Best printers for Home

Best Mixer Grinder

Best wired Earphones

Best 43 Inch TV in India

Best Wi Fi Routers

Best Home Theatre in India

Smart Watch under 5000

Best Laptops for Education

Best Laptop for Students

<ul class="summary-list"><li>A changing of the guard is underway at Boston-based venture capital firm Underscore VC.</li><li>Lily Lyman, a stalwart supporter of enterprise startups, has been identified as the next leader.</li></ul><p><a target="_blank" href="https://www.businessinsider.com/boston-venture-capital-vcs-startup-investors-new-england-2023-10#lily-lyman-underscore-vc-34">Lily Lyman</a>, a partner at the early-stage firm Underscore, has been known to lace up her cleats to chase a deal.</p><p>In her second year as a principal, she spent months courting founder Mike Greene to invest in a round of funding. His startup, Hi Marley, allows insurance providers to text with customers, and it had several name-brand firms circling. In her final attempt to win the deal, Lyman offered to coach his 10-year-old daughter's lacrosse team. She played midfield for <a target="_blank" href="https://www.businessinsider.com/harvard-freshman-what-my-first-day-of-classes-was-like-2023-9">Harvard University</a>.</p><p>"As part of the term sheet, she included a picture of her in full lacrosse gear, mouthpiece in," Greene said.</p><p>She won the deal, and Greene took her up on the offer.</p><p>The average founder in the Valley might not know Lyman, but she's become a force in <a target="_blank" href="https://www.businessinsider.com/boston-startups-outpace-new-york-funding-carta-data-shows-2024-2">Boston's startup scene</a> and the wider world of early-stage investing. She arrived at Underscore after four years at <a target="_blank" href="https://www.businessinsider.com/layoff-angst-meta-employees-face-tough-reviews-reorgs-2024-3">Facebook</a>, where she worked with telecom companies worldwide to bring a hundred million new users to the app. The former growth hacker has made a name for herself over the past six years as an ardent backer of <a target="_blank" href="https://www.businessinsider.com/future-of-work">future-of-work </a>software, including companies like <a target="_blank" href="https://www.businessinsider.com/the-19-most-exciting-insurance-startups-europe-according-to-vcs-2023-5">insurtech</a> startup Hi Marley, the events business Goldcast, and the phone-answering service Slang.ai — all of which graduated from seed to early stage.</p><p>Now, the weight of Underscore's future falls on Lyman as she ascends to a more substantial role. The nine-year-old firm is undergoing a generational transition, Business Insider has learned, positioning Lyman as its next leader.</p><p>The succession plan has been in progress for more than a year since founder Michael Skok <a target="_blank" href="https://mjskok.com/the-truth-is-always-best">suffered a brain tumor</a> and stepped back from investing. Skok's cofounder <a target="_blank" href="https://www.bizjournals.com/boston/news/2023/11/20/john-pearce-massachusetts-boston-tech-obit.html">John Pearce</a>, who previously served as chief executive of cloud giant Demandware, died unexpectedly at age 69 last fall.</p><p>Lyman's promotion to managing partner is a boon for Underscore, known locally for its stalwart support of Boston's founders — about half of its capital flows into the region, according to Lyman — but flies under the radar of distant entrepreneurs. Her expertise and sterling reputation among founders she invests in give her the potential to raise the firm's profile to new heights.</p><p>Speaking to people who know Lyman, it was clear that her peers already looked to her as the face of Underscore.</p><p>"I didn't have to tell everybody, 'I think we should appoint Lily,'" said Skok. "Leaders are not appointed, they're acknowledged. And Lily is the acknowledged leader."</p><h2>The six degrees of Lily Lyman</h2><p>On a frigid day in Boston, I met Lyman at a Japanese cafe near the Old State House. The venture capitalist, wearing a cherry red cardigan and <a target="_blank" href="https://www.businessinsider.com/guides/tech/best-apple-watch">Apple Watch</a>, cracked open a notebook and set it beside an iced coffee. Before we began, she confessed she was "not interesting enough for this."</p><p>Lyman is modest but not meek. She said being a middle child made her fiercely competitive as a young gymnast and a college athlete. Her partner Skok recalled her gusto during a company offsite, saying, "Lily would make damn sure she wins the ping-pong tournament."</p><div type="image" title="Lily Lyman, a partner at Underscore, poses for a photo inside the firm's trendy office at the Old State House in Boston." height="2001" width="2668" msid="108267494" hostid="261" sizebytes="171008"></div><p>Lyman's Facebook credentials could have given her a ticket to many venture firms located down the road in Menlo Park. But a friend, <a target="_blank" href="https://www.businessinsider.com/top-startup-founders-who-also-invest-in-other-startups-2022-7">Alessandra Henderson</a>, a founder of the menopause care provider <a target="_blank" href="https://www.businessinsider.com/35-most-promising-femtech-startups-investors-women-health-2022-10#elektra-health-11">Elektra Health</a>, encouraged her to meet Underscore on the other side of the country. Lyman was in her first trimester of pregnancy when she took a red-eye flight to attend one of its events.</p><p>In a hotel conference room buzzing with participants from the Boston tech scene, Lyman got a taste of Underscore's secret sauce. The <a target="_blank" href="https://underscore.vc/core-community/">Core Community</a> is an invite-only coalition of hundreds of Boston's leading entrepreneurs, executives, and tech experts, that serves to provide founders with the resources they need to build an enduring business. For their support — and deal flow — they get carried interest in the fund or a share of profits.</p><p>"The thesis is that if you get the right people around the business at the right time, it'll change the trajectory of the business," Lyman said. "People are everything."</p><p>Since taking the job, Lyman has only increased her reach. She found a friend and mentor in the <a target="_blank" href="https://www.businessinsider.com/jpmorgan-expanding-tech-vc-life-science-team-hiring-banking-interview-2021-5">head of venture capital at JPMorgan, Pamela Aldsworth</a>; she serves as a leader of the Boston chapter of All Raise and the New England Venture Capital Association; and she fosters the firm's relationships with funds like Dorm Room Fund, MIT Sandbox, and the Allston Venture Fund at Harvard.</p><p>"Lily is a gem — a prime example of Boston serving as a talent magnet, even for those wayward souls who temporarily venture West," said <a target="_blank" href="https://www.businessinsider.com/boston-venture-capital-vcs-startup-investors-new-england-2023-10#jeffrey-bussgang-flybridge-capital-partners-8">Jeff Bussgang</a>, a cofounder and general partner at Boston's Flybridge Capital Partners.</p><div type="image" title="Lily Lyman is a general partner at Underscore VC." height="2001" width="2668" msid="108267497" hostid="261" sizebytes="183164"></div><p>Greene of Hi Marley says Lyman is a force on the cap table, helping to recruit every person in the executive suite. She also introduced Greene to <a target="_blank" href="https://www.businessinsider.com/gordon-ritter-emergence-capital-founder-interview-2018-2">Gordon Ritter</a> at Emergence Capital, who led Hi Marley's Series B round. Greene jokes that Lyman has six degrees of separation from anyone in tech, styling her as a Kevin Bacon of her field.</p><p>"Nobody fosters community like Lily Lyman," he said.</p><h2>As Lyman steps up, so does Underscore</h2><p>Underscore is moving into its next phase during <a target="_blank" href="https://www.businessinsider.com/2024-year-of-vc-reckoning-2024-2">a reckoning for venture capital</a>. The heady days of the pandemic have led to a global correction in the private markets, making it harder for funds to raise money from outside investors. Firms are <a target="_blank" href="https://www.businessinsider.com/venture-capital-fundraising-decline-leads-to-layoffs-restructuring-quitting-2024-1">scaling back</a> the size of funds they planned. A rare few are going out of business.</p><p>In December, OpenView Venture Partners, located just minutes from Underscore, said it would no longer raise funds from outside investors in a sudden move.</p><p>Underscore is now raising $50 million for a third fund, according to documents filed with the SEC, in one of the most challenging fundraising markets in a decade.</p><p>Underscore is targeting a much smaller fund size than the last $140 million vehicle, which closed in 2018. Some might suggest Underscore's investors, or limited partners, are churning after the firm's two founders departed. But, two people familiar say the fund size reflects a strategy shift.</p><div type="image" title="Employees of Underscore for a photo inside the firm's trendy office at the Old State House in Boston." height="2001" width="2668" msid="108267499" hostid="261" sizebytes="471554"></div><p>In the past, some partners went out of their lane to invest at later stages. Skok said he "broke every rule in our book" when he backed <a target="_blank" href="https://underscore.vc/blog/why-we-invested-in-coda/">Coda</a>, a Greylock-backed documents editor, at its Series C. Some of the younger partners pushed back against the multistage strategy, saying that the best way to hone their craft was to focus on seed, Skok said.</p><p>The latest, slimmer fund reflects a more focused strategy on pre-seed and seed, two people familiar with the strategy said. A smaller fund also means the firm can get better multiples on the invested capital, and it doesn't come under pressure to grow the team or the number of deals it executes. Underscore's sweet spot is 20 to 25 rounds per fund, and it expects to continue this pace, one person said.</p><p>While Lyman was unable to comment on the fundraise, she says she's excited about what's happening at the seed stage right now. These market conditions are breeding a class of founders who know their space well and have the discipline to build a lasting business. They will embrace new technologies like artificial intelligence, and will hire some of the talent streaming out of tech layoffs.</p><p>"A lot of the 'wantrepreneurs' are not coming out to play in this market dynamic, which I actually think is a net positive thing. It helps you filter out," Lyman said. "There's certainly a lot of noise from AI hype, but it is a fundamental shift in technology that is reinventing the way that we do things. It is now allowing us to do things with technology that we couldn't do before."</p><p>Being at the helm of Underscore, especially in a <a target="_blank" href="https://www.businessinsider.com/venture-capital-funding-crunch-will-continue-2024-2023-12">thorny fundraising market</a>, will test Lyman's mettle. However, her belief that the right people, at the right time, can change the trajectory of a business may also be true for Underscore.</p><p>"She just seems like a person who's really comfortable being herself and not trying to be anybody else," said Ritter, a cofounder of Emergence Capital who serves on the board of Hi Marley with Lyman. "The firm will be rebuilt in her image and that's just what it should be."</p>

