Embed Size (px)
DESCRIPTION
Heavybit Talk: As a Partner at Greylock, Jerry invests in new enterprise apps, and cloud and application infrastructure including distributed app platform Docker. Prior to joining Greylock, Jerry was VP of Cloud and Application Services at VMware for 9 years and has also worked for Bain, Accel, and AEA. In this Heavybit talk, Chen discusses his thoughts on scaling units of value for startups. For the complete video check out http://www.heavybit.com/library/video/2014-11-04-jerry-chen
Citation preview
Disclaimer
Everything in this talk is my personal opinion, theory, conjecture, and probably wrong. In the event that anything is right, it is either pure coincidence or I blatantly stole the idea from someone much, much, smarter.
Greylock Partners
Jerry Chen VMware 2003-2013 • 250 to 15k people, IPO, and $5B • Virtual Desktop Infrastructure • Cloud Application Platform
• Cloud Foundry • Spring Framework • vFabric • Data products (Gemfire,
Postgres, Hadoop)
Enterprise team focused on cloud and application infrastructure • Docker • Awake Networks
@jerrychen
Unit of Value
David versus Goliath
Tech vs DistribuBon
“The race between startups & incumbents is a race between technology & distribuBon. Startups have beFer tech; incumbents have distribuBon. Can a startup build distribuBon before the incumbent builds or acquires tech?” –Aneel Bhusri, CEO Workday & Greylock
Why Does GTM MaFer? • It’s the “hyphen” in “product-‐market fit” • Impacts how much money to raise • Determines profit margins at scale • Cost of distribuBon must match what
customer’s willingness to pay • How and who you sell to will change as
you scale
Things to think about GTM
• Channel • Field operaBons • Pricing & Packaging • Partnerships • Awareness & Trial • UNIT OF VALUE
Unit of Value
Unit of Value Defined
Noun 1. Smallest measurable unit at which
your product or service delivers value.
2. Unit of scaling your product at a customer.
3. It’s what your customers pay for.
Single Units
• DropBox, one user • VMware, one server • Docker, one container • Office Suite, one user
Small (Teams?)
• Salesforce, 3-‐4 sales reps • Box or SharePoint, team or
department • Atlassian and GitHub, dev team
Big Units of Value
• Hadoop, Big data e.g. terabytes • Mesos, enBre cluster of servers • Workday, Human capital management
for the enBre company • SAP, ERP for enBre company or LOB • Oracle, Financials for enBre company
Bigger doesn’t mean BeFer
• The bigger the unit of value 1. Longer sales cycles & big deals 2. How to build a cost effecBve direct
sales force 3. Big deals doesn’t mean big market
• Smaller unit of value 1. Shorter sales cycle & small deals 2. How do I create cost effecBve
channel? 3. How to scale up the value?
Developer Technologies
Small • Dev Tools • API / services Medium • CollaboraBon tools Large • Cloud Plaeorms
Economics — Rules of Thumb for $100M
$100K+ $10-‐20K+ $100
outside self-‐serve,
assisted inside
<$10K
1,000
Pricing
Model
Sales
consumer service
5,000-‐10,000 >10,000 1M
dead zone
$0.10
API call
1B calls
(but what’s the distribuBon of your revenue?)
Few Customers Can Drive $$$ • Company A: API Service • API service < $0.10 per API call • 50% of bookings are from
customer doing $25k+
• Company B: Cloud app infra service • 50k+ users • Average monthly customer < $50 • 5% of customers 50% of MRR
Sum of units
Value
CreaBng Non-‐Linear Value
Going Non-‐Linear
• The more your customers consume the more value they receive
• Selling addiBonal products at scale (e.g. management, monitoring, security)
• Selling to a different / addiBonal buyer (CTO, CIO, CFO)
Ways to Increase Value
• Network effects • StandardizaBon • Plaeorms
Network effects
• Metcalfe’s law the value of a network is proporBonal to the square of the number of connected users of the system
• CollaboraBon tools • Email • Slack • GitHub
Standards
• Technical standards vs de facto standards • It’s why many tech market shares end up
at 60/30/10 at maturity • Reduce complexity: Languages and
frameworks, databases • Value to a single standard: NewRelic &
AppD, MS Office • De facto standards can change (e.g.
browser wars)
Plaeorms
• System of record, data: Salesforce and Force.com, Workday and HCM & Financials
• “Glue layer” for infrastructure, storage, networking, monitoring, management
• ApplicaBon & cloud plaeorms try to be both storage (data) and glue
Sum of units
Value
CreaBng Non-‐Linear Value
customer standard
sell addi/onal products
create pla1orm ecosystem
Summary
• What is your Unit of Value? • How do you increase the value as
customers scale? • What go to market matches this Unit of
Value? • Can you achieve this in one product or
need mulBple products sold together?
Thank you
www.greylock.com
@GreylockVC
medium.com/@GreylockVC
@jerrychen
Jerry Chen
Follow us: Contact me:
