The year was 2001, and the landscape was littered with internet companies gone bust. The list included such once-promising names as Pets.com, Webvan and eToys.com.
That's when a worried Marc Benioff, CEO of a two-year-old startup called Salesforce.com, sought the advice of Michael Dell, founder of the game-changing personal computer company bearing his name.
The way Dell tells it today, "I knew then, as I know now, that economic shakeouts need not bode misfortune for technology companies. Not, at least, the innovative ones. Technology does not recognize economic recessions or depressions; it always continues."
To say that Dell had a good point is an understatement. Truly innovative companies aren't subject to the same forces that shape many of their contemporaries whose businesses are based on older, more established trends.
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That's just one of the game-changing insights in Marc Benioff's book, Behind the Cloud: The Untold Story of How Salesforce.com Went from Idea to Billion-Dollar Company and Revolutionized an Industry.
Published in 2009, the book still allows us to benefit from the experiences of an industry champion. In this case, we can learn from the unique experience of the brains behind one of the first pure-play cloud companies, and his quest to solve industry inefficiencies. I highly recommend the book to those of you who are interested in learning about how groundbreaking ideas come to rule the world.
Today, cloud-based Salesforce.com (NYSE: CRM), which went public in 2004, is a $60.1 billion company with shares are trading at all-time highs.
(Michael Dell took his company private in 2013 in a $25 billion deal that was the largest corporate privatization in history.)
The Cloud Business Is Big Business...
Meanwhile, spending on public cloud services and infrastructure will reach $122.5 billion this year, up 24.4% from 2016, according to International Data Corporation (IDC). Over a five-year period ending in 2020, cloud spending will experience 21.5% annual growth rate, nearly seven times the rate of IT spending, IDC says.
Indeed, the cloud is truly a game-changing trend if there ever was one. That's why it's been an intense area of focus for us in my premium newsletter, Game-Changing Stocks.
In our quest to find outsized gains, we've come across three cloud companies, all of which are in the green.
2U's (Nasdaq: TWOU) business uses a SaaS (software as a service) version of the cloud: in addition to the student-facing Online Campus, 2U's cloud-based platform provides the entire operating infrastructure used to attract, enroll, educate, support and graduate students. Its global reach is another plus. I'm sitting on a 28.2% gain in TWOU after adding the company to my portfolio last August.
GrubHub (NYSE: GRUB), whose shares soared more than 20% today on a blockbuster earnings report, uses the public cloud to store its web and mobile properties. I added GRUB to the portfolio last November.
Twilio (NYSE: TWLO) is a cloud communication platform. Its goal is to build apps that communicate with everyone in the world. I added the company to the portfolio earlier this month, and shares are already up 8.1%.
These are just three examples of the kinds of big-potential investments you can find in the cloud space. I'm happy to share them with you today -- after all, my Game-Changing Stocks subscribers and I have already made money from them (though I expect more gains to come).
But my most recent pick, which I can't share with you today out of fairness to my subscribers, offers a service that would ordinarily require significant computational hardware resources that are difficult and expensive to maintain. Its solution: the cloud, which allows clients to access its complete suite of tools anywhere, at any time, through a simple web browser.