Conferences are Back! 4 Takeaways for 2023 Event Planning

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“The vendors, the prospects, people wanted to get together. Not just for demos but to talk about business over a beer.” — Levona Simha, Cymulate

Conferences returned in-person and in full-swing this summer after more than two years of cancelations, postponements, and a hard pivot to virtual. The Cybersecurity industry saw three of its largest events: RSA Conference (RSAC), AWS re:Inforce and Black Hat USA conference take place back to back between June and August. We asked three senior marketing leaders in the DTC portfolio about what they learned from this summer’s events and how that’s influencing 2023 planning.

 TL;DR

  • Man, it was great to be back in person. Pent up demand led to solid, high-quality lead generation opportunities.
  • Virtual engagement is (probably) not dead. With the right assets, there is opportunity for experimentation and positive ROI from virtual programs.
  • Be bolstered by engagement results from the large 2022 conferences but consider that 2023 might be a year of tighter travel and conference budgets across the board.
  • 2023 will see a refreshed focus on in-person experiences at the big shows but also at smaller regional events. Targeted activities and novel approaches to sponsorships can lead to higher ROIs.


WHAT WE EXPECTED, WHAT WE SAW

“The quantity of attendees was lower across the events but then the quality went way up. People had been missing that human connection over the last two years. Coming through the booth, they were more patient and much more receptive to interactions.” — Varun Kohli, Cequence

Planning for 2022 conferences was challenging. RSAC was rescheduled from January to June as Covid persisted. The question if people would feel safe enough to travel to and attend the events persisted. Turns out, plenty of people were excited to get back together in person. Those who were willing and able to travel this year were highly motivated to meet and engage.

“I’m a personable person. I like to talk to people,” shared Levona Simha. And that was true for this year’s conference attendees. “The vendors, the prospects, people wanted to get together. Not just for demos but to talk about business over a beer. And the quality was very high, at Black Hat especially. There were a lot of decisionmakers there.”

“The RSAC tradeshow floor was as chaotic as I’d ever seen it; the energy was really positive. People were excited to be back together. Our Innovation Sandbox session was oversold by a few hundred people. The organizers had to turn people away,” said Luke Tucker. He added, “and at Black Hat, it really did feel like it was 2019 energy levels. It was really dense, good traffic, and a lot of opportunities to meet people and have high quality conversations.”

Varun agreed, “It was something we all were waiting for. The quantity of attendees was lower across the events but then the quality went way up. People had been missing that human connection over the last two years. Coming through the booth, they were more patient and much more receptive to interactions.”

The Cequence team at RSAC 2022.

All three marketers walked away from the summer’s events with strong lead-generation results from their in-person efforts.

THE FUTURE OF VIRTUAL

“These aren’t random badge scans or people stopping by for giveaways. The virtual engagements are motivated people who legitimately want to learn more about their products.” — Luke Tucker, Lightspin

While RSAC and AWS re:Inforce focused on the in-person experience, Black Hat offered a full array of virtual sponsorship packages that included digital booths and advertising. For this year, the marketers believed that the meaningful engagements would happen in person. While all three companies participated in Black Hat’s virtual booths, it was mostly a repurposing of existing content.

Luke at Lightspin did spend against some of the digital “bells and whistles” available upgrading their virtual booth presence to add rotating, programmable banner ads. This allowed him to promote more content and product features to virtual visitors.

That one experimental upgrade paid off well beyond expectations. Lightspin’s virtual booth garnered well over 1,100 leads during the conference. Luke considers this a win, especially for a company as early in its journey as they are. These aren’t random badge scans or people stopping by for giveaways. The virtual engagements are motivated people who legitimately want to learn more about their products.

“Our email campaigns are performing well against this list. Definitely better than against a standard cold list. I think we are going to have some very good conversations and will definitely generate some pipeline from the virtual booth visits,” Luke said.

With a relatively small investment in a virtual presence paying off, Lightspin will likely invest more in experimenting next year, potentially creating purpose-built content that will live on beyond the conference. Luke observed, “when you’re at a conference, people want to see your product, meet your community. They don’t care much about content in the present. They will catch it after the conference on YouTube.”

Lightspin’s Purple Cloud Summit preceding RSAC 2022.

Keeping “content with legs” in mind, instead of chasing speaking opportunities or bigger sponsorships that come with branded panels Luke suggests creating content you can own. “We hosted the Purple Cloud Summit that we hosted the day before RSAC, pulling together a panel with Lightspin, a couple of CISOs, and a partner that’s a cybersecurity unicorn. I can use that content at a digital booth and across our social channels for as long as we’d like. It’s a stronger, longer brand play for us.”

