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State of the Cloud Report
2016Byron Deeter & Kristina Shen
www.bvp.com/cloud
2
24% OF THE TOTAL CLOUD
MARKET CAP GOT ACQUIRED
IN THE LAST 12 MONTHS
AWS – BY THE NUMBERS
70%	
>$12Billion
$2.5	billion
YoY	Growth
ARR	Run	Rate
Operating	Income	Run	Rate
Source:	Public	SEC	fi...
Worldwide spending on public cloud
services was $70B worldwide in 2015,
growing at a 19.4% CAGR, but still
only 5% of tota...
CLOUD MARKETS OUTPERFORMING NASDAQ BY 2X
5
0%	
50%	
100%	
150%	
200%	
1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/201...
WITH ALPHA COMES VOLATILITY
6
BVP Cloud Index
42 Publicly Traded Cloud Companies Indexed as of Dec. 2015 | @ 08/24/2016
0%...
BUT REVENUE MULTIPLES ARE BACK TO “NORMAL” LEVELS
7
NTM Multiples Over Time
4.9x
3.5x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
1/1/2...
PRIVATE CLOUD MULTIPLES ARE TRADING AT A PREMIUM TO
PUBLIC CLOUD MULTIPLES… BUT THEY ARE CONVERGING
8
NTM Multiples Over T...
ONLY 3 CLOUD IPOs IN THE LAST 12 MONTHSONLY 3 CLOUD IPOs IN THE LAST 12 MONTHS
Early
(Seed/Series A)
Mid
(Series B/Series ...
ONLY 3 CLOUD IPOs IN THE LAST 12 MONTHS
Early
(Seed/Series A)
Mid
(Series B/Series C and/or < $30mm Raise)
Late
(Series D ...
CHEAP PUBLIC CLOUD MULTIPLES RESULTED IN $50.4B
OF PUBLIC M&A IN JUST 12 MONTHS
11
Company	 Acquirer Valuation	of	Acquisit...
SUMMARY OF LAST 12 MONTHS
12
Public	cloud	multiples	remain	cheap
M&A	will	continue	because	legacy	vendors	
have	to	react
O...
KEY TOPICS FOR TODAY
13
• State	of	the	Cloud	Industry	in	the	last	12	months
• Benchmarking	and	Best	Practices
• Predictions
5 C’S OF CLOUD FINANCE
Representative Cloud Business ($15mm ARR)
CARR
% Fwd Growth
1
Good
Better
Best
50-100%
50%
100%+
CA...
[make left turn or right turn, high growth or high profitability]
HIGH GROWTH,
PATH TO
PROFITABILITY
HIGH
PROFITABILITY,
M...
GROWTH REMAINS AN IMPORTANT METRIC…
0%
20%
40%
60%
80%
100%
120%
140%
160%
T-4 T-2 T+0 T+2 T+4 T+6 T+8 T+10 T+12
Pre	IPO P...
…BUT IS NO LONGER THE STRONGEST METRIC
17
2U
Appfolio
Athenahealth
Atlassian
Bazaarvoice
Benefitfocus
Box
BroadSoft
Castli...
DEFINING THE EFFICIENCY SCORE
18
Rule of 40
= % Annual Revenue Growth + % Profit Margins
DEFINING THE EFFICIENCY SCORE
19
Rule of 40
= % Annual Revenue Growth + % Profit Margins
Efficiency Score
= % Annual CARR ...
INVESTORS ARE NOW FOCUSED ON EFFICIENT GROWTH
Efficiency Score vs Revenue Multiple
20
2U
Appfolio
Athenahealth
Atlassian
B...
EXAMPLE 1: SHOPIFY
HIGH GROWTH + BREAKEVEN FCF
21
Efficiency Score 2013 Efficiency Score
108%
89%
95%
79%
44%
36%
-40%
-20...
EXAMPLE 2: VEEVA
MODEST GROWTH + HIGH FCF
22
Efficiency Score 2013 Efficiency Score
62%
19%
81%
0%
50%
100%
%	Revenue	Grow...
DIFFERENT STAGES REQUIRE EFFICIENCY SCORES
23
100%
73%
56% 53%
45%
38% 35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pri...
