State of the Cloud 2020: The COVID Beneficiaries Edition with Bessemer Venture Partners

Welcome to our next session. We are here to talk about State of the Cloud 2020, the COVID Beneficiaries Edition with Bessemer Partners. We've got Byron Dieter and Elliot Robinson. Thank you both for joining us. Go ahead and take it away.

Cheers and thank you. Welcome everyone. Excited to be back with you. Here in Saastraland, virtual as it may be. Uh, we're gonna dive in, and, uh, the way we're splitting up the time today is we're going to walk you through an update of our State of the Cloud presentation, the 2020 COVID craziness edition, and then we'll have some time for Q&A at the end, uh, and be able to dive into questions that you have. So as we go through the talk, feel free to type the questions in. I'm sure you're now Zoom professionals, so you can enter your questions into the chat, into the Q&A feature, and then we'll try to do our best to cover as many of those as we can as we get into it. But let's set the stage first, and I'm going to dive in here with a little bit of an overview to say that 2020 has been unusual and unprecedented and momentous would all be understatements. But let's just begin by taking a little look back at how we've gotten here, and we want to take you through the cloud journey over the last several years. And we're going to start with, uh, some dates that predated COVID and really go to prior SASTRs. And so if you look back on February 5th, 2019, which was the SASTR annual— hopefully many of you were there in person— we gave this state of the cloud presentation and talked about the, the power of the industry and the power that's been building in terms of market capitalization of just the public cloud companies and what they show. That was February 5th, 2019. Coincidentally, SASTR Annual was slated to be February 5th, 2020 this year, where we were going to reveal that the cloud had passed the $1 trillion market cap mark, which was exactly one year after the SASTR Annual 2019. Uh, it was a meaningful milestone, uh, for many reasons, uh, and yet just a few days later the world changed pretty dramatically. If you look at, uh, the March volatility, the major indices fell 30% pretty much across the board as the health crisis started to take hold and the economic crisis was starting to be previewed. Now, uh, the cloud index fell along with it. The blue line here is the Bessemer NASDAQ Emerging Cloud Index, which is an index that we've tracked for many years, which is the basket of the pure-play public cloud stocks. And you'll see here from this blue line, uh, the 30% fall, uh, that, that rapidly rolled through our entire industry. Now, as April came, we started to see those climb back. You fast forward to May, you started to see not only the, the indices roll back, but specifically this blue line of the cloud industry. And as we rolled to June and July, um, and then all the way through to August, uh, we saw essentially a separation that is reflected, uh, over the longer time arc here as well. If you go back to before 2014, what you see is the power of the cloud, and you see that both organizations embracing this cloud movement, but specifically in COVID, more and more companies turning to the cloud as their solution for business continuity or for business growth in these times when shelter in place is making on-prem solutions difficult and in many cases impossible to use. It's also been a powerful moment for technology to be a force for good. And we've seen many of the cloud community companies help usher in this transformative, somewhat defensive posture, but also allowing companies to reinvent themselves and to grow. And to give a few examples, when the entire restaurant hospitality industry was forced to reinvent themselves, most restaurants shutting down entirely due to shelter in place, mandates. Toast, which is a leading point-of-sale solution and vertical SaaS application and mobile application for the restaurant industry, um, and an all-in-one restaurant platform, rapidly switched and helped offer new solutions for online ordering, contactless delivery, and allowed restaurants that had never before provided takeout and were literally facing bankruptcy shutdown situations to suddenly create an entire new line of business. Another collection of their customers actually turned their kitchens into service offerings. This here is an example from a Burmese restaurant called Thami in D.C., which has partnered with World Central Kitchen, and they're donating thousands and thousands of meals to people in need, healthcare staff, in frontline workers, Black Lives Matter protesters in the community. And so you see that these teams and these small businesses across America rallying with the help of technology solutions provided by many of you on this call and cloud providers more broadly. The same needs existed with the physical world that we saw with the virtual world in many ways and physical store owners. Had this crisis moment where they were shutting down. And so they had to reinvent themselves. And this million business milestone was passed in March by Shopify, one of the leading storefront providers and a cloud vertical solution for e-commerce, where they grew 400,000 storefronts between mid-March and mid-April because of small businesses again, that had been only physical before and found that to survive and hopefully ultimately thrive, the cloud solutions were their way forward. And so we celebrate businesses like that. And of course, the platform we're on today with Zoom, that has really become a communications platform that's defining this, this COVID era. They're giving us the connectivity to communicate with our colleagues, friends, and family. They're facilitating virtual schooling, they're helping governments organize, they've helped with life's most important and sacred moments, whether that's birthday celebrations, weddings, and unfortunately even in some cases the last goodbyes. But it is really incredible and inspiring to see how these companies and these cloud leaders have ushered in this new phase of innovation and growth. Even