Meet Boston's new power venture capitalist

<ul class="summary-list"><li>On Tuesday, the Australian <keyword id="1968247" type="PERSON" weightage="60" keywordseo="DevOps">DevOps</keyword> startup Buildkite announced $28 million in fresh funding, bringing its valuation to $200 million.</li><li>Buildkite builds continuous integration and continuous delivery (CI/CD) tools that help developers release code faster and more often, and it competes with Jenkins, CircleCI, Travis CI, and others. </li><li>Buildkite CEO and cofounder Lachlan Donald says the company has been profitable since its early days because it charged for its product since the start, focused on building a quality product, and kept its headcount low.</li></ul><p>For a long time, the Australian DevOps startup Buildkite didn't take calls from investors, even though it was "bombarded" by VCs reaching out.</p><p>Why not? In part because the firm never needed the money. Buildkite achieved profitability in the first month after launching in 2013, cofounder and CEO Lachlan Donald told Business Insider by charging for its products right off the bat, rather than offering a "freemium" product like many other startups. That model has really forced it to make its product shine brighter than other free competitors, he adds. </p><p>Buildkite sells tools for <a href="https://www.businessinsider.com/what-is-ci-cd-software-development-2018-11">continuous integration and continuous delivery (CI/CD)</a>, which help developers release code faster and more often. The firm currently supports over 30,000 engineers and 1,000 corporate customers, including Shopify, Pinterest, and Wayfair.</p><p>"[BuildKite] is not often the first CI tool you use, but what you come to when you're a successful business — when you've outgrown those introductory tools," Donald said. "We've been very successful in getting customers that are the best technology companies in the world using us. The fact that we charge for our products helps us work really hard at creating the best product possible."</p><p>But finally, after seven years, Buildkite decided to raise money to promote the company and build partnerships: On Tuesday, it announced $28 million in funding led by OpenView, bringing its valuation to over $200 million. </p><p>"We keep hearing from our customers that 'Buildkite is the best-kept secret in the dev tool space. You're our secret weapon,'" Donald told Business Insider. "The biggest challenge for us is telling people about Buildkite. This is the best CI/CD tool that every company needs. We want to try to get more people aware of it."</p><p>The company has a grand total of zero salespeople, and only recently hired its first marketing employee. The new funding will change that, Donald said. </p><h2><strong>Buildkite is taking on other CI/CD tools like Jenkins, CircleCI, and Travis CI</strong></h2><p>Previously, Donald worked as the CTO of 99designs, where his team "tried every CI tool," but was frustrated that other products were either like the open source project Jenkins, which is built for on-premise data centers, or entirely cloud-based, like <a href="https://www.businessinsider.com/circleci-56-million-vc-funding-ci-cd-devops-2019-7">CircleCI</a> and Travis CI. So, Donald decided he wanted to build a hybrid tool that works for both kinds of customers. </p><p>"Buildkite was built because we thought CI/CD as it was designed was broken," Donald said. He wanted to "rethink" how it could be done, and decided that "hybrid architecture gives you the best of both worlds."</p><p><strong><em>Read more: </em></strong><a href="https://www.businessinsider.com/what-is-ci-cd-software-development-2018-11"><em>Investors are betting hundreds of millions of dollars that startups like PagerDuty, GitLab, and CloudBees can change the way software gets made</em></a></p><p>Buildkite also differentiates itself from other <a href="https://www.businessinsider.com/developer-technologies-digital-transformation-tech-companies-2020-1">CI/CD companies</a> because of its "unlimited" ability to scale and run thousands of operations at once, Donald says. It has some core philosophical differences that differentiate it from other startups in general, too. </p><p>It keeps its headcount low — with only 26 remote employees in six countries — rather than taking what Donald describes as the "land grab approach" of hiring many employees.</p><p>"We think that a lot of companies view headcount as a vanity metric," Donald said. "It's almost always the first question people ask: 'How many people are in your company?' We're trying to build a company where we can do more with less. We keep the headcount small but still be really effective."</p><p>In the future, Buildkite also plans to also focus on software testing to understand data on which tests are faster and slow and how they can solve problems. With the new funding, Buildkite plans to "keep doing what we've always been doing, which is to have a hyperfocus on customers." </p><p><em><strong>Got a tip?</strong> Contact this reporter via email at <a href="mailto:rmchan@businessinsider.com">rmchan@businessinsider.com</a>, Signal at 646.376.6106, Telegram at @rosaliechan, or Twitter DM at <a href="https://twitter.com/rosaliechan17">@rosaliechan17</a>. (PR pitches by email only, please.) Other types of secure messaging available upon request.</em></p>

Profitable Australian DevOps startup Buildkite explains how its new $28 million in funding will let it spread the word about being 'the best-kept secret in the developer tool space'

