What's 🔥 in Enterprise IT/VC #248

Creating new infrastructure categories takes time, the compounding value of community - Replicated 4 years from Series A to B, 9 mos to Series C

While we live in a world of instant gratification and perceived overnight success, a couple threads from this past week reminded me that the best things take time to build and creating a new movement or category does not happen overnight.

First off is Replicated (a portfolio co) which announced its $50M Series C round led by Owl Rock and including existing investors boldstart, Amplify Partners, Two Sigma Ventures and others.

Here’s the deck from Business Insider that they used to raise the C along with a few screen shots. Take a look at last slide which has the power of the community engine for referrals and leads.

I remember many years ago when Replicated launched EnterpriseReady.io and the ultimate SaaS Features guide to help cloud companies go on-premise. Here’s version 1.0 from November 23, 2016 and the initial messaging. The 🔑 is that this was not about Replicated but a movement for everyone to join…which many did.

And here’s the latest site - not much has changed but remember this was from 5 years ago - consistency of messaging and effort. New categories, especially in infrastructure, take time.

While it seems like Replicated just raised a Series B last year which was announced just 8 months ago, notice how long it took to from Series A to B - 4 years!

Founders, stay the course because the best things come to those who wait and the power of the community takes a long time to build, but once it does, it compounds quickly.

One last point from this week is that is also takes time to build a venture firm. Read the 🧵 here - we were down on our luck just 3 years ago trying to get institutional investors to pay attention to us! That’s after having started boldstart in 2010 with a vision to be the best day one partner for technical enterprise founders.

Ed Sim @edsim

3 years ago this week - @etdurbin + I on an air taxi, squeezing in a LP meeting in NYC and then Boston to try to get our first close of Fund IV done, $40M out of $75M. This was only way we could squeeze 2 meetings in 1 day We failed - marked low point @Boldstartvc

It’s nice to remind ourselves of how not long ago where we were and to know that if you truly believe in what you are doing and work your tail off, good things can happen!

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

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Scaling Startups

1. How Superhuman built its initial team and tradeoffs of initial higher cost of acquisition but less churn and higher long term value over time

   @rahulvohra onboarded each of the first 100 users individually, in person, starting w/ 1 hour + getting it down to 30 minutes, also left the users w/ @Superhuman swag. Big question was to how to scale this...personal touch = more stickiness, tradeoff initial CAC higher but >LTV in long run

   Paul Yacoubian @PaulYacoubian

   After reading @DavidSacks post on enterprise saas org charts, I dove into org design for product led growth saas. Here's one I put together for @Superhuman, one of my favorite apps on the planet. No wonder their onboarding experience is soooo good!

   

2. Speaking of remote first, super hard to transition from all in person to remote but here’s how Jean Yang from Akita did it

   ⚡️ Jean Yang ⚡️ @jeanqasaur

   My latest blog post: how I went from believing early-stage startups need to be completely in-person, to embracing remote-first for @AkitaSoftware. Spoiler: a big part of this was getting our virtual office right. Read the post for more! 👾🏢 akitasoftware.com/blog-posts/how…

   

   akitasoftware.comHow Our Virtual Office Empowered Us to Go Remote-First — Akita SoftwareThis blog post, in addition to being a love letter to offices, is about what life was like in our physical office, our rough transition to Slack and Zoom, and how we found our groove after “moving in” to our virtual office, which we’ve built using a platform called ohyay. We’re still figuring things…

3. DU nailed the current state of the market

   David Ulevitch 🇺🇸 @davidu

   We're not running a process, but we are talking to a select number of firms (5 to 10) and here's our deck, data room, and timeline for the raise.

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Enterprise Tech

1. Let’s go Kubernetes! Spectro Cloud (a portfolio co) announced a $20M Series A led by Stripes Group and including T-Mobile and existing investors like boldstart, Sierra Ventures, Westwave Capital

   Unleashing the potential of the open source community with enterprise-grade curation

   The last 18 months we have been maniacally focused on bringing on core features to our platform and making it truly enterprise-ready, continuing our work with our customers and design partners. Our goal has always been to enable organizations with a single, flexible platform to easily manage any Kubernetes environment, new or existing, on any location, always optimizing for minimum effort. We want to be the “vCenter” -like environment for Kubernetes and container workloads, but a lot more flexible and extensible for multi-cluster and multi-environment support.

