Cloud Computing Law #8 - Bessemer Venture Partners

Investment Practice Overview
Cleantech
Cloud Computing
Data Security
Financial Services
Healthcare
India Opportunities
Israel Opportunities
Online Retail

BESSEMER CLOUD COMPUTING LAW #8: Leverage and monetize the data asset.

While Cloud Computing is about providing a subscription service to your customers, one of the happy consequences is that you end up hosting their data. This becomes a critical asset that you can monetize by increasing the value of your offering; by leveraging it across your customer base in the form of benchmarks; or for specific businesses, by using the data to generate leads (within the contracted obligations). In these difficult economic times, where prices are under pressure and customers are tightening their budgets, data can be a difference maker.

As a Cloud Computing service, your company captures a lot of business information on each individual customer, information that is typically peripheral to the delivery of your service, but could be very interesting for your customer’s executives. This information can generally be packaged and synthesized into a set of management dashboards that you can provide to your customers, potentially for an incremental subscription fee, or as a way to expand usage and increase product stickiness. Within our own portfolio, successful examples include the “CMO dashboard” (Eloqua), “Merchandising Dashboard” (Retail Solutions), “CFO Dashboard” (Intacct), and “HR Dashboard” (Cornerstone OnDemand) .

A second way to monetize your data is to identify the key performance indicators that you can derive from them – typically the ones that you have identified for your executive dashboards – and develop benchmarks across your customer base. These benchmarks can be customized along several dimensions (e.g., by company size, sector, geography) and be provided separately to your customers and even included in the executive dashboard. One of the early companies to sell benchmarks was Concur, the leading public company in the expense management space. With Concur reports, customers can compare their travel costs and business expenses against their peer group and track the evolution over time. We believe this “data-as-a-service” model has a lot of potential and will become more prominent as companies mature and need to find additional revenue streams.

Finally, another way to take advantage of your data is to use it to generate leads. While we recognize that this may not be possible for many of the B2B businesses for obvious reasons, this practice has proven to be successful for the lower end of the market, including small businesses and consumers. A company like Mint for example (now part of Intuit), even based its business model around it. Mint launched a SaaS financial application for consumers, competing against Quicken, but while the Quicken and Quicken Online business models used a license or a subscription fee, Mint was free and generated revenue by using its consumer insights to generate leads that were sold to service providers. For example, if Mint identified that your savings account had a 2% rate, it would notify you by email that another bank could offer you 2.5% and sell your click (or whatever action you would perform if interested) to a provider. Mint was so successful in this customer acquisition model that it ended up being acquired by Intuit in 2009 and will now replace the Quicken Online product.

<< Previous Law

1 2 3 4 5 6 789 10 Bonus

Next Law >>

Return to Cloud Computing Home Page

We believe Cloud Computing is the most important trend in the software industry of the decade. We have been fortunate to work with many of the early pioneers in this high growth market segment, and continue to invest actively to grow our current portfolio.

Adam Fisher joined Bessemer in 2007 as a Partner. Based in the Larchmont office, he focuses on the firm’s Israel-related investments in both the U.S. and Israel. Adam is Bessemer’s first partner to be dedicated to Israel, where the firm has made a number of investments, including ART (acquired by Scansoft, now Nuance

BroadSoft is the leading provider of service delivery and creation systems for next generation communication networks.

Byron Deeter is a Partner in BVP's Menlo Park office after having previously been a successful entrepreneur, investor, and consultant. At Bessemer, he focuses on investments in the software, Software as a Service (SaaS) , Internet, and gaming sectors. Most recently, Byron was an executive at IBM, as a result of

Cornerstone OnDemand provides a comprehensive suite of talent management solutions for learning, performance, compensation, succession and compliance management to meet the human resource development needs of business and education .

Counterpane Systems is a data security monitoring service that monitors the firewalls and intrusion detection products protecting corporate networks.

