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Confluent CEO Jay Kreps is coming to TC Sessions: SaaS for a fireside chat
As companies process ever-increasing amounts of data, moving it in real time is a huge challenge for organizations. Confluent is a streaming data platform built on top of the open source Apache Kafka project that’s been designed to process massive numbers of events. To discuss this, and more, Confluent CEO and co-founder Jay Kreps will be joining us at TC Sessions: SaaS on Oct 27th for a fireside chat.
Data is a big part of the story we are telling at the SaaS event, as it has such a critical role in every business. Kreps has said in the past the data streams are at the core of every business, from sales to orders to customer experiences. As he wrote in a company blog post announcing the company’s $250 million Series E in April 2020, Confluent is working to process all of this data in real time — and that was a big reason why investors were willing to pour so much money into the company.
“The reason is simple: though new data technologies come and go, event streaming is emerging as a major new category that is on a path to be as important and foundational in the architecture of a modern digital company as databases have been,” Kreps wrote at the time.
The company’s streaming data platform takes a multi-faceted approach to streaming and builds on the open source Kafka project. While anyone can download and use Kafka, as with many open source projects, companies may lack the resources or expertise to deal with the raw open source code. Many a startup have been built on open source to help simplify whatever the project does, and Confluent and Kafka are no different.
Kreps told us in 2017 that companies using Kafka as a core technology include Netflix, Uber, Cisco and Goldman Sachs. But those companies have the resources to manage complex software like this. Mere mortal companies can pay Confluent to access a managed cloud version or they can manage it themselves and install it in the cloud infrastructure provider of choice.
The project was actually born at LinkedIn in 2011 when their engineers were tasked with building a tool to process the enormous number of events flowing through the platform. The company eventually open sourced the technology it had created and Apache Kafka was born.
Confluent launched in 2014 and raised over $450 million along the way. In its last private round in April 2020, the company scored a $4.5 billion valuation on a $250 million investment. As of today, it has a market cap of over $17 billion.
In addition to our discussion with Kreps, the conference will also include Google’s Javier Soltero, Amplitude’s Olivia Rose, as well as investors Kobie Fuller and Casey Aylward, among others. We hope you’ll join us. It’s going to be a thought-provoking lineup.
Buy your pass now to save up to $100 when you book by October 1. We can’t wait to see you in October!
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How Cisco keeps its startup acquisition engine humming
Enterprise startups have several viable exit strategies: Some will go public, but most successful outcomes will be via acquisition, often by one of the highly acquisitive large competitors like Salesforce, Microsoft, Amazon, Oracle, SAP, Adobe or Cisco.
From rivals to “spin-ins,” Cisco has a particularly rich history of buying its way to global success. It has remained quite active, acquiring more than 30 startups over the last four years for a total of 229 over the life of the company. The most recent was Epsagon earlier this month, with five more in its most recent quarter (Q4 FY2021): Slido, Sedona Systems, Kenna Security, Involvio and Socio. It even announced three of them in the same week.
It begins by identifying targets; Cisco does that by being intimately involved with a list of up to 1,000 startups that could be a fit for acquisition.
What’s the secret sauce? How it is going faster than ever? For startups that encounter a company like Cisco, what do you need to know if you have talks that go places with it? We spoke to the company CFO, senior vice president of corporate development, and the general manager and executive vice president of security and collaboration to help us understand how all of the pieces fit together, why they acquire so many companies and what startups can learn from their process.
Cisco, as you would expect, has developed a rigorous methodology over the years to identify startups that could fit its vision. That involves product, of course, but also team and price, all coming together to make a successful deal. From targeting to negotiating to closing to incorporating the company into the corporate fold, a startup can expect a well-tested process.
Even with all this experience, chances are it won’t work perfectly every time. But since Cisco started doing M&A nine years into its history with the purchase of LAN switcher Crescendo Communications in 1993 — leading to its massive switching business today — the approach clearly works well enough that they keep doing it.
