Byron Deeter, Partner, and Kristina Shen, Vice President present the Bessemer Venture Partners: The State of the Cloud, 2017-2018 Edition. AI and voice are on the rise, NPS is still king, and diversity is even more important than you realize.
8. Source: 43 companies in BVP Cloud Index as of 02/01/2017. CapIQ
A ROCKY START TO 2016
BVP Cloud Index (1/1/2016 – 2/12/2016)
43 Publicly Traded Cloud Companies Indexed as of Jan. 2016 |
@ 02/01/2017
50%
60%
70%
80%
90%
100%
110%
120%
1/1/2016
1/3/2016
1/5/2016
1/7/2016
1/9/2016
1/11/2016
1/13/2016
1/15/2016
1/17/2016
1/19/2016
1/21/2016
1/23/2016
1/25/2016
1/27/2016
1/29/2016
1/31/2016
2/2/2016
2/4/2016
2/6/2016
2/8/2016
2/10/2016
2/12/2016
BVP Index Nasdaq S&P Dow Jones
9. BVP Cloud Index (2/12/2016-2/3/2017)
43 Publicly Traded Cloud Companies Indexed as of Jan. 2016 | @
02/03/2017
Source: 43 companies in BVP Cloud Index as of 02/03/2017. CapIQ
...BUT THE MARKET COMPLETELY REBOUNDED
IN 2H 2016
BVP Cloud Index (1/1/2016 – 2/12/2016)
43 Publicly Traded Cloud Companies Indexed as of Jan. 2016 |
@ 02/03/2017
50%
60%
70%
80%
90%
100%
110%
120%
1/1/2016
1/3/2016
1/5/2016
1/7/2016
1/9/2016
1/11/2016
1/13/2016
1/15/2016
1/17/2016
1/19/2016
1/21/2016
1/23/2016
1/25/2016
1/27/2016
1/29/2016
1/31/2016
2/2/2016
2/4/2016
2/6/2016
2/8/2016
2/10/2016
2/12/2016
BVP Index Nasdaq S&P Dow Jones
50%
60%
70%
80%
90%
100%
110%
120%
BVP Index Nasdaq S&P Dow Jones
10. BVP Cloud Index
43 Publicly Traded Cloud Companies Indexed as of Jan. 2011 | @ 02/03/2017
JUST A SMALL BUMP IN A CRAZY RIDE UP!
50%
100%
150%
200%
250%
300%
350%
1/1/2011
3/1/2011
5/1/2011
7/1/2011
9/1/2011
11/1/2011
1/1/2012
3/1/2012
5/1/2012
7/1/2012
9/1/2012
11/1/2012
1/1/2013
3/1/2013
5/1/2013
7/1/2013
9/1/2013
11/1/2013
1/1/2014
3/1/2014
5/1/2014
7/1/2014
9/1/2014
11/1/2014
1/1/2015
3/1/2015
5/1/2015
7/1/2015
9/1/2015
11/1/2015
1/1/2016
3/1/2016
5/1/2016
7/1/2016
9/1/2016
11/1/2016
1/1/2017
BVP Index Nasdaq S&P Dow Jones
Source: 43 companies in BVP Cloud Index as of 02/03/2017. CapIQ
11. 0
5
10
15
20
25
30
35
40
45
50
2008 2009 2010 2011 2012 2013 2014 2015 2016
Number of tech
IPOs on U.S.
Stock exchanges
Source: Bloomberg
*Tech IPOs less than $5MM are not included | *Listings for this year are through Nov 15
FEWEST TECH IPOS SINCE FINANCIAL CRISIS
14. M&A From 2009 to Today
4X MORE M&A 2016 THAN ANY OTHER YEAR
$1,676 $2,279
$5,627
$13,708
$8,889
$14,921
$17,655
$60,713
$3,700
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: CapIQ
15. PUBLIC CLOUD COMPANIES 2009 – 2017
Source: CapIQ and public fillings.
Note: >$300BN market cap also includes 25 companies that are either public companies that are <$1bn market cap or large private acquisitions >$500m market cap.
Salesforce
LinkedIn
Workday
ServiceNow
Netsuite
Concur
Veeva
Atlassian
Ultimate Software
Athenahealth
Shopify
Ariba
Dealertrack
Successfactors
Appdynamics
Tableau
$59.9
$29.0
$21.1
$16.0
$9.3
$8.3
$6.2
$6.2
$5.9
$5.4
$5.2
$4.6
$4.0
$3.9
$3.7
$3.9
Xero
Taleo
LogMeIn
Marketo
Rightnow
New Relic
RingCentral
Omniture
Blackboard
Digital Insights
Cvent
2U
Responsys
Qualys
Blackline
Kenexa
$1.9
$1.9
$1.8
$1.8
$1.8
$1.8
$1.8
$1.7
$1.7
$1.7
$1.7
$1.6
$1.6
$1.6
$1.4
$1.4
>$300BN Market Cap
Proofpoint
Medidata Solutions
LogMeIn
RealPage
Demandware
Twilio
Exact Target
Wix
Fleetmatics
Lifelock
CornerstoneOnDemand
Box
Skillsoft
Zendesk
Hubspot
$3.7
$3.3
$3.2
$2.9
$2.8
$2.7
$2.6
$2.6
$2.4
$2.4
$2.4
$2.3
$2.3
$2.3
$2.0
Coupa Software
Broadsoft
SPS Commerce
Constant Contact
Mindbody
Eloqua
$1.3
$1.3
$1.2
$1.1
$1.0
$1.0
16. 40% OF MARKET CAPACQUIRED
Source: CapIQ and public fillings.
