Where The Cloud Is Headed in 2021 | Cloud 100 | Salesforce Ventures

Hello everyone. Thank you so much for joining us for the 6th annual Cloud 100. My name is Alex Kahl, Managing Partner at Salesforce Ventures and we're so excited to have you here today as we celebrate 2021's Cloud 100. Over the past 18 months, we've experienced one of the most challenging periods in recent memory, but also one that has seen unprecedented innovation.

And I'm Elliot Robinson, partner at Bessemer Venture Partners. It has indeed been a banner year across the entire venture capital and startup ecosystem. In the first half of 2021 alone, VCs from around the world have invested a total of $288 billion, which is an all time record for our industry. Entrepreneurship is gaining momentum around the globe as more than half of the venture capital dollars raised went to startups based outside of the United States. Powered by cloud technology itself, we're seeing generational shifts in both established and emerging markets when it comes to opportunities for cross border collaboration, communication and the ability to scale world class remote teams from just about anywhere. But today we're all here to celebrate a unique subset of the venture backed community. The top 100 privately held cloud companies.

We've got this very simple two step plan.

Step one, build one of the world's most valuable companies and step two, do.

The most good we can do. And I feel like that is such.

A huge, not just opportunity, but incredible responsibility.

In a moment of crisis, you can't control what's going on out there, but what you can do is, is determine your response and you act decisively and you act correctly. With the right plan, you can come out of the crisis better off than had you not acted at all.

We have to adapt and innovate at.

All times if we're going to stay current and part of the creative economy.

We have an opportunity ahead of us to create systemic changes to help any entrepreneur, no matter what your background is and run a great business.

As a leader, you do your best to try to motivate. You know, you have 53 different people on the team from different walks of life, different religions, different socioeconomic backgrounds and you just try to find what makes each person tick. Everybody's motivated by different things and as a leader, you have to find out what each person you know really is in it for.

What are the durable soft power skills that we need all Americans to have so that we can have a nimble economy that can survive the next big pivot, which I hope isn't a pandemic, but is some other industrial change. We haven't seen yet.

Welcome to Cloud 100. With two of the largest cloud portfolios. Salesforce Ventures and Bessemer Venture Partners have partnered with Forbes, the top publication in venture capital. Together, we recognize the leaders in businesses shaping the future of the cloud economy. The global pandemic has changed the way the world works, and we're not going back to the way things were. Customer and employee expectations have changed and companies have digitally transformed at a faster pace than ever before. For many founders all over the world, these challenging times have brought a renewed sense of purpose which we've been so grateful to be a part of. Times of adversity are often the greatest moments of transformation and opportunity. Many of the changes that were instigated by the pandemic are becoming permanent societal norms. We've seen a shift to remote and hybrid work, an increased focus on automation, personalization and convenience, and entrepreneurship is on the rise. This is the new normal and we're so excited for the role that the cloud ecosystem will play in driving that transformation.

All of you watching today, the people that are leading, building and fueling the cloud economy are the real trendsetters in the new future of work. In your collective efforts, you are the ones that define best in class, culture and the never ending innovation that helps industries thrive. The tech sector continues to drive value and wealth creation in the broader global economy, and the cloud represents a source of economic opportunity across almost every industry you can think of. Since January, Cloud100 companies grew their employee ranks by a net average of 26%. That translates to a total of more than 17,000 new hires. And it's probably no surprise to learn that after the fintech sector raised a record $33.7 billion from venture capitalists in Q2 alone, fintech companies on the Cloud 100 list also created the greatest number of new jobs this year to date compared to 2020.

US workers are feeling more confident than ever to try for new opportunities. Economists say this signals a healthy labor market as people gravitate to jobs more suited to their skills, interests and personal lives. And as employees seek values driven, supportive and flexible organizations, great leaders are responding in kind. For example, Guild Education, co founded by CEO Rachel Kallston, recently opened a daycare center for their employees. By better catering to working parents. Gild has maintained a 96% retention rate amongst parents during the pandemic and set an example for great leadership. In today's environment, being values driven and values led matters more than ever.

80% of workers also say they want business leaders to speak up on social and political issues and think companies can do more when it comes to diversity, equity and inclusion. But it's not about furthering diversity theater or promoting empty pledges and public statements. It's about turning your values into tangible, measurable actions that drive exponential impact and generate superior business outcomes. All of this is exemplified through the culture and products that you build, how you treat your customers and employees, and ultimately who you empower to be the leaders within your organization. Plus, as the cloud economy taps further into talent pools from all over the globe, companies need to rethink and retool their human resources technology stack. For example, companies like Papaya Global help businesses navigate the complexity of a rapidly evolving remote workforce to more effectively manage international taxes, payroll and and benefits across one unified platform.

