Dec
15
2018
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The limits of coworking

It feels like there’s a WeWork on every street nowadays. Take a walk through midtown Manhattan (please don’t actually) and it might even seem like there are more WeWorks than office buildings.

Consider this an ongoing discussion about Urban Tech, its intersection with regulation, issues of public service, and other complexities that people have full PHDs on. I’m just a bitter, born-and-bred New Yorker trying to figure out why I’ve been stuck in between subway stops for the last 15 minutes, so please reach out with your take on any of these thoughts: @Arman.Tabatabai@techcrunch.com.

Co-working has permeated cities around the world at an astronomical rate. The rise has been so remarkable that even the headline-dominating SoftBank seems willing to bet the success of its colossal Vision Fund on the shift continuing, having poured billions into WeWork – including a recent $4.4 billion top-up that saw the co-working king’s valuation spike to $45 billion.

And there are no signs of the trend slowing down. With growing frequency, new startups are popping up across cities looking to turn under-utilized brick-and-mortar or commercial space into low-cost co-working options.

It’s a strategy spreading through every type of business from retail – where companies like Workbar have helped retailers offer up portions of their stores – to more niche verticals like parking lots – where companies like Campsyte are transforming empty lots into spaces for outdoor co-working and corporate off-sites. Restaurants and bars might even prove most popular for co-working, with startups like Spacious and KettleSpace turning restaurants that are closed during the day into private co-working space during their off-hours.

Before you know it, a startup will be strapping an Aeron chair to the top of a telephone pole and calling it “WirelessWorking”.

But is there a limit to how far co-working can go? Are all of the storefronts, restaurants and open spaces that line city streets going to be filled with MacBooks, cappuccinos and Moleskine notebooks? That might be too tall a task, even for the movement taking over skyscrapers.

The co-working of everything

Photo: Vasyl Dolmatov / iStock via Getty Images

So why is everyone trying to turn your favorite neighborhood dinner spot into a part-time WeWork in the first place? Co-working offers a particularly compelling use case for under-utilized space.

First, co-working falls under the same general commercial zoning categories as most independent businesses and very little additional infrastructure – outside of a few extra power outlets and some decent WiFi – is required to turn a space into an effective replacement for the often crowded and distracting coffee shops used by price-sensitive, lean, remote, or nomadic workers that make up a growing portion of the workforce.

Thus, businesses can list their space at little-to-no cost, without having to deal with structural layout changes that are more likely to arise when dealing with pop-up solutions or event rentals.

On the supply side, these co-working networks don’t have to purchase leases or make capital improvements to convert each space, and so they’re able to offer more square footage per member at a much lower rate than traditional co-working spaces. Spacious, for example, charges a monthly membership fee of $99-$129 dollars for access to its network of vetted restaurants, which is cheap compared to a WeWork desk, which can cost anywhere from $300-$800 per month in New York City.

Customers realize more affordable co-working alternatives, while tight-margin businesses facing increasing rents for under-utilized property are able to pool resources into a network and access a completely new revenue stream at very little cost. The value proposition is proving to be seriously convincing in initial cities – Spacious told the New York Times, that so many restaurants were applying to join the network on their own volition that only five percent of total applicants were ultimately getting accepted.

Basically, the business model here checks a lot of the boxes for successful marketplaces: Acquisition and transaction friction is low for both customers and suppliers, with both seeing real value that didn’t exist previously. Unit economics seem strong, and vetting on both sides of the market creates trust and community. Finally, there’s an observable network effect whereby suppliers benefit from higher occupancy as more customers join the network, while customers benefit from added flexibility as more locations join the network.

… Or just the co-working of some things

Photo: Caiaimage / Robert Daly via Getty Images

So is this the way of the future? The strategy is really compelling, with a creative solution that offers tremendous value to businesses and workers in major cities. But concerns around the scalability of demand make it difficult to picture this phenomenon becoming ubiquitous across cities or something that reaches the scale of a WeWork or large conventional co-working player.

All these companies seem to be competing for a similar demographic, not only with one another, but also with coffee shops, free workspaces, and other flexible co-working options like Croissant, which provides members with access to unused desks and offices in traditional co-working spaces. Like Spacious and KettleSpace, the spaces on Croissant own the property leases and are already built for co-working, so Croissant can still offer comparatively attractive rates.

The offer seems most compelling for someone that is able to work without a stable location and without the amenities offered in traditional co-working or office spaces, and is also price sensitive enough where they would trade those benefits for a lower price. Yet at the same time, they can’t be too price sensitive, where they would prefer working out of free – or close to free – coffee shops instead of paying a monthly membership fee to avoid the frictions that can come with them.

And it seems unclear whether the problem or solution is as poignant outside of high-density cities – let alone outside of high-density areas of high-density cities.

