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Index Ventures, Stripe back bookkeeping service Pilot with $40M

Posted by on Apr 18, 2019 in computing, Dropbox, Finance, funding, Index Ventures, jessica mckellar, ksplice, linux, MIT, oracle, San Francisco, Software, Startup company, Startups, stripe, Waseem Daher, zulip | 0 comments

Five years after Dropbox acquired their startup Zulip, Waseem Daher, Jeff Arnold and Jessica McKellar have gained traction for their third business together: Pilot.

Pilot helps startups and small businesses manage their back office. Chief executive officer Daher admits it may seem a little boring, but the market opportunity is undeniably huge. To tackle the market, Pilot is today announcing a $40 million Series B led by Index Ventures with participation from Stripe, the online payment processing system.

The round values Pilot, which has raised about $60 million to date, at $355 million.

“It’s a massive industry that has sucked in the past,” Daher told TechCrunch. “People want a really high-quality solution to the bookkeeping problem. The market really wants this to exist and we’ve assembled a world-class team that’s capable of knocking this out of the park.”

San Francisco-based Pilot launched in 2017, more than a decade after the three founders met in MIT’s student computing group. It’s not surprising they’ve garnered attention from venture capitalists, given that their first two companies resulted in notable acquisitions.

Pilot has taken on a massively overlooked but strategic segment — bookkeeping,” Index’s Mark Goldberg told TechCrunch via email. “While dry on the surface, the opportunity is enormous given that an estimated $60 billion is spent on bookkeeping and accounting in the U.S. alone. It’s a service industry that can finally be automated with technology and this is the perfect team to take this on — third-time founders with a perfect combo of financial acumen and engineering.”

The trio of founders’ first project, Linux upgrade software called Ksplice, sold to Oracle in 2011. Their next business, Zulip, exited to Dropbox before it even had the chance to publicly launch.

It was actually upon building Ksplice that Daher and team realized their dire need for tech-enabled bookkeeping solutions.

“We built something internally like this as a byproduct of just running [Ksplice],” Daher explained. “When Oracle was acquiring our company, we met with their finance people and we described this system to them and they were blown away.”

It took a few years for the team to refocus their efforts on streamlining back-office processes for startups, opting to build business chat software in Zulip first.

Pilot’s software integrates with other financial services products to bring the bookkeeping process into the 21st century. Its platform, for example, works seamlessly on top of QuickBooks so customers aren’t wasting precious time updating and managing the accounting application.

“It’s better than the slow, painful process of doing it yourself and it’s better than hiring a third-party bookkeeper,” Daher said. “If you care at all about having the work be high-quality, you have to have software do it. People aren’t good at these mechanical, repetitive, formula-driven tasks.”

Currently, Pilot handles bookkeeping for more than $100 million per month in financial transactions but hopes to use the infusion of venture funding to accelerate customer adoption. The company also plans to launch a tax prep offering that they say will make the tax prep experience “easy and seamless.”

“It’s our first foray into Pilot’s larger mission, which is taking care of running your companies entire back office so you can focus on your business,” Daher said.

As for whether the team will sell to another big acquirer, it’s unlikely.

“The opportunity for Pilot is so large and so substantive, I think it would be a mistake for this to be anything other than a large and enduring public company,” Daher said. “This is the company that we’re going to do this with.”


Source: The Tech Crunch

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Former Dropbox exec Dennis Woodside joins Impossible Foods as its first President

Posted by on Mar 14, 2019 in California, Chief Operating Officer, cloud storage, Companies, computing, dennis woodside, Dropbox, executive, Food, food and drink, Google, Impossible foods, manufacturing, meat substitutes, Motorola Mobility, president, Redwood City, Singapore, supply chain, TC, United States | 0 comments

Former Google and Dropbox executive Dennis Woodside has joined the meat replacement developer Impossible Foods as the company’s first President.

Woodside, who previously shepherded Dropbox through its initial public offering, is a longtime technology executive who is making his first foray into the food business.

The 25-year tech industry veteran most recently served as the chief operating officer of Dropbox, and previously was the chief executive of Motorola Mobility after that company’s acquisition by Google.

“I love what Impossible Foods is doing: using science and technology to deliver delicious and nutritious foods that people love, in an environmentally sustainable way,” Woodside said. “I’m equally thrilled to focus on providing the award-winning Impossible Burger and future products to millions of consumers, restaurants and retailers.”

According to a statement, Woodside will be responsible for the company’s operations, manufacturing, supply chain, sales, marketing, human resources and other functions.

The company currently has a staff of 350 divided between its Redwood City, Calif. and Oakland manufacturing plant.

Impossible Foods now slings its burger in restaurants across the United States, Hong Kong, Macau and Singapore and is expecting to launch a grocery store product later this year.


Source: The Tech Crunch

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GM Cruise snags Dropbox HR head to hire at least 1,000 engineers by end of year

Posted by on Mar 11, 2019 in Arden Hoffman, Artificial Intelligence, Automotive, autonomous vehicles, chief technology officer, cloud storage, computing, cruise, Cruise Automation, Dan Ammann, Dropbox, executive, General Motors, Google, honda, Kyle Vogt, Lidar, Personnel, San Francisco, Seattle, Softbank, Software, software engineering, strobe, Transportation | 0 comments

GM Cruise plans to hire hundreds of employees over the next nine months, doubling its engineering staff, TechCrunch has learned. It’s an aggressive move by the autonomous vehicle technology company to double its size as it pushes to deploy a robotaxi service by the end of the year. Arden Hoffman, who helped scale Dropbox, will leave the file-sharing and storage company to head up human resources at Cruise.

The GM subsidiary, which has more than 1,000 employees, is expanding its office space in San Francisco to accommodate the growth. GM Cruise will keep its headquarters at 1201 Bryant Street in San Francisco. The company will also take over Dropbox headquarters at 333 Brannan Street some time this year, a move that will triple Cruise’s office space in San Francisco.

“Arden has made a huge impact on Dropbox over the last four years. She helped build and scale our team and culture to the over 2300 person company we are today, and we‘ll miss her leadership, determination, and sense of humor. While we’re sorry to see her go, we’re excited for her and wish her all the best in this new opportunity to grow the team at Cruise,” a Dropbox spokesperson said in an emailed statement. 

Prior to joining Dropbox, Hoffman was human resources director at Google for three years.

The planned expansion and hiring of Hoffman follows a recent executive reshuffling. GM president Dan Ammann left the automaker in December and became CEO of Cruise. Ammann had been president of GM since 2014, and he was a central figure in the automaker’s 2016 acquisition of Cruise and its integration with GM.

