Episode #65. Hey hey 👋🏼

Your week was busy? Mine as well! You did not have time to read much? Do not worry, The Timestamp is here to help!

Here are 5 new great reads you might have missed over the past few days. I am doing my best to make your Sunday a day you will remember as being a great day. Get ready! Here is our catch of the week:

Good forecast for cloud companies 🌤
Sequoia Capital > Not time to panic but…
Unblock your life
7 CEO tips leading to performance
Addressability vs cookies 🍪

#1. Bessemer Report: State of the Cloud 2022 ☁️

TL;DR From this article 👉 State of the cloud 2022 published by Bessemer Venture Partners on May 10, 2022.

Despite inflation and Saas valuations being hit, cloud companies still exhibit strong fundamentals (e.g., 41% average growth rate, 71% average gross margin, 45% average efficiency score.)

The Saas model with an S&M payback of 12 months is still very interesting and valued at 15x ARR.

3 trends are powering cloud services:

Sensitive data on the cloud (health, finance, or customer data),
VPC aka. Virtual Private Clouds > makes it easier "for SaaS companies to serve a wider range of customers that may prefer to keep certain sensitive data or applications in a VPC."
Middleware emerges and brings the power of the cloud to the data, wherever it may be.

Bessemer predicts that :

Indirect monetization as the First Act >> Mostly applies to BtoC SaaS business and uses monetization APIs or implement a freemium model to attract customers.
The cloud goes to marketplaces >> Google, Amazon, Microsoft, and Red Hat "provide value to both buyers who want to consolidate spending with their cloud providers and gain economies of scale, and SaaS sellers, who want to streamline the procurement process and access larger budgets. Cloud marketplaces can serve as powerful sales and fulfillment channels for any SaaS companies that sell into enterprises with substantial cloud spend."

Cloud marketplaces are still nascent, but in 2021, marketplace transactions grew an estimated 70% to $4 billion, which is 3x faster growth than the public cloud at large. Selling through marketplaces is a growing trend.

Last but not least, the new KPI to evaluate the success of a startup will not be giant valuations anymore as the world now counts more than a thousand Unicorns (companies being valued at > 1bn$ with sometimes ARR < 10m$). Becoming a Centaur -reaching 100m$ in ARR- is now the new target; "While 520 unicorns were born in 2021, ~60 private cloud businesses reached Centaur status in that same year" incl. Dataiku 🇫🇷. With 150 Centaurs globally, they become 7x more rare than Unicorns.

#2. Bessemer Report: State of the Cloud 2022 ☁️

TL;DR From a presentation at Founder All Hands 👉 Adapting to Endure published Sequoia Capital in May 2022.

For startups, time has come to reassess... not to panick. Develop a "mindset to respond with intention rather than regret".

The market downturn will likely impact consumer behavior, the labor market, and more which means that the recovery will take much longer that expected.

Inflation and the prospect of 5-year forward inflation are today at the highest levels in decades.

First, when capital was free, the best-performing companies were capital intensive. Now that money is expensive, these have become the worst-performing companies.

61% of software, Internet and Fintech companies are now trading below pre-2020 pandemic levels.

Growth at all costs is no longer being seen as success.

The rule that applies in any market condition is to build consistent growth with disciplined financial management that translates into growing margins.

Companies that move the quickest have the most runway and are most likely to avoid a death spiral.

Here is the advice that Sequoia gives to founders:

Time to confront your fear with courage. Courage is a decision.
Prepare your team. Align your team and ask for commitment.
Time to lighten the lifeboat and concentrate all investment in the future.
Constraints create creativity.
As a leader, you have to Communicate with Conviction, Confidence, and Calmness.

And Sequoia reminds founders of fundamentals :

Simplicity scales, complexity doesn't,
Speed is one of the greatest business strategies,
Double down on your top talent,
Alignment over agreement,
Tighten up value proposition to drive sales, and bring either 1 of those 3 benefits to your customers/prospects: more revenue, more savings, less risk.

#3. Don’t stop yourself

TL;DR From this article 👉 You may be stopping yourself from creating your own life published by Marshall Goldsmith in his newsletter The Earned Life on April 21, 2022. Curation by Patrick Kervern.

For the first time in history, people have multiple choices on how to lead a life but society is totally unprepared for it.

Freedom and mobility create what the American psychologist Barry Schwartz famously described as “the paradox of choice.” That is, we do better with fewer choices, not more.

Faced with thirty-nine flavors of ice cream, we often make a disappointing choice.

The first active choice is to escape inertia. Our default response in life is not to experience meaning or happiness. Our default response is to experience inertia.

Appreciating our agency over inertia’s impact can teach us how to shape it into a positive force.

#4. 7 tips for CEOs leading to performance

TL;DR From this Twitter thread 👉 Every startup CEO wants a high-performance culture published by Greg Moran on May 10, 2022.

Greg Moran ✈️ @EvergreenMEP

Every startup CEO wants a high performance culture. You can build it with these 7 simple steps.

Here is a method to develop a high-performance culture in a company:

Remove low performers
Build a talent pipeline
Raise hiring standards
Communicate KPIs
Discuss failures
Reduce initiatives
Delegate goals instead of tasks

Most companies have too many goals > Narrow the goals and initiatives and communicate them constantly.

Communicate KPI progress transparently and frequently is a must. Monthly cadence minimum, weekly for high growth or companies in crisis.

This also means performance (only) comes with (team) communication.

#5. Cookies & addressability 🍪

TL;DR From this article 👉 The future of addressability = $100B published by Evgeny Popov on January 25, 2022.

(Apologies if this last section is a bit techy; it will give you a feel of my week life 😎).

Looking at the future of advertising and marketing technologies, there is one word that you cannot ignore: addressability.

Addressability is the capacity for an entity to be targeted and found.

Addressability is simply what connects advertisers (brands) to publishers (media companies); the clock is ticking as most methods that were being used to date to activate an audience, and measure the effectiveness of an ad strategy will soon be obsolete with the privacy regulations drastically evolving (aka the end of third party cookies).

« Proliferation of clean rooms and walled garden environments will grow at a greater velocity than ever; however, it will not solve for mid to long-tail publishers who don’t have enough scale to invest in cloud infrastructure.”

SSP (supply-side platforms) do have a unique opportunity to provide solutions for site conglomerates (alliances).

Two options may guide different buying strategies going forward:

buy to walled gardens (YouTube, Meta etc) or
buy audiences on the open web using the following tactics:

2.1 Pseudonymization
2.2 Authenticated traffic
2.3 Interest-based ads (IBAs)
2.4 Signal targeting (aka contextual).

2022 is the year of testing as the solutions we just listed are somewhat new and embark their pros and cons.

How will the 2023 advertising budgets get allocated between known PII (Personal Identifiable Information in 1 & 2 ) and behavioral targeting 3 & 4).

Or will it go massively to walled gardens… time will tell.

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See you next Sunday!

The Timestamp

Bessemer about Cloud in 2022 ☁️- Sequoia…