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Battery Ventures Company Confidential | 1
QUIET EXPERTISE THAT SPEAKS VOLUMES.
VENTURE + GROWTH | PRIVATE EQUITY
2017
Software 2017
Where are we now and where are we going?
Neeraj Agrawal
Logan Bartlett
Battery Ventures Company Confidential | 2
2017
Disclaimers
This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with such
verbal or written comments, is referred to herein as the “presentation.” This presentation is being provided for informational purposes only. Nothing
herein is or should be construed as investment, legal or tax advice, a recommendation of any kind or an offer to sell or a solicitation of an offer to buy
any security. This presentation does not purport to be complete on any topic addressed. The information in this presentation is provided to you as of
May 17th unless otherwise noted and Battery Ventures does not intend to update the information after its distribution, even in the event the
presentation becomes materially inaccurate. Certain information in this presentation has been obtained from third party sources and, although
believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. Certain logos, tradenames,
trademarks and copyrights included in the presentation are strictly for identification and informational purposes only. Such logos, trade names,
trademarks and copyrights may be owned by companies or persons not affiliated with Battery Ventures and no claim is made that any such company
or person has sponsored or endorsed the use of such logos, trade names, trademarks and copyrights in this presentation. This presentation includes
various examples of companies in which Battery Ventures has invested. These examples are included as illustrations of various investment strategies.
For a complete list of all companies in which Battery Ventures has invested, please visit here. Information regarding the specific performance of prior
investment recommendations is available upon request. Past performance is not evidence of future results and there can be no assurance that a
particular Battery Ventures Fund will achieve comparable results to any other Battery Ventures Fund. There can be no assurance that the investment
objectives of a Battery Ventures Fund will be achieved or that the investment strategies utilized will be successful.
The information contained herein is based solely on the opinions of Neeraj Agrawal and Logan Bartlett and nothing should be construed as
investment advice. The anecdotal examples throughout are intended for an audience of entrepreneurs in their attempt to build cloud-focused
businesses and not recommendations or endorsements of any particular business.
Battery Ventures Company Confidential | 3
2017
CloudNY was started with our friends from FirstMark Capital. Our goal from the start was to provide a forum for CEOs of leading
cloud software companies to collaborate and learn from one another in a private setting. We hope to foster a sense of giving back by
those that have successfully navigated the journey before and an environment of shared learning by those that are on the journey
currently.
New York was an obvious destination as it has personal affinity to both the teams from Battery and FirstMark and it allows us to
highlight the burgeoning ecosystem of software companies in the area – plus New York in May is tough to beat.
We are already in the preliminary stages of planning next year’s event, so if you would like to get your name on the list for potential
attendance, please visit www.cloudny.com and request and invitation. We would love to see you there!
Best,
Neeraj and Logan
Battery Ventures Company Confidential | 4
WHY WE ARE LONG SOFTWARE
Battery Ventures Company Confidential | 5
2017
Overall software spend continues to grow
Source: Gartner Market Databook, 4Q16 Update; Forrester; PwC
21.6%
20.1%
18.7%
17.0% 16.4%
2.3%
2.3% 2.2% 2.2% 2.2%
7.1% 6.8% 6.5% 6.3% 6.5%
(0.6%)
2.7% 2.6% 2.6% 2.9%
-5%
0%
5%
10%
15%
20%
25%
2016 2017 2018 2019 2020
SaaS CAGR: 18.3%
Software CAGR: 6.9%
US GDP CAGR: 2.2%
Total IT CAGR: 2.3%
vs.
vs.
vs.
18.3%
6.9%
2.3%
2.2%
2016-2020 CAGR
SaaS spend
2016-2020 CAGR
Software spend
2016-2020 CAGR
Total IT spend
2016-2020 CAGR
Total US GDP
Battery Ventures Company Confidential | 6
2017
Software has consistently grown through different eras & delivery models
Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input Research
Note: Homegrown/Internal Software is estimate based on hours worked.
$0
$100
$200
$300
$400
$500
$600
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018
Billions
Homegrown/Internal Software On-Prem + Mainframe SaaS
Global Software Industry Revenue
Battery Ventures Company Confidential | 7
2017
$406
$771
$1,174
$2,450
$1,558
$2,817
$1,337
$948 $950
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
Cloud/Software IPOs since 2009
Cloud/Software IPOs since 2009
TotalAmountRaisedinIPOs(Millions)
Source: Battery Ventures and Capital IQ. Includes all new cloud/software public offerings listed on major US exchanges.
* Denotes a current or former Battery portfolio company
*
*
*
*
*
*
*
*
Battery Ventures Company Confidential | 8
2017
PrivateCompanies
2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
$525 $1,200 $1,650 $2,325 $700 $1,100 $3,700*
$689 $1,341 $1,100 $675 $900 $614
$660 $850 $1,000 $675 $800* $610
(PND) $600* $930 $594 $800 $600
$752 (PND) $750
(PND) $650
$600
1 4 4 6 5 7 4
$525 $2,549 $4,441 $6,107 $2,644 $5,600 $5,524
PublicCompanies
$1,676* $1,033 $3,764 $4,608 $2,640* $8,300 $4,500 $29,000
$721 $1,763 $1,921 $1,608 $2,613 $4,000 $9,300
$1,640 $1,050 $514 $2,505 $4,300
$1,397 $2,800
$958 $2,400
$625 $1,800
$1,790*
$1,650
$1,100
$850
$663
$625
$544
$532
$509
1 2 2 6 3 3 3 15
$1,676 $1,754 $5,527 $11,149 $5,298 $11,427 $11,005 $57,863
Total
1 3 2 10 7 9 8 22 4
$1,676 $2,279 $5,527 $13,698 $9,739 $17,534 $13,649 $63,463 $5,524
Cloud M&A Analysis since 2009
Data is as-of 5/15/2017 and prices are in millions. “PND” denotes price not disclosed; price for Digital Insight represents acquisition by NCR in
December 2013.
