The Year in Review

Foreign.

Hi everyone. Welcome to Grey Matter. I'm Heather Mack from Greylock Partners. Today we're doing something we've been waiting to do for a while. We are saying goodbye to 2020. In this episode, Greylock investors share their thoughts on how the past year impacted entrepreneurship and how it may continue to influence startups and investing going forward. With that, I'll hand it over to the partners of the Greylock team.

Sarah.

I'm Sarah Guo. 2020 accelerated shifts that were already in motion in a massive way. I call it the pandemic leap forward. And I think we're going to see a lot of category creation based on the crises of these past 10 months. I'm very bullish on video as a platform with consumers accustomed to it and advances on enabling infrastructures such as WebRTC, it just means we're going to see massive innovation on the experience side across a range of use cases. And so one category I think is going to emerge is virtual workplace. And we're invested in remotion in this area. As everyone accepts that remote and hybrid teams are the new normal and fight to stay connected and productive in that mode, they're going to adopt new tools. I also think that a remote workforce will be a more global and fluid one. It just enables that opportunity. And so people have been talking about the gig economy for a long time, but that's a very narrow view of the extended workforce. That's just not how most companies, especially larger companies, work. They can't go from we had full time employees to, you know, they're going to do an hour of work dynamically for us. There's a huge number of people and companies that want all sorts of arrangements in the middle. And so in this area we're invested in utmost, which helps companies like connect with a more agile workforce that they don't own, but instead build different types of alliances with. So I think this points to our belief that extended workforce management will be a category. And just thinking about this past week, the SolarWinds breach is a generational event. We're still finding out how bad this Is, but clearly SaaS security and more broadly, identifying activity that uses legitimate credentials in your business. Critical applications such as email file share, hr, CRM that will be a category. You can't rely on perimeter defense and fragmented logs in your SIEM. So I think 2020 is gonna change a lot in terms of the opportunities that emerge. Just like 2020 has brought into focus new opportunities in the landscape, it's changed work. I know that in the investing world the pace of doing business has dramatically accelerated and it's also created more focus for me. I think a common thread in my investing in 2020 and how I've looked at companies and helped support them in 2020 is the way we find products or goods today is clearly digital first. It has to be. But I also think it will stay that way. So I was already investing in B2B software companies that were, I guess you could call them D2C product led growth companies. So think clubhouse, Figma, Remotion, Coda, but I think it's very simplistic to call them bottoms up. There's huge variance in how these companies actually operate. So some are middle out developer adopted like mid market to enterprise, pure SMB. And there's this thread that we're going to build these companies that don't have sales but that's just not true as most companies scale. And one thing that I believe that's come sharply into focus in 2020 is companies that are doing this modern go to market. They're building a unified engine that involves like product marketing, sales and success. And so I'm trying to identify companies that have built this and also support my portfolio companies in doing so. And so that's a huge area of focus going forward. I just don't think it'd be reasonable to talk about company leadership in 2020 without mentioning Eric Yuan. Like his ops team is keeping the world economy running and he expanded his video conferencing network into a, you know, a consumer and education business. I remember talking to Eric in 2017 and him telling me, like Sarah, we're just not going to travel for business in the future. I hate traveling for work. It just doesn't make sense. And like apparently the man is right and he deserves major props for the work he's done this past year. This has been a traumatic year for the world, but it's also just a time of huge opportunity for the people who are building new products. And I'm very inspired by the amount of creativity that's out there today because there's just a dump truck of problem statements around everything from supply chain to accessibility of healthcare to how we work together. So 2021 will be better.

