By 2015, Manny Medina had reached a point where he felt the only way he could save his failing business was to sell all his office equipment. His company, Outreach, was struggling to find buyers for its recruitment software and after just one year of operation, it didn’t have enough cash left to cover legal fees. 

Out of desperation, Medina and his small team began tagging things on eBay, calculating how much they could get for their computers. They quickly realised the answer was “not much”.

“It was one of those moments where everybody is shaken and freaking out and not thinking rationally,” Medina, who co-founded Outreach and remains the CEO, tells Cloud Pro. “Nobody wants to do it, but we’re all thinking ‘what? We fold and then go get jobs at Microsoft?’ No one wants to do that. That’s when we sat down and talked through giving it another shot.”

What happened next is the startup version of the phoenix from the flames – or unicorn from the flames, if you will – as Outreach moved to a new business model and, five years later, is worth over a billion dollars.

The pivot

Originally Outreach was an online recruitment business using used technology to search the marketplace for IT and digital talent. While the tech side of it worked, according to Medina, both the sales and the marketing teams struggled to get the company going and within a year it was almost out of money.

“We were about two months away from being out of cash,” Medina explains. “The co-founders turned to each other and were like, ‘we shouldn’t be using tech to solve the marketing problem, we should be using tech to just drive more demand’. 

“I have a background in sales, so I voted for using direct sales as a way to generate traffic. We decided if we drove 10 times more meetings per representative we could dig ourselves out of the problem.”

The company didn’t have the resources to throw more people at the problem, however, and its three employees needed to sell as much as a team of twenty to bring in enough cash. To help, Medina and his team built an AI engine that could send out emails with personalised messages and then follow up on any response it got. Before long, they realised the automated call system was generating ten times more potential job interviews and pulling in a reply rate of almost 50% on cold emails. 

“That was pretty unheard of at the time,” Median explains. “The problem with that is we didn’t have the capacity to follow up on all those meetings and actually close business. So I started talking to agency recruiters, telling them, ‘look, I can sell you meetings instead of candidates’.”

The agencies Medina reached out to were sceptical at first, questioning why he would do that, but also curious as to how he was able to generate so many? When he explained the AI engine and how it worked, no one was interested in paying for the meetings – they wanted the software. 

Venture capitalists  

The initial business model struggled to attract investment. Although Medina managed to source enough to get going, there was a lot of rejection from potential backers. Rajeev Batra, a venture capitalist from Mayfield, was one of those who weren’t keen on the idea and suggested it wouldn’t work based on his experience of the market – but he was left impressed by Medina. 

Batra was even more impressed after Outreach pivoted, but by then, the company had grown profitable so quickly that Medina considered not raising capital at all. Batra was persistent, sensing that the team was onto something with lots of potential and eventually wore Medina down in August 2015. 

“I convinced Manny to accelerate the product roadmap and GTM of the company by capitalising it properly and partnering with us to go for it,” Batra tells IT Pro. “I felt they could build a platform company. We made a compelling offer to him and the company with the promise that we would do everything we can to help them succeed.”

For Batra, partnering with Outreach was one of the best, and luckiest, decisions he ever made. For Medina, getting rebuffed for the initial idea turned out to be a financial blessing in disguise. 

“It could very well have been that if we were successful as the original company, we could have been like [hiring marketplace] Vettery, which was sold to [HR consultancy and hiring firm] Adecco for $100 million,” Medina suggests. “We’re now worth $1.1 billion (£883.6 million). Even if we had a good outcome, it would have been ten times lower than what it is right now. Life is perverse that way and now Rajeev thinks we should thank him for not previously investing.”

Office workers will be urged to continue working from home as part of the UK government’s roadmap to easing lockdown restrictions, according to reports. 

The proposal is among a list of guidelines drawn up by the Department for Business, Energy & Industrial Strategy (BEIS) following consultations with bosses, unions and trade bodies. 

The documents are thought to be a crucial element of an announcement from Boris Johnson on how the government plans to ease the lockdown in order to get the UK’s economy moving, which he is expected to make on Thursday, according to The Financial Times. 

UK deaths due to the coronavirus increased by 315 over the weekend to 28,446, but the government said last week that the country had “passed the peak”. 

With the public and businesses now asking when they can return to work, the government is concerned about transport systems being overwhelmed, so those that can work from home will be encouraged to continue to do so after the lockdown is lifted. Businesses will also be asked to monitor the mental and physical health of these employees. 

The daily routines of those that return to the office will change significantly, according to the guidelines. Businesses with five or more employees will have to undertake “risk assessments” before allowing anyone to return and will be asked to submit a document explaining how they’ll maintain safe working conditions.