<ul class="summary-list"><li>As 2023 winds down, a reckoning in the VC industry is underway.</li><li>With startup failures and VC-firm layoffs, it's not likely to improve in early 2024.</li></ul><p>I was on a Zoom call with a staffer for the venture capital arm of a big tech company. She's a person I've known for years.</p><p>We were chatting about life when she stopped talking, looked at her phone and said in a clipped voice, "I'll have to call you back. We just had layoffs."</p><p>Her job was safe, I later learned. But it was clear that the VC world has entered into rarified territory: people are getting fired, not because of performance, but because their industry is in a cataclysmic downward spiral.</p><p>In 2023: Y Combinator cut 17 people, <a target="_blank" href="https://www.ycombinator.com/blog/changes-at-yc">it said.</a> Sequoia Capital laid off seven staffers, about a third of its talent operations unit, <a target="_blank" href="https://finance.yahoo.com/news/sequoia-cuts-seven-talent-staffers-212407134.html">it told Bloomberg</a>. Greycroft cut five investors; and Boston firm OpenView stopped new investments and laid off most of its staff, <a target="_blank" href="https://affiliate.insider.com?h=e5bdfde7e880977fdd79545fd96710c7998a0cb1bc9cd2f749d169b1af70358e&amp;postID=65735d7a33f7fba9f649582f&amp;postSlug=venture-capital-cataclysm-layoffs-2024-outlook-2023-12&amp;site=bi&amp;u=https%3A%2F%2Fwww.theinformation.com%2Farticles%2Fvc-firm-openview-abruptly-winds-down-as-industry-pressure-rises">the Information reported.</a></p><p>In 2023, the house of cards the VC industry had built in the previous decade — and especially the previous three years — was no longer shielded by short-term financial maneuvers. Economic headwinds had arrived.</p><p>And signs point to more challenges for at least the first quarter of 2024.</p><h2>What led to trouble in 2023?</h2><p>A decade-long bull market in tech accelerated into a startup-funding frenzy by 2021 (sans a couple-months scare in late spring of 2020 from the pandemic lock-down).</p><p>Opportunists, <a target="_blank" href="https://www.businessinsider.com/tiger-global-changed-venture-capital-startups-funding">exemplified by hedge-fund turned-venture-capitalist Tiger Global,</a> looked at the prices paid for shares in early-stage startups and wanted in.</p><p>Shares in companies that will eventually have multi-billion dollar IPOs go from a few quarters to a few dollars when they are at their earliest stages. For good reason. Picking winners before they've got customers and business models make them the riskiest bets in venture. It looks like easy money but it isn't.</p><p>"You do seed investing because you love it," one investor — who works for an established VC firm with $3.5 billion under management — told me. There's, frankly, more money to be made in later-stage investing when startups have track records, he conceded. The checks are bigger. The time-frames are shorter. That kind of investing is all about pricing.</p><p>"These early stage investors, it's like same sport, different league. It's harder [to make big money] because you are going super early, but you love the building phase," he said.</p><p>But the game-plan for opportunists was different. These investors raised mega, multi-billion funds, giving them sizable income on their 2% management fees, long before they had delivered results. Some classic VCs sounded the alarm at the time, <a target="_blank" href="https://www.businessinsider.com/wesley-chan-vc-market-in-danger-tiger-global-andreessen-horowitz-2021-11">that this was "misaligned incentives"</a> that would cause trouble when the venture market cooled.</p><p>The opportunist's strategy was "spray and pray," getting into as many deals as they could, as fast as they could. In Tiger's case, it did <a target="_blank" href="https://www.businessinsider.com/tiger-global-changed-venture-capital-startups-funding">hundreds of deals of year,</a> famously took no board seats and did little to no meddling in the business itself, as traditional white-glove VCs do.</p><p>Their deal making pace caused the rest of the VC world — always subject to a bit of herd mentality — to follow. If a venture investor wanted a piece of the hot startup they were wooing, they had better offer high valuations — <a target="_blank" href="https://www.businessinsider.com/vcs-say-exploding-term-sheets-are-on-the-rise-founders-beware-2021-7">possibly without great due diligence</a>, or lose out to those who would.</p><p>The whole seed fund landscape changed. Everyone wanted in. There were new fund types: <a target="_blank" href="https://www.businessinsider.com/why-more-tech-investors-are-starting-rolling-venture-funds-2020-8">rolling funds</a>, and <a target="_blank" href="https://www.businessinsider.com/solo-gps-lone-wolf-vc-investors-competing-despite-funding-slump-2023-8">micro-funds</a>. Pre-seed rounds grew as big as seed rounds. Seed rounds grew so large, they became <a target="_blank" href="https://www.businessinsider.com/seed-stage-funding-deal-trends-2020-12">known as "mango" rounds</a> — as big as previous Series A rounds and so on up the stack.</p><p>Many of these startups were commanding share prices that, by 2023, couldn't be justified. I recently talked to a startup CEO who became a unicorn in 2021 and when I asked him if he would land the same now, he laughed and said, "May we all live up to our 2021 valuations."</p><p>Rising interest rates in 2022 crashed the frenzy. Cash conservation became the be-all. Investors grew stingy. Valuations fell. VCs looked at their startup portfolio and quietly, if not openly, chose which ones they would continue to support.</p><p>They helped some of those startups arrange <a target="_blank" href="https://www.businessinsider.com/seed-startups-venture-capital-funding-rounds-decline-2023-9">short-term funding like bridge or extension rounds.</a> Both of those involve committing to sell more shares at favorable prices to investors and are not ideal for startups. They can result in giving up a bigger chunk of the company at lower prices than a later deal would.</p><p>And if the startup isn't in excellent shape when that cash ran out, it will most likely be doomed, even if it had a great idea, great tech, a great team and so on.</p><p>By Q4, 2023, those 2022 extension rounds started running out, one investor told me in September. He predicated that in the last quarter of this year through the first of 2024, the startup "mass extinction" event would take place.</p><p><a target="_blank" href="https://www.businessinsider.com/failed-venture-capital-startups-burnt-27-billion-pitchbook-2023-12">3,200 startups have died in 2023</a>, along with $27 billion in venture investment, deal-tracking database Pitchbook says.</p><p>High profile, recent deaths among the unicorn ranks include <a target="_blank" href="https://www.geekwire.com/2023/convoy-collapse-read-ceos-memo-detailing-sudden-shutdown-of-seattle-trucking-startup/">Convoy</a>, <a target="_blank" href="https://www.healthcaredive.com/news/olive-ai-shuts-down/698455/">Olive</a> and <a target="_blank" href="https://techcrunch.com/2023/11/27/prefab-home-builder-veev-reportedly-shutting-down-after-reaching-unicorn-status-last-year/">Veev</a>.</p><h2>'Dry powder' is a myth</h2><p>There should have been a silver lining to all of this.</p><p>All of that money raised for VC funds during the heat of 2021 should have meant that VCs would be out there funding lots of promising startups, and at bargain prices.</p><p>But another phenom is also happening.</p><p>With the IPO market still closed, and startup valuations down, the limited partner investors in venture capital funds have been pressuring their VCs to slow their investing.</p><p>"LPs have been putting pressure on but also asking for ways to get liquidity," one investor told me.</p><p>This person says that a VC firm with $80 billion under management has created a new <a target="_blank" href="https://www.orrick.com/en/Insights/2023/09/Continuation-Funds--A-Continuing-Trend">continuation fund</a> — a type of fund that allows their LPs to either let their investments ride or cash out a small percentage.</p><p>This means that at least some of the so-called "dry powder" raised in 2021 is somewhat of a myth.</p><p>Yes, the LPs did commit that money to funds. Yes, by the end of 2022, dry powder (money raised but not spent) had reached a record high of about $280 billion, <a target="_blank" href="https://pitchbook.com/news/articles/venture-startup-trends-charts-q2-2023">according to Pitchbook</a>. Yes, if a fund puts out a capital call to its LPs, they must pay up, or face potential consequences (should the fund wish to take the politically treacherous step to sue their investors). But the LPs are the VC funds' customers. Angering them when they tell you to slow your roll to help them rebalance their assets is a death wish.</p><h2>'Greed' may return in 2024</h2><p>Right now, there are no indicators that we've hit rock bottom. For a shift to happen interest rates may need to drop. The IPO market may need to resume its appetite for cash-burning tech companies. The regulator environment may need to get less hostile to acquisitions from incumbents.</p><p>In the meantime, startups are facing more harpoons.</p><p>Seed investor and prolific VC industry secret-spiller, Elizabeth Yin, explained in a <a target="_blank" href="https://twitter.com/dunkhippo33/status/1732498998077129009">recent X thread</a> how VC funds <a target="_blank" href="https://www.businessinsider.com/audits-venture-capital-firms-startup-valuations-2022-12">hire independent auditors to value their startups</a> and report results to their LPs. Many LPs invest in multiple funds. Many LPs are later stage firms. Many funds invest in the same startup. So a mark-down in one fund could be seen and repeated by the others.</p><p>"Now all of a sudden the whole LP world sees that you've been written down," she wrote. And when that startup goes to raise, VCs may already be a no, even though "some of your actual VC investors may not actually think you are a bad company."</p><p>As startups fail, that brings VC funds down, making this a dangerous time for those who work in venture capital.</p><p>One of the VCs I talked to quipped, "VC is the best job ever if you're ok with living in constant anxiety with no control."</p><p>But here's the kicker. As soon as fortunes reverse — as they will — VCs will do it all over again. All the VCs I spoke to agreed. They'll invest, compete, grow frenzied, build another unsustainable bull market.</p><p>VC works in "fear and greed" cycles, one investor told me. If the IPO market opens up in early 2024, then maybe we'll be "coming out of the fear stage and the question is, are we already about to turn back to greed? I think you're going to see more greed come around, especially if some of these IPOs come around."</p>

A VC cataclysm has begun. Early 2024 will be rough. But it won't change anything.