2020 has changed so much about our everyday lives. The obvious one is the changes in our work and our life through extension through the digital Internet. We're now going to be much more comfortable with telemedicine. It'll be a frontline response. Regulatory will change to it. That'll be true for education, that'll be true for work, that'll be true for entertainment. And we will now have a wide variety of usage patterns of all these services that will now be advanced. Satya said at the very beginning of the pandemic, which is that each month is a year plus of digital transformation. Now I think the thing that is perhaps less obvious is that I think that actually in fact, while the engagement of digital and the network and the phones and the computers through our lives, through all these aspects that really matter to us will still be persistent, I think they're now going to be more deeply integrated as we come back together. That the notion that we are now kind of more fragmented, that it's rolled back the clock, that many companies will work completely distributedly, et cetera. Actually, I think that will change back relatively fast. But what will happen is now these tools of how we think, how we make decisions, how we communicate, how we entertain ourselves, how we deal with our health will now still be as present. For example, you could be sitting with your doctor, leveraging resources while you're still seeing your doctor. You may have seen your doctor first through telehealth, but then that will go into how you actually in fact then go into the doctor's office, or go in and be educated in the classroom, or go into work, all of which will return at strong vigor. But now with these digital amplification and the one thing that I'm going to personally do differently is that I now will actually have a much broader geographic spread. So as opposed to simply waiting to when I am going to be in town or arranging the trip, could be range from board meetings, it can range from business conferences like well, there's that business conference I really want to go to or actually now only be digitally connected. And so I think it will change patterns of contact and communication at a much broader range. I think there'll be a lot more digital only events that I will actually in fact participate in. In between the in person events, for example, conferences will not just be the conference. I think there will be in person business conferences, but they will now actually have slices throughout the rest of the year and that those will be integrated. So it's the digital and physical combined. Obviously 2020 was this asteroid hitting public health, hitting society, hitting the economy and entire industries were just smashed and disrupted, obviously most prominently travel, entertainment and restaurants and all the rest of that. And so in terms of great leadership, I think Brian Chesky may very well get the 2020 prize. Because when the asteroid hit, it's easy to just say okay, buckle down it's all very painful. As opposed to saying, hey, we participate in all of our communities. So sure, we had all of these strong growth plans in business as natural and as usual, but actually, in fact, that's now gone. We now have to replan from zero. And while we had hired all these really, really amazing people, we have to part from them in ways that is highest dignity for them and for the company, which includes helping them get placed. Not just, hey, too bad, so sad we're keeping the, you know, the best people. It's actually, no, no, we're actually releasing great people. Let's really try to help them. Let's try to make sure that that's part of our community. Let's try to balance out and share the pain with our hosts and our guests, giving our guests refunds, covering, you know, substantial portions for our hosts dealing with this asteroid to try to keep the community vibrant and healthy, to try to keep the network and the marketplace vibrant and healthy in order to adapt. And then let's immediately enable, with whatever tools we can, our host to adapt to a new pattern of traveling, to new ways that the searching will happen to try to get our hosts smart as fast as possible about COVID safety and about what transacting in a home or a room or an apartment might be, what would be the new interest and demand of the travelers. And I think Brian led through what could be just like, oh my God, it's all about me. And instead, for Brian, it was all about his employees, it was all about his hosts, it was all about his travelers. It was all about the new traveling experience, the new experience of belonging. And he took a number of proactive, very difficult, very bold moves early to return to retrenchment and then growth again very fast. You know, 2020 is obviously going to be a landmark year in a lot of different things. It was clearly, you know, massive failures across society in responding to the pandemic, uneven shutdowns, hundreds of thousands of lives lost within the U.S. millions of jobs, trillions of dollars in debt, all because of a essentially deeply incompetent federal government and states trying to rise to the occasion. But how does this change entrepreneurship? And the answer is actually not necessarily that much. Entrepreneurship is actually, in fact, the changes in the market, the changes in technology, the changes in products, services, the changes in the way that talent generates products and services. And that's entrepreneurship is crossing that ground. New building the new thing, or either innovating or renovating or re innovating or reinventing. And so that pattern is Actually, in fact, more the same.

Sure.