THE BVP EFFICIENCY RULE – 70 – 50 – 30
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
IPO	- 3Y IPO	- 3Y IPO	- 2Y IPO	- 1Y IPO...
THE BVP EFFICIENCY RULE – 70 – 50 – 30
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
IPO	- 3Y IPO	- 2Y IPO	- 1Y IPO IPO	+	1Y...
THE BVP EFFICIENCY RULE – 70 – 50 – 30
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
IPO	- 3Y IPO	- 2Y IPO	- 1Y IPO IPO	+	1Y...
KEY TOPICS FOR TODAY
27
• State	of	the	Cloud	Industry	in	the	last	12	months
• Benchmarking	and	Best	Practices
• Predictions
2015 PREDICTION #1:
INDUSTRY CLOUD ON THE RISE
28
2015 PREDICTION #1:
INDUSTRY CLOUD ON THE RISE
29
$9.2B OF INDUSTRY CLOUD ACQUISITIONS & 2 IPOs
$4B
$2.4B
$663M
$1.6B
$532M
$661M
(IPO)
30
$616M
(IPO)
Notable	Financings
2015 PREDICTION #2:
CYBERSECURITY, A HOT MARKET
31
2015 PREDICTION #2:
CYBERSECURITY, A HOT MARKET
32
$2.1	trillion
PREDICTION #2 - CYBERSECURITY, A HOT MARKET
Cost	of	data	breaches	
globally,	4x	more	than	
20151
Source:	(1)...
14$2.1	trillion
PREDICTION #2 - CYBERSECURITY, A HOT MARKET
Cost	of	data	breaches	
globally,	4x	more	than	
20151
Of	the	Cl...
14$2.1	trillion
Cost	of	data	breaches	
globally,	4x	more	than	
20151
$170	Billion
Of	the	Cloud	100	were	
Cybersecurity	Com...
38
PREDICTION #3: THE DEVELOPER IS MORE IMPORTANT
2015 PREDICTION #3:
DEVELOPERS ARE THE NEW KID ON THE BLOCK, AND HERE TO STAY
39
NOW THE COOL KID…
APIS TO ACCELERATE YOUR BUSINESS
Mapping
Payments
Communication
(Messaging/Voice)
Email
SSO
Customer
Engagement
Storage
41
2015 PREDICTION #4:
MORE M&AAHEAD
2015 PREDICTION #4:
MORE M&AAHEAD
THE LEGACY PLAYERS ARE….
47
CORNERED ANIMALS…
45
Classic	Innovator’s	
Dilemma	allowed	cloud	
entrants	to	thrive
Too	late	to	build
Facing	an	extinction...
‘NUFF SAID
$50.4B
50
‘NUFF SAID
$50.4B
2015 PREDICTION #5:
MOBILE IS A GAME CHANGER FOR THE ENTERPRISE
48
2015 PREDICTION #5:
MOBILE IS A GAME CHANGER FOR THE ENTERPRISE
49
PREDICTION #5: MOBILE IS A GAME CHANGER FOR THE ENTERPRISE
85%
Americans	between	18-29
>50%
Internet	usage	on	mobile	vs	de...
EARLY ENTERPRISE MOBILE USE CASES
Healthcare Education Safety/Compliance
Construction Field	Services Retail	Sales
Events A...
52
53
MESSAGING IS THE KILLER MOBILE EXPERIENCE
• 2.7MM DAUs
• 320 million minutes of active
usage per weekday
• 800K paid seats...
2016 PREDICTION:
SAAS 2.0 BEGINS TO DISRUPT SAAS 1.0
?
PREDICTION – SAAS 2.0 BEGINS TO DISRUPT SAAS 1.0
HCM is the First Market
Phase	0	 Phase	1	 Phase	2	Phase	1.5	
61
2016 PREDICTION:
USE OF DEEP LEARNING & AI IN ENTERPRISE
?
CONSUMER IS AHEAD, BUT ENTERPRISE WILL FOLLOW
Photo Recognition Voice Recognition Text Recognition
Text RecognitionVoice R...
2016 PREDICTIONS, FROM “CONVENTIONAL WISDOM” TO
EMERGING
EMERGING CONVENTIONAL
WISDOM
7 6 5 4 3 2 1
Deep	
Learning/	
AI	
E...