Kyle Vogt,  a Cruise co-founder who was CEO and also unofficially handled the chief technology officer position, is now president and CTO.

Cruise has grown from a small startup with 40 employees to more than 1,000 today at its San Francisco headquarters. It has expanded to Seattle, as well, in pursuit of talent. Cruise announced plans in November to open an office in Seattle and staff it with up to 200 engineers. And with the recent investments by SoftBank and Honda, which has pushed Cruise’s valuation to $14.6 billion, it has the runway to double its staff.

The hunt for qualified people with backgrounds in software engineering, robotics and AI has heated up as companies race to develop and deploy autonomous vehicles. There are more than 60 companies that have permits from the California Department of Motor Vehicles to test autonomous vehicles in the state.

Competition over talent has led to generous, even outrageous, compensation packages and poaching of people with specific skills.

Cruise’s announcement puts more pressure on that ever-tightening pool of talent. Cruise has something that many other autonomous vehicle technology companies don’t — ready amounts of capital. In May, Cruise received a $2.25 billion investment by SoftBank’s vision fund. Honda also committed $2.75 billion as part of an exclusive agreement with GM and Cruise to develop and produce a new kind of autonomous vehicle.

As part of that agreement, Honda will invest $2 billion into the effort over the next 12 years. Honda also is making an immediate and direct equity investment of $750 million into Cruise.

Cruise will likely pursue a dual path of traditional recruitment and acquisitions to hit that 1,000-engineer mark. It’s a strategy Cruise is already pursuing. Last year, Cruise acquired Zippy.ai, which develops robots for last-mile grocery and package delivery, for an undisclosed amount of money. The deal was more of an acqui-hire and did not include any of Zippy’s product or intellectual property. Instead, it seems Cruise was more interested in the skill sets of the co-founders, Gabe Sibley, Alex Flint and Chris Broaddus, and their team.

In 2017, Cruise also acquired Strobe,  a LiDAR sensor maker. At the time, Cruise said Strobe would help it reduce by nearly 100 percent the cost of LiDAR on a per-vehicle basis.


Source: The Tech Crunch

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Patreon’s future and potential exits

Posted by on Feb 23, 2019 in Dropbox, EC-1, Endeavor, Facebook, jack conte, Media, Patreon, Shopify, YouTube | 0 comments

Through the Extra Crunch EC-1 on Patreon, I dove into Patreon’s founding story, product roadmap, business model and metrics, underlying thesis, and competitive threats. The six-year-old company last valued around $450 million and likely to soon hit $1 billion is the leading platform for artists to run membership businesses for their superfans.

As a conclusion to my report, I have three core takeaways and some predictions on the possibility of an IPO or acquisition in the company’s future.

The future is bright for creators

First, the future is promising for independent content creators who are building engaged, passionate fanbases.

There is a surge of interest from the biggest social media platforms in creating more features to help them directly monetize their fans — with each trying to one-up the others. There are also a growing number of independent solutions for creators to use as well (Patreon and Memberful, Substack, Pico, etc.).

We live in an economy where a soaring number of people are self-employed, and the rise of more monetization tools for creators to earn a stable income will open the door to more people turning their creative talents into a part-time or full-time business pursuit.

Membership is a niche market and it’s unclear how big the opportunity is

Patreon’s play is to own a niche category of SMB who it recognizes has particular needs and provide them with the comprehensive suite of tools and services they need to manage their businesses. A large portion of creators’ incomes will need to go to Patreon for it to someday earn billions of dollars in annual revenue.

The market for content creators to build membership businesses appears to be growing, however, membership will be only one piece of the fan-to-creator monetization wave. The number of creators who are a fit for the membership business model and could generate $1,000-500,000 per month through Patreon (its target customer profile) is likely measured in the tens of thousands or low hundreds of thousands right now, rather than in the millions.

To get a sense of the revenue math here, Patreon will generate about $35 million this year from the 5,000-6,000 creators who fit its target customer profile; if you believe this market is expanding at a fast clip, capturing 10% of the revenue (Patreon’s current commission) from 20,000 such creators could bring in $140 million. And that’s without factoring in the potential success of Patreon implementing premium pricing options, which is a high priority. If Patreon can increase its commission from 10% to 15%, it would need around 47,500 creators in the $1,000-$500,000/month range (9.5x its current number) to reach $500 million in revenue from them.

There is a compelling opportunity for a company to provide the dominant business hub for creators, with tools to manage their fan (i.e. customer) relationships across platforms and to manage back-office logistics. At a certain point it taps out though.

That’s one of the reasons why Patreon’s vision includes extending into areas like business loans and healthcare. For companies targeting small and medium businesses like Shopify, Salesforce and Dropbox, there is so much more growth tied to their core products that there is no need for them to consider such unrelated offerings as business loans. Patreon has to both expand its market share and also expand the services it offers to those customers if it wants to reach massive scale.

Patreon faces serious competition but is evolving in the right direction

Patreon is the leading contender in this market, and there’s a role for an independent player even if Facebook, YouTube, and other distribution platforms push directly competing functionality. Patreon will need to make three important changes to compete effectively: more aggressively segment its customers, make the consumer-facing side of its platform more customizable by creators, and build out more lightweight talent management services.

What’s next for Patreon?

Having raised over $100 million in funding over the last six years, what is the path to a liquidity event for investors and employees? 

In a worst case scenario, it is unlikely the company would go out of business even if it fell into disarray because it would be strategic for several large companies to takeover at a discount. Patreon may be on the path to IPO (as CEO Jack Conte hopes), but I find it more likely that the company gets acquired sometime in the next couple years.

Path to IPO?

If a public offering is in Patreon’s future, it’s several years out. It now defines itself as a SaaS company and has a plan to earn a higher blended commission on the sales of its customers through premium pricing options. It is a frequently misunderstood company, however, and needs to prove that a big market exists for mid-tail creators building membership businesses. 

According to a summary by Spark Capital’s Alex Clayton, SaaS companies who went public in 2018 typically:

    • had $100-200 million in revenue over the prior twelve months,
    • were 14 years old,
    • had an average year-over-year revenue growth rate of ~40%,
    • earned 90% of revenue from subscriptions,
    • had a median gross margin of 73%,
    • ranged from roughly 500 to 2500 employees,
    • had a raised a median of $300 million in VC funding,
    • and IPO’d with a median market cap of $2 billion

Public market companies to benchmark it against will be Shopify (as SaaS infrastructure for small businesses selling to, and managing payments from, consumers) and Zuora (Patreon can be viewed as a media-specific SMB alternative to Zuora’s “Subscription Relationship Management” system). Compared to Shopify, whose market of SMB e-commerce businesses globally is easily understood to be enormous, Patreon would face more skepticism from public investors about the market size of mid-tail content creators.

