# Top 10 in Tech - What to know for Week ending February 2, 2024

Published: 1 February 2024
Canonical: https://www.top10in.tech/posts/week-ending-february-2-2024

## 1. SaaS METRIC OF THE WEEK

From the brilliant minds at Bessemer Venture Partners comes a new metric for 2024 called "[The Rule of X](https://www.bvp.com/atlas/the-rule-of-x)," challenging the traditional "[Rule of 40](https://www.top10in.tech/top-10-in-tech/top-10-in-tech-what-to-know-for-week-ending-december-8-2023)" and emphasizing growth over profitability. It asserts growth impacts valuation more significantly than free cash flow (FCF) margins, advocating a 2-3x higher weighting for growth. This rule considers long-term market trends, recognizing that while profitability matters, sustainable growth drives greater long-term value. This approach is particularly relevant for the new world of late-stage private and public companies focusing on efficient growth strategies (see #7 on layoffs below).

Link: https://www.bvp.com/atlas/the-rule-of-x

## 2. ZERO-OPS

A new entry for your tech dictionary, [ZeroOps is a set of practices that result in developers focusing solely on coding](https://cloudgeometry.io/blog/the-zeroops-journey-mind-the-gap/) and creating, with 0% of their time spent on operations or [infrastructure](https://www.amazee.io/blog/post/what-is-zeroops).

Link: https://cloudgeometry.io/blog/the-zeroops-journey-mind-the-gap/

## 3. DEMO 1

The path to Demo is *exactly* the primary call to action my website is designed for. I assume it's the same for many of you non-PG B2B people, so....."[Should Your Website Drive Prospects to a Demo?](https://kellblog.com/2021/11/21/should-your-website-drive-prospects-to-a-demo/)" Take a read of the article to determine if this is a problem at your startup.

Link: https://kellblog.com/2021/11/21/should-your-website-drive-prospects-to-a-demo/

## 4. DEMO 2

Following up from above, [here are some great tips for running a demo](https://medium.com/boldstart-ventures/how-to-run-a-great-demo-when-youre-not-a-sales-person-378bae382001) without being a salesperson, applicable to both sales and investment pitches.

Link: https://medium.com/boldstart-ventures/how-to-run-a-great-demo-when-youre-not-a-sales-person-378bae382001

## 5. AI

Big Tech is playing hard in this space with a few notable articles this week. First up - [the new Big Tech Acronym - MANG](https://apoorv03.com/p/mang) (Microsoft, Amazon, Nvidia, Google), the newest group of prolific venture capitalists in data and AI. In 2023, their combined deals totaled $25B+ (8% of all North American venture capital). Secondly, Meta is desperate to be on that list and is playing catch-up after missing the Metaverse mark, so it is now pouring money into [developing open-source AGI](https://venturebeat.com/ai/meta-is-all-in-on-open-source-agi-says-zuckerberg/). What could possibly go [wrong](https://www.theguardian.com/technology/2024/jan/19/mark-zuckerberg-artificial-general-intelligence-system-alarms-experts-meta-open-source)? Finally, Sam Altman of OpenAI wants to go more vertical by [raising billions of dollars to set up a new AI chip-making venture](https://www.reuters.com/technology/sam-altman-seeks-raise-billions-network-ai-chip-factories-bloomberg-news-2024-01-19/) to compete against NVIDIA and the like (who apparently sold.

Link: https://apoorv03.com/p/mang

## 6. SECTOR GROWTH

. According to Tomasz Tunguz, [the fastest growing software sectors will be Security and Data](https://tomtunguz.com/fastest-growing-software-category-2024/) this year (security at 29% expected growth, outpacing Data at 23%). High growth rates in these sectors drive much better forward-revenue multiples. Both sectors average about 10x, significantly higher than others. He expects to extend this growth into private markets, influencing acquisitions and financings.

Link: https://tomtunguz.com/fastest-growing-software-category-2024/

## 7. LAYOFFS

Tech industry layoffs are not [slowing down](https://www.cnbc.com/2024/01/26/tech-layoffs-jump-in-january-as-alphabet-meta-microsoft-reach-high.html) into 2024 as right-sizing, [R&D-based layoffs](https://medium.com/north-america-tech-for-kiwis/the-impact-of-r-d-and-software-startups-0c1774eaf4a1), and positioning into [profitability](https://www.linkedin.com/pulse/shift-towards-profitability-navigating-recent-layoffs-thomas-gregg-jcwce/?trk=public_post) (or [Shareholder Value](https://www.business.com/finance/big-tech-earnings-and-layoffs-compared/)) measures continue. As of the writing of this newsletter, we have [94 tech companies reporting a total of 25k layoffs](https://layoffs.fyi/) year to date.

Link: https://www.cnbc.com/2024/01/26/tech-layoffs-jump-in-january-as-alphabet-meta-microsoft-reach-high.html

## 8. M&A

Software M&A is also off to a quick start this year, and Janelle Teng tries to [make some observations/predictions for the year in this post](https://nextbigteng.substack.com/p/five-software-m-and-a-observations). Starting with valuation multiples compressing and a corresponding activity slow down due to valuation mismatches. Regulatory scrutiny will rise (impacting deal dynamics and timelines). Soft landings are becoming more common due to challenging operational conditions, and AI-driven acquisitions(see #5 above) are gaining traction.

Link: https://nextbigteng.substack.com/p/five-software-m-and-a-observations

## 9. SaaS TRENDS

Vendr runs a Quarterly SaaS Trends Report, and now that 2023 is over, they have just released their [wrap-up report for the year](https://www.vendr.com/insights/saas-trends-report-2023). According to the report, some of the key findings are: Software buyers are consolidating their tech stacks and reducing spend, sellers are focusing on price transparency and lower discounts (for example, ACV dropped about 45% between Q1 and Q2), most popular categories for SaaS were sales and revenue and cybersecurity (see #6 above).

Link: https://www.vendr.com/insights/saas-trends-report-2023

## 10. CASE STUDY

Atlassian has grown from a bootstrapped startup in 2002 to a $50 billion public company. This[article outlines the pillars of their growth strategy](https://www.howtheygrow.co/p/how-atlassian-grows): product-led, customer-centric, partner-enabled, and culture-driven and highlights some of the unconventional and contrarian decisions they made along the way, such as having no sales team, using rock-paper-scissors to resolve disputes and acquiring their competitors.

Link: https://www.howtheygrow.co/p/how-atlassian-grows

## POD OF THE WEEK

From the Go To Market Podcast - [Building a top-down sales strategy while maintaining a bottoms-up approach](https://gtmnow.com/gtm-77-top-down-sales-strategy-bottoms-up-approach-leena-joshi/) to build longer-lasting relationships with customers and stakeholders.

Link: https://gtmnow.com/gtm-77-top-down-sales-strategy-bottoms-up-approach-leena-joshi/