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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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Zoom, a profitable unicorn, files to go public

Posted by on Mar 22, 2019 in Cisco, Cisco Systems, Emergence Capital, Eric Yuan, Fundings & Exits, Goldman Sachs, jp morgan, morgan stanley, oracle, sequoia capital, TC, telecommunications, unicorn, Venture Capital, Video, video conferencing, web conferencing, WebEX, zoom | 0 comments

Zoom, the video conferencing startup valued at $1 billion in early 2017, has filed to go public on the Nasdaq as soon as next month.

The company joins a growing list of tech unicorns making the leap to the public markets in 2019, but it stands out for one very important reason: It’s actually profitable.

Zoom was founded in 2011 by Eric Yuan, an early engineer at WebEx, which sold to Cisco for $3.2 billion in 2007. Before launching Zoom, he spent four years at Cisco as its vice president of engineering. In a conversation with TechCrunch last month, he said he would never sell another company again, hinting at his dissatisfaction at WebEx’s post-acquisition treatment being his motivation for taking Zoom public as opposed to selling.

Zoom, which raised a total of $145 million to date, posted $330 million in revenue in the year ending January 31, 2019, a remarkable 2x increase year-over-year, with a gross profit of $269.5 million. The company similarly more than doubled revenues from 2017 to 2018, wrapping fiscal year 2017 with $60.8 million in revenue and 2018 with $151.5 million.

The company’s losses are shrinking, from $14 million in 2017, $8.2 million in 2018 and just $7.5 million in the year ending January 2019.

Zoom is backed by Emergence Capital, which owns a 12.5 percent pre-IPO stake, according to the IPO filing. Other investors in the business include Sequoia Capital (11.4 percent pre-IPO stake); Digital Mobile Venture (9.8 percent), a fund affiliated with former Zoom board member Samuel Chen; and Bucantini Enterprises Limited (6.1 percent), a fund owned by Li Ka-shing, a Chinese billionaire and among the richest people in the world.

Morgan Stanley, JP Morgan and Goldman Sachs have been recruited to lead the offering.


Source: The Tech Crunch

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Mixtape Podcast: Oracle’s alleged $400M issue with underrepresented groups

Posted by on Feb 1, 2019 in AI, facial recognition, IBM, oracle, TC, TechCrunch Mixtape | 0 comments

Screen time for kids, corporations allegedly not paying people from underrepresented groups and IBM offers some hope for the future of facial recognition technology: These are the topics that Megan Rose Dickey and I dive into on this week’s episode of Mixtape.

According to research by psychologists from the University of Calgary, spending too much time in front of screens can stung the development of toddlers. The study found that kids 2-5 years old who engage in more screen time received worse scores in developmental screening tests.” We talk a bit about this then wax nostalgically about “screen time” of yore.

We then turn to a filing against Oracle by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs that states the enterprise company allegedly withheld upwards of $400 million to employees from underrepresented minority groups. The company initially declined to comment, but then thought better of itself and returned the very next day with its thoughts on the matter.

And finally, IBM is trying to make facial recognition technology a thing that doesn’t unfairly target people of color. Technology! The positive news comes a week after Amazon shareholders demanded that the company stop selling Rekognition, its very own facial recognition tech that it sells to law enforcement and government agencies.

Click play above to listen to this week’s episode. And if you haven’t subscribed yet, what are you waiting for? Find us on Apple PodcastsStitcherOvercastCastBox or whatever other podcast platform you can find.


Source: The Tech Crunch

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Oracle allegedly withheld $400 million in wages from underrepresented employees

Posted by on Jan 22, 2019 in Diversity, ofccp, oracle, TC | 0 comments

Oracle has allegedly withheld $400 million in wages from racially underrepresented workers (black, Latinx and Asian) as well as women, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs said in a filing today. The OFCCP is the office within the DOL that enforces equal pay and ensures government contractors comply with anti-discrimination regulation.

In the OFCCP’s second amended complaint today, the office alleges Oracle “impermissibly denies equal employment opportunity to non-Asian applicants for employment, strongly preferring a workforce that it can later underpay. Once employed, women, Blacks and Asians are systematically underpaid relative to their peers,” the complaint alleges.

Allegedly, Oracle’s underpayment of certain employees is driven by the company’s reliance on prior salary information and funneling non-white, non-male employees into lower-paid roles.

The department argues that Oracle’s “stark patterns of discrimination” started back in 2013 and continues into the present day. More specifically, the OFCCP alleges Oracle discriminated against black, Asian and female employees. This has all ultimately resulted in the collective loss of more than $400 million for this group of employees, the suit alleges.

The office also alleges Oracle discriminates against those who have visas, often putting them in low-level jobs. The vast majority of hires from Oracle’s college recruiting program, the suit alleges, were international students with student visas.

“These students required work authorization to remain in the United States after graduation,” the suit alleges. “In other words, Oracle overwhelmingly hires workers dependent upon Oracle for sponsorship to remain in the United States.”

