What SaaS As an Industry Really Looks Like Now. It's Changed.

Hey everybody, let's talk just a little bit about what SaaS is like right now because things continue to change so much. And what are we seeing? What am I seeing across dozens and dozens of SaaS, companies I'm working with and dozens of venture capitalists? Let me summarize three things I'm seeing and maybe some actual insights around it. The first one, maybe the most important one because it impacts our application so much, is I think we need to plan that nobody in software, software and information technology, they can avoid going back to the office this year will I think no one's going to go back to the office at Facebook, at Google, at Salesforce, at Slack, at anywhere until 2021. And Google and Facebook already said it this week, they said our employees do not need to go back to the office next week. And that's the tip of the iceberg. Everyone in Internet and tech and SaaS is going to tell their teams to work at home for the rest of the year because there's no way to know it's going to be safe. There's no way to know you're not going to get coronavirus. There will be no vaccine this year and probably not next year. So for safety's sake, if you can tell your knowledge workers to work from home, you will. So don't expect anyone's going back to the office this year that doesn't have to. And that means two things in sas. It first means that there will be an enduring boost to collaboration. A lot of folks are wondering, hey, is is Slack a one time boost? Will zoom use decrease? After all, this is telemedicine a flash in the pan and folks aren't going to be doing intake with doctors on an iPhone once they can go back to their offices. No, these changes now are going to be enduring because they're going to last into next year. To be a flash in the pan, we all had to be getting off slack much sooner than we're going to be. So collaboration is not going to dip. The gains we see are sort of everlasting and so we'll see that in collaboration, E Health, E Learning as well. All categories that have seen a 40 to 70% boost in usage. Now that's going to last because the office isn't really going to reopen until next year. The next one is that digital transformation, which is a hot term at CIO's office in it, that trend is going to last for well into next year. And digital transformation has been a catch term for several years, just about accelerating things, accelerating Cloud contact centers, accelerating E signatures, accelerating collaboration, accelerating all these things. And it was an initiative, but it was mostly around efficiency being more efficient than the competition. Now that's changed with shelter and work from home. And digital transformation has become the top initiative for CIOs and folks that sell the enterprise that I talk to. But the big difference is digital transformation is no more about efficiency or gains. It's about must have. What are the top three or four digital imperatives overall for larger companies and for each department? And those top imperatives, whether it's to get zoom up and running, to get slack, to get collaboration, to get elearning, to get digital onboarding, whatever it is, those top initiatives are being dramatically accelerated. And that's just going to continue to happen through next year as we keep working from home. But the digital initiatives that are nice to haves, as you've seen, are being dropped left from right. So if nothing else, jump on this digital transformation bandwagon if you can. Can you be one of the four or five initiatives that your buyers need to do in this new world? If so, you're going to get a Covid boost. Okay? The next thing to see in SaaS and to be careful of as we're trying to predict the future is that I do not believe that there's going to be any great boost from sort of human behavior changes. And so it's confusing. It's confusing when we see people go back to the beaches. It's confusing when we see Disney World start to work on reopening Downtown Disney or whatever it's called now. It's confusing when Shanghai Disneyland sells out in five minutes, that's going to happen. And there's pros and cons with that in terms of impact on all of our health. But that doesn't mean that the SMBs that many of us sell to is going to recover. It doesn't mean the restaurants are going to recover or the small shops or the auto body shops or the car dealerships or any of Those businesses, these SMBs are going to take years to recover. So when we see sort of people behavior change, let's not consume, confuse that with SMB and end user behavior. SMB buying in the real world, not online, which we'll talk to in a second, but in the world is going to be impacted for years. But E commerce, boy, it's been pulled ahead. Shopify Stock was up 51% last month. And the numbers are just crazy Gorgeous, which is the number one contact center in Shopify. Its usage grew 70% last month. So folks that did get into E commerce, that did become Digital natives for SMBs, they're going to continue to accelerate in the coming year and a half as things don't go back to normal, as we don't roll back to the office and roll back to restaurants and roll back to anything. And folks that can't move into E commerce are going to be destroyed quickly. It's already happening. And the last point I wanted to get into is VC funding. We chatted about this a little bit before, but it's interesting. VC funding is almost back. It's almost back to pre March levels, but it can be hard to tell on Twitter. And why? Well here's, here's. Let me simplify it. There are enough SaaS companies that have gotten a Covid boost that are growing faster because of collaboration or telemedicine or elearning or even just mobile app deployment and other things that there's so much VC capital that they're more than willing to invest in the ones with a Covid boost. But that means, as strange as this will sound to some of you, you have to be growing faster than before all this. And that also means if you were growing reasonably quickly before, you no longer are. But not, not struggling. But say you went from 100% growth before to 50% today, you probably aren't going to get funded now. Almost certainly not. Why? Because there's too many Covid beneficiaries. I know that sounds crazy, but remember there's only so many companies that need to get venture funded each year and VCs have tilted. They say, you know what, we're going to, we're going to find the 15 to 20% of SaaS companies that are growing faster now and deploy all the capital there. So the COVID beneficiaries are just going to suck up all these funds that have been raised. So VC is, it's bounced back. It's almost bounced back 100% and it's, it should have in some ways because the NASDAQ is almost back and the BVP NASDAQ Cloud Index is close to all time highs. But it's bounced back differently and VC money is only going to go to Covid beneficiaries for the next year and a half.