Without density, is the competition for space or traffic in coffee shops and free workspaces still high enough where it’s worth paying a membership fee for? Would the desire for a private working environment, or for a working community, be enough to incentivize membership alone? And in less-dense and more-sprawl oriented cities, members could also face the risk of having to travel significant distances if space isn’t available in nearby locations.

While the emerging workforce is trending towards more remote, agile and nomadic workers that can do more with less, it’s less certain how many will actually fit the profile that opts out of both more costly but stable traditional workspaces, as well as potentially frustrating but free alternatives. And if the lack of density does prove to be an issue, how many of those workers will live in hyper-dense areas, especially if they are price-sensitive and can work and live anywhere?

To be clear, I’m not saying the companies won’t see significant growth – in fact, I think they will. But will the trend of monetizing unused space through co-working come to permeate cities everywhere and do so with meaningful occupancy? Maybe not. That said, there is still a sizable and growing demographic that need these solutions and the value proposition is significant in many major urban areas.

The companies are creating real value, creating more efficient use of wasted space, and fixing a supply-demand issue. And the cultural value of even modestly helping independent businesses keep the lights on seems to outweigh the cultural “damage” some may fear in turning them into part-time co-working spaces.

And lastly, some reading while in transit:

Dec
14
2018
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GE’s digital future looking murkier with move to spin off Industrial IoT biz

When I visited the GE Global Research Center in Niskayuna, New York in April 2017, I thought I saw a company that was working hard to avoid disruption, but perhaps the leafy campus, the labs and experimental projects hid much larger problems inside the company. Yesterday GE announced that it is spinning out its Industrial IoT business and selling most of its stake in ServiceMax, the company it bought in 2016 for $915 million.

For one thing, Jeff Immelt, the CEO who was leading that modernization charge, stepped down six months after my visit and was replaced by John Flannery, who was himself replaced just a year into his tenure by C. Lawrence Culp, Jr. It didn’t seem to matter who was in charge, nobody could stop the bleeding stock price, which has fallen this year from a high of $18.76 in January to $7.20 this morning before the markets opened (and had already lost another .15 a share as we went to publication).

It hasn’t been a great year for GE stock. Chart: Yahoo Finance

Immelt at least recognized that the company needed to shift to a data-centered Industrial Internet of Things future where sensors fed data that provided ways to understand the health of a machine or how to drive the most efficient use from it. This was centered around the company’s Predix platform where developers could build applications using that data. The company purchased ServiceMax in 2016 to extend that idea and feed service providers the data they needed to anticipate when service was needed even before the customer was aware of it.

As Immelt put it in a 2014 quote on Twitter:

That entire approach had substance. In fact, if you look at what Salesforce announced earlier this month around service and the Internet of Things, you will see a similar strategy. As Salesforce’s SVP and GM for Salesforce Field Service Lightning Paolo Bergamo described in a blog post, “Drawing on IoT signals surfaced in the Service Cloud console, agents can gauge whether device failure is imminent, quickly determine the source of the problem (often before the customer is even aware a problem exists) and dispatch the right mobile worker with the right skill set.”

Photo: Smith Collection/Gado/Getty Images

The ServiceMax acquisition and the Predix Platform were central to this, and while the idea was sound, Ray Wang, founder and principal analyst at Constellation Research says that the execution was poor and the company needed to change. “The vision for GE Digital made sense as they crafted a digital industrial strategy, yet the execution inside GE was not the best. As GE spins out many of its units, this move is designed to free up the unit to deliver its services beyond GE and into the larger ecosystem,” Wang told TechCrunch.

Current CEO Culp sees the spin-out as a way to breathe new life into the business “As an independently operated company, our digital business will be best positioned to advance our strategy to focus on our core verticals to deliver greater value for our customers and generate new value for shareholders,” Culp explained in a statement.

Maybe so, but it seems it should be at the center of what the company is doing, not a spin-off — and with only a 10 percent stake left in ServiceMax, the service business component all but goes away. Bill Ruh, GE Digital CEO, the man who was charged with implementing the mission (and apparently failed) has decided to leave the company with this announcement. In fact, the new Industrial IoT company will operate as a wholly owned GE subsidiary with its own financials and board of directors, separate from the main company.

With this move though, GE is clearly moving the Industrial IoT out of the core business as it continues to struggle to find a combination that brings its stock price back to life. While the Industrial Internet of Things idea may have been poorly executed, selling and spinning off the pieces that need to be part of the digital future seem like a short-sighted way to achieve the company’s longer term goals.