The OFCCP filed the suit against Oracle last January, following the Labor Department’s 2014 audit of the company. That suit was followed by an employee-led class-action lawsuit last September alleging Oracle pays women less than men in similar jobs.

Oracle is subject to auditing as a result of its contracts with the federal government. Given Oracle’s agreement to provide equal employment opportunity, the OFCCP is asking the Court to require Oracle to pay those affected and correct its “discriminatory compensation and hiring practices.” The office is also demanding that Oracle lose its $100 million worth of annual contracts with the government.

Oracle, which declined to comment for this story, is not the only company the OFCCP has gone after. A couple of years ago, the office went after Google in an attempt to obtain compensation data, followed by a claim that Google has systemic gender-based pay inequities. That same year, the office sued Palantir for racial discrimination. Palantir, several months later, settled with the DOL, agreeing to pay $1.7 million in back wages and other types of monetary relief to those affected.


Source: The Tech Crunch

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How open source software took over the world

Posted by on Jan 12, 2019 in apache, author, cloud computing, Cloudera, cockroach labs, Column, computing, Databricks, designer, executive, free software, Getty, GitHub, HashiCorp, hortonworks, IBM, linus torvalds, linux, Microsoft, microsoft windows, mongo, MongoDB, mulesoft, mysql, open source software, operating system, operating systems, oracle, red hat, RedHat, sap, Software, software as a service, TC, Yahoo | 0 comments

It was just 5 years ago that there was an ample dose of skepticism from investors about the viability of open source as a business model. The common thesis was that Redhat was a snowflake and that no other open source company would be significant in the software universe.

Fast forward to today and we’ve witnessed the growing excitement in the space: Redhat is being acquired by IBM for $32 billion (3x times its market cap from 2014); Mulesoft was acquired after going public for $6.5 billion; MongoDB is now worth north of $4 billion; Elastic’s IPO now values the company at $6 billion; and, through the merger of Cloudera and Hortonworks, a new company with a market cap north of $4 billion will emerge. In addition, there’s a growing cohort of impressive OSS companies working their way through the growth stages of their evolution: Confluent, HashiCorp, DataBricks, Kong, Cockroach Labs and many others. Given the relative multiples that Wall Street and private investors are assigning to these open source companies, it seems pretty clear that something special is happening.

So, why did this movement that once represented the bleeding edge of software become the hot place to be? There are a number of fundamental changes that have advanced open source businesses and their prospects in the market.

David Paul Morris/Bloomberg via Getty Images

From Open Source to Open Core to SaaS

The original open source projects were not really businesses, they were revolutions against the unfair profits that closed-source software companies were reaping. Microsoft, Oracle, SAP and others were extracting monopoly-like “rents” for software, which the top developers of the time didn’t believe was world class. So, beginning with the most broadly used components of software – operating systems and databases – progressive developers collaborated, often asynchronously, to author great pieces of software. Everyone could not only see the software in the open, but through a loosely-knit governance model, they added, improved and enhanced it.

The software was originally created by and for developers, which meant that at first it wasn’t the most user-friendly. But it was performant, robust and flexible. These merits gradually percolated across the software world and, over a decade, Linux became the second most popular OS for servers (next to Windows); MySQL mirrored that feat by eating away at Oracle’s dominance.

The first entrepreneurial ventures attempted to capitalize on this adoption by offering “enterprise-grade” support subscriptions for these software distributions. Redhat emerged the winner in the Linux race and MySQL (thecompany) for databases. These businesses had some obvious limitations – it was harder to monetize software with just support services, but the market size for OS’s and databases was so large that, in spite of more challenged business models, sizeable companies could be built.

The successful adoption of Linux and MySQL laid the foundation for the second generation of Open Source companies – the poster children of this generation were Cloudera and Hortonworks. These open source projects and businesses were fundamentally different from the first generation on two dimensions. First, the software was principally developed within an existing company and not by a broad, unaffiliated community (in the case of Hadoop, the software took shape within Yahoo!) . Second, these businesses were based on the model that only parts of software in the project were licensed for free, so they could charge customers for use of some of the software under a commercial license. The commercial aspects were specifically built for enterprise production use and thus easier to monetize. These companies, therefore, had the ability to capture more revenue even if the market for their product didn’t have quite as much appeal as operating systems and databases.

However, there were downsides to this second generation model of open source business. The first was that no company singularly held ‘moral authority’ over the software – and therefore the contenders competed for profits by offering increasing parts of their software for free. Second, these companies often balkanized the evolution of the software in an attempt to differentiate themselves. To make matters more difficult, these businesses were not built with a cloud service in mind. Therefore, cloud providers were able to use the open source software to create SaaS businesses of the same software base. Amazon’s EMR is a great example of this.

The latest evolution came when entrepreneurial developers grasped the business model challenges existent in the first two generations – Gen 1 and Gen 2 – of open source companies, and evolved the projects with two important elements. The first is that the open source software is now developed largely within the confines of businesses. Often, more than 90% of the lines of code in these projects are written by the employees of the company that commercialized the software. Second, these businesses offer their own software as a cloud service from very early on. In a sense, these are Open Core / Cloud service hybrid businesses with multiple pathways to monetize their product. By offering the products as SaaS, these businesses can interweave open source software with commercial software so customers no longer have to worry about which license they should be taking. Companies like Elastic, Mongo, and Confluent with services like Elastic Cloud, Confluent Cloud, and MongoDB Atlas are examples of this Gen 3.  The implications of this evolution are that open source software companies now have the opportunity to become the dominant business model for software infrastructure.

The Role of the Community

While the products of these Gen 3 companies are definitely more tightly controlled by the host companies, the open source community still plays a pivotal role in the creation and development of the open source projects. For one, the community still discovers the most innovative and relevant projects. They star the projects on Github, download the software in order to try it, and evangelize what they perceive to be the better project so that others can benefit from great software. Much like how a good blog post or a tweet spreads virally, great open source software leverages network effects. It is the community that is the source of promotion for that virality.

The community also ends up effectively being the “product manager” for these projects. It asks for enhancements and improvements; it points out the shortcomings of the software. The feature requests are not in a product requirements document, but on Github, comments threads and Hacker News. And, if an open source project diligently responds to the community, it will shape itself to the features and capabilities that developers want.

The community also acts as the QA department for open source software. It will identify bugs and shortcomings in the software; test 0.x versions diligently; and give the companies feedback on what is working or what is not.  The community will also reward great software with positive feedback, which will encourage broader use.

What has changed though, is that the community is not as involved as it used to be in the actual coding of the software projects. While that is a drawback relative to Gen 1 and Gen 2 companies, it is also one of the inevitable realities of the evolving business model.

Linus Torvalds was the designer of the open-source operating system Linux.

Rise of the Developer

It is also important to realize the increasing importance of the developer for these open source projects. The traditional go-to-market model of closed source software targeted IT as the purchasing center of software. While IT still plays a role, the real customers of open source are the developers who often discover the software, and then download and integrate it into the prototype versions of the projects that they are working on. Once “infected”by open source software, these projects work their way through the development cycles of organizations from design, to prototyping, to development, to integration and testing, to staging, and finally to production. By the time the open source software gets to production it is rarely, if ever, displaced. Fundamentally, the software is never “sold”; it is adopted by the developers who appreciate the software more because they can see it and use it themselves rather than being subject to it based on executive decisions.

In other words, open source software permeates itself through the true experts, and makes the selection process much more grassroots than it has ever been historically. The developers basically vote with their feet. This is in stark contrast to how software has traditionally been sold.

Virtues of the Open Source Business Model

The resulting business model of an open source company looks quite different than a traditional software business. First of all, the revenue line is different. Side-by-side, a closed source software company will generally be able to charge more per unit than an open source company. Even today, customers do have some level of resistance to paying a high price per unit for software that is theoretically “free.” But, even though open source software is lower cost per unit, it makes up the total market size by leveraging the elasticity in the market. When something is cheaper, more people buy it. That’s why open source companies have such massive and rapid adoption when they achieve product-market fit.

Another great advantage of open source companies is their far more efficient and viral go-to-market motion. The first and most obvious benefit is that a user is already a “customer” before she even pays for it. Because so much of the initial adoption of open source software comes from developers organically downloading and using the software, the companies themselves can often bypass both the marketing pitch and the proof-of-concept stage of the sales cycle. The sales pitch is more along the lines of, “you already use 500 instances of our software in your environment, wouldn’t you like to upgrade to the enterprise edition and get these additional features?”  This translates to much shorter sales cycles, the need for far fewer sales engineers per account executive, and much quicker payback periods of the cost of selling. In fact, in an ideal situation, open source companies can operate with favorable Account Executives to Systems Engineer ratios and can go from sales qualified lead (SQL) to closed sales within one quarter.

This virality allows for open source software businesses to be far more efficient than traditional software businesses from a cash consumption basis. Some of the best open source companies have been able to grow their business at triple-digit growth rates well into their life while  maintaining moderate of burn rates of cash. This is hard to imagine in a traditional software company. Needless to say, less cash consumption equals less dilution for the founders.

Photo courtesy of Getty Images

Open Source to Freemium

One last aspect of the changing open source business that is worth elaborating on is the gradual movement from true open source to community-assisted freemium. As mentioned above, the early open source projects leveraged the community as key contributors to the software base. In addition, even for slight elements of commercially-licensed software, there was significant pushback from the community. These days the community and the customer base are much more knowledgeable about the open source business model, and there is an appreciation for the fact that open source companies deserve to have a “paywall” so that they can continue to build and innovate.

