SYS-CON MEDIA Authors: Liz McMillan, Elizabeth White, Pat Romanski, Jason Bloomberg, Dana Gardner

Blog Feed Post

The Resurgence of the Enterprise: What’s Old is New Again

A few weeks ago Jim Goetz — a leading VC and partner of Sequoia Capital — said it was “shocking” that more entrepreneurs weren’t targeting the enterprise. Goetz’s point: Since 2002, twice as many enterprise startups had $1 billion IPOs as consumer companies.

While he’s right, I can understand the disconnect. I can count on one hand (and still have fingers left over) the number of venture capitalists investing in the enterprise space in the past 10 years. That’s because the consumer space was sexy and — thanks to innovations like Amazon Web Services — it was cheap. Using AWS, a handful of engineers working with $2 million or less could write apps like Instagram or Meebo, then sell their companies months later for a healthy profit for their investors.

Contrast that with the enterprise market. Startups in this space need an army of highly expert developers to create an enterprise-hardened platform and apps that meet stringent corporate demands. (At GoodData, for example, we have more than 100 engineers focused on delivering the capabilities and experience our enterprise customers expect.) And forget about courting customers with something that’s merely “cool,” like nifty effects from your mobile phone’s camera. In the enterprise space, finding the right product/market fit means knowing what enterprises already have and what they need — and understanding how they work. Until recently, that’s the sort of expertise that VCs have short-changed.

Marc Andreessen defined product/market fit as “being in a good market with a product that can satisfy that market.” Gartner Research recently projected companies worldwide will spend $3.6 trillion on technology, including $109 billion on public cloud services. By 2016, enterprise global cloud spending will reach $209 billion1.

Now comes the hard part in Marc’s formula, which I define as having a product that’s easy to sell, for a problem that needs to be solved, that can scale quickly and for which there’s strong enterprise demand. But in the enterprise space, “easy to sell” is relative. That’s because many of the dynamics that defined selling to the enterprise in 1999 still apply: New technologies and products have to work with what’s already installed. Large purchases have to be justified. And customers are leery of buying from companies that aren’t ready for primetime.

That’s why today’s enterprise-focused companies — start-ups included — still need dedicated sales reps who can demo a product, explain its value proposition, offer competitive positioning and traverse customers’ different purchasing processes. As proof, consider salesforce.com, which reported 4,700 new employees between January 2010 and August 2012, primarily in sales.

For these reasons, it takes about five years and more than $50 million in funding for a startup to succeed in the enterprise. It also requires a level of maturity and experience that venture capitalists haven’t actively sought out since the dot-com bubble burst.

Building a successful startup is never easy. That’s especially true in the enterprise market, given the upfront costs and tough going just to meet enterprise requirements. To paraphrase Seth Godin: “It takes three years to be an overnight success” in the enterprise space. That’s three years, lots of money, and the expertise to know what customers want. That might explain why there are so few startups gearing up for the enterprise.

1: “Gartner Says Worldwide IT Spending On Pace to Surpass $3.6 Trillion in 2012,” press release. July 9, 2012.
2: Transcripts of salesforce.com’s quarterly conference calls with analysts.


Tagged: enterprise, startup, VC

Read the original blog entry...

More Stories By Roman Stanek

Roman Stanek is a technology visionary who has spent the past fifteen years building world-class technology companies. Currently Founder & CEO of Good Data, which provides collaborative analytics on demand, he previously co-founded first NetBeans, now a part of Sun Microsystems and one of the leading Java IDEs, and then and Systinet, now owned by Hewlett-Packard and the leading SOA Governance platform on the market.

