Wednesday, June 12, 2013

Why "Enterprise SaaS" may soon be a misnomer

One of the most exciting developments to hit the enterprise software world in decades was the rise of SaaS.  Companies like blazed a trail that built enormous amounts of wealth and improved the lives of end-users.

Prior to SaaS, most enterprise software was sold based on perpetual licenses, to CIOs and IT departments, with little to no input from end-users.  The result was generation after generation of shelfware.

In contrast, SaaS made it easy to adopt new software packages, especially for line-of-business managers, shaking up what had become a rigid market dominated by three players (Microsoft, SAP, and Oracle).

A second wave of SaaS companies rode the freemium business model to even more rapid success, as exemplified by the "Box Brothers," Box and Dropbox.  These cloud storage companies used the consumerization of the enterprise to build 9-figure businesses.

There's only one problem--as Box and Dropbox turn their attention to true enterprise sales, they're going to find their way blocked.

Quietly, "Enterprise SaaS" has been beaten to the punch by "Hybrid Cloud."  These companies provide a web/mobile front end that runs on a back end contained in the customer's data center.

CIOs have jumped on hybrid cloud like a starving man on a pizza.  SaaS promised to make datacenters (and the CIOs who run them) obsolete.  Hybrid Cloud lets them offer the CEO and business heads SaaS-like apps (consumer-y, web/mobile) while still keeping the keys to the kingdom (the datacenter, hardware, and data).

Faced with a choice between paying the Box Brothers $1 million+, or spending most of that on their own datacenter and staff, which do you think the CIO is going to choose?

It ain't pretty, it ain't in the best interests of the business, but it's going to happen.

Tuesday, June 11, 2013

Address objections, don't hide from them

In response to my blog post on Cutting The Bullshit, the good folks at Storygami pointed me to a blog post they had written about their approach to applying for TechStars:

The Storygami team addresses the probable objections head-on, including one objection that is typically a deal-killer:
Two Of Our Founders Are A Couple

So this is one of those things that is a thing but shouldn’t be. We’ve met other tech startups that were founded by couples and we always get asked whether we’re okay with being so ‘open’ about it. Yes, we’re okay with it. In fact, last year I did a TED talk and started out by mentioning how we argue all the time but that this was a good thing – at least for the business side of our equation! Now, granted I would say this, but having been with Heidi for nearly seven years and engaged, to me this is kind of a cool thing and not something I feel the need to repress for any application to anything. I’m sure this sounds strange to any other startup out there but my advice to those in a similar position is to not worry about it, it really isn’t a thing if you don’t let it be.
This is a very real investor rule of thumb.  Ironically, sometimes it even helps the couple.  Clint and Miriam Korver of Ulu Ventures founded a company together; their VC made one of them leaving the company a precondition of investment.  After a lot of soul-searching, Miriam left the company...which then failed.  Fortunately, after leaving the company, Miriam joined a small startup as General Counsel.  The startup turned out to be Google.

This is the kind of objection you can't hide from.  Investors can be lazy, but not so lazy as to miss that two of the founders are engaged to each other!

I think Storygami handles it exactly right--acknowledging the fact, explaining why it's not an issue, and moving on without a lot of drama.  Not every investor will agree, but almost all will appreciate how they handle the issue.

I'll be interested to see (takes off sunglasses) how their story turns out.