in the hardest moments of society. And what we see is this unlocking of cloud power, and we see this acceleration of the trends that we've known are building through the years, and it reinforces the growth of the industry. And if we look at that and step back, you can think of this, uh, again from the leading perspective of the public's first, which is this evolution over time. Just 12 years ago, the entire market capitalization of the top 5 cloud companies was less than $14 billion. When you roll that forward just 7 years, that was up 8x. You roll that forward just 12 years, it is up a staggering 61x. Just in the top 5 names, the growth has been spectacular. And if you think about the broader hybrid vendors, so the Amazons, Googles, and Microsofts that have cloud businesses that are growing and building within, the same trends exist there. If you look at the IaaS vendors, they passed a $130 billion revenue milestone this year. We've all seen AWS and what they've done with their platform. It is staggering. And even at spectacular scale, they're still growing at 30%. Azure has been gaining on them rapidly and is growing at double that rate, still has some market share to go, but is providing a fantastic offering that many of you benefit from. Google Cloud, AliCloud International, et cetera. The industry has just been going through this massive transformation and has been responsive to the market demands of COVID in ways that wouldn't be possible in a non-public cloud, non-scalable way. That's allowing the continuity and the power in a modern format that wasn't before possible. But if you think of all these stats out there, there's one number that for me is most impressive. It's 94%. What this number means is across all industries, 94% of businesses today use at least one cloud solution. We are truly living in a cloud-first world today, where businesses not only understand, but they now embrace and are looking to lead with technology solutions from folks on this Zoom, uh, who are cloud-first and providing that next generation of solutions. And if you think of this in the context of software, it's particularly powerful because for years, we've been seeing the visionaries out there promoting this transition, but it takes a long time to build. The blue, the dark blue bar here is cloud as a percentage of worldwide software spend. And for years, it barely registered as it was building. And what we've seen over the last several years is that compounding starting to develop. And if you roll forward and see what happens, if you go to 2032, out just a dozen years from now, how massively that transformation takes hold. And the 50% mark is gonna cross within the next 3 years, and the vast majority of all software quickly will become cloud. And so if you think of this over, this arc, and in fact, if you reinvent it in a circle chart or a pie chart, you can see visually how cloud is eating software. You've got this dynamic within the next couple of years where cloud becomes a majority, but it just rolls forward, and you get this almost eating effect. I think of it as Pac-Man in motion. Where truly cloud is taking over the core of technology and all of software. And so if you think of this from a market size standpoint, there's often this debate, is that good or bad? Um, what happens when cloud has consumed software? What happens to growth? What is the potential? And this fantastic staggering growth that we've seen over the prior years is that sustainable? Can it continue? And there's all sorts of implications for you out there founding new businesses. Is it too late for investors, public and private? Have I missed my window, or what is fair value? This is the chart that we think helps answer that, which is to zoom out and think of not only cloud and its current market size, or not even just software in its current market size, which, mind you, is a multiple of that. So we have— through that 2032 range, we show how the growth rates are certainly sustainable. And in fact, in some industries will accelerate as you get this compounding building and you get this sea change effect as the industry realizes and embraces cloud. But you actually should zoom out another level. And you should think of this as the technology industry as a whole is really the addressable market by all of you. Because more and more hardware is becoming soft, and it's the software within hardware that's powering innovation and powering efficiency and powering growth. And really, cloud absorbs hardware, software, and services. And so as you see more opportunities for automation, and as you see more of the technology— of the cloud and software percentage of technology reveal itself, it's really that $3.7 trillion market that's addressable. And as you think even more, both broadly in sector and in geography, the global GDP is increasingly becoming tech-based. And as you think about cloud, as hands down the most powerful force in all of software, and really now in all of technology, And we all know that technology is increasingly driving other industries and innovation across industries. We absolutely believe that a large percentage of global GDP will be cloud-driven and cloud-based in the years ahead. And so when asked specifically, how does this end or how does this play out? We absolutely believe we're still in the early days. And what has become obvious to those of us in the cloud community and what's starting to become more and more obvious to the world, uh, has a long and powerful future ahead. And that's going to be the basis of the rest of this conversation. We're going to talk you through a little bit of the learnings from these leaders and our experiences working with many of the innovators. And then we're going to end with some predictions. We're going to give you a sense of where we think the industry is headed, and then we'll turn it over to Q&A to get interactive and fun. And so with that, I'm going to let my partner, Elle, take it from here and guide you through some of the lessons learned and some of the 10 Laws takeaways over the last many years of working with these leading companies.