* Denotes a current or former Battery portfolio company
* *
*
*
*
*
Battery Ventures Company Confidential | 9
2017
Software and IT have had a strong impact on productivity
Source: OECD.org; “The U.S. Software Industry: An Engine for Economic Growth and Employment”, SIIA, 2014
Note: Constant currency for 2010 USD
$0
$10
$20
$30
$40
$50
$60
$70
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
USDollars
Productivity - GDP
Per Hour Worked in the US
52% 49% 46%
17%
7%
24%
31%
44%
30%
1974-1995 1995-2004 2004-2012
IT Increased Workforce Skills Other
IT's Contribution to Productivity Growth
Battery Ventures Company Confidential | 10
2017
Software has had a demonstrable impact on employment
Source: “The $1 Trillion Economic Impact of Software”, BSA | The Software Alliance, June 2016
The US software industry supports nearly 10 million jobs
2.5M directly employed in the software industry
7.2M software-supported indirect and induced jobs
$$The average annual wage
for software developers is
> 2x the average annual
wage for all US jobs
Battery Ventures Company Confidential | 11
2017
We believe that software’s impact on the US economy will reach
$2 trillion and 10% of GDP by 2020
$1.4
$2.0
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
2015 2020
Trillions
Software as a Percentage
of 2015 GDP8%
Software Industry Value-Add to US GDP
6.9%
2016-2020
CAGR(1)
10% Software as a Percentage
of 2020 GDP
Source: Battery Ventures analysis using 2015 US GDP data; “The $1 Trillion Economic Impact of Software”, BSA | The Software Alliance, June 2016
(1)US Software Spend CAGR: Gartner Market Databook, 4Q16 Update; Forrester; PwC
Note: includes direct, indirect and induced impacts on GDP.
Battery Ventures Company Confidential | 12
BUT WE FEEL
THIS IS JUST THE BEGINNING
Battery Ventures Company Confidential | 13
2017
The Five Forces of Software’s Accelerating Growth
Software is infiltrating what were once niche markets
Every company is becoming a software company
Software is displacing hardware
Software is displacing services & labor
Existing software markets are growing over time1
2
3
4
5
Battery Ventures Company Confidential | 14
The Five Forces of Software’s Accelerating Growth
2017
Existing software markets are growing over time
*
*
*
ILLUSTRATIVEEXAMPLES
*
* Denotes a current or former Battery portfolio company
*
Source: Morgan Stanley; IDC; Gartner; Accel 2016 State of the Union Report
Mainframe Era Client Server Era Desktop SaaS Era Cloud-First Era
Golden Years 1970 -1985 1985 - 2000 2000 - 2015 2015 -
Potential Users 1M 10M-100M 1B+ 10B+
Buyer IT IT Business Units Business Users
Customers Gov’t, Manufacturing, Financial Large Businesses Most Businesses All Businesses
Market Size $ $$ $$$ $$$$$
CRM
ERP
HR/Accounting
Expense Mgmt
Procurement
Systems Mgmt
Content Mgmt
Contact Center
Identity
BI
Battery Ventures Company Confidential | 15
The Five Forces of Software’s Accelerating Growth
2017
Software is infiltrating what were once niche markets
*
* Denotes a current or former Battery portfolio company
SUBSCRIPTION
COMPUTE
CapEx OpEx
LIMITED
DISTRIBUTION COSTS
Plumbing, HVAC and
Electrical
Construction
Real Estate Asset
Managers and Brokers
Law EnforcementHome-health
Ticketing + Visitation
Illustrative Vertical Market Examples
Sales Tax
SOX/Audit/ SEC
Compliance
Cap Table Management Document Signing
Visitor ManagementSales BI
*
Illustrative Hyper-Focused Business Processes Examples
Marketing Automation
Email
Customer Service
CRM
Accounting + Budgeting
E-Commerce
Illustrative SMB Market Examples
*
*
*
Battery Ventures Company Confidential | 16
The Five Forces of Software’s Accelerating Growth
2017
Hardware Software As-a-Service
Software is displacing hardware
of organizations plan
to increase spending
on data center
infrastructure
10%
of organizations plan
to increase spending on
cloud applications
60%
Hardware Software
Car Console
Watch
Source: IDC Worldwide Quarterly Cloud IT Infrastructure Tracker, Q4 2015
Battery Ventures Company Confidential | 17
The Five Forces of Software’s Accelerating Growth
2017
Software is displacing services & labor
Battery Ventures Company Confidential | 18
The Five Forces of Software’s Accelerating Growth
2017
Every company is becoming a software company
*
Source: 451 Research. Includes all announced software acquisitions by historically non-technology buyers with
transaction value over $250M since 11/2014.
Date Acquirer Target
Total Deal
Amount
12/09/2014 $710
05/19/2015 $687
10/08/2015 $675
10/31/2016 $632
04/27/2015 $600
03/11/2016 $581
08/03/2015 $500
05/05/2015 $448
11/05/2014 $427
11/03/2014 $400
11/11/2014 $325
10/26/2015 $262
* Denotes a current or former Battery portfolio company
Date Acquirer Target
Total Deal
Amount
06/15/2015 $4,000
12/06/2016 $2,800
08/03/2015 $2,738
08/01/2016 $2,400
07/01/2016 $1,500
04/20/2015 $1,300
01/25/2017 $1,100
01/25/2016 $970
11/14/2016 $915
06/21/2016 $900
02/22/2016 $800
Battery Ventures Company Confidential | 19
2017
$0
$100
$200
$300
$400
$500
$600
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Billions
~5
Global Software Industry Revenue
We’re still in the early innings of the software revolution
Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input Research
Battery Ventures Company Confidential | 20
2017
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
Billions
~5
Global Software Industry Revenue
We’re still in the early innings of the software revolution
Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input Research
Battery Ventures Company Confidential | 21
2017
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
Billions
TODAY
Assumed 2017-2050 CAGR
Global Software Revenue
~5%
Global Software Industry Revenue
We’re still in the early innings of the software revolution
Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input Research
$1 TRILLION
Battery Ventures Company Confidential | 22
SO WHAT DOES THIS
MEAN FOR YOU?
Considerations for the Modern Software CEO
Battery Ventures Company Confidential | 23
2017
Considerations for the Modern Software CEO
* Denotes a current or former Battery portfolio company
*
*
*
*
*
**
*
*
*
*
*
*
*
*
**
*
*
*
Sample Company Examples from Disparate Geographies
Software innovation is now global
Are you fully cognizant of your international competitors?
Are you building your product and go-to-market for global scale?
