Grove joined the team as a general partner and Stephanie Rich came aboard as head of platform.

The growth of the Twin Cities’ startup ecosystem is precisely why The Syndicate Fund rebranded. The firm, which has $10 million in assets under management, will invest in three of Minneapolis’ biggest strengths: agriculture and food, health care and enterprise software.

Agtech interest spans the entire spectrum from farming to restaurants and grocery stores. The firm is also interested in the “messy middle” of supply chain and logistics around food, said Brohl and is interested in a mix of software, hardware and biosciences. Within health care, the firm evaluates solutions focused on prevention versus treatment, female health startups working on maternal health and fertility and software focused on the aging population and millennials.

It’s also looking at enterprise software that can serve large businesses and scale efficiently.

Jun
26
2020
--

CIO Cynthia Stoddard explains Adobe’s journey from boxes to the cloud

Up until 2013, Adobe sold its software in cardboard boxes that were distributed mostly by third party vendors.

In time, the company realized there were a number of problems with that approach. For starters, it took months or years to update, and Adobe software was so costly, much of its user base didn’t upgrade. But perhaps even more important than the revenue/development gap was the fact that Adobe had no direct connection to the people who purchased its products.

By abdicating sales to others, Adobe’s customers were third-party resellers, but changing the distribution system also meant transforming the way the company developed and sold their most lucrative products.

The shift was a bold move that has paid off handsomely as the company surpassed an $11 billion annual run rate in December — but it still was an enormous risk at the time. We spoke to Adobe CIO Cynthia Stoddard to learn more about what it took to completely transform the way they did business.

Understanding the customer

Before Adobe could make the switch to selling software as a cloud service subscription, it needed a mechanism for doing that, and that involved completely repurposing their web site, Adobe.com, which at the time was a purely informational site.

“So when you think about transformation the first transformation was how do we connect and sell and how do we transition from this large network of third parties into selling direct to consumer with a commerce site that needed to be up 24×7,” Stoddard explained.

She didn’t stop there though because they weren’t just abandoning the entire distribution network that was in place. In the new cloud model, they still have a healthy network of partners and they had to set up the new system to accommodate them alongside individual and business customers.

She says one of the keys to managing a set of changes this immense was that they didn’t try to do everything at once. “One of the things we didn’t do was say, ‘We’re going to move to the cloud, let’s throw everything away.’ What we actually did is say we’re going to move to the cloud, so let’s iterate and figure out what’s working and not working. Then we could change how we interact with customers, and then we could change the reporting, back office systems and everything else in a very agile manner,” she said.

Jun
22
2020
--

4 enterprise developer trends that will shape 2021

Technology has dramatically changed over the last decade, and so has how we build and deliver enterprise software.

Ten years ago, “modern computing” was to rely on teams of network admins managing data centers, running one application per server, deploying monolithic services, through waterfall, manual releases managed by QA and release managers.

Today, we have multi and hybrid clouds, serverless services, in continuous integration, running infrastructure-as-code.

SaaS has grown from a nascent 2% of the $450B enterprise software market in 2009, to 23% in 2020 and crossed $100B in revenue. PaaS and IaaS revenue represent another $50B in revenue, expecting to double to $100B by 2022.

With 77% of the enterprise software market — over $350B in annual revenue — still on legacy and on-premise systems, modern SaaS, PaaS and IaaS eating at the legacy market alone can grow the market 3x-4x over the next decade.

As the shift to cloud accelerates across the platform and infrastructure layers, here are four trends starting to emerge that will change how we develop and deliver enterprise software for the next decade.

1. The move to “everything as code”

Companies are building more dynamic, multiplatform, complex infrastructures than ever. We see the “-aaS” of the application, data, runtime and virtualization layers. Modern architectures are forcing extensibility to work with any number of mixed and matched services.

Jun
18
2020
--

Superhuman’s Rahul Vohra says recession is the ‘perfect time’ to be aggressive for well-capitalized startups

Email is one of those things that no one likes but that we’re all forced to use. Superhuman, founded by Rahul Vohra, aims to help everyone get to inbox zero.

Launched in 2017, Superhuman charges $30 per month and is still in invite-only mode with more than 275,000 people on the waitlist. That’s by design, Vohra told us earlier this week on Extra Crunch Live.

“I think a lot of folks misunderstand the nature of our waitlist,” he said. “They assume it’s some kind of FOMO-generating technique or some kind of false scarcity. Nothing could be further from the truth. The real reason we have the waitlist is that I want everyone who uses Superhuman to be deliriously happy with their experience.”

Today, the app is only available for desktop and iOS. Superhuman started with iOS because most premium users have iPhones, Vohra said. Still, many users have Android, so Superhuman’s waitlist consists mostly of Android users.

“We don’t think that if we onboard them they’d have the best experience with Superhuman because email really is an ecosystem product,” he said. “You do it just as much on the go as you do from your laptop. There’s a lot of reasons like that. So if you’re a person who identifies that as a must-have, well, we’ll take in the survey, we’ll learn about you so we know when to reach out to you. Then when we have those things built or integrated, we’ll reach out.”

We also chatted about his obsession with email, determining pricing for a premium product, the impact of COVID-19, diversity in tech in light of the police killing of George Floyd and so much more.

Throughout the conversation, Vohra also offered up some good practical advice for founders. Here are some highlights from the conversation.

On competition from Hey, the latest buzzy email app

Yeah, I’m not at all worried. I used to get worried about this. You know, 10 years ago, even as recently as five years ago, I would get worried about competitors. But I think Paul Graham has really, really great advice on this. I think he says pretty much verbatim: Startups don’t kill other startups. Competition generally doesn’t kill the startup. Other things do, like running out of money being the biggest one, or lack of momentum or lack of motivation or co-founder feuds; these are all really dangerous things.

Competition from other startups generally isn’t the thing that gets you and you know, props to the Basecamp team and everything they’ve done with Hey. It’s really impressive. I think it’s for an entirely different demographic than Superhuman is for.

Superhuman is for the person for whom essentially email is work and work is email. Our users kind of almost personally identify with their email inbox, and they’re coming from Gmail or G Suite. Typically it’s overflowing so they often receive hundreds if not thousands of emails a day, and they send off 100 emails a day. Superhuman is for high-volume email for whom email really matters. Power users, essentially, though power users isn’t quite the right articulation. What I actually say is prosumers because there’s a lot of people who come to us at Superhuman and they’re not yet power users of email, but they know they need to be.

That’s what I would call a prosumer — someone who really wants to be brilliant at doing email. Now Hey doesn’t seem to be designed for that target market. It doesn’t seem to be designed for high-volume emailers or prosumers or power users.

Powered by WordPress | Theme: Aeros 2.0 by TheBuckmaker.com