Bessemer Venture Partners’ Elliott Robinson, joins Yahoo Finance to discuss the accelerated growth of the cloud and how the pandemic impacted the digital shift across industries.

Video Transcript

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JULIE HYMAN: Well, while we are seeing some turbulence within tech stocks right now, we all know how much technology and specifically cloud-based technology has changed our lives over the past year and how it has had to adapt as we have had to adapt. Let's talk about the road forward now. Elliott Robinson is joining us with Bessemer Venture Partners, who just put out, along with his colleagues, "2021 State of the Cloud Report."

Elliott, thank you for being here. Before we sort of dive into your predictions, I do want to ask, given what we have been seeing happen in the market, how you are thinking about what this year looks like with the cloud with sort of this adjustment to reopening, for example.

ELLIOTT ROBINSON: Yeah, for sure. I think, you know, what we talked about mostly as a backdrop in our report this year is that we're living through a new normal. Regardless of how quickly things open back up, how they open back up, we're going to be in a hybrid new normal.

There was never a world where I thought I'd be sending an iPad to my father so I could Zoom with him two to three times a week. And I don't think that's going to change, regardless of if he's going to his favorite sushi place on Wednesday nights. And all of us are going to be working more remote going forward.

So I'm really excited about the growth and the cloud stock market. Of course, the Bessemmer NASDAQ EMCLOUD is kind of how we track it. And we are taking a long view. This is more of a decade, if not generational, view on cloud software. And we still think, evidenced by the chart on the screen now, that we're still in the early innings of that.

MYLES UDLAND: And, you know, Elliott, the number one kind of prediction you guys have is the unbundling of the office, the continued unbundling, I guess. And I suppose I would ask it this way. If we look back in time, it seems like things went OK. We all went home overnight, and it seems like things went OK.

But how unprepared really were we, relative to what you guys think is coming down the pike with some of the opportunities are there to make working at home a lot more enjoyable and make it make more sense, I think, than perhaps it did for a lot of 2020?

ELLIOTT ROBINSON: Yeah, for sure. So, you know, when we talk about unbundling the home office, a lot of that kind of perspective and philosophy and prediction starts with things like Microsoft Office, something that we've all become accustomed to over the last few decades of working at the office. Now that we're all working at home, people had to figure out, well, how do we collaborate more? How do we get all the trains running on time?

So when we looked at companies like Calendly, for example, in Atlanta, that's unbundling how we deal with our Outlook Calendar. How do we all get on the same page where we can't do the water cooler, hey, can you meet at 3 o'clock or get a small team together ad hoc? And then tools like Asana in the public markets, it's that last thing that really help you collaborate and work together with your peers more.

I'm telling you, this wave has been going for about the last five years in the public markets. And we've got another decade plus for everyone to figure out, how do we do more remote-first working more effectively? So when we talk about prediction one, we know for a fact in the hybrid new normal there's going to be a huge number of companies that enter this space and then a number of companies that achieve massive scale.

BRIAN SOZZI: Elliott, you just referenced Microsoft. And in your report, I mean, it was really-- it's awesome work here. You mentioned that Microsoft Azure--

ELLIOTT ROBINSON: Thank you.

BRIAN SOZZI: --Azure could surpass AWS, Amazon AWS, in market share in three years. Why would that happen?

ELLIOTT ROBINSON: Yeah, so I would say that, you know, if you look at the places where AWS really started, so that was more consumer-facing businesses, so B2C or B2B2C. Now, as an ex-Microsoft Ventures and Microsoft employee, I saw very much firsthand how Azure broke into the market with a government focus with a large multinational enterprise focus.

And they've really started to catch up where AWS had about a decade lead. And that was working with the startups at a firm like ours at Bessemer and our venture peers back. And then they become the public company. So Microsoft has increased their credibility in the enterprise, has really done things like working with governments and highly regulated industries like health care to really improve its market share.

And while it still hasn't achieved the scale of AWS, if you look at our report and you track it over the last few years, their growth rate shows that it should surpass it here in the next decade for sure.

JULIE HYMAN: Elliott, there's a bit of news today that has directly to do with some of the issues that we're talking about. And that is Google saying it's going to spend more than $7 billion on real estate across the US. And this isn't just about offices, a lot of it is about data centers and the importance of data as well.

Our editor in chief, Andy Serwer, had the chance to talk to CFO-- Google CFO Ruth Porat as part of his "Influencers" series. And she talked a little bit about the investment.

RUTH PORAT: Then 2021 will be investing over $7 billion in offices and data centers across the US. And we are committed to creating at least 10,000 new full-time jobs for Googlers in the US. And importantly, what we're doing is we're both building on our existing major centers as well as expanding across the US. In fact, this covers investments across 19 states.

JULIE HYMAN: You know, it's such an interesting statement because although it's my understanding that Google actually spent $22 billion on the same sort of thing in 2020, but still, an expansion, a lot of jobs, that seems to indicate that the industry is continuing, if not at the same clip of growth, certainly still a robust clip of growth, and that a lot of it is going to be within the cloud and within the data center areas. Is that how you're reading this announcement as well?

ELLIOTT ROBINSON: Yeah, that's exactly how I'm reading it. I'll say two or three things. One, as more brick and mortar businesses, or traditional businesses, let's say, are doing more e-commerce and taking their platforms online. What that's really creating is a bunch more data and new ways for them to connect to their end consumer or end user.

So that type of investment, whether it comes from Google or another large tech enterprise, it's really taking the long view. Yes, there's been a bit of a pullback year-to-date on cloud stocks and technology stocks more broadly. But a company like Google is taking the long view. What I love most about the announcement when I saw it and read it was it's actually hitting more diverse cities.

It's not just hitting the Bay Area, where I live and work. It's hitting a lot of the cities that I really care about and lived in. So Atlanta, my home state and city of Virginia and the broader DC area. It's hitting places like Atlanta, where I went to school. So outside of just making a really smart business decision, what I love most is that they're focusing on the newer tech hubs.

All of these places that they're putting in these dollars have incredible engineering schools, data science schools, business and finance schools. And it's great to see them opening the aperture in terms of where they're looking to recruit talent and where they're looking to grow their workforce. So all of those places I'm really excited about. And I'm really anticipating to see those new tech hubs benefit from investments like the one that Google announced.

JULIE HYMAN: Yeah, and especially after the last year, people are expanding their horizons of where they want to live. So it definitely makes a lot of sense. Elliott, thank you so much for being here today. Elliott Robinson of Bessemer Venture Partners, hope to catch up with you again soon. Thanks.