Latest Stories
Eric Taylor, a former hacker, reveals what he's learned about cybersecurity. Taylor's life as a hacker began when he was just 12 years old and playing video games at home. Russian hackers are notorious for their hacking skills, but one American says he hacked a Russian cyber gang at just 15 years old. The government eventually caught up with Taylor and he pleaded guilty to posting the personal information on the internet, among other charges. Eric Taylor, who went by the nickname Cosmo...
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
SUSE is a German-based, multinational, open-source software company that develops and sells Linux products to business customers. Founded in 1992, it was the first company to market Linux for the enterprise. Founded in 1992, SUSE is the world’s first provider of an Enterprise Linux distribution. Today, thousands of businesses worldwide rely on SUSE for their mission-critical computing and IT management needs.
Mid-sized companies will be pleased with StorageCraft's low cost for this solution compared to others in the market. There are no startup fees, our solution has a predictable monthly cost, highly competitive pricing and offers ongoing value for our partners month after month. By enabling pooling and StorageCraft's 30-days of free virtualization the company removes several concerns surrounding machine size management and disaster recovery testing costs that add to the complexity of implementing a...
Cryptomage, Inc. is a dynamic hi-tech ICT company offering products and services in the cybersecurity area. We deliver high quality solutions both technologically and conceptually. We have academic roots and hire scientists, cybersecurity experts, software developers and analysts. Our strategy is focused on maintaining the highest skills of our human resources. The Cryptomage team is capable of more than delivering complex solutions; we can improve the whole concept to deliver real added value t...
There's no doubt that blockchain technology is a powerful tool for the enterprise, but bringing it mainstream has not been without challenges. As VP of Technology at 8base, Andrei is working to make developing a blockchain application accessible to anyone. With better tools, entrepreneurs and developers can work together to quickly and effectively launch applications that integrate smart contracts and blockchain technology. This will ultimately accelerate blockchain adoption on a global scale.
In addition to 22 Keynotes and General Sessions, attend all FinTechEXPO Blockchain "education sessions" plus 40 in two tracks: (1) Enterprise Cloud (2) Digital Transformation. PRICE EXPIRES AUGUST 31, 2018. Ticket prices: ($295-Aug 31) ($395-Oct 31) ($495-Nov 12) ($995-Walk-in) Does NOT include lunch.
Early Bird Registration Discount Expires on August 31, 2018 Conference Registration Link ▸ HERE. Pick from all 200 sessions in all 10 tracks, plus 22 Keynotes & General Sessions! Lunch is served two days. EXPIRES AUGUST 31, 2018. Ticket prices: ($1,295-Aug 31) ($1,495-Oct 31) ($1,995-Nov 12) ($2,500-Walk-in)
DevOpsSUMMIT at CloudEXPO will expand the DevOps community, enable a wide sharing of knowledge, and educate delegates and technology providers alike. Recent research has shown that DevOps dramatically reduces development time, the amount of enterprise IT professionals put out fires, and support time generally. Time spent on infrastructure development is significantly increased, and DevOps practitioners report more software releases and higher quality. Sponsors of DevOpsSUMMIT at CloudEXPO will b...
Yottabyte is a software-defined data center (SDDC) company headquartered in Bloomfield Township, Oakland County, Michigan. The mission of Yottabyte is to enable any organization to easily and economically realize the benefits of the cloud in their own datacenter. The Yottabyte Cloud Software natively virtualizes compute, storage, and network resources into a resilient, automated software-defined cloud infrastructure solution. Both Enterprise IT customers and Service Providers benefit from Yottab...
FinTech Is Now Part of the CloudEXPO New York Program. Financial enterprises in New York City, London, Singapore, and other world financial capitals are embracing a new generation of smart, automated FinTech that eliminates many cumbersome, slow, and expensive intermediate processes from their businesses. Accordingly, attendees at the upcoming 22nd CloudEXPO | DXWorldEXPO November 12-13, 2018 in New York City will find fresh new content in two new tracks called: FinTechEXPO New York Blockchain E...
Only Adobe gives everyone - from emerging artists to global brands - everything they need to design and deliver exceptional digital experiences. Adobe Systems Incorporated develops, markets, and supports computer software products and technologies. The Company's products allow users to express and use information across all print and electronic media. The Company's Digital Media segment provides tools and solutions that enable individuals, small and medium businesses and enterprises to cre...
In addition to 22 Keynotes and General Sessions, pick from 40 technical sessions in two tracks: (1) DevOpsSUMMIT (2) Cloud-Native & Serverless. EXPIRES AUGUST 31, 2018. Ticket prices: ($295-Aug 31) ($395-Oct 31) ($495-Nov 12) ($595-Walk-in) Does NOT include lunch. DevOps Institue Certification DevOps Institute Two-Day DevOps Certification Program EXPIRES AUGUST 31, 2018. Ticket prices: ($995-Aug 31) ($1,095-Oct 31) ($1,195-Nov 12) ($1,395-Walk-in)
Despite being the market leader, we recognized the need to transform and reinvent our business at Dynatrace, before someone else disrupted the market. Over the course of three years, we changed everything - our technology, our culture and our brand image. In this session we'll discuss how we navigated through our own innovator's dilemma, and share takeaways from our experience that you can apply to your own organization.
Today we introduced our New York & Silicon Valley combo sponsorship and exhibit opportunities with unmatched pre and post-show promotion. At CloudEXPO | DevOpsSUMMIT | DXWorldEXPO NY & CA, Digital Transformation (DX) is a major focus with the introduction of DXWorldEXPO within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune...