What's 🔥 in Enterprise IT/VC #287

Building in a 🐻 market and getting ahead while you have the 💰

Coming back from 36 hours at the FTX Crypto Conference and one would have no idea that this was happening all week.

Ed Sim @edsim

Well…the good news is that lots of investors and founders who have only seen and built companies through this 📈will now know how to build companies in a 🐻 market.

While I urge founders and investors not to panic as these are the best times to build a company, we all do need to pay attention..especially these companies 👇🏼

Ed Sim @edsim

💰 is 👑 If you have it, preserve it All of those founders who raised mega Series A + B rounds will have to show more progress than before just to reach valuation parity, let alone exceed the last round Make sure you have enough runway + then some

Ed Sim @edsim

Premature scaling sales is easiest way to burn 💰, if u don't have true PMF, hiring more reps does not = revenue, don't be a victim of ur sales model, let's hire now for 6 mos ramp. Ask yourself the tough questions - is this truly repeatable or r we searching for 🦤?

Building a startup in a market defined by unlimited capital available at exorbitant prices is different than one when builds when investor psychology shifts as the Nasdaq is down 13% in one month. Founders and their board members should have a number of plans at the ready, base case along with worst and best cases. If you don’t have one at the ready, here’s an easy way to start, back of the napkin is ok.

Ask you and your team this question:

If we had to extend runway by 6, 12, and 18 months, what decisions would we have to make? What are the tradeoffs under each scenario, what would we be giving up, and how would that impact overall value?

Weigh that against where the business truly is (be honest with yourselves), and if the team believes they can hit their milestones. I am not urging panic mode but more planning mode and making sure founders ask themselves the tough questions. The funding environment for Series C and beyond have clearly changed, multiples have compressed to pre-Covid levels, and while you have 💰 is the best time to plan.

The good news for now is that IT Spending continues to ramp up in the enterprise. Bill McDermott of ServiceNow said it well in his earnings call this past week:

Our customers know they have to continue to invest in digital transformation,” McDermott says. “There is no other way to fight inflation. Software is the only deflationary force that exists in the world today.

The cloud providers also continue to grow at phenomenal rates.

Puru Saxena @saxena_puru

Cloud is alive and well - Q1 '22 revenue growth (YoY) AWS +37% Azure +46% GCP + 44%

Nate Webster @Nategwebster

“The number of $100M+ Azure deals more than doubled year over year” The fact $100M Azure deals occur frequently enough to be referenced by Satya as a statistic, let alone one growing >100%, is absurd. $MSFT @jaminball

Here’s more from Microsoft’s earnings transcript on the next quarter outlook:

We expect to close FY22, even in a more complex macro environment, with the same consistency we have delivered throughout the year. With strong revenue growth, share gains, and improved operating margins as we invest in the areas that are key to sustaining that growth. As we look toward FY23, our track record of delivering high value to our customers across many diverse and durable growth markets gives us confidence that we will drive continued healthy double-digit revenue and operating income growth.

Be careful out there as the world has changed, do your scenario planning, and come out of this stronger than before. Let’s keep building 🏗️.

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

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Scaling Startups

1. Most startups are operating like this by default but great to see AirBnB make this its official policy - 🧵 on how plan will be implemented

   Brian Chesky @bchesky

   Today, we’re announcing that Airbnb employees can live and work anywhere. Our design for working at Airbnb has 5 key features:

2. On the new owner of Twitter but many forget that Tesla was near death

   Jon Erlichman @JonErlichman

   Elon Musk first invested in Tesla on this day 18 years ago. Here’s how it happened… 🧵

   

3. Founders chasing 🦄 valuations - be careful what you wish for, especially if your revenue numbers aren’t up to snuff - great advice from Dharmesh Thakker - Battery Ventures (Forbes)

   “Finally, my advice to founders and CEOs in this market is to be long-term greedy. Sure, it feels great to raise money at unicorn valuations early in your company’s lifecycle, just like it feels great to see the value of your house double on Zillow during Covid. But that value only matters when you exit! Do not confuse the ability to raise money with the ability to spend it. Being a great steward of your capital and using it wisely to scale, acquire companies and build competitive advantage in your specific market can create value and loyalty in your employee base—and, ultimately, reward all stakeholders involved.”

4. PSA - Enjoy the journey

   Adam Grant @AdamMGrant

   Happiness is not a function of what you achieve. It's a function of how you spend your time. Success is a temporary thrill. Happiness lies in doing daily activities that bring you joy. There's always a new mountain to climb. You don't have to anchor your emotions to the summit.