How we work has undergone a paradigm shift and businesses of all shapes and sizes are reimagining the tools that are needed to ensure the work from anywhere world is a sustainable, long lasting solution that could be driving additional team collaboration with solutions such as Miro and Loom, securing remote devices with Tanium or leveraging tools that enable better sales and service such as gong Outreach and HighSpot. And thanks to the rise of low code and no code solutions, our capacity at work continues to expand. Anyone can collaborate on building beautiful designs with Canva and Figma, and in a few clicks Zapier, Workato and Monday.com can turn routines into automated processes, helping people do their jobs more efficiently.

We also saw the promise of the work from anywhere movement come to life as vertical software giants such as Procore, ServiceTitan and Toast demonstrated that the power of the cloud is not only found in what we think of as the more traditional enterprise software environments, but also for all professionals, from construction to plumbing, landscaping, restaurants and beyond. When we Compare this year's Cloud 100 list to previous years, we've never seen so much dramatic change. Companies from the Cloud 100 continued to achieve fantastic success via both large acquisitions and record breaking IPOs. As you may recall, Snowflake, which earned the number one spot in the 2020 Cloud 100 rankings, went public just moments after Forbes revealed the list, making it not only the largest cloud cloud IPO in history, but the largest IPO in the entire history of software. And since last year's event, we've seen more than 19 Cloud 100 honorees also graduate from this prestigious list, including companies as UiPath, Confluent, Procore, Auth0, DigitalOcean, Gainsight, and many more.

And speaking of publicly traded cloud companies, top CEOs who grew this market into what it is today served as judges and helped us determine this year's list. Thank you to the many cloud giants and leaders who have given their time and support to participate as our 2021 judges. And of course, we want to recognize the generosity and support of our event partners for helping us bring these amazing speakers to you at home today. So on behalf of Salesforce Ventures, Forbes and Bessemer Venture Partners, I'd like to give a big thanks to our sponsors. We really couldn't run this event without you. Now over to you Byron, for an industry update.

This time last year we saw historic rates of digital transformation as companies rapidly transitioned to the cloud as a necessity. After all, it's even harder to work with a legacy on premise software if no one's on premise. But we continue to see these trends and they further accelerate because one thing is clear, cloud is not a fad, it's a business imperative. Your employees and customers demand it. And increasingly, cloud is a necessity to survive and to compete in our digital ecosystem. Even further accelerated by the global pandemic our digital economy is going through. This historic period of re platforming. Cloud continues to be the the growth driver of the tech economy. And it's no coincidence that the companies with the largest market caps in the world, Microsoft, Amazon, Google, Alphabet and even Alibaba are not only worldwide tech giants, but they have multi billion dollar cloud business units within them now. For years, investors have talked about the faang stocks the Internet revolution with the emergence of Facebook, Apple, Amazon, Netflix and Google as the flag bearers of the new economy. But as the trends of Internet and mobile mature, there's a changing of the guard underway. At Bessemer Venture Partners, we coined a new basket of high performing stocks called Mount SaaS, consisting of Microsoft, Twilio, Salesforce, Amazon, Adobe and Shopify. Last year, Mount SaaS outperformed FAANG by over 100%. What Mounts SAS illustrates is the power of the cloud and how it will continue to drive technology and innovation forward. Simply put, cloud computing is increasingly consuming software, hardware and services, and it is therefore the most exciting megatrend in technology, making it one of the most compelling themes impacting global GDP over these coming years. Last year Cloud 100, we made two predictions. First, we predicted that the public cloud markets would surpass $2 trillion in total market capitalization. Well, we've blown through that number. Over the past months, the total market cap of public cloud companies has added another $1.3 trillion of market cap on top of the already impressive 1 trillion, hitting 2.3 trillion in total market cap and growing 130% over that time. The public cloud markets have never grown this fast in all of our cloud index history. Our second prediction had to do with valuations. In 2020, 87% of the Cloud 100 was already made up of unicorns. Well, we're excited to announce that in 2021 we've crossed another milestone. Every single company on the cloud 100 has a billion dollar plus valuation. We've even seen a few emerging decacorns continue to emerge onto this list. This community continues to astound us. When we created the first list six years ago, this milestone seemed inconceivable. And yet today we've had to leave dozens of unicorns off the list because there are just too many in this amazing cloud community. Now there are thousands of amazing cloud companies worthy of potential inclusion, and now over 150 of them are cloud unicorns. Yet our judges could only pick the 100. This compounding power of the cloud is a model and a thing to witness, especially considering that 15 years ago there were zero public and private cloud unicorns on the index. Private cloud valuations are getting bigger and bigger as the market's appetite for the cloud continues to grow. Over the past six years, the average Cloud 100 valuation has grown by a tremendous 5.2x from 1 billion in 2016 to 5.2 billion in 2021. And when we compare last year's average cloud valuation, which stood at 2.7 billion, that number has doubled again over this time period. Together, the the cumulative value of the Cloud 100 in 2021 totals an impressive $518 billion. Again, almost a complete doubling in just a year with a 94% increase. The benchmarks and data around these companies are equally eye popping and far too extensive to share with you all here today. But if you want to see the deeper analysis and get into the cloud 100 benchmarks directly, you can read it all in our report@bvp.com Cloud100 as we reflect on how far the cloud economy's come and where it's headed, it's amazing to see that today's Cloud 100, the definitive ranking of private cloud companies, has a cumulative value worth more than what the public cloud markets in total were valued at just a few years ago. So for the investors and founders alike, building a cloud business today has never been more valuable and very different from just a few years ago. We're seeing more and more of these exciting cloud businesses being built outside the traditional Silicon Valley zip codes.

