2022 headlines are all about tech stocks getting crushed but if you read on, there is a silver lining.

While I’ve always believed that a correction on valuation multiples was imminent, focusing on the stock market tick by tick could cause one to lose their mind. If you’re a believer in enterprise IT and infrastructure, what you want to look at is where IT spending is going. And one of the most transparent organizations to analyze is JP Morgan. They are usually a leading indicator of what other banks (largest spenders in tech) are doing and hence other large multinationals. As tech spending increases, there are usually plenty of net new opportunities for startups to sell into. In a flat or downward spending cycle, much of the opportunity becomes all about replacement of old tech which means super long sales cycles. The good news is that in JPM’s Q4 2021 earnings call/report they spent $12B on tech in 2021 and expect that to grow over 20%, yes over 20% to $14.4B (PDF here).

And tech, which we've broadened to include tech-adjacent spend, reflecting our recognition that tech means more than just software development. It encompasses data and analytics, AI, as well as the physical aspects of modernization, such as data centers. And what's really powerful to note here is our ability to make these investments, which are quite significant in dollar terms and are designed to secure our future, while still delivering excellent current returns.

Turning to Page 14. In addition to all of our distribution-related investments, a critical foundational component of our strategy is technology, where we spend over $12 billion annually, with about half of that being investments or, as we sometimes call it, change the bank spend.

It's important to understand what's in the investment category. About half of that is foundational and mandatory, which includes regulatory-related investments, modernization and the retirement of technical debt, in addition to other key strategic initiatives to help us face the future. On the left-hand side, you can see some more detail around this. Modernization, which includes migrations to the cloud, as well as upgrading legacy infrastructure and architecture; data strategy that enables us to extract the value that exists in our proprietary data set by cleaning it and staging it in the right ways and then deploying modern techniques against it; attracting and acquiring top talent with modern skills; and a product operating model, which is, obviously, a popular buzzword these days.

But if you look through all that, it reflects the simple reality that the best products get delivered when developers and business owners are working together iteratively with end-to-end ownership. Underpinning all of this is our continued emphasis on cybersecurity to protect the firm and our clients and customers, as well as maintaining a sound control environment. Moving to the right-hand side. The other half of the investment spend is to drive innovation across our businesses and with our client-facing products.

We believe it's critical to identify and resolve customer pain points and improve the user experience. And we're attacking the problem with a combination of building, partnering and buying

Here’s Jamie Dimon on cloud spend - still lots of apps to be migrated from legacy data centers to the cloud:

Jamie Dimon -- Chairman and Chief Executive Officer

And Mike, to tell you, so we spent $2 billion on brand-new data centers, OK, which have all the cloud capability you can have in private data centers and stuff like that. We're still running the old data centers. Now we are not going to get involved in every time we talk to you, I'll explain every part of the pancake buildup of expenses going in and expenses going out. But all this stuff going to these new data centers, which is now completely up and running, are on apps.

Well, some are, but most of the applications that go in have to be cloud eligible. Most of the data that goes in has to be cloud eligible. We're running a whole bunch of major programs, which I don't think we disclosed, on AWS. And we're working with Google and Microsoft to run stuff -- some of the stuff in the cloud because we want to have multiple cloud capabilities.

And this year, roughly 30%, 40%, 50% of all our apps and all data will be moving to cloud-related type of stuff. This stuff is absolutely totally valuable. I mean, I can't -- if you sat in this room and look at the power of the cloud and big data on risk, fraud, marketing, capabilities, offers, customer satisfaction, do with errors and complaints, prospecting, it's extraordinary. You actually see some of that already in how we manage stuff.

Add to that this most recent Morgan Stanley CIO report 🧵…

Jamin Ball @jaminball

Some takeaways from Morgan Stanley's Q4 CIO survey - Software has the highest growth expectations in IT - Strong demand in software persisting (not simply pull forward in 2021) - Cloud computing remains CIO's top priorities - Security software most defensible More graphs below

January 12th 2022

78 Retweets341 Likes

and I see continued scaling of enterprise IT ARR and we’re still early!

As always, 🙏🏼 for reading and please share with your friends and colleagues.