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Enterprise Tech

1. Building an open source and infrastructure company takes time so its important to celebrate milestones to share with other founders that it’s not always 📈 on day 1. 🔥 up for Mike Malone and the Smallstep team on this $26M Series A (Greenspring, Bain, Accel, boldstart, upside, Ridgline) as its OSS is the easiest way to manage and scale identity for systems.

   “It’s been six years since I started Smallstep. That’s an unusually long youth for a startup. We’ve been using that time to work collaboratively with the community to build, and open source, core infrastructure — something that few early-stage startups have been able to pull off.”

   smallstep @smallsteplabs

   We are funded! 🎉 We raised $26M to bring you the best way to secure your infrastructure with certificates. smallstep.com/blog/how-we-go…

   

   smallstep.comHow we got here, and where we are headedSmallstep raises 26 million in funding. How we got here, and where were are headed

   More from TechCrunch

2. Speaking of building developer first startups, this is aMUST LISTEN 🎙️ as Blake Bartlett from Openview interviews Peter McKay, CEO of Snyk, on leading through hypergrowth…as a day one investor working closely with Peter through the years, I reiterate for all founders to listen to this and learn, especially the idea of being paranoid when things are going great and not just relying on metrics to anticipate what’s next

   Here’s more from Peter’s LinkedIn post:

   

3. Forbes CIO Next List - shoutout to good friend Marty Brodbeck, CTO Priceline, who has worked with a number of our startups from day 1, helping refine product and pitch - many folks on this list are like Marty, willing to engage with startups earlier in their lifecycle - take a look and the next time your OSS project has someone from one of these shops reach out, it may not be nothing

4. Cheat sheet on Good and Great startup growth rates

   Lenny Rachitsky @lennysan

   I asked 25 of the smartest investors I know what they consider GOOD and GREAT growth rates by company stage. Here’s what I learned 🧵👇

   

5. Harness raised $230M at a $3.7B valuation led by Norwest with a number of strategics participating - developer and infra tooling still on 🔥

   “Harness's mission is to enable every one of the 27 million software developers in the world to deliver code to their end users quickly, securely, reliably and efficiently while dramatically improving the developer experience. The financing round follows a year of major accomplishments across the company, including:

   - Annual revenue rate (ARR) more than doubled year over year
   - Rapid employee growth from 250 employees in January 2021 to nearly 700 Harnessians today
   - Hundreds of new enterprise customers added to the Harness Software Delivery Platform

6. Having been through this 🎥 before, all great ideas but blockchains are not a solution for every single one as just a database can work for lots of problems. Don’t get me wrong, I’m bullish and investing in lots of core infra but just don’t believe it can solve all of these.

   gaut @0xgaut

   'web3 is a solution looking for a problem' A high-level thread on problems web3 can address 🧵👇

7. TradFi to crypto - Fidelity will allow 401Ks to invest in Bitcoin - this is just the beginning

8. More on TradFi moving to crypto - 🔥 up for port co Blockdaemon -Christopher Sharp profile:

   CORE RESPONSIBILITIES
   ★ Created the Apple Pay team from scratch with only 6 engineers, successfully sustaining an Agile, entrepreneurial, start-up environment to ensure on-time and high quality deliverables.

   The Crypto Lauren @thecryptolauren

   probably nothing @BlockdaemonHQ

   

9. Where’s Hopin, the virtual events platform, today? (FT)

   
   ”In November 2020, with the pandemic in full force, British virtual events start-up Hopin declared that a new era of digital gatherings had begun. Virtual events were “here to stay”, said founder Johnny Boufarhat, as he bragged that there were “more than 15,000 monthly events” available on Hopin’s “Explore” platform. Today, there are fewer than 500 listed.”

10. for those Excel nerds…I learned how to code in early 90s in Visual Basic 🧵

    Blake Burge 💡 @blakeaburge

    This thread will make you better at Excel: 📊

11. So true…

    kvm @__kvm

    Netflix infra to handle a trillion events every day v/s Series A startups with five customers

    

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Markets

1. Worth a read/listen no matter what side you come out on with respect to yield farming

   Robin Wigglesworth @RobinWigg

   That @SBF_FTX interview with Bloomberg is quite... something. Basically comes out and says, well yes the whole yield farming thing is a big fat Ponzi.

   

   ft.comFTX/ Defi: If it looks like a duck and quacks like a duck . . .Sam Bankman-Fried explains “yield-farming” to Bloomberg.