<ul class="summary-list"><li>Moving from boxed software to cloud-based subscriptions was a big change during the last recession.</li><li>While that's still widely used, a new usage-based pricing model has quickly gained popularity.</li></ul><p>When the Great Recession of 2008 hit, it proved to be a real opportunity for the tech industry to push a new business model: Instead of paying once for boxed software, companies like Salesforce, NetSuite, and even Google got their customers acclimated to getting billed as a monthly or annual subscription.</p><p>Now, a decade and a half later, the subscription model is the <a href="https://www.businessinsider.com/subscription-economy-salesforce-microsoft-adobe-explained-2019-11">hallmark of the cloud-computing era</a>. Incumbents like  like Microsoft and Adobe and startups like Zoom all got on the bandwagon, making subscriptions the default way that many companies and consumers alike use software. </p><p>With another global recession looming, another change to the software business model is on the horizon, industry insiders say. Instead of charging one time for the software, or a monthly subscription, a new breed of tech companies is <a href="https://www.businessinsider.com/cloud-subscription-saas-usage-based-pricing-2021-5">pushing so-called usage-based pricing</a>, also known as consumption pricing.</p><p>"The best companies are saying, 'We want to have a mix of models that really accommodates all our different customers,'" said Tien Tzuo, the CEO of the subscription-billing-management company Zuora. "Different customers might want different things as well."</p><p>As the name suggests, the usage-based model sees customers only billed for what they use — no more, and no less. It's not exactly new: Cloud platforms like <a href="https://www.businessinsider.com/aws-ceo-adam-selipsky-pitches-cloud-cost-savor-spending-concerns-2022-12">Amazon Web Services</a> bill for the use of their cloud-hosted servers by the minute, and new-generation data companies like <a href="https://www.businessinsider.com/snowflake-databricks-big-data-ai-collision-course-ghodsi-slootman-2021-4">Snowflake</a> charge for the data stashed on their platforms.</p><p>Experts predict the flexibility of this billing model will prove irresistible to customers, who are under pressure to stretch their dollars to the limit. That, in turn, will push companies large and small to at least explore the concept. </p><p>"If you think about the evolution of business models, it's always trended more and more towards being more friendly to the customer," Rishi Jaluria, a software analyst with RBC, told Insider. "It is very likely, in my opinion, that there will be more companies that are either on a consumption model or offer a consumption element to the model."</p><h2><strong>Usage-based pricing has drawbacks, but can ultimately pay off</strong></h2><p>The one drawback of usage-based models for the companies that offer them is a lack of predictability.</p><p>A company can make an informed guess about its next month's revenue based on the number of paying subscribers. But when you're paying based on consumption, a customer who uses the service a lot one month may not use it at all the next. That, in turn, leaves usage-based companies more susceptible to a downturn, since it's a relatively easy for customers to cut spending.</p><p>On the flip side, experts say that customers love that same flexibility, which could boost loyalty and overall usage. </p><p>In other words, the model forces companies to "earn customers' business each month," said Sanjiv Kalevar, a partner at the venture-capital firm OpenView. He says it's "the natural extension" of sending customers a bill every week, month, or year: "Why every month? Why not every week or every day, or every piece of compute?" </p><p>The flexibility also allows customers to feel like they're using everything they pay for.</p><p>"I think that it's important for providers to provide options to customers," the Gartner analyst John Santoro said. "So that when the customers become more price sensitive, they have options other than dropping the product entirely."</p><h2><strong>Hybrid-pricing models will become standard across the industry </strong></h2><p>While many analysts agree that usage-based pricing isn't going to be right for every situation, some believe that <a href="https://www.businessinsider.com/salesforce-layoffs-a-sign-that-things-get-worse-cloud-2023-2023-1">subscription pioneers like Salesforce</a> may have to rethink their approach under the present circumstances. Its core software may not be billed by consumption, but it may find a future in going that route for additional services or tools that go beyond its existing model.</p><p>"I think that is a conversation Salesforce will have," RBC's Jaluria said. "Consumption models tend to lend themselves for now more at the infrastructure layer than the application layer, so it will take time, but I do think over time Salesforce will probably offer some sort of consumption-like element to their software, and customers will ask for it."</p><p>Ultimately, there will be a lot of hybrids between the two approaches, predicted OpenView's Kalevar. A company might sell its core product for a fixed recurring cost, and anything beyond that on a usage basis. That would give the vendors some predictability while also offering customers more flexibility, ideally landing on the best of both worlds.</p><p>"A lot of companies are choosing an in-between: between subscription and pay-as-you-go, what we call usage-based subscriptions," Kalevar said.</p><p><em><strong>Got a tip?</strong> Contact this reporter via email at <a href="mailto:pzaveri@businessinsider.com" target="_blank" rel="noopener">pzaveri@insider.com</a> or Signal at 925-364-4258. (PR pitches by email only, please.) </em></p>

The market crash could finally break Big Tech's addiction to subscriptions

<p>Good morning! This is the tech news you need to know this Friday. <a href="http://newsletter.businessinsider.com/join/4np/10-things-in-tech&amp;hash=8122c716833601fc1471f79af063b104?nr_email_referer=1&amp;utm_source=Sailthru&amp;utm_medium=email&amp;utm_content=10_things_tech&amp;utm_campaign=Post%20Blast%20sai:%2010%20things%20in%20tech%20you%20need%20to%20know%20today&amp;utm_term=10%20THINGS%20IN%20TECH%20YOU%20NEED%20TO%20KNOW%20-%20ENGAGED%2C%20ACTIVE%2C%20PASSIVE%2C%20DISENGAGED0PASSIVE%2C%20DISENGAGED">Sign up here</a> to get this email in your inbox every morning.</p><p>Have an Amazon Alexa device? Listen to this update by searching "Business Insider" in your flash briefing settings.</p><p>And for the biggest stories in politics, <a href="http://newsletter.businessinsider.com/join/10-things-in-politics" target="_blank" rel="noopener">sign up here for 10 Things in Politics You Need to Know Today</a> — launching soon!</p><ol><li><strong>Steve Bannon isn't getting booted from Facebook.</strong> Despite the former White House adviser suggesting that COVID-19 adviser Dr Fauci should be beheaded, <a href="https://www.businessinsider.com/zuckerberg-facebook-didnt-ban-steve-bannon-not-violated-enough-policies-2020-11?r=US&amp;IR=TIR=T">Facebook CEO Mark Zuckerberg said he hadn't violated</a> the platform's policies.<br /><br /></li><li><strong>Mark Zuckerberg privately acknowledged President-elect Joe Biden.</strong> "I believe the outcome of the election is now clear and Joe Biden is going to be our next president," <a href="https://www.businessinsider.com/facebook-ceo-mark-zuckerberg-acknowledged-biden-as-next-president-2020-11?r=US&amp;IR=TIR=T">Zuckerberg told a private meeting</a> of employees.<br /><br /></li><li><strong>TikTok isn't getting banned yet. </strong>The Commerce Department <a href="https://www.businessinsider.com/trump-administration-wont-enforce-tiktok-ban-following-court-order-2020-11?r=US&amp;IR=TIR=T">said it won't enforce an executive order</a> that would have effectively banned TIkTok in the US in order to comply with a federal judge's ruling temporarily blocking the ban.<br /><br /></li><li><strong>100 Google rivals complained to Europe's most powerful tech regulator. </strong>Firms including TripAdvisor and Expedia <a href="https://www.businessinsider.com/google-eu-antitrust-travel-job-sites-2020-11?r=US&amp;IR=TIR=T">say Google uses its existing search dominance</a> to expand unfettered into vertical search such as Google Flights and Google Travel.<br /><br /></li><li><strong>US cyber chief Christopher Krebs expects to be fired. </strong>His agency, CISA, <a href="https://www.reuters.com/article/us-usa-cyber-officials-exclusive-idUSKBN27S2YI">has displeased the White House</a> by running a website that fact-checks election misinformation, including information put out by President Trump.<br /><br /></li><li><strong>Xi Jinping personally blocked Ant Group's IPO.</strong> <a href="https://www.wsj.com/articles/china-president-xi-jinping-halted-jack-ma-ant-ipo-11605203556?mod=djemalertNEWS">According to the Wall Street Journal</a>, the Chinese premier was furious at Ant CEO Jack Ma for criticizing financial regulation.<br /><br /></li><li><strong>Don't vape into your new Xbox. </strong>Microsoft <a href="https://www.businessinsider.com/xbox-series-x-smoke-videos-dont-vape-into-console-microsoft-begs-2020-11?r=US&amp;IR=TIR=T">requested users not to blow vape smoke</a> into the Xbox Series X after viral videos showed smoke billowing from its vented top.<br /><br /></li><li><strong>We collated the 28 most powerful EU lawmakers and lobbyists. </strong>Top regulator Margrethe Vestager, and internal market commissioner Thierry Breton <a href="https://www.businessinsider.com/meet-28-most-powerful-people-tech-laws-eu-2020-11?r=US&amp;IR=T#thierry-breton-was-targeted-by-google-in-a-bid-to-stifle-new-regulation-2on-2">are among those blazing the trail</a> on tech regulation.<br /><br /></li><li><strong>Microsoft poached a Salesforce exec.</strong> The Redmond giant <a href="https://www.businessinsider.com/microsoft-poached-salesforce-chief-data-officer-hernan-asorey-2020-11?r=US&amp;IR=TIR=T">hired Salesforce chief data officer</a> Hernan Asorey to take the same role within its commercial business unit, according to the executive's LinkedIn.<br /><br /></li><li><strong>Enterprise software looks recession-proof.</strong> Cloud-based software companies have largely shook off the effects off the coronavirus pandemic, <a href="https://www.businessinsider.com/cloud-based-software-saas-companies-recession-proof-report-2020-11?r=US&amp;IR=TIR=T">according to a new report from VC firm</a> OpenView Venture Partners.</li></ol>