Thanks, Byron. Let's see. I think I've got control over the slides now. Uh-oh.

I booby-trapped you. And I'll hand it over now. Hopefully you can drive. There we go.

OK, fantastic. So as Byron, uh, walked everyone through, there's been a lot of change and evolution that's taken place in the cloud software market. And today, there's more than 140 private and public cloud companies that are worth more than $1 billion, including a lot of companies that are speaking at SaaStr. Um, here at Bessemer, we've been really lucky to work with some of the best, as you can tell from my partner Byron's, uh, Zoom background. Um, but what we really like to do is try to share best practices. Amongst the many years of experience we've had working with cloud companies. And what we're going to do today is highlight 3 of them. You know, we're all living through a really unique time with COVID Companies are working more remote first. Everyone's trying to traverse the new landscape. And I think that these 3 have really stood the test of time since we published the first 10 Laws of Cloud report more than a decade ago. So let's dive in. So law number 1: in the cloud economy, scale wins. You know, a bit of a personal note for me. Before coming to Bessemer, I was with a great fund in Toronto, Canada called Georgian Partners. I'm a big fan of Canadian entrepreneurs, so shout out to any of you on the Zoom today. And one of the early co-investments with my prior firm in Bessemer was in Shopify. And one of the favorite quotes that I always had from Tobi and really his philosophy was that, you know, reaching scale, it's not just about the revenue. It really is about, you know, finding a product that sets the pace of innovation and having this mentality that while you might be really excited about the product that you're offering to the market today, you actually want to render it obsolete so that your competitors can't just copy what you're doing. So, you know, we've had a lot of discussion about Zoom over the last few months, as Byron alluded to, with everyone working at home. But if you just take a step back for any kind of market that we've had success with, with cloud software companies, the majority of the market, say 50, 60, sometimes 70%, goes to the scaled leader. In the unified communications and video conferencing space, Zoom has definitely taken a new position as the market leader. This number might have increased just in the past week, but it certainly sits somewhere around 64-65%, where you're seeing companies like Skype, BlueJeans, and Webex kind of coming up just behind them. Another thing that we've seen over the last decade is, you know, cloud companies have this unique ability to scale way more rapidly than they have in the past and many of their other tech market peers. So if you look at companies like Cornerstone On Demand, which we invested in a long time ago, it took them some time to get to $100 million of ARR. But if you look at new companies like a Shopify, a Twilio, a HashiCorp, they're able to get there even faster, somewhere around kind of 4, 5, 6 years. And that's something that we're seeing with all the cloud giants that are entering the market today. Leveraging on some of Toby's philosophy, it's something here that we call at Bessemer finding your second act. So everyone kind of knows Shopify for what it is today, but in the earlier days, it really was the best SaaS platform for SMB e-commerce providers. And then they found somewhere in like year 2014 and '15 that they could they could layer in something like payments as an additional way to monetize their customer base. We call that a second act. What that does is not only did it accelerate the top-line revenue for Shopify, but it dramatically opened up their total addressable market on a revenue basis. So if you're a cloud founder sitting at home today and you've got a great value prop for your customer base and your market, you do wanna think about, you know, maybe 12 months, 18 months from now, what's that next thing that I could layer into the market, not just for expansion in your base, but upsell as well, and, you know, more of a new platform value prop you could take to the market. Byron gave a great example with Toast, one of my favorite portfolio companies. They started in the point-of-sale market, and then as the company scaled, they rolled out new value props and modules for payroll or Toast Capital, or ways to manage, you know, your employee base. With Twilio, for example, they expanded into email. And you can also find your second act inorganically via acquisition, as Twilio did with SendGrid. And then in HashiCorp's case, one of the most exciting cloud infrastructure software companies that we found, you know, they've expanded their second act with Terraform in the provisioning space, and then Consul in the networking space. Law number 3, this is huge, particularly in COVID. So we're going to talk about this a little bit differently. You know, everyone is trying to figure out the go-to-market learning curve. Now, what, you know, we haven't really seen over a lot of time, or we couldn't have predicted, was everyone's sales forces basically working from home. So, you know, if you're a founder today and you're trying to scale your go-to-market org, in the early days, you're in what we call the initiation phase. This is really founder-led sales. You're wearing multiple hats. You're probably the head of sales, head of content marketing, also head of inside sales. But what you really want to do is, as you're finding your first sales leaders to bring into the org, you know, we typically call them Renaissance salespeople. So they have this unique