Through February 5th, the average top-15 enterprise SaaS stock is down 28.2% from its December 31st close. That’s worse than the 2016 China crash (-26.9%), worse than the 2022 rate hike panic (-16.7%), and worse than any other year on record.

It’s a bloodbath.

The Numbers Don’t Lie

I analyzed the top 15 SaaS companies by market cap for every year since 2010, measuring performance from December 31st through early February. Here’s what the data shows:

2026 now stands alone as the worst start to a year for enterprise SaaS stocks in history.

The Carnage, Stock by Stock

Nearly every major SaaS name is experiencing its worst start to a year ever:

10 of the 14 enterprise SaaS stocks in our basket are at all-time worst starts. The only companies escaping their personal record lows are ServiceNow, Shopify, Workday, and Veeva - and even they’re down 17-33%.

What’s Driving the Selloff?

Three forces are converging:

1. AI Disruption Fears

The market is repricing SaaS multiples as investors question whether AI agents will commoditize enterprise software. If an AI can replace a $150/seat/month tool, what’s the moat?

2. Multiple Compression

After years of “growth at any cost,” investors are demanding profitability. SaaS companies trading at 15-20x revenue are being repriced to 8-12x.

3. Tech Rotation

Capital is flowing out of application software and into AI infrastructure plays - Nvidia, hyperscalers, and AI-native companies.

Methodology Note

This analysis uses an equal-weighted basket of the top 15 SaaS companies by market cap as of December 31, 2025. The basket is reconstituted annually to reflect the actual investable universe each year.

I excluded Zoom from the 2026 basket because its recent stock performance is driven primarily by its equity stake in Anthropic, not its core SaaS business. Including Zoom would mask the true severity of the enterprise SaaS selloff.

The full basket for 2026 includes: Salesforce (CRM), Shopify (SHOP), Intuit (INTU), ServiceNow (NOW), Adobe (ADBE), CrowdStrike (CRWD), Snowflake (SNOW), Workday (WDAY), Datadog (DDOG), Atlassian (TEAM), Veeva (VEEV), Zscaler (ZS), Twilio (TWLO), and HubSpot (HUBS).

What Comes Next?

History offers some comfort. After the 2016 crash (-26.9% through early February), SaaS stocks recovered and ended the year roughly flat. After the 2022 selloff, the sector rallied 20%+ by year-end.

Only time will tell what happens at the end of 2026.

Data sources: Financial Modeling Prep API for historical prices and market caps. Analysis methodology and code available on request.

The Bigger Announcement: MCP Apps

The headline today is “Claude can now embed Figma and Asana.” But the more significant news is buried in a separate MCP blog post: MCP now has official support for UI components.

This matters because MCP Apps standardizes how interactive UI patterns work across all chat interfaces: Claude, ChatGPT, VS Code, Goose, and whoever else adopts MCP. One SDK, multiple platforms. I’ve been playing with Shopify’s MCP-UI for the last few months, and it’s great to see this paradigm being standardised across the industry.

Here’s a thought experiment: imagine if Google and Apple had aligned early on a shared framework for how mobile apps operate. Developers wouldn’t need to maintain both Android and iOS versions. That’s essentially what MCP Apps is attempting for AI chat interfaces. Will it sustain as platforms grow? Maybe not; someone big enough might eventually fork. But for now, this is the closest thing to utopia we’ve seen in this space.

For anyone building similar interfaces (like we are at Adobe), this is a stronger foundation to build on. The technical spec is worth reading.

The Apps Themselves: Mostly Leads, Not Products

I tried several apps today. My honest take: they’re still mostly useless for real work.

Good ideas? Yes. Likely to get adoption? Probably not in their current form.

Here’s what’s actually happening: these embedded apps function as lead generation for the SaaS companies. Users start a task in Claude (maybe drafting an Asana project or sketching in Figma) but can’t finish. I don’t even think people get 50% of their work done before needing to jump to the native app. More realistically, it’s 10–20%. Just as one example, I created a Figma board from a single prompt. That’s magic. But I can’t even edit a single text box within this interface, and I need to go to Figma’s interface for that.

Why? Three possibilities:

1. Rushed releases. Maybe app companies just needed something to feature in Claude’s launch video. Ship fast, polish later.

2. SDK immaturity. The MCP Apps SDK might not yet support the depth needed for real workflows. iOS and Android SDKs took years to mature; maybe MCP Apps hits its stride by mid-2026.

3. A creativity/skill gap. Perhaps Anthropic or OpenAI themselves need to build reference apps that demonstrate what’s actually possible. Show the industry how it’s done.
   
   Note - I think analytics apps are an exception to this rule. It’s the true “secondary app” for most people, and as the CEO of Amplitude says, very few people want to keep logging in and learning about analytics apps. It’s an interesting thought exercise which other apps fall in this bucket.