Note: Map not to scale
Battery Ventures Company Confidential | 24
2017
There are competitors in all segments of the software market
Enterprise Mid-market SMB
CRM
E-Commerce
B2C Marketing
Marketing Automation
HCM/Accounting
Applicant Tracking
Customer Service
Telephony
Procurement
Expense Management
System Management
How aware are you of competitors that may be upstream or downstream?
What are your soft spots that your competitors could exploit?
*
*
ILLUSTRATIVEEXAMPLES
* Denotes a current or former Battery portfolio company
Considerations for the Modern Software CEO
*
*
*
Battery Ventures Company Confidential | 25
2017
Product now drives software sales
1970-2000 2000-2015 2015-
Era
Sales-driven
software purchases
Marketing-driven
software purchases
Product-driven
software purchases
Sample Companies
to Emerge
Sample Enablers
Does your product require detailed voice-over or speak for itself?
Do you know what features drive adoption, loyalty and high NPS?
Best-in-Class Good Average
Net Promoter Score 50+ 30-50 10-30
*
*
*
*
* *
Considerations for the Modern Software CEO
* Denotes a current or former Battery portfolio company
PENDO* NPS BOARD SLIDE
Battery Ventures Company Confidential | 26
2017
Network effects and ecosystems build moats and drive stickiness
Does each incremental customer and user make your product more valuable?
What are data or network moats that can keep competitors at bay?
ILLUSTRATIVEEXAMPLES
Considerations for the Modern Software CEO
*
The largest open
source community
in the world
*
* Denotes a current or former Battery portfolio company
Battery Ventures Company Confidential | 27
2017
Internet Mobile AI/Machine Learning
Time 1995-2005 2005-2015 2015-
Enabler .com Smartphones Big Data
Consumer
Lighthouses
Platform SaaS Mobile Apps Voice?
Sample B2B Leaders
AI and machine learning are enabling applications
Are you leveraging AI and machine learning where appropriate in your product?
Are you prepared for what a potential platform shift might entail for your market?
Considerations for the Modern Software CEO
0
50
100
150
2004-01
2005-01
2006-01
2007-01
2008-01
2009-01
2010-01
2011-01
2012-01
2013-01
2014-01
2015-01
2016-01
2017-01
Google Trends: Interest in “Internet”
Peak popularity:
Jan ‘04
0
50
100
150
2004-01
2005-01
2006-01
2007-01
2008-01
2009-01
2010-01
2011-01
2012-01
2013-01
2014-01
2015-01
2016-01
2017-01
Google Trends: Interest in “Mobile”
Peak popularity:
Jan ‘12
Google Trends: Interest in “Machine
Learning”
0
20
40
60
80
100
2004-01
2005-01
2006-01
2007-01
2008-01
2009-01
2010-01
2011-01
2012-01
2013-01
2014-01
2015-01
2016-01
2017-01
Peak popularity:
Current
Battery Ventures Company Confidential | 28
2017
Microservices architecture and rapid product delivery are now must-haves
How quickly can you deliver production code with no customer impact?
How dependent are you on your infrastructure provider?
Sample Tools
Infrastructure
Orchestration /
Runtime
Provisioning /
Deployment
Visibility /
Monitoring
Security /
Governance
Best-in-Class Good Average
Many times
a day
Many times
a week
Every week
Mainframe
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Client Server Multi-Tenancy Cloud-Native
How quickly can you deliver production code?
Considerations for the Modern Software CEO
* Denotes a current or former Battery portfolio company
SALESFORCE
AWS O365
*
*
*
Three Tier
Battery Ventures Company Confidential | 29
2017
Culture is paramount and employee feedback is public
Are you keeping the talent bar high as you scale?
Are culture and diversity top CEO priorities?
BEST-IN-CLASS GOOD AVERAGE
Company
Rating
4.5+ 4.0-4.5 3.3-4.0
CEO Approval 94%+ 80-94% 67-80%
Business
Outlook
88%+ 75-88% 45-75%
*
Considerations for the Modern Software CEO
* Denotes a current or former Battery portfolio company
AVERAGE COMPANY
RATING
COMPARISON
AVERAGE CEO
APPROVAL RATING
COMPARISON
AVERAGE BUSINESS
OUTLOOK COMPARISON
Battery Ventures Company Confidential | 30
2017
Source: Wall Street Journal
Culture is paramount and employee feedback is public (cont.)
Considerations for the Modern Software CEO
Battery Ventures Company Confidential | 31
2017
Find a Product Wedge
Illustrative Legacy Examples Illustrative Modern Examples
Okta leveraged the proliferation
of cloud apps as its wedge into
Windows’ leadership in identity
management with Active Directory
Box used the ability to sync
cross-device, particularly on mobile
as its wedge into customers that
were already using Microsoft Sharepoint
Contentful decoupled the back-end
of the CMS from the front-end of the
website, which allowed it an entry point into
Adobe’s entrenched position in the CMS space
Appboy leveraged mobile app
marketing as a wedge into
ExactTarget’s customer base before
broadening its suite of services to include email marketing
Procurement
Enterprise HR/Accounting
Workplace Communication
*
*SMB HR and Benefits
Find a wedge and change the market dynamic
Is there a product gap in an incumbent solution that you can exploit?
Is there a weakness in an incumbent’s business model that you can use to your advantage?
Enterprise File and Document Management
Identity
Digital Content Management
B2C Marketing
* Denotes a current or former Battery portfolio company
Considerations for the Modern Software CEO
* *
Find a Business Model Wedge
Illustrative Legacy Examples Illustrative Modern Examples
Workday moved to subscription
sales, decreasing the upfront switching
cost for PeopleSoft customers
Coupa provided the supplier network
for free, decreasing the friction
for suppliers to join its marketplace
Slack leveraged bottoms up selling and
“fair pricing”, enabling end-users to try
the product themselves and IT administrators
to only pay for users utilizing the service
Zenefits and Bob monetize the insurance broker
subscription instead of simply
monetizing through traditional software sales
Battery Ventures Company Confidential | 32
2017
Grow fast or die slow
Are you strategically using capital to capture your market?
Are you moving to where the market will be in 24 months, not just where it is today?
