The gap between enterprise and the entrepreneur
Last week Business Insider published a summarized interview with VC Jim Goetz. At the heart of the interview – fairly obvious given the title of the article – was the fact that a shockingly small percentage of startups are focusing on the $500 billion enterprise market.
At Sequoia, upwards of a hundred entrepreneurs a week present and if we’re lucky, maybe a dozen of them are focusing on the enterprise…
– Jim Goetz at Disrupt
I don’t know anything about the makeup or background of the startups presenting to Sequoia, but I can offer up my two cents on why more startups aren’t focusing on the enterprise. They aren’t living the day-to-day problems of the enterprise and therefore cannot identify the business opportunities.
Here’s what I mean by that. I started my professional career in the project management side of commercial construction. Living and breathing project management in that industry for several years gave me great insights into inefficiencies that could be turned into real business opportunities; areas for improvement that I could not have possibly identified without being fully emerged. These weren’t broad-stroking problem domains like CRM, but instead very targeted, industry specific problems that teams experienced every day.
I left the industry in 2007 to develop a product that I believed would solve a specific problem: document management in the field. It was a software solution, I didn’t know how to build software, it died on the vine. It was, however, a viable solution and has been implemented in the industry by other companies, companies that could build software.
Understanding that it would behove me to know how to build software if I were to continue to try and start software companies, I spent the next four years in software product management and development. Over those four years something interesting happened. I was no longer able to identify the business (enterprise) opportunities that were so easily identifiable in the past. Why was this? Well, my problem domain had shifted to managing and developing software. Business opportunities were now solutions to software problems. While this enterprise is lucrative in its own respect, it’s highly competitive and having all software companies solving software development problems wouldn’t get us very far. We all know this which is why we, as entrepreneurs, continually try to solve problems outside of the software problem domain.
Based on my experience, not speaking for everyone, identifying enterprise problems to solve without living that business is really hard. So, I think we then tend to focus our problem solving efforts on the consumer market, the other problem domain we are familiar with and live on a daily basis. This isn’t necessarily a good thing. As a matter of fact, I think it has lead to an influx of apps that are indistinguishable from each other and have a hard time identifying the value they provide to the consumer. However, it’s just the reality for a certain portion of entrepreneurs and startups out there right now and I am by no means excluded.
The great thing is, if you believe the preceding synopsis to be true, either through experience or observation, you’ll also recognize this as a business opportunity. I’m curious to hear people’s thoughts on this.