Varun is taking a slightly more conservative approach around virtual events for Cequence. He believes the emphasis on creating rich virtual experiences for the major conferences will fade give the world is “open” again. “We saw a 50/50 split in in-person conference content versus virtual at the start of 2022 but by next year, we’ll be back to 80/20 or 90/10,” he predicted. Part of that is because the virtual experience never really delivered during the pandemic. Another contributing factor is proving out ROI. With a finite marketing budget, it’s hard to justify investing in virtual engagements haven’t proven to be as effective as in person.  Especially in the cases where virtual events are commanding sponsorship fees upwards of $50k.

LOOKING AHEAD TO 2023

“You don’t always need a booth to have a presence at the big events,” said Levona. “Depending on your objectives, a smaller, themed, curated event can achieve a lot more.” — Levona Simha, Cymulate

Covid-related event cancelations may be behind us but a combination of increasing costs to attend and the potential for slimmer travel budgets next year means having to be extra thoughtful on budgeting. All three senior marketers agreed that attending the cornerstone events are a given. What’s up for debate is how big of a booth/how much of a spend they really need to have impact. And, they’re experimenting with smaller, more bespoke experiences.

Cymulate promotes their invite-only event from RSA 2022.

“You don’t always need a booth to have a presence at the big events,” said Levona. “Depending on your objectives, a smaller, themed, curated event can achieve a lot more.” For example, this year at RSAC, instead of having a large booth, Cymulate hosted a successful speakeasy-themed dinner for 30 VIP attendees. Next year, she plans to have a presence at all the major security events but to also focus on smaller, more regional roundtables in support of the company’s sales objectives.

Luke agrees that smaller format events can have an outsized payoff. He’s found that “there is a real hunger” in cities like Denver or Nashville for content and community. It takes more legwork to create a presence in those geos but if done right, it can lead to a higher ROI than spending $30k on a conference roundtable sponsorship. There’s some risk, he cautions, that a new city might flop. He’s hoping to try outreach in a few cities in 2023, heading into the effort with a tight handle on spend and well-defined success metrics.

Given Cequence’s successful return to in-person events this year, Varun is not likely to commit the company to larger, flashier booths for 2023. At Black Hat, they invested in a 20 ft x 10 ft booth – the same size as ZScaler, a scaled public company with a market cap of ~$25B, Varun noted – and in unique engagement experiences that generated a high volume of quality leads. “I’m not convinced that going bigger, even doubling your booth size will net a proportional increase in leads. It’s more about focusing on the preparation and strategic outreach leading up to the event and creating interesting engagement experiences once you’re there,” he said, “The ‘spray and pray’ approach does not work for events. You can actually “be bigger” without going bigger.

On booth giveaways, Luke at Lightspin is looking forward to experimenting more with the virtual booth features in 2023 but he’s also considering a more sophisticated take on swag. Instead of shipping boxes of t-shirts and tchotchkes to conference venues, he’s engaging with an online platform to create a more tailored digital experience. The goal is to cut down on waste while creating an instant digital relationship with strong leads. “You don’t have to scan every badge that walks in the booth. If they’re there for the free notebook, let them have it. For people genuinely interested in our solution, we can invite them to a more bespoke experience.”

CONCLUSION
The return to in-person conferences has been a welcome change across the board. The cornerstone events have been revitalized, maintaining their pull for vendors and decisionmakers alike. Virtual platforms never really delivered as a 1:1 replacement for scaled in-person events but they offer ample opportunity for augmenting, extending, and amplifying a company’s conference presence. The two-year, COVID-enforced in-person events pause gave marketers time to rethink event strategies. In 2023, we’ll see a return to big conference engagements but also a greater emphasis on smaller, more curated experiences on and off the conference circuit. And new technologies supporting smarter content distribution, hyper-targeted ads, and bespoke branded swag experiences will give marketers avenues for getting more sophisticated with their programming.

 

 

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Managing Cloud Spend from Day One

Managing Cloud Spend
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With increasing concerns about economic headwinds heading our way, founders are facing increased pressure to preserve cash and extend their runway. The potential for a lean couple of years ahead means taking a hard look at everything from headcount and real estate to marketing and tech spend.