Dec
13
2018
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They scaled YouTube — now they’ll shard everyone with PlanetScale

When the former CTOs of YouTube, Facebook and Dropbox seed fund a database startup, you know there’s something special going on under the hood. Jiten Vaidya and Sugu Sougoumarane saved YouTube from a scalability nightmare by inventing and open-sourcing Vitess, a brilliant relational data storage system. But in the decade since working there, the pair have been inundated with requests from tech companies desperate for help building the operational scaffolding needed to actually integrate Vitess.

So today the pair are revealing their new startup PlanetScale that makes it easy to build multi-cloud databases that handle enormous amounts of information without locking customers into Amazon, Google or Microsoft’s infrastructure. Battle-tested at YouTube, the technology could allow startups to fret less about their backend and focus more on their unique value proposition. “Now they don’t have to reinvent the wheel” Vaidya tells me. “A lot of companies facing this scaling problem end up solving it badly in-house and now there’s a way to solve that problem by using us to help.”

PlanetScale quietly raised a $3 million seed round in April, led by SignalFire and joined by a who’s who of engineering luminaries. They include YouTube co-founder and CTO Steve Chen, Quora CEO and former Facebook CTO Adam D’Angelo, former Dropbox CTO Aditya Agarwal, PayPal and Affirm co-founder Max Levchin, MuleSoft co-founder and CTO Ross Mason, Google director of engineering Parisa Tabriz and Facebook’s first female engineer and South Park Commons founder Ruchi Sanghvi. If anyone could foresee the need for Vitess implementation services, it’s these leaders, who’ve dealt with scaling headaches at tech’s top companies.

But how can a scrappy startup challenge the tech juggernauts for cloud supremacy? First, by actually working with them. The PlanetScale beta that’s now launching lets companies spin up Vitess clusters on its database-as-a-service, their own through a licensing deal, or on AWS with Google Cloud and Microsoft Azure coming shortly. Once these integrations with the tech giants are established, PlanetScale clients can use it as an interface for a multi-cloud setup where they could keep their data master copies on AWS US-West with replicas on Google Cloud in Ireland and elsewhere. That protects companies from becoming dependent on one provider and then getting stuck with price hikes or service problems.

PlanetScale also promises to uphold the principles that undergirded Vitess. “It’s our value that we will keep everything in the query pack completely open source so none of our customers ever have to worry about lock-in” Vaidya says.

PlanetScale co-founders (from left): Jiten Vaidya and Sugu Sougoumarane

Battle-tested, YouTube-approved

He and Sougoumarane met 25 years ago while at Indian Institute of Technology Bombay. Back in 1993 they worked at pioneering database company Informix together before it flamed out. Sougoumarane was eventually hired by Elon Musk as an early engineer for X.com before it got acquired by PayPal, and then left for YouTube. Vaidya was working at Google and the pair were reunited when it bought YouTube and Sougoumarane pulled him on to the team.

“YouTube was growing really quickly and the relationship database they were using with MySQL was sort of falling apart at the seams,” Vaidya recalls. Adding more CPU and memory to the database infra wasn’t cutting it, so the team created Vitess. The horizontal scaling sharding middleware for MySQL let users segment their database to reduce memory usage while still being able to rapidly run operations. YouTube has smoothly ridden that infrastructure to 1.8 billion users ever since.

“Sugu and Mike Solomon invented and made Vitess open source right from the beginning since 2010 because they knew the scaling problem wasn’t just for YouTube, and they’ll be at other companies five or 10 years later trying to solve the same problem,” Vaidya explains. That proved true, and now top apps like Square and HubSpot run entirely on Vitess, with Slack now 30 percent onboard.

Vaidya left YouTube in 2012 and became the lead engineer at Endorse, which got acquired by Dropbox, where he worked for four years. But in the meantime, the engineering community strayed toward MongoDB-style non-relational databases, which Vaidya considers inferior. He sees indexing issues and says that if the system hiccups during an operation, data can become inconsistent — a big problem for banking and commerce apps. “We think horizontally scaled relationship databases are more elegant and are something enterprises really need.

Database legends reunite

Fed up with the engineering heresy, a year ago Vaidya committed to creating PlanetScale. It’s composed of four core offerings: professional training in Vitess, on-demand support for open-source Vitess users, Vitess database-as-a-service on PlanetScale’s servers and software licensing for clients that want to run Vitess on premises or through other cloud providers. It lets companies re-shard their databases on the fly to relocate user data to comply with regulations like GDPR, safely migrate from other systems without major codebase changes, make on-demand changes and run on Kubernetes.

The PlanetScale team

PlanetScale’s customers now include Indonesian e-commerce giant Bukalapak, and it’s helping Booking.com, GitHub and New Relic migrate to open-source Vitess. Growth is suddenly ramping up due to inbound inquiries. Last month around when Square Cash became the No. 1 app, its engineering team published a blog post extolling the virtues of Vitess. Now everyone’s seeking help with Vitess sharding, and PlanetScale is waiting with open arms. “Jiten and Sugu are legends and know firsthand what companies require to be successful in this booming data landscape,” says Ilya Kirnos, founding partner and CTO of SignalFire.