10 things in tech you need to know today

<ul class="summary-list"><li>Highspot uses machine learning to help salespeople land and retain customers by organizing and recommending the types of sales content, such as brochures or case studies, most likely to help them win a deal.</li><li>The Seattle-based startup was cofounded by a former <a href="https://www.businessinsider.com/category/microsoft">Microsoft</a> exec who served as a chief marketing officer under <a href="https://www.businessinsider.com/category/satya-nadella">Satya Nadella</a>. </li><li>Highspot announced $75 million in funding from existing investors ICONIQ Capital, Madrona Venture Group, OpenView, Salesforce Ventures, and Sapphire Ventures.</li><li>The funding follows a $60 million Series D round in June. The company declined to reveal its valuation, but PitchBook estimated it was worth $530 million at the end of its June funding round. </li><li>Highspot now has 375 employees and plans to grow to 700 employees by the end of 2020, including aggressively hiring engineering, product management and design roles based in Seattle. </li><li>Highspot has focused on providing a platform for salespeople but now, with the latest funding, it plans to expand its services.</li><li><a href="https://www.businessinsider.com/prime">Click here to read more BI Prime stories</a></li></ul><p>Robert Wahbe left his job at Microsoft in 2012, a couple of years before his boss Satya Nadella would become CEO. </p><p>Now the startup that Wahbe left Microsoft to launch has achieved a big milestone of its own. Highspot, Wahbe's Seattle-based startup, has raised $200 million from investors including Salesforce's venture capital arm and has partnerships with Salesforce and Microsoft.</p><p>Companies such as Microsoft and Salesforce sell customer relationship management software that helps salespeople record interactions with current and potential customers, such as when they were last contacted and where they are in the sales process.</p><p>"It turns out those systems don't tell you how to engage those customers effectively so that you … either become or stay a customer," he said. "Highspot helps teams understand how to engage those customers - what to know and what to say."</p><p>Highspot on Wednesday announced $75 million in funding from existing investors ICONIQ Capital, Madrona Venture Group, OpenView, Salesforce Ventures, and Sapphire Ventures. The funding follows a $60 million Series D round in June. The company declined to reveal its valuation, but PitchBook estimated it was worth $530 million after the June funding round.</p><h2>How it works</h2><p>Large enterprise companies might have 50,000 pieces of content, such as brochures or case studies, available for salespeople to use to court customers, Wahbe said.</p><p>Because of the sheer volume of documents, a lot of those pieces go unused. Highspot's software is meant to help salespeople organize all those pieces and provide guidance about how and when to use them to maximize their chances of landing or keeping a customer.</p><p>For example, when a salesperson is about to contact a potential customer, Highspot uses machine learning to analyze data including on the interactions the salesperson has had with that customer and can recommend the three or four case studies most likely to help them win the deal. </p><h2>Highspot's origins</h2><p>Wahbe joined Microsoft in 1996 after the company acquired his first startup, a software maker called Colusa. He stayed at the company for more than 15 years, ultimately serving the corporate vice president who ran marketing for Microsoft's server and tools division, which Nadella ran before took over for Steve Ballmer in 2014 as Microsoft's CEO.</p><p>Wahbe left the company to start Highspot out of a rented house with his two cofounders Oliver Sharp, the former general manager of strategy for Microsoft's server and tools division, and David Wortendyke, a former partner architect for Microsoft's Azure cloud computing business.</p><p>Wahbe said the "moment of truth" for Highspot was when it landed its first large enterprise customer SAP Concur in 2015.</p><p>At the time, the company had commercial and small and medium business customers but was just starting to ask big customers to put their time, reputation and money on the line and work with a startup, Wahbe said.</p><p>He remembers driving to the Chateau Ste. Michelle Winery about eight miles north of Microsoft's headquarters to a venture capital event where Satya Nadella would be attending at 7 p.m. on a weekday when he got a call from SAP Concur.</p><p>"I was driving in the dark and in the rain when I got a call from business contact at this major enterprise and thought, "Is this going to be good news or is this going to be bad news?'," he said. "They decided to adopt our platform - it's a great feeling when you start to feel validation."</p><p>Since then, Wahbe said Highspot has doubled year over year in metrics including revenue, user count and customer count, though Highspot declined to share actual figures for those metrics.</p><h2>What's next</h2><p>Highspot has focused on providing a platform to salespeople but now, with the latest funding, it plans to expand its services to other groups within a company who interact with customers such as services and support.</p><p>Highspot now has 375 employees and plans to grow to 700 employees by the end of 2020, including aggressively hiring engineering, product management and design roles based in Seattle. </p><p>Highspot's website list 26 open positions, but the company may be hiring for more than one person per position, and it has space for about 800 employees in its Seattle headquarters.</p><p>Wahbe said the startup plans to grow across offices in the UK, Western Europe, the Middle East and Africa and potentially in the Asia-Pacific region.</p><p class="tagline"><a href="https://www.businessinsider.com/intelligence/bi-intelligence-daily?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_subscription&amp;itm_content=microsoft&amp;itm_campaign=bi-intelligence-daily"></a></p>

One of Satya Nadella's former lieutenants just raised $75 million for his startup Highspot to build the 'missing layer of software' for salespeople - and Salesforce is an investor

