A very curious thing has happened during this very sad and stressful time: the Era of the SaaS Decacorn has firmly arrived.
— Amit Karp (@amitkarp) May 15, 2020
When I started as a SaaS CEO, there was only one SaaS unicorn: Salesforce. Its market cap at the time was $2.6 billion. I remember from our Series A VC pitch.
Let’s look where we are today, after an incredible run for many SaaS and Cloud leaders since the temporary (for now) drop after Covid-19 hit. It’s breathtaking:
What was a unicorn is now a decacorn. And it’s been accelerated, for now, by how the world has changed.
One piece, of course, is work-from-home. That’s accelerated more Cloud leaders than it has harmed. It’s not just Zoom and Slack. Many other functions have quickly moved to the Cloud, e.g. call centers like RingCentral and Five9. When I invested in Talkdesk in 2014, Five9 had a $150m market cap. Today, six years later, it is $7 billion. Let that sink in a bit 🙂
Will it last? Well, it sure looks like it for now. For now at least.
According to Gartner, while IT is undergoing one of its most massive contractions of all times … -8% (!) in 2020 … Cloud and SaaS are still growing. Cloud is still projected to grow +19% in 2020, and SaaS 20%+. That’s during a -8% contraction in IT spend. In addition, in Gartner’s May survey, 50% of CIOs are now increasing spend in automation. That’s fueling a lot of this.
Should SaaS and Cloud deserve these all-time high multiples? That’s an existential question for the stock market. But there are winners and losers in every crisis. Before it hit, Cloud was a big winner. Shelter has accelerated this in many cases. “Digital Transformation” is being pulled ahead by years.
The Age of the SaaS Decacorn is really here. Who knew it would be a global tragedy that would do it? It’s hard to not have some mixed feelings. But it’s time now to dust yourself off, and take advantage of what the world is today. Focus on the areas and customers you have that are growing in these crazy times. They are still buying. In fact, they are buying more.