Startup companies had to work remotely, they had to use the tools in order to do that, keep up their energy and connection. They had to hire while doing that. They had to assess markets, they had to raise capital, they had to do all of this motion. It affected what that we're thinking about in terms of the product design, it will affect what the go to market strategy is, how do you reach customers. And all of that, of course, was very different in 2020, but that adaptation is root to the entrepreneurial journey in, you know, whether it's 2019, 2021, 2022, and as it changes, and it changes going forward, entrepreneurship will just adapt and learn to that. So it's, it's more within the general pattern of entrepreneurship. And to some degree, I think 2020 will actually turn out to be, in retrospect, a very good year to have started a company, because many strong companies are started during downturns, during recessions, during periods of adversity because you have less competition, which tends to be the driving characteristic for how much Runway does an entrepreneur get before getting into competition and the things that kind of slow it for how it operates. And so I actually think 2020 hasn't really changed entrepreneurship that much. I mean, if anything, it's actually in fact the social injustice that was brought to such crystal view by the murder of George Floyd and the paucity of again, the federal government's response to it, of the importance that we need to be building the society that we're proud of, that we need to be diverse and inclusive, and that that sort of thing really needs to be added in. Because you're looking at this and you're going, okay, you know, entrepreneurs tend to hire immediately from the networks. And I think many entrepreneurs started thinking, okay, how do I have a network that includes people of color, includes disadvantaged minorities as much as possible to include them from the very earliest stages in those journeys. And that's obviously what we also did at Greylock, partnering with management leaders of tomorrow and looking for various ways that we can build the network to include these other minorities in the earliest stages of startups. Founders, executives, employees, in what we're doing in investing and in what we're doing in the technology ecosystem writ large. The sharing economy started out of the last financial crisis. One of the things we do as investors is we always are looking for what is the brilliant new idea that will come to us through the creativity, the innovation, the brilliance of entrepreneurs. So rather than predicting this ourselves, we look for where do entrepreneurs have seen what 2020 and its crises have made possible. Now I can say a little bit of what I hope for, which is I hope for the fact that part of what happens is new platforms, Web 2.0, you know, Facebook, LinkedIn, Twitter, et cetera. New platforms, Airbnb marketplaces. What I hope for is a platform for general entrepreneurship. Because in order to, to make our way out of this kind of economic crisis that we're going to be in for years because of the pandemic, the asteroid, the incompetence of the Trump administration's response, we're going to need entrepreneurship everywhere, not just in technology companies, but entrepreneurship for, okay, what are we going to do with all the closed restaurants and reopening and, and changing of them? What are we going to do with the changes in businesses? And we're going to need entrepreneurs to create new products and services, new middle class jobs. And so a generalized platform for that to help across the country is one of the things I hope emerges and then I hope is engaged and I hope it helps a whole wide variety of businesses start. And obviously the platform itself will be a technology platform. Think of it like Airbnb, like what Airbnb was doing with magical trips and experiences. But something that helps general entrepreneurship across the country. I had hoped for that. I think we should all support it. I think we should all get a lot of entrepreneurs engaged in it. Might come from techstars, might come from endeavor, might come from any number of places. But that I think would be a very useful thing for the country. One of the things that I think the lasting impacts from 2020 will bring on startups is that a number of different areas of the world of the US will now have startup teams that will started, will have gotten that funding and gotten going in geographically dispersed ways. That dispersion will be team starting in different areas, team starting in a distributed way. And that, that will now be a set of tools that entrepreneurs will then deploy in certain kinds of startups going forward. Venture capitalists and angel investors will invest in. It won't be the only pattern, it won't be the only way these happen. I think we will actually in fact get back with reasonable vigor to the typical of, you know, the reason why there's a density around Silicon Valley and the rejuvenation of that. But I think we will also see this other pattern now continue as investors and as entrepreneurs and as angel investors learn that's a new path for starting companies, for getting them going. I guess I'd look at 20, 23 ways. One how are 2020 launching new companies within the specific markets of 2020 and 2021 and what is the early ways of getting on board and how will that be continuing to change and iterate from from then? I am always a student of that and actually, in fact I think the way that companies get launched or which companies are right in 2018 was different than 2010. What is the technology enabling? What does the market allow? Where do you see it coming? What is the way that you go to market? What is the way you hire? All of these things are learnings and process. That's part of the reason why we do masters of scale, why we do gray matter, why we launch blitzscaling. Now, in terms of the different of the way that I approach my investments is, you know, when I see something really shaken up, I don't necessarily go to what I think is the intelligent common sense or intelligent common wisdom. Hey, we're all going to go look at telemedicine. Hey, we're all going to go look at tele education. Hey, we're going to look at digital tools. Although we've been doing those for years, those obviously are amplified by this coda and other things figma that are in the portfolio. But actually for me, what I tend to do is then look more far in the field. Where is something like discovery of cryptocurrency or autonomous vehicles and those kinds of areas. Where is something that is now suddenly dislocated. That is the brilliant thing usually brought about by an entrepreneur that you can now see as possible. And so what I double down on is looking for the surprises, looking for the things that are like, oh, that's different and if that works, that'll be huge.

Mike DeBeau, partner at Greylock so one of the areas I've been spending a bunch of time on over the last handful of years has been around E commerce. And I think we've all seen this chart that has shown basically a decade of progress on e commerce penetration within one year of COVID Some might argue it's been out of necessity given physical retail has been closed. I have a strong belief that this pandemic has actually accelerated adoption of E commerce in a way that's going to be more permanent for most categories. As people have seen the convenience of not only shopping from their favorite D2C brand online, but ordering groceries. It is just kind of reset expectations on what a modern commerce experience looks like. And the part that's excited for me and about how I am thinking about investing behind this is like the enablement technology around E commerce to allow businesses to set up, operate, optimize, manage their storefronts with very minimal headcount in a more efficient way. It's never been more important than it is right now. I was bullish on kind of E commerce infrastructure prior to all this and I walk out even more bullish on that. That's one of the areas that I think is definitely going to endure. I continue to spend time around B2B marketplaces and I think the thesis underlying many of these is that the way we buy in our consumer lives is and different world than the way most B2B purchasers go through their own kind of commerce experiences. And I think while B2C commerce has seen just a complete wave of innovation over the last handful of years, B2B commerce still stays, you know, in largely offline methods. Take any, you know, B2B vertical. You're largely doing this over pen and paper, sometimes fax machines. Discoverability is very, very limited. There's no real transparent kind of marketplaces or apps. And so I think in a year where so much kind of analog behavior has been forced to modernize, I think we're going to see a big acceleration and adoption of just modern purchasing solutions for a lot of these B2B verticals that were previously lagging. B2C as far as impressive, go to market strategy or pivot. One of the businesses I've been fascinated by is fair. So I spend a lot of time in B2B marketplaces. I think fair has become a category definer here. And at the start of the pandemic one might take a look and see physical retail has shut down. That business is going to go to zero. And one of the things that they did that was so impressive during all of this was they made a bunch of changes in a very short period of time. But one of the products that they actually launched in the midst of all this was a virtual trade show product. And the biggest competitor to the behavior that fair enables is really retailers and suppliers going to trade shows and forming relationships that way. FAIR basically capitalized on the fact that that behavior was prohibited during the pandemic and had built out their own virtual trade show product essentially to onboard more suppliers and retailers onto the network. And that worked exceptionally well. The model also became more compelling during the pandemic fairs. Payment terms and free returns, basically risk free procurement for these local retailers. It is basically a lifeline for them at a time when they needed it to stay alive. And I think, you know, they will come out on the other side of this looking stronger than they did going into it.