* *
Considerations for the Modern Software CEO
* Denotes a current or former Battery portfolio company
Battery Ventures Company Confidential | 33
2017
In software, being first seldom decides a market
Considerations for the Modern Software CEO
(1) Disclosed acquisition price according to 451 Research
(2) Enterprise value as of 5/2/2017
(3) Most recent private company financing valuation
Sample Vendors
Market Core Competitive Time Early to Market Valuation Market Leader Valuation
Relational Database 1980 – 1986 N/A $185.4B(2)
Spreadsheets 1982 – 1987 N/A N/A
Expense Management 1996 – 2001 $160M(1) $8.3B(1)
Web Conference 1999 – 2002 $200M(1) $3.2B(1)
CRM 2000 – 2003 $5.9B(1) $61.9B(2)
Applicant Tracking 2000 – 2004 $115M(1) $1.9B(1)
Learning Management 2007 – 2010 $400M(1) $2.2B(2)
Pharma CRM 2008 – 2012 $415M(1) $7.5B(2)
SMB E-Commerce 2008 – 2013 N/A $7.5B(2)
Enterprise E-Commerce 2008 – 2013 $1.0B(1) $2.9B(1)
Online Payments 2012 – 2016 $800M(1) $9.1B(3)
Battery Ventures Company Confidential | 34
2017
Category leadership is all that matters
71% 79% 72%
29% 21% 28%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000-2003 2004-2008 2009-2013
Category King Everyone Else
Equity Value by Category Leader
Category king Everyone else
70%
market share
in their respective
markets
Category kings
consistently captured
more than
(1)
Considerations for the Modern Software CEO
(1) Period slightly skewed by Facebook
Source: “Time to Market Cap: The New Metric That Matters”, Play Bigger Advisors
Battery Ventures Company Confidential | 35
2017
Are you fully cognizant of your international competitors?
Are you building your product and go-to-market for global scale?
How aware are you of competitors that may be upstream or downstream?
What are your soft spots that your competitors could exploit?
How quickly can you deliver production code with no customer impact?
How dependent are you on your infrastructure provider?
Is there a product gap in an incumbent solution that you can exploit?
Is there a weakness in an incumbent’s business model that you can use to
your advantage?
Software innovation is now global
There are competitors in all segments of the market
Does your product require detailed voice-over or speak for itself?
Do you know what features drive adoption, loyalty and high NPS?
Product now drives software sales
Are you keeping the talent bar high as you scale?
Are culture and diversity top CEO priorities?
Culture is paramount and employee feedback is public
Does each incremental customer and user make your product more valuable?
What are data or network moats that can keep competitors at bay?
Network effects and ecosystems build
moats and drive stickiness
Are you leveraging AI and ML where appropriate in your product?
Are you prepared for what a platform shift might entail for your market?
AI and machine learning are enabling applications
Microservices architecture and rapid product
delivery are now must haves
Find a wedge and change the market dynamic
Are you strategically using capital to capture your market?
Are you moving to where the market will be, not just where it is today?
Grow fast or die slow
Summary: Tactical considerations to help the modern software CEO
become a category king
Considerations for the Modern Software CEO
Battery Ventures Company Confidential | 36
2017
Top 5 execution missteps and tactical advice
Equating early product-market fit with long-term company success
 Look for the operational issues when things are going well
1
Being reluctant to let your team drive key deals
 The sooner the sales team does the selling the better you are
2
Waiting too long to embrace team-building as a key priority
 Executive recruiting should consume 50% of your time3
Focusing only on 1st level management vs. 2nd level management
 2nd level management is the true leverage point in scaling
4
Viewing the board in isolation
 Hire and recruit board members just like your executive team
5
Battery Ventures Company Confidential | 37
WE FEEL THAT THIS IS JUST THE
BEGINNING
Battery Ventures Company Confidential | 38
2017
Nasdaq Composite Index
0
1,000
2,000
3,000
4,000
5,000 1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: Capital IQ
Battery Ventures Company Confidential | 39
2017
Disruptive software companies will be started in all markets
Nasdaq Composite Index
0
1,000
2,000
3,000
4,000
5,000 1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
*
*
*
*
**
*
*
*
*
* Denotes a current or former Battery portfolio company
Includes public cloud companies with TEV >$500M as of 5/3/17 according to Capital IQ, cloud companies acquired for over $500M since 2009 according to
Pitchbook, and private cloud companies valued at over $1.5B as of 5/3/2017 according to Crunchbase. Excludes companies based in Asia.
Battery Ventures Company Confidential | 40
2017
$0
$100
$200
$300
$400
$500
$600 1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Global Software Industry Revenue
*
*
*
*
*
*
*
*
* Denotes a current or former Battery portfolio company
Includes public cloud companies with TEV >$500M as of 5/3/17 according to Capital IQ, cloud companies acquired for over $500M since 2009 according to
Pitchbook, and private cloud companies valued at over $1.5B as of 5/3/2017 according to Crunchbase. Excludes companies based in Asia.
Billions
*
Battery Ventures Company Confidential | 41
2017
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
~5
We’re just getting started
Billions
* Denotes a current or former Battery portfolio company
Includes public cloud companies with TEV >$500M as of 5/3/17 according to Capital IQ, cloud companies acquired for over $500M since 2009 according to
Pitchbook, and private cloud companies valued at over $1.5B as of 5/3/2017 according to Crunchbase. Excludes companies based in Asia.
*
*
*
*
*
*
*
*
*
Your Logo Here?
Global Software Industry Revenue
Battery Ventures Company Confidential | 42
2017
Biographies
Logan is a vice president in Battery’s Boston office, focused on growth investments for business-to-
business software companies. He is currently involved in Battery’s investments in Amplitude, Appboy,
Narvar, Pendo, and TrendKite. In 2017, Logan was named to Forbes’ “30 Under 30” list of leading
young entrepreneurs, innovators and game changers. Logan graduated with a BS from Washington
and Lee University, where he played men’s lacrosse.
Neeraj joined Battery in 2000 and invests in SaaS and internet companies across all stages. He was a founding
investor in BladeLogic and has invested in several other companies that have gone on to stage IPOs, including
Bazaarvoice, Coupa, Guidewire Software, Marketo, Nutanix, Omniture, RealPage and Wayfair. He also invested in
several Battery portfolio companies that have experienced M&A events. Neeraj’s current private investments
include Amplitude, Appboy, BloomReach, Catchpoint, Chef, Cohesity, Glassdoor.com, OpsGenie, Optimizely, Outlyer,
Pendo, SmarterHQ, Sprinklr, StellaService, Tealium, TrendKite and Yesware. He has been recognized as a top-100
global venture capitalist on the Forbes Midas List for the past seven consecutive years.
Twitter: @neerajvc
Email: neeraj@battery.com
Twitter: @jloganbartlett
Email: logan@battery.com
Neeraj Agrawal
Logan Bartlett
Special thanks to Galit Krifcher for her tireless work on this with us

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Software 2017 - Where are we now and where are we going?

  • 1. Battery Ventures Company Confidential | 1 QUIET EXPERTISE THAT SPEAKS VOLUMES. VENTURE + GROWTH | PRIVATE EQUITY 2017 Software 2017 Where are we now and where are we going? Neeraj Agrawal Logan Bartlett
  • 2. Battery Ventures Company Confidential | 2 2017 Disclaimers This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with such verbal or written comments, is referred to herein as the “presentation.” This presentation is being provided for informational purposes only. Nothing herein is or should be construed as investment, legal or tax advice, a recommendation of any kind or an offer to sell or a solicitation of an offer to buy any security. This presentation does not purport to be complete on any topic addressed. The information in this presentation is provided to you as of May 17th unless otherwise noted and Battery Ventures does not intend to update the information after its distribution, even in the event the presentation becomes materially inaccurate. Certain information in this presentation has been obtained from third party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. Certain logos, tradenames, trademarks and copyrights included in the presentation are strictly for identification and informational purposes only. Such logos, trade names, trademarks and copyrights may be owned by companies or persons not affiliated with Battery Ventures and no claim is made that any such company or person has sponsored or endorsed the use of such logos, trade names, trademarks and copyrights in this presentation. This presentation includes various examples of companies in which Battery Ventures has invested. These examples are included as illustrations of various investment strategies. For a complete list of all companies in which Battery Ventures has invested, please visit here. Information regarding the specific performance of prior investment recommendations is available upon request. Past performance is not evidence of future results and there can be no assurance that a particular Battery Ventures Fund will achieve comparable results to any other Battery Ventures Fund. There can be no assurance that the investment objectives of a Battery Ventures Fund will be achieved or that the investment strategies utilized will be successful. The information contained herein is based solely on the opinions of Neeraj Agrawal and Logan Bartlett and nothing should be construed as investment advice. The anecdotal examples throughout are intended for an audience of entrepreneurs in their attempt to build cloud-focused businesses and not recommendations or endorsements of any particular business.
  • 3. Battery Ventures Company Confidential | 3 2017 CloudNY was started with our friends from FirstMark Capital. Our goal from the start was to provide a forum for CEOs of leading cloud software companies to collaborate and learn from one another in a private setting. We hope to foster a sense of giving back by those that have successfully navigated the journey before and an environment of shared learning by those that are on the journey currently. New York was an obvious destination as it has personal affinity to both the teams from Battery and FirstMark and it allows us to highlight the burgeoning ecosystem of software companies in the area – plus New York in May is tough to beat. We are already in the preliminary stages of planning next year’s event, so if you would like to get your name on the list for potential attendance, please visit www.cloudny.com and request and invitation. We would love to see you there! Best, Neeraj and Logan
  • 4. Battery Ventures Company Confidential | 4 WHY WE ARE LONG SOFTWARE
  • 5. Battery Ventures Company Confidential | 5 2017 Overall software spend continues to grow Source: Gartner Market Databook, 4Q16 Update; Forrester; PwC 21.6% 20.1% 18.7% 17.0% 16.4% 2.3% 2.3% 2.2% 2.2% 2.2% 7.1% 6.8% 6.5% 6.3% 6.5% (0.6%) 2.7% 2.6% 2.6% 2.9% -5% 0% 5% 10% 15% 20% 25% 2016 2017 2018 2019 2020 SaaS CAGR: 18.3% Software CAGR: 6.9% US GDP CAGR: 2.2% Total IT CAGR: 2.3% vs. vs. vs. 18.3% 6.9% 2.3% 2.2% 2016-2020 CAGR SaaS spend 2016-2020 CAGR Software spend 2016-2020 CAGR Total IT spend 2016-2020 CAGR Total US GDP
  • 6. Battery Ventures Company Confidential | 6 2017 Software has consistently grown through different eras & delivery models Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input Research Note: Homegrown/Internal Software is estimate based on hours worked. $0 $100 $200 $300 $400 $500 $600 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 Billions Homegrown/Internal Software On-Prem + Mainframe SaaS Global Software Industry Revenue
  • 7. Battery Ventures Company Confidential | 7 2017 $406 $771 $1,174 $2,450 $1,558 $2,817 $1,337 $948 $950 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 Cloud/Software IPOs since 2009 Cloud/Software IPOs since 2009 TotalAmountRaisedinIPOs(Millions) Source: Battery Ventures and Capital IQ. Includes all new cloud/software public offerings listed on major US exchanges. * Denotes a current or former Battery portfolio company * * * * * * * *
  • 8. Battery Ventures Company Confidential | 8 2017 PrivateCompanies 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD $525 $1,200 $1,650 $2,325 $700 $1,100 $3,700* $689 $1,341 $1,100 $675 $900 $614 $660 $850 $1,000 $675 $800* $610 (PND) $600* $930 $594 $800 $600 $752 (PND) $750 (PND) $650 $600 1 4 4 6 5 7 4 $525 $2,549 $4,441 $6,107 $2,644 $5,600 $5,524 PublicCompanies $1,676* $1,033 $3,764 $4,608 $2,640* $8,300 $4,500 $29,000 $721 $1,763 $1,921 $1,608 $2,613 $4,000 $9,300 $1,640 $1,050 $514 $2,505 $4,300 $1,397 $2,800 $958 $2,400 $625 $1,800 $1,790* $1,650 $1,100 $850 $663 $625 $544 $532 $509 1 2 2 6 3 3 3 15 $1,676 $1,754 $5,527 $11,149 $5,298 $11,427 $11,005 $57,863 Total 1 3 2 10 7 9 8 22 4 $1,676 $2,279 $5,527 $13,698 $9,739 $17,534 $13,649 $63,463 $5,524 Cloud M&A Analysis since 2009 Data is as-of 5/15/2017 and prices are in millions. “PND” denotes price not disclosed; price for Digital Insight represents acquisition by NCR in December 2013. * Denotes a current or former Battery portfolio company * * * * * *
  • 9. Battery Ventures Company Confidential | 9 2017 Software and IT have had a strong impact on productivity Source: OECD.org; “The U.S. Software Industry: An Engine for Economic Growth and Employment”, SIIA, 2014 Note: Constant currency for 2010 USD $0 $10 $20 $30 $40 $50 $60 $70 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 USDollars Productivity - GDP Per Hour Worked in the US 52% 49% 46% 17% 7% 24% 31% 44% 30% 1974-1995 1995-2004 2004-2012 IT Increased Workforce Skills Other IT's Contribution to Productivity Growth
  • 10. Battery Ventures Company Confidential | 10 2017 Software has had a demonstrable impact on employment Source: “The $1 Trillion Economic Impact of Software”, BSA | The Software Alliance, June 2016 The US software industry supports nearly 10 million jobs 2.5M directly employed in the software industry 7.2M software-supported indirect and induced jobs $$The average annual wage for software developers is > 2x the average annual wage for all US jobs
  • 11. Battery Ventures Company Confidential | 11 2017 We believe that software’s impact on the US economy will reach $2 trillion and 10% of GDP by 2020 $1.4 $2.0 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 2015 2020 Trillions Software as a Percentage of 2015 GDP8% Software Industry Value-Add to US GDP 6.9% 2016-2020 CAGR(1) 10% Software as a Percentage of 2020 GDP Source: Battery Ventures analysis using 2015 US GDP data; “The $1 Trillion Economic Impact of Software”, BSA | The Software Alliance, June 2016 (1)US Software Spend CAGR: Gartner Market Databook, 4Q16 Update; Forrester; PwC Note: includes direct, indirect and induced impacts on GDP.