As part of these measures, businesses will reportedly be asked to reduce hot-desking and use “staggered” shift times to minimise the likelihood of infection spreading, while employees will be told to avoid sharing stationary and to steer clear of face-to-face meetings.

The two-metre distancing protocol will be enforced by floor tape, according to the guidelines, and staff canteens will remain closed.

There was very little in the documents about the use of PPE, but the guidelines insist on high levels of deep cleaning and sanitary practices within all work environments.

​Welcome to the fourth issue of IT Pro 20/20, our brand-new digital magazine that brings all of the previous month’s most important tech issues into clear view.

Each month, we will shine a spotlight on the content that we feel every IT professional should be aware of, only in a condensed version that can be read on the go, at a time that suits you.

This month we’re taking a look at how technology is reshaping our lives, for better and for worse. While it’s something of a cliche to say, we really are at the mercy of technology. The coronavirus has pushed the majority of businesses to extreme limits, and without technology to keep us connected and productive, many would surely have collapsed by now. It’s this idea of technology continuing to reshape how we interact with the world around us that is at the core of this month’s theme.

Our lead feature takes a look at what Microsoft is doing to help repair the damage caused by the launch of Tay, a chatbot so ill-suited to its purpose that it would serve as a warning for anyone developing AI for public consumption. We also highlight how technology has influenced management styles in recent years, and how overbearing cyber security training has the potential to turn employees against a business.

As ever, you’ll also find a roundup of the four biggest stories of the month that are likely to reverberate throughout 2020.

The next IT Pro 20/20 will be available on Friday 29 May. Previous issues can be found here.

We hope you enjoy reading this month’s issue. If you would like to receive each issue in your inbox as they release, you can subscribe to our mailing list here.

​Amazon Web Services surpassed $10 billion for 2020 first-quarter revenues, putting the tech giant on a run rate of more than $40 billion.

The overall net income of Amazon was down by $1 billion compared to last year, according to its earnings report, but the company’s cloud computing arm contributed 13.5% to the overall revenues. 

Analysts surveyed by FactSet had expected the cloud giant to hit $10.33 billion for the first quarter of 2020, according to CNBC, but it fell just short of that at $10.22 billion.

According to analysts at Goldman Sachs, the sudden global switch to remote business operations has helped the company avoid big financial hits due to the coronavirus.

“Our partner checks continue to reflect the relative strength in the AWS platform, as incremental demand from customers to accelerate their migration into the cloud, provide full virtual-desktop coverage (AWS WorkSpaces), and other work from home and business continuity needs, seem to have more than offset the disruption from longer sales cycles and delays in planned migrations as IT priorities have shifted in the current environment,” the analysts wrote, according to CNBC.

Since it’s inception in 2006, AWS has become a powerful business of its own, with a growth rate of 33%, and despite slowing gradually, it’s still way out in front in the cloud market.

Its closest challenger is Microsoft, which has shown quicker growth over the last year or so. On Thursday the company reported 59% growth for Azure, beating Wall Street estimates with services like Teams and Xbox seeing surges in users. 

Despite this, AWS is still ahead, largely due to it being the first big player in the market. Its first-quarter revenues for the last six years highlights how quickly it has grown, according to a tweet from Bloomberg’s Jon Ehrlichman, with just $1.1 billion recorded in 2014.​

Salesforce has cancelled all physical events for the rest of the year, including November’s Dreamforce conference, due to the coronavirus pandemic.

Instead, the company will “reimagine” all conferences as virtual events. 

The spread of COVID-19 has seen nearly all major events of 2020 either cancelled or pushed to 2021, while most technology firms, such as Google, Facebook and Microsoft, have opted to turn their conferences into virtual experiences.

In March, Salesforce turned its World Tour Sydney into a virtual event, transforming what would have been a physical event for 11,000 people into an online conference viewed by 80,000, according to the company.

Dreamforce, which was scheduled for November, is a key event for the company, attracting 171,000 people last year and reportedly creating more than $240 million in revenue for the San Francisco Bay Area. The event is one of the largest in the tech calendar, usually attracting significant media attention and famous speakers, such as former US president Barack Obama in 2019.

“As the COVID-19 situation continues to evolve, our first priority is to help ensure the health and safety of our customers, partners, employees and communities,” the company said on its website.

“With this in mind, we have decided to reimagine our events through the end of the year in new and virtual ways. This will be true for all events, including Dreamforce, Tableau Conference 2020, Tableau Conference Europe, TrailheaDX India and our World Tours.”

The company said it will reimburse partners that had sponsored the event and people that had purchased tickets, though it won’t refund flights or hotel accommodation.

“We will record as much content as possible for on-demand viewing,” the company added. “Some content and experiences may only be available during the live virtual events so we encourage our community to join us live for maximum engagement.”