Note: >$300BN market cap also includes 25 companies that are either public acquisitions <$1bn market cap or large private acquisitions >$500m market cap.
Salesforce
LinkedIn
Workday
ServiceNow
Netsuite
Concur
Veeva
Atlassian
Ultimate Software
Athenahealth
Shopify
Ariba
Dealertrack
Successfactors
Appdynamics
Tableau
$59.9
$29.0
$21.1
$16.0
$9.3
$8.3
$6.2
$6.2
$5.9
$5.4
$5.2
$4.6
$4.0
$3.9
$3.7
$3.9
Xero
Taleo
LogMeIn
Marketo
Rightnow
New Relic
RingCentral
Omniture
Blackboard
Digital Insights
Cvent
2U
Responsys
Qualys
Blackline
Kenexa
$1.9
$1.9
$1.8
$1.8
$1.8
$1.8
$1.8
$1.7
$1.7
$1.7
$1.7
$1.6
$1.6
$1.6
$1.4
$1.4
>$300BN Market Cap
Proofpoint
Medidata Solutions
LogMeIn
RealPage
Demandware
Twilio
Exact Target
Wix
Fleetmatics
Lifelock
CornerstoneOnDemand
Box
Skillsoft
Zendesk
Hubspot
$3.7
$3.3
$3.2
$2.9
$2.8
$2.7
$2.6
$2.6
$2.4
$2.4
$2.4
$2.3
$2.3
$2.3
$2.0
Coupa Software
Broadsoft
SPS Commerce
Constant Contact
Mindbody
Eloqua
$1.3
$1.3
$1.2
$1.1
$1.0
$1.0
17. MORE THAN
MEETS THE EYE
$400B Market Cap
Creation in Just the
Top 200 Companies
$180BN
Public
$129BN
Major Acquisitions
$104BN
Top 100 Private
Cloud Companies
~$400B
MARKET
CAPTop 200
companies
1,000s of Private
Cloud Companies
Source: SLWA Blog
18.
19. HUGE BACKLOG OF PRIVATE COMPANIES
>$100BN MARKET CAP IN CLOUD 100
20. HOW DO I
SCALE?
HOW MUCH
SHOULD I
BURN?
HOW FAST
SHOULD I BE
GROWING?
KEY QUESTIONS FROM TOP PRIVATE
CEOS
24. Years from $1M to $10M ARR
HOW DO THE TOP CLOUD COMPANIES PERFORM?
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
0.5 Yr 1 Yr 1.5 Yr 2 Yrs 2.5 Yrs
ARR(in$M)
Source: CapIQ, internal sources and company announcements..
Note: Use quarterly revenue times four as a proxy for ARR.
25. $0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
0.5 Yr 1 Yr 1.5 Yr 2 Yrs 2.5 Yrs
ARR(in$M)
Years from $1M to $10M ARR
HOW DO THE TOP CLOUD COMPANIES PERFORM?
Source: CapIQ internal sources and company announcements..
Note: Use quarterly revenue times four as a proxy for ARR.
26. $0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1 2 3 4 5 6 7 8 9 10 11 12 13 14
$ARR(inM)
Years
YEARS FROM $1M TO $100M ARR
Source: CapIQ, internal sources and company announcements..
Note: Use quarterly revenue times four as a proxy for ARR. Note: Assuming it takes 24 months from founding to $1M ARR if do not have actual data.
27. YEARS FROM $1M TO $100M ARR
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1 2 3 4 5 6 7 8 9 10 11 12 13 14
$ARR(inM)
Years
5.3 yrs
Top 25%
Source: CapIQ and internal sources. Includes 46 public or recently acquired public companies from the BVP Cloud Index. Excludes companies who reached $100M ARR prior to public
reported periods.
Note: Assuming it takes 24 months from founding to $1M ARR if do not have actual data. Use quarterly revenue times four as a proxy for ARR.