Two Harder Problems

Even if those issues get solved, there are structural problems that might be more fundamental.

Problem 1: Misaligned incentives

What’s the incentive for Figma to build an amazing Claude integration?

Take the extreme case: if an embedded Figma app is so good that 99% of users can complete their work inside Claude, how does Figma make money? And even if they solve that, it’s only a matter of time before Anthropic and OpenAI bake those capabilities into the platform natively, just like platforms eventually absorb the best third-party app features.

Problem 2: Claude/ChatGPT isn’t a primary app (for most people, yet)

This might be the bigger issue. ChatGPT (and Claude) are still secondary apps: things you tab into, not things you live in.

It almost always makes more sense to embed AI into the apps where people already spend their time. I’m far more likely to use AI features inside Slack (if the Slack bot becomes truly great) than to use ChatGPT to send a Slack message. For a designer, Figma is the primary app; Claude is the assistant.

So for these embedded apps to really work, Claude and ChatGPT first need to become destinations where people spend hours getting real work done. Right now, they’re assistive: you visit, get help, leave.

The good news: this might just be an “industry early” problem. Claude Code has arguably already crossed this threshold for developers. It’s become a primary tool, not a helper. Claude Cowork is an attempt to generalize that to everyone else, though I’m skeptical it’ll work in its current form.

What Would Actually Work

Here’s what I think would change the game: if OpenAI ships the workspace product they’ve reportedly been building (something that competes directly with Google Workspace and Microsoft Office) that could turn ChatGPT into a primary app. And then building apps on top makes sense, with real adoption potential.

Anthropic seems to understand this. Claude in Excel works because Excel is already a primary app. You’re embedding the assistant where people already are, not asking them to come to you.

The apps launched today are interesting experiments. I would love for them to play out soon! But I don’t think they are ready for prime time today.

In the past few week, I’ve had dozens of people come to me and question the feasibility of the AI ecosystem. Here’s the summary →

In recent weeks, I've had dozens of people come to me and question the feasibility of the AI ecosystem. This skepticism stems from Sequoia’s famouse article, “AI’s $600B Question” highlighting the discrepancy between GenAI expenses and current revenue. For reference, here’s the original article.

The AI Revenue Gap

The crux of the argument is this:

• AI training expenses are exceptionally high.

• To support this level of capital expenditure, GenAI applications should be generating nearly $600 billion in revenue.

• Even the most optimistic estimates place current revenue around $100 billion.

• This leaves a staggering $500 billion "hole" in revenue.

This leads to an obvious question: Is AI sustainable?

My Perspective

1. Unprecedented Growth

Unlike past tech cycles (such as Crypto or Mobile), the AI revolution isn't driven solely by future potential. It's fueled by real, substantial dollars being exchanged:

• Large cloud providers are paying significant sums to companies like Nvidia.

• Customers are shelling out considerable amounts to use AI softwares (OpenAI seems to be making over 1Bil USD from ChatGPT).

While the speed of spending increase is unprecedented (barring the infrastructure build-up before the dot-com bubble), the pace of revenue growth is equally remarkable. Consider this: GenAI has been in the spotlight for barely 18 months, yet it's already approaching a $100 billion revenue rate. That's nothing short of incredible!

2. Unit Economics

In most cases, GenAI is profitable on a per-inference cost basis. While I haven't conducted detailed calculations, I believe that companies like OpenAI, Anthropic aren't losing money when an average ChatGPT paying customer makes an inference call. (I could be wrong, but this is my current understanding.)

3. Training vs. Inference Costs

The majority of the $600 billion figure likely represents training costs and associated expenses like synthetic data generation, not inference costs. Two phenomena are occurring simultaneously:

1. As GenAI consumption increases, inference is increasingly moving to the edge, which will help keep costs down.

2. Small Language Models (SLMs) are growing in intelligence faster than Large Language Models (LLMs). This trend could lead to more efficient and cost-effective AI solutions in the future.

4. The Future Landscape

Today, most of the large companies are training their own foundation models. This might not be the best allocation of resources. The AI ecosystem may eventually reach an equilibrium where:

• A handful of companies train their own foundational models.

• These models are then licensed to others for fine-tuning or general commercial access.

Currently, the world gains most value from three primary LLMs: OpenAI, Anthropic, and Llama. If the industry consolidates around a few core model providers, with others focusing on fine-tuning and specialized applications, we could see training costs plummet. This, by itself could solve the problem in costs Sequoia mentioned.

Of course, as Mark Zuckerberg recently pointed out, no one wants to be left behind in what could be the next major tech platform. This explains why many companies are willing to incur short-term losses to stay in the game.

General Valuation Concerns in the startup space

It's worth noting that some current AI valuations are indeed inflated, and there might be a valuation bubble. Expectations for short-term AI revenue from public companies are unrealistic.