  • 12. Battery Ventures Company Confidential | 12 BUT WE FEEL THIS IS JUST THE BEGINNING
  • 13. Battery Ventures Company Confidential | 13 2017 The Five Forces of Software’s Accelerating Growth Software is infiltrating what were once niche markets Every company is becoming a software company Software is displacing hardware Software is displacing services & labor Existing software markets are growing over time1 2 3 4 5
  • 14. Battery Ventures Company Confidential | 14 The Five Forces of Software’s Accelerating Growth 2017 Existing software markets are growing over time * * * ILLUSTRATIVEEXAMPLES * * Denotes a current or former Battery portfolio company * Source: Morgan Stanley; IDC; Gartner; Accel 2016 State of the Union Report Mainframe Era Client Server Era Desktop SaaS Era Cloud-First Era Golden Years 1970 -1985 1985 - 2000 2000 - 2015 2015 - Potential Users 1M 10M-100M 1B+ 10B+ Buyer IT IT Business Units Business Users Customers Gov’t, Manufacturing, Financial Large Businesses Most Businesses All Businesses Market Size $ $$ $$$ $$$$$ CRM ERP HR/Accounting Expense Mgmt Procurement Systems Mgmt Content Mgmt Contact Center Identity BI
  • 15. Battery Ventures Company Confidential | 15 The Five Forces of Software’s Accelerating Growth 2017 Software is infiltrating what were once niche markets * * Denotes a current or former Battery portfolio company SUBSCRIPTION COMPUTE CapEx OpEx LIMITED DISTRIBUTION COSTS Plumbing, HVAC and Electrical Construction Real Estate Asset Managers and Brokers Law EnforcementHome-health Ticketing + Visitation Illustrative Vertical Market Examples Sales Tax SOX/Audit/ SEC Compliance Cap Table Management Document Signing Visitor ManagementSales BI * Illustrative Hyper-Focused Business Processes Examples Marketing Automation Email Customer Service CRM Accounting + Budgeting E-Commerce Illustrative SMB Market Examples * * *
  • 16. Battery Ventures Company Confidential | 16 The Five Forces of Software’s Accelerating Growth 2017 Hardware Software As-a-Service Software is displacing hardware of organizations plan to increase spending on data center infrastructure 10% of organizations plan to increase spending on cloud applications 60% Hardware Software Car Console Watch Source: IDC Worldwide Quarterly Cloud IT Infrastructure Tracker, Q4 2015
  • 17. Battery Ventures Company Confidential | 17 The Five Forces of Software’s Accelerating Growth 2017 Software is displacing services & labor
  • 18. Battery Ventures Company Confidential | 18 The Five Forces of Software’s Accelerating Growth 2017 Every company is becoming a software company * Source: 451 Research. Includes all announced software acquisitions by historically non-technology buyers with transaction value over $250M since 11/2014. Date Acquirer Target Total Deal Amount 12/09/2014 $710 05/19/2015 $687 10/08/2015 $675 10/31/2016 $632 04/27/2015 $600 03/11/2016 $581 08/03/2015 $500 05/05/2015 $448 11/05/2014 $427 11/03/2014 $400 11/11/2014 $325 10/26/2015 $262 * Denotes a current or former Battery portfolio company Date Acquirer Target Total Deal Amount 06/15/2015 $4,000 12/06/2016 $2,800 08/03/2015 $2,738 08/01/2016 $2,400 07/01/2016 $1,500 04/20/2015 $1,300 01/25/2017 $1,100 01/25/2016 $970 11/14/2016 $915 06/21/2016 $900 02/22/2016 $800
  • 19. Battery Ventures Company Confidential | 19 2017 $0 $100 $200 $300 $400 $500 $600 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Billions ~5 Global Software Industry Revenue We’re still in the early innings of the software revolution Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input Research
  • 20. Battery Ventures Company Confidential | 20 2017 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Billions ~5 Global Software Industry Revenue We’re still in the early innings of the software revolution Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input Research
  • 21. Battery Ventures Company Confidential | 21 2017 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Billions TODAY Assumed 2017-2050 CAGR Global Software Revenue ~5% Global Software Industry Revenue We’re still in the early innings of the software revolution Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input Research $1 TRILLION
  • 22. Battery Ventures Company Confidential | 22 SO WHAT DOES THIS MEAN FOR YOU? Considerations for the Modern Software CEO
  • 23. Battery Ventures Company Confidential | 23 2017 Considerations for the Modern Software CEO * Denotes a current or former Battery portfolio company * * * * * ** * * * * * * * * ** * * * Sample Company Examples from Disparate Geographies Software innovation is now global Are you fully cognizant of your international competitors? Are you building your product and go-to-market for global scale? Note: Map not to scale
  • 24. Battery Ventures Company Confidential | 24 2017 There are competitors in all segments of the software market Enterprise Mid-market SMB CRM E-Commerce B2C Marketing Marketing Automation HCM/Accounting Applicant Tracking Customer Service Telephony Procurement Expense Management System Management How aware are you of competitors that may be upstream or downstream? What are your soft spots that your competitors could exploit? * * ILLUSTRATIVEEXAMPLES * Denotes a current or former Battery portfolio company Considerations for the Modern Software CEO * * *
  • 25. Battery Ventures Company Confidential | 25 2017 Product now drives software sales 1970-2000 2000-2015 2015- Era Sales-driven software purchases Marketing-driven software purchases Product-driven software purchases Sample Companies to Emerge Sample Enablers Does your product require detailed voice-over or speak for itself? Do you know what features drive adoption, loyalty and high NPS? Best-in-Class Good Average Net Promoter Score 50+ 30-50 10-30 * * * * * * Considerations for the Modern Software CEO * Denotes a current or former Battery portfolio company PENDO* NPS BOARD SLIDE
