Remote work helps Zoom grow 169% in one year, posting $328.2M in Q1 revenue

Today after the bell, video-chat service Zoom reported its Q1 earnings. The company disclosed that it generated $328.2 million in revenue, up 169% compared to the year-ago period. The company also reported $0.20 per-share in adjusted profit during the three-month period.

Analysts, as averaged by Yahoo Finance, expected Zoom to report $202.48 million in revenue, and a per-share profit of $0.09. After its earnings smash, shares of Zoom were up slightly Update: Zoom shares are now up 2.3% ahead of its earnings call; investors had priced in this outsized-performance, it seems.

Zoom grew 78% in its preceding quarter on an annualized basis. The company’s growth acceleration is notable.

Investors were expecting big gains. Before its earnings, shares in the popular business-to-business service were up by more than 3x during the year; Zoom has found itself in an updraft due in part to COVID-19 driving workers and others to stay home and work remotely. Zoom’s software has also seen large purchase amongst consumers hungry for a video chatting solution that was simple and that works.

If the company could sustain its valuation gains going into this earnings report was an open question that has now been answered.

Gains

Zoom’s growth in its Q1 fiscal 2021 generated some notable profit results for the firm. The firm’s net income, an unadjusted profit metric, rose from $0.2 million in the year-ago quarter to $27.0 million in its most recent three months.

And Zoom’s cash generation was astounding. Here’s how the company described its results:

Net cash provided by operating activities was $259.0 million for the quarter, compared to $22.2 million in the first quarter of fiscal year 2020. Free cash flow was $251.7 million, compared to $15.3 million in the first quarter of fiscal year 2020.

It’s difficult to recall another company that has managed such growth in cash generation in such a short period of time, driven mostly by operations and not other financial acts. Zoom’s customer numbers were similarly sharp, with the firm reporting that it had 265,400 customers with more than 10 seats (employees) at the end of the quarter, which was up 354% from the year-ago period.

Though not all news for Zoom was good. Indeed, the company’s gross margin fell sharply in the quarter, compared to its year-ago result. In is Q1 fiscal 2020, Zoom reported a gross margin of around 80%. In its most recent quarter that number slipped to around 68%. In short, the company managed to convert many free users to paying customers, but still had to carry the costs of free usage of its product, something that has exploded in recent months.

Looking ahead, Zoom expects the current quarter to be another blockbuster period. The company noted in its release that it expects “between $495.0 million and $500.0 million” in revenue for Q2 of its fiscal 2021 (the current period). Looking ahead for the full fiscal year, Zoom anticipates revenues “between $1.775 billion and $1.800 billion,” numbers that take into account “the demand for remote work solutions for businesses” and “increased churn in the second half of the fiscal year” when some customers might no longer need Zoom if they can return to their offices.

Its shares might have priced in these results, but the numbers themselves are simply massive. Just three months ago Zoom turned in revenues of just $188.3 million. That’s less than it generated in free cash flow during its next three months.


By Alex Wilhelm

Pitch deck teardown: The making of Atlassian’s 2015 roadshow presentation

In 2015, Atlassian was preparing to go public, but it was not your typical company in so many ways. For starters, it was founded in Australia, it had two co-founder co-CEOs, and it offered collaboration tools centered on software development.

That meant that the company leaders really needed to work hard to help investors understand the true value proposition that it had to offer, and it made the roadshow deck production process even more critical than perhaps it normally would have been.

A major factor in its favor was that Atlassian didn’t just suddenly decide to go public. Founded in 2002, it waited until 2010 to accept outside investment. After 10 straight years of free cash flow, when it took its second tranche of investment in 2014, it selected T. Rowe Price, perhaps to prepare for working with institutional investors before it went public the next year.

We sat down with company president Jay Simons to discuss what it was like, and how his team produced the document that would help define them for investors and analysts.

Always thinking long term

Simons said co-founders Scott Farquar and Mike Cannon-Brooke always had a vision of building a public company from the early days.

