What was the most significant or overlooked trend in enterprise technology in 2020? We asked our a16z enterprise team as well as a few of our founders and leaders in the industry…
TABLE OF CONTENTS
Data and AI
TABLE OF CONTENTS
Data becomes the new software. As AI replaces and supplements traditional programming in the enterprise, the rise of a data development toolchain as comprehensive as the software development toolchain is perhaps the most underrated and significant trend in enterprise. — Ben Horowitz (@bhorowitz), a16z cofounder and general partner
Better tools for AI/ML. Think wait time prediction, think personalization, think dynamic pricing. All of these require real-time answers while customers are using an app and provide huge business differentiation. Until recently, this use case was served by data teams building complex models in R and coming up with bespoke ways of serving that into production. We’re now seeing the emergence of new tools, such as MLFlow, and feature stores that turn operational AI/ML into a pattern served by the architecture around data lakes. — Martin Casado (@martin_casado), a16z general partner
a16z recommends: Emerging Architectures for Data Infrastructure
Standardization sets the stage for AI/ML in analytics. With the increasing adoption of standard schemas for data ingestion and transformations, downstream analytics tools are capable of automatically recognizing the semantics of a given dataset. And in 2021, look for this trend to accelerate, as ML/AI is poised to take over more and more of the rote and repetitive tasks that have dominated analyst workflows. — Peter Bailis (@pbailis), Founder & CEO, Sisu
AI turns software into virtual experts. AI is being used to turn software into virtual expert platforms. Take Intuit, for instance. It used to be software for accountants, but now with AI, the software is becoming the expert. AI can capture, sort, and distill the knowledge of a network of accountants so anyone can access their expertise, closing the gap between what we want a product to do and the work it takes for us to make it do that thing. — Zayd Enam (@zaydenam), Founder & CEO, Cresta
Chief Data Officers. The importance of cloud and data have led to two notable organizational changes: digital and IT are starting to roll up into the same C-suite leader, usually the Chief Digital Information Officer, and there has been a rise in the number of Chief Data Officers. — a16z Market Dev Team
Want more on AI? Read our roundup of the best a16z articles and podcasts from 2020
Work goes remote
HR, BizOps, and IT — the unsung heroes of remote work. On the talent side, remote work has increased the importance of building out the processes and teams around IT, HR, finance, and BizOps. Where IT used to handle equipment in the office, it’s now become the geek squad for employees, provisioning and de-provisioning equipment to protect IP and ensuring applications and equipment are up and running. HR has become a strategic function for communicating to employees, managing the virtual experiences for candidates, and combating burnout. And BizOps has become the central hub for how an organization is functioning. Sales and marketing ops teams, for instance, keep the systems — Salesforce, Looker, Marketo — that tie the organization together running, an even more difficult feat now that these teams aren’t sitting next to one another in an office. — Shannon Schiltz, a16z People Practices and Jeff Stump, a16z Talent
The ubiquity of video (and it’s not just live). As everyone went remote, online video became one of the most important mediums to connect, communicate and collaborate with other people. Perhaps the most interesting video innovation was a return to good ol’ fashioned “on-demand” video, particularly in the workplace. Product walkthroughs, sales introductions, all hands meetings, and more have found a surprising home in the world of asynchronous video, which allows for more reliable production and a chance for the subject to pick the take they like, while letting prospects/employees watch when they want. — Matt McClure (@matt_mcclure), Cofounder & Head of Technology, Mux
Remote work speeds up user research and testing, making qualitative data more accessible. When it comes to product development, quantitative user data is often retrospective, while qualitative data provides forward looking trends with higher fidelity. With remote work, user testing is more accessible and the results are more analyzable through video conferencing or voice recording. We are seeing a new set of tools for better collecting, analyzing and integrating qualitative feedback into product development. — Jennifer Li (@jenniferhli), a16z deal partner
Community for growth and competitive moat. As remote-first becomes the norm for business and education, companies are using a surge in online gatherings and platforms to find new avenues for business and product development. In particular, the intersection of public communities and open source software is creating powerful competitive advantages — and even moats — that can differentiate a company from its peers and enable rapid scaling. MongoDB started as an open source noSQL database technology that built a thriving community and global brand. Elastic spent three and a half years as an open source product and community before becoming a company. And Apollo, which built a suite of tools to work with open source project GraphQL, was celebrating a million queries a month two years ago. Now, it’s on its way to handling a trillion queries a month, enabled by its connection to a broader community that is building tools and services which go beyond what the company could do alone. — Prashanth Chandrasekar (@pchandrasekar), CEO, Stack Overflow
a16z recommends: Commercializing Open Source
The remote work boom for enterprise startups. The rise of remote work, and the digital transformation it required, validated how big enterprise startups can get. This pandemic accelerated many of the trends we were already seeing, and enterprise software companies designing the future of work have seen multiple years of growth in just 2020. — Ian White, Founder & CEO, ChartHop