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Datadog</span></p><p class="caption">Datadog cofounders Alexis Lê-Quôc and Olivier Pomel</p></div><p></p></div></div></p><ul class="summary-list"><li><strong>Data analytics company <a href="https://www.businessinsider.com/category/datadog">Datadog</a> went public on Thursday, and its stock rose 39% in the first day of trading. </strong></li><li><strong>DataDog was last valued privately at $7.83 billion, but should see a richer valuation than that when the markets open on Friday. </strong></li><li><strong>Datadog co-founder and CEO Olivier Pomel says that hiring is the company's top priority with the IPO out of the way. </strong></li><li><strong>He also said that DataDog's roadshow took an unusual turn: The company interviewed potential investors to make sure they understood what they were getting themselves into. </strong></li><li><strong>Pomel says that Datadog's focus on making its products accessible to as many customers as possible helps it take on competitors like <a href="https://www.businessinsider.com/category/ibm">IBM</a>, <a href="https://www.businessinsider.com/category/hp">HP</a>, <a href="https://www.businessinsider.com/category/broadcom">Broadcom</a>, and <a href="https://www.businessinsider.com/category/splunk">Splunk</a>.</strong></li><li><strong><a href="https://www.businessinsider.com/prime?module=article&amp;area=summary" target="_blank" rel="noopener">Click here for more BI Prime stories</a>.</strong></li></ul><p>The data analytics company Datadog soared 39% on its first day of trading on Thursday.</p><p>Last privately valued at $7.83 billion, Datadog had previously raised money from the likes of OpenView Venture Partners, RTP Ventures, and Index Ventures. Earlier this month, <a href="https://www.bloomberg.com/news/articles/2019-09-18/cisco-is-said-to-have-bid-7-billion-plus-for-datadog-before-ipo?cmpid=BBD091819_TECH&amp;utm_medium=email&amp;utm_source=newsletter&amp;utm_term=190918&amp;utm_campaign=tech">Bloomberg reported</a> that Cisco was willing to acquire Datadog for a premium price, but Datadog passed. </p><p>Now, <a href="https://www.businessinsider.com/11-enterprise-rock-stars-quietly-changing-the-industry-2019-3">Datadog</a> has gone public, and co-founder and CEO Olivier Pomel says he thinks Datadog can "grow a lot more as a company."</p><p>"We have some good proof points around the product and what we can do," Pomel told Business Insider. "The IPO is not an end in and of itself. We will go to business and really fully chase the opportunity of the massive transformation of companies moving from legacy IT to public and private cloud."</p><p>Pomel says Datadog plans to build more products, but his top priority is around hiring. He says everything, including building products, selling to customers, and operating the business flows from hiring, training, and retaining employees.</p><p>"Now, I don't spend my days doing any building myself," Pomel said. "I don't spend my days pitching my company to investors. I spend my days making sure we hire people well."</p><h2><strong>A 'mad dash'</strong></h2><p>As Datadog geared up for its IPO, Pomel says the last two weeks on the roadshow have been a "mad dash." As is usually the case with these roadshows, Datadog answered plenty of investor questions about the company and why Wall Street firms should invest. </p><p>But Pomel also says that Datadog did something just a little different on its roadshow: It interviewed investors to see how well they understand the company and its long term plans. </p><p>"There's a good amount of time that goes into how to present the business to the outside world so investors can understand what it's about and what matters and how to model the business," Pomel said. "One thing that's important about your IPO is it's the last time you get to pitch your investors. You try to set yourself for success by having your investors understand your business."</p><p>Now, Datadog joins a host of <keyword id="6356323" type="UNKNOWN" weightage="100" keywordseo="enterprise">enterprise</keyword> software companies that have gone public this year, including <a href="https://www.businessinsider.com/zoom-ipo-interview-ceo-eric-yuan-and-cfo-kelly-steckelberg-on-whats-next-2019-4">Zoom</a>, <a href="https://www.businessinsider.com/pagerduty-ceo-jennifer-tejada-ipo-2019-4">PagerDuty</a>, <a href="https://www.businessinsider.com/crowdstrike-accel-falcon-fund-venture-capital-security-startups-2019-8">CrowdStrike</a>, <a href="https://www.businessinsider.com/slack-stock-first-earnings-loss-outage-credits-2019-9">Slack</a>, and <a href="https://www.businessinsider.com/dynatrace-ipo-wall-street-stock-2019-8">Dynatrace</a>. It'll also continue to compete with rivals like <a href="https://www.businessinsider.com/category/ibm">IBM</a>, <a href="https://www.businessinsider.com/category/hp">HP</a>, <a href="https://www.businessinsider.com/category/broadcom">Broadcom</a>, and <a href="https://www.businessinsider.com/category/splunk">Splunk </a>- many of whom are larger and better funded. </p><p>However, Pomel says that he's not especially worried: As the cloud computing market continues to grow, so too will demand for DataDog's services, he says - DataDog is especially well-suited to helping users track and improve the performance of software running in the cloud. </p><p><strong><em>Read more: </em></strong><a href="https://www.businessinsider.com/11-enterprise-rock-stars-quietly-changing-the-industry-2019-3"><em>11 enterprise rock stars that have quietly been responsible for some of the most successful cloud services in the world</em></a></p><p>"It's a very big market," Pomel said. "The world is transitioning from legacy IT to public and private cloud. It's going to grow and grow and grow for many years. It's not a winner take all market."</p><p>Pomel says that Datadog has a different approach to its competitors, as well. He says that its software is easy to use, such that any customer can pick it up and experiment with how best to use it.</p><h2><strong>A 'consistent' vision</strong></h2><p>Shardul Shah, partner at Index Ventures and a Datadog board member, says that although the company has grown, two big things have stayed the same.</p><p>"What stayed the same is, number one, the company has been relentlessly focused on customer value," Shah told Business Insider. "Second, they're addressing a ubiquitous need. Cloud migration and the requirement for collaboration is persistent across every industry. As a consequence, I'm looking forward to that combination as a persistent and deep need for driving business."</p><p>Shah says that one challenge companies face as they grow is "not sticking to their vision," but he's not worried about Datadog. </p><p>"What I have confidence in is Olivier's vision has always been consistent," Shah said. "I think these themes of businesses organizing teams to collaborate will be persistent. That Datadog has been able to go public shows how pervasive those things are and how important customer experience is."</p><p>Pomel adds that Datadog has come a long way since it first started in 2010. In 2012, it released its first cloud monitoring product. Since then, it has added app performance monitoring and log management products to its product lineup.</p><p>"We take it from the perspective of taking as much data as possible from different titles and making it accessible to as many people as possible," Pomel said. "Our focus is to get as broadly adopted as possible as opposed to being specialized on specific use cases that are then going to be used by tiny, tiny subsets for the workforce."</p><p class="tagline"><a href="https://www.businessinsider.com/intelligence/banking?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_subscription&amp;itm_content=wallstreet&amp;itm_campaign=banking_launch"></a></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/reporter-luke-harding-explains-life-under-fsb-surveillance-2017-12">A reporter who lived in Russia for 4 years reveals what it was like being stalked by Russian spies</a></h3>        <div>                    </div>    </div>

Data analytics company Datadog soared 39% on its first day of public trading. The CEO says its next big thing is hiring: 'I spend my days making sure we hire people well.'

<p><div class="KonaFilter image-container float_right click-to-enlarge"><div class="image on-image"><a title_source="OpenView Partners" title_caption="Blake Bartlett" class="zoomin" href="https://static-ssl.businessinsider.com/image/53fb2abfecad04f04ad26fa4-960/blakebartlett.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span><a href="http://blog.openviewpartners.com/secret-ingredient-to-being-a-great-vc/">OpenView Partners</a></span></p><p class="caption">Blake Bartlett</p></div><p></p></div>Becoming an excellent venture capitalist isn't just about reading the right books or getting an MBA.</p>
<p>In fact, the most important quality that could make or break an investor's career has little to do with work experience at all, according to Blake Bartlett, vice president OpenView Venture Partners.</p>
<p>In <a href="http://blog.openviewpartners.com/secret-ingredient-to-being-a-great-vc/">his latest blog post</a>, Bartlett emphasizes the importance of what he calls "intellectual curiosity."</p>
<p>Examining companies and potential investment opportunities with a healthy dose of skepticism helps VCs look beyond the short term and into the bigger picture.</p>
<p>Bartlett uses Blue Bottle, the <a href="http://www.businessinsider.com/inside-blue-bottle-coffee-2014-1?op=1">craft coffee retailer that raised $25 million</a> from Morgan Stanley Investment Management and other big-name investors in January, as an example.</p>
<p>If someone claims that coffee companies like Blue Bottle are going to kill Starbucks, an "intellectually curious" person wouldn't just take that at face value. He or she would ask questions like "Why is Starbucks so broken?" and "When and where did this coffee trend start?" and "Who are the leading players today?" as Bartlett points out.</p>
<p>Asking questions and maintaining a strong sense of curiosity is also necessary to see a company or market trend for what it truly is. For example, Bartlett notes that competitors may bash their rivals and executives could try to inflate the achievements of their company's department. It's the VC's job to cut through any exaggerations and investigate which claims are valid.</p>
<p>Before becoming vice president at OpenView Venture Partners, Bartlett was the vice president at Battery Ventures, where his investments included Glassdoor and Wayfair among others. </p>
<p>Be sure to check out <a href="http://blog.openviewpartners.com/secret-ingredient-to-being-a-great-vc/">Blake Bartlett's blog post</a> for more detail about what it means to be an "intellectually curious" VC. </p>