Patreon’s gross margins can’t be much more than 50% given that almost half of revenue is going toward payment processing. Patreon mirrors Shopify’s topline revenue growth in the run up to its 2015 IPO: Shopify reported $23.7 million for 2012, $50.3 million for 2013, $105 million for 2014 and I estimate Patreon brought in $15 million for 2017, $30 million for 2018, and will hit $55 million for 2019. Most of Shopify’s revenue came from subscriptions, however, with only 37% coming from the “merchant solutions” services where Shopify had to pay out payment processing fees. Patreon’s revenue net of payment processing fees is closer to $7.5 million for 2017, $15 million for 2018, and $27 million (predicted) for 2019.

There’s a lot of capital chasing late-stage startups right now. How long that remains the case is unknown, but Patreon can likely raise the funding to operate unprofitably a few more years — getting topline revenue closer to $150-200 million, proving creators will adopt premium pricing, and showcasing its ability to compete with Facebook and YouTube in a growing market. In that case, it could become a strong IPO candidate.

The acquisition route

The other scenario, of course, is that a larger company buys Patreon. In particular, one of the large social media platforms building directly competitive features may decide it is easier to buy their expansion into membership than build it from scratch. Patreon is the dominant platform without any noteworthy direct competitor among independent companies, so acquiring it would immediately put the parent company in a market-leading position. Competing social platforms wouldn’t have another large Patreon-like startup to acquire in response.

There are three companies that jump out as both the most likely acquirers. Each of these M&A scenarios would be mutually beneficial: advancing Patreon’s mission and providing strategic value to the parent. The first two companies are probably obvious, but the last one may be less known to TechCrunch readers.

Facebook

I highlighted Facebook as the top competitive threat to Patreon. This is also why it’s a natural acquirer. Patreon would bring fan relationship management to the Facebook ecosystem and particularly the company’s Creator App with CRM and analytics specifically fit for creators’ needs. It would also bring a stable of 130,000 creators of all types to make Facebook the primary infrastructure through which they engage their core fans.

Facebook is prioritizing human relationships more and clickbait content less. A natural replacement for the flood of news articles and viral videos is deeper engagement with the creators that Facebook users care the most about.

Since the annual churn rate of Patreon creators who earn $500 per month or more is under 1%, the ~9,200 creators who fit that category would likely stick around as Patreon’s infrastructure integrates with Facebook’s; the vast majority probably already have Facebook pages and possibly use the Creator App.

Facebook’s data on who fans are, what they like, and who their friends are is unrivalled. The insights Facebook could provide Patreon’s creators on their fans could help them substantially grow their number of patrons and build stronger relationships with them.

Like all major social media platforms, Facebook has partnership teams vying to get major celebrities to use its products. Patreon could lock the mid-tail of smaller (but still established) creators into its ecosystem, which means more consumer engagement, more time well spent, and more revenue through both ads and fan-to-creator transactions. Owning and integrating Patreon could have a much bigger financial benefit than solely revenue from the core Patreon product.

As a Facebook subsidiary, Patreon would stick more closely to being a software solution; it wouldn’t develop as robust of a creator support staff and the vision that it may expand to offer business loans and health insurance to creators would almost surely be cut. Facebook would also probably discontinue supporting the roughly 23% of Patreon creators who make not-safe-for-work (NSFW) content.

Given Patreon’s mission to help creators get paid, it may make a bigger impact as part of Facebook nonetheless. Facebook’s ecosystem of apps is where creators and their fans already are. Tens of thousands of creators could start using Patreon’s CRM infrastructure overnight and activating fan memberships to earn stable income.

A Facebook-Patreon deal could happen at any point. I think a deal could just as likely happen in a few months as in a few years. The key will be Facebook’s business strategy: does it want to build serious infrastructure for creators? And does it believe paywalled access to some content and groups fits the future of Facebook? The company is experimenting with both of those right now, but doesn’t appear to be committed as of yet.

YouTube

The other most likely acquirer is Google-owned YouTube. Patreon was birthed by a YouTuber to support himself and fellow creators after their AdSense income dropped substantially. YouTube is becoming a direct competitor through YouTube Memberships and merchandise integrations.

If Patreon shows initial success in getting creators to adopt premium pricing tiers and YouTube sees a strong response to the membership functionality it has rolled out, it’s hard to imagine YouTube not making a play to acquire Patreon and make membership a priority in product development. This would create a whole new market for it to dominate, making money by selling business features to creators and encouraging fan-to-creator payments to happen through its platform.

In the meantime, it seems that YouTube is still searching for an answer to whether membership fits within its scope. It previously removed the ability for creators to paywall some videos and it could view fan-to-creator monetization efforts as a distraction from its dominance as an advertising platform and its growing strength in streaming TV online (through the popular $40/month YouTube TV subscription).

YouTube is also a less compelling acquirer than Facebook because the majority of Patreon’s creators don’t have a place on YouTube since they don’t produce video content (as least as their primary content type). Unless YouTube expands its platform to support podcasts and still images as well, it would be paying a premium to acquire the subset of Patreon creators that it wants. Moreover, as much as a quarter of those may be creators of NSFW content that YouTube prohibits.

YouTube is the potential Patreon acquirer people immediately point to, but it’s not as tight of a fit as Facebook would be…or as Endeavor would be.

Endeavor

The third scenario is that a major company in the entertainment and talent representation sphere sees acquiring Patreon as a strategic play to expand into a whole new category of talent representation with a technology-first approach.  There is only one contender here: Endeavor, the $6.3 billion holding company led by Ari Emanuel and Patrick Whitesell that is backed by Silver Lake, Softbank, Fidelity, and Singapore’s GIC and has been on an acquisition spree.

This pairing shows promise. Facebook and YouTube are the most likely companies to acquire Patreon, but Endeavor may be the company best fit to acquire it.

Endeavor is an ecosystem of companies — with the world’s top talent agency WME-IMG at the center — that can each integrate with each other in different ways to collectively become a driving force in global entertainment, sports and fashion. Among the 25+ companies it has bought are sports leagues like the UFC (for $4 billion) and the video streaming infrastructure startup NeuLion (for $250 million). In September, it launched a division, Endeavor Audio, to develop, finance and market podcasts.

Endeavor wants to leverage its talent and evolve its revenue model toward scalable businesses. In 2015, Emanuel said revenue was 60% from representation and 40% from “the ownership of assets” but quickly shifting; last year Variety noted the revenue split as 50/50.