Post-ChatGPT, we've seen an explosion of new AI companies. However, in my opinion, most of these companies should be valued like SaaS companies rather than deep-tech firms.

Conclusion

Personally, I'm not overly concerned about the current state of AI spending. While we may be in a phase of minor overvaluation, I don't believe we're in an AI bubble.

Consider this: By the end of the year, with the launch of Apple's AI features in the iPhone 16 and Meta's integration of LLMs across its platforms, over half a billion people will be using LLM capabilities in some form. For a technology less than two years old, that's remarkably fast adoption!

The AI revolution is here, and it's moving at an unprecedented pace.

The State of Indian Railway Stations

Based on my recent journey through Anant Vihar and a similar experience at Hyderabad railway station a few months back, here are my observations:

• Human Experience: The experience remains quite taxing. Passengers are expected to load extremely heavy bags themselves through security counters, elevators don’t work reliably / are designed badly.

• Handling of Luggage: If you don’t pick up your bag on time post security, it will literally drop on the floor!

• Infrastructure: The paint is falling off from the walls, suggesting a lack of maintenance.

• Hygiene: Platforms are slightly smelly, indicating cleanliness issues.

Review of Vande Bharat Train

I recently traveled from Delhi to Dehradun in the executive chair car of the Vande Bharat train. Here’s my review:

• Comfort: The ride is extremely comfortable. Compared to economy flights, the leg space (and leg-rest!) feels royal.

• Meals: I was served three different meals during the 4.5-hour journey!

• Reading/Working: It’s easier to read or work compared to a car journey. The experience is much less claustrophobic.

• Travel Time: Spending 5 hours in a train is much better than 5 hours in a plane or a car.

• Comfort Level: The trains are not a generational jump in passenger comfort over those from the previous decade. They are a slight improvement, and most of the hype seems to be around the fact that they are made in India.

• Speed: The peak speed was 110 km/h, which is well within the range of Rajdhani trains, so it didn’t feel significantly faster.

Arriving at the Destination

Once you reach your destination, you are reminded that you are not in a swanky airport but another subpar railway station. However, the fact that you land in the middle of the city rather than 1.5 hours away is a definite advantage.

Conclusion

There’s no clear winner between the old and new systems, but I am looking forward to taking more trains to make up my mind.

• 2000 apps for vision pro. 1.5 mil compatible apps from iPad OS

• VisionOS 2

  • Photos - Automatically creating depth images from 2D images using machine learning.

  • Mac content display going to get higher resolution etc.

  • Adding train support to transit (along with airplanes which was previously supported)

• Canon is launching a new lens to shoot spatial videos.

  • Can be edited in FinalCutPro and viewed in Vimeo

• Partnered with Blackmagic Design to support Apple Immersive Design

• Expanding to China, Singapore and Japan in the next couple of weeks.

iOS 18

• Logos - Logos will change color in dark mode. Or can change color of all logos at the same time. Way too much personalisation for my preference.

• Control center - Apple is making control center more powerful (and more confusing).

  • Developers can add their own items on the control center. (this might be useful, depending on what app developers do with it).

  • Can swap out torch and camera controls in lock screen with this.

• Privacy -

  • Lock an app - Sensitive apps will be protected by Facetime verification.

  • Hide an app - Sensitive apps can be hidden.

• iMessages -

  • Allow tapbacks with any emoji.

  • Scheduled messages / send later.

  • Text formatting (strike text, underline etc).

  • Text effects

  • iMessages via Satellite

• Mail -

  • On-device categorisation

• Maps -

  • Offline save your hikes

• Wallet -

  • Tap to cash.

  • Pay from apple wallet.

  • Apple pay online

  • Event tickets get a redesigned. More details of venues.

• Journal -

  • A new insights view.

  • Better search for past entries.

• Gaming -

  • Game mode is coming to iPhone.

    • Just like on Mac, minimises background activity.

    • Improves responsiveness for wireless audio

• Photos -

  • “Biggest redesign ever to photos”

  • Adding more themes on the home page (called collections) instead of just getting to the photos. (mostly not useful for me personally)

  • Filter option seems very useful!

  • Instead of people search, you also now have “Groups of people”. Say best friends together.

Audio and Home

• Airpods

  • Nod head as an action instead of just the tap actions. This is perfect for indians.

  • Bringing voice isolation to airpods pro.

  • Personalized spatial audio API

• TV OS

  • Audio

    • InSight - Swipe down on TV. See actors, music etc in real time. Also available on iPhone app.

    • Enhance dialogue! Very useful.

    • Subtitles will autoprompt at more

  • Video

    • 21:9 support

    • Much better screensavers

WatchOS 11

• Activity

  • Training load - Will calculate “effort” automatically. Can adjust it manually. This will calculate Training load.

