Hot in Enterprise IT/VC - What's 🔥 in Enterprise IT/VC #227
While tech stocks took a beating this past week with high flyers like Zoom and Snowflake down double digits, I want to remind all of us that we are still just in the early innings for enterprise startups. This slide from Neeraj Agrawal’s (Battery Ventures) State of the Cloud 2021 best sums it up as software is still only 6% of the S&P 500. Call me an optimist, but I’m a believer in the long term despite my short term pessimism around valuations. Speaking of valuations, this is where the venture market is in terms of paying now for future potential. Let’s 🙏🏼 that these companies can deliver on these expectations or 2-3 years from now we will have a generation of orphaned enterprise startups who can’t raise funding because their prices were too high to start. Related to that, many of the companies realizing these premium valuations are those with a developer first or product led growth motion. Long ago I said that if you’re a company with a top down enterprise go-to-market motion, then you should be deadly worried about any one coming from the bottom up with a more efficient GTM. Okta made a bet the company move this week to bring much needed expertise in the developer first motion by announcing an acquisition of Auth0 for $6.5 billion or about 20% of its market cap. This is another huge win for developer first companies and just the beginning as more and more developer first startups will go public or get acquired at huge multi billion $ valuations over the next couple of years. I took a few slides from the Okta deck (slides here) to highlight more on the developer first motion. While these Auth0 numbers are incredibly attractive, this is still lower than best in class dev first companies like Datadog which still has NRR over 130% and had greater than 100% growth when relatively the same size. Notice the fine print as well - the >$200M ARR represents estimates for FY ending 1/31/22 so my sources say the ARR was closer to $150mm. Using $150mm ARR as a baseline you get a 43.3x trailing ARR and a 32.5 forward ARR multiple. Going back to my earlier point on the importance of PLG and a developer first motion, this slide shows the various GTM motions at Okta and how Auth0 fills that much needed developer and self service hole. This also ties in nicely with Neeraj’s State of the Cloud report where he outlines the need to transition from the one-size fits all SaaS metrics based on averages to a more nuanced understanding based on cohort or like-minded customer bases. Bottom line, the SaaS markets keep growing, companies keep getting bigger than ever, and winning the ❤️ and 🧠 of developers is becoming more and more important. As always, 🙏🏼 for reading and please share with your friends and colleagues. Scaling Startups
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What's 🔥 in Enterprise IT/VC #226
Saturday, February 27, 2021
😲 $1 Trillion of ☁️ spend up for grabs in next 10 years, Enterprise Tech 30 + power of PLG + OSS
What's 🔥 in Enterprise IT/VC #224
Saturday, February 13, 2021
💰 won't get you to product market fit faster, the importance of walking before you run
What's 🔥 in Enterprise IT/VC #223
Saturday, February 6, 2021
We're past the age of decacorns 🦄 - what's the new bar for enterprise outliers?
What's 🔥 in Enterprise IT/VC #222
Saturday, January 30, 2021
🥾Bootstrapping works, the value of constraints + the scrappiness of not raising too much 💰, Qualtrics, Calendly...
What's 🔥 in Enterprise IT/VC #221
Saturday, January 23, 2021
The developer first dilemma, the value of patience, and why going enterprise too early can be hazardous to your health ⚠️
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