Personal blog of Yzmir Ramirez

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.

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.

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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 Ventures‘ Alastair 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.

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.

Traditionally, measuring business success requires a greater understanding of your company’s go-to-market lifecycle, how customers engage with your product and the macro-dynamics of your market. But in the most challenging environment in decades, those metrics are out the window.

Enterprise application and SaaS companies are changing their approach to measuring performance and preparing to grow when the economy begins to recover. While there are no blanket rules or guidance that applies to every business, company leaders need to focus on a few critical metrics to understand their performance and maximize their opportunities. This includes understanding their burn rate, the overall real market opportunity, how much cash they have on hand and their access to capital. Analyzing the health of the company through these lenses will help leaders make the right decisions on how to move forward.

Play the game with the hand you were dealt. Earlier this year, our company closed a $40 million Series C round of funding, which left us in a strong cash position as we entered the market slowdown in March. Nonetheless, as the impact of COVID-19 became apparent, one of our board members suggested that we quickly develop a business plan that assumed we were running out of money. This would enable us to get on top of the tough decisions we might need to make on our resource allocation and the size of our staff.

While I understood the logic of his exercise, it is important that companies develop and execute against plans that reflect their actual situation. The reality is, we did raise the money, so we revised our plan to balance ultra-conservative forecasting (and as a trained accountant, this is no stretch for me!) with new ideas for how to best utilize our resources based on the market situation.

Burn rate matters, but not at the expense of your culture and your talent. For most companies, talent is both their most important resource and their largest expense. Therefore, it’s usually the first area that goes under the knife in order to reduce the monthly spend and optimize efficiency. Fortunately, heading into the pandemic, we had not yet ramped up hiring to support our rapid growth, so were spared from having to make enormously difficult decisions. We knew, however, that we would not hit our 2020 forecast, which required us to make new projections and reevaluate how we were deploying our talent.

In 2015, Atlassian was preparing to go public, but it was not your typical company in so many ways. For starters, it was founded in Australia, it had two co-founder co-CEOs, and it offered collaboration tools centered on software development.

That meant that the company leaders really needed to work hard to help investors understand the true value proposition that it had to offer, and it made the roadshow deck production process even more critical than perhaps it normally would have been.

A major factor in its favor was that Atlassian didn’t just suddenly decide to go public. Founded in 2002, it waited until 2010 to accept outside investment. After 10 straight years of free cash flow, when it took its second tranche of investment in 2014, it selected T. Rowe Price, perhaps to prepare for working with institutional investors before it went public the next year.

We sat down with company president Jay Simons to discuss what it was like, and how his team produced the document that would help define them for investors and analysts.

Always thinking long term

In business, there’s nothing so valuable as having the right product at the right time. Just ask Zoom, the hot cloud-based video conferencing platform experiencing explosive growth thanks to its sudden relevance in the age of sheltering in place.

Having worked at BlackBerry in its heyday in the early 2000s, I see a lot of parallels to what Zoom is going through right now. As Zooming into a video meeting or a classroom is today, so too was pulling out your BlackBerry to fire off an email or check your stocks circa 2002. Like Zoom, the company then known as Research in Motion had the right product for enterprise users that increasingly wanted to do business on the go.

Of course, BlackBerry’s story didn’t have a happy ending.

From 1999 to 2007, BlackBerry seemed totally unstoppable. But then Steve Jobs announced the iPhone, Google launched Android and all of the chinks in the BlackBerry armor started coming undone, one by one. How can Zoom avoid the same fate?

As someone who was at both BlackBerry and Android during their heydays, my biggest takeaway is that product experience trumps everything else. It’s more important than security (an issue Zoom is getting blasted about right now), what CIOs want, your user install base and the larger brand identity.

When the iPhone was released, many people within BlackBerry rightly pointed out that we had a technical leg up on Apple in many areas important to business and enterprise users (not to mention the physical keyboard for quickly cranking out emails)… but how much did that advantage matter in the end? If there is serious market pull, the rest eventually gets figured out… a lesson I learned from my time at BlackBerry that I was lucky enough to be able to immediately apply when I joined Google to work on Android.