The big cloud providers are trying to adapt to the relational database trend, with Google’s Cloud Spanner and Cloud SQL, and Amazon’s AWS SQL and AWS Aurora. Their huge networks and marketing war chests could pose a threat. But Vaidya insists that while it might be easy to get data into these systems, it can be a pain to get it out. PlanetScale is designed to give them freedom of optionality through its multi-cloud functionality so their eggs aren’t all in one basket.

Finding product market fit is tough enough. Trying to suddenly scale a popular app while also dealing with all the other challenges of growing a company can drive founders crazy. But if it’s good enough for YouTube, startups can trust PlanetScale to make databases one less thing they have to worry about.

Dec
13
2018
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Chorus.ai rings up $33M for its platform that analyses sales calls to close more deals

Chorus.ai, a service that listens to sales calls in real time, and then transcribes and analyses them to give helpful tips to the salesperson, has raised $33 million to double down on the current demand for more AI-based tools in the enterprise.

The Series B is being led by Georgian Partners, with participation also from Redpoint Ventures and Emergence Capital, previous investors that backed Israeli-founded, SF-based Chorus.ai in its $16 million Series A two years ago.

In the gap between then and now, the startup has seen strong growth, listening in to some 5 million calls, and performing hundreds of thousands of hours of transcriptions for around 200 customers, including Adobe, Zoom, and Outreach (among others that it will not name).

Micha Breakstone, the co-founder (who has a pretty long history in conversational AI, heading up R&D at Ginger Software and then Intel after it acquired the startup; and before that building the tech that eventually became Summly and got acquired by Yahoo, among other roles), says that while the platform gives information and updates to salespeople in real time, much of the focus today is on providing information to users post-conversation, based on both audio and video calls.

One of its big areas is “smart themes” — patterns and rules Chorus has learned through all those calls. For example, it has identified what kind of language the most successful sales people are using and in turn prompts those who are less successful to use it more. Two general tips Breakstone told me about: using more collaborative terms like we and us; and giving more backstory to clients, although there will be more specific themes and approaches based on Chorus’s specific customers and products.

“I’d say we are super attuned to our customers and what they need and want,” Breakstone said. Which makes sense given the whole premise of Chorus.

It also creates smart “playlists” for managers who will almost certainly never have the time to review hundreds of hours of calls but might want to hear instructive highlights or ‘red alert’ moments where a more senior person might need to step in to save or close a deal.

There are currently what seems like dozens of startups and larger businesses that are currently tackling the opportunity to provide “conversational intelligence” to sales teams, using advances in natural language processing, voice recognition, machine learning and big data to help turn every sales person into a Jerry Maguire (yes, I know he’s an agent, but still, he needs to close deals, and he’s a salesman). They include TalkIQ (which has now been acquired by Dialpad), People.AI, Gong, Voicera, VoiceOps, and I’m pulling from a long list.

“We were among the very first to start this, no one knew what conversational intelligence was before us,” Breakstone says. He describes most of what was out in the market at the time as “Nineties technology” and adds that “our tech is superior because we built it in the correct way from the ground up, with nothing sent to a third party.”

He says that this is one reason why the company has negative churn — it essentially wins customers and hasn’t lost any. And having the tech all in-house not only means the platform is smarter and more accurate, but that helps with compliance around regulations like GDPR, which also has been a boost to its business. It’s also scored well on metrics around reps hitting targets better with its tools (the company claims its products lead to 50 percent greater quota attainment and ‘ramp time’ up by 30 percent for new sales people who use it).

Chorus.ai has helped us become a smarter sales organization as we’ve scaled. We have visibility into our sales conversations and what is working across all of our offices”, said Greg Holmes, Head of Sales for Zoom Video Communications, in a statement. “We’ve seen a drastic reduction in new hire ramp times and higher sales productivity with even more reps hitting quota. Chorus.ai is a game changer.”

Chorus has raised $55 million to date and Breakstone said he would not disclose its valuation — despite my best attempts to use some of those sales tips to winkle the information out of him. But I understand it to be “significantly higher” than in its last round, and definitely in the hundreds of millions.

As a point of reference, after its Series A two years ago, it was only valued at around $33 million post-money according to PitchBook.

“Maintaining high-quality sales conversations as you scale a sales organization is hard for many companies, but key to delivering predictable revenue growth. Chorus.ai’s Conversation Intelligence platform solves that challenge with a market-leading solution that is easy-to-use and delivers best-in-class results.” said Simon Chong, Managing Partner at Georgian Partners, in a statement. (Chong is joining the board with this round.) “Chorus.ai works with some of the best sales teams in the world and they love the product. We are very excited to partner with Chorus.ai on their next phase of growth as they help world class sales teams reach higher quota attainment and efficiency.”