The shift to cloud has unlocked tremendous business value and accelerated innovation through increasing agility and providing enabling technologies ‘on demand’ and ‘as a service.’  These pay for use consumption models can quickly turn into runaway expense if not governed in a structured manner. Many organizations today experience some form of unexpected or overage cloud costs on a monthly basis. As a result, it’s not unusual for small and medium enterprises to be allocating roughly half of their annual technology budgets towards cloud services.

The good news is there are strategies to consider and levers that can be pulled to affect meaningful savings for early-stage companies building their products and services in the cloud.

Providers Get Flexible
Along with many advantages that building in and for the cloud affords, it also comes with some interesting economics. The faster you scale, the quicker the costs compound. This may not seem so consequential when you’re going from zero to one but can become a real challenge for companies scaling to the next several orders of magnitude.

The good news: Cloud providers understand the current headwinds companies are facing. They’re incentivized to work hard for your continued business – both Microsoft and Amazon proactively talked about helping their customers control cloud spend in their Q1 earnings calls.

In the last couple of months, we’ve seen early stage DTC portfolio companies cut their cloud spend by north of 30% without sacrificing quality of service. Here are some tips on navigating the process.

Find Allies in Your Account Managers
Programs like AWS Activate and Google Cloud Startups Program use credits to incentivize companies to develop and consume services on their platforms. While credits can feel like free money early on, you should be thoughtful with how you are leveraging these promotions and budget them like any other expense drawing down your bank account.

Along with the credit programs, you have access to account managers who you should consider as resources. Engage with them to discuss your goals, map out a forecast, and monitoring plan to review your utilization. When these teams understand your goals, they will be in a better position to align strategic and promotional programs, and help explore technical and financial engineering opportunities to help you reduce your cloud spend.

If you wait until two years into your engagement to reach out to introduce yourself to your account managers after you’ve runout of credits, the chances of them being willing or able to help will be quite low.

Change Your Compute Behavior
If you have flexibility in when your applications can run, consider Spot Instances or Spot VM’s. This can yield significant savings – in some cases, up to 90% over published on-demand rates.

Consider also signing up for an EC2 savings plan or Google Committed Use Discount Program. These programs offer lower pricing over on demand rates based on committing to specific usage, usually over one- or three-year periods. There are no upfront spend requirements for these programs and they can result in significant savings (AWS claims up to 72%).

Review Your Application Architecture
Check out AWS’s Well-Architected tool, Azure’s Well-Architected Framework and Google’s Cloud Architecture Framework for architectural review processes that can identify opportunities for improvement and cost optimization. Pay particular attention to your VM’s, machines, databases, telemetry and logging.

If you’re a later stage startup or more infrastructure resource intensive company (or are on track to becoming one in the next two to three years), consider exploring a Private Pricing Agreement (PPA) with your cloud provider. PPAs offer custom pricing and enhanced resources that are usually reserved for companies spending more than ~$50K/month but in some cases can be made available to companies scaling in that direction.

When you have a good grasp of your usage and spend, and how to best optimize your relationship with your current provider, consider diversifying where your compute happens. Migrating to or diversifying with another CSP migrating is a heavy lift but there can be incentives available to do so. If this was already a part of your long term plan anyway, now’s a great time to kick off those conversations.

Other Tools to of the Trade
Beyond what the CSPs themselves offer, there are a bevy of tools/services focused on cloud/SaaS spend optimization that can help find significant efficiencies in your tech spend including: Cast.ai, Zesty, Zylo, Vendr, and CloudZero. These tools are provider agnostic and can provide a lot of value to help optimize spend, increase visibility, and improve governance across your CSP and SaaS relationships.

Finally, Tap Into Your Investors
Please know that you are not facing the current economic uncertainties alone. Investors and portfolio support teams are here to help companies strategize in situations like this. We can connect you to resources and to other founders who are working through similar challenges so you can collaborate and exchange best practices. We can also offer aggregate learnings from across myriad sectors in organizations from seed stage to publicly traded companies. We are happy to be a first line resource for you.

 

 

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M&A: From LOI to Deal Closed

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Yair Snir is a managing director at DTC focused on investing in early-stage companies across Israel and Europe. His current investments include companies such as Lightbits Labs, Pecan.ai, Swish.ai, and VAST Data.

Good companies get bought, not sold, cont’d.