It starts with cash
If you want to be an acquisitive company, chances are you have a fair amount of cash on hand. That is certainly the case with Cisco, which currently has more than $24.5 billion in cash and equivalents, albeit down from $46 billion in 2017.
CFO Scott Herren says that the company’s cash position gives it the flexibility to make strategic acquisitions when it sees opportunities.
“We generate free cash flow net of our capex in round numbers in the $14 billion a year range, so it’s a fair amount of free cash flow. The dividend consumes about $6 billion a year,” Herren said. “We do share buybacks to offset our equity grant programs, but that still leaves us with a fair amount of cash that we generate year on year.”
He sees acquisitions as a way to drive top-line company growth while helping to push the company’s overall strategic goals. “As I think about where our acquisition strategy fits into the overall company strategy, it’s really finding the innovation we need and finding the companies that fit nicely and that marry to our strategy,” he said.
“And then let’s talk about the deal … and does it make sense or is there a … seller price point that we can meet and is it clearly something that I think will continue to be a core part of our strategy as a company in terms of finding innovation and driving top-line growth there,” he said.
The company says examples of acquisitions that both drove innovation and top-line growth include Duo Security in 2018, ThousandEyes in 2020 and Acacia Communications this year. Each offers some component that helps drive Cisco’s strategy — security, observability and next-generation internet infrastructure — while contributing to growth. Indeed, one of the big reasons for all these acquisitions could be about maintaining growth.
Playing the match game
Cisco is at its core still a networking equipment company, but it has been looking to expand its markets and diversify outside its core networking roots for years by moving into areas like communications and security. Consider that along the way it has spent billions on companies like WebEx, which it bought in 2007 for $3.2 billion, or AppDynamics, which it bought in 2017 for $3.7 billion just before it was going to IPO. It has also made more modest purchases (by comparison at least), such as MindMeld for $125 million and countless deals that were too small to require them to report the purchase price.
Derek Idemoto, SVP for corporate development and Cisco investments, has been with the company for 100 of those acquisitions and has been involved in helping scout companies of interest. His team begins the process of identifying possible targets and where they fall within a number of categories, such as whether it allows them to enter new markets (as WebEx did), extend their markets (as with Duo Security), or acqui-hire top technical talent and get some cool tech, as they did when they purchased BabbleLabs last year.
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Cisco beefing up app monitoring portfolio with acquisition of Epsagon for $500M
Cisco announced on Friday that it’s acquiring Israeli applications-monitoring startup Epsagon at a price pegged at $500 million. The purchase gives Cisco a more modern microservices-focused component for its growing applications-monitoring portfolio.
The Israeli business publication Globes reported it had gotten confirmation from Cisco that the deal was for $500 million, but Cisco would not confirm that price with TechCrunch.
The acquisition comes on top of a couple of other high-profile app-monitoring deals, including AppDynamics, which the company bought in 2018 for $3.7 billion, and ThousandEyes, which it nabbed last year for $1 billion.
With Epsagon, the company is getting a way to monitor more modern applications built with containers and Kubernetes. Epsagon’s value proposition is a solution built from the ground up to monitor these kinds of workloads, giving users tracing and metrics, something that’s not always easy to do given the ephemeral nature of containers.
As Cisco’s Liz Centoni wrote in a blog post announcing the deal, Epsagon adds to the company’s concept of a full-stack offering in their applications-monitoring portfolio. Instead of having a bunch of different applications monitoring tools for different tasks, the company envisions one that works together.
“Cisco’s approach to full-stack observability gives our customers the ability to move beyond just monitoring to a paradigm that delivers shared context across teams and enables our customers to deliver exceptional digital experiences, optimize for cost, security and performance and maximize digital business revenue,” Centoni wrote.
That experience point is particularly important because when an application isn’t working, it isn’t happening in a vacuum. It has a cascading impact across the company, possibly affecting the core business itself and certainly causing customer distress, which could put pressure on customer service to field complaints, and the site reliability team to fix it. In the worst case, it could result in customer loss and an injured reputation.
If the application-monitoring system can act as an early warning system, it could help prevent the site or application from going down in the first place, and when it does go down, help track the root cause to get it up and running more quickly.