Hi, this is Jerry Chen. Happy 2021. 2020 has changed so much of our everyday lives. And some of these changes, I think will become part of our daily habits. For work wise, we're going to be doing more zoom meetings, more remote teams, more distributed teams, for sure. We're going to do more delivery of food and groceries as a country and a population, for sure. But I think one of the habits that I'm going to do differently going forward is a reverse habit. I think after 12 months of not seeing friends, family and traveling, my goal in 2021 is to make up for lost time and really appreciate the freedom, flexibilities that we lost. And I think for me, the tough part was feeling like I couldn't even go to a different state or a different country without quarantine myself or hug a family member. So going forward, what I would do differently is travel more and see my friends more and see my family more and hug them just a little bit closer, a little bit tighter. So 2020 has changed founders and entrepreneurship in very different ways. I'd say the following both from a business model perspective, a crisis management perspective, and also a people perspective and from a business model perspective and the ability to make decisions. I think the shocks of the early quarantine and Covid Crisis created wartime CEOs, if you will, trying to understand how their businesses would change in the economic slowdown of the recession and then being surprised or disappointed when recovery did not help or hurt their business, respectively. So I think it taught founders that we always say success is never a straight line, right? There's always ups and downs and those local mins between local maximums. No one thought the local mins and local maxes would come so close together and in one year. So I think it taught entrepreneurs and entrepreneurship resilience matters. But I think more importantly how he's changed is how you deal and manage the people. Oftentimes we think of these founders as brilliant technologists or brilliant visionaries. But more than ever, with everyone working remotely, being distributed and dealing with a healthcare crisis, economic crisis, and quite frankly a societal crisis, with the Black Lives Matter movement, with elections in 2020, the ability to recruit, lead, communicate and inspire a team as a CEO, all behind a zoom camera became important. And so those leaders and those entrepreneurs that were able to maneuver their business model as well as inspire and keep connected to their people, that people side of leadership and entrepreneurship became even more important this year. And I think going forward, those leadership Skills and founders are are going to become even more and more important going forward. So 2020 was a series of shocks and series of adventures if you will. And we were in the early days we didn't know how the economy would suffer or recover. We didn't know what sectors would thrive with sectors would fail. But one thing has stood out is both economy and the stock market has told us that technology growth technology is what seemed to lead the authors say antifragile, right? In many ways, stock IPOs and the valuations private publicly in the cloud means that we realize how technology is going to be a big part of our lives. But B is a powerful business model, perhaps more powerful than we realize as investors even. And I think one of the cardinal sins as an investor is underestimate how big these markets can be, how big the TAM can be and how fast the market can expand. And so one of the things that I've talked a lot about is not only how cloud is such a powerful business model, which I mean infrastructure like Amazon Web Services, SaaS, companies like Workday and Salesforce are startups I'm involved with like Rockset or Chronosphere, gladly spoke or even blend how I think about investing is cloud or cloud only is such a powerful wave to ride. But B is it's kind of reaffirmed my aggressiveness and belief that this is really the right business model and the right technology and that they're less fragile of a market and a business model than I thought before and actually quite powerful because they could withstand all the shocks of 2020. 2020 was such a crazy year, both from a healthcare perspective, social unrest perspective, political perspective and obviously economic perspective. There are a bunch of products and services I cannot survive without in 2020 and everything from the little things. If it wasn't for Netflix and just binge watching great content in between watching the electoral map every night, I don't think I would have if it wasn't for all the on demand delivery of food and groceries, I would probably have burned down my apartment long ago trying to cook. And so I think we underestimated previously how much these on demand services and media content services would change our life day to day. And it's really become a daily habit for me and will become a daily habit for me going forward. 2020 showed us a great amount of leaders in different areas of technology and economics and polit. But really I think that the leaders I admired the most this year were the ones in charge of our health care. From Dr. Fauci, watching his kind of calming demeanor during press conferences to the Mayor of San Francisco and the Governor of California, London Breed and Governor Newsom, respectively. Be aggressive and honest about taking precautions around our health care and the economy in the early days of the pandemic. I think it's hard often to be a leader to say and do the most unpopular things like speaking truth to power. And so all our leaders that spoke truth to power or spoke truth to people who didn't want to hear the truth and made the tough decisions. I admire their leadership this past year for obvious reasons. I'll tell you one surprising or a couple of surprising changes around go to Market when air travel disappeared and everyone had to do business in sales calls and marketing calls, over phone and over video conferences, be it Google Meets or Microsoft Teams or Zoom, a lot of companies and founders and sales executives thought large enterprise deals, these seven figure deals where you had to buy steak dinners to the CIO or CEO, were going away. It might be true that steak dinners are going away because I think going forward you'll see less business travel, more remote work, more distributed work. But one of the surprising things is that the great founders, the great sales teams, the great go to market teams have figured out how to close large enterprise deals over zoom, over chat, over email. And while I think the field reps and great sales team is still a powerful weapon and a resource for every company to invest in, I think that the founders and the companies were able to figure out how to close large enterprise deals has made a big difference. Increasingly we know for a fact that bottoms up adoption line of business adoption Persona or practitioner led adoption for go to market has become more powerful and more of a weapon in 2020 because the unit value, the insertion point, the wedge to a single user, a single line of business, a single department is a better way to go when you can't meet people in face or meet people in a conference. So that is a powerful weapon and teams that can invest in that have benefited. But the teams that still figure out a way out to do these large enterprise deals, seven figure deals, I think that's a powerful skill that those teams have figured out will benefit going forward.

