The Big Story

Cloud power

A pandemic is raging. The U.S. economy is teetering on a razor's edge. California is on fire. Yet four prominent enterprise tech companies took a look at the state of the world in August 2020 and decided: This was the week to test the public markets.

Cloud services have enjoyed huge success over this incredible year, and these IPOs are yet another reminder that even if the pandemic accelerated the roadmap for companies modernizing their infrastructure, there's still an enormous amount of growth left in this market. With their decision to go public, Snowflake, Asana, JFrog and Sumo Logic are all capitalizing on different parts of this technology shift, which continues to upend traditional infrastructure philosophies in favor of those born of this era.

So how did they get here? Here are a few important things to know about these four companies.

Snowflake is probably the best-known of the four, having raised $1.4 billion in a series of mega-rounds that eventually valued the company at $12.4 billion.

• It pioneered a cloud-first approach to a data warehouse, a specific type of database used when companies want to ask lots of quick analytical questions of their data.
• Data is the lifeblood of enterprise tech: Few infrastructure decisions now have as many far-reaching effects as the tools companies use to store and access their data, and they are willing to pay handsomely for technology that allows them to move faster and more confidently than their competitors.
• Nobody knows that better than the cloud providers, however, who have embraced Snowflake's data services on their platforms but pose perhaps its biggest threat should they come up with "good enough" versions of modern database or data warehouse technology that check enough of the boxes sought by Snowflake customers.
• Snowflake has a solid chance to become one of the most prominent cloud-era database companies — should it find ways to expand its product portfolio and fend off the cloud providers.

Asana's project management tools sit within a crowded space, with companies like Atlassian, Airtable, Microsoft and Smartsheet also vying to be the central hub for product development.

• Founded and backed by Facebook co-founder Dustin Moskowitz, Asana has enjoyed critical acclaim for its project management app but has struggled to turn that reputation into dollars.
• 3.2 million people have signed up for a free Asana account since it launched in 2008, but only 75,000 customers pay for premium features. That's both an opportunity and a significant challenge.
• As more and more companies are forced to become software companies, they need tools to help them move quickly (more on that in a bit) and decisively when building internal applications or adding new digital features to their own products.
• Compliance has become an important part of building modern software, as new regulations roll out across the world and future ones are debated. Tools like Asana help product managers and business staffers verify that their software was built according to specifications, with demand for a "single source of truth" having been a prominent vendor talking point over the last year or so.

Software organizations, especially ones operating on the cloud, now talk about their "velocity," the ever-increasing speed at which they build, test, deploy and monitor their applications. JFrog's tools were designed to help companies keep that up.

• The Israeli company makes software that helps other companies ship reliable software at a steady pace, which it calls "continuous software release management."
• Organizations can either manage those tools themselves on their own infrastructure or subscribe to a managed service provided by JFrog that works with multiple cloud providers as well as self-managed infrastructure.
• Tools like JFrog's are often used in conjunction with a philosophical shift toward "DevOps," an organizational principle that breaks down the old walls between software developers and operations engineers, the folks who have to actually make the software work at scale.
• This shift is an essential part of digital transformation: Even if companies decide to run their own infrastructure, they'll still need to improve the speed at which they deliver software to keep up with disruptive younger competitors built around these principles.

Of course, if you've chosen a database and a product management tool, and embraced DevOps, you still need to make sure everything is actually working. That's Sumo Logic's business.

• Sumo Logic offers monitoring services that help companies ensure their applications are running as intended and spot problems before they turn into disasters.
• These tools can also provide insight into how customers are actually using a product, something lots of focus groups and feedback channels of the world have trouble capturing.
• Sumo is using machine-learning techniques to identify some of the patterns behind performance data, which can help predict performance issues and also has security benefits.
• But Sumo could be vulnerable to some of the same platform pressures as Snowflake and JFrog: While companies are willing to pay for Sumo's tools — it more than doubled its revenue over the last two years — cloud providers are likely to be inspired to improve their own monitoring and observability services.

