SaaStr Annual: Predictions and Startup Advice for the Next Wave of the Cloud

In March, the S&P 500 dropped more than 30% in three weeks in response to the coronavirus pandemic. Despite this, the cloud industry continued to experience strong growth, as more businesses turned to the cloud to support their remote teams and build new applications quickly to help navigate the disruption.  

But what does the future hold? Last month, a few members of our Future Stack practice attended SaaStr Annual 2020 At Home to learn from some of the brightest about what’s coming next for the cloud. We particularly enjoyed a presentation on the State of the Cloud 2020 from Byron Deeter and Elliott Robinson, partners at Bessemer Venture Partners (BVP), who discussed trends in public and private cloud and offered some tips for cloud entrepreneurs. 

Here are some predictions they offered for the future of cloud:

Remote work is here to stay

With offices shut down across the globe, demand for remote and virtual conference platforms like Zoom has surged to meet remote work practices. As organizations reshape how teams are built and what “work” entails, a wave of new enterprise chat and collaboration tools will come to the forefront to ease the transition.

Privacy debt will be the new technical debt

Most companies are good at collecting data, but less savvy when it comes to protecting it. This gap between where data privacy, processes and regulations are today and where they should be creates “privacy debt,” which requires reworking internal systems to adapt to the newest standards and technologies for global privacy. In the future, there will be more solutions designed to protect consumers, intra-company data and company-to-company data.

The cloud will proliferate globally

More and more companies that operate at massive scale are rolling out across the globe. When it comes to cloud-based software, the U.S. remains the largest entry market but no longer has the monopoly of power. Innovation will start to proliferate in previously uncharted pockets of APAC and EMEA. 

Given the market shifts in response to the pandemic, we’re sure to see other changes to the way consumers and businesses interact with cloud-based products and services. With that in mind, BVP outlined three trends they believe entrepreneurs should be able to capitalize on in the coming years.

B2B transactions will move online

Thus far, digital entrepreneurs have paid more attention to B2C commerce than to B2B commerce. However, the B2B market is many times bigger than the B2C market (annual global B2B spend is more than $100 trillion), and much of it is still offline. COVID-19 has forced businesses to rethink their global supply chains in order to keep pace with demand, manage disruption and find alternative suppliers.  Digitizing B2B commerce provides a wealth of data to work with, making it easier to keep stores stocked, track deliveries and open new supplier relationships quickly. That creates opportunities for B2B commerce companies in the future.

Achieving scale isn’t just about gradually increasing revenue; it’s about constantly reinventing yourself and building new products that keep you out in front.

The API universe will drive innovation across all industries

In the early years of the cloud, people were squarely focused on leaders like Amazon and Twilio. Now the market is building: Stripe is slated to go public, and Plaid was just bought by Visa for a staggering $5.3 billion. BVP believes that there will soon be a cloud giant in every industry or service sector that is API-driven. We’re just starting to see an unbundling of services and business, which signals immense momentum and creates an opportunity for net-new innovation.

In the cloud economy, scale wins

Achieving scale isn’t just about gradually increasing revenue; it’s about constantly reinventing yourself and building new products that keep you out in front. Often, this means expanding your current addressable market with adjacent or complementary products that build on what you already offer. This is  what BVP refers to as a “Second Act.” For example, Shopify was just a SaaS platform for SMB e-commerce providers; then they figured out how to layer in payments as an additional way to monetize their customer base. Similarly, Toast started out in Point-of-Sale, scaled and offered new options for payroll, and it later launched Toast Capital. Twillo expanded its market inorganically by buying SendGrid. To find your second act, take a customer-led approach to product development. Find a gap in your market and fill it. 

2020 has been a rollercoaster of a year, and while there’s no way to predict the future, one thing is for sure: The cloud industry has helped save businesses, our health, and our sanity. Business continuity wouldn’t be possible without cloud-based solutions, and the economy has been kept afloat by our new virtual world. We’re all excited to follow the trend as we head into 2021 and beyond. Stay well, stay sane, and stay cloudy!