Hi, I'm David Thacker. I just joined the firm in June of 2020. So right in the middle of the pandemic, I'm now six months into the role and I haven't had an in person meeting yet with my Greylock colleagues, which is pretty amazing. Everything's been remote over zoom. But despite that, I've still made a few investments in My first few months here and that's despite not having interacted with any of these founders in person during the process. Everything's been over video conferencing. So I think the amazing thing about the venture world is things have continued to move forward. Startups are still getting started and entrepreneurs are still raising capital in this environment. I think there's going to be a lot of long term impacts that persist post Covid that impact the way startups operate. I think the biggest I'm seeing right now is just the way startups work. You know, out of necessity, startups have been forced to move to a remote structure like many companies around the world. But I think the difference with startups is, you know, many of them are permanently moving to remote first. And newer startups that are starting are deciding at the outset they want to be remote first. That means they'll never have dedicated physical office space for all the employees to be under one roof. And I think that's a big change. Prior to the pandemic there were startups that were remote first. Companies like Buffer, GitLab, Zapier. But it was a pretty rare thing. And now what you're seeing, it's becoming very mainstream and I think this will continue to persist. There's a lot of benefits to the startups themselves. Companies can hire basically anyone in the world, so they get access to a much bigger, broader talent pool. And as we've seen over the last decade or so, the biggest challenge for every startup has been just hiring great talent. There's really a scarcity and a shortage, but this really changes things. I also think there's big benefits to employees. Employees tend to be much more productive and happier when they can work from wherever they want to. You know, no commuting and the tool sets today, the advances we've seen in collaboration tools like Google's suite of tools or like video conferencing tools, advancements there have really made it possible to work in this way. And so I think you're going to continue to see that going forward. Now, this pandemic in 2020 has changed so much about our everyday lives. And I think as venture capitalists, one of the big things we're trying to figure out is what are these changes to consumer behavior will persist post Covid and what's going to go back to, quote, normal? And I don't really think we'll ever go back to the way things were before 2020, but I do think some things will moderate some types of consumer behavior post the pandemic subsiding you know, there's a couple categories I'm really interested in that I've been tracking. You know, one has been gaming. And gaming has seen a surge and a boom during the pandemic. People have had more free time, they've been at home. And so you've seen more consumers gaming. And this is everything from people rediscovering gaming that maybe have not played many games recently, to kids spending a lot more time online now that they can't meet their friends in person. Using games as a way to interact with their peers and with their friends. And so gaming is already the largest category of digital media. It's going to continue to grow, in our opinion, at a very healthy rate. It's much more than just playing games now. Gaming has really become a social activity. So the best, most successful games that have come out in gaming platforms are really social and multiplayer experiences. Right. So this is the way people are interacting with their friends in a digital environment. And it's even the way some people make friends today. They make gaming friends in these games that they've never met in real life before.

Right.

