What's 🔥 in Enterprise IT/VC #279

What goes up must come down - ❄️ back to earth, what it means for private cos + how a customer discovery email turned into a company

Mar 5

Let’s all support the people of 🇺🇦 - this is one of many ways to do so but one to which I’ve contributed.

Flexport is organizing an airlift of humanitarian relief supplies to refugee centers in Eastern Europe. You can help by donating to pay for more flights at flexport.org/donate. 🧵👇Flexport.org - to aid refugees from the Ukraine and other people in needFlexport.org enables organizations to deliver global aid and impact - and meet their sustainability goals with greater ease and lower costs.flexport.org

Switching gears, the last of the high growth public cloud companies is coming back to 🌎 multiple wise. Snowflake beat its quarter, as usual, but guided to less growth in the future and here’s what happened.

Francis - Analyst @InvestiAnalyst

Snowflake's Revenue Growth over the last 8-Quarters: • 149% • 121% • 119% • 117% • 110% • 105% • 110% • 101% What went wrong? + Biggest deceleration YoY + 15% QoQ was the weakest in a long-time + Guide was weak, Q1 implies 90% YoY & + FY Guide inline w/ consensus.

Jamin Ball sums up the cloud multiples best here…

Look at the Top 5 multiples - down from 80x NTM to 30.9X - 😲.

Yes, folks, this multiple compression has been sustained and does have an impact on later stage companies raising growth rounds.

Snowflake was always at 40x and higher and gravity is a powerful force which finally took hold. If you are thinking of getting that 100x NTM multiple for your company, then think again. It’s not coming back…it will get better as the world normalizes in 12 months but the 100x days are over. While growth investors have adjusted their 🤔, it’s time for founders to do the same and go back to picking the right partner and right amount of capital for your business. Overcapitalizing your business at too high a price can eventually cause massive ripple effects for your business if you “miss” a quarter. Here’s one of many examples we will probably read about in the near future.

Kate Clark @KateClarkTweets

Tiger, Bessemer-backed Automation startup @HyperscienceAI laid off 100 workers last week after it failed to meet revenue targets. This morning, its co-founder and CEO—who decided two weeks ago to make deep cuts—resigned. Scoop:

Automation Firm Hyperscience Slashes Staff, Loses CEO as Startups Face Growing PressureIn December, automation-software startup Hyperscience said it raised $100 million in venture capital from Tiger Global Management, Bessemer Venture Partners and other firms at a post-investment valuation of $1.65 billion. Then last week, less than three months later, a harsh reality set in: The ...theinformation.com

As for Series As and Bs, this multiple compression has not filtered down yet and the best companies are still raising large sums of 💰 at super high valuations. However, eventually even these companies will have to perform in order to raise their next round. If you have 💰, remember cash is king and spend it wisely.

Top of mind for me this week was also the launch of CommonPaper which we funded over a year ago, backing Jake Stein (for a 3rd time) and Ben Garvey. I remember first talking to Jake about his idea and thinking to myself, I can’t wait to back Jake but whoa, how does one create a scalable way to solve the problem of standardizing sales contracts to close deals faster (see our Why We Invested post).

So how did this customer discovery email turn into a company?

As background, you can share that I’m researching an idea for a startup related to improving commercial contracting in B2B software sales. I’d love to ask XXX a few questions about how XXX handles this and get his feedback on the new approach I have in mind.

Ed Sim @edsim

GM - want to close cloud software deals faster + turn contracts into APIs? Try the #OSS standard agreements + structured contract platform from @UseCommonPaper 🔥 up for @Boldstartvc to partner with @jakestein @bengarvey for 3rd time along with friends @uncorkcap

CommonPaper @UseCommonPaper

Big day! The Common Paper platform is now publicly available, we published an open-source standard agreement for selling cloud software AND announced our $4.5M seed round co-led by @Boldstartvc + @uncorkcap. Check it out: https://t.co/F6qKAmlKRU

It’s called founder magic 🪄 is when you take a pain, a ❓, + a discovery email and turn it into contracts as APIs with a structured contract platform and open source standards (CommonPaper blog post here).