If you’ve been to any recent SaaStr Annuals, you’ll know that one staple of the event is Byron Deeter of Bessemer Venture Partners launching the latest edition of Bessemer’s State of the Cloud — live.

And while we had to re-imagine the Annual as an At Home event for 2020, both Byron Deeter and Elliott Robinson of BVP were gracious enough to update the State of the Cloud 2020 to include their learnings of COVID-19’s impact on the market.

A few key learnings and top trends to consider:

#1 There is unlimited potential; even with COVID ‘craziness’

As we continue to face and adapt to the challenges of COVID-19, many companies are turning to Cloud for Business Continuity and growth. During the COVID crisis over 400,000 storefronts made the switch to e-commerce. This will usher in unlimited potential for new innovation and growth in SaaS and Cloud.

# 2 Cloud is Eating Software

Just twelve years ago, the entire market cap of top five cloud companies was less than 14 billion dollars. Rolling forward just seven years that has jumped eight times, and another staggering 61 times in twelve years. Now, across all industries, 94% of companies today use at least one cloud solution. The astonishing fact is: cloud is eating software. In just five years, Cloud will become the majority of the software market. By 2030, it is predicted to take over all technology and software. Think of this take over like a Pac-man eating effect. Cloud will continue to consume until there is little to nothing left. state of the cloud BVP

This poses so many questions to business owners and investors. Is this good or bad? Is there potential? Is this growth sustainable?

YES- zoom out, think of not only cloud and its current market size, but at the tech industry as a whole. The tech industry is our addressable market. Hardware is turning soft, and software is empowering innovation. It is predicted a large percent of global GDP will be cloud based in years to come. 

The truth is- Cloud is still in its early days. It has an extremely long and powerful future ahead. 

#3: In the cloud economy, scale wins.

In the last decade cloud companies have scaled much more rapidly than in the past. All cloud giants entering the market today, grow much quicker. This is mostly due to “finding your second app.” A software company called Toast, started off as a P.O.S system, and offered payroll and capital as a second app. 

#4: Invest behind the cloud sales and marketing curve. 

Your early days of marketing are known as your Initiation days, here is where you gather your founder-led sales and wear multiple hats. Next you’ll tackle your transition phase to test two or three reps. 

During these phases, make sure to calculate your CAC payback. This is crucial to analyzing a period back, and finding out how much it costs to acquire a customer. To find this, divide by the gross margin. How many months does it take to turn a new customer into a profitable customer?

This is important today since there is so much uncertainty in COVID. You must figure out payback on a monthly basis. Nail it before you scale it.

#5: Tone starts at the top

Yes that’s right, as the founder and CEO it is essential to clearly state your company’s mission or vision. Be sure to:

  1. Define culture and core values.
  2. Report on employee engagement metrics.
  3. Conduct 360 feedback. 

If you can’t measure it, you can’t change it.

2021 Predictions:

  1. The future of work will be remote. 
  2. Privacy Debt will be the new technical debt.
  3. Cloud Industry will continue to proliferate around the globe. 
  4. B2B transactions move online. 
  5. The API universe will drive innovation across all industries 
  6. We’re entering the age of “automation at scale”. 

Watch the full State of the Cloud 2020 below, or click here if you prefer to listen to it as a podcast.

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