As investors’ appetites sour in the midst of a pandemic, a three-and-a-half-year-old Indian firm has secured $10.3 billion in a month from Facebook and four U.S.-headquartered private equity firms.

The major deals for Reliance Jio Platforms have sparked a sudden interest among analysts, executives and readers at a time when many are skeptical of similar big check sizes that some investors wrote to several young startups, many of which are today struggling to make sense of their finances.

Prominent investors across the globe, including in India, have in recent weeks cautioned startups that they should be prepared for the “worst time” as new checks become elusive.

Elsewhere in India, the world’s second-largest internet market and where all startups together raised a record $14.5 billion last year, firms are witnessing down rounds (where their valuations are slashed). Miten Sampat, an angel investor, said last week that startups should expect a 40%-50% haircut in their valuations if they do get an investment offer.

Facebook’s $5.7 billion investment valued the company at $57 billion. But U.S. private equity firms Silver Lake, Vista, General Atlantic, and KKR — all the other deals announced in the past five weeks — are paying a 12.5% premium for their stake in Jio Platforms, valuing it at $65 billion.

How did an Indian firm become so valuable? What exactly does it do? Is it just as unprofitable as Uber? What does its future look like? Why is it raising so much money? And why is it making so many announcements instead of one.

It’s a long story.

Run up to the launch of Jio

Billionaire Mukesh Ambani gave a rundown of his gigantic Indian empire at a gathering in December 2015 packed with 35,000 people including hundreds of Bollywood celebrities and industry titans.

“Reliance Industries has the second-largest polyester business in the world. We produce one and a half million tons of polyester for fabrics a year, which is enough to give every Indian 5 meters of fabric every year, year-on-year,” said Ambani, who is Asia’s richest man.

This week, Verizon Communications CEO Hans Vestberg joined us for an episode of Extra Crunch Live.

Vestberg is leading the company through the midst of one its biggest rollouts to date with the push into 5G connectivity. In our discussion, he spoke about how he’s managing the organization during this global crisis, his thoughts on work from home and acquisition strategy, and the ways in which 5G will change the way we work and live.

(Disclosure: Verizon Communications is TechCrunch’s parent company.)

Extra Crunch members can check out a partial transcript of the conversation (edited for length and clarity) or watch it in its entirety via YouTube video below.

Extra Crunch Live features some of the brightest minds in tech and VC, including Aileen Lee, Roelof Botha, Kirsten Green and Mark Cuban. Upcoming episodes will include Aaron Levie from Box, GGV’s Hans Tung and Jeff Richards, Eventbrite’s Julia Hartz and others. Extra Crunch members can submit questions to speakers in real time, so please sign up here if you haven’t already.

His initial reaction to news of the lockdown

We’re a large company with 135,000 employees in 70 different countries around the globe. So, of course, we had an early warning when it started actually in Asia. We have employees in Asia, so we got the feeling that this could be really serious. It was early in the first week of February, we moved to the highest emergency or crisis level in the company. That means that we go to a certain crisis mode on how we organized and how we galvanized the company.

That’s usually put into place every time there is a big national disaster because you need to split between people taking care of the crisis and people taking care of running the business. So we were very early on with that. In the beginning of February, we started the emergency crisis operations center that was taking care of employee questions and prioritization of important things. At the same time, we continued to run the business. That was the first thing we did very early on.

The other thing we did very early on is that we understood that this was something unprecedented. I mean, you have been in crisis before. I mean, I’ve been in the telecom crisis, and we’ve been in the banking crisis when everything just went boom. This is something totally different. You cannot use any of your historical experience when it comes to this pandemic, which actually impacts each and every one of us when it comes to health. So I was honest, and thought that they’re going to be a lot of questions. We decided very early on to run our noon live webcast to our employees. We are on our… I think it’s the 11th week, where at noon every day, we run the webcast for all our employees. That was two of the first things we did.

