What's 🔥 in Enterprise IT/VC #270

Happy New Year 🥳 - 7 themes from 2021 + 4 macro predictions for 2022

Happy New Year to all my What’s 🔥 in Enterprise IT/VC readers. Thank you for being on the journey with me as I’ve shared my evolving musings and thoughts over the past year with 52 issues.

Looking back, the clear themes that emerged in 2021 (with links to past issues) were:

1. Rise of developer tooling in the mainstream IPO markets with companies like Datadog, MongoDB (rise of a D2E juggernaut), Hashicorp (breakdown of S-1/biz model), and Gitlab (S-1/biz model breakdown) growing and gaining attention. Also check out one of my own Snyk (dev first security) as it grew to a $8.6B valuation this year (Issue #254 - journey from day 1 to $8.6b)

2. PLG as the dominant GTM (Issue #250 and Issue #238 with Monday S-1)

3. Insane 💰 flowing into startups at record valuations (most issues incl. recent #265)

4. Talent wars and my concerns around how companies can keep growing and scaling (playbook from Snyk on how it scaled from 100 - 700 in 2 yrs)

5. Remote first everything - it’s here to stay and a competitive advantage and also disadvantage (Issue #241)

6. Everything bigger (Future of enterprise software edition and Issue #223) - decacorns and other mythic animals as markets for enterprise tech and valuations are higher than we ever thought

7. Crypto in the mainstream - the last couple months my newsletter has been sprinkled with thoughts on crypto infrastructure and expect more of that in 2022 (Issue #263 - going down the crypto 🐰 hole)

There is so much more that I shared this past year so please look at the ARCHIVES for tips on starting a company, scaling, building your team, finding the right investment partner, and other trends.

So now you’re probably wondering what’s next and or what’s 🔥 in 2022? Well, this year since we are all inundated with so many predictions, I’m just going to stick with a few. And if you want more from VCs who are usually self interested in their predictions 😄, Nikhil Basu Trivedi does a fantastic job curating predictions from 50 top thinkers in tech (read Next Big Thing in 2022)

The next big thing in 2022 is...

- also glad to be included in this year’s edition which will kick off my own short list which is more macro in nature:

1. The next big thing in 2022 is blockchain is the new "dev tool" as many long time enterprise founders rush to explore and build newcos in crypto infra and enterprise investors fund any company with "enterprise + crypto." Despite the number of companies that don't make it, there will be a handful of foundational companies started in 2022 that will create returns that far exceed the money lost.

2. VC funding will hit another record year in 2022 but don’t be fooled as while the total will be higher than 2021, the numbers will be skewed towards the perceived highest quality and fastest growing companies. In 2022, there will continue to be separation from the haves and have nots and this further increases the importance for funding outstanding and dynamic management teams who are also recruiting machines.

3. Speed bumps will surface for overcapitalized companies who raised too much 💰 too early and who tried to stay on the trajectory of super fast growth to be one of the top companies but fell short - lots of pain will surface in 2022 from these companies that overspent and don’t have much to show for it.

4. A number of open source projects will become a DAOs (decentralized autonomous organization) instead of pursuing the classic venture backed model.

When my 81 year old father-in-law who has gold bars was over last night asking me about what crypto and NFTs to buy, I know that 2022 is going to be an interesting one for sure! For a good laugh, check out the South Park Return of Covid Special which pokes some fun at the crypto craze.

🙏🏼 again for being with me through 2021, and 🥂 to a happy, healthy, rewarding, and prosperous 2022!

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Scaling Startups

1. Great 🧵 from one of the best at open source and PLG, helped scale Mongo Atlas sales, now CRO of Starburst Data

   Javier Molina @JavierMolinaSW

   Building a MODERN GTM in 2022 and beyond: 🧵 There’s plenty of content around recruiting in tech, PLG, how to start a sales team, product innovation…etc However, all of this should fit together as an engine 1/

2. 👇🏼 💯

   Jason ✨BeKind✨ Lemkin ⚫️ @jasonlk

   In theory, SMB > Enterprise More customers, much faster sales cycles, faster PLG and viral cycles But even 100% NRR is tough to hit with SMBs, While 120%-140% common in Enterprise Most SMB SaaS goes at least bit enterprise or at least into more “bigger deals” to balance it out

3. Matthew Prince still sending out offers as founder of Cloudflare - great 🧵 - CEOs need to focus on hiring, recruitment and stay engaged no matter how big you get

   Matthew Prince 🌥 @eastdakota

   Just sent the last @Cloudflare employment offer of 2021. I still personally send all the offers out because nothing is more important than hiring. Some numbers: We received more than 200,000 applications. We extended 1,455 offers. And we had a 92% offer acceptance rate.