  • Goals can be adjusted based on day of the week etc.

• Health

  • New Vitals app to see body vital measurements and see trends.

  • Cycle tracking will now help during pregnancy.

• Connected

  • Automatically add new widgets to the smart stack.

  • Live activities coming to apple watch.

  • Check in also coming to apple watch.

• Customisation

  • WatchOS11 will help automatically identify and frame best photos for apple watch.

iPadOS 18

• New ways to personalise home screen (same as iPhone)

• New photos app (same as iPhone)

• Introducing a Tab bar to help ensure apps are full screen. (i love this, but might not be very easy for most people to get used to this). This is replacing/augmenting the side bar.

• Shareplay introduces annotations and remote control.

• Freeform adds scenes.

• Bringing calculator to iPad!

  • Math notes is cool! (especially that the output handwriting is same as input)

  • This is also coming to notes.

• SmartScript in Apple notes -

  • improve your handwriting as you go! you can also paste text.

  • Spell check works great.

  • Can move/adjust text.

  • To erase, scratch text out.

MacOS Sequoia

• Math notes in Mac!

• Can plan a hike on Mac.

• Continuity

  • iPhone mirroring on a mac

  • iPhone notifications on Mac

  • iPhone’s audio also comes through on the Mac.

  • Your phone stays locked.

  • Can drag/drop files from computer to the mirrored iPhone.

  • MacOS does tiling automatically! No need to use rectangle.app or something similar. Finally!

• Screen sharing - Background replacement coming natively to Mac.

• New Passwords app - Available on all devices, including windows.

• Safari

  • Highlights automatically pulled in from a page.

  • Summaries included for apps in the reader mode.

  • Introducing “Viewer” for “focussed mode for videos”

• Gaming

  • Game porting toolkit 2

  • Easier to bring mac games to iPad, iPhone etc. As an example, Assassin’s creed shadow will come to iPhone, iPad and Mac.

Generative AI (Apple Intelligence)

• Apple’s AI design Principals

  • Powerful

  • Intuitive

  • Integrated

  • Personal

  • Private

Capabilities

• Create language and images.

• Take actions

• Understands you

Specific things -

• iPhones can prioritise notifications.

• Brand new writing tools system wide!! Mail, notes, safari, third party tools will all support it.

• Autogenerated images when writing text (sketch, illustration and animation).

  • This is built into all apps too!

Action -

• “Pull up the files that Joz showed last week”

• “Play the podcast that my wife sent me last week”

Personal context -

• Can refer to content on your screen.

• Search your calendar, past messages etc.

Architecture

• On-device privacy.

• A17 pro and M family of chips can all support it! (which means all current macs will get it, along with iPhone 15?)

• Semantic index.

• Apple is creating a private cloud. (verifiable by third party). This is scary, so apple is spending a LOT of time on it.

Experiences

Siri

• Different visual look.

• You can correct what you are speaking. Mistakes are okay.

• Carries context from previous messages.

• Double tap on bottom of the screen - Write to siri.

• More info about features and settings.

• Next year -

  • Siri will have on-screen awareness.

  • Ability to take actions inside apps (and more importantly, across apps).

  • Will be made possible by “App Intents”

• Ability to extract drivers license numbers etc from historical pictures.

All Siri updates on iPad, Mac, iPhone.

Some more updates -

• Writing tools

  • Rewrite coming natively to Mac.

  • Proofread.

  • Smart reply in mail.

• Mail - Instead of seeing email in preview in the mail app, it will show summaries. interesting!

• Reduce interruptions focus mode. AI decides how important a notification is.

• Communicating with Emoji upgraded - Genmoji. Create a new emoji every single time! (man, this is why the researchers did text to 3D generation?). You can add people in Genmoji.

• Image Playground

  • you can add a bunch of objects and automatically generate previews. hence no prompt engineering!

  • happens on device. so no cost.

  • pick from animation, sketch or illustration

  • integrated in most apps, but also as a separate app.

• Rough sketch to a polished app in apple notes. Circle to call image playground.

• Photos

  • Photo-editing - Native object removal built on photos.

  • Can search images and videos using NLP. (in videos, it will take you to the right spot automatically)

  • Create a memory movie - Just write what you would like to create the video to be about, it will automatically pull in the right content

• Notes app can record audio.

• Phone app can record a call and take notes!

Apple intelligence will be free.

Integrating ChatGPT, GPT4o.

• Siri can tap into GPT4o.

• Include photos into message sent to ChatGPT.

• Integrated ChatGPT into writing tools for “compose”

• Compose will also tap into ChatGPT’s image capabilities.

• ChatGPT available for free. For people who have paid accounts, they will get native features in iOS.