Dec
12
2018
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Tigera raises $30M Series B for its Kubernetes security and compliance platform

Tigera, a startup that offers security and compliance solutions for Kubernetes container deployments, today announced that it has raised a $30 million Series B round led by Insight Venture Partners. Existing investors Madrona, NEA and Wing also participated in this round.

Like everybody in the Kubernetes ecosystem, Tigera is exhibiting at KubeCon this week, so I caught up with the team to talk about the state of the company and its plans for this new raise.

“We are in a very exciting position,” Tigera president and CEO Ratan Tipirneni told me. “All the four public cloud players [AWS, Microsoft Azure, Google Cloud and IBM Cloud] have adopted us for their public Kubernetes service. The large Kubernetes distros like Red Hat and Docker are using us.” In addition, the team has signed up other enterprises, often in the healthcare and financial industry, and SaaS players (all of which it isn’t allowed to name) that use its service directly.

The company says that it didn’t need to raise right now. “We didn’t need the money right now, but we had a lot of incoming interest,” Tipirneni said. The company will use the funding to expand its engineering, marketing and customer success teams. In total, it plans to quadruple its sales force. In addition, it plans to set up a large office in Vancouver, Canada, mostly because of the availability of talent there.

In the legacy IT world, security and compliance solutions could rely on the knowledge that the underlying infrastructure was relatively stable. Now, though, with the advent of containers and DevOps, workloads are highly dynamic, but that also makes the challenge of securing them and ensuring compliance with regulations like HIPAA or standards like PCI more complex, too. The promise of Tigera’s solution is that it allows enterprises to ensure compliance by using a zero-trust model that authorizes each service on the network, encrypts all the traffic and enforces the policies the admins have set for their company and needs. All of this data is logged in detail and, if necessary, enterprises can pull it for incident management or forensic analysis. 

Dec
12
2018
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AI-powered knowledge-sharing platform Guru raises $25 million Series B

Guru, the enterprise-focused information-sharing platform, has today announced the close of a $25 million Series B funding led by Thrive Capital, with participation from existing investors Emergence Capital, FirstMark Capital, Slack Fund and Michael Dell’s MSD Capital.

Guru came on to the scene in 2013 with the premise that organizations are not so great at building out informational databases, nor are they very good at using them. So Guru built a Chrome extension that simply sits as a layer on employees’ computers and surfaces the right information whenever asked.

Specifically, this comes in handy for customer service agents and sales people who need to answer questions from people outside of the organization quickly and accurately.

This summer, Guru revamped the platform to incorporate a new feature set called AI Suggest. The feature simply auto-surfaces relevant information as the employee goes about their business, with no searches or inquiries necessary. The company also unveiled two versions of the feature, text and voice, so that it is still useful when employees are on the phone.

Companies that are sensitive about their information being shared with Guru can customize the level of access given to Guru, including or excluding certain third-party integrations etc., as well as how long information is stored on Guru. No personally identifying information about end-customers is ever stored on the Guru platform.

Over the past couple of years, Guru has brought on big-name clients, including BuzzFeed, Glossier, Intercom and Thumbtack.

Guru has signed on 200 new clients since the launch of AI Suggest in July, with a total of around 800 companies on the platform, representing thousands of users.

For now, the company is hyper-focused on growth.

“We are not profitable yet,” said co-founder and CEO Rick Nucci .” But we’re intentionally focused on growth. What prompted us to raise this round right now is to continue to execute on the momentum of the business.”

Guru has now raised a total of $27.5 million.

Dec
12
2018
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Software marketplace G2 Crowd acquires Siftery to fold software usage into its dataset

After raising $55 million in October at a $500 million valuation, business software marketplace G2 Crowd is making its first-ever acquisition to bring more features to its platform. It is acquiring Siftery, a startup that has built its own database of business software not on user reviews, but by providing a service to businesses where it identifies what is actually getting used and when across their networks.

Terms of the deal are not being disclosed, G2 Crowd’s CEO and founder Godard Abel said in an interview. Siftery had been around for a couple of years and had raised a seed round of $4.1 million from a group of notable investors, including Founders Fund, Felicis and Venrock. All 20 employees, including co-founders CEO Vamshi Mokshagundam and CTO Ayan Barua, are joining G2 Crowd.

G2 Crowd has been building a name for itself as a place where IT buyers can discover and buy software and services for solving specific issues; and if they already are already using or considering a product, a place where they can read other’s reviews and compare it against competitors.

