Bessemer Venture Partners' State of the Cloud Report, where they explore the major milestones and changes within the cloud economy and original analysis on what’s driving today’s private cloud valuations. In this report they share new frameworks and emerging strategies to help founders measure growth endurance and drive go-to-market momentum. In addition, they talk about their seven predictions for 2021.

1. SaaStr Annual 2021:
State of the Cloud
September 27-29, 2021

2. State of the Cloud 2021: The Age of Cloud Unicorns (1/3)
Speakers: Byron Deeter, Partner, Bessemer Venture Partners (BVP); Elliott Robinson, Partner, BVP; Mary D’Onofrio, Partner, BVP
Description:
Unicorn birth rate is at an all-time high and the cloud economy is officially entering the age of decacorns. Bessemer Venture Partners shares the industry
trends that led to the creation of these massive private cloud companies. Releasing vital insights for founders with big ambitions, Byron Deeter, Elliott
Robinson, and Mary D'Onofrio share the insights from benchmark data and key frameworks that power the fastest-growing businesses in technology.
Session summary:
§ State of the industry:
§ In Feb 2020, just before covid-19, the public cloud had a $1 trillion combined market cap – just a year later the industry exceeded $2 trillion in
combined market cap, and currently in Sep 2021 within grasp of the $3 trillion milestone
§ If you bought the average public cloud company eight years ago, your return would have been ~12x
§ Cloud is pulling away from Internet and Mobile: There is an ongoing changing of the guard, with MT SAAS pulling ahead of FAANG in market
returns – BVP believes the cloud players will lead the next decade like FAANG has dominated the 2010s
§ Every company on BVP’s Cloud 100 of private companies is now comprised exclusively of unicorns, and excluded 50 unicorn companies that didn’t
make the list – 74% increase in number of unicorns in 2021 vs. 2020 representing a total private “market cap” of $500bn+
§ 2021 is on track of making tech market history, with records across every single metric: US Tech IPO proceeds have exceeded $100b, VC invested in
more than $288bn worldwide, while realizations/exits are record breaking ($230bn+ sold by VCs, 410+ IPOs, $2.9 trillion in global M&A, just in H1
2021)
§ The path to scale has never been faster – Cornerstone took 12+ years to get to $100m in ARR, while HashiCorp exceeded $100m in 4 years; while
Canva hit $1bn in ARR in just 3 years after the $100m mark (vs 6/7 years for Hubspot and Veeva): It is increasingly not just possible, but probable
that you will succeed in SaaS if you do things right
§ How to build a unicorn – a look at three of Bessemer Venture Partners’ 10 Laws of SaaS: If you get these right, you are well on your way to becoming a
unicorn
§ Law 1: In he cloud economy, scale wins – reaching scale lets you set the pace of innovation for you customers, market and competition
§ Video conferencing example: Zoom holds a 64% market share, vs 26% for Skype and 10% for Cisco Webex
§ A successful “Second Act” drives scale, and payment solutions are often a great complement to subscription solutions: e.g. Shopify added
payments to its core offering, which rapidly contributed massively to growth and about 50% of their business
§ Law 3: Invest behind the cloud sales and marketing learning curve
§ Be cautious with investments as you test and iterate, fail fast and be aggressive in getting to a great model before scaling