2. It’s clear that all applications should have live collaboration built in - check out launch of LiveBlocks with an API to make it easy for devs

   Liveblocks @liveblocks

   Liveblocks is now available for everyone! 🚀 Feel free to check out our new website to learn more and sign up. 👉 liveblocks.io

   

3. Rise of Policy as Code when it comes to Cloud Security

   Policy as code has risen to the fore due to concern about cloud misconfiguration, but also as part of a larger effort to automate the entire software and cloud development/deployment lifecycle. How it is implemented remains to be seen. Writing a policy may be the easy part. Maintaining, testing and enforcing policies across multiple CI/CD pipelines and cloud environments will be trickier.

4. AWS’s Egregious Egress - AWS’s Hotel California Pricing

   Another oddity of AWS’s pricing is that they charge for data transferred out of their network but not for data transferred into their network. If the only time you’ve paid for bandwidth is with your residential Internet connection, then this may make some sense. Because of some technical limitations of the cable network, download bandwidth is typically higher than upload bandwidth on cable modem connections. But that’s not how wholesale bandwidth is bought or sold.

   The only rationale we can reasonably come up with for AWS’s egress pricing: locking customers into their cloud, and making it prohibitively expensive to get customer data back out. So much for being customer-first.

5. Open Source is not a business model (interview with Mitchell Hashimoto - Hashicorp) and once again, it takes time…3 years into journey Hashicorp focused on enterprise version after building a rabid community

   Open source is not a business model. They’re separate dimensions to me on the graph. You could have a really good business model and be open source — I think we’re hopefully an example of that — but you could have a really good business model and not be open source. So when people say ‘I’m starting a business in open source,” I always ask: Why? What are you trying to do? Are you just trying to share technology? That’s a good reason. Are you trying to build a community of contributors? That’s another good reason.

   At a certain point, we realized that all our big users were begging us for certain features, and they were also begging to pay us. I learned that a company would rather pay a vendor, not just for support but to ensure they’re sustainable.

   Three years into the business or so, we decided that we would focus on enterprise as a business, and we would create an open core base model of an enterprise version — the open source version. And we would focus very enterprise-y features into the paid version that hopefully wouldn’t upset our open source user base. And I think we ended up doing that pretty well.

6. The magic behind AWS Lambda and how it really works

   Lambda is split into a control plane and data plane. Each plane is responsible for a specific set of activities in the service. The Control Plane provides management APIs and manages integrations with all AWS services. Whilst the Data Plane is Lambda's Invoke API that triggers Lambda function invocations, this explanation is still very abstract but things will become clearer over time.

7. Overestimating short term impact of new tech and underestimating the long term - 🧵

   Chris Dixon @cdixon

   13/ In summary, it’s important to ask questions about new technologies that go beyond first impressions. 🚂 “Looks like a toy” → How fast will it improve? 💰 “Too expensive”→ How fast will the price come down? 🛠 “Doesn’t solve a problem” → Does it provide new capabilities?

8. best freemium SaaS plans to learn from

   Hiten Shah @hnshah

   What SaaS product(s) have a free plan that you absolutely love?

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Markets

1. All your ☁️ results from Jamin Ball - growth 📈

   Jamin Ball @jaminball

   Cloud Giants Update: AWS (Amazon): $59B run rate, growing 37% YoY (accelerating growth) Azure (Microsoft): ~$35B run rate, growing 45% YoY (steady growth) Google Cloud (includes GSuite): $19B run rate, growing 54% YoY (slightly accelerating growth)

2. Twilio - developers, 😲 - incredible growth and net $ retention at this scale

   Jeff Lawson @jeffiel

   That's a wrap on @twilio's Q2 2021 earnings! $669M up 67% Y/Y, fueled by 135% net expansion. Congrats to Twilions everywhere for yet again wearing our customers' shoes and driving the future of customer engagement (and helping to vaccinate nearly 300M people!) #ProudTwilion

   

3. Super interesting trend for IPOs and early investors and employees - Where Has the IPO Lockup Gone? Tech Firms Trim Them Back (The Information)

   Of the 15 largest 2021 tech IPOs based on valuation, nine abandoned the traditional restriction on selling shares for the first six months. Instead, they offer employees and early shareholders opportunities to sell earlier at various points, such as once the stock price hits a certain level. The companies providing these early exits include Affirm, Coupang, UiPath and Confluent.