“Mike and Scott were intent on building an iconic, multigenerational company. They were always talking about a company that outlasted them. And one of the examples that we always used was Hewlett-Packard, in that they wanted to build a company that stood the test of time,” Simons said. That aspiration was associated with their desire to behave with the discipline of a company that was publicly traded.

“Being a public company demands a level of athleticism and rigor and accountability and discipline in planning and thinking and execution,” he said. “And so I think if you set your sights on being an iconic company, more than likely you will choose the path of being a publicly-traded company because it sort of raises your game.”

It’s worth noting that when the company accepted funding in 2010 from Accel and again in 2014, these were secondary investments, meaning the investors were buying equity directly from the company’s founders and employees. As a result, the first time it raised primary capital was at its IPO.

Moving beyond Australia

Long before the company decided to go public, Atlassian began expanding internationally. By the time the team began drafting the roadshow deck, it had offices in San Francisco and Austin, along with a robust international customer base.

“We were proud of our heritage [as a company started in Australia], but we definitely positioned ourselves as a global company. We had a really strong concentration employee base in both San Francisco and Austin by the time we decided to go public, and we had customers in 140 different countries with 50,000 active customers at the time, and so we were a significant global company,” Simons said.

He said their origins also meant they had to cultivate international markets from early on. By the time the company went public, he said, unlike a lot of startups at that stage, half their market was in North America and half was in other countries, and that was a big selling point for investors.

Gearing up

Simons said the roadshow deck they would create was adapted from the deck they developed when they approached VCs in 2010 for the first round of investment capital. That would eventually lead to a $60 million investment from Accel.

“In many ways that [early investor deck] was the first version where you had to really explain the business, and not just at a high level kind of value proposition to somebody that would potentially buy the software. We needed to explain the business and how it operated and what our financials looked like and how we thought about our market opportunity and what we thought was unique about our company, our business model and our culture.”

Well before Atlassian filed an S-1, big banks began expressing interest in getting to know the company, believing correctly that it would eventually go public. So they prepared a presentation for bankers that introduced the company and explained its mission to people who may not have been familiar, an exercise that also helped them create their roadshow deck.

“This particular deck continued to evolve and take shape from those conversations as we used it,” he said.

Getting down to business

Once the company decided to file for an IPO, it hired a bank and began drafting the S-1 document that would announce its intent to go public. As they went through this process, it laid out much of the information the company would want to include in the roadshow deck.

“There were parts of what we already had communicated in deck form that we could incorporate into the S-1 in a narrative form, and then parts of writing that long-form narrative that we wanted to incorporate back into the deck. A relatively small team worked on both the S-1 document and then recalibrating the deck around the S-1 and vice versa,” Simons said.

The process began in August 2015, but the roadshow deck went through dozens of iterations until they crafted the final version in November 2015. The team also prepared a video of the presentation; around that time, companies were moving away from releasing videos with talking heads standing in front of a backdrop, so they decided to improve their production values.

Hitting the road

Once the deck was ready, the company hit the road and delivered the presentation across the country, starting on the West Coast, moving through the Midwest and ending up in New York City.

They rarely presented the deck start to finish as most investors had seen it ahead of time; instead, presentations tended to be more interactive with attendees asking questions. “Nobody wants to just watch an infomercial, so we were digging into things that either weren’t totally clear to them in the deck or there was a level of detail that they wanted to try to see; so it was not uncommon to have it be conversational,” he said.

The roadshow team flew their spouses out to NYC to meet them for a free weekend, took in a Nets game and a Broadway show and generally relaxed before they went public on December 9, 2015. If the first day was any indication, the offering was a rousing success finishing up 32% on a valuation of $5.8 billion.

The company went public at $21 a share. Today the price sits at more than $188 with a market cap above $46 billion. It seems to have all worked out just the way they planned when they started thinking of going public all those years ago, but there was no way to know that when they sat down to write the deck. No matter how well prepared they were.


