DREAMTECH NEWS

Aaron Levie: ‘We have way too many manual processes in businesses’

Box CEO Aaron Levie has been working to change the software world for 15 years, but the pandemic has accelerated the move to cloud services much faster than anyone imagined. As he pointed out yesterday in an Extra Crunch Live interview, who would have thought three months ago that businesses like yoga and cooking classes would have moved online — but here we are.

Levie says we are just beginning to see the range of what’s possible because circumstances are forcing us to move to the cloud much faster than most businesses probably would have without the pandemic acting as a change agent.

“Overall, what we’re going to see is that anything that can become digital probably will be in a much more accelerated way than we’ve ever seen before,” Levie said.

Fellow TechCrunch reporter Jon Shieber and I spent an hour chatting with Levie about how digital transformation is accelerating in general, how Box is coping with that internally and externally, his advice for founders in an economic crisis and what life might be like when we return to our offices.

Our interview was broadcast on YouTube and we have included the embed below.


Just a note that Extra Crunch Live is our new virtual speaker series for Extra Crunch members. Folks can ask their own questions live during the chat, with past and future guests like Alexis Ohanian, Garry Tan, GGV’s Hans Tung and Jeff Richards, Eventbrite’s Julia Hartz and many, many more. You can check out the schedule here. If you’d like to submit a question during a live chat, please join Extra Crunch.


On digital transformation

The way that we think about digital transformation is that much of the world has a whole bunch of processes and ways of working — ways of communicating and ways of collaborating where if those business processes or that way we worked were able to be done in digital forms or in the cloud, you’d actually be more productive, more secure and you’d be able to serve your customers better. You’d be able to automate more business processes.

We think we’re [in] an environment that anything that can be digitized probably will be. Certainly as this pandemic has reinforced, we have way too many manual processes in businesses. We have way too slow ways of working together and collaborating. And we know that we’re going to move more and more of that to digital platforms.

In some cases, it’s simple, like moving to being able to do video conferences and being able to collaborate virtually. Some of it will become more advanced. How do I begin to automate things like client onboarding processes or doing research in a life sciences organization or delivering telemedicine digitally, but overall, what we’re going to see is that anything that can become digital probably will be in a much more accelerated way than we’ve ever seen before.

How the pandemic is driving change faster


By Ron Miller

Salesforce stock is taking a hit today after lighter guidance in yesterday’s earning’s report

In spite of a positive quarter with record revenue that beat analyst estimates, Salesforce stock was taking a hit today because of lighter guidance. Wall Street is a tough audience.

The stock was down $8.29/share or 4.58% as of 2:15 pm ET.

The guidance, which was a projection for next quarter’s earnings, was lighter than what the analysts on Wall Street expected. While Salesforce was projecting revenue for next quarter in the range of $4.89 to $4.90 billion, according to CNBC, analysts had expected $5.03 billion.

When analysts see a future that is a bit worse than what they expected, it usually results in a lower stock price and that’s what we are seeing today. It’s worth noting that Salesforce is operating in the same economy as everyone else and being a bit lighter on your projections in the middle of pandemic seems entirely understandable.

In yesterday’s report CEO Marc Benioff indicated that the company has been offering some customers some flexibility around payment as they navigate the economic fallout of COVID-19, and the company’s operating cash took a bit of a hit because of this.

“Operating cash flow was $1.86 billion, which was largely impacted by delayed payments from customers while sheltering in place and some temporary financial flexibility that we granted to certain customers that were most affected by the COVID pandemic,” president and CFO Mark Hawkins explained in the analyst call.

Still, the company reported revenue of $4.87 billion for the quarter, putting it on a run rate of $19.48 billion.

In a statement, David Hynes, Jr of Canaccord Genuity still remained high on Salesforce. “If you step back and think about what Salesforce is actually providing, tools that help businesses get closer to their customers are perhaps more important than ever in a slower-growth, socially distanced world. We have long reserved a spot for CRM among our top names in large cap, and we feel no differently about that view after what we heard last night. This is a high-quality firm with many levers to growth, and as such, we believe CRM is a good way to get a bit of defensive exposure to the favorable trends at play in software.”

The company is after all still firmly on the path to a $20 billion in revenue. As Hynes points out, overall the kinds of tools that Salesforce offers should remain in demand as companies look for ways to digitally transform much more rapidly in our current situation, and look to companies like Salesforce for help.


