So the good thing is I don't think you actually need to be a service company to do that. I think you just have to act like one for a bit when you're first building whatever you're building. That's partly to build the right thing for all the complicated stuff enterprises want, and partly because that's usually the only way to get an enterprise buyer to pay attention to a small startup.
I worked at an Option 2 company for a while, on the services team. Enterprise from day 1, co-building for the biggest `something` group in the world. Data transformation semantic layer etc *
A few problems that I reflect on:
1. customers stuck on various versions across a decade of releases
2. economics more attractive to PE than VC, expensive cost of capital
3. very services heavy sales cycle due to rough edge product
4. customers largely misuse product, despite 3, possibly due to 3. Related to this other comment. "Enterprise as a collective unit is less capable of being smart, and so needs its products to be more guard-railed."
However, the primary one I come back to: you can only work with one enterprise at a time, the idiosyncrasies of each are obviously relatively unique, this combined with the insane bureaucracy means IF you solve something useful, it probably won't generalise very well. "Happy enterprises are all alike; every unhappy enterprise is unhappy in its own way."
* The company is almost 25 years old and just raised an additional $300m from private equity (not sure what to make of that), so I guess to your point, it leads to more focussed and enduring companies!
Ah, interesting. I do wonder if there's a kind of blended version here actually, that's enterprise focused, but on a smaller problem. It does seem that most companies that do this enterprise thing tend to try to do something huge. I'm not sure if that's necessary because solving anything for enterprises will always snowball into solving that entire category of thing, or if it's just that "enterprise" and "all-in-one" have similar connotations, so people lump them together. Could you be an enterprise tool that only does a couple things, but does them very well and in the messy context of how enterprises want to do them? I really don't know.
That is an interesting point, they certainly do get lumped together.
It didn't help that the company in question did one thing very well but was required to chased endless must-have-features necessary to win enterprise deals.
My reflection from not that long in that space was that it was much the same game, played at one-tenth speed, with many more players on each team and much lower risk tolerance so less dynamism.
Yeah, and that would be my worry, is that you can't actually do a narrow thing because you've got to build 1000 tentacles to connect that narrow thing to the rat's nest it has to operate it. Which, bummer.
I was really depressed until the penultimate paragraph, when I realized all of our problems are because we ARE embracing the messiness of the Enterprise. So, we are failing the Right way?
I don't think of any of this as failing, actually. It's like saying, so you want to become a heart surgeon - well, it's gonna take a long time. That's just how it goes. It wasn't meant to say everything is a failure (but maybe a little, everything might *feel* like a failure).
The thing about heart surgeons (like my father!) is that there’s a clear path, and obvious markers of progress and success. Enterprise startups used to have those, but now it’s much more of an Epic Quest.
All the “obvious” business models are taken, which means we have to be contrarian but right. And the only way I know to discover that is to fail forward.
[If you know a shortcut, DM me directly so it doesn’t get commoditized away :-]
This was sooo good! Awesome post (as always). For startups trying to pivot to enterprise - here is a protip. Just take your current website and messaging -- then redo it pretending like it was 10 years ago. Done. The enterprise clients will be beating down your door! 😂
Thanks! And that’s actually a pretty funny heuristic. So many startups are like, “no, we’re a whole new category;” I wonder if they’d be better fully leaning into some old category. It’s some warped version of under-promising and over-delivering, where you promise to be a “enterprise security ERP” or something, people assume you must be 30 years old, and then they’re impressed that you work on browsers other than IE, rather than being disappointed that you have one of the fifty features they want.
Yes - and when selling to enterprise you have to remember the types of people that work at enterprises and what they value. I think stability is the one word I would choose. And again - most startups don’t scream stability.
As I read every paragraph, I could not get out of my mind the current dumpster fire that is Airtable's financial situation. But, this is not uncommon. Many SaaS ventures are worth 20% or less than their original preferred investment.
If all that's true, that definitely seems like a particularly aggressive version of this, but a story that I'm sure is all over the place in some form or another.
It's not, uh, fun? But honestly, I think the worst part of it is if you don't expect it (it's the waiting for Godot part). Which was part of the idea behind writing this - it's much easier if you know it's coming. (Eg, I'd imagine med school is hard but not that depressing, because you know it's going to be hard.)