State of the Cloud Report
2016Byron Deeter & Kristina Shen
www.bvp.com/cloud
Bessemer's 2016 State of the Cloud
Bessemer's 2016 State of the Cloud
Bessemer's 2016 State of the Cloud
Bessemer's 2016 State of the Cloud
Bessemer's 2016 State of the Cloud
Bessemer's 2016 State of the Cloud
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Bessemer's 2016 State of the Cloud

In 2015, cloud markets outperformed NASDAQ by 2x demonstrating how cloud computing continues to be an influential technology sector. In Bessemer’s 2016 State of the Cloud, leading SaaS and cloud investors Byron Deeter and Kristina Shen highlight market trends, metrics and benchmarks every SaaS founder should track, and the top predictions for 2016.

In this report, you’ll also learn:
- Key trends of the Cloud Index from 2015
- The five metrics of cloud finance
- Predictions for 2016

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Bessemer's 2016 State of the Cloud

  1. 1. State of the Cloud Report 2016Byron Deeter & Kristina Shen www.bvp.com/cloud
  2. 2. 2 24% OF THE TOTAL CLOUD MARKET CAP GOT ACQUIRED IN THE LAST 12 MONTHS
  3. 3. AWS – BY THE NUMBERS 70% >$12Billion $2.5 billion YoY Growth ARR Run Rate Operating Income Run Rate Source: Public SEC filings
  4. 4. Worldwide spending on public cloud services was $70B worldwide in 2015, growing at a 19.4% CAGR, but still only 5% of total IT spend.1 (1) Source: Forbes Cloud Roundup 2016
  5. 5. CLOUD MARKETS OUTPERFORMING NASDAQ BY 2X 5 0% 50% 100% 150% 200% 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 BVP Cloud Index Nasdaq Index S&P Index Dow Jones BVP Cloud Index 42 Publicly Traded Cloud Companies Indexed as of Jan. 2011 | @ 08/24/2016 Source: 42 companies in BVP Cloud Index as of 8/24/2016. CapIQ.
  6. 6. WITH ALPHA COMES VOLATILITY 6 BVP Cloud Index 42 Publicly Traded Cloud Companies Indexed as of Dec. 2015 | @ 08/24/2016 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% 12/31/15 1/7/16 1/14/16 1/21/16 1/28/16 2/4/16 2/11/16 2/18/16 2/25/16 3/3/16 3/10/16 3/17/16 3/24/16 3/31/16 4/7/16 4/14/16 4/21/16 4/28/16 5/5/16 5/12/16 5/19/16 5/26/16 6/2/16 6/9/16 6/16/16 6/23/16 6/30/16 7/7/16 7/14/16 7/21/16 7/28/16 8/4/16 8/11/16 8/18/16 8/25/16 BVP Cloud Index Nasdaq Index S&P Index Dow Jones Source: 42 companies in BVP Cloud Index as of 8/24/2016. CapIQ. Cut in ½ in 1 mo Full rebound in 6 mos
  7. 7. BUT REVENUE MULTIPLES ARE BACK TO “NORMAL” LEVELS 7 NTM Multiples Over Time 4.9x 3.5x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 BVP Cloud Index Legacy Software Peak - Jan 2014 9.5x Lowest – Feb 2016 3.1x High M&A Activity Begins Source: 42 companies in BVP Cloud Index as of 8/24/2016. CapIQ.