Public Cloud Companies
7.3 yrs
Median
10.6 yrs
Bottom 25%
28. From $1mm ARR
BVP GROWTH BENCHMARK
BEST
GOOD
BETTER
Yearsto$10MARR
Yearsto$100MARR
3Years
7Years
4Years
10Years
2Years
5Years
38. CUSTOMER ACQUISITION COST
CAC PAYBACK
CAC PAYBACK
PERIOD
(months)
TOTAL S&M COSTS
LAST QUARTER
= NEW CMRR ADDED LAST
QUARTER
X
% GROSS MARGIN
39. CAC COCKTAIL
CAC
COCKTAIL
FORMULA SALES
# of AEs
Quota
Inside sales
Field /enterprise sales
Ramp time
Inside sales
Field sales
Attainment rate
$400k-$800k
$1-1.5m
1-3mo
6-9mo
70-90%
LEAD/OPPORTUNITY
GENERATION
# of SDRs
Opportunities/SDR/month
Close rate
Marketing Spend
(% of Total S&M)
Inside/field sales model
Freemium/internet sales
15-25
15-30%
25-33%
33-67%
40. Find the model that works for you
UNDERSTANDING YOUR SALES MODEL
SMB EnterpriseMidmarket
12 Mos 18-24 Mos3-6 Mos
AVG ACV
CHURN /
UPSELL
CAC
PAYBACK
$12 - $50K<$12k $50K+
1% Monthly<3% Monthly
<1% Monthly,
Upsell
41. MULTIPLE WAYS TO BE SUCCESSFUL:
UPSELL MAJOR DRIVER
12 Mo CAC Payback, 100% Retention 24 Mo CAC Payback, 115% Retention
Note: Assumed 80% gross margin, and no other expenses.
Revenue
Cash Flows (Gross Profit – S&M)
S&M Costs
Year 1 Year 2 Year 3 Year 4Year 1 Year 2 Year 3 Year 4
$10
$8
$0
$10 $10 $10
$8
$16
$24
$10
$8
$16
$12
$1
$13
$12
$15
$24Result in same
cash flow after 4
years
45. THE YEAR OF HUMAN ASSISTED AI
SECURITY
Estimated 1mm unfilled
cybersecurity jobs
available
SALES & MARKETINGCUSTOMER SUPPORT
50% of customer service
agents failed to answer a
consumers questions
HEALTHCARE
#1
$12.8B per year on sales
acceleration technology
40% of healthcare
providers are expanding
IT budgets
47. COST OPTIMIZE
YOUR PUBLIC
CLOUD
INFRASTRUCTURE
AS YOU GROW
ELECTRONIC CALCULATOR
4
7
GT
7
5
8
+ - MRC M- M+
-6 ×
9 %
BASE INSTANCE
+ STORAGE COST
+ PROVISIONED IOPS FOR
DATABASES
+ LOCAL SSD
+10% FOR PREMIUM SUPPORT
+10% FOR DEDICATED
INSTANCES OR HOSTS
=
TOO EXPENSIVE
ARCHITECT
FOR
SUCCESS IN
AN INFINITE
COMPUTE
WORLD
#3
48. FIELD SERVICES
VERTICALHORIZONTAL
CONSTRUCTION RETAIL SALES
EDUCATIONHEALTHCARE SAFETY / COMPLIANCE
AGRICULTUREEVENTS SMBS
COMMUNICATION
PAPER REPLACEMENT
(FORMS/INVOICING)
MOBILE
UNLOCKS NON-
DESK WORKER
PRODUCTIVITY
#4
50. U.S. Labor Force by
Generation, 1995-2015
Source of Graph: Pew Research Center tabulations of monthly 1995-2015. Current Population Surveys, Integrated Public Use Microdata Series (IPUMS)
Source of Data: Fast Company, Rob Hernandez, Future of Work; Forbes, Jeanne Meister, Future Workplace “Multiple Generations @ Work” Survey; PwC, Millennials at Work.
MILLENNIALS ARE A MAJORITY OF THE US
WORKFORCE
think the performance review
process is flawed69%
“feel in the dark” about how their
managers think they are
performing
74%
expect to stay in job for less
than
3 years
91%
ranked personal development
as #1 reason for accepting a
job
65%
In millions
Boomer
s
Gen
Xers
Silents
Millennial
s
52. 7K
Alexa/
Echo has
skills
THE MARKET
HAS FALLEN IN
LOVE WITH
VOICE
8.2MM
Alexa/Echo‘s sold
since late 2014
intro
Source: Consumer Intelligence Research Partners
53. 11.30%
9.50%
18.70% 19.00%
41.60%
When did you first start using
voice search/commands?
Source: MindMeld, SEL Blog by Greg Sterling 2016
Within the last 6 monthsBetween 6 months and 1 year agoBetween 1 to 2 years agoBetween 2 to 3 years agoMore than 3 years ago
20%…of queries on the
Google mobile app and
android devices are voice
searches
Sundar Pichai
Google I/O Keynote
May 2016
VOICE
54. DIVERSE TEAMS WIN#7
of companies funded by American
VCs had “one core foreign born
team member such as CEO or
CTO.”
75%
of U.S. Billion-Dollar startups
were founded by immigrant.s
51%
of top 10 companies in silicon
valley by NASDAQ market
cap are run by women.
20%
profitability increase when
adding 30% more female
talent to a company.
15%
55. BVP’S 7 PREDICTIONS FOR 2017
1
APIs will serve as the backbone for
a majority of software infrastructure
The screenless software movement
Mobile unlocks non-desk worker productivity
NPS everything
Architect for infinite scale without
infinite spend
The year of human assisted AI
Diverse teams win
2
3
4
5
6
7
Hinweis der Redaktion
Twilio opened the IPO markets and proved a developer business had value