Do Enterprise Tech Companies Have Room to Rise?

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Jan. 9 (Bloomberg) –- Index Ventures General Partner Mike Volpi discusses his outlook for Enterprise tech companies in 2014 with Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

Right question mark tell me about where you are looking in 2014. there are a lot of exciting areas in the enterprise.

Enterprise has seen a resurgence over the last year or two.

Driven principally by the fact that we are a recovering economy and corporations are spending more money on their technology to improve productivity and so forth, but there has also been a big shift in technology spending, going from individual cio's to every head of the department.

Vp of hr or sales or marketing all spending money on technology.

That has created a much broader and diverse range of customers for enterprise committees.

And a lot of the smaller companies are seeing the growth that they are seeing right now.

Last year, enterprise companies were really the darlings.

They have not been the cool kids in a long time.

Twitter had a big leader -- a big year last year.

At the beginning of this year, a little shaky.

How will consumer tech stack up to enterprise tech this year?

In the enterprise sector, generally speaking, companies have shown more predict ability.

Sales a -- more predictability.

Sales cycles are long and you can assess the value of the company in a long-term way.

When you think of the core drivers, open source, use of cloud services, those are very long-term themes that we are in the early innings of written -- of.

I think we will see some big things coming from enterprise companies.

One of your companies, we here they are heading into ipo territory.

I think you will see interesting ipos in almost every sector of the enterprise.

You are going to see companies like pure storage last year, nimble came out at the end of the year with some terrific stuff happening.

I think you will see the early exits in the ipo markets for big companies.

I think software, service companies are showing some very interesting -- these are all companies you think will go public this year?

I do not know about this year, but they are getting into the realm and scale of companies.

What about acquisition?

I think we will see some.

There is some level of consolidation that is happening as these companies start to go public.

For example, we saw fire eye -- so consolidation in security and where else?

Software service.

There are a lot of small verticals that can be put together.

I think more of these companies will take their companies public because of predict ability inserted and demand.

You guys led a huge investment in dropbox and did not even get a board seat.

How are you feeling about that investment about now?

We are feeling very good about that investment.

The company has done significantly better than our expectations.

They continue to be the leader in that sector.

At the time of the investment, people were worried about icloud, microsoft service, g- drive, and none of those things have materially impacted growth rate.

And they have done a great job penetrating the enterprise.

We could not be happier.

Do you see a bubble anywhere in this market?

Do you see things that you look at and say, this is too expensive?

Certain things seem expensive to us and certain things do not.

The real issue is our ability to assess risk and what exactly we think something is worth today versus tomorrow.

Most of these companies that are getting high valuations are representing a very large wave of the future and we do not know exactly how to price it.

They may be off a little, but i do not know that we necessarily feel it is a bubble in the sense that it is isolated and not related to actual success.

These companies are genuinely having robust success.

What about a company like twitter?

I use twitter a lot, a lot of users, and it has not turned a profit yet.

How concerned are you with that kind of volatility?

They did not lose $9 billion in the market cap -- on a percentage basis, it is less than 20% of the valuation changed.

If things were in the 20% range, we would be delighted.

One mentally, these companies move into the public markets and it is hard to assess the value of these businesses.

Right now, investors are giving them the benefit of the doubt.

They say we are going to value you as if we assume you are going to be successful.

My guess is this is about what twitter will be worth it they do not screw it up.

I used pass a lot to talk to my friends in the tech bubble.

Is it ever going to go mainstream?

Path is at the highest level of traffic that we have seen it.

It is a network oriented for small groups.

Small groups are not as viral.

The best we can hope for is to maintain solid growth like we have had and to expand the user base at a pace that we can sustain.

Do you think it will be a more niche social network?

It just does not have the potential range of a facebook or twitter.

It is just going to be smaller.

I think the range is there.

I think it take longer to achieve that range because it is not necessarily designed to be as viral.

What about snapchat?

Obviously, they turned a $3 billion offer from facebook down.

Do you think they are here to stay or do you think it is a fad?

I think the volt case is that it is going to stay.

What is the mike volpi case?

I think they will find evolutionary paths to the product.

We think of snapchat as it is today and say that is a lot of value.

You could say the same thing about twitter at one point in time.

I think the expectation is that, in all likelihood, snapchat will be a lot more than what we see today.

We just do not know what it looks like.

Turning down $3 billion, is that the right decision?

I do not know if i would have done it.

So you would not have done it if you were evan spiegel?

This text has been automatically generated. It may not be 100% accurate.

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