ability to evangelize your product in the market, learn from your early customers what they like, what they don't like, bring that feedback loop into product, into marketing, and really start to make that flywheel work. And you really don't want to think about bringing in new salespeople until you're seeing that first round of product-market fit, and then you're ready to go into the transition phase. So this is when you're actually building out your org. You might be thinking about BDRs, some ISRs, some field sales reps. And you as a founder can take off one of your hats and maybe move into more strategic sales with your biggest and most valued customers. Here, what you really want to think about is, you know, testing out 2 or 3 reps, seeing how they work, see if their, their quotas are about right. Are they hitting their numbers? Are customers happy with what they're seeing? You don't really want to scale beyond that first batch of reps You know, a general rule of thumb is about 2 to 3 times their fully loaded cost before you start rolling them in. Again, you know, this is supposed to be our COVID considerations version of this report, and everyone is kind of an inside sales rep today. So the one thing that, you know, we like to talk about is CAC payback. That's really, you know, analyzing a period back How much does it cost to acquire a customer? So that's your CAC. If you divide that by the gross margin, how many customers you get in a period forward, you can start to figure out against your churn how many months gross margin affected does it take for you to turn that newly acquired customer into a profitable customer? Why does that matter even more in COVID? Well, there's just more uncertainty. We don't really know how long it's going to be before people are back in the field flying on planes regularly where you can touch and feel your customers. So your churn might be a little more volatile in this period. So actually tracking your CAC, calculating it, gross margin affecting it, and figuring out what your CAC payback is on a monthly basis is even more important. So after you figure out how your go-to-market org is going to scale potentially, you know, you see success, you're adding field sales reps, you might be going more geo-focused, more industry vertical-focused. Now you're in the execution phase. This for us means, you know, typically you're finding some sales folks that may or may not be a little more coin-operated, so less of that Renaissance rep that's really evangelizing. They're always going to be great shepherds and voice and face of your company, but these folks, you want to give them a territory, a good list of customers, maybe they even have their own book of business, and you let them go. And then the one thing that you always want to think about is nail it before you scale it. You know, make sure in the initiation phase you feel comfortable with, with the results before you move into the transition phase, and that's the same thing with the execution phase. And then my favorite personal law, number 9, tone starts at the top. So what's really interesting about this, we talked about it and we updated the report before COVID and you know, oftentimes people say, you know, things like culture and values and how we track that stuff internally, How important is it? Well, I'll tell you one thing. Portfolio companies of ours and founder friends of mine who now have their entire employee base working remotely or from home, now this really matters. You as a founder have to set the tone and you can't do it, you know, in a weekly standup or an all-hands meeting in person. You gotta do it remote. So we have this framework that we typically talk to our portfolio company founders about. You know, it starts with defining your culture and values early, really understanding and letting your early employees understand why do we work here, what are we really trying to accomplish. And it also allows your early employees to find that values fit with you, your philosophy, and where your company is going. Number 2, we really want companies to report and track these metrics early. If you can't measure it, you can't really change it. You're just kind of putting your finger in the air and doing a gut check. And then number 3, 360 feedbacks. Our advice is you can't really do these too early. It's how we all get better. And as an investor and board member, one of my favorite things is doing 360 feedback for the founder CEO, you know, talking to the board members, talking to their direct reports, and giving a unique set of feedback to that founder. Beyond that, you know, there's some great software, cloud software options you can use. Both Glint and Culture Amp are great solutions that many of our companies use. And then, you know, just a personal note, you know, we're living through a really interesting time here in our country and in tech. You know, statistically, I don't look like your average venture capitalist, but I really do care about diversity and inclusion. It's not just something good to do. It's actually a great business strategy and competitive advantage. You know, this is just a little bit of a shout out to one of my favorite companies. It just so happens they're a Bessemer company, but that doesn't matter. Edith at LaunchDarkly, you know, they put their culture and values very publicly on their website, very prominently. They've got some incredible initiatives, particularly in the engineering and coding org, about how to make diversity inclusion a strategic advantage for them. And then I'm going to pass it back— excuse me— to my partner Byron. To talk about one of our favorite initiatives, Pledge 1%.