Bought, sold. This may be splitting hairs. But how does an M&A transaction get done for venture-backed startups? There are planned acquisition processes and there are opportunistic ones. Planned is a process you kick off, opportunistic would be initiated by a buyer. In either case, it starts with having a strong list of potential acquirers (as covered in M&A Part I). Then, it’s a sprint with those potential acquirers that (hopefully) results in Letters of Intent. From there, it’s due diligence time which can last several weeks. With some luck and a lot of hard work, the deal closes and you’re onto the post-acquisition integration.

 The Shopping Sprint
In an opportunistic process, you’ve been approached by an acquirer. If you decide to pursue a path to acquisition, there’s a compressed timeframe to continue that conversation and to reach out to the other companies on your potential acquirers list. In that initial conversation with the active buyer, you can expect to learn how much the buyer intends to offer and a framework for the process.

For a planned process, you control the timing but you have to consider what might be your triggering event that creates some time-bound pressure. In the opportunistic example, the triggering event is being approached by an active buyer. For venture-backed companies in a planned process, the triggering event is often a funding round. You might become interesting to the companies on your list if they think they can acquire you at today’s valuation versus at a higher valuation after you’ve raised another round.

Then things get hectic.

Road to an LOI
Regardless of how the process started, you, along with your board and advisors have a few short weeks to negotiate with all interested parties. As a founder, you’ll either reach out to potential buyers yourself or will direct board members to do so on your behalf. Buyers will often want to work with a founder/CEO directly but running in parallel is unavoidable. Realistically, the entire process from start to a signed Letter of Intent (LOI) could be done in as few as one to three weeks.

The goal of these short, stressful weeks is to get the best terms possible in an LOI from one or more potential buyers. Companies that are active acquirers will move fast, responding in a day or two with interest. Then the vigorous negotiations begin to determine price, timing, team retention and other high-level terms.

When you are working towards an LOI, keep in mind that you are determining the next phase for your company and team. Even if the sale price isn’t going to break records, you have the opportunity here to create a successful outcome that will maximize your long-term impact.

The Shopping Sprint ends when you sign an LOI, putting you in a ‘no-shop’ mode and the due diligence process with the selected buyer begins. An LOI is not a legally binding agreement; it does not guarantee a sale. Generally speaking, either side can walk away by simply letting the LOI expire.

Note: This is not an open-air auction. There should be NDAs in place throughout the Shopping Sprint. You are not sharing details with buyers of who else you’re in discussions with or how much others are willing or likely to pay. This is to both secure any current offer and to optimize the price of any potential offer.

Bring in the Bankers?
Potentially. Acquisition processes can be run with or without bankers. The more complicated the situation, the more benefit there will be to working with a banker to drive the process. The variables here include timing, cost, the competitive landscape, your company’s momentum and the public and private markets. Your board and advisors should be helpful in deciding bankers or no bankers.

Diving into Due Diligence
Buyers will have a defined due diligence process that they work against. The goal of this phase is for the buyer to get to know the company from multiple aspects. They’ll ask hard questions and discover discrepancies – many of which exist not because of deficiencies but because no two companies are set up the same. As CEO, it’s your duty to have all the needed info ready and organized for this to be an expedited process.

The diligence process is as much for the buyer’s full M&A team as it is for the deal owner, i.e., the relevant business/product executive championing the deal internally. It’s the deal owner who will convince the rest of the stakeholders to proceed or to walk away from the deal. This is also the person who will on the “Day After” take on the acquired company and will wear its success or its failure.

Defining the Day One
After the LOI is signed, details around employee retention, team integration and reporting structures are decided. There can be a tendency to over-index on the deal terms and not spend enough energy on the integration or “day after” experience. As CEO, you should be digging just as deep into understanding the “Day One” experience for your team.

Your team successfully navigating an M&A transaction depends on how many certainties you can define and deliver for them. Focusing on the minutia now sets you – and your team – up for success in the next phase.

Questions to consider:

  • What are the buyer’s expectations for the success of the acquisition? What would be your business targets?
  • Who will you and your team report into? What is your team’s charter and who defines it?
  • Who on your team stays? Who goes? And why?
  • What does the compensation structure look like? Will there be parity in benefits?
  • Where does your budget come from? Is there room for headcount growth?
  • How integrated will you be with the “mothership?” Or will you continue to operate independently? It’s important to understand this from both a product & business and a cultural frame of reference.

The goal is to build a roadmap for your team that reflects what the next one to three years will look like. Ideally these conversations will result in agreed upon integration plans. These important details aren’t usually written into the acquisition deal itself, but they are crucial to having a smooth post-close integration of team and product.