In fact, from a customer perspective the two value propositions of open source software are that you a) read the code; b) treat it as freemium. The notion of freemium is that you can basically use it for free until it’s deployed in production or in some degree of scale. Companies like Elastic and Cockroach Labs have gone as far as actually open sourcing all their software but applying a commercial license to parts of the software base. The rationale being that real enterprise customers would pay whether the software is open or closed, and they are more incentivized to use commercial software if they can actually read the code. Indeed, there is a risk that someone could read the code, modify it slightly, and fork the distribution. But in developed economies – where much of the rents exist anyway, it’s unlikely that enterprise companies will elect the copycat as a supplier.

A key enabler to this movement has been the more modern software licenses that companies have either originally embraced or migrated to over time. Mongo’s new license, as well as those of Elastic and Cockroach are good examples of these. Unlike the Apache incubated license – which was often the starting point for open source projects a decade ago, these licenses are far more business-friendly and most model open source businesses are adopting them.

The Future

When we originally penned this article on open source four years ago, we aspirationally hoped that we would see the birth of iconic open source companies. At a time where there was only one model – Redhat – we believed that there would be many more. Today, we see a healthy cohort of open source businesses, which is quite exciting. I believe we are just scratching the surface of the kind of iconic companies that we will see emerge from the open source gene pool. From one perspective, these companies valued in the billions are a testament to the power of the model. What is clear is that open source is no longer a fringe approach to software. When top companies around the world are polled, few of them intend to have their core software systems be anything but open source. And if the Fortune 5000 migrate their spend on closed source software to open source, we will see the emergence of a whole new landscape of software companies, with the leaders of this new cohort valued in the tens of billions of dollars.

Clearly, that day is not tomorrow. These open source companies will need to grow and mature and develop their products and organization in the coming decade. But the trend is undeniable and here at Index we’re honored to have been here for the early days of this journey.


Source: The Tech Crunch

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Google takes a step back from running the Kubernetes development infrastructure

Posted by on Aug 29, 2018 in alibaba, Cloud, cncf, computing, Developer, dns, Enterprise, Google, IBM, Kubernetes, Microsoft, oracle, sap, TC, vmware | 0 comments

Google today announced that it is providing the Cloud Native Computing Foundation (CNCF) with $9 million in Google Cloud credits to help further its work on the Kubernetes container orchestrator and that it is handing over operational control of the project to the community. These credits will be split over three years and are meant to cover the infrastructure costs of building, testing and distributing the Kubernetes software.

Why does this matter? Until now, Google hosted virtually all the cloud resources that supported the project, like its CI/CD testing infrastructure, container downloads and DNS services on its cloud. But Google is now taking a step back. With the Kubernetes community reaching a state of maturity, Google is transferring all of this to the community.

Between the testing infrastructure and hosting container downloads, the Kubernetes project regularly runs more than 150,000 containers on 5,000 virtual machines, so the cost of running these systems quickly adds up. The Kubernetes container registry has served almost 130 million downloads since the launch of the project.

It’s also worth noting that the CNCF now includes a wide range of members that typically compete with each other. We’re talking Alibaba Cloud, AWS, Microsoft Azure, Google Cloud, IBM Cloud, Oracle, SAP and VMware, for example. All of these profit from the work of the CNCF and the Kubernetes community. Google doesn’t say so outright, but it’s fair to assume that it wanted others to shoulder some of the burdens of running the Kubernetes infrastructure, too. Similarly, some of the members of the community surely didn’t want to be so closely tied to Google’s infrastructure, either.

“By sharing the operational responsibilities for Kubernetes with contributors to the project, we look forward to seeing the new ideas and efficiencies that all Kubernetes contributors bring to the project operations,” Google Kubernetes Engine product manager William Deniss writes in today’s announcement. He also notes that a number of Google’s will still be involved in running the Kubernetes infrastructure.

“Google’s significant financial donation to the Kubernetes community will help ensure that the project’s constant pace of innovation and broad adoption continue unabated,” said Dan Kohn, the executive director of the CNCF. “We’re thrilled to see Google Cloud transfer management of the Kubernetes testing and infrastructure projects into contributors’ hands — making the project not just open source, but openly managed, by an open community.”

It’s unclear whether the project plans to take some of the Google-hosted infrastructure and move it to another cloud, but it could definitely do so — and other cloud providers could step up and offer similar credits, too.


Source: The Tech Crunch

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VMware pulls AWS’s Relational Database Service into the data center

Posted by on Aug 27, 2018 in Amazon Web Services, Andy Jassy, ceo, cloud computing, computing, Microsoft, mysql, oracle, postgresql, relational database, TC, vmware | 0 comments

Here’s some unusual news: AWS, Amazon’s cloud computing arm, today announced that it plans to bring its Relational Database Service (RDS) to VMware, no matter whether that’s VMware Cloud on AWS or a privately hosted VMware deployment in a corporate data center.

While some of AWS’s competitors have long focused on these kinds of hybrid cloud deployments, AWS never really put the same kind of emphasis on this. Clearly, though, that’s starting to change — maybe in part because Microsoft and others are doing quite well in this space.

“Managing the administrative and operational muck of databases is hard work, error-prone and resource intensive,” said AWS CEO Andy Jassy . “It’s why hundreds of thousands of customers trust Amazon RDS to manage their databases at scale. We’re excited to bring this same operationally battle-tested service to VMware customers’ on-premises and hybrid environments, which will not only make database management much easier for enterprises, but also make it simpler for these databases to transition to the cloud.”

With Amazon RDS on VMware, enterprises will be able to use AWS’s technology to run and manage Microsoft SQL Server, Oracle, PostgreSQL, MySQL and MariaDB databases in their own data centers. The idea here, AWS says, is to make it easy for enterprises to set up and manage their databases wherever they want to host their data — and to then migrate it to AWS when they choose to do so.

This new service will soon be in private preview, so we don’t know all that much about how this will work in practice or what it will cost. AWS promises, however, that the experience will pretty much be the same as in the cloud and that RDS on VMware will handle all the updates and patches automatically.

Today’s announcement comes about two years after the launch of VMware Cloud on AWS, which was pretty much the reverse of today’s announcement. With VMware Cloud on AWS, enterprises can take their existing VMware deployments and take them to AWS.


Source: The Tech Crunch

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Salesforce promotes COO Keith Block to co-CEO alongside founder Marc Benioff

Posted by on Aug 8, 2018 in ceo, cloud applications, co CEO, computing, coo, Enterprise, executive, Keith Block, Marc Benioff, oracle, partner, Salesforce, salesforce.com | 0 comments

Salesforce is moving to a two CEO model after it promoted executive Keith Block, who was most recently COO, to the position of co-CEO. Block will work alongside Salesforce’s flamboyant founder, chairman and CEO (now co-CEO) Marc Benioff, with both reporting directly to the company’s board.

Block joined Salesforce five years ago after spending 25 years at Oracle, which is where he first met Benioff, who has called him “the best sales executive the enterprise software industry has ever seen.”

News of the promotion was not expected, but in many ways it is just a more formalized continuation of the working relationship that the two executives have developed.

Block’s focus is on leading global sales, alliances and channels, industry strategy, customer success and consulting services, while he also oversees the company’s day-to-day operations. Benioff, meanwhile, heads of product, technology and culture. The latter is a major piece for Salesforce — for example, it has spent Salesforce has spent over $8 million since 2015 to address the wage gaps pertaining to race and gender, while the company has led the tech industry in pushing LGBT rights and more.

“Keith has been my trusted partner in running Salesforce for the past five years, and I’m thrilled to welcome him as co-CEO,” said Benioff in a statement. “Keith has outstanding operational expertise and corporate leadership experience, and I could not be happier for his promotion and this next level of our partnership.”

This clear division of responsibility from the start may enable Salesforce to smoothly transition to this new management structure, whilst helping it continue its incredible business growth. Revenue for the most recent quarter surpassed $3 billion for the first time, jumping 25 percent year-on-year while its share price is up 60 percent over the last twelve months.

When Block became COO in 2016, Benioff backed him to take the company past $10 billion in revenue and that feat was accomplished last November. Benioff enjoys setting targets and he’s been vocal about reaching $60 billion revenue by 2034, but in the medium term he is looking at reaching $23 billion by 2020 and the co-CEO strategy is very much a part of that growth target.

“We’ve said we’ll do $23 billion in fiscal year 2022 and we can now just see tremendous trajectory beyond that. Cementing Keith and I together as the leadership is really the key to accelerating future growth,” he told Fortune in an interview.


Source: The Tech Crunch

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Oracle launches autonomous database for online transaction processing

Posted by on Aug 7, 2018 in Cloud, database as a service, databases, Enterprise, Larry Ellison, oracle | 0 comments

Oracle executive chairman and CTO, Larry Ellison, first introduced the company’s autonomous database at Oracle Open World last year. The company later launched an autonomous data warehouse. Today, it announced the next step with the launch of the Oracle Autonomous Transaction Processing (ATP) service.

This latest autonomous database tool promises the same level of autonomy — self-repairing, automated updates and security patches and minutes or less of downtime a month. Juan Loaiza SVP for Oracle Systems at the database giant says the ATP cloud service is a modernized extension of the online transaction processing databases (OLTP) they have been creating for decades. It has machine learning and automation underpinnings, but it should feel familiar to customers, he says.

“Most of the major companies in the world are running thousands of Oracle databases today. So one simple differentiation for us is that you can just pick up your on-premises database that you’ve had for however many years, and you can easily move it to an autonomous database in the cloud,” Loaiza told TechCrunch.

He says that companies already running OLTP databases are ones like airlines, big banks and financial services companies, online retailers and other mega companies who can’t afford even a half hour of downtime a month. He claims that with Oracle’s autonomous database, the high end of downtime is 2.5 minutes per month and the goal is to get much lower, basically nothing.

Carl Olofson, an IDC analyst who manages IDC’s database management practice says the product promises much lower operational costs and could give Oracle a leg up in the Database as a Service market. “What Oracle offers that is most significant here is the fact that patches are applied without any operational disruption, and that the database is self-tuning and, to a large degree, self-healing. Given the highly variable nature of OLTP database issues that can arise, that’s quite something,” he said.

Adam Ronthal, an analyst at Gartner who focuses on the database market, says the autonomous database product set will be an important part of Oracle’s push to the cloud moving forward. “These announcements are more cloud announcements than database announcements. They are Oracle coming out to the world with products that are built and architected for cloud and everything that implies — scalability, elasticity and a low operational footprint. Make no mistake, Oracle still has to prove themselves in the cloud. They are behind AWS and Azure and even GCP in breadth and scope of offerings. ATP helps close that gap, at least in the data management space,” he said.

Oracle certainly needs a cloud win as its cloud business has been heading in the wrong direction the last couple of earnings report to the point they stopped breaking out the cloud numbers in the June report.

Ronthal says Oracle needs to gain some traction quickly with existing customers if it’s going to be successful here. “Oracle needs to build some solid early successes in their cloud, and these successes are going to come from the existing customer base who are already strategically committed to Oracle databases and are not interested in moving. (This is not all of the customer base, of course.) Once they demonstrate solid successes there, they will be able to expand to net new customers,” he says.

Regardless how it works out for Oracle, the ATP database service will be available as of today.


Source: The Tech Crunch

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Walmart acquiring Shopify is no longer a laughable idea

Posted by on Jul 19, 2018 in Amazon, AWS, bigcommerce, Bonobos, Canada, Column, Demandware, DoorDash, eBay, eCommerce, Flipkart, IBM, India, modcloth, NetSuite, oracle, Postmates, prestashop, Shopify, TC, Tesla, U.S. Securities and Exchange Commission, Walmart | 0 comments

As competition between Walmart and Amazon intensifies, the acquisition of Shopify’s merchant marketplace may be the boost that the Walton family’s juggernaut needs to move ahead.

In May this year, Amazon published its small business impact report, in which it disclosed there are 20,000 small and medium-sized businesses that make a million dollars or more in sales on its platform.

Amazon boasts about 5 million third-party sellers on its marketplace today, with an estimated 100,000 sellers hopping on-board every month.

At 100,000 sellers a month over the next five years, there could be an estimated 11 million sellers on Amazon’s marketplace by 2023.

E-commerce intelligence firm Marketplace Pulse estimates Amazon’s gross merchandise volume, or GMV, for 2018 at $280 billion, set to triple over a five-year period, concluding that the marketplace contribution to Amazon’s GMV would surpass 70 percent by 2023.

Combined with Prime and FBA, this high-level picture sounds like Amazon can afford to not worry about its marketplace. But an uneasy trend seems to simmer within its 5 million cohort. Looking at Feedvisor’s survey of Amazon marketplace merchants from 2017 and 2018 and some interesting trends surface. 

Marketplace merchants are looking to keep their advertising costs low and are worried about rising fees on the Seattle-based company’s e-commerce platform. They’re also concerned about competition coming from Amazon as it continues to launch its own brands. Indeed, 60 percent of merchants told Feedvisor in 2017 that they planned to diversify to other channels. Walmart emerged as the most preferred channel, followed very closely by Shopify and eBay. 

About 10 percent of those surveyed in 2017 were making a million dollars or more in annual sales. A year on, this figure is up to 19 percent. One can tell where these first-time millionaires are heading when we see that Walmart today supports 9 percent more Amazon merchants than it did in 2017.

In its pursuit for parity with Amazon, Walmart has clearly overtaken eBay in merchant preference. The latter supports 12 percent fewer Amazon merchants today than it did in 2017, and is closely trailed by Shopify and Jet.com.

Shopify is one of Canada’s biggest tech success stories

Can Walmart afford to be conservative?

Walmart’s marketplace has 18,000 sellers, 36 percent of whom make at least $2 million in sales — all of whom sell on Amazon!

With its e-commerce business struggling to see gains since 2016, when it acquired Jet.com, Walmart has recently been making the waves with its string of partnerships and acquisitions. In May, it announced that it was partnering with Postmates and DoorDash for expanding its last-mile delivery of online groceries.

In what seemed to be a rebuttal to Amazon’s private label push, Walmart acquired Bonobos, Shoebuy, ModCloth and Moosejaw. It also announced in May that it was adding four fashion brands to its kitty.

While it continues to be hard-fisted about who sells on its marketplace, a trend seems to be emerging wherein Walmart is not just competing with Amazon but is also striving to bring reputed retail brands under its banner and is attempting to re-shape consumer perception of it being low-price and inexpensive.