Cyota is the leading player in the anti-fraud space, specializing in financial institutions. It specializes in fraud related to the Internet, such as online banking fraud, eCommerce fraud and phishing. In December 2005, Cyota was acquired by RSA Security (NASDAQ:RSAS).

David Cowan joined Bessemer in 1992. Of his 45 early-stage investments, 18 were acquired and 19 went public.

Eloqua is the industry leader in demand generation applications.

Endeca's innovative search and navigation platform provides unprecedented online data exploration that exposes the full richness and potential of online information.

Intacct provides on demand accounting, business and financial management applications over the web using a Software As A Service model.

Intego's software products protect the Macintosh computers of more than a million users in 60 countries from the dangers of the Internet.

Jeremy is a Partner with Bessemer Venture Partners. He focuses primarily on software and services investments. Prior to joining BVP in 2001, Jeremy was Vice President of Operations at Dash, an Internet software publisher. Jeremy joined Dash from AEA Investors, a private equity firm with an expertise in leveraged an

In 1997 BVP's David Cowan led the Series A round in Keynote, a provider of Internet performance data and diagnostic services. The company went public in 1999 as NASDAQ KEYN.

The nation's first ID theft protection company.

A business networking Internet site.

The first company to offer a service that reliably and transparently enables global sub second response time to Web enabled applications through Internet Optimization providing LAN like performance over WANs. It was acquired by Akamai (NASDAQ AKAM)in 2007.

Parallels is a global leader in virtualization and automation software that helps consumers, businesses, and service providers optimize their use of technology. The company's software powers more than 130,000 servers and 650,000 desktops worldwide.

Perimeter provides comprehensive, on-demand messaging and security services to thousands of businesses.

Philippe Botteri is a Senior Associate in BVP’s Menlo Park office. Working primarily with Byron Deeter, he focuses on the enterprise software and internet sectors. Most recently, Philippe was a senior engagement manager at McKinsey & Co.’s high-tech practice in Silicon Valley, where he focused in the software,

Postini provides email security and management for the enterprise. BVP's David Cowan invested in the company's later rounds and served on the board. In July 2007, Postini was acquired by Google (NASDAQ: GOOG).

PSINet was the first venture backed Internet Service Provider in the world. BVP's David Cowan and Felda Hardymon invested in its early rounds starting in 1993. PSINet went public in May 1995 as NASDAQ PSIX.

Register.com provides domain name registration and related Internet services. BVP's David Cowan invested in the company in 1999 it went public as NASDAQ RCOM the following year.

The leading RFID analytics and applications company.

SelectMinds helps its clients build relationships among their employees, alumni, and other key constituents.

Stephen Bluestein is a Senior Associate in BVP’s New York office. He works with Bob Goodman, focusing on opportunities in software, communications, and healthcare IT. He serves on the board of Ziff David Enterprise and is closely involved with the firm’s investments in GTS Central Europe , Syncsort , and Netsmart

Storwize provides a unique, transparent, real time storage compression solution that dramatically boosts available storage space.

Telocity was an early provider of residential broadband internet service provider. BVP's David Cowan co led the first venture round in 1998. Telocity went public as NASDAQ TLCT on March 31, 2001 (the last IPO of the dotcom era). Hughes'

Trevor Oelschig is a Senior Associate in BVP’s New York office. He works with Rob Stavis, focusing on opportunities in software, consumer technologies, and digital and mobile media. Prior to BVP, Trevor was an Associate with Panorama Capital (previously JPMorgan

Trigo creates enterprise software solutions for Product Information Management. In 2004, IBM (NYSE IBM) acquired the company.

VeriSign is the leading provider of trusted infrastructure services. David Cowan co-founded the company in 1995 as a spin-out from RSA, and served as VeriSign's initial Chairman and CFO. The company went public in 1998 (NASDAQ:VRSN).

Wix allows anyone to create stunning flash content anywhere on the web.