Today, we’re doing something we’ve been waiting to do for a while: we are saying goodbye to 2020.
While it’s been difficult, 2020 has also been a time of great progress in the startup ecosystem. Not only have we seen extraordinary efforts to advance technology and experiment with new business models, we’ve seen many individuals and organizations taking important strides towards building a more sustainable, equitable and inclusive future. This year, Greylock began working with several new promising companies operating across a wide range of technology sectors; added two general partners to our investing team; raised our 16th fund, partnered with the nonprofit Management Leadership for Tomorrow to help improve diversity in tech and VC; and watched proudly as long-time portfolio companies Airbnb and Sumo Logic went public. Throughout it all, we’ve been consistently impressed with the resilience and adaptability of entrepreneurs and everyone around them. We are grateful for everyone’s hard work to make the most out of a most challenging time.
In this episode of Greymatter, Greylock investors share their thoughts on how the past year impacted entrepreneurship, and how it may continue to influence startups and investing going forward. You can listen to the podcast here.
Full Transcript
Sarah Guo
2020 accelerated shifts that were already in motion – in a massive way. I call it “the pandemic leap forward.”I think we’re going to see a lot of new categories created based on the crises of these past 10 months.
For example, I’m very bullish on video as a platform. With cons ers accustomed to it – and advances on enabling infrastructures, such as WebRTC – we’re going to see massive innovation on the experience side across a range of use cases. I think one category that is going to emerge is virtual workplace (in this area, we’re invested in Remotion). As everyone accepts that remote and hybrid teams are the new normal and fights to stay connected and productive in that mode, they’re going to adopt new tools. I also think that a remote workforce will by necessity be a more global and fluid one. [The current crisis] enables that opportunity. People have been talking about the gig economy for a long time, but that’s a very narrow view of the extended workforce, and companies – especially large ones – work. They can’t go from having full-time employees to those who are just going to do an hour of work, dynamically, for them. But there are a huge n ber of people in companies who want all sorts of arrangements in the middle (in this area, we’re invested in Utmost, which helps companies connect with a more agile workforce that they don’t own and can instead build different types of alliances with). This points to our belief that extended workforce management will be a category.
[Another area of opportunity] is illustrated by events of the past week like the Solar Winds breach. It’s a generational event – we’re still finding out how bad it is. But clearly, we need to be thinking about saas security, andmore broadly, technology that identifies activity that uses legitimate credentials in your business’s critical applications such as email share and HR CRM. That will be a category where you can’t rely on perimeter defense and fragmented logs in your SIM. So I think 2020 is going to change a lot in terms of the opportunities that emerge because it has brought into focus new opportunities, and the landscape has changed how we all work.
I know that in the investing world, the pace of doing business has dramatically accelerated and it’s also created more focus for me. I think a common thread in my investing in 2020 – in how I’ve looked at companies and helped support them – is the way we find products or goods today: It’s clearly digital first – it has to be – and I also think it will stay that way. I was already investing in B2B software companies that you could call D2C, product-led, growth companies (think Clubhouse, Figma, Remotion, Coda – but I think it’s very simplistic to call them bottoms-up. There’s huge variance in how these companies actually operate. Some are middle out, developer-adopted, mid-market to enterprise purists and B&I.
There’s this [narrative] that we’re going to build these companies that don’t have sales, but that’s just not true as most companies scale. One thing that I believe that’s come sharply into focus in 2020 is companies that are doing this modern go-to-market. They’re building a unified engine that involves product marketing, sales and success. So I’m trying to identify companies that have built this and also support my portfolio companies in doing so. That’s a huge area of focus going forward.
I don’t think it’s possible to talk about company leadership in 2020 without mentioning [Zoom CEO] Eric Yuan. His ops team is keeping the world economy running. He expanded his video conferencing network into a cons er and education business. I remember talking to Eric in 2017 and him telling me like, “Sarah, we’re just not going to travel for business in the future. I hate traveling for work. It just doesn’t make sense.” And apparently the man is right. He deserves major props for the work he’s done this past year.
This has been a tra atic year for the world, but it’s also just a time of huge opportunity for the people who are building new products. I’m so inspired by the amount of creativity that’s out there today because there’s just a d p truck of problem statements around everything from the supply chain, to accessibility of healthcare, to how we work together. And so 2021 will be better.
Reid Hoffman
The obvious impact of 2020 is the changes in our work – and our life, through extension – through the digital internet. For example, we’re going to be much more comfortable with telemedicine as a frontline response and there will be regulatory change to it. That’ll be true for education, that may be true for work, it will be true for entertainment. And we will now have a wide variety of usage patterns of all the services that will now be advanced in way.
