What's 🔥 in Enterprise IT/VC #156

Ed Sim's weekly readings and notes on VC, software, and scaling startups

Trying a new format with publishing platform Substack. Given how more and more of my time is spent collating news and thoughts from tweets, this provides a more flexible platform for sharing and conversing.

So much this week has been written about WeWork and the WeMess. All I can say is, no, the sky is not falling for everyone, especially enterprise tech. I won’t go into the details of WeWork, but I do have one concern. The enterprise market has become too 🔥 and private multiples are on the super high end of the range making me wonder how long this can and will last. On the flip side, the replatforming of IT is so massive that I strongly believe there is lots more market share to capture.

On the sad side, RIP Don Valentine, founder of Sequoia Capital. He was a legend and inspired so many in the tech community: “The key to making great investments is to assume that the past is wrong, and to do something that’s not part of the past, to do something entirely differently.”

Finally, if you like the new format or content, please share and ❤️ above!

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Scaling Startups

1. from Christopher McQuarrie, screenwriter, producer of Mission Impossible, Edge of Tomorrow, Top Gun - so applicable to founders, click to read the whole thread!

   Christopher McQuarrie @chrismcquarrie

   7. After twenty five years in the craft, I’ve learned the secret to making movies is making movies - starting with little movies no one will ever see. The secret to knowledge is doing and failing - often and painfully - and letting everyone see.

2. Nuggets of wisdom from memos written for internal audiences. Sriram Krishnan shares some of the best he’s collected over the years from Bill Gates (Internet Tidal Wave) to Jeff Raikes to Warren Buffet on how to value Microsoft. Here’s our first check memo/investment for Superhuman.

3. 👇🏼💯

   Clari @clarihq

   Marketers, are you sitting in on your sales team's pipeline call? If not, you should be. To learn more from @carl_eschenbach (Partner at @sequoia) and watch the rest of Masters of Revenue, Episode 1: bit.ly/2XmlsSl #sales #marketing #marketingprofs

   

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Enterprise

1. Europe has some amazing enterprise tech companies as summarized by Accel in its 2019 Euroscape. Excited to have boldstart portfolio cos Snyk, BigID, and Front on the list. We’ve always viewed NYC as a great bridge between Europe/Israel and the west coast. Of note, more SaaS companies valued above $5 billion and time to $100mm ARR faster and faster.

2. Gartner IT Symposium - Top 10 Tech Trends sounds like Gartner is trying way too hard! What is hyperautomation, multiexperience, deomcrotization of expertise and practical blockchain? Sounds like ridiculous buzzwords to me - more here.

3. RPA 🔥 and not so 🔥 - Instabase raised at $1 billion valuation while UIPath fired 400. IMO, UIPath is absolutely crushing it and this is standard par for course as they overhired sales and churning through less productive folks and pruning for profitability. All in all, market is growing super fast and I wouldn’t be overly concerned on the downsizing of UIPath. On Instabase, it certainly has a huge vision and positions as much more intelligent than existing solutions. And please please, don’t compare UIPath to WeWork. Reminds me of my prediction from end of year and being sick of the news sensationalizing stories.

   Ed Sim @edsim

   Founders, keep ur heads down + keep building -why is everything always either so great or terrible? As I said end of 2018, 2019 is all about balanced growth vs growth at all costs bit.ly/2LMG0yi vs. A Hard Lesson in Silicon Valley: Profits Matter nyti.ms/2IyOWXQ

   

4. Every Fortune 500 is a tech co - Nike hires ServiceNow CEO as its new CEO

   What Donahoe does understand is technology, something Nike has been investing in heavily. Last year it acquired the data-analytics firm Zodiac. This year it bought Celect, a company specializing in predictive analytics. They’re part of Nike’s strategy of using customer data to be “more personal at scale,” as Parker has previously put it.

5. UI matters even for infrastructure companies

   Ed Sim @edsim

   one thing I’ve learned in the many years of seeding enterprise infrastructure companies is that no matter how fast or scalable your tech is, eye candy, beautiful design and UI always sells, even for infrastructure!

6. Ever heard of chaos engineering? It’s the idea of injecting failure in software systems to see what breaks, to learn more about unknown unknowns and popularized by Netflix. In laymen’s terms, it’s not that dissimilar from getting a flu vaccine. It’s building momentum in the dev ops and SRE world and Nora Jones (Slack, Netflix) lays out what you need before you run a chaos experiment.

   Nora Jones @nora_js

   A few asked for these slides specifically from my #monitorama talk yesterday. This is advice on what kind of incident data is useful to look at "Before" you run a chaos engineering experiment. Designing a chaos experiment is arguably the most useful part of Chaos Engineering.

   

   

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Markets

1. Next twelve months multiples over time - coming back to earth

   Tom Loverro @tomloverro

   Here's what has been happening with high growth public co SaaS multiples in recent weeks and months. You can see the public markets are correcting from the historically high and anomalous multiples that dominated CY2019 #backtoreality

   

2. 💯 and according to Mike D. Kail that’s less than what Softbank invested in WeWork

   Chetan Puttagunta @chetanp

   SAP bought Successfactors, Ariba, and Concur for $15B total. Astonishingly, SAP then grew revenue by $2.1B and net income by $539M across these three properties. The three assets now generate $3.6B in revenue and $418M in net income per year. SAP's execution here is amazing.

   

3. Venture funding slowed in Q3 according to PWC and CB Insights Money Tree report

   

4. Big Idea - $278mm of funding for Pensado Systems with Cisco’s John Chambers as Chairman

   Pensando's execs say they are taking on cloud giant Amazon Web Services with this tech by helping AWS's competitors make their clouds faster for the next wave of apps. But they also mentioned another type of competitor in their press release: "eliminating multiple legacy appliances."