In alignment with Patreon, Endeavor is a big company centered on guiding the business activities of all types of artists and helping them build out (and maximize) new revenue streams. When you hear Emanuel and Whitesell, they reiterate the same talking points that Patreon CEO Jack Conte does: artists are now multifaceted, and not stuck to one activity. They are building their own businesses and don’t want to be beholden to distribution platforms. Patreon could thrive under Endeavor given their alignment of values and mission. Endeavor would want Patreon to grow in line with Conte’s vision, without fearing that it would cannibalize ad revenue (a concern Facebook and YouTube would both have).

In a June interview, Whitesell noted that Endeavor’s M&A is targeted at companies that either expand their existing businesses or ones where they can uniquely leverage their existing businesses to grow much faster than they otherwise could. Patreon fits both conditions.

Patreon would be the scalable asset that plugs the mid-tail of creators into the Endeavor ecosystem. Whereas WME-IMG is high-touch relationship management with a little bit of tech, Patreon is a tech company with a layer of talent relationship management. Patreon can serve tens of thousands of money-making creators at scale. Endeavor can bring its talent expertise to help Patreon provide better service to creators; Patreon would bring technology expertise to help Endeavor’s traditional talent representation businesses better analyze clients’ fanbases and build direct fan-to-creator revenue streams for clients.

If there’s opportunity to eventually expand the membership business model among the top tiers of creators using Patreon.com or Memberful (which Conte hinted at in our interviews), Endeavor could facilitate the initial experiments with major VIPs. If memberships are shown to make more money for top artists, that means more money in the pockets of their agents at WME-IMG and for Endeavor overall, so incentives are aligned.

Endeavor would also rid Patreon of the “starving artist” brand that still accompanies it and could open a lot of doors in for Patreon creators whose careers are gaining momentum. Perhaps other Endeavor companies could access Patreon data to identify specific creators fit for other opportunities.

An Endeavor-Patreon deal would need to occur before Patreon’s valuation gets too high. Endeavor doesn’t have tens of billions in cash sitting on its balance sheet like Google and Facebook do. Endeavor can’t use much debt to buy Patreon either: its leverage ratio is already high, resulting in Moody’s putting its credit rating under review for downgrade in December. Endeavor has repeatedly raised more equity funding though and is likely to do so again; it canceled a $400M investment from the Saudi government at the last minute in October due to political concerns but is likely pitching other investors to take its place.

Patreon has strong revenue growth and the opportunity to retain dominant market share in providing business infrastructure for creators — a market that seems to be growing. Whether it stays independent and can thrive in the public markets sometime or whether it will find more success under the umbrella of a strategic acquirer remains to be seen. Right now the latter path is the more compelling one.


Source: The Tech Crunch

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How students are founding, funding and joining startups

Posted by on Feb 6, 2019 in Accel, Accel Scholars, Alumni Ventures Group, Amanda Bradford, Artificial Intelligence, Bill Gates, boston, coinbase, Column, CRM, CrunchBase, distributed systems, Dorm Room Fund, Drew Houston, Dropbox, editor-in-chief, Energy, entrepreneurship, Facebook, Finance, FiscalNote, Forward, General Catalyst, Graduate Fund, greylock, harvard, Jeremy Liew, Kleiner Perkins, lightspeed, Mark Zuckerberg, MIT, Pear Ventures, peter boyce, Pinterest, Private Equity, Series A, stanford, Start-Up Chile, Startup company, Startups, TC, TechStars, True Ventures, Ubiquity6, uc-berkeley, United States, upenn, Venture Capital, venture capital Firms, Warby Parker, Y Combinator | 0 comments

There has never been a better time to start, join or fund a startup as a student. 

Young founders who want to start companies while still in school have an increasing number of resources to tap into that exist just for them. Students that want to learn how to build companies can apply to an increasing number of fast-track programs that allow them to gain valuable early stage operating experience. The energy around student entrepreneurship today is incredible. I’ve been immersed in this community as an investor and adviser for some time now, and to say the least, I’m continually blown away by what the next generation of innovators are dreaming up (from Analytical Space’s global data relay service for satellites to Brooklinen’s reinvention of the luxury bed).

Bill Gates in 1973

First, let’s look at student founders and why they’re important. Student entrepreneurs have long been an important foundation of the startup ecosystem. Many students wrestle with how best to learn while in school —some students learn best through lectures, while more entrepreneurial students like author Julian Docks find it best to leave the classroom altogether and build a business instead.

Indeed, some of our most iconic founders are Microsoft’s Bill Gates and Facebook’s Mark Zuckerberg, both student entrepreneurs who launched their startups at Harvard and then dropped out to build their companies into major tech giants. A sample of the current generation of marquee companies founded on college campuses include Snap at Stanford ($29B valuation at IPO), Warby Parker at Wharton (~$2B valuation), Rent The Runway at HBS (~$1B valuation), and Brex at Stanford (~$1B valuation).

Some of today’s most celebrated tech leaders built their first ventures while in school — even if some student startups fail, the critical first-time founder experience is an invaluable education in how to build great companies. Perhaps the best example of this that I could find is Drew Houston at Dropbox (~$9B valuation at IPO), who previously founded an edtech startup at MIT that, in his words, provided a: “great introduction to the wild world of starting companies.”

Student founders are everywhere, but the highest concentration of venture-backed student founders can be found at just 5 universities. Based on venture fund portfolio data from the last six years, Harvard, Stanford, MIT, UPenn, and UC Berkeley have produced the highest number of student-founded companies that went on to raise $1 million or more in seed capital. Some prospective students will even enroll in a university specifically for its reputation of churning out great entrepreneurs. This is not to say that great companies are not being built out of other universities, nor does it mean students can’t find resources outside a select number of schools. As you can see later in this essay, there are a number of new ways students all around the country can tap into the startup ecosystem. For further reading, PitchBook produces an excellent report each year that tracks where all entrepreneurs earned their undergraduate degrees.

Student founders have a number of new media resources to turn to. New email newsletters focused on student entrepreneurship like Justine and Olivia Moore’s Accelerated and Kyle Robertson’s StartU offer new channels for young founders to reach large audiences. Justine and Olivia, the minds behind Accelerated, have a lot of street cred— they launched Stanford’s on-campus incubator Cardinal Ventures before landing as investors at CRV.

StartU goes above and beyond to be a resource to founders they profile by helping to connect them with investors (they’re active at 12 universities), and run a podcast hosted by their Editor-in-Chief Johnny Hammond that is top notch. My bet is that traditional media will point a larger spotlight at student entrepreneurship going forward.