3. State of the Cloud 2021: The Age of Cloud Unicorns (2/3)
Session summary:
§ (continued from prior page) Law 3: Invest behind the cloud sales and marketing learning curve
§ Three phases: 1) Founder led sales, 2) Sales Led Sales, 3) Scalable Sales & Marketing
§ “Nail it before you scale it”: Use founder led sales until your first 2-3 sales reps are covering their own cost and more, when it is time for
moving to sales-led sales with a few more reps, a few more segments and geographies – once this early sales organization covers 3-4x its
own cost, this is when you go to the execution phase: Scalable sales & marketing
§ Most “new normal” GTM strategies can be classified into three broader categories: Product-led growth, making it easy to buy without a
sales team present (e.g. PagerDuty, Productboard, Intercom); Usage-based pricing, making it cheap to start and easy to expand (e.g.
Courier, Zapier, Yotpo); Sales via Cloud Marketplaces (e.g. Sisense, Tackle.io, Auth0)
§ The traditional, static, linear sales funnel is “dead”; since leads now come in at all stages of maturity, aim to create a GTM flywheel that
creates customer champions who help sell your product on your behalf instead (i.e. Captivate->Catalyze->Cultivate->Champion)
§ Example: Hyperscience switched to a champion flywheel model at the start of the crisis, their flywheel model has resulted in 250%
YoY ARR growth, 10x increase in platform usage, 140% overall account growth and 170% NRR
§ Law 5: “The 56 C’s of Cloud Finance” – the metrics you should use to track and measure your cloud business
§ The 5Cs of Cloud Finance: Committed ARR (CARR) Growth, Customer Acquisition Cost (CAC) Payback time, Customer Lifetime Value
(CLTV), Churn and Cash Flow margin
§ In addition to the traditional “5C’s”, BVP is introducing the Cash Conversion Score as the 6th
C: Current CARR / (Total Capital Raised to Date
– Cash), i.e. CARR divided by raised Equity and Debt minus Cash – 0.25-0.5x is defined as good, 0.5x-1x is better, and 1x is best-in-class,
(i.e. $1 invested results in $1 of ARR)
§ Market trends:
§ Across the Cloud 100, growth rates, multiples and addressable markets have expanded through covid-19 – including growth-adjusted multiples
§ The rise of the cloud is a global phenomenon, not just in the United States, and across every single industry segment and sub-sector
§ In particular, data infrastructure and fintech have grown dramatically between 2020 and 2021
Speakers: Byron Deeter, Partner, Bessemer Venture Partners (BVP); Elliott Robinson, Partner, BVP; Mary D’Onofrio, Partner, BVP
Description:
Unicorn birth rate is at an all-time high and the cloud economy is officially entering the age of decacorns. Bessemer Venture Partners shares the industry
trends that led to the creation of these massive private cloud companies. Releasing vital insights for founders with big ambitions, Byron Deeter, Elliott
Robinson, and Mary D'Onofrio share the insights from benchmark data and key frameworks that power the fastest-growing businesses in technology.

4. Session summary:
§ 2021 Predictions – where are we going:
§ Prediction 1: The continued unbundling of the office will continue, with purpose built solutions continuing to reaching scale (e.g. Calendly or
calendars, Mural and Miro for collaboration, Hopin for events)
§ Prediction 2: We’re bringing SMBs back with SaaS – SaaS solutions tailored to particular business verticals dominated by SMBs
§ Prediction 3: Diversity, equity and inclusion software take their rightful place, with dedicated SaaS solutions for addressing diversity, pay equity
etc. (e.g. Syndio, Unpacking, Diversio)
§ Prediction 4: Data and machine learning infrastructure accelerates to new heights, with endless opportunities across moving, storage and
analysis of data
§ Prediction 5: The rise of the “citizen” developer and creator continues, across no/low code app-building tools as well as for content creation
tools (e.g. Canva)
§ Prediction 6: Fintech and crypto players changes financial services forever, with all kinds of products building in fintech solutions earlier & better
§ Prediction 7: The vertical SaaS wave becomes a tsunami, driven by the convergence between the cloud and mobile, e.g. Shopmonkey for auto
repair, Cents for laundry operators
§ How to build a cloud unicorn – top takeaways
1. Every company on the Cloud 100 is now a unicorn; the industry has grown from zero to 150 cloud unicorns in 14 years – the avg. 2021 Cloud 100
company is worth $5.2bn, up $2.5bn YoY
2. The 10 Laws of Cloud are time tested lessons that help startups grow into category leaders
3. In the cloud economy, scale wins; the Second Act sparks a virtuous cycle for market leadership
4. GTM strategies have adapted to the New Normal, best practices include product-led growth, usage-based pricing and the adoption of cloud
marketplaces
5. The 6 C’s of Cloud Finance help companies measure and scale operationally efficient businesses
State of the Cloud 2021: The Age of Cloud Unicorns (3/3)
Speakers: Byron Deeter, Partner, Bessemer Venture Partners (BVP); Elliott Robinson, Partner, BVP; Mary D’Onofrio, Partner, BVP
Description:
Unicorn birth rate is at an all-time high and the cloud economy is officially entering the age of decacorns. Bessemer Venture Partners shares the industry
trends that led to the creation of these massive private cloud companies. Releasing vital insights for founders with big ambitions, Byron Deeter, Elliott
Robinson, and Mary D'Onofrio share the insights from benchmark data and key frameworks that power the fastest-growing businesses in technology.