By Ron Miller

Salesforce names Vlocity founder David Schmaier CEO of new Salesforce Industries division

When Salesforce announced it was acquiring Vlocity for $1.33 billion in February, it was a deal that made sense for both companies. Today, the company announced that the deal has closed and Vlocity CEO David Schmaier has been named CEO of a new division called Salesforce Industries.

Vlocity has built several industry-specific CRM tools such media and entertainment, healthcare and government on top of the Salesforce platform. While Salesforce has developed some of its own industry solutions, having a division devoted to verticalized tools creates additional market opportunities for the company.

Schmaier sees the new division as a commitment from the company on the value of an industry-focused approach.

“As Vlocity becomes part of what we’re calling Salesforce industries, this will be a larger group within Salesforce to really focus on bringing these industry-specific solutions to the customer, helping them go digital and working in a whole new way,” Schmaier told TechCrunch.

Salesforce president and COO Bret Taylor will be Schmaier’s boss. Writing in a blog post announcing the new division, Taylor said that like so many aspects of technology solutions these days, the industry focus is about helping companies with digital transformation. As the world changes before our eyes during the pandemic, companies are being forced to move operations online, and Salesforce wants to provide more specific solutions for customers who need it.

“Companies in every industry have a digital transformation imperative like never before — and many are accelerating their plans for a digital-first, work-from-anywhere environment. With Salesforce Customer 360 and Vlocity, our customers have the most advanced industries platform as well as tools and expert guidance completely tailored to their specific needs,” Taylor wrote.

Schmaier says the fact that his company’s tooling was already built on top of Salesforce allows them to really hit the ground running without the integration challenges that combining organizations typically face after an acquisition like this one.

“I’ve been involved in various mergers and acquisitions over my 30-year career, and this is the most unique one I’ve ever seen because the products are already 100% integrated because we built our six vertical applications on top of the Salesforce platform. So they’re already 100% Salesforce, which is really kind of amazing. So that’s going to make this that much simpler,” he said.

It’s likely that Salesforce will continue to build on the new division and add additional applications over time given the platform is already in place. “We basically have a platform now inside Salesforce to build verticals. So the cost to build new verticals is a fraction of what it was for us to build the first one because of this industry cloud platform. So we are going to look at opportunities to build new ones but we’re not ready to announce that today. For starters, we are forming this one organization,” Schmaier said.

The company reported a record quarter last Thursday, but light guidance for next quarter spooked investors and the stock was down on Friday (It is up .77% today as of publication). The company does not rest on its laurels though and having a division in place like Salesforce Industries provides a more focused way of dealing with verticals and another possible source of revenue.


By Ron Miller

Equinix is buying 13 data centers from Bell Canada for $750M

Equinix, the data center company, has the distinction of recently recording its 69th straight positive quarter. One way that it has achieved that kind of revenue consistency is through strategic acquisitions. Today, the company announced that it’s purchasing 13 data centers from Bell Canada for $750 million, greatly expanding its footing in the country.

The deal is financially detailed by Equinix across two axes, including how much the data centers cost in terms of revenue, and adjusted profit. Regarding revenue, Equinix notes that it is paying $750 million for what it estimates to be $105 million in “annualized revenue,” calculated using the most recent quarter’s results multiplied by four. This gives the purchase a revenue multiple of a little over 7x.

Equinix also provided an adjusted profit multiple, saying that the 13 data center locations “[represent] a purchase multiple of approximately 15x EV / adjusted EBITDA.” Unpacking that, the company is saying that the asset’s enterprise value (similar to market capitalization, a popular valuation metric for public companies) is worth about 15 times its earnings before interest, taxes, deprecation and amortization (EBITDA). This seems a healthy price, but not one that is outrageous.

Global reach of Equinix including expanded Canadian operations shown in left panel. Image: Equinix

The acquisition not only gives the company that additional revenue and a stronger foothold in the 10th largest economy in the world, it also gains 600 customers using the Bell data centers, of which 500 are net new.

As much of the world is attempting to digitally transform in the midst of the pandemic and current economic crisis, Equinix sees this as an opportunity to help more Canadian customers go digital more quickly.