New pools of capital are also available that are specifically for student founders. There are four categories that I call special attention to:

  • University-affiliated accelerator programs
  • University-affiliated angel networks
  • Professional venture funds investing at specific universities
  • Professional venture funds investing through student scouts

While it is difficult to estimate exactly how much capital has been deployed by each, there is no denying that there has been an explosion in the number of programs that address the pre-seed phase. A sample of the programs available at the Top 5 universities listed above are in the graphic below — listing every resource at every university would be difficult as there are so many.

One alumni-centric fund to highlight is the Alumni Ventures Group, which pools LP capital from alumni at specific universities, then launches individual venture funds that invest in founders connected to those universities (e.g. students, alumni, professors, etc.). Through this model, they’ve deployed more than $200M per year! Another highlight has been student scout programs — which vary in the degree of autonomy and capital invested — but essentially empower students to identify and fund high-potential student-founded companies for their parent venture funds. On campuses with a large concentration of student founders, it is not uncommon to find student scouts from as many as 12 different venture funds actively sourcing deals (as is made clear from David Tao’s analysis at UC Berkeley).

Investment Team at Rough Draft Ventures

In my opinion, the two institutions that have the most expansive line of sight into the student entrepreneurship landscape are First Round’s Dorm Room Fund and General Catalyst’s Rough Draft VenturesSince 2012, these two funds have operated a nationwide network of student scouts that have invested $20K — $25K checks into companies founded by student entrepreneurs at 40+ universities. “Scout” is a loose term and doesn’t do it justice — the student investors at these two funds are almost entirely autonomous, have built their own platform services to support portfolio companies, and have launched programs to incubate companies built by female founders and founders of color. Another student-run fund worth noting that has reach beyond a single region is Contrary Capital, which raised $2.2M last year. They do a particularly great job of reaching founders at a diverse set of schools — their network of student scouts are active at 45 universities and have spoken with 3,000 founders per year since getting started. Contrary is also testing out what they describe as a “YC for university-based founders”. In their first cohort, 100% of their companies raised a pre-seed round after Contrary’s demo day. Another even more recently launched organization is The MBA Fund, which caters to founders from the business schools at Harvard, Wharton, and Stanford. While super exciting, these two funds only launched very recently and manage portfolios that are not large enough for analysis just yet.

Over the last few months, I’ve collected and cross-referenced publicly available data from both Dorm Room Fund and Rough Draft Ventures to assess the state of student entrepreneurship in the United States. Companies were pulled from each fund’s portfolio page, then checked against Crunchbase for amount raised, accelerator participation, and other metrics. If you’d like to sift through the data yourself, feel free to ping me — my email can be found at the end of this article. To be clear, this does not represent the full scope of investment activity at either fund — many companies in the portfolios of both funds remain confidential and unlisted for good reasons (e.g. startups working in stealth). In fact, the In addition, data for early stage companies is notoriously variable in quality, even with Crunchbase. You should read these insights as directional only, given the debatable confidence interval. Still, the data is still interesting and give good indicators for the health of student entrepreneurship today.

Dorm Room Fund and Rough Draft Ventures have invested in 230+ student-founded companies that have gone on to raise nearly $1 billion in follow on capital. These funds have invested in a diverse range of companies, from govtech (e.g. mark43, raised $77M+ and FiscalNote, raised $50M+) to space tech (e.g. Capella Space, raised ~$34M). Several portfolio companies have had successful exits, such as crypto startup Distributed Systems (acquired by Coinbase) and social networking startup tbh (acquired by Facebook). While it is too early to evaluate the success of these funds on a returns basis (both were launched just 6 years ago), we can get a sense of success by evaluating the rates by which portfolio companies raise additional capital. Taken together, 34% of DRF and RDV companies in our data set have raised $1 million or more in seed capital. For a rough comparison, CB Insights cites that 40% of YC companies and 48% of Techstars companies successfully raise follow on capital (defined as anything above $750K). Certainly within the ballpark!

Source: Crunchbase

Dorm Room Fund and Rough Draft Ventures companies in our data set have an 11–12% rate of survivorship to Series A. As a benchmark, a previous partner at Y Combinator shared that 20% of their accelerator companies raise Series A capital (YC declined to share the official figure, but it’s likely a stat that is increasing given their new Series A support programs. For further reading, check out YC’s reflection on what they’ve learned about helping their companies raise Series A funding). In any case, DRF and RDV’s numbers should be taken with a grain of salt, as the average age of their portfolio companies is very low and raising Series A rounds generally takes time. Ultimately, it is clear that DRF and RDV are active in the earlier (and riskier) phases of the startup journey.

Dorm Room Fund and Rough Draft Ventures send 18–25% of their portfolio companies to Y Combinator or Techstars. Given YC’s 1.5% acceptance rate as reported in Fortune, this is quite significant! Internally, these two funds offer founders an opportunity to participate in mock interviews with YC and Techstars alumni, as well as tap into their communities for peer support (e.g. advice on pitch decks and application content). As a result, Dorm Room Fund and Rough Draft Ventures regularly send cohorts of founders to these prestigious accelerator programs. Based on our data set, 17–20% of DRF and RDV companies that attend one of these accelerators end up raising Series A venture financing.

Source: Crunchbase

Dorm Room Fund and Rough Draft Ventures don’t invest in the same companies. When we take a deeper look at one specific ecosystem where these two funds have been equally active over the last several years — Boston — we actually see that the degree of investment overlap for companies that have raised $1M+ seed rounds sits at 26%. This suggests that these funds are either a) seeing different dealflow or b) have widely different investment decision-making.

Source: Crunchbase

Dorm Room Fund and Rough Draft Ventures should not just be measured by a returns-basis today, as it’s too early. I hypothesize that DRF and RDV are actually encouraging more entrepreneurial activity in the ecosystem (more students decide to start companies while in school) as well as improving long-term founder outcomes amongst students they touch (portfolio founders build bigger and more successful companies later in their careers). As more students start companies, there’s likely a positive feedback loop where there’s increasing peer pressure to start a company or lean on friends for founder support (e.g. feedback, advice, etc).Both of these subjects warrant additional study, but it’s likely too early to conduct these analyses today.