By Ron Miller

How startups can leverage elastic services for cost optimization

Due to COVID-19, business continuity has been put to the test for many companies in the manufacturing, agriculture, transport, hospitality, energy and retail sectors. Cost reduction is the primary focus of companies in these sectors due to massive losses in revenue caused by this pandemic. The other side of the crisis is, however, significantly different.

Companies in industries such as medical, government and financial services, as well as cloud-native tech startups that are providing essential services, have experienced a considerable increase in their operational demands — leading to rising operational costs. Irrespective of the industry your company belongs to, and whether your company is experiencing reduced or increased operations, cost optimization is a reality for all companies to ensure a sustained existence.

One of the most reliable measures for cost optimization at this stage is to leverage elastic services designed to grow or shrink according to demand, such as cloud and managed services. A modern product with a cloud-native architecture can auto-scale cloud consumption to mitigate lost operational demand. What may not have been obvious to startup leaders is a strategy often employed by incumbent, mature enterprises — achieving cost optimization by leveraging managed services providers (MSPs). MSPs enable organizations to repurpose full-time staff members from impacted operations to more strategic product lines or initiatives.

Why companies need cost optimization in the long run


By Walter Thompson

Cisco to acquire internet monitoring solution ThousandEyes

When Cisco bought AppDynamics in 2017 for $3.7 billion just before the IPO, the company sent a clear signal it wanted to move beyond its pure network hardware roots into the software monitoring side of the equation. Yesterday afternoon the company announced it intends to buy another monitoring company, this time snagging internet monitoring solution ThousandEyes.

Cisco would not comment on the price when asked by TechCrunch, but published reports from CNBC and others pegged the deal at around $1 billion. If that’s accurate, it means the company has paid around $4.7 billion for a pair of monitoring solutions companies.

Cisco’s Todd Nightingale, writing in a blog post announcing the deal said that the kind of data that ThousandEyes provides around internet user experience is more important than ever as internet connections have come under tremendous pressure with huge numbers of employees working from home.

ThousandEyes keeps watch on those connections and should fit in well with other Cisco monitoring technologies. “With thousands of agents deployed throughout the internet, ThousandEyes’ platform has an unprecedented understanding of the internet and grows more intelligent with every deployment, Nightingale wrote.

He added, “Cisco will incorporate ThousandEyes’ capabilities in our AppDynamics application intelligence portfolio to enhance visibility across the enterprise, internet and the cloud.”

As for ThousandEyes, co-founder and CEO Mohit Lad told a typical acquisition story. It was about growing faster inside the big corporation than it could on its own. “We decided to become part of Cisco because we saw the potential to do much more, much faster, and truly create a legacy for ThousandEyes,” Lad wrote.

It’s interesting to note that yesterday’s move, and the company’s larger acquisition strategy over the last decade is part of a broader move to software and services as a complement to its core networking hardware business.

Just yesterday, Synergy Research released its network switch and router revenue report and it wasn’t great. As companies have hunkered down during the pandemic, they have been buying much less network hardware, dropping the Q1 numbers to seven year low. That translated into a $1 billion less in overall revenue in this category, according to Synergy.

While Cisco owns the vast majority of the market, it obviously wants to keep moving into software services as a hedge against this shifting market. This deal simply builds on that approach.

ThousandEyes was founded in 2010 and raised over $110 million on a post valuation of $670 million as of February 2019, according to Pitchbook Data.


By Ron Miller

Mirantis releases its first major update to Docker Enterprise

In a surprise move, Mirantis acquired Docker’s Enterprise platform business at the end of last year and while Docker itself is refocusing on developers, Mirantis kept the Docker Enterprise name and product. Today, Mirantis is rolling out its first major update to Docker Enterprise with the release of version 3.1.

For the most part, these updates are in line with what’s been happening in the container ecosystem in recent months. There’s support for Kubernetes 1.17 and improved support for Kubernetes on Windows (something the Kubernetes community has worked on quite a bit in the last year or so). Also new is Nvidia GPU integration in Docker Enterprise through a pre-installed device plugin, as well as support for Istio Ingress for Kubernetes and a new command-line tool for deploying clusters with the Docker Engine.