A Successful VC Reveals The Big Secret Behind Becoming A Great Investor

<p class="p1"><span style="line-height: 1.5em;"><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div>Instructure, the Salt Lake company providing cloud services to educators, has raised a $40 million round from a group of investors led by Insight Venture Partners, Business Insider has learned. </span></p><p class="p3">Other investors in the round include OpenView Venture Partners, based in Massachusetts, and EPIC Ventures, a Utah investor. The $40 million round brings the total capital behind Instructure to about $90 million, and, according to a source, Instructure will use its new round to push the company toward an IPO. </p><p class="p3">Earlier, TechCrunch <a href="http://techcrunch.com/2015/02/18/on-the-way-to-an-ipo-education-technology-startup-instructure-is-close-to-raising-a-big-new-round/">reported</a> the news, without specifying the size of the round or the investors. </p><p class="p3">With the new round, Instructure will launch Bridge, a source said, a cloud-based corporate learning platform. Moving into the enterprise market signifies the pursuit of a new vertical for the company. </p><p class="p3">Instructure has built its Canvas learning management system since 2011, attracting 18 million students and teachers across more than 1,200 institutions. </p><p class="p3">Instructure's primary competition is Blackboard, which was acquired by private equity Providence Equity Partners in a $1.64 billion deal in 2011. </p><p class="p3">The company did not respond to a request for comment. </p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/excel-index-match-vlookup-video-how-to-2015-2">This is what separates the Excel masters from the wannabes</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="50YnY4czr4ms1vJ7yz3xzq0excz_pUMs" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Education tech startup Instructure has raised $40 million