Dorm Room Fund and Rough Draft Ventures have impressive alumni that you will want to track. 1 in 4 alumni partners are founders, and 29% of these founder alumni have raised $1M+ seed rounds for their companies. These include Anjney Midha’s augmented reality startup Ubiquity6 (raised $37M+), Shubham Goel’s investor-focused CRM startup Affinity (raised $13M+), Bruno Faviero’s AI security software startup Synapse (raised $6M+), Amanda Bradford’s dating app The League (raised $2M+), and Dillon Chen’s blockchain startup Commonwealth Labs (raised $1.7M). It makes sense to me that alumni from these communities that decide to start companies have an advantage over their peers — they know what good companies look like and they can tap into powerful networks of young talent / experienced investors.

Beyond Dorm Room Fund and Rough Draft Ventures, some venture capital firms focus on incubation for student-founded startups. Credit should first be given to Lightspeed for producing the amazing Summer Fellows bootcamp experience for promising student founders — after all, Pinterest was built there! Jeremy Liew gives a good overview of the program through his sit-down interview with Afterbox’s Zack Banack. Based on a study they conducted last year, 40% of Lightspeed Summer Fellows alumni are currently active founders. Pear Ventures also has an impressive summer incubator program where 85% of its companies successfully complete a fundraise. Index Ventures is the latest to build an incubator program for student founders, and even accepts founders who want to work on an idea part-time while completing a summer internship.

Let’s now look at students who want to join a startup before founding one. Venture funds have historically looked to tap students for talent, and are expanding the engagement lifecycle. The longest running programs include Kleiner Perkins’<strong class=”m_1196721721246259147gmail-markup–strong m_1196721721246259147gmail-markup–p-strong”> KP Fellows and True Ventures’ TEC Fellows, which focus on placing the next generation’s most promising product managers, engineers, and designers into the portfolio companies of their parent venture funds.

There’s also the secretive Greylock X, a referral-based hand-picked group of the best student engineers in Silicon Valley (among their impressive alumni are founders like Yasyf Mohamedali and Joe Kahn, the folks behind First Round-backed Karuna Health). As these programs have matured, these firms have recognized the long-run value of engaging the alumni of their programs.

More and more alumni are “coming back” to the parent funds as entrepreneurs, like KP Fellow Dylan Field of Figma (and is also hosting a KP Fellow, closing a full circle loop!). Based on their latest data, 10% of KP Fellows alumni are founders — that’s a lot given the fact that their community has grown to 500! This helps explain why Kleiner Perkins has created a structured path to receive $100K in seed funding to companies founded by KP Fellow alumni. It looks like venture funds are beginning to invest in student programs as part of their larger platform strategy, which can have a real impact over the long term (for further reading, see this analysis of platform strategy outcomes by USV’s Bethany Crystal).

KP Fellows in San Francisco

Venture funds are doubling down on student talent engagement — in just the last 18 months, 4 funds have launched student programs. It’s encouraging to see new funds follow in the footsteps of First Round, General Catalyst, Kleiner Perkins, Greylock, and Lightspeed. In 2017, Accel launched their Accel Scholars program to engage top talent at UC Berkeley and Stanford. In 2018, we saw 8VC Fellows, NEA Next, and Floodgate Insiders all launch, targeting elite universities outside of Silicon Valley. Y Combinator implemented Early Decision, which allows student founders to apply one batch early to help with academic scheduling. Most recently, at the start of 2019, First Round launched the Graduate Fund (staffed by Dorm Room Fund alumni) to invest in founders who are recent graduates or young alumni.

Given more time, I’d love to study the rates by which student founders start another company following investments from student scout funds, as well as whether or not they’re more successful in those ventures. In any case, this is an escalation in the number of venture funds that have started to get serious about engaging students — both for talent and dealflow.

Student entrepreneurship 2.0 is here. There are more structured paths to success for students interested in starting or joining a startup. Founders have more opportunities to garner press, seek advice, raise capital, and more. Venture funds are increasingly leveraging students to help improve the three F’s — finding, funding, and fixing. In my personal view, I believe it is becoming more and more important for venture funds to gain mindshare amongst the next generation of founders and operators early, while still in school.

I can’t wait to see what’s next for student entrepreneurship in 2019. If you’re interested in digging in deeper (I’m human — I’m sure I haven’t covered everything related to student entrepreneurship here) or learning more about how you can start or join a startup while still in school, shoot me a note at sxu@dormroomfund.comA massive thanks to Phin Barnes, Rei Wang, Chauncey Hamilton, Peter Boyce, Natalie Bartlett, Denali Tietjen, Eric Tarczynski, Will Robbins, Jasmine Kriston, Alicia Lau, Johnny Hammond, Bruno Faviero, Athena Kan, Shohini Gupta, Alex Immerman, Albert Dong, Phillip Hua-Bon-Hoa, and Trevor Sookraj for your incredible encouragement, support, and insight during the writing of this essay.


Source: The Tech Crunch

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Dropbox may be adding an e-signature feature, user survey indicates

Posted by on Sep 11, 2018 in DocuSign, Dropbox, Enterprise, TC | 0 comments

A recent user survey sent out by Dropbox confirms the company is considering the addition of an electronic signature feature to its Dropbox Professional product, which it refers to simply as “E-Signature from Dropbox.” The point of the survey is to solicit feedback about how likely users are to use such a product, how often, and if they believe it would add value to the Dropbox experience, among other things.

While a survey alone doesn’t confirm the feature is in the works, it does indicate how Dropbox is thinking about its professional product.

According to the company’s description of E-Signature, the feature would offer “a simple, intuitive electronic signature experience for you and your clients” where documents could be sent to others to sign in “just a few clicks.”

The clients also wouldn’t have to be Dropbox users to sign, the survey notes. And the product would offer updates on every step of the signature workflow, including notifications and alerts about the document being opened, whether the client had questions, and when the document was signed. After the signed document is returned, the user would receive the executed copy saved right in their Dropbox account for easy access, the company says.

In addition to soliciting general feedback about the product, Dropbox also asked survey respondents about their usage of other e-signature brands, like Adobe e-Sign, DocuSign, HelloSign, and PandaDoc, as well as their usage other more traditional methods, like in-person signing and documents sent over mail.

Given the numerous choices on the market today, it’s unclear if Dropbox will choose to move forward and launch such a product. However, if it did, the benefit of having its own E-Signature service would be its ability to be more tightly integrated into Dropbox’s overall product experience. It could also push more business users to upgrade from a basic consumer account to the Professional tier.

This kind of direct integration would make sense in the context of Dropbox’s business workflows. If, for instance, a company is working on a contract workflow, being able to move to the signature phase without changing context (or to share with a user who doesn’t use Dropbox) could add tremendous value over and above simply storing the document.