• Coming “later this year”

• Will add support other vendors (outside of ChatGPT). No idea when.

Main new product additions (enabled by Underlord) →

1. Audio Dubbing (coming soon)

   1. Captions translation (available today)

2. Creating shorts from a video

3. Edit transcript using LLM (and edits auto-apply to the video)

   1. Remove retakes is so cool!

4. Create social post descriptions automatically from transcript.

Every week, the goal is to write at least a hundred words. It's a personal experiment to document evolving thoughts and ideas, aimed at giving them a better structure and sharing them more broadly.

Expect radical thoughts, unconventional ideas, and constant evolution of perspectives. Just as learning fuels growth, it also brings change. There might be times when a post from a few weeks back doesn't resonate with the current viewpoint. But that's the process of learning and evolving.

Constructive feedback is not just welcome, but essential. It’s a way to learn, to broaden the horizons, and to view things from different angles. Remember, this is not just about sharing thoughts, but also about evolving through collective wisdom.

This is the beginning of a journey filled with learning, sharing, and constant evolution. So here's to new beginnings!

• GS is leading the IPO

• Mission - "To give our customers the power to create their own work software".

Side note - Its been a while since I've used a new productivity software, but I would believe Monday is a software that people use to manage work, not a software that helps people create software to manage work? I have seen ClickUp make similar claims, is it because no code is all the buzz these days? Edit - The list of integrations on Monday is impressive, so this might be a very legitimate use.

• The company has cumulatively raised $234M.

Product

Monday.com seems more modular, and looks prettier than tools like Clickup. It has inbuilt support for things like invoice creation etc, allowing an interface truly getting close to a one fits all tools. Although in my quick search, I could not find any support for native docs (of course you can embed Google docs).

GTM Metrics

• $236M in implied ARR, up 85% y-o-y.

• ~88% non-GAAP gross margin.

• Net dollar retention - 107%. They breakout the number to be 121% for customers>10+ users (not sure why this breakdown).

• ACV - $1843. Since Monday.com has multiple plans starting from a free tier to $25 per user per month, assuming average to be ~10-15 USD, average number of users per company ~13-17.

Other Business Metrics

• The company has doubled the sales and success teams from 154 at the end of 2019 to 365 as of Q1'21. Of the company's 799 full-time-employees, 46% are in sales and success

• Enterprise customers, which the company defines as customers with more than $50K in ARR, grew 247% from 2019 to 2020 and the ARR from those customers grew 297% from 2019 to 2020, outpacing the company's total ARR growth.

• Monday.com disclosed in the S-1 that 16,925 developers had visited the “Developers” section.

This is a hilarious metric to discuss! The only metric that would make sense is #apps developer, or usage of those apps. A webpage view number is so easy to game (just run ads)!

• COVID-19 had no positive or negative impact on their business.

• ~38% of the Fortune 500 companies use Monday.com.

• 70% of Monday customers work in traditionally non-tech industries, such as real estate, banking, journalism and construction.

• As of December 31, 2019 and 2020 and March 31, 2021, customers with more than 10 users accounted for 53%, 63% and 65% of ARR, respectively.

This is the reason why they had broken the Net dollar retention number separately.

• Insight partners owns > 40% of the company! This would be a great exit for the team.

• Monday mentions they have spent $121M of cash to finance the growth of the business thus far and has generated $2+ of ARR for every $1 of capital used.

Non-GAAP Expenses as % revenue

Going into this event, this was the most understated tech keynote event recently. Major leaks about this started just 2-3 days back. And the production value of the event reflected the reason why. It was the most unadorned tech production in a long time! Forget about competing with Microsoft and Samsung. Even OnePlus creates better keynote presentations than Google did.

In terms of content, there was nothing that majorly stood out. The one thing I am most excited about is Multitask Unified Model (MUM) from Google search. It could have a GPT 3 like impact on search.

• The event starts with Google and it's Covid relief initiatives.

• Google maps

  • 150k of Bike maps added

  • Eco-friendly routes

  • Adding an option of safer routing (to minimise jerky breaks etc).

• Google Classroom

  • 150 million users

  • Chromebooks are #1 K-12 education devices

  • Richer collaboration in Google workspace! This is exciting, they were already at the bleeding edge of this.

    • Basically bringing Google meet into Google Slides, Doc and sheets.

  • Companion mode in Google meet - To allow people in office to have their own chat ability in google meet, without having multiple video streams.

  • Improved ML for noise cancellation and background light adjustment.

• Google Search

  • Translate

    • Breakthrough in NLP - LaMDA. Language framework for conversations. Still in RnD. Basically ,how do you start about talking from weather to going to sports naturally. Goal is to make conversations more natural.

  • Infrastructure

    • New TPU- v4. 2x speed of v3.