The run-up over the next few months to the public market listings of these four stocks will likely be one of the most uncertain periods in recent history, and that's saying something. But these modern infrastructure tools have never been a more essential part of running a business, and there's no going back. The question for them once they list will be whether they can maintain the upstart mentality in the big leagues.

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Five Questions For...

Andrew Anagnost, CEO, Autodesk

What was your first tech job?

I studied engineering at CSU Northridge, and my first jobs in tech were in aerospace at Lockheed. I worked as a composite structures engineer and a propulsion installation engineer. Later, during post-doctoral work, I got to briefly work on the Mars Pathfinder project.

What's the best piece of advice you could give to someone starting their first tech job?

It's the same advice I'd give anyone starting a new career: Don't focus on your next job, but on the job you're doing today. If you do your current job well, opportunities for your next one will show up. Early in your career, try to pursue as many different opportunities as you can that surround your interests. Don't be afraid of lateral moves. Ultimately, know thyself. The more you understand what you're good at, what you're not good at, what you want versus what you need, and what you can accept versus what you can't, the more success and satisfaction you'll have in your career.

What was the biggest reason for the success of cloud computing over the past decade?

Businesses and their employees need the flexibility, mobility and convenience that the cloud provides. Attitudes have also shifted as sharing and open source adoption are much more accepted and ingrained, so as more tools are democratized, users will have to face whether they want to jump onboard or fall behind. Consider this: Would you rather be a Blockbuster or a Netflix?

What will be the biggest challenge for cloud computing over the coming decade?

The cloud is not one-size-fits-all. It needs to be tailored for different verticals and customer usage, and we're learning that firsthand. Second, data privacy concerns will continue to be front and center issues for adoption and access, so while cloud models become more widely accepted, companies will also need to grapple with protection.

Will the pandemic usher in a new era of remote working, or will we all come back together when it is safe to do so?

I think the way we work has changed forever. Among our customers, we're seeing industries like manufacturing and construction come back to life, but not the same way. For instance, we had customers who had never used our cloud-based solutions start to leverage them, and now they're not going back. As we head into next year, I expect there will be a lot more changes as people go back to work, especially with the acceleration of digitization in industries that were traditionally slow to adopt digital processes.

Around The Cloud

• Salesforce raised its guidance for its current fiscal year on the strength of second-quarter earnings that beat expectations, one day after the Dow Jones Industrial Average announced it would add Salesforce to its index at the end of the month.
• Revenue fell 6% at HPE during its last fiscal quarter. But the company said demand for its GreenLake hybrid-cloud management software was up by 80% compared to last year, so there's that.
• Alibaba is also seeing strong revenue growth for its cloud services inside China. But it's still losing money on cloud computing as it invests billions of dollars in new capacity.
• Oracle co-founder Larry Ellison is one of the richest men in the world, but, as he does in many of his keynote speeches, he's promised a lot and delivered very little when it comes to charitable giving.
• Meanwhile, Oracle's interest in TikTok seems to be increasingly driven by current TikTok investors that would prefer a partner less interested in controlling the app than Microsoft.
• Redis Labs raised a new round of funding, crossing the $1 billion-valuation threshold with $100 million in new money that puts it in line for another enterprise-tech IPO in a year or two.
• Google announced new features for Anthos, its hybrid-cloud management product, including support for "bare metal" operating environments for companies that can't or don't want to share servers with another cloud customer.
• If you've struggled to understand what Kubernetes is, and what accounts for all the fuss, this explainer from The New Stack will probably help.
• Palo Alto Networks acquired The Crypsis Group for $265 million as it continues to find ways to add modern security technology and consulting talent to its arsenal.
• Microsoft is touting its pending JEDI success in pursuing cloud deals with governments around the world, although older Microsoft technology already runs a lot of those services.
• Microsoft and Google have tried to use Amazon's rapacious retail operation as a reason to avoid AWS for several years now. And it appears to be paying off for Google.

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