Companies like Dropbox have been looking for ways to move beyond pure storage to give customers the ability to collaborate and share that content, particularly without forcing them to leave the application to complete a job. This ability to do work without task switching is something that Dropbox has been working on with Dropbox Paper.

While it remains to be seen how they would implement such a solution, it might be a case where it would make more sense to partner with existing vendors or buy a smaller player than it would be build such functionality from scratch — although it’s not clear from a simple survey what their ultimate goal would be at this point.

Dropbox has not yet responded to requests for comment.


Source: The Tech Crunch

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Dropbox add-on makes it easier to manage Gmail attachments

Posted by on Jul 25, 2018 in Cloud, Dropbox, gmail, Google, Google Cloud Next 2018, Storage | 0 comments

When Dropbox announced it was integrating its storage product with GSuite in March, it was more of a heads up that the two companies were working together. Today at Google Next, Dropbox announced a new add-on to manage Gmail attachments in Dropbox.

Ketan Nayak, a product manager at Dropbox says this is the first concrete piece to come out of that earlier announcement. “Back in March, we announced a broader partnership with Google to bring about integrations and product initiatives across a range of different Google Cloud products. And what we wanted to share with you today was that we’re bringing one of the first [pieces] in this product partnership, the Dropbox add-on for Gmail, to GA,” he said.

The partnership makes sense for the two companies as they share lots of overlapping users with more than 50 percent of Dropbox users also using G Suite. Being able to access Dropbox without leaving Gmail or other G Suite tool could potentially save users time and effort spent copying and pasting and switching programs.

Instead, there is a direct integration now that displays the attachments in a side panel after which you can save them if you so choose directly into your Dropbox, and the experience is the same in the mobile app or on the web, Nayak explained.

Dropbox displays the attachments in the email in a side panel for easy access. Photo: Dropbox

“We created this cross-browser, cross-platform solution that doesn’t exist today, especially on mobile, where a lot of our users live and work across these different tools. It’s been really hard for users to navigate in and out of different apps, and we really think of this add-on as a first step that enables users across our two platforms to start working more seamlessly,” Nayak explained.

Indeed, other integrations between products are already in the works including one that will allow users to insert a link to a file stored in Dropbox in an email without leaving the program. “Users can share and generate links to Dropbox content while composing an email,” he said. While that particular functionality isn’t ready yet, the company was demonstrating it on stage at Google Next today and it should be available soon.

Nayak says, these announcements are really just a starting point of what they hope will be a much more comprehensive set of integrations between the two company’s products in the future.


Source: The Tech Crunch

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After twenty years of Salesforce, what Marc Benioff got right and wrong about the cloud

Posted by on Jun 17, 2018 in Adobe, Amazon, Amazon Web Services, Atlassian, AWS, bigid, CIO, cloud applications, cloud computing, cloud-native computing, Column, computing, CRM, digitalocean, Dropbox, Edward Snowden, enterprise software, European Union, Facebook, Getty-Images, github enterprise, Google, hipchat, Infrastructure as a Service, iPhone, Marc Benioff, Microsoft, open source software, oracle, oracle corporation, Packet, RAM, SaaS, Salesforce, salesforce.com, slack, software as a service, software vendors, TC, United States, web services | 6 comments

As we enter the 20th year of Salesforce, there’s an interesting opportunity to reflect back on the change that Marc Benioff created with the software-as-a-service (SaaS) model for enterprise software with his launch of Salesforce.com.

This model has been validated by the annual revenue stream of SaaS companies, which is fast approaching $100 billion by most estimates, and it will likely continue to transform many slower-moving industries for years to come.

However, for the cornerstone market in IT — large enterprise-software deals — SaaS represents less than 25 percent of total revenue, according to most market estimates. This split is even evident in the most recent high profile “SaaS” acquisition of GitHub by Microsoft, with over 50 percent of GitHub’s revenue coming from the sale of their on-prem offering, GitHub Enterprise.  

Data privacy and security is also becoming a major issue, with Benioff himself even pushing for a U.S. privacy law on par with GDPR in the European Union. While consumer data is often the focus of such discussions, it’s worth remembering that SaaS providers store and process an incredible amount of personal data on behalf of their customers, and the content of that data goes well beyond email addresses for sales leads.

It’s time to reconsider the SaaS model in a modern context, integrating developments of the last nearly two decades so that enterprise software can reach its full potential. More specifically, we need to consider the impact of IaaS and “cloud-native computing” on enterprise software, and how they’re blurring the lines between SaaS and on-premises applications. As the world around enterprise software shifts and the tools for building it advance, do we really need such stark distinctions about what can run where?

Source: Getty Images/KTSDESIGN/SCIENCE PHOTO LIBRARY

The original cloud software thesis

In his book, Behind the Cloud, Benioff lays out four primary reasons for the introduction of the cloud-based SaaS model:

  1. Realigning vendor success with customer success by creating a subscription-based pricing model that grows with each customer’s usage (providing the opportunity to “land and expand”). Previously, software licenses often cost millions of dollars and were paid upfront, each year after which the customer was obligated to pay an additional 20 percent for support fees. This traditional pricing structure created significant financial barriers to adoption and made procurement painful and elongated.
  2. Putting software in the browser to kill the client-server enterprise software delivery experience. Benioff recognized that consumers were increasingly comfortable using websites to accomplish complex tasks. By utilizing the browser, Salesforce avoided the complex local client installation and allowed its software to be accessed anywhere, anytime and on any device.
  3. Sharing the cost of expensive compute resources across multiple customers by leveraging a multi-tenant architecture. This ensured that no individual customer needed to invest in expensive computing hardware required to run a given monolithic application. For context, in 1999 a gigabyte of RAM cost about $1,000 and a TB of disk storage was $30,000. Benioff cited a typical enterprise hardware purchase of $385,000 in order to run Siebel’s CRM product that might serve 200 end-users.
  4. Democratizing the availability of software by removing the installation, maintenance and upgrade challenges. Drawing from his background at Oracle, he cited experiences where it took 6-18 months to complete the installation process. Additionally, upgrades were notorious for their complexity and caused significant downtime for customers. Managing enterprise applications was a very manual process, generally with each IT org becoming the ops team executing a physical run-book for each application they purchased.

These arguments also happen to be, more or less, that same ones made by infrastructure-as-a-service (IaaS) providers such as Amazon Web Services during their early days in the mid-late ‘00s. However, IaaS adds value at a layer deeper than SaaS, providing the raw building blocks rather than the end product. The result of their success in renting cloud computing, storage and network capacity has been many more SaaS applications than ever would have been possible if everybody had to follow the model Salesforce did several years earlier.