We didn’t think we were going to run for 11 weeks on the new live webcast, but we have done it because we see there’s a very good tool to communicate with all our employees.

We’ve been on a roll with our Extra Crunch Live Series for Extra Crunch members, where we’re talking to some of the biggest names in Silicon Valley about business, investment and the startup community. Recent interviews include Kirsten Green from Forerunner Ventures, Charles Hudson from Precursor Ventures and investor Mark Cuban.

Next week, we’re pleased to welcome Box CEO Aaron Levie. He is a well-known advocate of digital transformation, often a years-long process that many companies have compressed into a few months because of the pandemic, as he has pointed out lately.

As the head of an enterprise SaaS company that started out to help users manage information online, he has a unique perspective on what’s happening in this period as companies move employees home and implement cloud services to ease the transition.

Levie started his company 15 years ago while still an undergrad in the proverbial dorm room and has matured from those early days into a public company executive, guiding his employees, customers and investors through the current crisis. This is not the first economic downturn he has faced as CEO at Box; when it was still an early-stage startup, he saw it through the 2008 financial crisis. Presumably, he’s taking the lessons he learned then and applying them now to a much more mature organization.

Please join TechCrunch writers Ron Miller and Jon Shieber as we chat with Levie about how he’s handling the COVID-19 crisis, moving employees offsite and what advice he has for companies that are accelerating their digital transformation. After he’s shared his wisdom for startups seeking survival strategies, we’ll discuss what life might look like for Box and other companies in a post-pandemic environment.

During the call, audience members are encouraged to ask questions. We’ll get to as many as we can, but you can only participate if you’re an Extra Crunch member, so please subscribe here.

Extra Crunch subscribers can find the Zoom link below (with YouTube to follow) as well as a calendar invite so you won’t miss this conversation.

Like all business leaders, chief information security officers (CISOs) have shifted their roles quickly and dramatically during the COVID-19 pandemic, but many have had to fight fires they never expected.

Most importantly, they’ve had to ensure corporate networks remain secure even with 100% of employees suddenly working from home. Controllers are moving millions between corporate accounts from their living rooms, HR managers are sharing employees’ personal information from their kitchen tables and tens of millions of workers are accessing company data using personal laptops and phones.

This unprecedented situation reveals once and for all that security is not only about preventing breaches, but also about ensuring fundamental business continuity.

While it might take time, everyone agrees the pandemic will end. But how will the cybersecurity sector look in a post-COVID-19 world? What type of software will CISOs want to buy in the near future, and two years down the road?

To find out, I asked six of the world’s leading CISOs to share their experiences during the pandemic and their plans for the future, providing insights on how cybersecurity companies should develop and market their solutions to emerge stronger:

• Ian Amit, Cimpress
• Colin Anderson, Levi Strauss & Co.
• Al Ghous, ServiceMax
• Adrian Ludwig, Atlassian
• Rinki Sethi, Rubrik
• Elwin Wong, Ross Stores

The security sector will experience challenges, but also opportunities

The good news is, many CISOs believe that cybersecurity will weather the economic storm better than other enterprise software sectors. That’s because security has become even more top of mind during the pandemic; with the vast majority of corporate employees now working remotely, a secure network has never been more paramount, said Rinki Sethi, CISO at Rubrik. “Many security teams are now focused on ensuring they have controls in place for a completely remote workforce, so endpoint and network security, as well as identity and access management, are more important than ever,” said Sethi. “Additionally, business continuity and disaster recovery planning are critical right now — the ability to respond to a security incident and have a robust plan to recover from it is top priority for most security teams, and will continue to be for a long time.”

That’s not to say all security companies will necessarily thrive during this current economic crisis. Adrian Ludwig, CISO at Atlassian, notes that an overall decline in IT budgets will impact security spending. But the silver lining is that some companies will be acquired. “I expect we will see consolidation in the cybersecurity markets, and that most new investments by IT departments will be in basic infrastructure to facilitate work-from-home,” said Ludwig. “Less well-capitalized cybersecurity companies may want to begin thinking about potential exit opportunities sooner rather than later.”