  8. 8. PRIVATE CLOUD MULTIPLES ARE TRADING AT A PREMIUM TO PUBLIC CLOUD MULTIPLES… BUT THEY ARE CONVERGING 8 NTM Multiples Over Time The public / private gap converging Average 10-17x 4.9x 3.5x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 11.2x as of today on average Source: 42 companies in BVP Cloud Index as of 8/24/2016. CapIQ. Notes: In the last 6 months, the average ARR multiple paid was 11.2x; BVP Cloud Index multiple and Legacy software multiples are both NTM GAAP revenue. Private Cloud Multiples BVP Cloud Index Legacy Software
  9. 9. ONLY 3 CLOUD IPOs IN THE LAST 12 MONTHSONLY 3 CLOUD IPOs IN THE LAST 12 MONTHS Early (Seed/Series A) Mid (Series B/Series C and/or < $30mm Raise) Late (Series D + and/or > $30mm Raise) Market Cap (At the end of the 1st day) $2.6Bn TWLO 06/16 $5.7Bn TEAM 12/15 $467M INST 11/15 $455M APPF 06/15 $241M XTLY 06/15 $452M MB 06/15 $1.9Bn SHOP 05/15 $2.7Bn BOX 01/15 2016 IPO2015 IPOs e. Ventures Investment Group of Santa Barbara Note: Includes investors with >5% ownership post IPO according to SEC filings and/or leaders of a financing round according to Crunchbase. Includes secondary rounds as independent rounds. If no lead called out on Crunchbase, all >5% shareholders post IPO are called out. Market capitalization calculations include shares outstanding, restricted stock, and use treasury stock methodology on options.
  10. 10. ONLY 3 CLOUD IPOs IN THE LAST 12 MONTHS Early (Seed/Series A) Mid (Series B/Series C and/or < $30mm Raise) Late (Series D + and/or > $30mm Raise) Market Cap (At the end of the 1st day) $2.6Bn TWLO 06/16 $5.7Bn TEAM 12/15 $467M INST 11/15 $455M APPF 06/15 $241M XTLY 06/15 $452M MB 06/15 $1.9Bn SHOP 05/15 $2.7Bn BOX 01/15 2016 IPO2015 IPOs e. Ventures Investment Group of Santa Barbara Note: Includes investors with >5% ownership post IPO according to SEC filings and/or leaders of a financing round according to Crunchbase. Includes secondary rounds as independent rounds. If no lead called out on Crunchbase, all >5% shareholders post IPO are called out. Market capitalization calculations include shares outstanding, restricted stock, and use treasury stock methodology on options. BVP IS A PARTNER TO 5 OF 8 CLOUD IPOs 2015 -2016
  11. 11. CHEAP PUBLIC CLOUD MULTIPLES RESULTED IN $50.4B OF PUBLIC M&A IN JUST 12 MONTHS 11 Company Acquirer Valuation of Acquisition Valuation Multiple at Time of Announcement $1.6B 7.1x $2.4B 7.0x $26.2B 8.1x $1.8B 7.5x $9.3B 10.3x $2.8B 10.5x $532mm 3.2x $663mm 6.5x $4B 4.7x $1.1B 2.6x TOTAL $50.4B AVG: 6.5x
  12. 12. SUMMARY OF LAST 12 MONTHS 12 Public cloud multiples remain cheap M&A will continue because legacy vendors have to react Organic growth of cloud businesses leads to rise of cloud index Cloud IPO market is poised to reopen 1 2 3 4
  13. 13. KEY TOPICS FOR TODAY 13 • State of the Cloud Industry in the last 12 months • Benchmarking and Best Practices • Predictions
  14. 14. 5 C’S OF CLOUD FINANCE Representative Cloud Business ($15mm ARR) CARR % Fwd Growth 1 Good Better Best 50-100% 50% 100%+ CAC PAYBACK (Mos) 2 12 - 24 24 <12 CHURN (Monthly) 3 <1% 1-3% Net negative CLTV / CAC 4 3-5x 3x 5x+ CASH FLOW (New ARR/Mo Burn) 5 1x <1x >1x www.bvp.com/cloud 19
  15. 15. [make left turn or right turn, high growth or high profitability] HIGH GROWTH, PATH TO PROFITABILITY HIGH PROFITABILITY, MODEST GROWTH