The challenge here for Cisco is incorporating Epsagon into the existing components of the application-monitoring portfolio and delivering that unified monitoring experience without making it feel like a Frankenstein’s monster of a solution globbed together from the various pieces.
Epsagon launched in 2018 and has raised $30 million. According to a report in the Israeli publication, Calcalist, the company was on the verge of a big Series B round with a valuation in the range of $200 million when it accepted this offer. It certainly seems to have given its early investors a good return. The deal is expected to close later this year.
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Cyber risk startup Safe Security lands $33M from UK telco BT
Safe Security, a Silicon Valley cyber risk management startup, has secured a $33 million investment from U.K. telco BT.
Founded in 2012, Safe Security — formerly known as Lucideus — helps organizations measure and mitigate enterprise-wide cyber risk using its security assessment framework for enterprises (SAFE) platform. The service, which is used by a number of companies, including Facebook, Softbank and Xiaomi, helps businesses understand their likelihood of suffering a major cyberattack, calculates a financial cost to customers’ risks and provides actionable insight on the steps that can be taken to address them.
This funding round saw participation from Safe Security’s existing investors, including former Cisco chairman and chief executive John Chambers, and brings the total amount raised by Safe Security to $49.2 million.
BT said the investment, which is its first major third-party investment in cybersecurity since 2006, reflected its plans to grow rapidly in the sector. Philip Jansen, BT CEO said: “Cybersecurity is now at the top of the agenda for businesses and governments, who need to be able to trust that they’re protected against increasing levels of attack.
“Already one of the world’s leading providers in a highly fragmented security market, this investment is a clear sign of BT’s ambition to grow further.”
The startup’s co-founder and chief executive Saket Modi said he was “delighted” to be working with BT.
“By aligning BT’s global reach and capabilities with SAFE’s ability to provide real-time visibility on cyber risk posture, we are going to fundamentally change how security is measured and managed across the globe,” he said.
As part of the investment, which will see Safe Security double its engineering team by the end of the year, BT will combine the SAFE platform with its managed security services, and gain exclusive rights to use and sell SAFE to businesses and public sector bodies in the U.K. BT will also work collaboratively with Safe Security to develop future products, according to an announcement from the company.
Safe Security’s competitors include UpGuard, Exabeam and VisibleRisk.
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Cisco strikes again grabbing threat assessment tool Kenna Security as third acquisition this week
Cisco has been busy on the acquisition front this week, and today the company announced it was buying threat assessment platform Kenna Security, the third company it has purchased this week. The two companies did not disclose the purchase price.
With Kenna, Cisco gets a startup that uses machine learning to sort through the massive pile of threat data that comes into a security system on a daily basis and prioritizes the threats most likely to do the most damage. That could be a very useful tool these days when threats abound and it’s not always easy to know where to put your limited security resources. Cisco plans to take that technology and integrate into its SecureX platform.
Gee Rittenhouse, senior vice president and general manager of Cisco’s Security Business Group, wrote in a blog post announcing the deal with Kenna that his company is getting a product that brings together Cisco’s existing threat management capabilities with Kenna’s risk-based vulnerability management skills.
“That is why we are pleased to announce our intent to acquire Kenna Security, Inc., a recognized leader in risk-based vulnerability prioritization with over 14 million assets protected and over 12.7 billion managed vulnerabilities. Using data science and real-world threat intelligence, it has a proven ability to bring data in from a multi-vendor environment and provide a comprehensive view of IT vulnerability risk,” Rittenhouse wrote in the blog post.
The security sphere has been complex for a long time, but with employees moving to work from home because of COVID, it became even more pronounced in the last year. In a world where the threat landscape changes quickly, having a tool that prioritizes what to look at first in its arsenal could be very useful.
Kenna Security CEO Karim Toubba gave a typical executive argument for being acquired: it gives him a much bigger market under Cisco than his company could have built alone.