    • Improvements in Quantum computer. Personally, their explanation was more creepy than funny, but to each their own.

  • Privacy

    • Auto-delete info by default. delete in 18 months

    • A quick option to generate Delete last 15 mins history

  • Google is testing a new Search algorithm using Multitask Unified Model. Potentially 1000x more powerful than BERT.

    • The model seems to have some Generative behavior in it

    • It seems it's more end to end than the current model, allowing multi-language and multi-modal inputs. Will have to double check.

    • An example of the new architecture - For a google search for a hike on Mt Fuji, the engine will search all available text across all languages, images, videos and "generate" the best answer for you. Will have to confirm my understanding with their research papers when released.

• Google's password manager.

  • Import

  • Deeper integration in chrome, android

  • Compromised warning.

  • Quick fix feature - This is incredibly cool. It takes you to "change password" pages on websites where your password is compromised and helps you reset your password with an aided process.

  Personal comment - My basic premise for adopting password managers is that they need to easily export of passwords for ease in switching the software later. If Google's password manager allows that, I'll give it a shot, just to test the quick fix feature.

• Google Maps

  • Indoor AR

  • Adding crosswalks to street maps

  • More contextual/personalised maps (highlight breakfast places in the morning, dinner spots at night).

• Google Shopping

  • Shopping graph (similar to knowledge graph)

  • Making YouTube shoppable. How many startups did Google just killed?

  • Continuing their free for merchants to list approach, which they started in the Pandemic.

  • Integrating with Shopify! Wow! This means with a few buttons, your product will appear for purchase across Search, Maps, YouTube, Google Assistant.

• Google photos

  Apparently, most photos in Google photos are never viewed.

  • Little patterns. Showcase your past moments. This is cute. AI will create stories and memories of your life and find new automated patterns.

  • Cinematic Pictures - Take near-duplicate images and interpolate the frames. Examples looked great.

  • Added a feature to hide photos from memories! This is really important imo, because people have tragic movements they don't want to re-discover.

• Android 12 -

  • Update - 3 Billion active Android devices now.

  • Core principle - Instead of form following function, make form follow feeling.

  • Two main UI changes -

    • Custom color theme inside Every app! This is a HUGE change in how you think about UI.

      • Especially in Pixel, color theme inside every app will change based on automated color extraction from your wallpaper! Pixel will do clustering on the image pixels of the background to find the dominant color and find the closest match to the Material design color.

      • My worry is if it's just Pixel exclusive, no developer will care. Curious how much of this is baked into Android 12 v/s what's Pixel specific.

    • More responsive across themes.

  • Good improvements in Privacy.

    • Privacy Dashboard looks pretty useful! It gives you a timeline of apps that requested access.

    • During Camera and Microphone access, it will explicitly appear on top of your phone. And there will be a universal place for you to block camera/microwave access irrespective of individual app permission.

  • Better connection between android devices.

    • Can control Android TV directly from your Android 12 phone

    • AndroidAuto Wireless. Will launch Digital Keycard based on NFC and Ultra-Wideband. Can also remotely share it with a friend.

  • SmartWatch

    • Google worked with Samsung and combined WearOS and Tizen!

    • For Samsung, all future Gear watches will use WearOS and not Tizen. Does this mean all owners of current watches can say any chances of future OS updates goodbye? Would be regretting not buying an Apple Watch imo.

    • Very early preview of a few things like double tap to move between recent apps, low power consumption core, and more focus on health with Fitbit integration, but I would expect a lot more to come.

    • Google will be creating it's smartwatch with Fitbit, but no details. Hopefully some interesting wearables in October.

  • Health (R&D)

    • Google's been using AI for image processing (for ages!) for many health disease recognition. Launched some similar experiments and tests with Mammography.

  • Sustainability

    • Google is investing in Geothermal energy to power their plants with 100% renewable energy by 2030.

They ended with an INCREDIBlLE demo of Project Starline. It's a 3D holographic video conferencing software that makes it feels like the other person is in the same room!!! It was really cool! Many complex technologies like Creating a 3D model with multi-camera rigs, compression of this data stream for real-time streaming, light-field displays all come together for this. If the demo videos were representative of actual experience and not clever camera trickery, this would be amazing. No production date, still a research project.

Some notable disappointments -

1. Google meet. That platform needed more improvements.

2. Gmail didn't even get a mention.

3. Google has been pushing it's own chat/integrated work solution over Slack. The fact that it wasn't mentioned increases the probability of it landing in the Google Graveyard?

4. No updates from Waymo. Not sure if that's because it's an independent company now or just because they have nothing to share.

5. The video production in the event - The transitions were all nice and cute, but expected much better. There is serious wind in their audio recordings! The setup was terrible. I find 0 value in doing it live if everyone is going to stream the event. Just pre-record it and do it better.