There are some 550,000 reviews on the site today across nearly 60,000 products in 1,200 categories (those reviews are up by 50,000 in the last two months). Around 2 million business professionals visit and use the site each month, which they may go to because they are repeat users, or because G2 Crowd happens to have a very strong SEO game, with its links turning up at the top of the list when you do a search for a specific product or product category.

That economy of scale makes G2 Crowd a pretty logical home for Siftery, which had also provided a database of software for businesses, but at a much smaller scale and before it had been truly commercialised. Abel said that the startup had only around 1,500 customers, with most of them on a free version of the product.

“They were just getting to the point where there was a fork in the road,” he added. “What they hadn’t done yet is monetise and build a business, and we are product people at G2 Crowd.”

This also seems to be the stated logic for Siftery, too. “We’re excited to join the G2 Crowd team so we can more quickly realize our joint vision,” said Vamshi Mokshagundam, co-founder and CEO of Siftery, in a statement. “By becoming part of the G2 family, Siftery’s technology can reach millions more people, continue to develop rapidly, and have a bigger impact around the world in helping to eliminate wasted and inefficient software spend.”

Siftery’s additional functionality is interesting in terms of how G2 Crowd will develop going forward.

The smaller startup engaged with customers and their networks and provided insight into how much each product or service is actually getting used (not just enthused). That makes a handy way to determine whether money was being wasted on licenses for certain apps; or conversely whether companies are suffering from “shadow IT”: overpaying by not consolidating their purchasing and bargaining power. All that data subsequently also helped to provide insight to people searching its database to discover software.

The problem of overspending on software and apps happens to be a big one. G2 Crowd cites data from Netskope which estimates that the average enterprise now runs 1,246 cloud services, a figure that is growing over 10% each year. At the small business end, Siftery estimates that the average organization had 55 SaaS tools, more than doubling over the last three years.

And the challenge is still growing: across the range of company sizes, 35 percent more software gets trialled each year, with software budgets growing by 50 percent year-on-year for the past four. Some $1.4 trillion was spent on software and services last year, with waste in the UK and US collectively estimated at $34 billion, G2 Crowd said.

Abel said that for now the idea will be to keep Siftery’s product separate while it gets gradually integrated into G2 Crowd. There, it will potentially give the company another string in its bow in terms of the services it offers to businesses coming to its platform — and opting for paid usage tiers.

Interestingly, while G2 Crowd will likely continue to be popular as a marketplace to search for apps and services, this deal underscores how the company hopes to develop going forward. It has the opportunity to build a platform where organizations can manage their software, and potentially provide further tools to optimise how it is used, plan more deployments connected to it, and so on.

Abel has a long history building and selling startups focused around software productivity (most recently to Salesforce, but also to Oracle and before that CA), and that appears to be the direction he’s taking G2 Crowd, too. (Indeed, it seems to be part of a mini-wave of tech startups rethinking how businesses interact with software. Just earlier today, Nexthink out of Switzerland raised $85 million for its solution that helps enterprises monitor, triage and assist employees who encounter annoying software issues.)

Abel said that the engineering talent at Siftery was also a big attraction, and that could help shape other acquisitions going forward.

“I think we will look opportunistically,” he said. “It depends on finding a strong product and team.”

Dec
12
2018
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Nexthink raises $85M to monitor and improve ’employee experience’ of apps

As companies compete for talent, a startup that has built a platform to help ensure that the talent — once it’s working for you — doesn’t get bogged down by IT frustration, has raised a significant round of funding.

Lausanne, Switzerland-based Nexthink has nailed down $85 million in funding led by Index Ventures (which has a base in nearby Geneva), with participation also from Highland Europe, Forestay Capital, Galéo Capital and TOP Funds and Olivier Pomel (co-founder and CEO of Datadog).

Nexthink’s CEO Pedro Bados said in an interview that the company will be using this round to expand its business globally and specifically in the US.

It will be doing this from a healthy base. The company already has 900 enterprise customers, covering no less than 7 million endpoints, using its platform to improve employees’ interaction and satisfaction with the IT tools that they are required to use for work. Customers include Adobe, Advocate Healthcare, BlackRock, Commerzbank, Safran, Sega HARDlight, Tiffany & Co., Vitality, Wipro and Western Union.

Network monitoring is a big and established area in the world of IT, where tech companies provide a wide array of solutions to identify and potentially fix network glitches across on-premise, cloud and hybrid environments.

What is only becoming more apparent now to organizations is that problems with the dozens of apps and other software that employees need to use can be just as much, if not more, of an issue, when it comes to getting work done — for example, because something is not working in the app, the worker is unsure how to do something, or there is a configuration issue.

That is the issue that Nexthink is tackling. The company installs a widget — it calls it a Collector — on a worker’s phone, tablet, laptop, desktop computer, or whatever device is being used. That Collector in turn monitors hundreds of metrics around how you are using your device, ranging from performance issues and policy breaches through to examining what software is being used, and what is not.

