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Cloud Computing: The Outlook is Bright, According to Top CEOs

We hosted our quarterly CEO dinner at Marche restaurant in Menlo Park on Wednesday night.  The topic this quarter was Cloud Computing (intentionally broad), and as usual we ended up with an amazing group of executives from some of the country’s best cloud computing companies.  We had a lively conversation and more than a few barbs thrown.  The highlights:

– Our guest speakers were Tom Fisher, CIO of Successfactors (GGV portfolio co.), and Brian Lillie, CIO of Equinix.  Thank you both for participating.  My favorite quotes from each:

Tom: “We pay an exorbitant amount in annual fees to incumbent vendors for licenses, etc. and would love nothing more than to see a lot of those dollars flow to new players.”

Brian: “We have a cloud-first policy.  For any new strategy, concept, etc., we look to use cloud-based apps and technology as a default.”

– Our Associate Adam Altman organized an iPad survey (using PollDaddy) at the dinner.  A few highlights from that survey:

+ 90% of attendees said they believe their customers are going to spend A LOT more on cloud technology in 2011 than in 2010, “I’m seeing aggressive spending trends.”  Consistent with what we are seeing in our portfolio, as well as the market at large.

+ 53% of attendees have raised >$15M in venture capital.  Not surprising, given the enterprise focus of most cloud companies.

+ 60% of attendees feel hiring is harder than usual and/or a major challenge right now.  As I’ve written in other posts, this is a major challenge in Silicon Valley right now.

+ Only 16% of attendees worry about competition from large incumbent vendors.  68% worry most about competition from emerging companies and startups.

+ 58% of attendees feel cloud startup valuations are “high, but justified given the potential.”  We certainly agree, and it’s why we’re constantly putting new money to work in this space.  Additionally, 74% said they believe valuations will be richer in 6 months than they are now.  We’re all for it…

It takes guts and a lot of optimism to run a high growth company in a competitive space like cloud computing, so our survey results are not surprising.  I do have to agree, however, with John Dillon, CEO of EngineYard, who said to the group “I’ve been around the block for a few cycles.  This one is going to be even bigger than anyone in this room believes.”

Thanks to all who attended.  We’ll do it again soon.

 

One Response

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