And so I think you'll continue to see gaming be a big category and there's lots of opportunity there in terms of both platforms and new games. So it's an area that we've been spending time in. Another big area that obviously has seen a huge boom from the pandemic is E commerce. And you know, E commerce has been growing very steadily. But with the pandemic, we've seen years of acceleration in consumer adoption of E commerce. And I think what's been most interesting is there's been certain categories of commerce that really haven't moved online yet. But out of necessity, the pandemics for some of these to move online. So just a couple examples here. This is what I like to call high consideration commerce considered purchases where, you know, in the past, prior to the pandemic, people would do a lot of research online, you know, in terms of products and reviews and things like that. But their preference was to do the final transaction offline in person. Right. So an example here is, you know, buying a home, for instance. But you know, what you've seen with the pandemic, you know, companies like Redfin have reported that they've seen a surge in virtual home tours, which is where, you know, a person can do a walkthrough of a home with a real estate agent, you know, through video conference.

Right.

Really cool possibility here. But that's the way people are touring homes now. That's been really popular. Another example is groceries. You know, groceries were a category of commerce which really weren't transacted frequently online. Of course, that's totally changed with the pandemic. People ordering and having groceries delivered. I think once people have experienced that it's super convenient, you're going to see more of that. Other categories like pet food and companies like Chewy that now make it possible to subscribe to pet food online, again, been very popular. And even things like cars. Buying a car online without driving the car in person before purchasing it may seem like a foreign thing, but increasingly popular. You look at Tesla, which sells all of its cars online, but to companies like Carvana and Vroom, which allow you to buy a used car through a website and have it delivered to your home. Pretty amazing. So I think for consumers this is more convenience, better selection, oftentimes better pricing, and with the advancements in distribution and fast shipping, where you can get products delivered same day or next day, incredibly popular. So I think we'll see a lot of this persist and you're going to see all these categories continue to migrate to online purchases.

The best example of an impressive GTM strategy in 2020 has come from Zoom, in my opinion. And Zoom has certainly been one of the biggest beneficiaries of the pandemic. They've seen tremendous growth in a very crowded space. So when you look at Zoom, why were they so successful when others weren't? I think it really comes down to three reasons. The first is where they decided to focus and optimize their product, which is making their video conferencing product work really well. For people calling in from a mobile phone or a laptop over an Internet connection, that may not be great. And you think about the legacy video conferencing providers have really focused more on the high end of using proprietary hardware. Companies like WebEx using their proprietary hardware in a conference room scenario with high speed Internet. With the pandemic with everyone working from home, Zoom had the perfectly placed product for the market. The second aspect of Zoom strategy has been their viral growth model where most people attend Zoom meeting for the first time when they're invited to a Zoom meeting. And it's very easy to jump into a Zoom meeting for the first time through a web browser with downloading a quick plugin. And then they're able to convert those users that join as a participant for the first time into hosting their own meetings. And you can host a meeting on Zoom, a free meeting with virtually no friction at all. The third aspect that I think is really interesting about their model is their freemium strategy. And you know, many enterprise companies say, and consumer companies have successfully employed freemium strategies. I think Zoom was very clever about their paywalls. You know, they have no friction to host a meeting up to 40 minutes.

But if you want to host a.

Meeting longer than 40 minutes, you actually have to convert to a paying subscription. And so people get a great experience for the first meeting they host in 30 minutes. And if you're using Zoom for work or using it for organization, eventually you're gonna hit that 40 minute paywall and you're gonna decide it's worthwhile to upgrade to the paid product. Right. Which is why they've been so successful in driving their business. Now Zoom is a general purpose video conferencing solution, really horizontal use cases, really geared for the enterprise. And what I think has been amazing in the pandemic is it's been embraced and adopted by consumers and all other types of organizations to run their virtual meetings for a combination of these reasons around their gtm. And I think this is just showing that there's a massive need for video conferencing solutions for virtual solutions. And so I think this is going to be one of the most exciting areas of startup activities because I think you'll start to see purpose built solutions in the consumer world and the enterprise world for certain types of activities. So for instance, in attending virtual events, you've got companies like Hopin or Welcome.

To, they're helping build this.