“Equinix has been serving the Canadian market in Toronto for more than a decade. This expansion and scale gives the Canadian market a clear and rapid migration path to digital transformation. We’re looking forward to deepening our relationships with our existing Canada-based customers and helping new companies throughout the country position themselves for digital success,” Jon Lin, Equinix President, Americas told TechCrunch.

This is not the first time that Equinix has taken a bunch of data centers off of the hands of a telco. In fact, three years ago, the company bought 29 centers from Verizon (which is the owner of TechCrunch) for $3.6 billion.

As telcos move away from the data center business, companies like Equinix are able to come in and expand into new markets and increase revenue. It’s one of the ways it continues to generate positive revenue year after year.

Today’s deal is just part of that strategy to keep expanding into new markets and finding new ways to generate additional revenue as more companies use their services. Equinix rents space in its data centers and provides all the services that companies need without having to run their own. That would include things like heating, cooling, racks and wiring.

Even though public cloud companies like Amazon, Microsoft and Google are generating headlines with growing revenues, plenty of companies still want to run their own equipment without going to the expense of actually owning the building where the equipment resides.

Today’s deal is expected to close in the second half of the year, assuming it clears all of the regulatory scrutiny required in a purchase like this one.


By Ron Miller

Bonusly, the platform for employee recognition, raises $9 million Series A

Bonusly, a platform that involves the entire organization in recognizing employees and rewarding them, closed on a $9 million Series A financing round led by Access Venture Partners. Next Frontier Capital, Operator Partners, and existing investor FirstMark Capital also participated in the round.

Bonusly launched in 2013 when cofounder and CEO Raphael Crawford-Marks saw the opportunity to reinvent the way employers and colleagues recognize and reward their employees/coworkers.

“I knew that, in order to be successful, companies would be shifting their approach to employee experience and I thought software could enable that shift,” said Crawford-Marks. “Bonusly was this elegant idea of empowering employees to give each other timely frequent and meaningful recognition that would not only benefit employees because they would feel recognized but also surface previously hidden information to the entire company about who was working with whom and on what and what strengths they were bringing to the workplace.”

Most employers use year-end bonuses and performance reviews to motivate workers, with some employers providing some physical rewards.

Bonusly thinks recognition should happen year round. The platform works with the employers on their overall budget for recognition and rewards, and breaks that down into ‘points’ that are allotted to all employees at the organization.

These employees can give out points to other coworkers, whether they’re direct reports or managers or peers, at any time throughout the year. Those points translate to a monetary value that can be redeemed by the employee at any time, whether it’s through PayPal as a cash reward or with one of Bonusly’s vendor partners, including Amazon, Tango Card, and Cadooz. Bonusly also partners with nonprofit organizations to let employees redeem their points via charitable donation.

In fact, Crawford-Marks noted that Bonusly users just crossed the $500K mark for total donations, and have donated more than $100k to the WHO in six weeks.

Bonusly integrates with several collaboration platforms including Gmail and Slack to give users the flexibility to give points in whatever venue they choose. Bonusly also has a feed, not unlike social media sites like Twitter, that show employees who has received recognition in real time.

The company has also built in some technical features to help with usability. For example, Bonusly understands the social organization of a company, surfacing the most relevant folks in the point feed based on who employees have given or received points to/from in the past. In a company with tens of thousands of employees, this keeps Bonusly relevant.

Bonusly has also incorporated tools for employers, including an auto-scale button for employers with workers in multiple jurisdictions or companies. The button allows employers to scale up or down the point allotments in different geographies based on cost of living.

There are also privacy controls on Bonusly that allow high-level employees and leadership to give each other recognition for projects that may not be widely known about at the company yet, like say for an acquisition that was completed.

Bonusly says that peer-to-peer recognition is more powerful than manager-only recognition, saying its nearly 36 percent more likely to have better financial outcomes.

The company also cites research that says that a happy workforce raises business productivity by more than 30 percent.