Walmart may be second in line to Amazon, but it has its cons. Its process to qualify a third-party seller is more stringent. Sellers need to request an invitation to join and must fulfill certain quality requirements pertaining to product mix, price point and fulfillment.

Unable to differentiate among millions of sellers on Amazon and faced with rigorous screening from Walmart, the best bet for Amazon’s third-party sellers to diversify seems to be to set up their own store.

They can either create their own website or set up a store on an e-commerce platform like Magento or Shopify .

Shopify — the network is bigger than the software

Shopify, the e-commerce platform for small and medium-sized businesses, isn’t too far behind eBay and Walmart in merchant preference.

A seller can set up her own store on Shopify’s basic version for as little as $29 a month. It also has a premium version (for a $2,000 monthly fee) called Shopify Plus aimed at enterprise-level sellers and wholesalers. An estimated 3,600 merchants have already bought into Shopify Plus; among them are popular logos such as Tesla, Kylie Cosmetics and Budweiser.

Shopify has an estimated 600,000 merchants on its e-commerce platform and has seen its merchant base grow annually in excess of 100 percent since 2014.

What particularly makes Shopify attractive — and gives it an upper hand over marketplaces like Walmart — is its third-party network of developers, photographers, digital marketers and designers that merchants can leverage for their business. Shopify today is a more turnkey platform than Walmart! Of all digital commerce revenues in 2017 — totaling $2.3 trillion — Shopify sellers’ GMV was 1 percent, worth $26 billion, which shows just how important Shopify is next to Walmart.

Analysts are betting big for the next 10 years despite its recent volatility in stock price.

Around the same time, when Amazon published its small business impact report, Shopify announced that it would open a brick-and-mortar store in the U.S. by the end of summer this year to provide in-person advice and consulting services to its customers.

Such a showroom would also provide Shopify the opportunity to cross-sell its hardware products to merchants who are looking to go brick-and-mortar.

For these reasons, Shopify will continue to attract more merchants and will become more important in the days to come and, as it does, it will get noticed by the big players — Amazon and Walmart.

Shopify and Amazon share history

Shopify partnered with Amazon in 2015 as its preferred migration partner for webstore merchants. Many Shopify merchants already sell on Amazon; they have the option to use Amazon’s FBA and Payment gateway. And more than 50 percent of Shopify’s 3,600-odd “Plus” merchants sell on Amazon, as opposed to less than 1 percent who sell on Walmart.

Clearly, the preference for Walmart.com is abysmal among Shopify merchants.

At a market cap of $17 billion, Shopify can be acquired by Amazon without much hassle. While this may not be in Amazon’s cards considering the call it took four years ago to shut its webstore business and the ease with which it gets inbound interest from the long-tail e-commerce companies (which forms 90 percent of the independent e-commerce companies base), Walmart should start figuring Shopify into its strategic plans.

When your competition is Amazon, nothing is enough

In its SEC filings for the fiscal year ended January 2018, Walmart said that it is looking to increase investments in grocery and technology. Much of Walmart’s moves in these spaces continue to come across as reactive responses to Amazon:

  • Recently, in its overseas battle against Amazon, Walmart acquired a 77 percent stake in India’s Flipkart for $16 billion.
  • In what could be seen as a long overdue answer to AWS, it revealed its own cloud network.
  • It has also kickstarted efforts to take on Amazon Go. With FBA and Prime seeming invincible, Walmart will never be able to catch up to the giant. But, it can prove to be a serious rival if it decides to acquire Shopify.

(Photo by Joe Raedle/Getty Images)

Why Shopify?

The non-Amazon destination

Today, eBay has more Amazon merchants on its platform than Walmart does. However, Walmart is picking up pace and is evidently becoming more attractive.

Between 2017 and 2018, the percentage of Amazon sellers on eBay reduced from 65 percent to 52 percent. At the same time, Walmart and Jet.com combined saw an increase from 17 percent to 25 percent.

Given 2018’s stats, if Shopify were to become Walmart-owned, about 42 percent of Amazon’s sellers today, would be selling via either Walmart, Jet or Shopify. This would bring the difference between eBay and Walmart (Jet and Shopify included) down to 10 percent, in turn narrowing the competition gap between Walmart and Amazon.

Interestingly, there were rumors in 2017 that eBay was planning to acquire Shopify. The stocks reacted positively but there were no signs that eBay was interested in such an acquisition.

The perfect complement

The fundamental difference between Walmart and Shopify is that the former is a marketplace while the latter is an e-commerce platform.

It is hard for a seller with no distinct brand identity to differentiate herself on a marketplace unlike on a platform. As revenue channels, they are both necessary for a merchant’s omnichannel strategy.

While Amazon will rule the roost in the marketplace arena for a long time to come, merchants should start betting on Shopify. This acquisition will be an opportunity for Walmart to write its story in a market that Amazon tried and quit.