“Now is our opportunity to change the industry: once the acquisition is complete, we will be one step closer to delivering Kenna’s pioneering Risk-Based Vulnerability Management (RBVM) platform to the more than 7,000 customers using Cisco SecureX today. This single action exponentially increases the impact Kenna’s technology will have on the way the world secures networks, endpoints and infrastructures,” he wrote in the company blog.
The company, which launched in 2010, claims to be the pioneer in the RBVM space. It raised over $98 million on a $320 million post-money valuation, according to PitchBook data. Customers include HSBC, Royal Bank of Canada, Mattel and Quest Diagnostics.
For those customers, the product will cease to be standalone at some point as the companies work together to integrate Kenna technology into the SecureX platform. When that is complete, the standalone customers will have to purchase the Cisco solution to continue using the Kenna tech.
Cisco has had a busy week on the acquisition front. It announced its intent to acquire Sedona Systems on Tuesday, Socio Labs on Wednesday and this announcement today. That’s a lot of activity for any company in a single week. The deal is expected to close in Cisco Q4 FY 2021. Kenna’s 170 employees will be joining the Security Business Group led by Rittenhouse.
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Cisco to acquire Indy startup Socio to bring hybrid events to Webex
Cisco announced this morning that it intends to acquire Indianapolis-based startup Socio, which helps plan hybrid in-person and virtual events. The two companies did not share the purchase price.
Socio provides a missing hybrid event management component for the company to add to its Webex platform. The goal appears to be to combine this with the recent purchase of Slido and transform Webex from an application mostly for video meetings into a more comprehensive event platform.
“As part of Cisco Webex’s vision to deliver inclusive, engaging and intelligent meeting and event experiences, the acquisition of Socio Labs complements Cisco’s recent acquisition of Slido, an industry-leading audience engagement tool, which together will create a comprehensive, cost-effective and easy-to-use event management solution [ … ],” the company explained in a statement.
The impact of the pandemic was not lost on Cisco, and it’s clear that as we can foresee going back to live events, having the ability to combine it with a virtual experience means that you can open up your event to a much wider audience beyond those who can attend in person. That’s likely not something that’s going away, even after we get past COVID.
Jeetu Patel, SVP and GM for security and collaboration at Cisco says that the future of work is going to be hybrid, whether it’s for work meetings or larger events and Cisco is making this acquisition to expand the use cases for the Webex platform.
“Whether it’s a 1:1 call, a small team huddle, a group meeting or a large external event, we want to remove friction and help people engage with each other in an inclusive manner. Slido allows for every voice to be heard — even when you’re not talking. Socio allows for getting your voice heard by a large number of people,” Patel said.
And the company believes that Webex provides the platform to make it all happen. “It’s a really potent combination of technology to make human interactions more engaging, no matter the type of conversation,” he added.
Brent Leary, founder and principal analyst at CRM Essentials, says that it’s a smart move to take advantage of the changing events landscape and that this acquisition helps make Cisco a serious player in this space.
“As we get closer to a post-pandemic world, the need to create hybrid event experiences is going to quickly accelerate as people start venturing out to attend physical events. So having an event stack that combines local event support/participation with tools to integrate a broader virtual audience will be the future of event management,” Leary told me.
Socio was founded in 2016 and raised around $7 million in investment capital, according to Crunchbase data. It has a prestigious list of enterprise customers that includes Microsoft, Google, Jet Blue, Greenpeace, PepsiCo and Hyundai.
The deal is expected to close in Q4 of FY2021. When it does close, Socio’s 135 employees will be joining Cisco. The plan is to incorporate Socio’s tooling into the Webex platform while allowing it to continue as a stand-alone product, according to a Cisco spokesperson.
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Google’s Anthos multicloud platform gets improved logging, Windows container support and more
Google today announced a sizable update to its Anthos multicloud platform that lets you build, deploy and manage containerized applications anywhere, including on Amazon’s AWS and (in preview) on Microsoft Azure.
Version 1.7 includes new features like improved metrics and logging for Anthos on AWS, a new Connect gateway to interact with any cluster right from Google Cloud and a preview of Google’s managed control plane for Anthos Service Mesh. Other new features include Windows container support for environments that use VMware’s vSphere platform and new tools for developers to make it easier for them to deploy their applications to any Anthos cluster.