  • 26. Battery Ventures Company Confidential | 26 2017 Network effects and ecosystems build moats and drive stickiness Does each incremental customer and user make your product more valuable? What are data or network moats that can keep competitors at bay? ILLUSTRATIVEEXAMPLES Considerations for the Modern Software CEO * The largest open source community in the world * * Denotes a current or former Battery portfolio company
  • 27. Battery Ventures Company Confidential | 27 2017 Internet Mobile AI/Machine Learning Time 1995-2005 2005-2015 2015- Enabler .com Smartphones Big Data Consumer Lighthouses Platform SaaS Mobile Apps Voice? Sample B2B Leaders AI and machine learning are enabling applications Are you leveraging AI and machine learning where appropriate in your product? Are you prepared for what a potential platform shift might entail for your market? Considerations for the Modern Software CEO 0 50 100 150 2004-01 2005-01 2006-01 2007-01 2008-01 2009-01 2010-01 2011-01 2012-01 2013-01 2014-01 2015-01 2016-01 2017-01 Google Trends: Interest in “Internet” Peak popularity: Jan ‘04 0 50 100 150 2004-01 2005-01 2006-01 2007-01 2008-01 2009-01 2010-01 2011-01 2012-01 2013-01 2014-01 2015-01 2016-01 2017-01 Google Trends: Interest in “Mobile” Peak popularity: Jan ‘12 Google Trends: Interest in “Machine Learning” 0 20 40 60 80 100 2004-01 2005-01 2006-01 2007-01 2008-01 2009-01 2010-01 2011-01 2012-01 2013-01 2014-01 2015-01 2016-01 2017-01 Peak popularity: Current
  • 28. Battery Ventures Company Confidential | 28 2017 Microservices architecture and rapid product delivery are now must-haves How quickly can you deliver production code with no customer impact? How dependent are you on your infrastructure provider? Sample Tools Infrastructure Orchestration / Runtime Provisioning / Deployment Visibility / Monitoring Security / Governance Best-in-Class Good Average Many times a day Many times a week Every week Mainframe 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Client Server Multi-Tenancy Cloud-Native How quickly can you deliver production code? Considerations for the Modern Software CEO * Denotes a current or former Battery portfolio company SALESFORCE AWS O365 * * * Three Tier
  • 29. Battery Ventures Company Confidential | 29 2017 Culture is paramount and employee feedback is public Are you keeping the talent bar high as you scale? Are culture and diversity top CEO priorities? BEST-IN-CLASS GOOD AVERAGE Company Rating 4.5+ 4.0-4.5 3.3-4.0 CEO Approval 94%+ 80-94% 67-80% Business Outlook 88%+ 75-88% 45-75% * Considerations for the Modern Software CEO * Denotes a current or former Battery portfolio company AVERAGE COMPANY RATING COMPARISON AVERAGE CEO APPROVAL RATING COMPARISON AVERAGE BUSINESS OUTLOOK COMPARISON
  • 30. Battery Ventures Company Confidential | 30 2017 Source: Wall Street Journal Culture is paramount and employee feedback is public (cont.) Considerations for the Modern Software CEO
  • 31. Battery Ventures Company Confidential | 31 2017 Find a Product Wedge Illustrative Legacy Examples Illustrative Modern Examples Okta leveraged the proliferation of cloud apps as its wedge into Windows’ leadership in identity management with Active Directory Box used the ability to sync cross-device, particularly on mobile as its wedge into customers that were already using Microsoft Sharepoint Contentful decoupled the back-end of the CMS from the front-end of the website, which allowed it an entry point into Adobe’s entrenched position in the CMS space Appboy leveraged mobile app marketing as a wedge into ExactTarget’s customer base before broadening its suite of services to include email marketing Procurement Enterprise HR/Accounting Workplace Communication * *SMB HR and Benefits Find a wedge and change the market dynamic Is there a product gap in an incumbent solution that you can exploit? Is there a weakness in an incumbent’s business model that you can use to your advantage? Enterprise File and Document Management Identity Digital Content Management B2C Marketing * Denotes a current or former Battery portfolio company Considerations for the Modern Software CEO * * Find a Business Model Wedge Illustrative Legacy Examples Illustrative Modern Examples Workday moved to subscription sales, decreasing the upfront switching cost for PeopleSoft customers Coupa provided the supplier network for free, decreasing the friction for suppliers to join its marketplace Slack leveraged bottoms up selling and “fair pricing”, enabling end-users to try the product themselves and IT administrators to only pay for users utilizing the service Zenefits and Bob monetize the insurance broker subscription instead of simply monetizing through traditional software sales
  • 32. Battery Ventures Company Confidential | 32 2017 Grow fast or die slow Are you strategically using capital to capture your market? Are you moving to where the market will be in 24 months, not just where it is today? * * Considerations for the Modern Software CEO * Denotes a current or former Battery portfolio company
  • 33. Battery Ventures Company Confidential | 33 2017 In software, being first seldom decides a market Considerations for the Modern Software CEO (1) Disclosed acquisition price according to 451 Research (2) Enterprise value as of 5/2/2017 (3) Most recent private company financing valuation Sample Vendors Market Core Competitive Time Early to Market Valuation Market Leader Valuation Relational Database 1980 – 1986 N/A $185.4B(2) Spreadsheets 1982 – 1987 N/A N/A Expense Management 1996 – 2001 $160M(1) $8.3B(1) Web Conference 1999 – 2002 $200M(1) $3.2B(1) CRM 2000 – 2003 $5.9B(1) $61.9B(2) Applicant Tracking 2000 – 2004 $115M(1) $1.9B(1) Learning Management 2007 – 2010 $400M(1) $2.2B(2) Pharma CRM 2008 – 2012 $415M(1) $7.5B(2) SMB E-Commerce 2008 – 2013 N/A $7.5B(2) Enterprise E-Commerce 2008 – 2013 $1.0B(1) $2.9B(1) Online Payments 2012 – 2016 $800M(1) $9.1B(3)
  • 34. Battery Ventures Company Confidential | 34 2017 Category leadership is all that matters 71% 79% 72% 29% 21% 28% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2000-2003 2004-2008 2009-2013 Category King Everyone Else Equity Value by Category Leader Category king Everyone else 70% market share in their respective markets Category kings consistently captured more than (1) Considerations for the Modern Software CEO (1) Period slightly skewed by Facebook Source: “Time to Market Cap: The New Metric That Matters”, Play Bigger Advisors