Indeed, Cloud globalization is a macro trend, and the pandemic has further accelerated this trend. As an example, in the first half of this year, venture funding to startups in Europe totaled an unprecedented $59 billion. Having been based in London and invested in companies across more than 20 countries across the globe, I've seen firsthand how innovation really has no boundaries. Companies such as Stripe and Intercom, originating in Ireland, Contentful in Germany, Snyk in Israel and Colchamp in Australia have proven that the cloud ecosystem is thriving everywhere. We're also seeing more companies take a remote first approach to building their teams. Hopin is a great example. Initially based in the UK, the company now has over 600 employees across the world as they've catapulted onto the stage and with technical talent all over the world, we continue to see mega giants rising out of Asia Pacific, India and other international markets.

Cloud globalization will continue to fuel innovative startups from all over the world. As Byron mentioned just a minute ago, the cloud will have a sizable impact on global GDP in the next few years. But the footprint of the private cloud market now rivals some of the world's biggest economies. This year's Cloud 100 companies have a greater cumulative total value than the individual gross domestic product of 87% of countries on the planet.

The cloud universe is expanding in terms of geography as well as industries that they serve. Cloud 100 honorees span more than 10 different subsectors, including vertical software and enterprise automation, collaboration, productivity, and several more on the list. This year we've seen the most powerful growth in fintech startups, totaling a cumulative $146 billion in total valuation addition, which makes up more than a quarter of the Cloud100's cumulative value. In second place, data infrastructure businesses making up an impressive 63 billion. When we look at these two leading subcategories and how they've grown in cumulative valuation over the past three years alone, it reflects this market upward trajectory. Cloud 100 data infrastructure companies have grown 70% and the fintech companies have ballooned an impressive 461% as financial services infrastructure is being rebuilt and redesigned for this modern world. We've seen this similar transformation happen within the cloud data stack as amazing startups like Databricks and Fivetran, DataRobot, BigID and Firebolt are offering better and easier to use infrastructure for accessing, analyzing, furthering this use of data. The reason why cloud companies continue to grow in value is because they continue to deliver larger portions of the tech stack to their customers. For example, vertical software and fintech are increasingly converging as leaders such as Servicetitan, Procore and Toast shift entire businesses into the cloud and they embed these fintech solutions. Essentially vertical SaaS giants now process payments and payroll more efficiently and provide more capital and credit on better terms for their customers than many of the traditional banks themselves.

In parallel, we've seen e commerce penetration and payment volumes accelerate massively during the pandemic. In 2020, for example, we saw 10 years worth of growth in e commerce penetration in a matter of only three months as consumers shifted their behaviors online, and this momentum has sustained this year. This has led to a new crop of companies that are embedding financial services and payments directly into their applications as software and fintech come together. Interestingly, we've seen this impact come through in the B2B payment landscape as well. With companies like Earwallix, Melio and Razerpay.

Leading the way, we believe that cloud will become a majority of all software very shortly and help us all reimagine entire industries such as healthcare automation, gaming and entertainment. We continue to see how the cloud is forging infrastructure of tomorrow's digital economy and driving innovation for the future generations. Congratulations.

Congratulations.

Congratulations.

Now onto what we've all been waiting for. 2021's Cloud 100.