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Enterprise Tech

1. Dev Tools Predictions from Sergei at Atomic Jar (a portfolio co) - hint 2022 and Dev Tools 2.0 - it’s all about the ☁️ and the edge

   “What’s interesting though is that DevTools 2.0 will be focused on all these tools working together, each in their niche. Cloud IDEs alone would not solve everything. They can try, but I guess that the best Cloud IDEs will be marketplaces with lots of integrations for various use cases.

   Cloud IDEs give you what they are designed for – an IDE (what a surprise!), but, should you need to build an image, perform a security scan of the dependencies with Snyk, or run your Testcontainers-based tests, there will be integrations, similar to plugins in local IDEs.

   And these “for purpose” integrations will make the whole combo very efficient!”

2. 2022 Privacy will be big…great read from NY Times profiling OneTrust and BigID (a portfolio co)

   “It’s a booming market. OneTrust, a leader in the field, has been valued by investors at $5.3 billion. BigID, a competitor, raised $30 million in April at a $1.25 billion valuation. Another company that targets privacy regulations, TrustArc, raised $70 million in 2019. Yoti, a start-up that provides the kind of age-verification services that regulators are increasingly turning to to shield children from harmful content, has raised millions of dollars since it was founded in 2014.

   The emergence of these companies shows how complex regulations governing the web have become — and how much more complicated it is expected to get. Several privacy laws will take effect around the world in the coming years, with more countries and states expected to consider their own proposals.”

3. Docker made a huge bet in 2021 to go from free to paid and community still growing despite initial backlash

   Scott Johnston @scottcjohnston

   As 2021 winds down, here at @Docker we thank our employees, Captains, users, customers, and partners for our progress as a community: - 15M monthly active devs - 14M apps shared in Docker Hub - 1200+ sponsored OSS projects - 7000+ features, updates, fixes More to come in 2022!

4. Great story on Lacework (security co started by same team as Snowflake founders) from The Information and reminder that it’s hard in the early days and never a straight line to success - now valued at $8.3B valuation

   “Around the same time, Lacework founders seriously considered acquisition offers from network security firm Palo Alto Networks and data analytics provider Splunk of between $200 million and $300 million, the people said—which would have represented a disappointing outcome for the company and its backers. The details about Lacework haven’t been previously reported.

   Now, though, Lacework has largely shaken off the doldrums. It has raised a total of nearly $1.83 billion in two funding rounds this year. Each round was the largest in the history of the cybersecurity industry at the time of its announcement. Amid annual revenue growth of 200%, investors last month valued the company at more than $8 billion on paper and have compared it to cloud database company Snowflake, which like Lacework is backed by Sutter Hill Ventures. Snowflake saw a similar surge of investment in the year before its blockbuster initial public offering in September 2020.

   And after struggling for years to find a CEO, Lacework now has two of them. In an interview, one of Lacework’s co-CEOs, David Hatfield, said the company spent years refining its products, but he described that as a normal part of the “gestation period” for a startup.”

5. 😲

   Jon Erlichman @JonErlichman

   On this day in 1982: the computer is named Time’s person of the year. 1982: there were 621,000 home computers in the U.S. 2021: 621,000 computers are sold in the U.S. every 3 days.

   

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Markets

1. Angel investing disrupted with crypto?

   Balaji Srinivasan @balajis

   I wrote up a detailed piece on how we can combine web2 and web3 tools to automate the mess of angel investing. The key concept is a mirrortable, which is to a cap table what a stablecoin is to a fiat currency.

   

   balajis.comThe MirrortableMirrortables are to cap tables what stablecoins are to fiat currencies. They streamline and internationalize the logistical mess of angel investing.