[Microsoft CEO] Satya Nadella said at the very beginning of the pandemic that each month is a year-plus of digital transformation. I think the thing that is perhaps less obvious is that our current engagement of digital – and the network and the phones and the computers, through all of these aspects that really matter to us – will persist, and I think they’re now going to be more deeply integrated as we come back together. There is this notion that we are now more fragmented, that it’s rolled back the clock on how many companies will work completely distributed only, et cetera. But I actually think that will change back relatively fast. But it will happen in a way that all these tools that have changed how we think, how we make decisions, how we communicate, how we entertain ourselves, how we deal with our health – those tools will still be as present. For example, you could be sitting with your doctor and leveraging [digital] resources while you’re seeing your doctor. You may have seen your doctor first through telehealth, and that experience will go into how you go into the doctor’s office. Or [your virtual experience] will go into how you will be educated when you are in the classroom, or when you go into work. All of those things will return at a strong vigor, but will now be with these digital amplifications.
One thing that I’m going to personally do differently is that I will actually have a much broader geographic spread. So as opposed to simply waiting for when I am going to be in town or arranging the trip to do a range of things from board meetings to business conferences, I’ll think, “Well, is that a business conference I really want to go to, or will I actually now only be digitally connected?” And so I think 2020 will change patterns of contact and communication at a much broader range. I think there are many more digital-only events (that I will actually, in fact, participate in), in between the in-person events. For example, conferences will now not just be the conference. I think there will be in-person business conferences, but they will now actually have slices of the event throughout the rest of the year and then those will be integrated so it’s the digital and physical aspects combined.
Obviously, 2020 was this asteroid hitting public health, hitting society, hitting the economy. Entire industries were just smashed and disrupted. Obviously, this happened most prominently to travel, entertainment, restaurants and all the rest of that.
In terms of leadership, I think [Airbnb CEO] Brian Chesky may very well get the 2020 prize, because when the asteroid hit, it would have been easy to just say, “Ok, I’m buckling out, it’s all very painful.” As opposed to that, he said, “Hey, we participate in all of our communities.” Sure, he had all of these strong growth areas of the business, and he could have just acted like things were as natural and usual as ever. But he said, “Actually, in fact, those projects are now gone because we now have to re-plan from zero. And while we have hired all these really, really amazing people, we have to part from them in ways that are of the highest dignity for them and for the company.” This includes helping them get placed, not just, “Hey, too bad. So sad. We’re only keeping the best people.” It was actually like, “No, we’re releasing great people. Let’s really try to help them. Let’s try to make sure that that’s part of our community. Let’s try to balance out and share the pain with our hosts and our guests, giving our guests refunds, and covering a substantial portion for our hosts who are dealing with this asteroid. We have to try to keep the community vibrant and healthy, to try to keep the network and the marketplace vibrant and healthy in order to adapt. And then let’s immediately enable them with whatever tools we can for our host to adapt to a new pattern of traveling and new ways people will search to try to get to our hosts. Let’s get as smart about Covid safety as fast as possible. Let’s learn how transacting a home or a room or an apartment might be, and what the interest and demand of the travelers will be. And I think Brian led through what could have been just an instance of “Oh my God, it’s all about me.” Instead for Brian, it was all about his employees. It was all about his hosts. It was all about his travelers. It was all about the new traveling experience; the new experience of belonging. And he took a n ber of proactive, very difficult, very bold moves early to return to retrenchment and then growth (again) very fast.
2020 is obviously going to be a landmark year for a lot of different things. There were clearly massive failures across society and with the response to the pandemic: uneven shut downs, hundreds of thousands of lives lost within the U. S., millions of jobs, trillions of dollars in debt and all essentially because of a deeply incompetent federal government, and states trying to rise to the occasion.
But how has this changed entrepreneurship? The answer is actually, “Not necessarily that much.” Entrepreneurship is, in fact, the changes in the market, the changes in technology, the changes in product services, the changes in the way that talent generates products and services. That’s entrepreneurship. It’s crossing that ground and building the new thing, and either innovating or renovating or reinventing. That pattern is actually more of the same. Sure, a startup company has to work remotely and use tools in order to do that and keep up their energy and connections to new hires while doing that. They had to assess markets, they had to raise capital, they had to do all of these things that affected what they were thinking about in terms of the product design. It affected their go-to-market strategy and how they reach customers. All of that, of course, was very different in 2020, but that adaptation is the route to the entrepreneurial journey. Whether it’s 2019, 2020, 2021, 2022 – as things change going forward, entrepreneurship will just adapt and learn. This year is within the general pattern of entrepreneurship.