Nexthink’s algorithms both identify and even can anticipate when a problem is happening, and either provide a quick suggestion to fix it, or provide the right data to the IT team to help solve the problem.

In the “marketplace” created in an IT network, you might think of Nexthink as solving problems at two ends: for the IT team, reduces the number of calls it gets by helping solve problems and providing useful information in cases where they will really be needed. For the employees, it gives them a quick and hopefully helpful response so that they can get on with their work.

“Not only are employees happy and more productive, but costs go down on support,” Bados says.

Nexthink has actually been around for 14 years — Bados co-founded Nexthink with Patrick Hertzog and Vincent Bieri not long after he finished his graduate research work in artificial intelligence at the polytechnic in Lausanne — and this latest round is larger than all the funding that the company had raised up to now, which had been $69 million.

That in itself is a sign of how VCs and the industry are waking up to the opportunity to address the challenge of software usability and experience and how that might affect employee satisfaction and productivity.

“We’ve known the company for a while and have a lot of respect for Pedro as a CEO,” said Neil Rimer of Index Ventures in an interview. “We’ve been watching what they have been building focusing on user experience and management, and it’s an area that we find compelling.” Plus the customer caliber and loyalty helped, he said. “The retention and lack of churn are all very impressive.”

Unsurprisingly, there are a number of others also moving into the same space as Nexthink, including Microsoft, VMware and Riverbed, as well as others like New Relic around the same neighborhood of services. For now, Bados says he sees these more as potential partners than rivals.

Dec
11
2018
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Dell’s long game is in hybrid and private clouds

When Dell voted to buy back the VMware tracking stock and go public again this morning, you had to be wondering what exactly the strategy was behind these moves. While it’s clearly about gaining financial flexibility, the $67 billion EMC deal has always been about setting up the company for a hybrid and private cloud future.

The hybrid cloud involves managing workloads on premises and in the cloud, while private clouds are ones that companies run themselves, either in their own data centers or on dedicated hardware in the public cloud.

Patrick Moorhead, founder and principal analyst at Moor Insight & Strategy, says this approach takes a longer investment timeline, and that required the changes we saw this morning. “I believe Dell Technologies can better invest in its hybrid world with longer-term investors as the investment will be longer term, at least five years,” he said. Part of that, he said, is due to the fact that many more on-prem to public connectors services need to be built.

Dell could be the company that helps build some of those missing pieces. It has always been at its heart a hardware company, and as such either of these approaches could play to its strengths. When the company paid $67 billion for EMC in 2016, it had to have a long-term plan in mind. Michael Dell’s parents didn’t raise no fool, and he saw an opportunity with that move to push his company in a new direction.

It was probably never about EMC’s core storage offerings, although a storage component was an essential ingredient in this vision. Dell and his investor’s eyes probably were more focused on other pieces inside the federation — the loosely coupled set of companies inside the broader EMC Corporation.

The VMware bridge

The crown jewel in that group was of course VMware, the company that introduced the enterprise to server virtualization. Today, it has taken residency in the hybrid world between the on-premises data center and the cloud. Armed with broad agreements with AWS, VMware finagled its way to be a key bridge between on prem and the monstrously popular Amazon cloud. IT pros used to working with VMware would certainly be comfortable using it as a cloud control panel as they shifted their workloads to AWS cloud virtual machines.

In fact, speaking at a press conference at AWS re:Invent earlier this month, AWS CEO Andy Jassy said the partnership with VMware has been really transformational for his company on a lot of different levels. “Most of the world is virtualized on top of VMware and VMware is at the core of most enterprises. When you start trying to solve people’s problems between being on premises and in the cloud, having the partnership we have with VMware allows us to find ways for customers to use the tools they’ve been using and be able to use them on top of our platform the way they want,” Jassy told the press conference.

The two companies also announced an extension of the partnership with the new AWS Outposts servers, which bring the AWS cloud on prem where customers can choose between using VMware or AWS to manage the workloads, whether they live in the cloud or on premises. It’s unclear whether AWS will extend this to other companies’ hardware, but if they do you can be sure Dell would want to be a part of that.

Pivotal’s key role

But it’s not just VMware that Dell had its sights on when it bought EMC, it was Pivotal too. This is another company, much like VMware, that is publicly traded and operates independently of Dell, even while living inside the Dell family of products. While VMware handles managing the server side of the house, Pivotal is about building software products.

When the company went public earlier this year, CEO Rob Mee told TechCrunch that Dell recognizes that Pivotal works better as an independent entity. “From the time Dell acquired EMC, Michael was clear with me: You run the company. I’m just here to help. Dell is our largest shareholder, but we run independently. There have been opportunities to test that [since the acquisition] and it has held true,” Mee said at the time.