  16. 16. GROWTH REMAINS AN IMPORTANT METRIC… 0% 20% 40% 60% 80% 100% 120% 140% 160% T-4 T-2 T+0 T+2 T+4 T+6 T+8 T+10 T+12 Pre IPO Post IPO 1 Yr IPO 1 Yr 2 Yrs 3 Yrs Top Quartile 91% 61% 42% 36% 33% Median 72% 47% 35% 34% 24% Bottom Quartile 42% 34% 26% 28% 22% Source: SEC filings. BVP Cloud Index public companies. T = quarters 16 @ $10mm ARR @ $100mm ARR @ $300mm ARR % YoY Growth 300% 100% 30% (Starting From Four Quarters Prior to IPO) Public Cloud Company YoY Growth Best-In-Class Growth
  17. 17. …BUT IS NO LONGER THE STRONGEST METRIC 17 2U Appfolio Athenahealth Atlassian Bazaarvoice Benefitfocus Box BroadSoft Castlight Health Cornerstone OnDemand Cvent Fleetmatics Group HubSpot Instructure IntraLinks Jive Software LifeLock LinkedIn LivePerson LogMeIn Marin Software Medidata Solutions Mindbody MobileIron New Relic NetSuite Proofpoint Qualys RealPage RingCentral Salesforce ServiceNow Shopify SPS Commerce The Ultimate Software Group Veeva Wix Workday Xactly Xero Zendesk 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x -10% 0% 10% 20% 30% 40% 50% 2017 Revenue Multiple ’16-’17 Revenue Growth Source: 41 companies in BVP Cloud Index. CapIQ Note: Exclude Twilio as an outlier. Correlation (R2)= 39% 69% 3 years ago Revenue Growth vs Revenue Multiple
  18. 18. DEFINING THE EFFICIENCY SCORE 18 Rule of 40 = % Annual Revenue Growth + % Profit Margins
  19. 19. DEFINING THE EFFICIENCY SCORE 19 Rule of 40 = % Annual Revenue Growth + % Profit Margins Efficiency Score = % Annual CARR Growth + % FCF Margin
  20. 20. INVESTORS ARE NOW FOCUSED ON EFFICIENT GROWTH Efficiency Score vs Revenue Multiple 20 2U Appfolio Athenahealth Atlassian Bazaarvoice Benefitfocus Instructure BroadSoft Castlight Health Cornerstone OnDemand Cvent Fleetmatics Group HubSpot Box IntraLinks Jive Software LifeLock LinkedIn LivePerson LogMeIn Marin Software Medidata Solutions Mindbody MobileIron New Relic NetSuite Proofpoint Qualys RealPage RingCentral Salesforce ServiceNow Shopify SPS Commerce The Ultimate Software Group Veeva Wix Workday Xactly Xero Zendesk 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x -10% 0% 10% 20% 30% 40% 50% 60% 2017 Revenue Multiple ’16-’17 Revenue Growth + ’17 FCF Source: 41 companies in BVP Cloud Index. CapIQ Note: Exclude Twilio as an outlier. Correlation (R2)= 67% +10% efficient growth results in +1.4x Rev Mult
  21. 21. EXAMPLE 1: SHOPIFY HIGH GROWTH + BREAKEVEN FCF 21 Efficiency Score 2013 Efficiency Score 108% 89% 95% 79% 44% 36% -40% -20% 0% 20% 40% 60% 80% 100% 120% IPO - 3Y IPO - 2Y IPO - 1Y IPO IPO + 1Y IPO + 2Y Efficiency FCF Margin Revenue Growth 112% -4% 108% -20% 80% 180% % Revenue Growth % FCF Margin Power $50M ($2)M 2013 Revenue 2013 FCF Source: CapIQ Note: Efficiency score defined as % annual CARR Growth + % FCF Margin
  22. 22. EXAMPLE 2: VEEVA MODEST GROWTH + HIGH FCF 22 Efficiency Score 2013 Efficiency Score 62% 19% 81% 0% 50% 100% % Revenue Growth % FCF Margin Power $210M $39M 2013 Revenue 2013 FCF 117% 134% 81% 62% 45% 50% 0% 20% 40% 60% 80% 100% 120% 140% 160% IPO - 3Y IPO - 2Y IPO - 1Y IPO IPO + 1Y IPO + 2Y Efficiency FCF Margin Revenue Growth Source: CapIQ Note: Efficiency score defined as % annual CARR Growth + % FCF Margin