Most of the content is structured in bullet points for faster consumption. Also, most of the content are quoted directly from their S1.

Introduction

• History - The founders faced the problem firsthand at Facebook.

• 1.2 mil paid users. 75k paying customers. 143 Mil USD Annual revenue.

• 3.2 mil free activated accounts (since inception). ~25 Mil users.

• "Today, 60% of knowledge workers’ time is spent on work about work."

• "Despite the growth in collaboration technology such as content tools and messaging apps, there has been little innovation in work management—systems that help teams to plan, manage, and execute their work." → I find this hilarious.

• As customers realize the productivity benefits, we provide, our platform often becomes critical to managing their work and achieving their objectives, which drives further adoption and expansion opportunities. This is evidenced by our dollar-based net retention rate, which increases with greater organizational spend. As of January 31, 2020, our dollar-based net retention rate within organizations spending $5,000 or more with us on an annualized basis was over 125%, consisting of 6,555 customers. Our dollar-based net retention rate within organizations spending $50,000 or more with us on an annualized basis was over 140%, consisting of 207 customers. Our overall dollar-based net retention rate as of January 31, 2020 was over 120%.

• Seven hundred employees

• "The average knowledge worker receives 121 emails per day—70% of which are opened within six seconds."

• Spreadsheets are Asana's biggest competitors.

• Asana looks at 3 categories of users - Individuals, Team leads, Executives. This is interesting that their preferred division is not just organizations BUs, verticals but instead individual v/s team leads v/s executives.

• Our free-to-paid conversion rate of registered users, as measured by the number of paid users divided by the total number of then-registered users, has increased from 3.6% as of January 31, 2018 to over 4.8% as of January 31, 2020.

• Growth - We also see a large opportunity to expand our international customer base. For fiscal 2020, 41% of our revenues came from international regions, with limited dedicated sales effort and no product customization outside of limited language translation and multi-currency capabilities. Within the past 12 months, we have opened offices in key regions across Europe and Asia, and expect to grow our customer base within these areas.

• Asana is hosted on AWS.

• No individual customer represented more than 1% of Asana's revenues.

• Our “work graph.” Like the social graph the two of us helped create for Facebook, the work graph is a flexible data model—of people, tasks, goals, projects, portfolios, conversations, files, and the relationships among them—powering Asana. The work graph enables each Asana user to see information in the format that makes most sense for them.

Financials

• We introduced Enterprise subscriptions and Business subscriptions in December 2016 and November 2018, respectively. These subscriptions have grown to represent approximately 42% of our revenues during the three months ended January 31, 2020, up from 11% during the three months ended January 31, 2019.

• We have also experienced a shift to larger subscriptions, with subscriptions of over $5,000 representing 54% of our revenues for the three months ended January 31, 2020, compared to 43% for the three months ended January 31, 2019.

• Of our 100 largest customers today, virtually all came to Asana using a free trial of our paid levels or through an upgrade from our Basic level.

• Over 30% of Fortune 500 companies use Asana.

• No single customer accounted for more than 1% of our revenues, and our top 100 customers accounted for approximately 9% of our revenues for fiscal 2020. For fiscal 2020, 41% of our revenues were generated outside the United States with limited international sales presence or major product customization.

• By providing a free version of Asana, a free trial option, and a feature where customers can invite guests outside of their organizations to use Asana, we are able to seed the market with Asana users. Once individuals and teams within organizations adopt our platform, our direct sales team follows up with an opportunity to strategically expand our offerings across the organization. We are at the early stages of building our direct sales force to focus on the significant expansion opportunity we see within our customer base.

• For fiscal 2020, our payback was 10.6 months, and for the 12 months ended April 30, 2020, it was 11.4 month.

Results of operations -

• Cost of revenues increased $2.1 million, or 51%, during the three months ended April 30, 2020 compared to the three months ended April 30, 2019. The increase was primarily due to an increase of $0.7 million in third-party hosting costs as we increased capacity to support customer usage and growth of our customer base, $0.6 million in personnel-related costs due to increased headcount, $0.4 million in allocated overhead costs as a result of increased overall costs to support the growth of our business and related infrastructure, and $0.4 million in credit card processing fees.

• Research and development expenses increased $9.0 million, or 67%, during the three months ended April 30, 2020 compared to the three months ended April 30, 2019. The increase was primarily due to an increase of $6.9 million in personnel-related expenses driven by higher headcount and an increase of $1.7 million in allocated overhead costs as a result of increased overall costs to support the growth of our business and related infrastructure.

• Cost of revenues increased $6.0 million, or 44%, for fiscal 2020 compared to fiscal 2019. The increase was primarily due to an increase of $3.6 million in third-party hosting costs as we increased capacity to support customer usage and growth of our customer base, $1.6 million in personnel-related costs due to increased headcount, and $1.5 million in credit card processing fees, partially offset by a $0.7 million decrease in amortization of capitalized internal-use software costs.