Today’s update comes almost exactly two years after Google CEO Sundar Pichai originally announced Anthos at its Cloud Next event in 2019 (before that, Google called this project the “Google Cloud Services Platform,” which launched three years ago). Hybrid and multicloud, it’s fair to say, takes a key role in the Google Cloud roadmap — and maybe more so for Google than for any of its competitors. Recently, Google brought on industry veteran Jeff Reed to become the VP of Product Management in charge of Anthos.
Reed told me that he believes that there are a lot of factors right now that are putting Anthos in a good position. “The wind is at our back. We bet on Kubernetes, bet on containers — those were good decisions,” he said. Increasingly, customers are also now scaling out their use of Kubernetes and have to figure out how to best scale out their clusters and deploy them in different environments — and to do so, they need a consistent platform across these environments. He also noted that when it comes to bringing on new Anthos customers, it’s really those factors that determine whether a company will look into Anthos or not.
He acknowledged that there are other players in this market, but he argues that Google Cloud’s take on this is also quite different. “I think we’re pretty unique in the sense that we’re from the cloud, cloud-native is our core approach,” he said. “A lot of what we talk about in [Anthos] 1.7 is about how we leverage the power of the cloud and use what we call “an anchor in the cloud” to make your life much easier. We’re more like a cloud vendor there, but because we support on-prem, we see some of those other folks.” Those other folks being IBM/Red Hat’s OpenShift and VMware’s Tanzu, for example.
The addition of support for Windows containers in vSphere environments also points to the fact that a lot of Anthos customers are classical enterprises that are trying to modernize their infrastructure, yet still rely on a lot of legacy applications that they are now trying to bring to the cloud.
Looking ahead, one thing we’ll likely see is more integrations with a wider range of Google Cloud products into Anthos. And indeed, as Reed noted, inside of Google Cloud, more teams are now building their products on top of Anthos themselves. In turn, that then makes it easier to bring those services to an Anthos-managed environment anywhere. One of the first of these internal services that run on top of Anthos is Apigee. “Your Apigee deployment essentially has Anthos underneath the covers. So Apigee gets all the benefits of a container environment, scalability and all those pieces — and we’ve made it really simple for that whole environment to run kind of as a stack,” he said.
I guess we can expect to hear more about this in the near future — or at Google Cloud Next 2021.
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VergeSense raises $12M Series B for its workplace analytics service
VergeSense, a startup that uses machine vision to help businesses better understand how their office spaces are being utilized, today announced that it has raised a $12 million Series B funding round led by Tola Capital.
Including the company’s $9 million Series A round, which it raised earlier this year, VergeSense has now raised a total of $22.6 million. Previous investors include JLL Spark, Allegion Ventures, MetaProp, Y Combinator, Pathbreaker Ventures and West Ventures.
Given the COVID-19 pandemic, it’s maybe no surprise that VergeSense would be seeing quite a bit of demand for its service and sensors. While the company was seeing strong growth since its launch in 2017, the pandemic is accelerating the move to smarter office spaces. As VergeSense CEO and co-founder Dan Ryan told me, over the course of the last few months, the company added new features to help businesses manage social distancing, for example, and to better understand where in a given office they should intensify their cleaning protocols.
VergeSense sensor
It’s also becoming increasingly clear that even after we get the pandemic under control, office spaces — and office work — will look radically different. “It’s going to be a sort of a hybrid model of working, which, pre-pandemic, was already something that was happening — companies were experimenting with this — but now it’s been turbocharged,” Ryan said. “We never anticipated any of this, but I think it’s a great example of the possibilities that you can help support when you have this intelligent infrastructure all around you that allows you to almost program the physical world.”
Another new feature the company launched this year allows its tools to register when a seat is likely occupied, even though nobody is in it right now, by looking for backpacks and other signs that would signal that a desk is in use.