You’ve been acquired!
These two articles (read Part I) are a thumbnail sketch of what happens during an M&A process. The goal is to spark thought and conversation way ahead of any M&A activity. From experience on both sides of the table, we know the best outcomes happen when strong leaders of good companies have planned for all eventualities. While IPOs may get more of the headlines, a well-timed, well-planned acquisition can mean even larger opportunities for you, your team and the technologies you’ve built.

This article originally appeared as a part of the TechCrunch+ series on building startups. 

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Yair Snir is a managing director at DTC focused on investing in early-stage companies across Israel and Europe. His current investments include companies such as Lightbits Labs, Pecan.ai, Swish.ai, and VAST Data.

Good companies get bought, not sold.

This saying is conventional wisdom passed down through generations of entrepreneurs. But it doesn’t tell the entire story. While the IPO is characterized as the pinnacle outcome for venture-backed startups, far more companies see successful exits via an M&A process than by going public. Being bought by the best acquirer for you takes thoughtful planning and yes, selling.

As an entrepreneur, you probably started your company because you wanted to make a big impact. You’re building something that you truly believe will shift the world in a positive direction. And yes, there’s also an implied financial outcome there. People – maybe your investors, the media, your team – will often focus on the exit strategy in a financial outcome context. In my experience, many founders are more motivated by impact potential. For these kinds of founders, my advice is to always consider acquisition as an option. It might not be obvious at first, but an acquisition can be your best path to massive scale.

Prior to becoming an early-stage investor at DTC, I ran business development and M&A activity for Microsoft across Europe and Israel. I was on the other side of the negotiations as Microsoft looked for innovative teams and technologies to bring into their fold. The founders who were able to capitalize the best on the acquisition process were those who’d planned for it from day one.

Planning for a potential acquisition is not a defeatist attitude
Planning for all eventualities means you’re prepared for when it’s time to make decisions. Companies are 10x more likely to be sold than to IPO. This isn’t said to discourage you from having a plan to build, IPO, and then continue to your company for decades into the future. That’s one of many perfectly valid plans. If you are prepared, being bought by the right acquirer could mean a healthy financial outcome for you, your team, and investors and an even larger impact for the product and services you’ve worked hard to bring to life.

With that out of the way… I suggest to founders that they take a 360-degree view of possibilities and eventualities.

Understand your position in the world at any given time
You’ve done all kinds of product competitive analysis, but it is just as important to understand the macro – and micro – landscapes.

  • Where is the overall market heading? Are companies buying new technologies or are economic trends pushing them into, “Nobody ever got fired for buying IBM” territory?
  • What shifts could make your company significantly more valuable? And which might nullify your competitive advantage? Either state could mean becoming an attractive acquisition seemingly overnight.
  • Last but not least – how are you fairing? Being an entrepreneur is incredibly hard and staying in the startup business for a decade plus isn’t possible for everyone. Regularly checking in with your cofounders and leadership team, your family and yourself to understand your current life goals and your ability to engage and meet them is probably the most important exercise in this list.

Make a list and revisit and revise it regularly
Any investor or mentor will tell you that when a company says they want to buy you, the right answer is, “We are not for sale.” And that’s true. But there are still many reasons to keep a force-ranked list of which market leaders might be acquisitive in your space. This puts you many steps ahead when you get that acquisitive call.

  • Create a list of companies that need technology like yours in their product lineup to stay competitive.
  • On that list, highlight the ones that may have a “buy over build” philosophy.
  • Then, look at how “day two” has played out for recent acquisitions by them. Did they retain leadership? Was there a successful integration of team, product, and culture? Underline which, if any, of these companies feel most aligned with how you’d like a successful acquisition to go.

If you’re approached by a company that tops your list of potential acquirers, you’re still not for sale. But maybe this is an opportunity to explore a partnership or strategic alliance (more on that in Part II of this). Either way, with your understanding of who might be acquisitive and why, you’re more prepared to engage in the conversion.

Lean into the possibilities
Understanding all the possible acquisition eventualities does not mean you’re any less dedicated to other types of successful outcomes. It does put you in a position of strength where you will be better able to maximize your impact and to capitalize on the value of what you’ve created. This is what I want for every founder.

Part II talks about how to think through the very beginning of a potential acquisition and how to leverage your board and investors throughout the process.

This article originally appeared as a part of the TechCrunch+ series on building startups. 

 

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