Thanks, Al. And probably worth mentioning that you live and breathe this every day. And one of the things I remember when we first get to know you, your Twitter handle as the values VC, it's front and center in everything you do. And I appreciate your leadership for the industry and also within our firm. And as he alluded to, Pledge 1% is one of the many things that our companies and that our firm's doing to try to make philanthropy and philanthropic culture part of a normal business practice. And more and more, as you're asking your employees to bring their full self to work, and as work has now made its way into all of our homes even more directly, we do think that one of the real compelling resources that our companies have turned to is this idea of having a philanthropic corporate charter that the employees can be part of. And so Pledge 1% is one of the many great organizations that gives you structure and best practices and templates for how to think through this. Specifically through Pledge 1%, they have a very compelling program around equity, product, and time. And, you know, many of the early leaders in cloud with Salesforce and Atlassian have been supporters. And then since then, many of the, you know, great leaders of the industry today in sort of the, you know, the second and third wave with, you know, Twilio and PagerDuty and DocuSign and Pinterest and SendGrid, Box, you know, Okta, numerous others. It's really been inspiring, and we would just encourage those of you out there who our founders or leaders of your businesses to think about this as a vehicle to tie your employees to your community and really ignite corporate philanthropy in a positive way that even as capitalist board members, we feel there's a clear ROI and there's a lot of downstream qualitative benefits that we enthusiastically support. And so that gives you a sense of how to amplify the culture. We've talked about how to climb the sales and marketing learning curve, uh, and to scale through your second act. And so the next piece here is to talk about some of the markets that could be interesting for you, um, as you're thinking about targeting, uh, your business, either, uh, potentially steering a little bit of what you're taking in for the investors out there listening, um, or for net new founders thinking about it. And the thousands of you that are tuning in, uh, here's a little view of what we think will be some of the largest drivers of the cloud in the years ahead and what will be powering this continued and sustained growth that we're seeing. Now, Prediction 1 may seem a little more straightforward and obvious to all of us today. This is a prediction that we've shared openly well before COVID but it's certainly amplified by the trends we're seeing by the forced sheltering in place and by the forced remote work. However, we want to highlight not only was this building before, but that we think it will be permanent in terms of some of the shifts and dislocations that happen geographically and some of the positive implications. We absolutely believe that more collaborative platforms and technology will be needed to make this seamless. We've all worked through the glitches of distributed teams and some of the pressures that have been revealed when more and more of the organizations are going remote. But it absolutely gives our companies the ability to be more scalable, to have access to talent, both more diverse in every sense and in many ways, you know, more capable because you're able to get the world's best people in the world's best regions to benefit your cause. And so we do think that the knowledge economy is going to become increasingly decentralized. And that there's a whole need for tools and technology out there to help power that. And if I was founding my next cloud business right now, this is absolutely one of the areas that I would be thinking about and encourage those of you listening in who may be in that position to think about because of the massive potential that's being unlocked right now. Over to you, Will, for number 2.

You know, I remember earlier this year, one of my favorite tech writers wrote about CES and he said, You know, privacy, particularly data privacy, was the most talked about product that didn't have a booth at CES. So if you take a step back, I mean, there's been 20 years of technology, both on the consumer side and enterprise side, advancement where companies were really good at collecting our data. Unfortunately, what they were really not so good at was protecting it, managing it, and putting it in a safe space. So there's this big rift and kind of a chasm between where data privacy technology processes regulation should be and where they are today. So in that kind of situation, there's a ton of privacy debt that still is in the market today and is created kind of on a daily basis. So like technical debt, privacy debt requires reworking internal systems. It requires us and companies to adapt and build to new standards, regulations, and it's not just about making consumers happy, but making companies better. Thankfully, there's kind of this new field emerging called data privacy engineering. It's something that here at Bessemer we're spending a lot of time on. We put out some great content early this year. We encourage you to check it out. And as new global privacy regulations come into the market, We're just hoping that there's more and more solutions that will protect consumers, protect, you know, inner company data and company to company data. And to that end, you know, we've kind of mapped it out to say data de-identification, anonymization is one big field, data scanning and inventory where we've made an investment in a great company called BigID, data cataloging and governance, of course, consumer privacy, which many of us deal with day to day. One of our favorite companies, Dashlane, fits in that bucket. And then lastly, data privacy workflows and operations. So we think it's a huge market opportunity today. But as more and more data is being created, we think this is at least a decade run before we're even scratching the surface of the opportunity. Back to you, Brian.