Share What's Hot in Enterprise IT/VC

Scaling Startups

1. 👇🏼💯

   Naval @naval

   In the modern world, don’t minimize your risks - maximize your opportunities

   January 9th 2022

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2. Great read on how supportive Sequoia was in the worst of times, something you want in a true partner

   Ravi Gupta @GuptaRK22

   The best leaders are (both) demanding and supportive. (As a bonus, I would bet this is the only thing you'll read today that talks about Mike Moritz, my parents, and Game of Thrones) Demanding and Supportiverkg.blog

   January 7th 2022

   158 Retweets1,143 Likes

   Reminds me of this:

   Ed Sim @edsim

   Reminds me of the classic Clint Eastwood movie, The Good, The Bad and The Ugly: “In this world there's two kinds of people, my friend: Those with loaded guns and those who dig. You dig." Find partners who will dig with you!

   

   July 14th 2020

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3. 💯 and also why 2/3 of our new investments in 2021 were in Europe/Israel

   Patrick Collison @patrickc

   In Q1 2019, 39% of Stripe's hiring was outside Bay Area and Seattle. Last quarter, it was 74%. I think the rate at which tech industry is going global is still under-appreciated, and that this will be a big tailwind for the world over the next decade.

   January 10th 2022

   980 Retweets8,681 Likes

4. 👇🏼💯

   Manu Kumar (recruiting @HiHello 🚀) @ManuKumar

   The #1 reason for having a board meeting as an early stage company is not because you have investors/board members, but because it forces you to pull up from the weeds and think strategically. Board meeting serves as the forcing function for this on a regular cadence.

   January 11th 2022

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Enterprise Tech

1. Learnings from growing retool in low code, no code space

   Jamie Cuffe @CuffeJamie

   I’ve learned so much seeing @retool scale from <100 to 1000s of customers over the last 2 years. Given our recent Series C, I wanted to share share some of the lessons we discovered along the way 🧵

   January 12th 2022

   53 Retweets394 Likes

2. What is the definition of “customer” in a PLG motion? Javier Molina, former SVP Sales MongoDB and now CRO at starburst data shares his views 🧵

   Javier Molina @JavierMolinaSW

   @Justin_Digs threw down this poll on LinkedIn and I thought I’d add my elaborated thoughts based on my experience building the #plg engine at @MongoDB 🧵 1/

   

   January 9th 2022

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3. Chainalysis data on crypto crimes

4. Great read from Bucky Moore from Kleiner on where he’s investing

   Bucky Moore @buckymoore

   ‘22 is going to be an awesome year in infrastructure software. I see so many great companies out there that are ready to cross the chasm. Some thoughts from me on what is top of mind: Computing and data infrastructure in ’22Bucky Moore synthesizes the most impactful ideas from conversations over the past year, and their influence on his go-forward thinking as an investor.kleinerperkins.com

   January 10th 2022

   34 Retweets204 Likes

5. Why eBay’s AI chief is setting guardrails for use of low-code AI - more monitoring, permissioning, security tools needed

6. 👇🏼💯 lots of opportunities for picks and shovels…

   Andy Weissman @aweissman

   NFT sales 2020: $94.9M NFT sales 2021: $24.9B Wallets trading 2020: 545k Wallets trading 2021: 28.6M Putting aside for moment if you are lover or skeptic, a maximalist or hater, this is ridiculous growth

   Reuters @Reuters

   NFT sales hit $25 billion in 2021, data from market tracker DappRadar shows, but growth showed signs of slowing towards the end of the year https://t.co/UywxYhv0kf https://t.co/84KidrH3mV

   January 12th 2022

   75 Retweets360 Likes

7. My colleague Shomik is back!

   Shomik Ghosh @shomikghosh21

   Software Snack Bites #22: State of OpenCloud Report Deep Dive - 1st post of 2022 covering some personal news 🤣 - Diving into my favorite annual report on OSS and infra software from @BatteryVentures - GTM models, software trends, and of course the ☁️ shomik.substack.com/p/state-of-ope…State of OpenCloud Report Deep DiveThe Folks at Battery Ventures put out a great annual report on cloud and open source software, its worth a read yourself but here’s some things that jumped out to me!shomik.substack.com

   January 12th 2022

   6 Retweets42 Likes

Markets

1. 😲

   Austin Rief ☕️ @austin_rief

   INSANE fact of the day: Apple's market cap has grown $700m PER DAY since Tim Cook became CEO in 2011.

   January 8th 2022

   379 Retweets4,635 Likes

2. As I’m always keeping an eye out for exogenous shocks, this is one of best 🧵 I’ve read on situation in Kazakhstan and Russia

   Clint Ehrlich @ClintEhrlich

   The situation in Kazakhstan is a much bigger deal than Western media is letting on. I believe it significantly increases the risk of NATO-Russia conflict. Here is my report from Moscow. A MEGA-thread... 🧵

   January 7th 2022

   5,800 Retweets18,426 Likes