3rd Newsletter (Week of 6/15)
Welcome back to EVCA's growth vertical newsletter! EVCA is a non-profit dedicated to supporting the emerging (pre-partner) venture capital community. Feel free to visit our website: https://www.evca.org/. Twice a month we'll be looking at the latest news and trends in growth investing in a fun and interesting way, while also helping you get to stay on top of what’s going on in the EVCA community. Subscribe to our newsletter here if you're new!
Future of Work
This week we'll be talking about the future of work, a hot topic since COVID-19 has pushed startups to quickly adopt new tools and move to digital workplaces. While overall software spend will likely decline due to the on-going pandemic, categories related to the future of work will probably be the most resilient as companies look to increase efficiency and continue operations over the coming months. Goldman Sachs came out with a great report which we’ll be breaking down -- here were some our biggest takeaways and main thoughts on the space:
As companies evaluate their current IT infrastructure, we expect greater overall public cloud penetration and migration. Goldman Sachs Global Investment Research estimates cloud penetration to hit 15% in 2021 and to ultimately rise to 18% in 2022.
A recent Gartner survey showed that 74% of CFOs and finance leaders will move at least 5% of their previously on-site workforce into permanently remote positions post-pandemic. This will likely have large implications and lead to more widespread adoption of VDI (virtual desktop infrastructure) and DaaS (desktop-as-a-service) to provide secure work environments for employees across a multitude of different locations.
As we've all seen, communication and collaboration tools have been vital in enabling employees to interact remotely. COVID-19 will likely have lasting impacts on startups as team messaging, content collaboration, project management, and video conferencing platforms become necessary amongst knowledge workers.
Slack added 9,000 new users in Q1, up from 5,000 in each of the previous quarters.
Microsoft Teams added 31 million users in just over a month, now with 75 million daily active users.
Google Meet is adding more than 2 million new users a day worldwide, both for work as well as personal use. Daily usage is 25x higher than it was in January.
Zoom has over 300 million daily meeting participants.
Cloud UCaaS (unified communications as a service) solutions will become more popular, replacing legacy PBX (private branch exchange) architectures, giving employees more flexibility and allowing them to communicate from any device across a variety of modalities.
As retailers move from brick and mortar sales to more digital channels, omnichannel experiences become ever more important. CPaaS (communication platform as a service) can be one way of enabling communications and engaging customers across many channels e.g. text, video, voice, email. CPaaS still has a lot of room to expand especially in more traditional industries and could see accelerated usage.
Remote work has accentuated the need for a centralized system to store and maintain contracts. CLMs or contract life-cycle management and e-signature solutions will presumably play a large role in helping businesses manage their contracts in a more efficient manner and help them leverage data to mitigate risk.
HCM (human capital management software) and FMS (financial management systems) will keep their momentum as companies continue their need to attract and retain talent as well as automate key processes.
According to McKinsey, 51% of time spent in all US occupations is spent on collecting data, processing data, and predictable physical activities. Within those three categories, over 60% of that time is spent on activities that can be automated by adapting currently demonstrated technology. Adoption of RPA (robotic process automation) with complementary AI tools will accelerate as enterprises leverage more automation to redesign business processes and enhance workforce productivity.
Expect an accelerated shift towards cloud-based web security solutions. As businesses become more technologically adept and move towards cloud-based solutions, security attacks will also shift into those channels. We can expect a move away from on-premise to more cloud-based security platforms in order to meet the demand of the changing market.
System architectures will continue to evolve which means that network security will transform into being more distributed. This will lead to a number of new features like virtual private networks, data loss prevention, content filtering, and sandboxing, amongst many others.
AMA
Alex Lin
Hey everyone! I’m a MS/BS student at Stanford studying Management Science & Engineering (MS&E). I previously spent a year and a half building out a venture-backed lending startup based in São Paulo, Brazil. Most recently I’ve worked at Citi and am currently a venture fellow at NEA working with the NY team. Looking forward to learning more about venture and growth investing and meeting more people in the EVCA community! :)
What’s on your bucket list?
I love camping / hiking and going on outdoor adventures with friends. So far, we’ve been able to take a few road trips to places like Yosemite, Shenandoah, and Joshua Tree. It’d be great to one day drive cross-country AND hit a bunch of different national parks! I was also originally planning on backpacking across Europe (France, Germany, Switzerland, Italy, Austria) in late-March, but unfortunately had to cancel due to COVID — that’s definitely something I want to do in the future too!
What is your favorite hobby?
I really enjoy cooking and baking. I’ve been making a lot of Brazilian desserts like brigadeiro, cocada, and quindim lately. They’re pretty simple to make and super delicious! I'm currently trying to learn more about baking different types of bread (seemingly one of the most popular quarantine hobbies).
What’s your favorite song and why this particular one?
I wouldn’t say that there’s a specific song that’s my all-time favorite because I listen to a pretty diverse mix of music. However, one song I like and have been playing a lot recently is Beloved by Mumford & Sons, a powerful piece about tackling loss. I’d also highly recommend Bruno Major's album To Let A Good Thing Die — it came out last week and it’s just amazingly well written and absolutely breathtaking! I’m a huge fan of ODESZA’s A Moment Apart album too, but it’s a fair bit older.
Feel free to reach out to Alex (alexlin1@stanford.edu) directly to get to know him better. For next newsletter’s AMA we’ll be randomly matching and featuring two people in the growth vertical channel. Stay tuned!
Thanks Everyone!
-EVCA Growth Team
Jeremy Zhu (jeremyzhu@capitalg.com)
Russell Yue (ryue@higcapital.com)
Alexander Lin (alexlin1@stanford.edu)
Shaurya Mehta (smehta12@stanford.edu)