Predicting the Enterprise Tech Trends of 2019
2018 was a very active year for Salesforce Ventures as we completed a record 95 investments. We doubled down in a few areas where we had historically invested, including AI-enabled apps and industry verticals among them. We also jumped into other emerging enterprises, including open source, AR/VR, and solutions for developers. This probably goes without saying, but we continue to be bullish on investments in cloud companies even in the face of a turbulent market and a competitive investment environment marked by valuations that are high by historical standards.
What does it all mean? We firmly believe that we are still early in the digital transformation of enterprise businesses. And 2019 promises yet more change. Let’s dive into what we, and some of our portfolio companies, expect from the year ahead.
Software for Industry-Specific Verticals
In 2018, we invested heavily in software solutions focused on industry-specific verticals. We saw two forces at work: existing companies in these industries looking to gain increased operational efficiency and the threat that consumer-facing tech companies present. We invested across multiple industry verticals, including healthcare (Kyruus & Madaket), retail (Narvar and Tulip), financial services (Quovo), and media/telecom (Sitetracker). We expect to make several more investments within these and expand into additional industry verticals in 2019.
The Smart Use of Data is More Important than Ever
Many of the industry-vertical companies we invested in found market advantages in their data. They could aggregate and analyze massive amounts of data — and then provide actionable insights via applications. This is not, of course, unique to industry verticals. As the need for data competency increases, we see more solutions extending data analysis to more people within the enterprise. Now, business users can leverage the insights once reserved for data scientists. This is one of the things that motivated our investment in Alation.
“‘Data Enablement’ is the new ‘Customer Success’,” says Satyen Sangani, CEO of Alation.
Every Global 5000 company needs to learn how to make the most of its data. “Investment in people, tools, and business processes will ensure that data permeates their entire organization.”
The Changing Marketplace Requires a New Model of Education
Education presents some unique market dynamics. Given the rapidly changing job market and skills required to meet those demands, we have seen a lot of new companies arise to address the evolving marketplace, such as our portfolio companies Viridis and Andela. In 2018, we completed an investment in Guild Education, which is providing a new way for companies to educate their workers.
“The shelf life of a skill is now about five years,” says Rachel Carlson, CEO, and Co-Founder of Guild Education. “We’re anticipating growth in the trend of forward-thinking companies taking a leading role in the education of their employees, rather than relying exclusively on education institutions or the public sector to do so.” Transformation requires new and ever-changing skills, and companies need to recognize that they have to supply those skills through employee education.
Developers Gain More Power in the Enterprise
We also see the emergence of more companies selling solutions directly to developers, whose influence within the enterprise continues to increase. We saw this first with our investment in Twilio.
As Steve Singh, CEO and Chairman of Docker, says, “2019 is the year of the developer.”
Digital transformation is essential, regardless of industry. And that means having the workforce to implement it. “As every company becomes a software company, expect to see developers come to the forefront of every business,” says Singh.
More Sectors Use & Develop Open Source
The open-source movement gained a lot of steam last year, and we expect this to continue in 2019. There were several prominent IPOs and acquisitions of open-source technology last year. Salesforce acquired MuleSoft, and Salesforce Ventures invested in Docker, which is one of the leading open-source solutions in the market. Singh, Docker’s CEO, sees it becoming a new norm.
“Every company will act as not only consumers of open-source technologies, but as contributors,” he says. “You will see banks, insurance companies, manufacturers, oil and gas companies, and businesses in every sector adopt open-source technology to drive faster innovation and greater adoption.”
Microservices Reshape the Enterprise
Another trend that is giving developers more power within the enterprise is the rise of microservice-based applications. People are building enterprise applications not by leveraging a monolithic, full-stack platform, but by aggregating and coordinating across a lot of different microservices. Clouds become tools to use in combination.
We saw this firsthand with our investment in Contentful. They provide a headless CMS solution that allows companies to keep their content in one central location and utilize it across all of their applications via an API. This breaks down the traditional silos where content was historically stored.
Blockchain Finds its Footing in the Enterprise
We continue to assess blockchain, and we’ve made a few investments in the space. It’s still very early, and there isn’t yet a dominant platform to accelerate the growth of blockchain in the enterprise. But we are seeing emerging applications and are bullish on the long-term prospects.
We may also see new applications emerge, says Onfido’s Husayn Kassai. “Machine learning will help blockchain deliver value beyond crypto, especially in identity verification,” he says.
Further, he says to expect “identity verification and authentication to merge and create ‘authentication-as-a-service.’”
AR/VR and Other Interfaces Will Free Us from Our Devices
The advancement of new interfaces and ways of engaging with software will begin to lessen our dependence on keyboards and other manual interfaces.
“We will see a wave of Enterprise-to-Consumer AR applications driven by smartphones’ powerful specs, and the evolution of AR and AI capabilities built into the major mobile operating systems,” says Eitan Cohen, CEO of TechSee. Cohen also predicts that this is the year we go hands-free. “Voice interfaces will become the primary communication and control interface to many products and services.”
The Rise of the Rest
Lastly, a trend that is maybe the most exciting given the employment implications, and one we’ve been excited about for a long time is the rise of tech companies outside of Silicon Valley. There is an acceleration of companies in the enterprise space forming outside of Silicon Valley. We’ve seen this trend within our own portfolio as for the second straight year, within the US we’ve invested in more companies outside of California than within the state. This doesn’t include the fantastic growth we see internationally.
2019 promises variety and new possibilities coming out of the cloud as well as innovation hubs around the world. The spirit of collaboration is alive in open source and microservices, and investments in continuing education for the workforce means we can count on an engaged and active workforce. In 2019, we look forward to investing in more companies that don’t just predict what’s coming but work to create the future.
These are a few of the trends driving our investment theses. We’d like to hear from you. What are you seeing?