  23. 23. DIFFERENT STAGES REQUIRE EFFICIENCY SCORES 23 100% 73% 56% 53% 45% 38% 35% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Prior IPO - 3Y IPO - 2Y IPO - 1Y IPO IPO + 1Y IPO + 2Y IPO + 3Y Time % Annual CARR Growth + % FCF Margin 73% 56% 53% 45% 38% 35% 32% Source: 42 companies in the BVP Cloud Index, CapIQ Note: Average efficiency score of the 42 public cloud companies. Efficiency score defined as % annual CARR growth + % FCF margin. Efficiency Score of Public Cloud Companies @ IPO
  24. 24. THE BVP EFFICIENCY RULE – 70 – 50 – 30 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% IPO - 3Y IPO - 3Y IPO - 2Y IPO - 1Y IPO IPO + 1Y IPO + 2Y IPO + 3Y % CARR Growth + % FCF Margin Efficiency Score = % Annual CARR Growth + % FCF Margin 70% 50% 30% EXPANSION ($30-60M ARR) PRE IPO ($60-100M ARR) PUBLIC ($100M+ ARR)
  25. 25. THE BVP EFFICIENCY RULE – 70 – 50 – 30 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% IPO - 3Y IPO - 2Y IPO - 1Y IPO IPO + 1Y IPO + 2Y IPO + 3Y % CARR Growth + % FCF Margin 70% 50% 30% EXPANSION ($30-60M ARR) PRE IPO ($60-100M ARR) PUBLIC ($100M+ ARR) ? Efficiency Score = % Annual CARR Growth + % FCF Margin
  26. 26. THE BVP EFFICIENCY RULE – 70 – 50 – 30 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% IPO - 3Y IPO - 2Y IPO - 1Y IPO IPO + 1Y IPO + 2Y IPO + 3Y % CARR Growth + % FCF Margin 70% 50% 30% EXPANSION ($30-60M ARR) PRE IPO ($60-100M ARR) PUBLIC ($100M+ ARR) MID ($10-30M ARR) Net New ARR Net Cash Burn > 1 EARLY (<$10M ARR) CLTV CAC > 3 Efficiency Score = % Annual CARR Growth + % FCF Margin
  27. 27. KEY TOPICS FOR TODAY 27 • State of the Cloud Industry in the last 12 months • Benchmarking and Best Practices • Predictions
  28. 28. 2015 PREDICTION #1: INDUSTRY CLOUD ON THE RISE 28
  29. 29. 2015 PREDICTION #1: INDUSTRY CLOUD ON THE RISE 29
  30. 30. $9.2B OF INDUSTRY CLOUD ACQUISITIONS & 2 IPOs $4B $2.4B $663M $1.6B $532M $661M (IPO) 30 $616M (IPO) Notable Financings
  31. 31. 2015 PREDICTION #2: CYBERSECURITY, A HOT MARKET 31
  32. 32. 2015 PREDICTION #2: CYBERSECURITY, A HOT MARKET 32
  33. 33. $2.1 trillion PREDICTION #2 - CYBERSECURITY, A HOT MARKET Cost of data breaches globally, 4x more than 20151 Source: (1) Juniper Research, http://www.juniperresearch.com/press/press-releases/cybercrime-cost-businesses-over-2trillion (2) Gartner Inc. http://blogs.wsj.com/venturecapital/2016/02/17/the-daily-startup-increased-spending-in-cybersecurity-drives-funding-surge/
  34. 34. 14$2.1 trillion PREDICTION #2 - CYBERSECURITY, A HOT MARKET Cost of data breaches globally, 4x more than 20151 Of the Cloud 100 were Cybersecurity Companies, the largest share Source: (1) Juniper Research, http://www.juniperresearch.com/press/press-releases/cybercrime-cost-businesses-over-2trillion (2) Gartner Inc. http://blogs.wsj.com/venturecapital/2016/02/17/the-daily-startup-increased-spending-in-cybersecurity-drives-funding-surge/
  35. 35. 14$2.1 trillion Cost of data breaches globally, 4x more than 20151 $170 Billion Of the Cloud 100 were Cybersecurity Companies, the largest share Worldwide Cybersecurity Market by 2020, up from $75.4 B in 20152 PREDICTION #2 - CYBERSECURITY, A HOT MARKET Source: (1) Juniper Research, http://www.juniperresearch.com/press/press-releases/cybercrime-cost-businesses-over-2trillion (2) Gartner Inc. http://blogs.wsj.com/venturecapital/2016/02/17/the-daily-startup-increased-spending-in-cybersecurity-drives-funding-surge/
