BESSEMER CLOUD COMPUTING LAW #1: Drink Your Own Champagne

September 2012
Related Strategies: Cloud Computing

We first presented Bessemer’s Top 10 Laws for Being “SaaS-y” for internal discussion at our annual Cloud/SaaS CEO Summit almost five years ago, and were overwhelmed by requests to share the content more broadly.  We decided to not only share the insights and the discussion openly, but to treat this as an active discussion with ongoing updates to reflect the collective learning of the cloud community.  This update is the most extensive we have ever undertaken, and includes many changes and several entirely new concepts for this publication.  

This work is literally the result of thousands of conversations that the partners of Bessemer have participated in with cloud executives, including our past and current portfolio companies, as well as other leading public and private cloud companies.    We have been fortunate to be investors in many of the early cloud winners - such as LinkedIn (LNKD), Cornerstone OnDemand (CSOD), Broadsoft (BSFT), Eloqua (ELOQ),  Postini (Acq: Google), Netli (Acq: Akamai), Trigo (Acq: IBM), Keynote (KEYN), Cyota (Acq: RSA), and Verisign (Acq:SYMC) -  and continue to actively invest behind one of the largest cloud portfolios in the venture capital industry.  We don’t claim to be brilliant on these topics ourselves, but we do believe this full community – and thus the content - represents the leading thinking from true cloud experts.
 
Over the next several weeks we’ll be publishing the new 10 Laws to our blog in an effort to share this thinking, as well as spark further conversation in the comments below.  Please check back regularly as we release new laws and share your feedback.  You can also email us directly at cloudvc@bvp.com and we invite you to visit the Cloud Computing section of our website at www.bvp.com/cloud.
 
BESSEMER CLOUD COMPUTING LAW #1:  Drink Your Own Champagne.  
 
Drink it, live it, love the cloud.  Use your own product, and that of your customers, partners, and peers.  To understand the cloud revolution, you have to be a part of it.  You need to understand the issues, challenges, and opportunities with cloud deployments – starting with your own.  If you have a product that touches end users, then end users within your company should be power users of the product.  You should all become experts in the strengths and weaknesses of your product, and be able to discuss customer issues and roadmap priorities in some detail.  Most of our cloud portfolio companies are all power users of their own products and even those of their competitors.
 
Similarly, you should leverage the cloud for your internal systems. This will not only give you a direct understanding of the customer experience and best-of-breed strategies of cloud businesses, but it will free up your technical resources and balance sheet to focus on your core product and customers.  Although your technical team may be great at setting up email servers and voice systems, they are far too valuable to your organization to waste their time on such rote tasks.  Your cost of capital is also likely very high, making upfront hardware and license costs unnecessarily expensive for a young company.  By pushing as much as possible into the cloud, you avoid management headaches and make these expenses variable.  We highlight many of the best-of-breed offerings by category in Bessemer’s Cloudscape below, and there are dozens more emerging monthly. 
 
 
 
Cloud businesses should also leverage PaaS and IaaS whenever possible for core product development.  There has been a massive change in the consumer internet world over the last few years, with the vast majority of new internet websites and applications now using cloud environments such as Amazon Web Services as the foundation of their development from the first day.  We believe that quality of service and portability issues are rapidly resolving themselves at a level that will be suitable for enterprise deployments, and a similar migration will occur within the software and Software-as-a-Service worlds over the coming years.  There has also been an explosion of cloud based PaaS services that are part of the “developer citizenry” revolution, giving application developers access to a long list of powerful API’s that can be quickly integrated into product offerings, and purchased on a consumption basis with little or no upfront commitment.  
 
 

Michael Tessler
CEO Broadsoft (NASDAQ:BSFT) 

“We enable telephony services delivered from "the cloud," and every employee is a power user of our communication services.  This way everyone in our company is an expert on the product and can easily understand a user's needs, from the veteran sales executive to a new customer account manager.”

For a PDF of Bessemer's Top 10 Laws of Cloud Computing and SaaS please click here.