  • 35. Battery Ventures Company Confidential | 35 2017 Are you fully cognizant of your international competitors? Are you building your product and go-to-market for global scale? How aware are you of competitors that may be upstream or downstream? What are your soft spots that your competitors could exploit? How quickly can you deliver production code with no customer impact? How dependent are you on your infrastructure provider? Is there a product gap in an incumbent solution that you can exploit? Is there a weakness in an incumbent’s business model that you can use to your advantage? Software innovation is now global There are competitors in all segments of the market Does your product require detailed voice-over or speak for itself? Do you know what features drive adoption, loyalty and high NPS? Product now drives software sales Are you keeping the talent bar high as you scale? Are culture and diversity top CEO priorities? Culture is paramount and employee feedback is public Does each incremental customer and user make your product more valuable? What are data or network moats that can keep competitors at bay? Network effects and ecosystems build moats and drive stickiness Are you leveraging AI and ML where appropriate in your product? Are you prepared for what a platform shift might entail for your market? AI and machine learning are enabling applications Microservices architecture and rapid product delivery are now must haves Find a wedge and change the market dynamic Are you strategically using capital to capture your market? Are you moving to where the market will be, not just where it is today? Grow fast or die slow Summary: Tactical considerations to help the modern software CEO become a category king Considerations for the Modern Software CEO
  • 36. Battery Ventures Company Confidential | 36 2017 Top 5 execution missteps and tactical advice Equating early product-market fit with long-term company success  Look for the operational issues when things are going well 1 Being reluctant to let your team drive key deals  The sooner the sales team does the selling the better you are 2 Waiting too long to embrace team-building as a key priority  Executive recruiting should consume 50% of your time3 Focusing only on 1st level management vs. 2nd level management  2nd level management is the true leverage point in scaling 4 Viewing the board in isolation  Hire and recruit board members just like your executive team 5
  • 37. Battery Ventures Company Confidential | 37 WE FEEL THAT THIS IS JUST THE BEGINNING
  • 38. Battery Ventures Company Confidential | 38 2017 Nasdaq Composite Index 0 1,000 2,000 3,000 4,000 5,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Capital IQ
  • 39. Battery Ventures Company Confidential | 39 2017 Disruptive software companies will be started in all markets Nasdaq Composite Index 0 1,000 2,000 3,000 4,000 5,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 * * * * ** * * * * * Denotes a current or former Battery portfolio company Includes public cloud companies with TEV >$500M as of 5/3/17 according to Capital IQ, cloud companies acquired for over $500M since 2009 according to Pitchbook, and private cloud companies valued at over $1.5B as of 5/3/2017 according to Crunchbase. Excludes companies based in Asia.
  • 40. Battery Ventures Company Confidential | 40 2017 $0 $100 $200 $300 $400 $500 $600 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Global Software Industry Revenue * * * * * * * * * Denotes a current or former Battery portfolio company Includes public cloud companies with TEV >$500M as of 5/3/17 according to Capital IQ, cloud companies acquired for over $500M since 2009 according to Pitchbook, and private cloud companies valued at over $1.5B as of 5/3/2017 according to Crunchbase. Excludes companies based in Asia. Billions *
  • 41. Battery Ventures Company Confidential | 41 2017 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 ~5 We’re just getting started Billions * Denotes a current or former Battery portfolio company Includes public cloud companies with TEV >$500M as of 5/3/17 according to Capital IQ, cloud companies acquired for over $500M since 2009 according to Pitchbook, and private cloud companies valued at over $1.5B as of 5/3/2017 according to Crunchbase. Excludes companies based in Asia. * * * * * * * * * Your Logo Here? Global Software Industry Revenue
  • 42. Battery Ventures Company Confidential | 42 2017 Biographies Logan is a vice president in Battery’s Boston office, focused on growth investments for business-to- business software companies. He is currently involved in Battery’s investments in Amplitude, Appboy, Narvar, Pendo, and TrendKite. In 2017, Logan was named to Forbes’ “30 Under 30” list of leading young entrepreneurs, innovators and game changers. Logan graduated with a BS from Washington and Lee University, where he played men’s lacrosse. Neeraj joined Battery in 2000 and invests in SaaS and internet companies across all stages. He was a founding investor in BladeLogic and has invested in several other companies that have gone on to stage IPOs, including Bazaarvoice, Coupa, Guidewire Software, Marketo, Nutanix, Omniture, RealPage and Wayfair. He also invested in several Battery portfolio companies that have experienced M&A events. Neeraj’s current private investments include Amplitude, Appboy, BloomReach, Catchpoint, Chef, Cohesity, Glassdoor.com, OpsGenie, Optimizely, Outlyer, Pendo, SmarterHQ, Sprinklr, StellaService, Tealium, TrendKite and Yesware. He has been recognized as a top-100 global venture capitalist on the Forbes Midas List for the past seven consecutive years. Twitter: @neerajvc Email: neeraj@battery.com Twitter: @jloganbartlett Email: logan@battery.com Neeraj Agrawal Logan Bartlett Special thanks to Galit Krifcher for her tireless work on this with us