Shopify does not get you shoppers and Walmart does not get you the support services. As a combined entity, their value proposition becomes very compelling.

The apparent weakness is an actual strength

Shopify is not without faults. As with all e-commerce platforms, the majority of their e-commerce merchants are long-tail with little to no revenue. But critics, including Andrew Left of Citron Research, fail to understand that long-tail is sort of a deal pipeline to identify sellers who are likely to grow and contribute significantly to the revenue.

A study of Shopify’s marketplace will validate their claim that the merchants are there for the value of a “one-stop platform and extended services” and not just for Facebook data of their shoppers.

As Brian Stoffel put it in his article, “The moat is strong and growing, even as recent protests have tested the company.”

Shopify’s long-tail merchant base isn’t a weakness. It’s the pipeline that Walmart should value. It could be Walmart’s answer to Amazon’s merchant acquisition spree.

The neighborhood store is actually a Shopify Store

Shopify is an e-commerce platform provider but that’s no reason to dismiss it as a competitive threat to Walmart. Both target merchants are focused on making them sell online, albeit differently.

Walmart handpicks merchants. Shopify doesn’t.

Walmart is a legacy brand and has a perception problem in the market. Shopify is a born millennial, like Jet.

Walmart is competing with Amazon on multiple fronts. Amazon closed its webstore business and switched to an integration with Shopify!

Walmart has no equivalent to FBA. Shopify’s merchants can opt to have their merchandise fulfilled by Amazon.

Brett Andress of KeyBanc Capital Markets drives home the importance of Shopify — “Emerging brands on Shopify are getting larger, and more established brands are gravitating to Shopify to be more nimble.”

While Walmart continues to shop for private label brands in a bid to throw a new spin on its brand identity, it needs to look a few yards away. There are 600,000 of them. Either Walmart could hope for them to come list on its marketplace someday or make itself the very technology that powers their business.

Shopify is known for its ability to attract e-commerce merchants. Its tools — like the name generator, domain name generator, to name a few — are subtle retention hacks to get intending sellers hooked onto its platform. Should a seller decide to sell her business, Shopify has an exchange on which she can list her store for sale. On the partner front, developers, marketers and designers have helped create many success stories, while writing their own. Overall, it seems like the stickiness is here to stay.

With e-commerce still 12 percent of global retail trade and with an expected growth rate of 47 percent over the next three years, Shopify is well-positioned to capture a lot of the e-commerce upside. The neighborhood grocer is now more likely to open on Shopify or sell on Amazon than at the neighborhood. This is also why it makes sense for Walmart to acquire one of the two default portals of entry into e-commerce.

To compete with Amazon, it needs to make moves that shift the ground beneath the foot and a Shopify acquisition could be one of those bets still open.

Can Walmart afford it?

The retail analysts’ consensus is that Walmart needs to expand its e-commerce base, as the default for the younger demographic shopper is still Amazon. Walmart’s marketplace strategy, so far, hasn’t been about becoming that default.

Shopify is a credible option to expand its e-commerce base. Shopify was recently chided by activist investors like Andrew Left for being over-reliant on the top 10 percent of the merchant base.

There are about 4,500 e-commerce companies with $100 million-plus revenue out there and Shopify’s entry into the enterprise commerce market is a reactionary response to the inherent weakness in its own business model (of over-reliance on mid-market and long-tail e-commerce companies). The problem for Shopify and to an equal extent Magento, BigCommerce, WooCommerce and PrestaShop is that the enterprise e-commerce is the territory of Hybris, Demandware, NetSuite etc.

The tough phase for Shopify would be when its mid-market cash cow customers migrate to Hybris or WebSphere or Demandware. It has to backfill from its growing long tail unless it competes head-on with IBM, Adobe, Oracle NetSuite, Demandware or Hybris. This is one of the reasons Magento aligned with Adobe.

The problem for Walmart in making this acquisition though is Wall Street’s view that it’s a mature business with steady returns. Amazon, on the other hand, continues to treat e-commerce as a business which is in its Day 1.

You could observe the pressures Walmart has had in the past. It took Walmart over two years to finally pull the lever on the Flipkart deal, which is going to drain billions from its cash reserves (notwithstanding the revolving credit of $5 billion it has raised to fund the deal).

With the current market cap of $17 billion, Shopify isn’t pocket change. But for reasons mentioned above, Shopify’s growth will be tested. Expanding GMV of existing merchants is easier than conquering the enterprise market, especially if it aligns with Walmart.

Walmart’s cash reserves are less than $10 billion, making it a relatively expensive pursuit likely needing a leveraged buyout, and the market isn’t new to such deals. Amazon, on the other hand, has $265 billion to deploy, but it’s a buy that it doesn’t need. And that sums up Walmart’s predicament as a challenger to Amazon.


Source: The Tech Crunch

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