Panel
The Enterprise Strikes Back!
- The venture capital landscape is projected to shift toward identifying private companies at levels potentially exceeding previous Milken conference events, with investors placing bets on technology markets and emerging stories in broadcast advertising ($80 billion) and recruiting.
- Traditional enterprise vendors including Oracle, SAP, Google, IBM, EMC, and Microsoft face a dual mandate of defense and offense as changing platforms and consumer technology integration reset IT expectations, creating an open field for startups similar to the last 20 years.
- Software is expected to capture a larger percentage of GDP over a 10-year cloud era, with SaaS predicted to eventually displace existing markets as legacy vendors purchase cloud companies rather than perpetual licenses.
- Global internet user base growth is anticipated to reach 4 billion over the next decade, driven primarily by new users in China, India, Brazil, Mexico, and Indonesia, with a belief that major Chinese startups will eventually achieve global impact.
- Venture activity in New York is predicted to reverse after a five-to-six-year shift toward consumer software investment, while Boston requires an estimated five-year horizon to show critical massive results following early indications of recovery.
- Capital efficiency is highlighted as a strategic choice, with current investment levels returning to mid-1990s figures to avoid the capital inefficiency and aberrant behavior characteristic of the 2000 bubble.
- Valuations in the private market have increased significantly with hype in certain areas, yet some firms remain bullish on enterprise and internet markets despite concerns.
- Specific portfolio companies are targeted for public offerings or growth over the next 13 to 24 months, including Vista's Mises, SumTotal, and Big Machines, and JMI's Imprivata and 2U, with Mises identified as the largest core banking treasury management software company.
- Infrastructure investments by firms like General Atlantic and specific portfolio successes such as Cloudflare and Coursera indicate rapid growth in internet infrastructure and online education, with Coursera enrolling over 3 million students from 62 top universities within over a year.
- Cybersecurity is characterized as a continuous conflict with the "top of the first inning" of warfare involving critical infrastructure, requiring enterprise software to continuously evolve and manage security dampeners.
- Technological advancements in graphene are expected to enable embedding microprocessors in all devices within five years, though commercial products are not anticipated to hit the market until then.
- Emerging market opportunities exist in Latin American travel via Decolar and system integration disruption via Appirio in the $300 billion market, alongside Amazon's e-commerce dominance leaving service-side opportunities.
- Transition to a SaaS model is expected to be lengthy but inevitable due to inherent development speed virtues, despite challenges requiring venture firms to fund customers while developing large code bases.
- Contrarian asset categories are recommended for focus as investment levels stabilize to mid-1990s baselines, signaling a shift away from the hype-driven dynamics of recent years.