Suddenly able to access computing resources by the hour—and free from large upfront capital investments or having to manage complex customer installations—startups forsook software for SaaS in the name of economics, simplicity and much faster user growth.

Source: Getty Images

It’s a different IT world in 2018

Fast-forward to today, and in some ways it’s clear just how prescient Benioff was in pushing the world toward SaaS. Of the four reasons laid out above, Benioff nailed the first two:

  • Subscription is the right pricing model: The subscription pricing model for software has proven to be the most effective way to create customer and vendor success. Years ago already, stalwart products like Microsoft Office and the Adobe Suite  successfully made the switch from the upfront model to thriving subscription businesses. Today, subscription pricing is the norm for many flavors of software and services.
  • Better user experience matters: Software accessed through the browser or thin, native mobile apps (leveraging the same APIs and delivered seamlessly through app stores) have long since become ubiquitous. The consumerization of IT was a real trend, and it has driven the habits from our personal lives into our business lives.

In other areas, however, things today look very different than they did back in 1999. In particular, Benioff’s other two primary reasons for embracing SaaS no longer seem so compelling. Ironically, IaaS economies of scale (especially once Google and Microsoft began competing with AWS in earnest) and software-development practices developed inside those “web scale” companies played major roles in spurring these changes:

  • Computing is now cheap: The cost of compute and storage have been driven down so dramatically that there are limited cost savings in shared resources. Today, a gigabyte of RAM is about $5 and a terabyte of disk storage is about $30 if you buy them directly. Cloud providers give away resources to small users and charge only pennies per hour for standard-sized instances. By comparison, at the same time that Salesforce was founded, Google was running on its first data center—with combined total compute and RAM comparable to that of a single iPhone X. That is not a joke.
  • Installing software is now much easier: The process of installing and upgrading modern software has become automated with the emergence of continuous integration and deployment (CI/CD) and configuration-management tools. With the rapid adoption of containers and microservices, cloud-native infrastructure has become the de facto standard for local development and is becoming the standard for far more reliable, resilient and scalable cloud deployment. Enterprise software packed as a set of Docker containers orchestrated by Kubernetes or Docker Swarm, for example, can be installed pretty much anywhere and be live in minutes.

Sourlce: Getty Images/ERHUI1979

What Benioff didn’t foresee

Several other factors have also emerged in the last few years that beg the question of whether the traditional definition of SaaS can really be the only one going forward. Here, too, there’s irony in the fact that many of the forces pushing software back toward self-hosting and management can be traced directly to the success of SaaS itself, and cloud computing in general:

  1. Cloud computing can now be “private”: Virtual private clouds (VPCs) in the IaaS world allow enterprises to maintain root control of the OS, while outsourcing the physical management of machines to providers like Google, DigitalOcean, Microsoft, Packet or AWS. This allows enterprises (like Capital One) to relinquish hardware management and the headache it often entails, but retain control over networks, software and data. It is also far easier for enterprises to get the necessary assurance for the security posture of Amazon, Microsoft and Google than it is to get the same level of assurance for each of the tens of thousands of possible SaaS vendors in the world.
  2. Regulations can penalize centralized services: One of the underappreciated consequences of Edward Snowden’s leaks, as well as an awakening to the sometimes questionable data-privacy practices of companies like Facebook, is an uptick in governments and enterprises trying to protect themselves and their citizens from prying eyes. Using applications hosted in another country or managed by a third party exposes enterprises to a litany of legal issues. The European Union’s GDPR law, for example, exposes SaaS companies to more potential liability with each piece of EU-citizen data they store, and puts enterprises on the hook for how their SaaS providers manage data.
  3. Data breach exposure is higher than ever: A corollary to the point above is the increased exposure to cybercrime that companies face as they build out their SaaS footprints. All it takes is one employee at a SaaS provider clicking on the wrong link or installing the wrong Chrome extension to expose that provider’s customers’ data to criminals. If the average large enterprise uses 1,000+ SaaS applications and each of those vendors averages 250 employees, that’s an additional 250,000 possible points of entry for an attacker.
  4. Applications are much more portable: The SaaS revolution has resulted in software vendors developing their applications to be cloud-first, but they’re now building those applications using technologies (such as containers) that can help replicate the deployment of those applications onto any infrastructure. This shift to what’s called cloud-native computing means that the same complex applications you can sign up to use in a multi-tenant cloud environment can also be deployed into a private data center or VPC much easier than previously possible. Companies like BigID, StackRox, Dashbase and others are taking a private cloud-native instance first approach to their application offerings. Meanwhile SaaS stalwarts like Atlassian, Box, Github and many others are transitioning over to Kubernetes driven, cloud-native architectures that provide this optionality in the future.  
  5. The script got flipped on CIOs: Individuals and small teams within large companies now drive software adoption by selecting the tools (e.g., GitHub, Slack, HipChat, Dropbox), often SaaS, that best meet their needs. Once they learn what’s being used and how it’s working, CIOs are faced with the decision to either restrict network access to shadow IT or pursue an enterprise license—or the nearest thing to one—for those services. This trend has been so impactful that it spawned an entirely new category called cloud access security brokers—another vendor that needs to be paid, an additional layer of complexity, and another avenue for potential problems. Managing local versions of these applications brings control back to the CIO and CISO.

Source: Getty Images/MIKIEKWOODS

The future of software is location agnostic

As the pace of technological disruption picks up, the previous generation of SaaS companies is facing a future similar to the legacy software providers they once displaced. From mainframes up through cloud-native (and even serverless) computing, the goal for CIOs has always been to strike the right balance between cost, capabilities, control and flexibility. Cloud-native computing, which encompasses a wide variety of IT facets and often emphasizes open source software, is poised to deliver on these benefits in a manner that can adapt to new trends as they emerge.

The problem for many of today’s largest SaaS vendors is that they were founded and scaled out during the pre-cloud-native era, meaning they’re burdened by some serious technical and cultural debt. If they fail to make the necessary transition, they’ll be disrupted by a new generation of SaaS companies (and possibly traditional software vendors) that are agnostic toward where their applications are deployed and who applies the pre-built automation that simplifies management. This next generation of vendors will more control in the hands of end customers (who crave control), while maintaining what vendors have come to love about cloud-native development and cloud-based resources.

So, yes, Marc Benioff and Salesforce were absolutely right to champion the “No Software” movement over the past two decades, because the model of enterprise software they targeted needed to be destroyed. In the process, however, Salesforce helped spur a cloud computing movement that would eventually rewrite the rules on enterprise IT and, now, SaaS itself.


Source: The Tech Crunch

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