• Our gross margin increased for fiscal 2020 compared to fiscal 2019 as we increased our revenues and more efficiently managed third-party hosting costs, realized benefits due to economies of scale resulting from increased efficiency with our technology and infrastructure, and experienced a decrease in amortization of capitalized internal-use software costs.

  

• No majorly quarterly trends stand out.

Liquidity and Capital Resources

• Asana has spent a total of 365 mil USD till date. Raised 214 mil USD of external capital.

• In Apr 2020, they raised 40 mil USD in loan from SVB to build their headquarters. (wrong time? Covid? Work from home?)

• A substantial source of our cash provided by operating activities is our deferred revenue, which is included on our consolidated balance sheets as a liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is recorded as revenues over the term of the subscription agreement. As of January 31, 2020 and April 30, 2020, we had $64.1 million and $70.1 million of deferred revenue, respectively, of which $62.7 million and $68.6 million, respectively, were recorded as a current liability.

Contractual Obligations and commitments

• In February 2019, we entered into a new lease agreement for our corporate headquarters in San Francisco. This lease commenced in May 2020 and expires in October 2033. As part of the agreement, we issued a $17.0 million letter of credit upon access to the office space. We expect to start making recurring rental payments under the lease in the second quarter of fiscal 2022. We have begun participating in the construction of the office space and will incur construction costs to prepare the office space for its use, which will be partially reimbursed by the landlord. As of January 31, 2020, the future minimum payments and capital commitments related to this lease, which include tenant improvement allowances of $26.6 million, totaled $466.0 million. Subsequent to January 31, 2020, we incurred a delay associated with the construction of the office space, and as a result, we expect to incur a total of $457.4 million of future minimum payments and capital commitments as of April 30, 2020. Additionally, in April 2020, we amended the lease arrangement to include additional space, for which future minimum payments total $3.9 million. Our CEO acts as a personal guarantor to the lease for the full rent payments over the 148-month term should we default on our obligations. These amounts are not included in the table above.

Executive compensation | Certain relationships and related party transactions

• Dustin Moskovitz transferred a bunch of his shares to a trust

• Cap table summary

Some Miscellaneous Thoughts -

• Asana's dollar-based net retention rate increases with greater organizational spend.

• Spreadsheets are Asana's biggest competitors. Surprising that people have repurposed spreadsheets for this!

• Asana looks at 3 categories of users - Individuals, Team leads, Executives.

• The competition section brushes off everything.

• The first thing I see when I sign up on Asana is a maintenance tab that Asana will have a 2-hour planned downtime. This is surprising 😔

• Of our one hundred largest customers today, virtually all came to Asana using a free trial of our paid levels or through an upgrade from our Basic level. - Highlights the importance of having free trials?

Attended an interesting conversation hosted by Ankit from Product folks. Learnt some lessons of evolution of Asana as a product -

Learnings from webinar

• Generic point when companies go public - Average around 150M LTM recurring revenue

• Asana started from Tasks (internal PM tool developed in Facebook)

• Rosenstein and Moskovitz left Facebook to start Asana

• Dropbox was launched in private with 75k user waiting lists.

• In 2009, 5 people, 9mil USD from benchmark and A16Z.

• Asana was always trending in hackernews, quora etc. Evangelised well by their founders.

• Asana was finally launched in 2011. 1200 companies in waiting list. It was a very horizontal application.

• First paid plan for them was a tier based on number of users (<30, 30-50 etc instead of having a per user plan).

• Asana went after internal emails (like Slack).

Thought - World moves in small jumps. Even Email to Asana was too big, people preferred email to slack.

• Miscellaneous fact - Slack's co-founder is Flickr's co-founder.

• Asana was one of the first collaboration software to add calendar.

• But the common problem was that UI was pretty clunky.

• In 2015, they revamped a new UI. Existing customers hated it (it was like new Coke, where existing users of Coke hated it). Lesson for Asana is that don't introduced a big rebrand at once, make continuous minor tweaks.

• In 2016, Asana launched boards to compete against Trello.

Possible Discrepancies -

• Asana mentioned in Sept 2018 that they had 50k paying customers on the blog, but in S1 said >32k.

• "paid" customers v/s paying customers → Churn might have been ignored.

Competitor →

• Smartsheet is a direct competitor (like airtable, a few years behind).

• Dropbox was a product led growth. Almost close to a consumer app...

• 2.2% free to paid is not bad for a product led growth.

• People start free and sales teams go in when 50-60 users.

• Asana is a very team based product, whereas slack is organisational level. Hence the spend is a lot larger for the latter.

Will publish some interesting facts from Unity S1 soon (next weekend hopefully)!