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Alan Wilensky

I would respond that the current attitude towards well surveyed and researched B2B verticals is 'VC Hostile".

I have been campaigning for the seed fund to start independent mobile dispatch service for the automotive trades, based upon a new, arbitrage model of job order management.

I have been shut out. There is such a fever for the ephemeral social media and video sharing models that are all duplicates of one another, that there is no room for modest, trade-like ventures.

http://www.squidoo.com/ThruDispatch

phil jones

I guess one issue though is that there are serious barriers to entry to the Enterprisey market. It's easy for a bunch of 20 somethings straight out of college to imagine how to set up a "cool" consumer web-service, hawk it around VCs and TechCrunch etc.

But how the hell would they, with no contacts, little budget and no understanding of the complexities of selling into big enterprises, get their first customer?

phil jones

Sorry, let me repeat with the crucial missing word :

"But how the hell would they, with no contacts, little budget and no understanding of the complexities of selling into big enterprises, get their first *enterprise* customer?

sig

But Phil, enterprise includes small firms also, and they could sometimes be easier to work with than fickle consumers.

I am sure you have an uncle, a cousin, and old school mate somewhere in some small company - so getting foot in is possible, then if you have a good product you might be given the chance and so forth.

Another thing regarding the big companies is that not all enterprise software is waterfall and company-wide thus allowing for smaller implementations without bothering the C-level decision makers.

And yes, with server space cheap and flexible, most any developer could set up a web service - then if any good get a trickle or better of users using blogs, twitter, whatever to spread the word.

Thing is, that the users are not the "customer" in that case, "customer" as the one paying your bills - that would be doubleclick or Google or sponsorships... and that's when the fun starts. Sure there are easy to enter schemes, with rather low margins so at the end of the day if you look for reasonable margins and long term sustainable business you'll end up in the "sell to enterprise" world anyway.

Pretty complex picture for both - but I would not take it for granted that one is more difficult to enter than the other.

phil jones

Sig,

not trying to say that startups *ought* to go consumer ... but I'm betting that barriers of entry to selling to enterprises is a big part of why there are few in the enterprise space.

"not all enterprise software is waterfall and company-wide thus allowing for smaller implementations without bothering the C-level decision makers."

Well, in practice a hell of a lot of it is. Big companies, by definition, like consistency and internal standards. Hence they often have an immune system to reject small pieces of "different" software even for "personal" stuff.

Agree, it would be nice if they didn't ... but from what I've seen ... they still do.

sig

Phil,

agree that "waterfall" method will make sell-in and implementation hard, definitely.

Probably me who's skewed there as that's what I think new entries must try hard to avoid! That and any whiff of "investment budget" - if you can do an "extreme programming" type of implementation at coffee budget prices in the beginning until your stuff becomes a part of the machinery - well then I think it would be as easy. (Funny thing actually that many a big ticket system is coffee budget level if split per user or employee, but all in one go is more like a shipload of coffee...)

Non-waterfall, low initial cost would be kind of enterprise go-to-market cousin of the web based stuff we see in the consumer space. It's not that long since the consumer space was very much the same - CTOs, budgets, looong decision making process - distribution channels, packaging, ad spending, whatnot. Guess book publishing (consumer that) today is pretty much parallel to selling big systems to enterprises :)

Anshu Sharma

Sig: This is an excellent post. I went through a similar thought process when switching jobs recently - stay in boring old enterprise (with limited luck at impressing ladies) or join one of the hot new consumer startups or mega-startups (the search company). Over the last few years, I have seen some of the brightest talent I knew move to the consumer firms. For me, it did not hold much appeal as my background does not make an expert at consumer stuff (yes, stuff is the technical word) - and the chances of me making a significant and meaningful impact seemed lower than in enterprise.

Long winded way of saying - I agree with you that risk reward ratios (when you take both the magnitude of reward and the chances of success into account) are more interesting in enterprise.

sig

Thanks Anshu,

is it not amazing to see how folks are lured into the small and crowded segment when a bigger by a factor and almost not crowded segment lies bare?

Nah, not so, having experience from the Sports, Fashion and Yacht business - cool stuff that gives instant status in the bar gives instant influx of players and investors that gladly looses their money while killing off any notion of margins...

Here's me raising a glass in the bar to a boring Enterprise segment!

Clive Birnie

As someone who runs a dull old FMCG manufacturer in Somerset UK and also dabbles in enterprise software specifically designed for the small enterprise I can't fault your thinking here Sig.

VCs are Herds. Its the same reason some of my customers buy in China at a higher price than I charge. Looks good at the Club. Its a brave kid who points our the nakedness of the Emperor.

90% of the businesses in our area are small and fall under the UK Govt. classification of a small entrprise. We employ 40 - that puts us in the top 10% and WE fall under the SME definition.

But I guarantee that penetration of big brand "Pig" ERP software in these enterprises (and my own) is so close to zero that its hard to measure.

Most of these are boring businesses. Dull workaday enterprises with a small workforce. But you know what, that is just the type of opportunity I like. Untapped demand. Unsolved problems.

I join you in raising a glass.

sig

Clive, and here's a glass raised back - cheers! (or skaal as in my old country) :)

Online Gambling

I've always concentrated on entertainment related industries, because people absolutely love entertainment and it seems to always attract new investors. It has to be something exciting for me to invest, otherwise I lose interest.

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