In addition to the product updates, Mirantis is also launching three new support options for its customers that now give them the option to get 24×7 support for all support cases, for example, as well as enhanced SLAs for remote managed operations, designated customer success managers and proactive monitoring and alerting. With this, Mirantis is clearly building on its experience as a managed service provider.

What’s maybe more interesting, though, is how this acquisition is playing out at Mirantis itself. Mirantis, after all, went through its fair share of ups and downs in recent years, from high-flying OpenStack platform to layoffs and everything in between.

“Why we do this in the first place and why at some point I absolutely felt that I wanted to do this is because I felt that this would be a more compelling and interesting company to build, despite maybe some of the short-term challenges along the way, and that very much turned out to be true. It’s been fantastic,” Mirantis CEO and co-founder Adrian Ionel told me. “What we’ve seen since the acquisition, first of all, is that the customer base has been dramatically more loyal than people had thought, including ourselves.”

Ionel admitted that he thought some users would defect because this is obviously a major change, at least from the customer’s point of view. “Of course we have done everything possible to have something for them that’s really compelling and we put out the new roadmap right away in December after the acquisition — and people bought into it at very large scale,” he said. With that, Mirantis retained more than 90 percent of the customer base and the vast majority of all of Docker Enterprise’s largest users.

Ionel, who almost seemed a bit surprised by this, noted that this helped the company to turn in two “fantastic” quarters and was profitable in the last quarter, despite the COVID-19.

“We wanted to go into this acquisition with a sober assessment of risks because we wanted to make it work, we wanted to make it successful because we were well aware that a lot of acquisitions fail,” he explained. “We didn’t want to go into it with a hyper-optimistic approach in any way — and we didn’t — and maybe that’s one of the reasons why we are positively surprised.”

He argues that the reason for the current success is that enterprises are doubling down on their container journeys and because they actually love the Docker Enterprise platform, like infrastructure independence, its developer focus, security features and ease of use. One thing many large customers asked for was better support for multi-cluster management at scale, which today’s update delivers.

“Where we stand today, we have one product development team. We have one product roadmap. We are shipping a very big new release of Docker Enterprise. […] The field has been completely unified and operates as one salesforce, with record results. So things have been extremely busy, but good and exciting.”


By Frederic Lardinois

Wasabi announces $30M in debt financing as cloud storage business continues to grow

We may be in the thick of a pandemic with all of the economic fallout that comes from that, but certain aspects of technology don’t change no matter the external factors. Storage is one of them. In fact, we are generating more digital stuff than ever, and Wasabi, a Boston-based startup that has figured out a way to drive down the cost of cloud storage is benefiting from that.

Today it announced a $30 million debt financing round led led by Forestay Capital, the technology innovation arm of Waypoint Capital with help from previous investors. As with the previous round, Wasabi is going with home office investors, rather than traditional venture capital firms. Today’s round brings the total raised to $110 million, according to the company.

Founder and CEO David Friend says the company needs the funds to keep up with the rapid growth. “We’ve got about 15,000 customers today, hundreds of petabytes of storage, 2500 channel partners, 250 technology partners — so we’ve been busy,” he said.

He says that revenue continues to grow in spite of the impact of COVID-19 on other parts of the economy. “Revenue grew 5x last year. It’ll probably grow 3.5x this year. We haven’t seen any real slowdown from the Coronavirus. Quarter over quarter growth will be in excess of 40% — this quarter over Q1 — so it’s just continuing on a torrid pace,” he said.

He said the money will be used mostly to continue to expand its growing infrastructure requirements. The more they store, the more data centers they need and that takes money. He is going the debt route because his products are backed by a tangible asset, the infrastructure used to store all the data in the Wasabi system. And it turns out that debt financing is a lot cheaper in terms of payback than equity terms.

“Our biggest need is to build more infrastructure, because we are constantly buying equipment. We have to pay for it even before it fills up with customer data, so we’re raising another debt round now,” Friend said. He added, “Part of what we’re doing is just strengthening our balance sheet to give us access to more inexpensive debt to finance the building of the infrastructure.”

The challenge for a company like Wasabi, which is looking to capture a large chunk of the growing cloud storage market is the infrastructure piece. It needs to keep building more to meet increasing demand, while keeping costs down, which remains its primary value proposition with customers.

The money will help the company expand into new markets as many countries have data sovereignty laws that require data to be stored in-country. That requires more money and that’s the thinking behind this round.

