The Original 10 Laws of Cloud Computing 2008
Bessemer’s canonical principles for building and growing cloud businesses
At Bessemer Venture Partners, we have had the privilege of working closely with over 50 of the leading cloud computing companies over more than a dozen years. We continue to fundamentally believe that the emergence of cloud computing – and its three core components of Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS) – is completely changing the landscape of the multi-billion dollar software industry.
We first presented Bessemer’s Top 10 Laws for Being “SaaS-y” at our annual Cloud CEO Summit in 2012 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 these laws as an active dialogue with ongoing updates to reflect the collective learning of the cloud community. This most recent update is the most extensive we have ever undertaken and includes many changes and several entirely new concepts.
This work is the result of thousands of conversations that the Bessemer partners have had with cloud executives, including our past and current portfolio companies, as well as other leading public and private cloud companies.
Death of the suite; long live best-of-breed and even best-of-feature
For most of the last two decades, major software vendors such as SAP, Oracle, Microsoft, and others have pushed the concept of an “integrated” software suite on the market.
The pendulum is swinging back forcefully in favor of best-of-breed applications.
4. Measuring the impact of churn and renewal rates
These metrics also include logo churn, CMRR churn, and CMRR renewed.
It’s very difficult and expensive to grow subscription businesses if you have moderate customer churn, and prohibitive if your churn is high.
If you find yourself questioning several of these 10 laws however, it’s probably time to step back and take a hard look at your business. As former cloud executives and investors ourselves, we have learned the hard way that much of the battle is just learning from the mistakes of those who went before us. In our analysis of hundreds of cloud businesses, we encountered several successful companies that were on the borderline with one or two of these laws, but none that successfully challenged several of them.
We hope that you can benefit from some of these best practices we’ve learned through the years and these laws can help you run your cloud business more effectively.
Contributors
Byron Deeter
Partner
Byron Deeter is a leading investor in AI, Cloud, Frontier Technology, and the Business of Sports. He co-authored Bessemer’s iconic 10 Laws of Cloud Computing, the Bessemer Forbes Cloud 100, the BVP Nasdaq Emerging Cloud Index, and Bessemer’s STRIVE program for executive health and wellness. Byron works closely alongside many of the best founders in the cloud world, with 26 of Byron’s investments currently valued above $1 billion each, including 13 IPOs and counting.
Byron first raised a Series A with Bessemer back in 2000, as CEO and founder of Trigo Technologies. His company grew to be one of the first global SaaS companies, reaching profitability and was successfully sold to IBM. Byron foresaw that cloud computing would not only change the way people built new technologies but also how The Cloud would systematically run the world. In 2005, Byron returned to Bessemer, this time to help lead the firm’s global cloud practice.
Byron graduated with honors from The University of California, Berkeley, where he met his then college sweetheart and now wife. Byron is a perennial Midas List investor, past Chairman of the National Venture Capital Association, partner/owner of the San Francisco 49ers and Leeds United, as well as an active board member/advisor to numerous causes including the U.S. Olympic & Paralympic Foundation, U.C. Berkeley Foundation, Pledge 1% and Cal Rugby. Although he’s a four-time Rugby Collegiate National Champion and serial Ironman finisher, he’s largely converted to leisure sports of golf, wake surfing, and skiing with his wife and three children.
Disclaimer: The information presented here is for general informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any securities or investment products. Certain companies discussed may be current or former portfolio companies of Bessemer Venture Partners. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal.
