Jai Das, Sapphire Ventures’ President and Managing Director joins Yahoo Finance Live to discuss the 8 enterprise tech trends that will appear in a post-COVID world.
AKIKO FUJITA: Welcome back to "Yahoo Finance Live." The coronavirus pandemic and this push to all things digital have led to huge growth in the cloud space. And that momentum expected to continue this year. Gartner forecasting public cloud services will earn $304 billion in 2021. That is an 18% jump from last year. And our next guest has invested in some of the fastest growing cloud names, including Sumo Logic.
We've got Jai Das, Sapphire Ventures President and Managing Director. Jai, it's good to talk to you today. Before we get into your thesis here going into the year, I'd love to get your response on what played out over the weekend, because there was a lot of discussion about just sort of the power of these tech platforms and these cloud services. Mainly we're talking about AWS and this increased scrutiny moving forward about who these companies do business with. How are you looking at this debate playing out right now? And how that could potentially impact the growth?
JAI DAS: Yeah, it's a complicated issue, and there is no clear-cut answer which is right, which is wrong. And I'm glad that I'm not having to make those decisions. But look, all of these are companies that have some kind of criteria on who can be on their platforms. And I think they're using their right to kind make a decision on who they will provide their services to or who they won't.
ZACK GUZMAN: And I guess, I mean, part of the discussion also shifts to maybe some companies that you would think wouldn't have some risks associated to it. I mean, you can think about Amazon and hosting Parler and how they're kind of dragged into this conversation as well. How much does that maybe also trickle through to some of these other companies when we think about the cloud Infrastructure cyber security tied to this? How important is the issue across the whole tech sector right now?
JAI DAS: I think it is something that everybody is talking about. And I'm sure everybody's talking to their counsels and looking at their ELAs and kind of the agreement of who they host. Because look, you can always talk like what is the limit of, it can go, cut both sides, right? It can be like you turn off somebody right now that you're doing that, but somebody will not agree if you do it to somebody else.
In general, I think all of my portfolio companies don't really worry too much about what decisions they have to take other than following what regulations that has to be there. And I think all of these things have to be ultimately driven by regulations and the courts, who can be on these platforms and you can't be.
AKIKO FUJITA: When we talk about cloud services as a whole, significant growth last year, no question because of this push to digital. It's last year was all about companies that maybe didn't have as much in the cloud here, that migration itself, what do you think is the next trigger when we're looking at 2021 that could lead to the same kind of momentum? Or is there inevitable tapering off, if you will, just given the significant growth that we saw last year?
JAI DAS: Yeah, I don't think the movement to the public cloud will taper off this year. I think I would say we are probably in the second or maybe the third inning. And there is a lot, when we talk to our portfolio companies and CIOs in our network, they're actually accelerating all their movements to the cloud. I think when people saw that working from home is becoming just the way that you do work, having an infrastructure that you don't have to manage means that you can put everything in the public cloud.
And they are actually going forward and increasing spend and putting all on their infrastructure in the cloud, including companies which were actually going through a huge downturn. Like in the travel industry, we actually saw companies who although they were furloughing employees, they were actually spending a lot and actually moving their infrastructure into the cloud because they were just preparing for what would happen in the future.
ZACK GUZMAN: Yeah, so I mean, when you look across that space, what to you seems to be poised to enjoy the most growth in 2021? Because you could talk about a few different things there. I know at JFrogs, a Sapphire investment as well, that was a company that went public last year. Focused more on kind of those liquid updates, rolling updates, software updates for a lot of these apps.
And when you look across the space, there's still cyber security, which we talked about, and a few other spots here to consider as well. So where are you seeing maybe most enthusiasm regardless if we return to normal and go back to the way that we were doing things pre pandemic? What seems safest to you?
JAI DAS: Yeah, first and foremost, I don't think we are going back to the way we used to work before. Work from home is going to be work. People will have to reimagine their whole workspaces to be as kind of places that people come maybe two to three days in and maybe have off-sites and people have meetings. It's not going to be a place where you just come into work. Which kind of brings to this whole focus on security. You have the SolarWinds hack that happened, which is going to cause a lot more focus on security.
But also, now cybersecurity is going to go almost all the way to the home, because people will be working from their home. So you have to kind manage their network. So there is going to be a whole lot of work to be done in making sure that when I log in from my house I know my kids playing on their game and getting maybe getting hacked doesn't impact my firm's assets. And similarly, how do you kind of focus on applications that will tell you how people are doing and being productive working from home, as well as being in a well when you are at home.
Because wellness is a huge issue that people don't always focus on, and which was not something that you have to worry about when everybody came to work. Because you could tell immediately if somebody was doing well or not. So that's going to be, all these areas that kind of focus people to actually move not only the infrastructure to the cloud, but just the way they do collaborate and work to the cloud.
AKIKO FUJITA: We're coming off of what was an incredible year for IPOs, particularly in the tech space. Sumo Logic, of course, one of your portfolio companies, they debuted. And yet when you look at December, there did seem to be maybe hesitancy for some companies who were thinking of coming to market with those, like a road blocks or a firm a delaying their IPOs because of the significant pops that we saw from the likes of DoorDash and Airbnb as well. What's the conversation right now with some of the companies that you invest in about what the public markets are like for a lot of these tech startups and whether we're going to continue to see this kind of appetite that we saw back in 2020?
JAI DAS: Yeah, I think this year you'll see probably more IPO than you saw in 2020. And I think a lot of them will be driven by SPACs actually. There were I think over 200 SPACs that were raised last year. I don't remember exactly the amount. And the way SPACs work, after 12 to 18 months, if they don't find a target company to take public, they have to give their money back. So I think you will see a lot of companies going public through SPACs because SPACs will be somewhat desperate to take them public.
But I also think that the IPO that are going through SPACs might decrease the kind of standards for companies that go public. So you might see that that the SPAC IPOs not doing as well as the IPO that are going through the traditional route. And also, this year I think you would see a lot more direct listing IPOs that happen, especially since now I think both NYSE and NASDAQ and the SEC have enabled direct listings to let you raise primary capital, which was like a big issue with a lot of companies that were not cash-rich to be able to use direct listings are the way to go public.
ZACK GUZMAN: Yeah, now very interesting changes there. And of course, to the issues raised there on the, I guess the front and questions around some of these companies raised last year, Nikola being one of those companies that maybe ran into some issues going SPAC route as well. But Jai Das, Sapphire Ventures President, Managing Director, appreciate you joining us.