Bonusly competes with Kazoo and Motivocity, and Crawford-Marks says that the biggest differentiation factor is participation.

“We set a very high bar for how we measure participation and engagement in the platform,” he said. “You’ll see other companies claiming really high participation rates but typically if you dig into that they’re talking about getting recognition every six months or every year or just logging in, rather than giving recognition every single month, month over month.”

He noted that 75 percent of employees on average give recognition in the first month of deployment with an organization, and that number gradually increases over time. By the two-year mark, 80 percent of employees are giving recognition every month.

Bonusly has raised a total of nearly $14 million in funding since inception.


By Jordan Crook

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

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

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

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

11 VCs share their thoughts on enterprise startup trends and opportunities

Compared to other tech firms, enterprise companies have held up well during the pandemic.

If anything, the problems enterprises were facing prior to the economic downturn have become even more pronounced; if you were thinking about moving to the cloud or just dabbling in it, you’re probably accelerating that motion. If you were trying to move off of legacy systems, that has become even more imperative. And if you were attempting to modernize processes and workflows, whether engineer- and developer-related, or across other parts of the organization, chances are good that you are giving that a much closer look.

We won’t be locked down forever and employees will eventually return to offices, but it’s likely that many companies will take the lessons they learned during this era and put them to work inside their organizations. Startups are uniquely positioned to help companies solve these new modern kinds of problems, much more so than a legacy vendor (which could be itself trying to update its approach).

Venture capitalists certainly understand all of these dynamics and are always dutifully searching for startups that could help companies shift to a digital future more quickly.

We spoke to 11 of them to take their pulse and learn more about the trends that are exciting them, what they look for in an investment opportunity and which parts of the enterprise are ripe for startups to impact:

  • Max Gazor, CRV
  • Navin Chadda, Mayfield
  • Matt Murphy, Menlo Venture Capital
  • Soma Somasagar, Madrona Ventures
  • Jon Lehr, Work-Bench
  • Steve Herrod, General Catalyst
  • Jai Das, Sapphire Ventures
  • Max Gazor,  CRV
  • Ed Sim, Boldstart Ventures
  • Martin Cassado, Andreessen Horowitz
  • Vassant Natarajan, Accel

Max Gazor, CRV

What trends are you most excited about in the enterprise from an investing perspective?

It’s abundantly clear that cloud software markets are bigger than most people anticipated. We continue to invest heavily there as we have been doing for the last decade.

Specifically, the most exciting trend right now in enterprise is low-code software development. I’m on the board of Airtable, where I led the Series A and co-led the Series B investments, so I see first hand how this will play out. We are heading toward a future where hundreds of millions of people will be empowered to compose software that fits their own needs. Imagine the productivity and transformation that will unlock in the world! It may be one of the largest market opportunities we have seen since cloud computing.


By Ron Miller

Google Cloud earns defense contract win for Anthos multi-cloud management tool

Google dropped out of the Pentagon’s JEDI cloud contract battle fairly early in the game, citing it was in conflict with its “AI principals.” However, today the company announced a new 7 figure contract with DoD’s Defense Innovation Unit (DIU), a big win for the cloud unit and CEO Thomas Kurian.

While the company would not get specific about the number, the new contract involves using Anthos, the tool the company announced last year to secure DIU’s multi-cloud environment. In spite of the JEDI contract involving a single vendor, the DoD has always used solutions from all three major cloud vendors — Amazon, Microsoft and Google — and this solution will provide a way to monitor security across all three environments, according to the company.

“Multi-cloud is the future. The majority of commercial businesses run multi-cloud environments securely and seamlessly, and this is now coming to the federal government as well,” Mike Daniels, VP of Global Public Sector at Google Cloud told TechCrunch.

The idea is to manage security across three environments with help from cloud security vendor Netskope, which is also part of the deal.”The multi-cloud solution will be built on Anthos, allowing DIU to run web services and applications across Google Cloud, Amazon Web Services,  and Microsoft Azure — while being centrally managed from the Google Cloud Console,” the company wrote in a statement.