To some degree, I think 2020 will actually turn out to be (in retrospect), a very good year to have started a company because many strong companies are started during downturns, during recessions, during periods of adversity. You have less competition – which tends to be the driving characteristic for how much runway an entrepreneur gets before dying. Getting into competition, the things that slow it down is how it operates. And so that’s why I think 2020 hasn’t really changed entrepreneurship that much. If anything, the social injustice that was brought to such crystal clear view by the murder of George Floyd and the paucity of the federal government’s response to it – the importance that we need to be building a society that we’re proud of and that we need to be diverse and inclusive – that sort of thing really needs to be added in because you’re looking at this and you’re knowing that entrepreneurs tend to hire immediately from the networks And I think many entrepreneurs started thinking, “Ok, how do I have a network that includes people of color, includes disadvantaged minorities as much as possible, to include them from the very earliest stages in those journeys?’ That’s what we did at Greylock by partnering with Management Leaders of Tomorrow and looking for various ways that we can build a network to include these other minorities in the earliest stages of startups, founders, executives, employees. It’s about what we’re doing in investing and in what we’re doing in the technology ecosystem, writ large.
One of the things we do as investors is to always be looking for the brilliant new idea that will come to us through the creativity, innovation, and the brilliance of entrepreneurs. So rather than predicting this ourselves, we look for where entrepreneurs have seen what 2020 is and what its crises have made possible.
Now, I can say a little bit of what I hope for: it’s a fact that part of what makes things happen is new platforms – web 2.0, Facebook, LinkedIn, Twitter, Airbnb marketplaces, etc. What I hope for is a platform for general entrepreneurship. Because in order to make our way out of this economic crisis – which we’re going to be in for years because of the pandemic, the asteroid, the incompetence of the Tr p administration’s response – we’re going to need entrepreneurship everywhere, not just in technology companies. [We’re also going to need] entrepreneurship for things like what we are going to do with all the closed restaurants, and reopening and what we are going to do with the changes in business. We’re going to need entrepreneurs to create new products, new services, and new middle-class jobs. I hope there is a generalized platform across the country to help with that. That is one of the things that I hope emerges and something I hope people are engaged with, and I hope it helps a whole, wide variety of businesses start. And obviously the platform itself will be a technology platform. Think of it like Airbnb (like what Airbnb was doing with magical trips and experiences), but if you had a platform that helps general entrepreneurship across the country. I hope for that and I think we should all support it. I think we should all get a lot of entrepreneurs engaging. It might come from Techstars, it might come from Endeavor, it might come from any n ber of places, but I think it would be a very useful thing for the country.
One of the things that the lasting impacts from 2020 will bring on startups is that a n ber of different areas of the world of the U.S. will now have startup teams that will have gotten funding and gotten going in geographically dispersed ways. That dispersion will mean teams starting in different areas and starting in a distributed team way. There will now be a set of tools that entrepreneurs will then deploy in certain kinds of startups going forward. Venture capitalists and angel investors will invest in those kinds of areas. It won’t be the only pattern. It won’t be the only way these happen. I think we will actually get back with reasonable vigor to the typical way of doing things (there’s a reason why there’s a density around Silicon Valley, and there will be a rejuvenation of that). But I think we will also have this other pattern continue as investors and as entrepreneurs learn there is a new path for starting companies and getting them going.
I guess I look at 2020 in three ways. One: how are entrepreneurs launching new companies within the specific markets of 2020 and 2021? Two: what are the early ways of getting on board? And last, how will companies continue to change and iterate from [2020/21]? I’m always a student of that. Actually, in fact, I think the way that companies got launched and which companies were right in 2018 was different than those that did so in 2010. [You have to think about], What is the technology enabling? What does the market allow? Where do you see it coming? What is the way that you go to market? What is the way you hire? All of these things are our learnings and are our process. That’s part of the reason why we do Masters of Scale, why we do Greymatter, why we launched Blitzscaling.
Now, in terms of the difference in the way that I approach my investments is that when I see something really shaken up, I don’t necessarily go to what I think is the intelligent, common sense or common wisdom. For example, we’re all going to go look at telemedicine, we’re all gonna look at tele-education, we’re going to look at digital tools. Although we’ve been doing those areas and tools for years – for example, Coda and things like Figma that are in the Greylock portfolio – they are obviously amplified by 2020. But actually for me, what I tend to do is then look farther afield into something like the discovery of cryptocurrency or autonomous vehicles and those kinds of areas. Where is something that is now suddenly dislocated? That is the brilliant thing – usually brought about by an entrepreneur – that you can now see as possible. So I’ve doubled down on looking for these kinds of prizes; looking for the things that are like, “Oh, that’s different. And if that works, that’ll be huge.”