  36. 36. 38 PREDICTION #3: THE DEVELOPER IS MORE IMPORTANT
  37. 37. 2015 PREDICTION #3: DEVELOPERS ARE THE NEW KID ON THE BLOCK, AND HERE TO STAY 39
  38. 38. NOW THE COOL KID…
  39. 39. APIS TO ACCELERATE YOUR BUSINESS Mapping Payments Communication (Messaging/Voice) Email SSO Customer Engagement Storage 41
  40. 40. 2015 PREDICTION #4: MORE M&AAHEAD
  41. 41. 2015 PREDICTION #4: MORE M&AAHEAD
  42. 42. THE LEGACY PLAYERS ARE…. 47
  43. 43. CORNERED ANIMALS… 45 Classic Innovator’s Dilemma allowed cloud entrants to thrive Too late to build Facing an extinction level event Can’t afford to buy all of what’s needed
  44. 44. ‘NUFF SAID $50.4B 50
  45. 45. ‘NUFF SAID $50.4B
  46. 46. 2015 PREDICTION #5: MOBILE IS A GAME CHANGER FOR THE ENTERPRISE 48
  47. 47. 2015 PREDICTION #5: MOBILE IS A GAME CHANGER FOR THE ENTERPRISE 49
  48. 48. PREDICTION #5: MOBILE IS A GAME CHANGER FOR THE ENTERPRISE 85% Americans between 18-29 >50% Internet usage on mobile vs desktop 80% Workforce are non-desk workers ~EVERYONE IN ENTERPRISE B2B NOW HAS A SMARTPHONE INTERNET USAGE TIPPED TO MOBILE REACHES AN UNTOUCHED WORKFORCE Source: Pew Research Center, April, 2015, “The Smartphone Difference”. Source: eMarketer 9/14 (2008-2010), eMarketer 4/15 (2011-2015). Note: Other connected devices include OTT and game consoles. Mobile includes smartphone and tablet. Usage includes both home and work. Ages 18+; time spent with each medium includes all time spent with that medium, regardless of multitasking. KPCB Internet trends, 2015 Global Mobile Penetration 1995 - 2014 GLOBAL PENETRATION 1 –> 73% 50
  49. 49. EARLY ENTERPRISE MOBILE USE CASES Healthcare Education Safety/Compliance Construction Field Services Retail Sales Events Agriculture SMBs VERTICAL Paper Replacement (Forms/Invoicing) Collaboration HORIZONTAL www.bvp.com/cloud 51
  50. 50. 52
  51. 51. 53
  52. 52. MESSAGING IS THE KILLER MOBILE EXPERIENCE • 2.7MM DAUs • 320 million minutes of active usage per weekday • 800K paid seats weekly active user growth rate4 Source: (1) Business Insider. (2) Velocify., (3) eWeek. (4) TechCrunch, as of April 2016. 54 • The average Millennial (18-24) exchanges an average of 67 text messages per day1 • Text messages have a 98% open rate, while email has only a 20% open rate2 • Over 80% of people use text messaging for business, and 15% said that more than half their messages are for business purposes3
  53. 53. 2016 PREDICTION: SAAS 2.0 BEGINS TO DISRUPT SAAS 1.0 ?
  54. 54. PREDICTION – SAAS 2.0 BEGINS TO DISRUPT SAAS 1.0 HCM is the First Market Phase 0 Phase 1 Phase 2 Phase 1.5 61
  55. 55. 2016 PREDICTION: USE OF DEEP LEARNING & AI IN ENTERPRISE ?
  56. 56. CONSUMER IS AHEAD, BUT ENTERPRISE WILL FOLLOW Photo Recognition Voice Recognition Text Recognition Text RecognitionVoice RecognitionPhoto Recognition
  57. 57. 2016 PREDICTIONS, FROM “CONVENTIONAL WISDOM” TO EMERGING EMERGING CONVENTIONAL WISDOM 7 6 5 4 3 2 1 Deep Learning/ AI Enterprise Mobile SaaS 2.0 Cybersecurity Private M&A Developers Reign Industry Cloud
  58. 58. State of the Cloud Report 2016Byron Deeter & Kristina Shen www.bvp.com/cloud

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