Daniels says that while this is a deal with DIU, he could see it expanding to other parts of DoD. “This is a contract with the DIU, but our expectation is that the DoD will look at the project as a model for how to implement their own security posture.”

Google Cloud Platform remains way back in the cloud infrastructure pack in third place with around 8% market share. For context, AWS has around 33% market share and Microsoft has around 18%.

While JEDI, a $10 billion, winner-take-all prize remains mired in controversy and an on-going battle between The Pentagon, Amazon and Microsoft, this deal shows that the defense department is looking at advanced technology like Anthos to help it manage a multi-cloud world regardless of what happens with JEDI.


By Ron Miller

Identity management startup Truework raises $30M to help you verify your work history

As organizations look for safe and efficient ways of running their services in the new global paradigm of increased social distancing, a startup that has built a platform to help people verify their work details in a secure way is announcing a round of growth funding.

Truework, which provides a way for banks, apartment-rental agencies, and others to check the employment details of an applicant in a quick and secure manner online, has raised $30 million, money that CEO and co-founder Ryan Sandler said in an interview that it would use both grow its existing business, as well to explore adding more details — both via its own service and via third-party partnerships — to the identity information that it shares.

The Series B is being led by Activant Capital — a VC that focuses on B2B2C startups — with participation also from Sequoia Capital and Khosla Ventures, as well as a number of high profile execs and entrepreneurs — Jeff Weiner (LinkedIn); Tom Gonser (Docusign); William Hockey (Plaid); and Daniel Yanisse (Checkr) among them.

The LinkedIn connection is an interesting one. Both Sandler and co-founder Victor Kabdebon were engineers at LinkedIn working on profile and improving the kind of data that LinkedIn sources on its users (the third co-founder, Ethan Winchell, previously worked elsewhere), and while Sandler tells me that the idea for Truework came to them after both left the company, he sees LinkedIn “as a potential partner here,” so watch this space.

The problem that Truework is aiming to solve is the very clunky, and often insecure, nature of how organizations typically verify an individual’s employment information. Details about salary and where you work, and the job you do, are typically essential for larger financial transactions, whether it’s securing a mortgage or another financing loan, or renting an apartment, or for others who might need to verify that information for other purposes, such as staffing agencies.

Typically that kind of information gathering is time-consuming both to reach out to get and to confirm (Sandler cites statistics that say on average an HR person spends over 1,000 hours annually answering questions like these). And some of the systems that have been put in place to do that work — specifically consumer reporting agencies — have been proven not be as watertight in their security as you would hope.

“Your data is flowing around lots of third party platforms,” Sandler said. “You’re releasing a lot of information about yourself and you don’t know where the data is going and if it’s even accurate.”

Truework’s solution is based around a platform, and now an API, that a company buys into. In turn, it gives its employees the ability to consent to using it. If the employee agrees, Truework sources a worker’s place of employment and salary details. Then when a third party wants to verify that information for the person in question, it uses Truework to do so, rather than contacting the company directly.

Then, when those queries come in, Truework contacts the individual with an email or text about the inquiry, so that he/she can okay (or reject) the request. Truework’s Sandler said that it uses ISO27001, SOC2 Type 1 & 2 protections, but he also confirmed that it does store your data.

Currently the idea is that if you leave your job, your next employer would need to also be a Truework customer in order to update the information it has on you: the startup makes money by charging both larger enterprises to make the platform accessible to employees as well as those organizations that are querying for the information/verifications (small business employers using the platform can use it for free).

Over time, the plan will be to configure a way to update your profiles regardless of where you work.

So far, the concept has seen a lot of traction: there are 20,000 small businesses using the platform, as well as 100 enterprises, with the number of verifiers (its term for those requesting information) now at 40,000. Customers include The College Board, The Real Real, Oscar Health, The Motley Fool, and Tuft & Needle.

While all of this was built at a time before COVID-19, the global health pandemic has highlighted the importance of having more efficient and secure systems for doing work, especially at a time when many people are not in the office.