Mike Duboe
One of the areas I’ve been spending a bunch of time on over the last handful of years has been around e-commerce. And I think we’ve all seen that this year has shown basically a decade of progress on e-commerce penetration. It’s all within one year of Covid. Some might argue it’s been out of necessity, given that physical retail has been closed, but I have a strong belief that this pandemic has actually accelerated adoption of e-commerce in a way that’s going to be more permanent for most categories. As people have seen the convenience of not only shopping from their favorite D2C brands online, but ordering groceries, it just kind of reset expectations on what a modern commerce experience looks like.
The part that’s exciting for me – is how I am thinking about investing behind this – is the enablement technology around e-commerce to allow businesses to set up, operate, optimize, and manage their storefronts, with very minimal headcount, in a more efficient way. It’s never been more important than it is right now. I was bullish on e-commerce infrastructure prior to all this, and I walk out even more bullish on that. That’s one of the areas that I think is definitely gonna endure.
I continue to spend time around B2B marketplaces, and the thesis underlying many of these is that the way we buy in our cons er lives is a different world than the way most B2B purchasers go through their own commerce experiences. And I think while B2C commerce has seen a complete wave of innovation over the last handful of years, B2B commerce methods still stay largely offline. Take any B2B vertical, and you are largely doing [business] over pen and paper or sometimes fax machines. Discoverability is very, very limited. There haven’t been any real transparent marketplaces or apps. So, in a year where so much analog behavior has been forced to modernize, I think we’re going to see a big acceleration and adoption of modern purchasing solutions for a lot of these B2B verticals that were previously lagging.
As far as an impressive go-to-market strategy or pivot, one of the businesses I have been fascinated by is Faire. I spend a lot of time in B2B marketplaces and I think Faire has become a category definer here. At the start of the pandemic, one might have taken a look and seen that physical retailers were shutting down and businesses were going to go to zero. And one of the things Faire did that was so impressive during all of this was to make a bunch of changes in a very short period of time. One of the products they actually launched in the midst of all this was a virtual trade show product. The biggest competitor to the behavior that Faire enables is retailers and suppliers going to trade shows and forming relationships that way. So Faire basically capitalized on the fact that exact behavior was prohibited during the pandemic. They built out their own virtual product to onboard more suppliers and retailers onto the network, and that worked exceptionally well. The model that also became more compelling during the pandemic was Faire’s payment terms and free returns. It was basically risk-free procurement for these local retailers which is basically a lifeline for them at a time when they needed it to stay alive. And I think they will come out on the other side of this looking tronger than they did going into it.
Jerry Chen
2020 has changed so much of our everyday lives, and I think some of these changes will become part of our daily habits. Work-wise, we’re going to be doing more Zoom meetings, more remote teams, and more distributed teams, for sure. For sure, we’re going to do more delivery of food and groceries as a country and population. But I think one of the habits that I’m going to do differently going forward is a reverse habit: after 12 months of not seeing friends, family and not traveling, my goal in 2021 is to make up for lost time and really appreciate the freedom of the flexibilities that we lost. I think for me, the tough part was feeling like I can’t even go to a different state or a different country or hug a family member without first quarantining myself. So going forward, what I would do differently is travel more, see my friends and family more, and hug them just a little bit closer,
2020 has changed founders and entrepreneurship in very different ways, from a business model perspective, a crisis management perspective, and also a people perspective. From a business model perspective (and the ability to make decisions), I think the shocks of the early quarantine and Covid crisis created a sense of war time, because they had to understand how their businesses would change and how the economic slowdown of the recession would impact them. Then, they could either be surprised or disappointed when the recovery did not help or hurt their business, respectively. So I think 2020 taught founders about why we always say success is never a straight line. There are always ups and downs. And no one thought those would come so close together in one year. I think it taught entrepreneurs that resilience matters.
I think, more importantly, 2020 changed how you deal with and manage the people. Oftentimes you think of these founders as brilliant technologists and brilliant visionaries, but more than ever – with everyone working remotely, being distributed, dealing with a healthcare crisis economic crisis, and quite frankly, a societal crisis with the Black Lives Matter movement and with the elections of 2020 – the ability to recruit, lead, communicate and inspire your team as a CEO (all behind a Zoom camera) became important. And those leaders and those entrepreneurs that were able to maneuver their business model as well as inspire and keep connected to that people side of, of leadership and entrepreneurship became even more important this year. And I think going forward, those leadership skills of founders are going to become even more important.
