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What's 🔥 in Enterprise IT/VC #220
Coming out of stealth and what to 🤔 about to optimize the 👯♂️, all about momentum...
😮 Pitchbook and NVCA Monitor just came out with the YE 2020 US VC numbers and it was a record breaking year with over $150 billion invested into startups. As imagined the bulk of the 💰 was accounted for by the massive late stage investments which represented 67% of all dollars invested but only 29% of the deal count. In addition, look at the average valuation for enterprise startups which are on 🔥 over the last 10 years and in particular the last 2 years.
Switching gears, a question we often encounter when partnering with founders on day one is when to announce the initial funding round and when to “officially” come out of stealth.
There is so much that goes into timing; launch too early and you tip your hats to competitors and launch too late and you may have missed your initial window to claim ownership of a new category or new subcategory. In addition as the data shows above, there are so many later stage enterprise financings of significance that most reporters don’t care about seed rounds. So how should one go about it and cut through the noise?
One caveat is that the days of an official launch are overrated and many in the industry prefer a soft launch over time to onboard beta users, testers and to get external validation before formally announcing themselves to the world. So when I say “launch” assume that it really means coming out of stealth vs. the old school launch from a zero start. Slack did an amazing job getting tens of thousands of influencers before opening themselves to the world. Same with Superhuman who only officially came out a year after having thousands of paying users. And many infrastructure and developer first companies leverage Hacker News to generate early users and buzz like Supabase.
So here are a few random thoughts and by no means meant to be comprehensive but some things you should consider…
Work backwards in timing when you know product is good enough or story is strong enough from external validation vs. just rushing to get something out
Initial seed funding announcements on their own are not interesting to the press
Coincide initial funding announcement with product announcement
External validation is huge before launch: I strongly prefer having a number of beta users or testers or enterprise design partners ready to go at launch to further validate the need and excitement around the product. In Slim.ai’s case, they had tens of thousands of downloads and users of their open source project DockerSlim. In Jeli’s case, the company had one of their key users from Indeed talk and tweet about the product.
Only launch when product is “ready enough” as you only get one chance to make a first impression which means when the readers go to your site or repo or try your service, they will be 🤯. Launch when you know you can execute on the inbound customer traffic coming in - prepare for success!
Get the message right - think about 2 different audiences, your users and the rest of the world. For your users, the goal is to get signups so you can be more technical in nature in explaining the benefits of the product while for ROW you want to zoom out a bit and share where this fits in the market, why this product is needed, and to plant a flag for why you will own that market.
Having a working draft of your initial press release should help cover the ROW story. Here’s Slim’s from its announcement this past week.
Work with a PR professional - we’ve vetted and screened many and have a few we absolutely ❤️ to work with. Also your investors should hopefully have a few key press contacts as well because the next point is super important…
TechCrunch is the most important for coverage for ROW; potential customers, investors, and recruiting for employees; it usually generates 85% of the traffic so you need to get a story and nail it.
Whether TechCrunch covers you or not, try for wave two of coverage from Business Insider, Silicon Angle, Venture Beat and the others. If an infrastructure or developer play, make sure you post in Hacker News and placements down the line in the New Stack also reach a targeted developer audience.
For your users, especially in the developer or infrastructure world, have your why we built this and call to action post for actual users ready shortly after the TechCrunch piece - example from Slim.ai coming out party this past week. This is your chance to get more technical.
Have your investors at the ready with their versions of why they invested in your company and share different perspectives. Here’s ours from boldstart and Jon and Dan’s from Decibel.From open source project to company, excited to announce investment in , empowering developers to create, analyze, deliver, + run containerized applications faster
The launch is not just one day but need to think through a calendar of stories post announcing yourself to the world; what 3-4 follow up stories will you have showing momentum - customers, significant new hires, partners, etc. Think of this as the rolling thunder ⛈️ approach.
Enjoy and remember the launch is not one and done, it’s a continuous process and most important is to get your story straight for each audience in terms of why you exist and to continue to show the momentum afterwards to make people understand that this is a movement.
🙏🏼 as always for reading and please share with your friends and colleagues!
All about developer relations: lots of discussion this last week on how to measure developer relations and all I can say is that sometimes you can lost in the trees and forget about the forest by overdoing KPIs. Secondly, companies need to understand that the dev rel function, especially in the early days, is an investment and will take time to build and evangelize your product. Third, no matter what KPIs you have, the founders need to embrace the idea of dev rel and investing for the long term.
This great post from Petr Švihlik who is head of devrel at Kentico shares his search for the holy metric and what ultimately is the most important way to measure, tie dev rel to the company goals. Sounds simple but many miss this fact.
Amazing 🧵 from Dan Rose at Coatue and how the move off Sun servers saved the company and led to AWSI was at Amzn in 2000 when the internet bubble popped. Capital markets dried up & we were burning $1B/yr. Our biggest expense was datacenter -> expensive Sun servers. We spent a year ripping out Sun & replacing with HP/Linux, which formed the foundation for AWS. The backstory:
So much goodness here from Intercom helping find the right balance to getting a MVP out and not overbuilding at the beginning
10 technical strategies to avoid when scaling your startup (and 5 to embrace)”
From premature optimization to over-engineering solutions for your product, it’s easy to get caught up in making technology decisions that slow you down instead of speeding you up.
😮 Once upon a time you couldn’t make money selling to developers and DevOps didn’t exist - now day in and day out we are seeing massive funding rounds like Harness.io which just raised $85mm at $1.7 billion valuation 🦄. “Harness is a self service CI/CD platform for every team enabling software changes of all types to reach production environments in a safe, quick, and sustainable way.”
Amplitude hits the $100mm ARR mark - leading product intelligence platform using a data driven approach to helping companies build better products
Here’s Laceworks’ deck (Business Insider) from its $525mm round, whole product solution for cloud from SIEM to cloud config, vulnerability discovery, API, and containers…
While we all know 2020 was the year that digitization of everything accelerated, I keep thinking about what’s in store for the next few years, what will stick and continue to grow. I found this McKinsey Executive Survey from October (yes, data old as of now) but a good indicator of what may stick. And it also shows the mindset from 2017’s survey of how tech was viewed as a cost center where cutting costs was a top 3 imperative for almost 50% of organizations and now it’s 10%. The future is certainly bright for enterprise tech as more $$$ to be spent by global enterprises!
More Pitchbook YE data and here’s a graph showing growth in seed round sizes over time - note the 75th percentile going from $1 - 4mm in size - I see no sign of this slowing down.