What's 🔥 in Enterprise IT/VC #273

Talent in a down market 📉

As I tweeted this data out from Cambridge Associates, I didn’t realize that we would end the week with a market correction.

Ed Sim @edsim

Reminder to all VCs out there who didn't live through dot com era.. We're good but not that good - last time returns for venture were this high was '98, 99 + they ended up at just 1.5x + 0.9x TVPI 20 yrs later. Just 10% realized now Let's keep building! cambridgeassociates.com/answers/are-th…

A market correction is a decline of 10% or greater in a market and well folks, the Nasdaq blew threw that this week as its down more than 14% below its November record close. And that does not even show how bad it is for some stocks.

Gitlab which went public in mid-October last year is down over 50% from it’s peak with a valuation of $8.6B now.

Hashicorp was valued at over $14B on its IPO last month and now sits at $10.7B and its down over 40% from its market high.

So how bad is it? Jamin Ball from Clouded Judgement shares where multiples are after this week:

Update on Multiples

When looking at median multiples we’re now below where we were pre-covid. The overall median multiple is 7% below pre-covid highs, 13% above where we were on Jan 1, 2020, and 8% below the previous peak in August 2019.

However, high growth software multiples are still elevated. Looking at high growth software median only - we are still 49% above pre-covid highs, 76% above where we were on Jan 1, 2020, and 17% above the previous peak in September 2019

While multiples are off significantly for the Top 5 Median of 80x EV/NTM, it’s still at a healthy 33x next twelve month revenue. Late stage investors are adjusting on the fly this week as I’ve heard of some pulling back term sheets and others changing pricing. This has not filtered down to the early stages yet and given the amount of 💰 raised in the last year and on the sidelines, IMO early stage will continue to be strong as there is no better place to invest capital.

For founders who are just building, this is the best time ever to poach talent, especially from the public companies where employees unfortunately have underwater stock. This is also a great time to hire from private companies where valuations are super high and company performance is lagging. As you know, I’m always looking for the bright side and I continue to see a ton of opportunity to keep funding founders on day one.

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

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Scaling Startups

1. ❤️ the power of why and how Segment found PMF 🧵

   Peter Reinhardt @reinpk

   As Segment grew from open source afterthought to the leading customer data platform, we "refound" product market fit several times. Surprising to me as a product person, our biggest learnings in PMF were from wildly uncomfortable questions from our sales team 👀 a thread 1/14

2. I may dive into this more next week post market meltdown - the nuance here is timing and honesty…

   Ed Sim @edsim

   A great head of sales will stress the whole org from product to eng to marketing - can be an amazing add if you're startup is ready and has true PMF and if not, it can break you - just make sure you're honest with where you really are

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Enterprise Tech

1. The long arc of developer first businesses - focus on amazing developer experience and ❤️ first - takes time to nail down the largest of enterprises - such massive opportunity ahead for Stripe but patience in early days was 🔑

   Patrick Collison @patrickc

   🚗 @Ford is moving to @stripe! Our fastest-growing segment is now large, established businesses looking to retool for the digital age. detroitnews.com/story/business…

   

   detroitnews.comFord inks 5-year deal with financial service Stripe to overhaul online paymentsFord touted the deal as a way to make the online payments process more seamless for its customers.

   And if you’re selling to enterprises like Ford, well you need a CRO like this 👇🏼

   Matt Slotnick (hiring a lot!!) @matt_slotnick

   you can't outsell a guy dressed like this

   

2. Great read on why integration testing and what’s new and how Atomic Jar (portfolio co) is helping companies like Spotify, Google, Instana and Oracle

   “North built Testcontainers as an open source library that lets developers “test with containers” against data stores, databases, or anything else that can run in a Docker container, including popular frameworks such as Apache Kafka. Testcontainers provides an ergonomic, code-based way for developers to harness containers for local and continuous integration testing, without forcing every developer to become an expert on the many nuances of containers.”

   Matt Asay @mjasay

   Yes, you need to get serious about integration testing. And, yes, @whichrich's open source Testcontainers project can help infoworld.com/article/364728… by @mjasay for @InfoWorld

   

   infoworld.comA new kind of old-school testingLike unit testing, modern integration testing offers a way of testing complicated software interactions.

3. 💯 just the beginning with images…

   cantino.eth @chriscantino

   The programmability of NFTs unlocks value that will transform entire industries and asset classes. Art Governance Social networks Accounting Legal docs Loyalty programs Royalties Securities Insurance Certifications Media Software Gaming IP +so much more Trillions, not billions.

4. Amazing how much of this has been said since I started venture 25+ years ago and yet…still lots of opportunity

   Aaron Levie @levie

   Why cloud is still in the early days: 1. Billions of digital workers now 2. New era of work demands new tools 3. Bottom-up adoption scales 4. Consumer-like rate of innovation 5. Every vertical needs new software 6. Massive growth in IT spend 7. Best-of-breed solutions winning

5. Dev rel is one of hardest rolls to fill esp. if you look for one of these 🦄

   Tracy Miranda @tracymiranda

   job postings for director of devrel be like: - build our community! - rewrite our docs! - figure out what to do with open source! ...oh and work with marketing on events... ...and with product on their roadmap...

   

6. Big week for contract automation as Ironclad raised $150M at $3.2B (software to manage business contract lifecycle) and Juro raised $23M (browser based contract automation)

7. 👇🏼 want to start a newco? see below…

   Suhail @Suhail

   Apparently Google has released a ton of new ML/AI datasets in the last year or so. If I was going to start a new company, I’d start experimenting with these for inspiration. This is just so cool:

   

   

   

8. GDPR is real as EU issued $1.2B of fines in 2021

9. Must read on attack vectors on CI/CD pipelines

   “Mainstream appreciation for cyberattacks targeting continuous integration and continuous delivery/continuous deployment (CI/CD) pipelines has been gaining momentum. Attackers and defenders increasingly understand that build pipelines are highly-privileged targets with a substantial attack surface.

   But what are the potential weak points in a CI/CD pipeline?”

   Mark Carter @markcartertm

   🤔 10 real-world stories of how we’ve compromised CI/CD pipelines research.nccgroup.com/2022/01/13/10-… #infosec

   

   research.nccgroup.com10 real-world stories of how we’ve compromised CI/CD pipelinesMainstream appreciation for cyberattacks targeting continuous integration and continuous delivery/continuous deployment (CI/CD) pipelines has been gaining momentum. Attackers and defenders increasingly understand that build pipelines are highly-privileged targets with a substantial attack surface. B…

10. 🤣

    Chris Bakke @ChrisJBakke

    Hiring in 2022: Founder: "We raised $70m and are hiring engineers. Must have 15+ years of machine learning experience. PhD in comp sci + an MBA from a top school is ideal." Me: "Wow, what's the product?" Founder: "We're making an app that screen prints NFTs on cupcakes."

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Markets

1. 🤣

   Justin Kan ❄️ @justinkan

   

2. Rough week for crypto as well (Bloomberg)

   “Bitcoin’s decline since its November high has wiped out more than $570 billion in market value, and roughly $1.17 trillion has been lost from the aggregate crypto market”