2020 was a series of shocks and a series of adventures, if you will. When we were in the early days, we didn’t know how the economy would suffer or recover. We didn’t know what sectors would thrive and which sectors would fail. But one thing that has stood out is how both the economy and the stock market have told us that cloud technology is what author Nusseem Taleb calls “Antifragile” in many ways. The stock, IPOs, and valuations of both private and public cloud companies means we realize how this technology is going to be both a big part of our lives as well as a powerful business model – perhaps more powerful than we realize even as investors.
I think one of the Cardinal sins as an investor is to underestimate how big markets can be; how big the TAM could be and how fast the market can expand. And so one of the things I’ve talked a lot about is not only how cloud is such a powerful business model – think of infrastructure like Amazon Web Services, saas companies like Workday and Salesforce, or startups I’m involved with like Rockset or Chronosphere, Gladly, Spoke or Blend – but also how I think about investing. A), cloud or cloud-only is such a powerful wave to ride, and B) it has reaffirmed my aggressiveness and belief that this is really the right business model and the right technology. Cloud companies are[ operating in] less fragile of a market and business model than I thought before. They are quite powerful, because they basically could withstand all the shocks of 2020.
2020 was such a crazy year from a healthcare perspective, social unrest perspective, and political perspective. There are a bunch of products and services I cannot survive without in 2020, and they’re everything from the little things. If it wasn’t for Netflix and just binge watching great content in between watching the electoral map every night, I don’t think I would’ve kept my sanity. If it wasn’t for all the on-demand delivery of food and groceries, I probably would have burned down my apartment long ago trying to cook. I think we underestimated precisely how much these on-demand services and media content services would change our life day to day. And it has really become a daily habit for me and will become a daily habit for me going forward.
2020 showed us a great amount of leadership in different areas of technology, economics, and politics. But really, I think that the leaders I admired the most this year were the ones in charge of our healthcare: I admired Dr. Fauci and was always watching his calming demeanor during press conferences. I also admired the mayor of San Francisco and the governor of California London breed and Gavin Newsom, respectively, for being aggressive and honest about taking precautions around our healthcare and the economy in the early days of the pandemic. I think it’s often hard to be a leader and to do the most unpopular things like speaking truth to power. All of our leaders who spoke truth to power – or spoke truth to people who didn’t want to hear the truth – and made the tough decisions, I admire their leadership this past past year for obvious reasons.
There were a couple of surprising changes, around go-to-market strategy. When air travel disappeared and everyone had to do business, sales, and marketing calls over phone and video conferences (be it Google Meet or Microsoft Teams or Zoom), a lot of companies and founders and sales executives thought that the large enterprise deals – those seven-figure deals where we had steak dinners with the CIO or CEO – were going away. And it might be true that steak dinners are going away (because going forward, you’ll see less business travel, more remote work, and more distributed work), but the surprising things is that the great founders, the great sales teams, and great go-to-market teams have figured out how to close those large enterprise deals over Zoom, chat, and email. While I think field reps and a great sales team is still a powerful weapon and a resource for every company that invested in them, I think that the fact that founders and companies were able to figure out how to close large enterprise deals has made a big difference. Increasingly, we know for a fact that a bottoms-up line of business adoption and persona- or practitioner-led adoption for go-to-market has become more powerful and more of a weapon. And in 2020, that certain point – the wedge to a single user, a single line of business, a single department is a better way to go when the CEO can’t meet people face-to-face or meet people in a conference like VMWorld, for example. Those are powerful weapons, and teams that could invest in those events have benefited, but the teams that still figured out a way out to do these large, seven-figure enterprise deals [without those in-person situations] have a powerful skill. Those teams have figured out what will benefit them going forward.
David Thacker
I just joined the firm in June of 2020, so right in the middle of the pandemic. I’m now six months into the role and I haven’t had an in-person meeting yet with my Greylock colleagues, which is pretty amazing. Everything has been remote or over Zoom. But I’ve still made a few investments in my first few months here. That’s despite not having interacted with any of these founders in person during the process – everything’s been over video conferencing. So I think the amazing thing about the venture world is that things have continued to move forward – startups are still getting started and entrepreneurs are still raising capital in this environment.