Virtustream could also be a key piece providing a link to run traditional enterprise applications on multi-tenant clouds. EMC bought this company in 2015 for $1.2 billion, then later spun it out as a jointly owned venture of EMC and VMware later that year. The company provides another link between applications like SAP that once only ran on prem.

Surely it had to take all the pieces to get the ones it wanted most. It might have been a big price to pay for transformation, especially since you could argue that some of the pieces were probably past their freshness dates (although even older products bring with them plenty of legacy licensing and maintenance revenue).

Even though the long-term trend is shifting toward moving to the cloud, there will be workloads that stay on premises for some time to come. It seems that Dell is trying to position itself as the hybrid/private cloud vendor and all that entails to serve those who won’t be all cloud, all the time. Whether this strategy will work long term remains to be seen, but Dell appears to be betting the house on this approach, and today’s moves only solidified that.

Dec
11
2018
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InVision, valued at $1.9 billion, picks up $115 million Series F

“The screen is becoming the most important place in the world,” says InVision CEO and founder Clark Valberg . In fact, it’s hard to get through a conversation with him without hearing it. And, considering that his company has grown to $100 million in annual recurring revenue, he has reason to believe his own affirmation.

InVision, the startup looking to be the Salesforce of design, has officially achieved unicorn status with the close of a $115 million Series F round, bringing the company’s total funding to $350 million. This deal values InVision at $1.9 billion, which is nearly double its valuation as of mid-2017 on the heels of its $100 million Series E financing.

Spark Capital led the round, with participation from Goldman Sachs, as well as existing investors Battery Ventures, ICONIQ Capital, Tiger Global Management, FirstMark and Geodesic Capital. Atlassian also participated in the round. Earlier this year, Atlassian and InVision built out much deeper integrations, allowing Jira, Confluence and Trello users to instantly collaborate via InVision.

As part of the deal, Spark Capital’s Megan Quinn will be joining the board alongside existing board members and observers Amish Jani, Lee Fixel, Matthew Jacobson, Mike Kourey, Neeraj Agrawal, Vas Natarajan and Daniel Wolfson.

InVision started in 2011 as a simple prototyping tool. It let designers build out their experience without asking the engineering/dev team to actually build it, to then send to the engineering and product and marketing and executive teams for collaboration and/or approval.

Over the years, the company has stretched its efforts both up and downstream in the process, building out a full collaboration suite called InVision Cloud, so that every member of the organization can be involved in the design process; Studio, a design platform meant to take on the likes of Adobe and Sketch; and InVision Design System Manager, where design teams can manage their assets and best practices from one place.

But perhaps more impressive than InVision’s ability to build design products for designers is its ability to attract users that aren’t designers.

“Originally, I don’t think we appreciated how much the freemium model acted as a flywheel internally within an organization,” said Quinn. “Those designers weren’t just inviting designers from their own team or other teams, but PMs and Marketing and Customer Service and executives to collaborate and approve the designs. From the outside, InVision looks like a design company. But really, they start with the designer as a core customer and spread virally within an organization to serve a multitude.”

InVision has simply dominated prototyping and collaboration, today announcing it has surpassed 5 million users. What’s more, InVision has a wide variety of customers. The startup has a long and impressive list of digital-first customers — including Netflix, Uber, Airbnb and Twitter — but also serves 97 percent of the Fortune 100, with customers like Adidas, General Electric, NASA, IKEA, Starbucks and Toyota.

Part of that can be attributed to the quality of the products, but the fundamental shift to digital (as predicted by Valberg) is most certainly under way. Whether brands like it or not, customers are interacting with them more and more from behind a screen, and digital customer experience is becoming more and more important to all companies.

In fact, a McKinsey study showed that companies that are in the top quartile scores of the McKinsey Design Index outperformed their counterparts in both revenues and total returns to shareholders by as much as a factor of two.

But as with any transition, some folks are averse to change. Valberg identifies industry education and evangelism as two big challenges for InVision.

“Organizations are not quick to change on things like design, which is why we’ve built out a Design Transformation Team,” said Valberg. “The team goes in and gets hands on with brands to help them with new practices and to achieve design maturity within the organization.”

With a fresh $115 million and 5 million users, InVision has just about everything it needs to step into a new tier of competition. Even amongst behemoths like Adobe, which pulled in $2.29 billion in revenue in Q3 alone, InVision has provided products that can both complement and compete.

But Quinn believes the future of InVision rests on execution.

“As with most companies, the biggest challenge will be continued excellence in execution,” said Quinn. “InVision has all the right tail winds with the right team, a great product and excellent customers. It’s all about building and executing ahead of where the pack is going.”

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