But you think about all the types of things you can do virtually. There needs to be a great purpose built solution. And with advances in technology like WebRTC and we've seen the browser get a lot better, then I think there's tremendous areas here for startups to build interesting companies. One of the things I'm personally going to do differently once the pandemic ends is I'm going to continue to try to attend many meetings and many events virtually and remotely as opposed to in person. When I look back to my life before the pandemic, you know, like many professionals had the lifestyle where I was commuting five days per week to an office location, spending two hours a day in gridlock traffic, I was frequently traveling for business to other cities around the world, either to visit colleagues or to visit customers. And what I found during the pandemic is that I have been just as productive, if not more productive with these interactions, doing them virtually because the technology and the tools have gotten so much better to allow for this. And, you know, not only is it results in tremendous time savings on having to travel. And I can be more efficient, but it's less costly, it's better for the environment, gives me more time to spend with my family. And so I think, of course, you know, once the pandemic ends, people are going to want to go back to in person interactions. But I think, you know, for professionals we'll have a higher bar for when we're willing to take that on versus to do something virtually. And you know, what you're seeing is these technologies, tools that allow video conferencing, that allow virtual events, are getting better and better. And you can imagine that every year they're going to get better and better, be more engaging, more immersive and even better substitutes. And so they'll be able to displace a lot of things that were previously only done in person. And you're starting to even see that in the consumer world where people are able to attend weddings remotely, they're able to close on a home remotely, there's a lot of these interactions that used to have to be happen in person can now happen virtually. And I think that's a big win for everyone.

Hi, this is Sam Vladimiri, one of the partners here at Greylock. There are a number of products that have been absolutely critical for me getting through 2020. On the professional side, it's been all of the tools I use to run my digital office, starting with Superhuman, which helps me get through my inbox blazingly fast, Coda, which helps me organize my notes and pipelines, and of course, Zoom, where I spend all of my meetings. On the personal side, I've taken advantage of the fact that we're all at home to pay more attention to my health. I've loved getting into a more regular exercise routine on the peloton, tracking and improving my sleep with the 8 mattress and using the levels patch for metabolic health and Aura for monitoring biometrics. The last year has had a significant impact across industries and across the way different enterprises think about consuming technology. This has led to the acceleration of many startup companies and also creates opportunities for companies looking into 2021 as many of these new trends will endure far past the pandemic. In 2020, we've seen a complete acceleration of digital transformation and as part of that, the acceleration of trends that were already taking place, but now just happening much faster. Those are trends like the penetration of cloud, the penetration of E commerce and the growth of the remote office. These trends create a number of important opportunities for startups in the digital office. We See the rise of new collaboration tools to enable office workers to work collaboratively and productively from remote and distributed environments. This can include tools like Coda for documents and spreadsheets, figma for design, Clubhouse for project management, and Clockwise for team calendar management and customer experience. As more touch points between retailers and customers move online, we see a new set of products that enable companies to more effectively and efficiently serve and delight their customers on digital channels. That can include companies like Cresta and Gladly. And on the infrastructure side, given the rise of data, there's an intense desire in customers to better operationalize this data for business value. Whether that's using machine learning platforms like Snorkel to build automated workflows, or real time databases and analytics systems like Rockset. And lastly, security. As more work is moved online, the integrity of the digital office has become more important. Companies like Abnormal Security in the Email Space or Obsidian security around SaaS are of increased importance for customers as they think about their security strategy in 2021 and onwards.

I'm David Wadhwani and have been largely focused on enterprise investments. One of the core areas I've been spending a lot of time is looking at the convergence of three very significant trends. The first is around real time data and how it can reshape the way enterprises operate. The second one is around how with that real time data you can apply AI and ML to do better root cause analysis and understanding and explainability around what that data is telling you. And then thirdly, with the rise of the API adoption across platforms, how can you actually take that understanding, understanding and that explainability and convert it to automation and execution and action on the back end of it? 2020's impact on how I approach investment opportunities is probably a little bit more nuanced. On the one hand, it hasn't affected what I look for, the fundamentals of the business. I'm looking for great founders that I'm excited to work with. I'm looking for big markets to go after. I'm looking for disruptive technology and I'm looking for and a predictable initial insertion point that we can build the beginning of the business on. What it has done is it's changed my risk tolerance. I am willing to take on more risk and the reason for that is, as you think about the biggest shift that 2020 has driven is that it's accelerated 10 years of digital transformation into a few months. And as you think about these large organizations around the world that now view themselves as digital first businesses, they're willing to spend hundreds of millions of dollars on vendors that will help them be successful. And so I think what this will lead to is a few more winners than we would have had without this acceleration of digital transformation. But the bigger thing it will lead to is that the outcomes of those winners will be much larger than they would have been in the past. So I'd say the fundamentals haven't changed much, but the potential reward has gone up and that's driving how I think about about my investments. 2020 will have a lasting impact on how companies think about their enterprise go to market motions. You know, conventional wisdom was that you can't close big deals without many direct face to face relationship building meetings. It was very inefficient, but it was how business was done. Well, we've proven all of that wrong this year. I think, you know, enterprise software companies are thriving and businesses nearly exclusively conduct today over zoom. So after the pandemic, I think we will return to face to face meetings, of course. But I also expect that we'll see more efficient direct sales models that are going to benefit from less travel, from lower overhead meetings, and perhaps most importantly from product teams that are now designing their products for easier and remote onboarding. 2020 has fundamentally changed how startups operate and how entrepreneurs need to lead their organization organizations. I think it's fair to say that the pandemic has touched every aspect of how business gets done. But I think about it and I say, I think there are two enduring trends that will last well beyond this pandemic. The first is humanity. When I would meet with entrepreneurs in 2019 and prior, the conversations were almost entirely focused on the goals of the business. How does revenue look or how efficient is the business running? Today every conversation I have starts with the people. How are the employees doing? How are the customers doing? How is the community that supports you doing? And while we will always and still spend a significant amount of our time talking about and thinking about the fundamental metrics of the business and the goals of the business, the health and the well being of the people that make it happen is front of mind in every conversation. And I certainly hope that continues to persist well beyond this pandemic. I think it's the foundation of how great businesses are going to be built. The second thing I'd say is around process maturity. You know, when you have a few dozen people in the same office, process isn't that important. You know, startups are famous for winging it, but when you have a few dozen people that are never in the office together, you need to identify common Ways to share ideas, common ways to get feedback, to make decisions and communicate in general across the teams. And I think this is actually both of these things are good, fundamental ways to build great businesses that endure. And so I actually think that this mindset will help businesses as they scale in the years ahead.