I think there’s going to be a lot of long-term impacts that persist post-Covid that impact the way startups operate. I think the biggest I’m seeing right now is just the way startups work out of necessity. Startups have been forced to move to a remote structure (like many companies around the world have), but I think the difference with startups is that many of them are permanently moving to a remote-first office model. Newer startups that are starting are deciding at the outset they want to be remote-first. That means they’ll never have dedicated physical office space for all the employees to be under one roof. I think that’s a big change. Prior to the pandemic, there were startups that were remote-first like Buffer, GitLab, and Zapier, but it was a pretty rare thing. And now what you’re seeing is it is becoming very mainstream, and I think this will continue to persist. There’s a lot of benefits to the startups themselves. Companies can hire basically anyone in the world, so they get access to a much bigger, broader talent pool. As we’ve seen over the last decade or so, the biggest challenge for every startup has been just hiring great talent – there’s really a scarcity and a shortage – but this really changes things. I also think there are big benefits to employees. They tend to be much more productive and happier when they can work from wherever they want. There’s no commuting, and with the advances we’ve seen in collaboration tools like the Google suite of tools or video conferencing, those tools have really made it possible to work in this way. And so I think you’re going to continue to see that, that going forward.
This pandemic in 2020 has changed so much about our everyday lives. As venture capitalists, one of the big things we’re trying to figure out is what are the changes to cons er behavior that will persist post-Covid. What’s going to go back to normal? I don’t really think we’ll ever go back to the way things were before 2020, but I do think some things will moderate cons er behavior post when the pandemic subsides. There are a couple of categories I’m really interested in that I’ve been tracking. One has been gaming, and gaming has seen a surge and a boom during the pandemic. People have had more time and they’ve been at home, so you’ve seen more cons ers gaming. This is everything from people rediscovering gaming after having not played many games recently, to kids spending a lot more time online now that they can’t meet their friends in person, so they are using games as a way to interact with their peers and with their friends. Gaming is already the largest category of digital media. It’s going to continue to grow, in our opinion, at a very healthy rate. It’s much more than just playing games; it has really become a social activity. The best, most successful games and gaming platforms that have come out are really social and multiplayer experiences. This is the way people are interacting with their friends in a digital environment. It’s even the way some people make friends today. They may gain friends in these games that they’ve never been in real life before. I think you’ll continue to see gaming as a big category, and there is lots of opportunity in terms of both platforms and new games. So it’s an area that we’ve been spending time in.
Another big area that obviously has seen a huge boom from the pandemic is e-commerce. The sector had already been growing very steadily, but with the pandemic, we’ve seen years of acceleration and cons er adoption of e-commerce. I think what’s been most interesting is the fact that there have been certain categories of commerce that really hadn’t really moved online yet, but out of necessity, the pandemic forced some of them to move online. So just a couple examples here: There’s what I like to call “high consideration purchases,” where, in the past prior to the pandemic, people would do a lot of research online in terms of products and reviews and things like that. But their preference was to do the final transaction offline in person. So this would be something like buying a home, for instance. But what you’ve seen with the pandemic, companies like Redfin have reported that they’ve seen a surge in virtual home tours, which is where a person can go do a walk through of a home with a real estate agent through video conference. That’s a very cool possibility now, and that’s the way people are touring homes. It’s been really popular. Another example is groceries. Groceries were a category of commerce in which people weren’t really transacted frequently online. Of course, that’s totally changed with the pandemic and people ordering and having groceries delivered. I think once people have experienced that it’s super convenient, you’re going to see more of that as well as in other categories like pet food. Companies like Chewy make it possible to subscribe to buying pet food online and it’s been very popular.[ 2020 has impacted] even things like cars. Buying a car, online without driving the car in person before purchasing it may seem like a foreign thing, but it’s increasingly popular. You look at Tesla, which sells all of its cars online, and companies like Carvana and Vroom which allow you to buy a used car through a website and have it delivered to you. It’s pretty, pretty amazing. For cons ers, this is more convenient and there’s a better selection, and oftentimes better pricing. With the advancements in distribution and fast shipping, where you can get products delivered the same day or next day, it’s incredibly popular. So I think we’ll see a lot of this persist and you’re going to see all these categories continue to migrate to online purchases.
