What's 🔥 in Enterprise IT/VC #262
Breaking down HashiCorp's S-1 + playbook for building a massive OSS company + The 🐮 Case for Cloud Native and Infra
The moment all of us in open source and infrastructure land have been waiting for is finally here…HashiCorp filed its S-1 and with that we get a peek at the playbook for building a killer OSS company. Before I dive into that, let’s zoom out and enjoy the bull case for cloud and infra as per Battery’s State of the OpenCloud 2021 report.
What we all underestimated 10 years ago and continue to underestimate IMHO is the size of opportunity for ☁️ that still remains. Here are 2 great slides to illustrate that. First, look at the valuations of these now iconic infra companies pre-IPO, 1 year after IPO, and today. Twilio is >58x its pre-IPO price. Datadog is up even higher! BTW, what is most interesting about those two companies is usage-based and consumption based pricing also helps juice the ARR over time.
Secondly, because of the scale of opportunity, these companies are accelerating growth post-IPO! 🤯
Finally, as I always like to say, cloud and infra spend is a just a drop in the bucket when it comes to overall IT spend.
And with that, let’s break down HashiCorp’s S-1 filing not from a numbers perspective but a learnings one in terms of understanding the playbook for building a massively successful OSS-based software company. Check out my 🧵 and also the expanded discussion points with more goodness below.
Mitchell and Armon’s Founder Letter hits 4 key points + 1 I added for all developer first founders…
Win ❤️ and 🧠 of developers and win the enterprise
“The goal of our products is to enable developers, IT operators, and practitioners to automate cloud infrastructure. Practitioners, rather than executives, have become the decision makers for adopting modern enterprise products, making it imperative that we focus on these end users. At HashiCorp, we've always built tools we want to use ourselves. When practitioners succeed with our products, we win the right to be considered a commercial partner to their organizations. Our users downloaded our products approximately 100 million times during fiscal 2021 and we are thankful to the thousands of organizations who choose to partner with us.”
Why open source matters
“Open sourcing our products enabled us to grow a community of users and partners and accelerate their path to becoming the industry standard. We continue to benefit along multiple dimensions. End users give immediate feedback, advocate to their peers, and contribute back to the products. ISVs contribute and enable integrations across the technology ecosystem. This network, engaged around the products, leads to standardization of the technologies. Today, HashiCorp is one of the highest rated software technologies for practitioners, as evidenced by over 219,000 stars on our GitHub repositories. Our GitHub community includes thousands of contributors beyond our employees, including hundreds of partners.”
Open source culture showed way to hire best talent globally
“Our early decision to focus on open source also provided other opportunities and shaped how we have built the company. We recognize that talent is everywhere and not concentrated in a few geographies. The founding team was and continues to be distributed, and we have taken a remote-first approach to hiring ever since. This enables us to recruit from our open-source communities and hire the best talent regardless of location. We now have more than 1,650 employees, the majority of whom work from home across more than 850 cities in 20 countries. Employees in our San Francisco headquarters represent less than 10% of the company.”
“The Tao of HashiCorp describes our design principles. We solve for user workflows rather than focus on specific technologies. We design for simplicity and composability rather than monolithic platforms that bring complexity. We enable automation of processes through codification. We apply pragmatism in our approach and acknowledge the realities of our customers' complex and heterogeneous environments. We have applied this design ethos to all of our products and continue to as we solve new problems and add new capabilities.”
Every OSS/Infra/Dev First company eventually needs an enterprise sales team - sequencing matters…🧵
What a big week for developer first and cloud infrastructure companies! As always, 🙏🏼 for reading and please share with your friends and colleagues!
Yep, I like to say 1 step forward, 2 back, 3 forward…
Congrats to AtomicJar (a portfolio co) on its product announcement for Testcontainers Cloud, a game changer for developers for integration testing shifting ⬅️
❤️ this - product velocity matters, especially in OSS, great to see cos like TimeScaleDB continuing to make devs happy, no matter how big they get…💥 Move fast without breaking things. Always be launching. 🐯🚀 Not just empty words, but principles we live by at . Here's what we just did last month: - 13 (!!!) launches 🙀 - 6 Cloud - 2 DB - 2 Observability - 20 new NFTs 😉 - 5 front page HackerNews, 3 # 1s 🧵
What do 🌮 and Roblox have in common? Reminder - resiliency matters - incident analysis, load testing, resilience engineering help keep the 💡 on and for now, not a cyber security incident but this is why 💰 keeps flowing into these sectors (Verge)
“Roblox has been down for more than two days, with the game and its related website offline for millions of players. The hugely popular game-creating platform first started having issues at around 7PM ET on October 28th. Roblox initially said it was “working hard to get things back to normal,” and that it had identified “the root cause as [an] internal system issue.”
In a statement to The Verge late Saturday, Roblox confirmed its platform wasn’t down due to an “external intrusion,” and that the company is working “around the clock” to resolve the huge outage.”
All about APIs
How Spotify measures developer “productivity, efficiency, and effectiveness, along with other indicators that can tell you about the quality of the overall developer experience?”
Before we built Backstage (OSS software catalog/dev platform) in 2016, Spotify was in a hyper-growth period and hiring engineers at a breakneck pace. But when we took a look at metrics, we saw our productivity wasn’t getting better, despite all the new hires. Specifically, when we looked at our onboarding metric — which we measure as time-to-merge your 10th pull request — we saw it had ballooned to 60 days.
As we built Backstage, our north star metric was reducing that onboarding time. And it fell quickly to less than 20 days for a new joiner to merge their 10th PR. Even though you may not be onboarding new engineers as rapidly as we were, this metric is a great proxy for the overall complexity of your ecosystem. And reducing it benefits your whole engineering organization, since longtime team members don’t get tapped on the shoulder as often.”
Orbit State of Community Tools Report 2021
*A typical community is active across 6 different platforms
*Community teams use 7 apps to maange and understand their members. They’re planning to try 3 new tools in the next year
*Most teams lack integration between their tools and data. Only 1 in 5 have tools integrated with other teams
Where did the 100X ARR multiple for SaaS cos come from?