Hi everyone, I'm David z. I think 2020 changed entrepreneurship significantly, probably more than any year in recent history. The pandemic has forced incredible changes forward in our society, and it's also forced incredible changes in our consumption, behavior and habits, and also in testing out things that had not been tried before. Classic examples would be telehealth, telemedicine. It's revolutionized that as people have been forced to work from home, Remote work is a completely different world that will never go back to being the same. Health, exercise, those kind of things, those are all changed now being done. Virtual travel obviously has been impacted, but it has caused innovation across so many other vectors. And I think those changes are things that would have taken years and years to be attempted against all resistance and inertia. But as the world changed so dramatically, it forced changes in our habits and behaviors and allowed us to try things out that we had not been able to trial before and will never go back again. Fortunately for me, my sectors of focus have all been incredibly positively changed by the challenges that we faced in 2020. I focused in social networking and being involved with a company like Nextdoor. All of a sudden, social interaction, connection, when people were stuck in their homes, became really important. Online and local information and local connectivity became incredibly valuable in a way that it had never before been. And so it accelerated that experience. And I think social has become reinvigorated and empowered by the unfortunate challenges of 2020. Another sector that I'm involved with is gaming. And so companies like Roblox, companies like Discord, they've all seen incredible acceleration in their businesses as well. As people were stuck in their homes, they looked for ways to find entertainment and to engage with other people online and shared experiences. And that's accelerated those businesses in a way that I don't think ever goes back again. And then media convergence is another space that I am involved with. And as we've seen people's desire for media, their consumption of media, the variety of ways and places, and the varieties of types of media that they've been willing to engage with has expanded, broadened and deepened during this crisis as they've been stuck in their home and people's access to their broadband connectivity have become more important than almost anything else. In their home in these times. And it has really helped all of those sectors. And I think that that will continue to be a powerful force going forward. Now that habits have changed and have become ingrained. And while hopefully, knock on wood, things get better and the world opens up, we will see some slowing of that, but I don't think it will ever return to where it was. And it will always, forever have impacted the behaviors of consumption in those domains. I think telehealth and telemedicine have been catapulted forward and those industries have been forced to adapt because of the coronavirus and the other challenges of 2020. And it's created whole new ways of interacting that people are finding beneficial. And so I think that there will be hybrid innovations as the world starts to open up again, but will never go back. And there will be great opportunities created because of 2020's experience. I think education and ed tech is also something that has been forced to innovate and change dramatically in ways that would have taken decade to do otherwise. And I don't think that will ever go back and change. And I think we'll create great opportunities going forward. You know, work from home and remote work and hybrid mode work, I think is also something that we've all been forced to deal with in this year and has caused incredible innovation, incredible change and adaptation of behaviors that I don't think will ever go back. And in consumer in particular, you know, one of the hardest things to do is to cause a change in ingrained human behaviors. And this crisis has forced those dams to be broken. And as a result, people are finding new ways to do things, better ways to do things, discovering things that they feared actually turned out to be benefits and work better. And so I think there's a real lean into those changes that will never be undone. And I think there's new openness to moving and trying, new things that we haven't seen in a while and hopefully will carry over into the years to come.

Okay, everyone, that concludes this episode of Gray Matter. You can subscribe to our podcast on soundcloud.com greylock partners or wherever you get your podcasts. You can also find new episodes and blogs on our website, greylock.com. you can also follow us on Twitter @GreylockVC. Thanks for listening and have a happy, healthy and safe holiday season.