The best example of an oppressive GTM strategy in 2020 has come from Zoom, in my opinion, and Zoom has certainly been one of the biggest beneficiaries of the pandemic. They’ve seen tremendous growth in a very crowded space. So when you look at Zoom and you ask why they were so successful when others weren’t, I think it really comes down to three reasons: The first is where they decided to focus and optimize the product, which is making the video conferencing product work really well for people calling in from a mobile phone or a laptop over an internet connection that may not be great. You think about the legacy video conferencing providers, like WebEx, and they have really focused more on the high-end of using proprietary hardware in a conference room scenario with high speed internet. With a pandemic and everyone working from home, Zoom had the perfectly placed product for the market. The second aspect of Zoom’s strategy has been the viral growth model, where most people attend a Zoom meeting for the first time when they are invited to a meeting, and they see it’s very easy to j p into it through a web browser after downloading a quick plugin. Then [Zoom] is able to convert those users (who joined as a participant for the first time) into hosting their own meetings. And you can do that for free with virtually no friction at all. The third aspect that I think is really interesting about their model is their freemi strategy. And, you know, many enterprise companies and cons er companies have successfully employed freemi strategies. I think zoom was very clever about their paywalls. You know, they have no friction to host the meeting up to 40 minutes, but if you want to host a meeting longer than 40 minutes, you actually have to convert to a paid subscription. And so people get a great experience for the first meeting, they host in 30 minutes, and if you’re using Zoom for work or using it for your organization, you’re eventually going to hit that 40 minute paywall, and you’re going to say it’s well worth the upgrade to the paid product. Which is why they’ve been so successful in driving their business. Now, Zoom is a general purpose video conferencing solution with really horizontal use cases that are really geared for the enterprise.What’s been amazing in the pandemic is it’s been embraced and adopted by cons ers and all other types of organizations to run their virtual meetings for combination of these reasons around their GTM. This is showing that there’s a massive need for video conferencing solutions for virtual solutions, so I think this is gonna be one of the most exciting areas of startup activities, because I think you’ll start to see purpose-built solutions in the cons er world and in the enterprise world for certain types of activities. For instance, to attend virtual events, you’ve got companies like HopIn in or Welcome that are helping build this. You think about all the types of things you can do virtually, so there needs to be a great purpose-built solution and with advances in technology like WebRTC. We’ve seen the browser get a lot better, so I think there’s tremendous areas here for startups to build interesting companies.
One of the things I’m personally going to do differently once the pandemic ends is continue to try to attend many meetings and many events virtually and remotely, as opposed to in-person. When I look back to my life before the pandemic, I – like many professionals – had the lifestyle where I was commuting five days per week to an office location, spending two hours a day in gridlock traffic, I was frequently traveling for business to other cities around the world either to visit colleagues or to visit customers. What I found during the pandemic is that I have been just as productive, if not more productive, doing these interactions virtually because the technology and the tools have gotten so much better to allow for this. Not only does not having to travel result in tremendous time savings and more efficiency, but it’s less costly. Plus, it’s better for the environment and it gives me more time to spend with my family. Of course, I think once the pandemic ends that people are gonna want to go back to in-person interactions, but I also think professionals will have a higher bar for when we’re willing to take that on versus doing something virtually. We’re seeing these technologies and tools that allow video conferencing and virtual events get better and better, and you can imagine that every year they’re gonna get even better and be more engaging, more immersive, and just better substitutes for the real thing. They will be able to displace a lot of things that were previously only done in person. You are also starting to even see that in the cons er world, for instance, when people are able to attend weddings remotely, they’re able to close on a home remotely; a lot of these interactions that used to have to happen in person can now happen virtually. And I think that’s a big win for everyone.
David Wadhwani
I have been largely focused on enterprise investments. One of the core areas I’ve been spending a lot of time is looking at the convergence of three very significant trends. The first is around real-time data and how it can reshape the way enterprises operate. The second one is around how, with that real-time data, you can apply AI and ML to do better root-cause analysis, understanding and explainability around what that data is telling you. And then thirdly, with the rise of API adoption across platforms, how can you actually take that understanding of that explainability and convert it automation, execution and action on the back end of it.
2020’s impact on how I approach investment opportunities is probably a little bit more nuanced. On the one hand, it hasn’t affected what I look for in the fundamentals of the business. I’m looking for great founders that I’m excited to work with, I’m looking for big markets to go after, I’m looking for disruptive technology, and I’m looking for a predictable initial insertion point that we can build the beginning of the business on. What [2020] has done is changed my risk tolerance. I am willing to take on more risk, and the reason for that is – as you think about the biggest shift that 2020 has driven – it’s accelerated 10 years of digital transformation into a few months.
As you think about these large organizations around the world that now view themselves as digital-first businesses, they’re willing to spend hundreds of millions of dollars on vendors that will help them be successful. And so I think what this will lead to is a few more winners than we would have had without this acceleration of digital transformation. But the bigger thing it will lead to is that the outcomes of those winners will be much larger than they would have been in the past. So I’d say the fundamentals haven’t changed much, but the potential reward has gone up and that’s driving how I think about 2020 will have a lasting impact on how companies think about their enterprise go-to-market motions.