The company launched in 2015. It previously raised $68 million in 2018.


By Ron Miller

Baton raises $10M Series A to organize post-sale implementation

Baton, an early-stage startup that wants to help customers organize the post-sales implementation process, emerged from stealth today with a $10 million Series A investment.

Activant Capital led the round with help from Global Founders Capital and Hybris founder Carsten Thoma.

Like so many startups, the idea for Baton stemmed from a pain point that founder and CEO Alex Krug experienced first hand. He was co-founder at Behance, which was later sold to Adobe and he saw that there were tools to organize your customers and get you through the sale, but there was something distinctly lacking when it came to implementation post-sale.

Krug said that most companies hacked together a solution consisting of general project management tools, spreadsheets and email, but what was missing was a dedicated platform to help with this part of the process. He put his team to work to build it.

“We reconfigured a lot of the team that I worked with at Behance and Adobe and really started to build a platform around optimizing the implementation, what happens in between your presale and post sale and how customers get on boarded through a platform,” Krug told TechCrunch.

He says where project management tends to be internally focussed, Baton is designed to bring all the parties from vendor to client to systems integrator together in one tool, so everyone knows their responsibilities and targets.

While Krug understands that this may not be an optimal time to launch a startup out of stealth in the middle of a pandemic and corresponding economic crisis, he still sees a real need for a tool like Baton.

“This era of top line growth is gone. Efficient growth is here to stay and Baton really optimizes processes and standardizes a toolset that allows you to grow efficiently from your fifth customer to your thousandth customer, whereas previous iterations of implementation have been these static spreadsheets and chasing people for manual updates.”

He believes his company is offering a reasonable alternative to that, as does his lead investor Peter McCoy at Activant Capital. “The best SaaS companies are built off of product-led growth, that can be network effects, novel go-to-market strategies or some other distribution advantage. The problem I kept seeing was even companies that had one or a couple of these attributes created operational debt, when they bloated up their services teams to keep up with top line growth. The need for a platform like Baton was super clear to me,” McCoy said in a statement.

Beginning today, the company will set forth on its startup journey as it attempts to carve out a market in difficult times, and help customers with this crucial part of the selling cycle.


By Ron Miller

Extra Crunch Live: Join Verizon CEO Hans Vestberg for a live Q&A today at 2pm EDT/11am PDT

As the leader of a publicly traded corporation with 135,000 employees, Verizon Communications CEO Hans Vestberg has a unique perspective on the state of the world.

When he appears today on Extra Crunch Live, our virtual speaker series for Extra Crunch members, we’ll ask him about this extraordinary moment in history and his plans for seeing the company through a black swan event that’s reshaping the global economy.

The discussion starts at 2 p.m. EDT/11 a.m. PDT/9 p.m. GMT. You can find the full details below.

Vestberg served as president and CEO at Ericsson for six years and joined Verizon as its CTO and president of Global Networks in 2017 before stepping into the CEO role a little more than a year later. (Disclosure: TechCrunch is owned by Verizon).

We’ll talk to Vestberg about his tactics for managing a company at scale through a crisis and will check in on the company’s 5G rollout, a platform inflection point that should change the landscape for founders and entrepreneurs. Verizon recently acquired BlueJeans, which competes directly with Zoom and WebEx, so we’ll also ask Vestberg about the company’s forward-looking investment strategy.

Extra Crunch members are encouraged to ask their own questions during the Zoom call, so please come prepared. If you’re not already a member, sign up on the cheap right here.

You can also check out the full Extra Crunch Live schedule here.

See you soon!


By Jordan Crook

Scandit raises $80M as COVID-19 drives demand for contactless deliveries

Enterprise barcode scanner company Scandit has closed an $80 million Series C round, led by Silicon Valley VC firm G2VP. Atomico, GV, Kreos, NGP Capital, Salesforce Ventures and Swisscom Ventures also participated in the round — which brings its total raised to date to $123M.

The Zurich-based firm offers a platform that combines computer vision and machine learning tech with barcode scanning, text recognition (OCR), object recognition and augmented reality which is designed for any camera-equipped smart device — from smartphones to drones, wearables (e.g. AR glasses for warehouse workers) and even robots.

