How to Start a Startup Lecture: Building for Enterprise

Presenter – Aaron Levie (Box)

Launched Box in 2005 – back in 2004 it was really hard to share files. The cost of computing and storage had been dropping significantly. Internet was getting faster. The networks and browsers were becoming much more powerful. There were more locations and people to share with. They got funding from Mark Cuban, dropped out of college. They had a bunch of features that their consumers didn’t really need, but also not enough features that the enterprise wanted. They had to choose consumer or enterprise. In the consumer space there are really only two types of ways to make money: sell your product or service ($35 Billion market) OR you can sell advertising ($135 Billion market). Global enterprise IT is a $3.7 Trillion market. In the enterprise, the value equation is really different. They are not trying to get things for free, they want to make doing business more efficient and they will pay for it.

Challenges with enterprise:

  • Takes a long time to build the product
  • Expensive
  • Complex – the software that is out there is really complex and poorly designed
  • Sales take a long time before they even buy the software and even more to implement. You need to hire people to sell and support.

They decided they would only do enterprise if it could be done differently.

Everything about the enterprise has changed in the past 5 years:

  • Cloud computing vs. on-premise computing
  • Low cost computing
  • Standardized software vs customized software
  • Every business vs large enterprises
  • global vs regional
  • User-led vs IT-led
    • In an IT-led model, the incumbents will typically win
    • In a User-led model, the user drives the demand
  • 1.75B smart phones
  • 3B people online – every industry is changing
    • you need to ask yourself how startups are impacting your business model.
    • Every industry is going through huge changes due to the shifts above. Every company and industry in the world needs better technology to work smarter, faster, and more securely.

How do you get started??

  • Spot disruptions – Look for new enabling technologies that create a wide gap between how things have been done and how they can be done
    • What was impossible due to technical or economic feasibility that is now possible?
    • Example:
      • PlanGrid – a mobile platform that gets sent out to construction blueprints. Basically instead of the industry spending $4B in printing blueprints per year, they can update and upload to job sites.
  • Intentionally start small- Start with something simple and small, then expand over time. If people call it a “toy” you’re definitely on to something
    • Take a sliver of a problem and make it super simple. Expand out from there.
    • Incumbents will always go for the full solution, you fill a gap, then expand from there.
    • Example:
      • ZenPayroll fixed an issue people have with complex and crappy payroll systems for small businesses. As ZenPayroll gets bigger, they will be able to serve larger and larger companies
  • Find Asymmetries – do things that incumbents cannot or won’t do because it’s economically or technically infeasible for them to do them
    • Examples:
      • Go after the suite oriented incumbents- create something that is platform agnostic. (fishbowl inventory?)
      • Economically infeasible – where can you do something that no other software company is thinking of? Zenefits uses insurance company commissions to pay for their service.
  • Find the almost-crazy outliers- Go after the customers that are working in the future, but haven’t totally lost their minds (at the edge of their business model- Paul Graham)
    • Skycatch – enterprise drones (agriculture, oil and gas, construction) that allows them to survey
  • Listen to Customers – but don’t always build exactly what they are telling you. Build what they need.
    • Example
      • Palantir does this well
      • Modularize, don’t customize (salesforce)
      • Focus on the user – keep consumer DNA at the center of the product
  • Your product should sell itself – Sales should be used to navigate customers and close deals, not be a substitute for a great product.

Read these 3 books:

  • Innovators dillemna
  • Behind the cloud
  • Crossing the chasm

This is an amazing time to start an enterprise software company.

RG

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