VergeSense currently has customers in 29 countries. These include the likes of Shell, Quicken Loans, Roche, Cisco and Telus. In total, the company’s tools watch more than 40 million square feet of space now.
Image Credits: VergeSense
As Ryan told me, the company saw quite a bit of inbound interest from investors this year and the team wanted to capitalize on the current trends. “As we look forward to ’21, especially now that this transition to an agile hybrid seating model is going to be turbocharged, we were preparing for and planning for additional growth there as well. So this was sort of opportunistic opportunity to team up with Tola to help go to the next level,” Ryan explained.
The company plans to use the new funding to continue to work on its core computer vision capabilities and hardware, but as Ryan noted, one of the focus areas for VergeSense in 2021 will also include new partnerships and integrations with tools for booking desks and rooms, as well as building automation systems. To do so, it plans to double its headcount and hire across all departments.
VergeSense is obviously not the only company playing in this space. Swiss startup Locatee, for example, raised a Series A round for its service earlier this year, though it uses network data to measure occupancy and not the kind of dedicated sensors that VergeSense is developing. Other players include the likes of Density, Basking and SteerPath.
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Fylamynt raises $6.5M for its cloud workflow automation platform
Fylamynt, a new service that helps businesses automate their cloud workflows, today announced both the official launch of its platform as well as a $6.5 million seed round. The funding round was led by Google’s AI-focused Gradient Ventures fund. Mango Capital and Point72 Ventures also participated.
At first glance, the idea behind Fylamynt may sound familiar. Workflow automation has become a pretty competitive space, after all, and the service helps developers connect their various cloud tools to create repeatable workflows. We’re not talking about your standard IFTTT- or Zapier -like integrations between SaaS products, though. The focus of Fylamynt is squarely on building infrastructure workflows. While that may sound familiar, too, with tools like Ansible and Terraform automating a lot of that already, Fylamynt sits on top of those and integrates with them.
Image Credits: Fylamynt
“Some time ago, we used to do Bash and scripting — and then [ … ] came Chef and Puppet in 2006, 2007. SaltStack, as well. Then Terraform and Ansible,” Fylamynt co-founder and CEO Pradeep Padala told me. “They have all done an extremely good job of making it easier to simplify infrastructure operations so you don’t have to write low-level code. You can write a slightly higher-level language. We are not replacing that. What we are doing is connecting that code.”
So if you have a Terraform template, an Ansible playbook and maybe a Python script, you can now use Fylamynt to connect those. In the end, Fylamynt becomes the orchestration engine to run all of your infrastructure code — and then allows you to connect all of that to the likes of DataDog, Splunk, PagerDuty Slack and ServiceNow.
Image Credits: Fylamynt
The service currently connects to Terraform, Ansible, Datadog, Jira, Slack, Instance, CloudWatch, CloudFormation and your Kubernetes clusters. The company notes that some of the standard use cases for its service are automated remediation, governance and compliance, as well as cost and performance management.
The company is already working with a number of design partners, including Snowflake.
Fylamynt CEO Padala has quite a bit of experience in the infrastructure space. He co-founded ContainerX, an early container-management platform, which later sold to Cisco. Before starting ContainerX, he was at VMWare and DOCOMO Labs. His co-founders, VP of Engineering Xiaoyun Zhu and CTO David Lee, also have deep expertise in building out cloud infrastructure and operating it.
“If you look at any company — any company building a product — let’s say a SaaS product, and they want to run their operations, infrastructure operations very efficiently,” Padala said. “But there are always challenges. You need a lot of people, it takes time. So what is the bottleneck? If you ask that question and dig deeper, you’ll find that there is one bottleneck for automation: that’s code. Someone has to write code to automate. Everything revolves around that.”
Fylamynt aims to take the effort out of that by allowing developers to either write Python and JSON to automate their workflows (think “infrastructure as code” but for workflows) or to use Fylamynt’s visual no-code drag-and-drop tool. As Padala noted, this gives developers a lot of flexibility in how they want to use the service. If you never want to see the Fylamynt UI, you can go about your merry coding ways, but chances are the UI will allow you to get everything done as well.