​Cloud data services provider NetApp has announced the acquisition of CloudJumper, a leading player in the remote desktop services (RDS) and virtual desktop infrastructure (VDI) markets.

The acquisition is said to have resulted in a new NetApp Virtual Desktop Service (VDS) which aims to resolve the most demanding issues faced in virtual desktop services and application management.

It is also said to provide customers with a total solution on the public cloud of their choice in order to deploy, manage, and monitor applications, as well as optimisation, the company explained.

Anthony Lye, senior vice president and general manager of NetApp’s Cloud Data Services business unit, said that providing “a consistent virtual desktop experience at scale while keeping data available and secure without sacrificing performance has always been important and is especially critical in today’s unprecedented environment”.

“NetApp and CloudJumper provide a simplified management platform for delivering virtual desktop infrastructure, storage and data management across Microsoft Azure, AWS and Google Cloud with best in class virtual desktop management combined with best in class storage and data services,” he added.

NetApp is said to contribute to the existing CloudJumper channel partner program by providing resources to strengthen the capabilities of MSP, VAR, SI, and ISV partners in order to resolve customer issues and expand their businesses.

NetApp VDS will also provide CloudJumper’s customers with flexible and adaptable data storage, according to NetApp, which includes features such as global file caching and backup, which will assist businesses in moving their operations to the cloud

NetApp VDS is available immediately on the NetApp Cloud Central site. It will also be integrated with Azure NetApp Files and Cloud Volumes in the near future.

Cloud services have, to an extent, escaped the economic consequences of the coronavirus pandemic and subsequent lockdown. Google Cloud has experienced a 52% year-on-year surge in revenue for the first quarter of 2020, while Microsoft beat Wall Street expectations on Wednesday following increased demand in its cloud-based services such as Teams and Xbox.​

Microsoft beat Wall Street expectations on Wednesday following increased demand in its cloud-based services during the coronavirus pandemic, as more and more people are tapping into Teams and Xbox gaming while in lockdown.

Teams, in particular, saw another massive spike in daily active users, jumping up to 75 million, according to CEO Satya Nadella, which is almost double what the company reported a month ago. 

For its fiscal fourth quarter, the tech giant gave business forecasts that were below analyst estimates, suggesting hardware sales and services like LinkedIn would struggle.

But strong sales of its Windows operating services and also Surface hardware helped buoy the company, with shares rising 5% for the quarter. This was matched by “all-time-high” engagement on Xbox live, which Microsoft said had 19 million active users.

Since the pandemic took hold, demand for Microsoft’s cloud-services had put a strain on its data centres, forcing the tech giant to limit usage for new customers. The company has prioritised healthcare organisations and governments instead.

While the active Teams users were up, Microsoft’s CFO Amy Hood said some of the increased usage came from subscribers with access to the software as part of Office 365 that had simply turned it on for the first time. She also added that a large number came from the service being rolled out for free during the pandemic.

“In those instances, you also won’t see revenue, but seeing great usage obviously is terrific for us longer term if people want to convert that to a paying seat,” Hood said to Reuters.

“While I’m really excited about the long-term potential for revenue, you won’t see it in this (fiscal third) quarter, or really even in Q4. It’s more about people being more and more engaged with Microsoft products.”

Despite the increased demand for cloud service, Azure growth actually dropped from 62% to 58% compared to the same period last year, which company officials said was a result of how large the business had become.

Google Cloud has defied the current economic turbulence to experience a 52% year-on-year surge in revenue for the first quarter of 2020, despite its parent company Alphabet beginning to feel the effects.

The company’s cloud business generated $2.78 billion in revenue during the first quarter of 2020, representing a 52% year-on-year surge. This is in line with its financial results from the previous quarter, with $2.6 billion in revenue representing year-on-year growth of 53%, according to Business Insider.

This continued surge is in spite of Alphabet’s executives bemoaning a “sudden and significant” slowdown in revenue in March due to the effects of COVID-19.

Although Google’s total ad revenues rose to $33.76 billion during the quarter, representing 13% year-on-year growth, this increase in revenue began to rapidly decelerate towards the end of the quarter.

“Q1 was in many ways the tale of two quarters. For our advertising business, the first two months of the quarter were strong,” Google and Alphabet CEO Sundar Pichai said in an earnings call with analysts.

“In March, we experienced a significant and sudden slowdown in ad revenues. The timing of the slowdown correlated to the locations and sectors impacted by the virus and related shutdown orders. 

“As the impact of COVID-19 came into view, we delayed some ad launches and prioritized supporting our customers as many adjusted their strategies.”

While the firm’s quarterly financial results are slightly tarnished with a deceleration in ad revenue, the continued growth of its cloud business, led by Google Cloud CEO Thomas Kurian, offers signs of encouragement. 