Use-cases include mobile apps or websites for mobile shopping; self checkout; inventory management; proof of delivery; asset tracking and maintenance — including in healthcare where its tech can be used to power the scanning of patient IDs, samples, medication and supplies.

It bills its software as “unmatched” in terms of speed and accuracy, as well as the ability to scan in bad light; at any angle; and with damaged labels. Target industries include retail, healthcare, industrial/manufacturing, travel, transport & logistics and more.

The latest funding injection follows a $30M Series B round back in 2018. Since then Scandit says it’s tripled recurring revenues, more than doubling the number of blue-chip enterprise customers, and doubling the size of its global team.

Global customers for its tech include the likes of 7-Eleven, Alaska Airlines, Carrefour, DPD, FedEx, Instacart, Johns Hopkins Hospital, La Poste, Levi Strauss & Co, Mount Sinai Hospital and Toyota — with the company touting “tens of billions of scans” per year on 100+ million active devices at this stage of its business.

It says the new funding will go on further pressing on the gas to grow in new markets, including APAC and Latin America, as well as building out its footprint and ops in North America and Europe. Also on the slate: Funding more R&D to devise new ways for enterprises to transform their core business processes using computer vision and AR.

The need for social distancing during the coronavirus pandemic has also accelerated demand for mobile computer vision on personal smart devices, according to Scandit, which says customers are looking for ways to enable more contactless interactions.

Another demand spike it’s seeing is coming from the pandemic-related boom in ‘Click & Collect’ retail and “millions” of extra home deliveries — something its tech is well positioned to cater to because its scanning apps support BYOD (bring your own device), rather than requiring proprietary hardware.

“COVID-19 has shone a spotlight on the need for rapid digital transformation in these uncertain times, and the need to blend the physical and digital plays a crucial role,” said CEO Samuel Mueller in a statement. “Our new funding makes it possible for us to help even more enterprises to quickly adapt to the new demand for ‘contactless business’, and be better positioned to succeed, whatever the new normal is.”

Also commenting on the funding in a supporting statement, Ben Kortlang, general partner at G2VP, added: “Scandit’s platform puts an enterprise-grade scanning solution in the pocket of every employee and customer without requiring legacy hardware. This bridge between the physical and digital worlds will be increasingly critical as the world accelerates its shift to online purchasing and delivery, distributed supply chains and cashierless retail.”


By Natasha Lomas

IBM confirms layoffs are happening, but won’t provide details

IBM confirmed reports from over night that it is conducting layoffs, but wouldn’t provide details related to location, departments or number of employees involved. The company framed it in terms of replacing people with more needed skills as it tries to regroup under new CEO Arvind Krishna.

IBM’s work in a highly competitive marketplace requires flexibility to constantly remix to high-value skills, and our workforce decisions are made in the long-term interests of our business,” an IBM spokesperson told TechCrunch.

Patrick Moorhead, principal analyst at Moor Insights & Strategy says he’s hearing the layoffs are hitting across the business. “I’m hearing it’s a balancing act between business units. IBM is moving as many resources as it can to the cloud. Essentially, you lay off some of the people without the skills you need and who can’t be re-educated and you bring in people with certain skill sets. So not a net reduction in headcount,” Moorhead said.

It’s worth noting that IBM used a similar argument back in 2015 when it reportedly had layoffs. While there is no official number, Bloomberg is reporting that today’s number is in the thousands.

Holger Mueller, an analyst at Constellation Research, says that IBM is in a tough spot. “The bets of the past have not paid off. IBM Cloud as IaaS is gone, Watson did not deliver and Blockchain is too slow to keep thousands of consultants occupied,” he said.

Mueller adds that the company could also be feeling the impact of having workers at home instead of in the field. “Enterprises do not know and have not learnt how to do large software projects remotely. […] And for now enterprises are slowing down on projects as they are busy with reopening plans,” he said.

The news comes against the backdrop of companies large and small laying off large numbers of employees as the pandemic takes its toll on the workforce. IBM was probably due for a workforce reduction, regardless of the current macro situation as Krishna tries to right the financial ship.

The company has struggled in recent years, and with the acquisition of Red Hat for $34 billion in 2018, it is hoping to find its way as a more open hybrid cloud option. It apparently wants to focus on skills that can help them get there.

The company indicated that it would continue to subsidize medical expenses for laid off employees through June 2021, so there is that.


By Ron Miller