“Our biggest competitor is the fax machine and the phone call,” Sandler said, “but as companies move to more remote working, no one is manning the phones or fax machines. But these operations still need to happen.” Indeed, he points out that at the end of 2019, Truework had 25,000 verifiers. Nearly doubling its end-user customers speaks to the huge boost in business it has seen in the last five months.

That is part of the reason the company has attracted the investment it has.

“Truework’s platform sits at the center of consumers’ most important transactions and life events – from purchasing a home, to securing a new job,” said Steve Sarracino, founder and partner at Activant Capital, in a statement. “Up until now, the identity verification process has been painful, expensive, and opaque for all parties involved, something we’ve seen first-hand in the mortgage space. Starting with income and employment, Truework is setting the standard for consent-based verifications and unlocking the next wave of the digital economy. We’re thrilled to be partnering with this exceptional team as they continue to scale the platform.” Sarracino is joining the board with this round.

While a big focus in the world of tech right now may be on building more and better ways of connecting goods and services to people in as contact-free a way as possible, the bigger play around identity management has been around for years, and will continue to be a huge part of how the internet develops in the future.

The fax and phone may be the primary tools these days for verifying employment information, but on a more general level, there are companies like Facebook, Google and Apple already playing a big role in how we “log in” and use all kinds of services online. They, along with others focused squarely on the identity and verification space (and Truework works with some of them), and using a myriad of approaches that include biometrics, ‘wallet’-style passports that link to information elsewhere, and more, will all continue to try to make the case for why they might be the most trusted provider of that layer of information, at a time when we may want to share less and especially share less with multiple parties.

That is the bigger opportunity that investors are betting on here.

“The increasing momentum Truework has seen since its founding in 2017 demonstrates the critical need for transformation in this space,” said Alfred Lin, partner at Sequoia, in a statement. “Privacy, especially around identity data, is becoming increasingly top of mind for consumers and how they make transactions online.”

Truework has now raised close to $45 million, and it’s not disclosing its valuation.


By Ingrid Lunden

Microsoft launches Project Bonsai, its new machine teaching service for building autonomous systems

At its Build developer conference, Microsoft today announced that Project Bonsai, its new machine teaching service, is now in public preview.

If that name sounds familiar, it’s probably because you remember that Microsoft acquired Bonsai, a company that focuses on machine teaching, back in 2018. Bonsai combined simulation tools with different machine learning techniques to build a general-purpose deep reinforcement learning platform, with a focus on industrial control systems.

It’s maybe no surprise then that Project Bonsai, too, has a similar focus on helping businesses teach and manage their autonomous machines. “With Project Bonsai, subject-matter experts can add state-of-the-art intelligence to their most dynamic physical systems and processes without needing a background in AI,” the company notes in its press materials.

“The public preview of Project Bonsai builds on top of the Bonsai acquisition and the autonomous systems private preview announcements made at Build and Ignite of last year,” a Microsoft spokesperson told me.

Interestingly, Microsoft notes that project Bonsai is only the first block of a larger vision to help its customers build these autonomous systems. The company also stresses the advantages of machine teaching over other machine learning approach, especially the fact that it’s less of a black box approach than other methods, which makes it easier for developers and engineers to debug systems that don’t work as expected.

In addition to Bonsai, Microsoft also today announced Project Moab, an open-source balancing robot that is meant to help engineers and developers learn the basics of how to build a real-world control system. The idea here is to teach the robot to keep a ball balanced on top of a platform that is held by three arms.

Potential users will be able to either 3D print the robot themselves or buy one when it goes on sale later this year. There is also a simulation, developed by MathWorks, that developers can try out immediately.

“You can very quickly take it into areas where doing it in traditional ways would not be easy, such as balancing an egg instead,” said Mark Hammond, Microsoft General Manager
for Autonomous Systems. “The point of the Project Moab system is to provide that
playground where engineers tackling various problems can learn how to use the tooling and simulation models. Once they understand the concepts, they can apply it to their novel use case.”


By Frederic Lardinois