Bessemer Venture Partners knows the cloud.
The Silicon Valley venture capital firm meets with over a thousand cloud companies each year and keeps close tabs on its dozens of investments in the cloud market. Just to round things out, Bessemer also researches 78 cloud companies that have already gone public, keeping tabs on their performance so as to better advise their still-private investments.
All of this data comes together in the firm’s annual State of the Cloud report, which Bessemer published Thursday.
In the report, Bessemer investors Byron Deeter, Kristina Shen and Anna Khan share what they see in the year ahead for companies on the cloud.
Here’s what they expect to see in 2018.
APIs will continue to reign supreme
Bessemer predicts that APIs, which let programmers easily integrate their software and services with each other, will continue to drive innovation across tech.
Companies like Shippo offer an API to help e-commerce companies ship their products. The enterprise storage company Box is built around APIs to help software developers easily build cloud storage into their applications. In short, APIs make it easier than ever for engineers to build on top of existing technology in order to create new tools.
Apps are payment companies now, too
Anyone who does yoga knows how convenient it is to sign up for a class and pay using the MindBody app. What you may not realise is that MindBody does the payments processing itself, on behalf of the yoga studio.
Bessemer predicts that more and more software companies will begin offering payment processing to businesses. In the same way that a yoga studio doesn’t need to worry about taking credit cards if MindBody does it for them, more apps are going to centralize that function for all kinds of businesses.
Other notable companies with so-called payments as a service include Shopify and Service Titan.
Blockchain will take over in enterprise
Blockchain, the digital ledger technology at the heart of cryptocurrencies like bitcoin, will make a big splash in the enterprise in 2018.
Bessemer predicts that blockchains will be used primarily in the food, retail, and aviation sectors, where large enterprise companies like IBM and Oracle are already testing out new tools with clients.
In food, blockchains can be used to track produce from the farm to the store. This system makes it easier to track which produce is at what location – helpful in the event of a food-borne illness outbreak.
In aviation, Bessemer said, blockchains will make it easier to track parts for aeroplanes, which will ensure that companies are really getting the expensive, high-quality mechanical components they ordered, rather than counterfeit parts.
Company culture will impact the bottom line
In 2018, it won’t be enough just to have a great product idea. In a post-#MeToo world, Bessemer predicts that a company’s financial value will be more closely tied to cultural values.
This means that venture capitalists will have financial incentive to work more closely with founders to make sure they are creating diverse, equal, and professional work environments.
Voice is the new screen
While tablets and smart phones have completely ruled since the iPhone was first released in 2007, Bessemer predicts that voice controls will soon take over.
With advancements in artificial intelligence, and the popularity of voice assistants such as Amazon Alexa and Google Assistant, 2018 will see more software that relies on audio cues rather than visual cues, so that human/computer interactions become more of a hands-free experience.
Serverless computing will completely change computing
Serverless computing is a developer trend sweeping Silicon Valley. The basic idea: servers in the cloud that are only brought into existence at the very moment a piece of software needs them, and that then disappear after the fact.
If, for example, a translator app is built using serverless technologies, the servers to do the translation might not even exist until you hit the ok button, and they disappear again after the process is finished and the result is displayed on your phone.
It can result in huge cost savings – it means you don’t have to have servers sitting there, idly standing by and costing you money until they’re needed, and then going right back to idleness afterwards.
Data will be actionable, not just stagnant
In 2018, Bessemer predicts that software will move away from merely storing and repeating information, and into providing customers with reccomendations and constructive critiques.
Bessemer calls this a move from a “system of record to a system of results.” This means that digital tools will move beyond just aiding users, and into actually improving their work.
Successful companies won’t be limited to Silicon Valley
While Silicon Valley is still the global startup capital, other cities and countries around the world are starting to take a piece of the pie.
In 2018, Bessemer predicts that there will be more exciting products and innovative cloud companies coming from outside of California. This means it’s up to investors in the space to keep an open ear and an open mind as to who’s pitching the next great idea.