That Google Cloud has been somewhat immune from the dire economic consequences ongoing pandemic may not come as much of a surprise, given cloud providers have generally sustained heightened demand.

The number of G Suite users, for example, has risen sharply over the last few weeks. With millions of people now working from home fuelling a 25-times surge in usage for industry-focused video conferencing platform Google Meets.

This is an effect felt by major cloud players across the industry, with SAP, for example, reported an increase in revenue last week of 7% for the first quarter of 2020. Services like Microsoft Teams, meanwhile, have also experienced a massive rise in the usage of collaboration software.

Microsoft has expanded Azure Arc‘s Linux and Kubernetes capabilities to allow Red Hat customers to manage OpenShift clusters and data services on Azure.

The announcement came during the virtual Red Hat Summit where the open source giant unveiled a raft of new features for OpenShift and Kubernetes to help organisations develop and manage virtual machines, containers and serverless workloads.

Microsoft’s announcements will enable Azure Arc customers to centrally manage, secure and control Red Hat Enterprise Linux (RHEL) servers and OpenShift clusters from Azure at scale. It will also allow customers to apply their own policies and manage compliance for servers and multiple clusters.

Applications built in GitHub repositories can also be automatically deployed via Azure Policy and Azure Arc to any linked OpenShift cluster with policies that can be used to keep them up to date.

Red Hat’s own announcements start with OpenShift virtualisation, which is available now as a technology preview within OpenShift.

This has been developed via the KubeVirt open source project and enables organisations to deploy and manage applications consisting of virtual machines alongside containers and serverless. This can be done all in one unified cloud-native platform, according to Red Hat.

This update comes with Red Hat OpenShift 4.4, the latest version of Red Hat’s enterprise Kubernetes platform. Based on Kubernetes 1.17, OpenShift 4.4 is intended to offer a developer’s view of platform metrics and monitoring for application workloads. This includes monitoring integration for Red Hat Operators and costs management for specific applications across a hybrid cloud environment.

The company has also addressed management challenges for running cloud-native applications across large-scale, production and distributed Kubernetes clusters with Red Hat Advanced Cluster Management for Kubernetes. This will also be available as a technology preview and will provide a single, simplified control point for the monitoring and deployment of OpenShift clusters at scale.

“While some vendors seek to protect legacy technology stacks by dragging Kubernetes and cloud-native functionality backwards to preserve proprietary virtualisation, Red Hat does the opposite,” the company said. “Bringing traditional application stacks forward into a layer of open innovation, enabling customers to truly transform at their speed, not at the whims of proprietary lock-in.”

The updates come just days after parent company IBM posted its first-quarter figures with revealed that Red Hat had seen 18% growth revenue in the first three months of 2020. As a key driver of IBM’s hybrid cloud strategy, Red Hat has helped IBM’s cloud revenues to consistently rise.

Zoom has chosen public cloud giant Oracle to manage the enormous surge in users that its video conferencing platform has sustained a result of the global coronavirus pandemic.

Oracle Cloud Infrastructure will be adopted to support Zoom’s rapid growth and evolving business needs as it continues to develop its services. To illustrate the platform’s exorbitant growth, the firm added 100 million new users within a three-week period and also claims to boast 300 million daily meeting participants.

Zoom realised it needed additional cloud capacity immediately, so the service provider’s second-generation infrastructure was chosen to help the firm scale its capabilities so it could continue to deliver an undisrupted service to users and customers. 

“We recently experienced the most significant growth our business has ever seen, requiring massive increases in our service capacity. We explored multiple platforms, and Oracle Cloud Infrastructure was instrumental in helping us quickly scale our capacity and meet the needs of our new users,” said Zoom’s CEO Eric Yuan. 

“We chose Oracle Cloud Infrastructure because of its industry-leading security, outstanding performance, and unmatched level of support.”

Oracle claims it’s well placed to support Zoom’s rapid expansion thanks to its network architecture, capacity and the locations of its data centres. For reference, Zoom is currently transferring more than 7,000TB through Oracle’s systems each day, with this figure is only expected to grow.

Despite Zoom’s rapid growth and overnight success, the platform has been tarnished with a heft backlash around a collection of security and privacy shortcomings, varying in severity. The phenomenon of ‘Zoom-bombing’, for example, was deemed severe enough for the FBI to officially warn consumers and businesses against the potential for their meetings to be infiltrated by unauthorised third-parties.

Moreover, claims in Zoom promotional material that the platform guaranteed encryption was debunked following an investigation by journalists and analysts. The company last week released a major update adding 256-bit encryption to address these concerns, as part of a 90-day plan to rectify the overarching security concerns.

For Oracle, meanwhile, the deal represents a chance to eat into the massive market share enjoyed by its major cloud rivals Amazon Web Services (AWS) and Microsoft Azure.