GTM telemetry for remote performance. As hallway conversations and desk fly-bys give way to Zoom calls and internal messaging tools, companies are automating the capture of business activity done via email, video conferencing, contacts, and meetings — also known as go-to-market (GTM) telemetry — to train a remote employee base to achieve consistent performance regardless of geographic location. — Oleg Rogynskyy, Founder & CEO, People.ai
Cloud-first, cloud-native
The inevitability of cloud, and therefore multi-cloud. Cloud computing has passed the inflection point of being a technical certainty. With such rapid adoption of cloud, more and more organizations are now operating in more than one cloud platform for a variety of reasons — to meet regulatory requirements, diversify risk, avoid vendor lock-in, etc. These organizations want solutions that provide a consistent experience across cloud platforms, giving the edge to startups against native offerings from the major cloud providers. — Ali Ghodsi, CEO, Databricks
Knowledge centralization in cloud data warehouse/lakehouse. Whether data warehouse, lake, or “lakehouse,” more and more companies are centralizing their data and resulting knowledge assets. This cloud data storage, rather than CRMs, is becoming the organizational system of record. As more employees can access centralized data, common use cases emerge and become standardized, so that data analysts in different parts of the organization, or even at different companies, can meaningfully collaborate in ways not previously possible and without always needing top down coordination. — Tristan Handy (@jthandy), Founder & CEO, Fishtown Analytics
The importance of cloud infrastructure and SRE. With the pandemic, we were forced to stress test our collaboration tools in real time. They proved more dependable than we expected, and now, we depend on them more — and will long after some of us return to the office. This dependency has increased the importance of cloud computing and the underlying infrastructure that keep our tools dependable at-scale. Expect a continued wave of innovation in SRE (site reliability engineering) tools and how organizations structure SRE teams to keep infrastructure running. — Peter Levine, a16z General Partner
The Rise of JAMstack. Jamstack — an approach to building website and web applications that separates the frontend and backend — first bubbled up five years ago, but this year, COVID-19 turbocharged its adoption. As more and more of our lives moved online, we’ve relied on the web more than ever to serve more dynamic use cases, from e-commerce to online events, while remaining secure and performant at-scale. Major cloud providers, as well as startups, are contributing to the ecosystem of tools around Jamstack to move the security, performance, and scalability of the web forward. — Chris Bach (@chr_bach), President and Cofounder, Netlify
Data lakes drying up. Data lakes used to make sense when the data warehouse was a precious (and on-prem) resource that needed to be protected from too much data. Now, cloud-based data warehouses (Snowflake, BigQuery) and lakehouses (Delta Lake) have separated storage and compute, so that cost and latency make them the preferred approach for centralized storage. Organizations that have workflows built around existing data lakes have reasons to keep them (for now), but otherwise, data lakes have become a legacy technology that add architectural complexity with little concrete benefits. — George Fraser (@frasergeorgew), CEO & Founder, Fivetran
a16z recommends: The Great Data Debate
From monolithic apps to microservices. The rise of Kubernetes as the cloud’s operating system has allowed apps to be distributed across clusters, across clouds, and with an edge that is close to customers for better scalability and availability. As more organizations move from small, proof-of-concept deployments to running critical workloads in Kubernetes environments, almost every capability has to be reinvented for the new world of cloud-native. Security and load balancing, for instance, are now service-to-service rather than machine-to-machine. This requires a far more intelligent (and secure) network, that can be programmed and reprogrammed easily so a wide range of roles from platform team to app teams to SecOps can perform key tracing, networking, observability and security tasks at high scale with low latency. Architectural transformations don’t happen overnight — but, just as virtualized machines replaced on-premise servers, logically centralized, globally distributed apps are the future, already transforming gaming and financial services, with ecommerce, media, and other industries not far behind. — Thomas Graf (@tgraf__), CTO & Cofounder, Isovalent
The Next Generation of SaaS
Beyond payments, fintech in vertical SaaS. Early fintech in SaaS was typically limited to reselling payments for a referral fee. But, as vertical SaaS companies access better fintech tools and banking-as-a-service, they are moving beyond payments to include a range of financial services and products for bigger margins, larger addressable markets, and a better customer experience. — Kristina Shen (@kshenster), a16z general partner
a16z recommends: Fintech Scales Vertical SaaS
The importance of minor users. Traditionally, if enterprise software were sold to the finance leader, the major users would be the CFO, a controller, and maybe some accountants in the finance team. Nobody else in the company would really know, or care, about the software. But in today’s world of remote work and bottom-up SaaS, the winning products provide benefits and visibility for minor users. In a financial accounting tool, for instance, all of your different managers may become minor users, leveraging the tool for annual planning, budgets, and finance approvals. A far cry from the era of Quickbooks with just a handful of finance-focused major users.