One area the team is currently focusing on — and will use the new funding for — is building out its analytics capabilities that can help developers debug their workflows. The service already provides log and audit trails, but the plan is to expand its AI capabilities to also recommend the right workflows based on the alerts you are getting.
“The eventual goal is to help people automate any service and connect any code. That’s the holy grail. And AI is an enabler in that,” Padala said.
Gradient Ventures partner Muzzammil “MZ” Zaveri echoed this. “Fylamynt is at the intersection of applied AI and workflow automation,” he said. “We’re excited to support the Fylamynt team in this uniquely positioned product with a deep bench of integrations and a nonprescriptive builder approach. The vision of automating every part of a cloud workflow is just the beginning.”
The team, which now includes about 20 employees, plans to use the new round of funding, which closed in September, to focus on its R&D, build out its product and expand its go-to-market team. On the product side, that specifically means building more connectors.
The company offers both a free plan as well as enterprise pricing and its platform is now generally available.
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Which emerging technologies are enterprise companies getting serious about in 2020?
Startups need to live in the future. They create roadmaps, build products and continually upgrade them with an eye on next year — or even a few years out.
Big companies, often the target customers for startups, live in a much more near-term world. They buy technologies that can solve problems they know about today, rather than those they may face a couple bends down the road. In other words, they’re driving a Dodge, and most tech entrepreneurs are driving a DeLorean equipped with a flux-capacitor.
That situation can lead to a huge waste of time for startups that want to sell to enterprise customers: a business development black hole. Startups are talking about technology shifts and customer demands that the executives inside the large company — even if they have “innovation,” “IT,” or “emerging technology” in their titles — just don’t see as an urgent priority yet, or can’t sell to their colleagues.
How do you avoid the aforementioned black hole? Some recent research that my company, Innovation Leader, conducted in collaboration with KPMG LLP, suggests a constructive approach.
Rather than asking large companies about which technologies they were experimenting with, we created four buckets, based on what you might call “commitment level.” (Our survey had 211 respondents, 62% of them in North America and 59% at companies with greater than $1 billion in annual revenue.) We asked survey respondents to assess a list of 16 technologies, from advanced analytics to quantum computing, and put each one into one of these four buckets. We conducted the survey at the tail end of Q3 2020.
Respondents in the first group were “not exploring or investing” — in other words, “we don’t care about this right now.” The top technology there was quantum computing.
Bucket #2 was the second-lowest commitment level: “learning and exploring.” At this stage, a startup gets to educate its prospective corporate customer about an emerging technology — but nabbing a purchase commitment is still quite a few exits down the highway. It can be constructive to begin building relationships when a company is at this stage, but your sales staff shouldn’t start calculating their commissions just yet.
Here are the top five things that fell into the “learning and exploring” cohort, in ranked order:
- Blockchain.
- Augmented reality/mixed reality.
- Virtual reality.
- AI/machine learning.
- Wearable devices.
Technologies in the third group, “investing or piloting,” may represent the sweet spot for startups. At this stage, the corporate customer has already discovered some internal problem or use case that the technology might address. They may have shaken loose some early funding. They may have departments internally, or test sites externally, where they know they can conduct pilots. Often, they’re assessing what established tech vendors like Microsoft, Oracle and Cisco can provide — and they may find their solutions wanting.
Here’s what our survey respondents put into the “investing or piloting” bucket, in ranked order:
- Advanced analytics.
- AI/machine learning.
- Collaboration tools and software.
- Cloud infrastructure and services.
- Internet of things/new sensors.
By the time a technology is placed into the fourth category, which we dubbed “in-market or accelerating investment,” it may be too late for a startup to find a foothold. There’s already a clear understanding of at least some of the use cases or problems that need solving, and return-on-investment metrics have been established. But some providers have already been chosen, based on successful pilots and you may need to dislodge someone that the enterprise is already working with. It can happen, but the headwinds are strong.
Here’s what the survey respondents placed into the “in-market or accelerating investment” bucket, in ranked order:
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