Conventional wisdom was that you can’t close big deals without many direct face-to-face relationship building meetings. It was very inefficient, but it was how business was done. Well, we’ve proven all of that wrong this year. I think enterprise software companies are thriving and business is nearly exclusively conducted today over Zoom. So after the pandemic, I think we will return to face-to-face meetings, of course, but I also expect that we’ll see more efficient, direct sales models that are going to benefit from less travel and from lower overhead meetings. And perhaps most importantly, from product teams that are now designing their products for easier and remote onboarding
2020 has fundamentally changed how startups operate and how entrepreneurs need to lead their organizations. I think it’s fair to say that the pandemic has touched every aspect of how business gets done, but I think about it more and I say there are two enduring trends that will last well beyond this pandemic. The first is a bigger focus on humanity. When I would meet with entrepreneurs in 2019 and prior, the conversations were almost entirely focused on the goals of the business: How does revenue look, or how efficient is the business running? Today, every conversation I have starts with the people: How are the employees doing? How are the customers doing? How is the community that supports you doing? And while we will always still spend a significant amount of our time talking about and thinking about the fundamental metrics and the goals of the business, the health and the wellbeing of the people that make it happen is front of mind in every conversation. And I certainly hope that continues to persist well beyond this pandemic. I think it’s the foundation of how great businesses are going to be built.
The second thing I’d say is around process maturity. When you have a few dozen people in the same office, the process isn’t that important – startups are famous for winging it. But when you have a few dozen people that are never in the office together, you need to identify common ways to share ideas, common ways to get feedback, to make decisions and communicate in general across the teams. And I think both of these things are good, fundamental ways to build great businesses that endure. So I actually think that this mindset will help businesses as they scale in the years ahead,
David Sze
I think 2020 has changed entrepreneurship significantly, and probably more than any year in recent history. The pandemic has forced incredible changes forward in our society, and it’s also forced incredible changes in our consumption behavior and habits, and in testing out things that had not been tried before. The classic examples would be telemedicine and the way we have revolutionized work as people have been forced to work from home. Remote work is a completely different world that will never go back to being the same. Health, exercise and those kinds of things are all changed now and being done virtually. Travel, obviously, has been impacted, but it has caused innovation across so many other vectors, and I think those changes are things that would have taken years and years to be attempted against all resistance and inertia. But as the world changed so dramatically, it forced changes in our habits and behaviors and allowed us to try things out that we had not been able to try before, and we’ll never go back again.
Fortunately (at least for me), as far as my sector focus, the impacts have all been incredibly positive by the challenges that we faced in 2020. I focus on social networking, and being involved with a company like Nextdoor, when all of a sudden social interaction and connection, when people were stuck in their homes became really important online, and local information and local connectivity became incredibly valuable in a way that it had never before been. So it accelerated that experience and I think social has become reinvigorated and empowered by the unfortunate challenges of 2020.
Another sector that I’m involved with is gaming – companies like Roblox and Discord. They’ve all seen incredible acceleration in their businesses as people are stuck in their homes so they look for ways to find entertainment and engage with other people online in shared experiences. [2020] accelerated those businesses in a way that I don’t think ever rolls back again.
Media convergence is another space that I am involved with. And as we’ve seen, people’s desire for media – their consumption of media, the variety of ways and places and types of media that they’ve been willing to engage with – has expanded, broadened and deepened during this crisis as they’ve been stuck in their home. People’s access to their broadband connectivity has become more important than anything else in their home in these times, and that has really helped all of those sectors. I think that that will continue to be a powerful force going forward. Now that habits have changed and kind of become ingrained, when the world opens up – well, hopefully, knock on wood things will get better – we will see some slowing of that, but I don’t think it will ever return to where it was. Always and forever have behaviors of consumption been impacted in those domains.
I think telehealth and telemedicine have been catapulted forward. Those industries have been forced to adapt because of the coronavirus and the other challenges of 2020, and it’s created whole new ways of interacting that people are finding beneficial. I think that there will be hybrid innovations as the world starts to open up again, but we’ll never go back completely and there will be great opportunities created because of 2020’s experience. I think education and ed tech is also something that has been forced to innovate and change dramatically in ways that would have taken a decade to do otherwise, and I don’t think that we’ll ever change back. It will create great opportunities going forward.
Working from home/remote work and the hybrid model will work going forward. That was also something that we were forced to deal with this year and it caused incredible innovation and incredible change. I don’t think that adaptation of behaviors will ever change back. In consumer [businesses] in particular, one of the hardest things to do is to cause a change in ingrained behaviors, and this crisis has forced those dams to be broken. As a result, people are finding new and better ways to do things, and discovering things that they feared actually turned out to be benefits. Things work better, so I think there is a real leaning into those changes that will never be undone. I think there’s new openness to moving forward and trying new things that we haven’t seen in awhile, and hopefully that will carry over into the years to come.