Excellent. And all— before jumping into Prediction 3, I'll encourage folks with questions, feel free to type them into the Q&A feature of Zoom. I see a number of them populating. So So we'll switch over there shortly to, to dive in, but we've got a few more predictions to share with you. The next is really a hat tip to what is a mathematical majority of you Zooming in here remotely, and more than that, internationally. It's fantastic to finally see this tipping point starting to happen with cloud around the world. And at Bessemer now, we have 8 offices globally, specifically because we're immense believers in this trend. But if you look at this chart, And you look at the power that's building in the public markets, as well as the Cloud 100 list, which will reveal the update in 2 weeks. You'll see more and more companies at massive scale that are starting to roll out, not just through Western Europe, but in Asia. China's got an immense cloud market starting to build, and really globally. And so more and more, the cloud world is flat. The world is flat for you. And the markets are coming to you. And so the US remains the largest market, certainly as an entry market, oftentimes the first sequentially, but no longer the exclusive, and frankly no longer has that influence and power that it once did. And we encourage those of you sitting globally to think of your local markets and to think about the global markets that are addressable more and more today.

Um, you know, in the early 2000s, even up until the last few years, many of the most digitally, uh, savvy entrepreneurs, they really focused on B2C commerce. It totally makes sense. We deal with it every day. It's a huge market opportunity. But one of the predictions that we have is that more and more B2B transactions will move online. Um, you know, we've talked about a lot of the great B2C companies, whether it's Amazon, Shopify, Stripe today. But what a lot of people don't realize is that the B2B transaction market is many times bigger than the B2C market, more than $100 trillion annually. And they're moving a lot more of this transaction volume offline. You know, with COVID in mind, one of the areas that we saw transform immensely was the grocery market, trying to figure out how do we keep grocery stores and markets stocked, how do we track it, There was a long time and, you know, still today a lot of it happens over text and email, sometimes Excel. But there's some great companies going after those opportunities. We're still in the early innings of the B2B kind of purchasing renaissance that we're seeing. There's gonna be a ton of billion-dollar companies. We've been lucky to invest in some already like ACV Auctions and Choco and ProVee. But regardless of kind of the industry use case you're looking at, You know, these software tools and these entrepreneurs are reducing friction, providing a bunch of analytics from the data that's captured from these transactions, and actually shifting the way that these, these B2B marketplaces work. So we're really, really bullish on this area. And Byron, back to you.

Excellent. The API universe is is unlocking in a fabulous way. For, for the early years, people were focused on, you know, the few visible leaders, the Amazon Web Services and the Twilios of the world. Stripe sooner or later will eventually go public, I suspect. They've been this amazing force building that the public markets are looking at and waiting for. We saw Plaid with a staggering $5.3 billion acquisition. Earlier this year, and then you look across these industries and the Auth0s and Cloudinaris and Algolias and Intercoms of the world, the Shippos, they're just building and building and building. We absolutely have come to believe that we think there will be a cloud giant in every major industry or service sector that will be API-based and API-driven. And you're just starting to see this great unbundling of the services. And these fantastic businesses revealing themselves. And so this is another area of immense momentum and still immense opportunity for net new innovation.