When it comes to building SaaS products, this has made collaboration features — such as versioning and commenting — first-class citizens. And we’re looking for the next gen of SaaS tools that recognize a wider set of users beyond just the buyer or major users, and that leverage APIs where appropriate to ingest information from elsewhere and communicate out in a way that helps capture discussions, memorialize decisions, and more. — David Ulevitch (@davidu), a16z general partner
New tools for a collaborative, user-driven sales process. As individual workers organically adopt and discover products bottom-up, the user dictates the sales process, not the traditional sales funnel. Most existing go-to-market tools, however, are still architected around the idea of an account-driven, linear sales funnel. This year, we’ve seen the first wave of new SaaS tools geared towards helping product and community management teams engage in a more collaborative, user-driven sales process. — Kimberly Tan (@kimberlywtan), a16z deal partner
New products for better customer collaboration. Customer collaboration is an emerging category of collaboration products that wrap the core primitives of messaging, task management, and reporting around purpose-built workflows that navigate a prospect through the entire customer journey. Before the products to manage the customer relationship within a function were useless for coordinating activities across functions (and created a painful experience for the customer on the other side of the collaboration circus). Now, an entire new set of products aim to consolidate that entire journey — from early presales technical validation supported to implementation and customer success. For customers, this should mean a smoother sales process and a chance to escape implementation purgatory. — Peter Lauten (@peter_lauten), a16z deal partner
Other Notable Trends
Sea change in the chip industry. We have a bit of a perfect storm that is reshaping the chip industry and will have repercussions “up the stack.” For the last three decades, Intel/x86 dominated, due to a combination of superior manufacturing process and the PC as the place where computation happens. All of this is falling apart at a rapid pace: the smartphone + cloud are reshaping computing, and power efficiency requirements have led smartphones to use ARM rather than Intel chips. Meanwhile, TSMC and Samsung have surpassed Intel in manufacturing expertise, allowing competitors (most notably, AMD, Gravitron, and Apple) to build highly-competitive server CPUs. So, what does this mean for the enterprise? For enterprise founders, if you’re selling non-SaaS software, you need to have ARM support on your roadmap. For established software players, if you cannot offer “moving to a cheaper instance,” you may have a moment of vulnerability that new startups capitalize on. — Thomas Dullien (@halvarflake), Co-founder & CEO, Optimyze
a16z recommends: 16 Minutes: Nvidia + Arm
The massive leap of the digital economy. 2020 has shown us that every company — no matter their industry or size or age — has to become a technology company to survive. Before the pandemic, digital transformation was happening, but hyped; today, it’s happening faster than we could have anticipated. Take the transformation of commerce for example: in the first six months of 2020 alone, e-commerce in North America as a percentage of overall commerce increased more than in the entire decade beforehand, going from 16% in January 2020 to 27% by July 2020, after starting 2010 at only 6%. In our new digital economy, every enterprise needs to build faster, frictionless mobile and website experience for their customers, partners, vendors and suppliers. — Frederic Kerrest (@fkerrest), Executive Vice Chairman, COO, and co-founder, Okta
Security is countercyclical. The business of security tends to boom when broader macroeconomic conditions deteriorate. Amid this year’s pandemic and resulting economic uncertainty, security trends — such as data as the new endpoint, distributed networking, and zero trust — accelerated. And remote work brought new challenges: a rise in ransomware and attacks on critical systems and supply chains, the need to securely onboard and offboard remote employees, and a growing talent shortage in an increasingly important industry. — Joel de la Garza, a16z security partner
a16z recommends: Security in 2020 and 16 Steps to Securing Your Data (and Life)
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