Top 10 in Tech - What to know for Week ending March 26, 2021 - State of The Cloud Special!

One of my favorite sessions to attend every year at SaaStr is the Bessemer Venture Partners State of the Cloud Report. It’s a fantastic, detailed, deep dive into micro and macro trends, forecasts, and industry predictions. This year SaaStr release was a Cloud edition but here are the Presentation files and link to the full presentation page on their website - or if this is your thing: The PDF version. They also finish off with top predictions for 2021 (which I feel we already did to death here - so that part is skipped - here if you want to read more - because it’s good)

MARKET CAP

Cloud companies have thrived in 2020 with a record-breaking market cap of more than $2 trillion! For context, two years ago (February 2019) the collective value of the cloud index was $690 billion

VALUATIONS

Cloud multiples are rising to new heights - *AVERAGE* is 20x!!!! That's an increase of over 150% in the last five years. Why? Growth rates - that don't quit - the average is 40%

PUBLIC CLOUD

AWS continues to dominate public cloud - but MSFT is growing share fast (And Public cloud is now greater than $2 trillion). AWS, Azure, Google Cloud, and Ali Cloud. All of them enjoy more than 50% growth annually.

PRIVATE CLOUD

There is more demand than supply for cloud assets, with a 10x increase in investments into private cloud companies. It is clear that cloud computing will become a majority of enterprise software by 2025 - which leads onto #5 below:

UNICORNS

The number of private unicorns has doubled in the past two years (527 of them) with a cumulative value of $1,964 Billion) and this growth shows no sign of slowing

DIGITAL TRANSFORMATION

Went bonkers - high demand, high multiples, high growth rates, and large access to capital means that 2020 is the best time in history to be a private cloud company founder

GROWTH 1 - Usage-based pricing models

When Bessemer release these reports, they also share insights into how to drive go-to-market strategies - starting with usage-based pricing models. This strategy goes hand in hand with PLG (see below). Usage-based pricing helps minimize friction during customer onboarding, as customers only pay for what they’re using. This strategy typically sees best-in-class net-dollar retention results.

GROWTH 2 - Product-Led Growth

PLG (if you didn't already get the hint from this newsletter) has been growing over the past several years as the ubiquity of solutions and increased automation has pushed purchasing decisions down to the end-user. The cumulative market cap of product-led growth companies has grown more than 100x in six years.

GROWTH 3 - Cloud marketplaces

This should come as no surprise to anyone who has Shopify, Atlassian, or Salesforce partner experience. - but here are some good stats: SaaS businesses experience 50% faster sales cycles on average through cloud marketplaces; revenue generated through cloud marketplaces is predicted to reach $3B in 2021.

FAANG IS DEAD

Well not really - the old Facebook, Amazon, Apple, Netflix, and Alphabet (aka Google) championship team of high performing technology companies are going gangbusters (330% return over the last 4 years) but have been superseded by a new (and slightly less cool but more mountainous) acronym of the top publicly traded tech companies - MT SAAS. Microsoft, Twilio, Salesforce, Amazon, Adobe, and Shopify (803% return).