And then lastly, prediction 6, you know, we really are entering the age of automation at scale, particularly in the enterprise. This is my favorite prediction of this year's class. Really, because I think, one, it's a huge opportunity. Two, you know, we wrote these predictions again before COVID happened, but I'll reference a quote from one of my favorite CEOs as an ex-Microsoft Ventures employee. You know, Satya said back in, I think it was a May earnings call, he said, look, we've seen more digital transformation happen in the enterprise amongst our clients in the last 2 months than we have in the last 2 years. And that's happening up and down the stack. So enterprise automation is a space that we're spending a lot of time in. Companies like UiPath have totally scaled the last few years and been really exciting. Companies like Unqork, Instabase, and the low-code/no-code movement. One of our favorite portfolio companies, Zapier, also Unito in the integrated platform as a service space. And then my latest investment, which we announced in June, a great company out of New York City called Hyperscience, which is taking a new approach called software-defined management, where it's all about increasing the efficacy between kind of human and machine collaboration in a fully automated way, from input of the data to output of the outcome. So this is a space that we're spending an incredible amount of time in, and we think the opportunity is both massive and global. So with that, those are the 6 predictions for this year's State of the Cloud. In the interest of time, Byron and I could keep talking about this stuff forever. It's usually what we spend most of our time talking about. But what we really wanted to do was open it up for questions with the time that we have left.

Great. And I'll just note— well, there's Elliot's Twitter handle there. I encourage you all to follow him, @thevaluesvc, as well. As we do put out a lot of content. Also, I had mentioned that the Cloud 100 is upcoming annually with Forbes. We publish the list of the top 100 private cloud companies. That will drop in 2 weeks, and there is more information at the Cloud 100 URL in terms of the event and content there. And then I would also mention that there, there's a bunch of resources online at our website with the full presentation you can download, including an appendix section with a lot of reference materials and links out to the greatest reports of the year from others. We're huge consumers of content and very appreciative of all the work from our peers in the industry, and so there's a bunch of links there at bvp.com/cloud. We also now have a podcast where we do interviews with the public cloud giants and go through their growth through IPO stories to get the pearls of wisdom and the best practices that many of you are living through and experiencing. Another example of a resource to follow. With that, I'm going to stop the screen share here. We're going to flip over to the Q&A part of this and encourage folks to dive in with questions. I'm going to— even though, El, you're the actual real-world DJ, I'll play DJ of the questions so we can coordinate. I'll throw you the first one, which is to comment on the flood of IPOs that just dropped, and specifically, Do you think there's a— which is the one you're most excited about and will have the most impact in the industry?

Yeah, that's a great question. So my general comment is I think it's a good thing. You know, as a venture capitalist and growth equity investor more specifically, we have seen a pretty large influx of assets under management. So a lot of these companies had an opportunity to stay private longer. I think there's a lot of good things that happen through that transition where People really focused on many of the metrics that we talked about today, also in our 5 Cs of Cloud Finance and our 10 Laws of Cloud report. Definitely check that out. But it also allowed them to think through long-term planning in a different way. I mean, once you go public, you're really thinking about, you know, hitting the quarter with a bit of a product roadmap on the back end or serving as your backdrop. So I'm really excited about the, the recent rash of IPOs and that window opening again. In terms of what am I most excited about, I think Snowflake for me. You know, it's certainly a company that I wish I had an opportunity to partner with and be a little closer to the ride. But, you know, when I think about some of the big cloud infrastructure giants that we talked about today, Byron, whether it's Amazon or Azure or GCP, I love the fact that there's more and more infrastructure software companies coming into the fold, publicly traded, that have a huge opportunity to go after markets and customers in ways that maybe some of the bigger guys can't.

I would agree wholeheartedly. People asked recently how to value something like that, and I don't think the external world realizes how big and how powerful they are, but I think that may be a $30 billion+ company in 2 weeks when they trade. It's just staggering what's happening there. And so the questions are now flooding in, so thank you. And I will apologize in advance, we're not going to be able to get to anywhere near all of them, but let me combine a couple. And El Aki, David, a number of other folks are asking marketing questions, which I think were prompted by your sales and marketing learning curve. What do you see about organic search and content marketing at these times with people more at home? What do you think about event marketing? What are virtual events happening? What happens when people return to work? Can you talk a little bit about digital marketing in this era and what you see our companies and others doing given that enterprise sales is shut down and physical events are on a long-term hold at best?