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">Scott Kupor, managing partner at Andreessen Horowitz</p></div><p></p></div></div>What's notable about recent mergers and acquisitions (M&amp;A) activity in software companies (including <a href="https://a16z.com/category/software-as-a-service/" target="_blank">SaaS</a>) isn't the number of deals (7), their worth ($8.6B disclosed value), or even the timing (all took place in just the last 30 days).</p><p>What's notable is whether this recent wave of activity signals the arrival of more <em>growth</em> - as opposed to consolidation - deals by acquirers.</p><p>Why does that distinction matter? Well first, let's take a quick look at the deals: four of the seven deals were private equity firms (Vista Equity Partners, Accel KKR, and Thoma Bravo) acquiring companies (Marketo &amp; Ping Identity, Sciquest, and Qlik Technologies, respectively). That's just business as usual in line <a href="https://a16z.com/2015/04/10/whats-holding-tech-ma-back/" target="_blank">with past tech M&amp;A activity</a>: <em>Non-growth</em> transactions in the form of going-private deals (or consolidation by large, established technology companies) have largely driven tech M&amp;A volumes just shy of peak levels last seen in 2000.</p><p><div class="KonaFilter image-container display-table"><div><div class="image"><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">Overall tech M&amp;A volume has been robust</p></div><p></p></div></div></p><p>Since not all M&amp;A is equal, the difference between non-growth and growth M&amp;A is important as it signals forward-looking investment in <a href="http://fortune.com/2014/10/13/what-ebay-and-other-tech-splits-say-about-the-future-of-cloud-computing/" target="_blank">a broader platform shift</a> and new product cycles.</p><p>That's why the other three recent cloud services deals - Salesforce.com's $2.9B acquisition of ecommerce software platform Demandware and Oracle's acquisitions of customer engagement and energy efficiency company Opower and construction contracts/payment management company Textura - are the ones worth paying attention to. They represent <em>growth</em> deals - product-line extensions, geographic extensions, and so on - orchestrated to increase top-line growth for the acquirer. As I've <a href="https://a16z.com/2015/04/10/whats-holding-tech-ma-back/" target="_blank">written about before</a>, this has been a lagging area of tech M&amp;A for the past 15 years and belies what was really happening underneath the superficial increase in M&amp;A activity in 2015 (i.e., growth volumes represented only about 20% of peak 2000 levels).</p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Andreessen Horowitz" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/5759972e91058424008c7d9d-960/consolidationvsgrowthdeals_a16z.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Andreessen Horowitz</span></p></div><p></p></div></div></p><h2>But is there now more growth M&amp;A activity on the horizon?</h2><p>The question is whether the recent acquisitions by Salesforce.com and Oracle foreshadow the impending arrival of more "growth" acquisitions from other large tech incumbents, such as the likes of Cisco and Microsoft. To answer this question, it helps to look at the broader context of what conditions tend to drive M&amp;A -</p><h2>Condition #1: Declining core revenue growth</h2><p>Tech is, by definition, a product-driven business. Products have cycles. Revenue tracks cycles. So when a company gets to the other side of a product cycle, revenue growth rates decline until the company finds a way to re-invigorate that cycle or, more likely, to invent - or acquire - a new product that is on the leading vs. lagging side of its product cycle.</p><p>IBM's 16 straight quarters of declining revenue growth are an example of what happens when a company is on the lagging side of a product cycle. What remains to be seen is if their long-term bets <a href="http://www.recode.net/2016/6/1/11830076/ibm-ginni-rometty-watson" target="_blank">in A.I. and blockchain</a> (CEO Ginni Rometty recently <a href="https://twitter.com/RecodeEvents/status/738059215973949444" target="_blank">revealed</a> that they have over 200 experiments going) can help get them to the other side. With most companies in this position - that is, in between short-term product cycles and long-term investment payoff or seeking new directions altogether - we might expect them to look to M&amp;A as a way to address that gap and decline in core revenue growth.</p><h2>Condition #2: High cash balances</h2><p>M&amp;A requires money. A measure of a company's ability to make acquisitions is the amount of cash on the balance sheet divided by the market capitalization of the company; if the result is high then that means the company has more degrees of freedom to use cash to fund acquisitions.</p><p>So, all things being equal, we would expect more M&amp;A activity when companies have a high percentage of cash relative to market cap. The most innovative companies, after all, are the ones that <a href="http://a16z.com/2014/09/05/why-amazon-has-no-profits-and-why-it-works/" target="_blank">re-invest</a> their cash into future growth - not just as dividends to stockholders - so they can continue to stay ahead and build even greater value.</p><h2>Condition #3: Increasing (or at least stable) PE multiples</h2><p>Every company wants to make acquisitions when its stock is trading at all-time high price-to-earnings (PE) multiples. Especially relative to the target company's PE multiple. Why? Because the earnings that the company acquires from the target company are valued post-deal at the acquirer's PE multiple, which makes the deal more palatable to the existing company's shareholders. Earnings dilution is bad and deters M&amp;A.</p><p>But, if you can't have all-time high PE multiples (as we saw in the 2000 tech bubble), then you at least want stable and increasing vs. decreasing multiples. Volatility in PE multiples makes it hard for boards to forecast dilution or accretion from M&amp;A and thus makes them more likely to sit tight until multiples stabilize.</p><p>Given our above conditions framework for thinking about tech M&amp;A, let's take a look at what's happening among the potential "incumbent" acquirer class.</p><p>Note, when we talk about the "incumbents", we mean large tech companies that have been public company leaders in their respective domains for a long time - EMC (now <a href="http://a16z.com/2015/10/26/dell-emc-vmware/" target="_blank">Dell-EMC</a>), Google, HP (now Hewlett Packard Enterprise and HP Inc), Microsoft, Oracle, Salesforce.com, SAP, VMware (also part of Dell-EMC), etc. We'd contrast these with the "new incumbents" - companies that have gone public in the past five years or so that are now establishing themselves as potential new leaders - Facebook, LinkedIn, Servicenow, Splunk, Workday, etc. Every successful startup, after all, goes on to become the new incumbent - and at faster time scales than ever before.</p><p><div class="KonaFilter image-container display-table"><div><div class="image"><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">What drives M&amp;A?</p></div><p></p></div></div></p><p>The graph above shows the trends among the top tech incumbents against the three M&amp;A conditions I outlined:</p><ul><li>Declining core revenue growth - Check! In fact, from the bubble peaks, where revenue growth was around 40%, this group is now looking at ~10% trailing revenue growth.</li><li>High cash balances - Check! Cash as a percentage of market cap is approaching 20%, near the highs of the last 17-years. We haven't seen levels higher than this since 2002, when we were in the doldrums of the post-bubble crash and market caps were near all-time lows.</li><li>Increasing/stable PE multiple - Somewhat. While we are a ways off the peak 2000 PE levels of 140x, PE levels are still very robust and, most importantly, stable. Stability is more important even without super high multiples, because volatility is the enemy of M&amp;A activity.</li></ul><p>So if conditions are ripe for tech M&amp;A among the incumbent group, why haven't we seen more growth M&amp;A to date?</p><p>Well, it turns out that many of the same market characteristics that favor M&amp;A also make companies prime targets for the <a href="https://a16z.com/tag/activist-investorsshareholders/" target="_blank">activist shareholder</a> crowd. Activists screen for declining core businesses with high cash balances because they want that cash returned to shareholders in the form of dividends or stock buybacks. This means those activist targets can no longer invest in growth - in the form of new product-cycle M&amp;A or internal R&amp;D - because doing so would depress their near-term earnings and consume excess cash.</p><p>And that's exactly what's happened in tech: As the amount of assets under management by activists has grown…</p><p><div class="KonaFilter image-container display-table"><div><div class="image"><p class="source"><span>Andreessen Horowitz</span></p></div><p></p></div></div></p><p>…so too has the level of activist engagement among the tech incumbent crowd.</p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Andreessen Horowitz" title_caption="Activist targets" class="zoomin" href="https://static-ssl.businessinsider.com/image/5759a0fd52bcd028008c80b8-960/activisttargets_a16z.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">Activist targets</p></div><p></p></div></div></p><p>Notice what names are absent from the list of recent activist engagements above however - Salesforce.com and Oracle, both of whom feature prominently among the recent M&amp;A activity.</p><p>So why have they escaped the wrath of the activists? Salesforce.com has, quite straightforwardly, done a great job growing the business. Even though their revenue growth rate has slowed over the past 5 years, they've still grown the top line roughly 5x over that time period. That kind of growth is kryptonite to the activists. And Oracle, despite having basically flat top-line growth, is roughly 25% controlled by its founder, Larry Ellison. That kind of shareholder control is another kind of prophylactic that protects against activist intervention. It's for these reasons that Google, too (with its tri-class voting structure) has been an active acquirer among the incumbent crowd since it doesn't have to spend time fighting activists.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">"Unencumbered" incumbents</p></div><p></p></div></div></p><p>The good news is that activists might now be dialing back their tech activity overall. Besides obvious reasons like declining <a href="http://www.nytimes.com/2016/01/27/business/dealbook/activist-investors-may-have-met-their-match-a-down-market.html" target="_blank">returns/poor performance</a> for this asset class, many tech incumbents that would otherwise be attractive activist targets are on the other side of the activist cash curve. Or as I like to think of it, they've already "given at the office" - most of them survived the activist cashectomy by returning cash to their investors in the form of dividends and buybacks, or by <a href="http://fortune.com/2014/10/13/what-ebay-and-other-tech-splits-say-about-the-future-of-cloud-computing/" target="_blank">splitting themselves</a> (as eBay and HP did). Which means those companies' boards now have the freedom to re-constitute their shareholder base and pursue a growth agenda.</p><p>In fact, the M&amp;A activity reveals a number of strategic growth deals on the heels of requited activist campaigns. Post-split, we've seen eBay make two acquisitions (Cargigi, Twice); Paypal make three (Cyactive, Modest, Xoom); and HPE make three of its own as well (Aruba, Contextream, Stackato). And maybe it was mere coincidence, but within days of notorious activist investor Carl Icahn announcing that he had fully exited Apple stock, Tim Cook announced Apple's $1 billion investment in Didi Chuxing.</p><p>So the sky appears to be clearing when it comes to activists. But what then of the <a href="https://medium.com/@villispeaks/why-saas-consolidation-is-not-happening-2b9b722e0250" target="_blank">argument</a> that regardless of the broader macro and incumbent picture, SaaS is inherently harder to acquire than classic on-premise software companies? Besides the evidence of $8.6 billion SaaS deals in the past 30 days, my experience on the other side - not just as an investor but as a former manager of HP's global software support business - suggests that isn't a likely deterrent to M&amp;A.</p><p>While it's true that it requires a higher customer success standard to be a SaaS vendor - you have to support a run-time environment for your customers instead of dumping on-prem software onto the company's IT operations team to manage - it's actually <em>easier</em> to integrate SaaS companies when it comes to acquisitions. Why? Because of the "versioning debt" problem inherent in the on-premise alternative. Simply put, on-prem software requires huge engineering, support, and professional services costs to maintain multiple, legacy versions of the software. And, perhaps more significantly, these costs become <em>multiplicative</em> when you add in acquisitions.</p><p>At HP, we had to support 'n' versions of every legacy product family - not just HP's own Openview system, but products acquired from Opsware (which was how I came to HP), Mercury Interactive, Peregrine Systems, SPI Dynamics, and so on - each with its own unique configurations, integrations, and supporting back-end systems. The compatibility matrix of supported combinations made Microsoft's massive device driver library look like a beach-read novelette!</p><p>SaaS mostly rids us of the versioning debt problem by shifting the onus from the customer to the vendor, who determines the size of the compatibility matrix. (Not to mention that the SaaS vendor also has the data across multiple clients to make sure things really work given the inherent multi-tenant architecture <a href="http://a16z.com/2014/05/13/understanding-saas-valuation-primer/" target="_blank">of SaaS</a>).</p><p>None of this is meant to trivialize the support required of SaaS vendors to ensure customer success, but it does reduce a barrier to M&amp;A activity relative to traditional on-premise solutions. And owning the responsibility for the success of your customers - as SaaS vendors must do - is a great form of long-term customer-relationship management and stickiness. Instead of sitting on the shelf unused as often happens with on-prem software, SaaS products are <em>actually</em> used - tying the runtime success of the customer to the success of the vendor. There's no better example of an alignment in incentives that ensures SaaS M&amp;A would be more successful in the long run.</p><p><strong>* * *</strong></p><p>Ultimately, when it comes to software, SaaS, or any other M&amp;A it's useful to view it through the lens of "growth or non-growth?"; we can't treat both the same when it comes to objectives and outcomes. You can't judge a SaaS deal book by its cover.</p><p>And only time will tell whether "growth" M&amp;A among the tech incumbents is on the rise - or whether the activity of the past 30 days is simply a flickering mirage in a long-dry desert. But, if conditions remain ripe and the activist barrier is indeed on the decline, growth may be on the horizon.</p><p><em>Scott Kupor is the managing partner at venture capital firm Andreessen Horowitz. This post <a href="http://a16z.com/2016/06/08/saas-mergers-acquisitions-trends/">originally appeared on Andreessen Horowitz</a>. It is reprinted here with permission.</em></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/google-opens-campus-seoul-startups-korea-2015-5">Google opens up a 21,000-square-foot campus in South Korea for startups</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="swaHVhdTpQ39OXNWrkpqJkA-QbVzp7qe" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

You Searched For "openview venture partners" and got 10 results

Meet Boston's new power venture capitalist

Melia Russell

Profitable Australian DevOps startup Buildkite explains how its new $28 million in funding will let it spread the word about being 'the best-kept secret in the developer tool space'

Rosalie Chan

A VC cataclysm has begun. Early 2024 will be rough. But it won't change anything.

Julie Bort

The market crash could finally break Big Tech's addiction to subscriptions

Paayal Zaveri

10 things in tech you need to know today

Shona Ghosh

One of Satya Nadella's former lieutenants just raised $75 million for his startup Highspot to build the 'missing layer of software' for salespeople - and Salesforce is an investor

Ashley Stewart

Data analytics company Datadog soared 39% on its first day of public trading. The CEO says its next big thing is hiring: 'I spend my days making sure we hire people well.'

Rosalie Chan

A Successful VC Reveals The Big Secret Behind Becoming A Great Investor

Lisa Eadicicco

Education tech startup Instructure has raised $40 million

Jonathan Marino

Not all software M&A is created equal

Scott Kupor, Andreessen Horow…

Popular Keywords

Buying Guides