That's a great question. You know, at Bessemer and like many of our venture peers, we try to be as value-added and tangible advisors and partners to our companies. So I've been attending and trying to give some best practices through COVID to many of our sales leaders. I'm, you know, in October speaking at one of the QBRs for one of our best-performing portfolio companies. But one thing that we're hearing from our sales and marketing orgs is everything's totally different. We can't go to conferences, we can't get our customers together. So one of the areas that we've been advising our companies on is how do you take the typical kind of dinner experience or more kind of small customer experience into the home. We've seen a lot of success with, you know, many of us are doing team building things where it might be a wine tasting or a cocktail event or trivia event at home. We've actually seen a lot of success with our sales and marketing leaders partnering with these newly found companies that can send some wine or adult beverages or maybe not adult beverages to some of your customers. You can wrap some really engaging content around it and in 30 minutes you can get your value prop out, you can get a demo done, and hopefully over a glass of nice cab, it doesn't feel like you're really disrupting people's lives at home. You know, in terms of taking the content market question, It is an investment, but you've got to be more creative. Everyone is at home and we're really, really living through this digital attention economy question where you're sitting at home. I've got Zoom fatigue. I love Zoom, but I've got Zoom fatigue. And just looking at static slides throughout the day or being on Zoom calls from, you know, 8 AM until 7 PM every day, it does get tiring. So we've seen some really interesting companies take a new view into content marketing. A lot more video I'm seeing come out, a lot more customer testimonials that I'm seeing come out, and they bring them into the Zoom meeting. Don't just come in, you know, without some dynamic content to share with someone. Just think more and more creatively and talk to your peers. I mean, one of the best ways that we find these insights and experiences, we build community around our kind of go-to-market sales and marketing leaders hear from them and let them share, uh, what's working for them, and, and then they evolve on it over time.

Excellent. And then, um, I'll field one quickly, and then, El, um, there is a specific question on the Latin American markets, uh, and maybe as the last question, I'll, I'll let you expand that out and just give a global commentary since so many of the SaaStr community are based outside of the U.S. So just talk through a little bit, if you can, the global markets. I'll tackle— there's A great question on edge computing. There's a great question on low-code/no-code, a great one on B2B payments. I'm going to refer you back to the bvp.com/cloud site and encourage you to look at the 2018 and 2019 State of the Cloud presentations. I love those questions because we comment on all of them. They were part of prior predictions, and we absolutely see the, the trends building. And as one example, I'll call out that we specifically cited payments as a service in one of our predictions as one of the major drivers that we're seeing. And it's not just the past, you know, Adyen and Stripe, but it's actually payments embedded, particularly in vertical apps. So Shopify and Toast and Mindbody and ServiceTitan in our portfolio alone have seen huge ARR uplift due to payments being embedded as part of the app. And it's being, you know, a wildly compelling feature for their customers. And so more and more the fintech and cloud worlds are converging in a very positive way, and it's unlocking value and driving up ASPs, in many cases double what our internal models and what the team models had before that. So, El, I'll let you drive us home with just a commentary on the geographic questions we're getting as well, please.

Yeah, so one of the biggest changes in my day-to-day when it comes to talking to entrepreneurs is it's way, way more global. You know, we're really seeing this shift from on-prem to cloud software happening in geos that, you know, traditionally might not have been the first ones you think through. If I think about my last 60 days sitting here at home, I've had more conversations with founders in the Middle East, throughout Africa, and throughout EMEA, more, more more broadly than I have probably in the last 10 years of my venture career. And then we're spending more and more time seeing throughout APAC, China specifically, companies that have worked on-prem, have always had a great value prop, but now that the cloud infrastructure is being built out, whether it's through Alibaba Cloud or some of our kind of California companies here going into those markets, it's creating new opportunities for software founders to build on top of that. The same goes for Latin America, quite frankly. You know, what I'm most excited about is being able to leverage a lot of the best practices that we talked about in the 10 Laws of Cloud into those markets, but also nuance them for those markets. So I can't take the same exact best practices into China or the Middle East or Latin America, but there's certainly at least 85% overlap of what we've learned primarily in North America, taking it into those markets, And a big shout out to companies like Amazon and Microsoft Azure and GCP that have been partnering with some of the biggest companies in those new geos, but also trying to build some commonality and some community with the startups so we can go to market together and they can take the best practices that they've seen with this on-prem to cloud transition into these global opportunities.

Very well said. We wanna be respectful of the amazing other speakers that they have lined up for you today with SaaStr. And so unfortunately we have to cut it there. What I would say for all of you with these great questions that we weren't able to get to, if you hit us up on Twitter, we will endeavor to respond to everyone. So Elliot is @thevaluesvc. I'm just @bdieter, B-D-E-E-T-E-R. Email us, et cetera. And we look forward to hopefully seeing you all in person at the next SASDR Annual next year. And until then, stay well, stay sane, and stay cloudy. Cheers.