<I'm in this photo and I don't like it>
https://www.etsy.com/uk/listing/544872340/free-beer-tomorrow-funny-retro-metal
This piece is being shared in hundreds of places right now with the comment “did this guy work here?!?”
Option 2 is the way to go but a lot of VC's dont like the service part.
So the good thing is I don't think you actually need to be a service company to do that. I think you just have to act like one for a bit when you're first building whatever you're building. That's partly to build the right thing for all the complicated stuff enterprises want, and partly because that's usually the only way to get an enterprise buyer to pay attention to a small startup.
Excellent article!
I worked at an Option 2 company for a while, on the services team. Enterprise from day 1, co-building for the biggest `something` group in the world. Data transformation semantic layer etc *
A few problems that I reflect on:
1. customers stuck on various versions across a decade of releases
2. economics more attractive to PE than VC, expensive cost of capital
3. very services heavy sales cycle due to rough edge product
4. customers largely misuse product, despite 3, possibly due to 3. Related to this other comment. "Enterprise as a collective unit is less capable of being smart, and so needs its products to be more guard-railed."
https://open.substack.com/pub/benn/p/how-much-for-that-dag-in-the-window?commentId=39133999
However, the primary one I come back to: you can only work with one enterprise at a time, the idiosyncrasies of each are obviously relatively unique, this combined with the insane bureaucracy means IF you solve something useful, it probably won't generalise very well. "Happy enterprises are all alike; every unhappy enterprise is unhappy in its own way."
* The company is almost 25 years old and just raised an additional $300m from private equity (not sure what to make of that), so I guess to your point, it leads to more focussed and enduring companies!
Ah, interesting. I do wonder if there's a kind of blended version here actually, that's enterprise focused, but on a smaller problem. It does seem that most companies that do this enterprise thing tend to try to do something huge. I'm not sure if that's necessary because solving anything for enterprises will always snowball into solving that entire category of thing, or if it's just that "enterprise" and "all-in-one" have similar connotations, so people lump them together. Could you be an enterprise tool that only does a couple things, but does them very well and in the messy context of how enterprises want to do them? I really don't know.
That is an interesting point, they certainly do get lumped together.
It didn't help that the company in question did one thing very well but was required to chased endless must-have-features necessary to win enterprise deals.
My reflection from not that long in that space was that it was much the same game, played at one-tenth speed, with many more players on each team and much lower risk tolerance so less dynamism.
Yeah, and that would be my worry, is that you can't actually do a narrow thing because you've got to build 1000 tentacles to connect that narrow thing to the rat's nest it has to operate it. Which, bummer.
I was really depressed until the penultimate paragraph, when I realized all of our problems are because we ARE embracing the messiness of the Enterprise. So, we are failing the Right way?
I don't think of any of this as failing, actually. It's like saying, so you want to become a heart surgeon - well, it's gonna take a long time. That's just how it goes. It wasn't meant to say everything is a failure (but maybe a little, everything might *feel* like a failure).
The thing about heart surgeons (like my father!) is that there’s a clear path, and obvious markers of progress and success. Enterprise startups used to have those, but now it’s much more of an Epic Quest.
All the “obvious” business models are taken, which means we have to be contrarian but right. And the only way I know to discover that is to fail forward.
[If you know a shortcut, DM me directly so it doesn’t get commoditized away :-]
Having worked on mode for ten years, no, it does not appear that I know a shortcut...
This was sooo good! Awesome post (as always). For startups trying to pivot to enterprise - here is a protip. Just take your current website and messaging -- then redo it pretending like it was 10 years ago. Done. The enterprise clients will be beating down your door! 😂
Thanks! And that’s actually a pretty funny heuristic. So many startups are like, “no, we’re a whole new category;” I wonder if they’d be better fully leaning into some old category. It’s some warped version of under-promising and over-delivering, where you promise to be a “enterprise security ERP” or something, people assume you must be 30 years old, and then they’re impressed that you work on browsers other than IE, rather than being disappointed that you have one of the fifty features they want.
Yes - and when selling to enterprise you have to remember the types of people that work at enterprises and what they value. I think stability is the one word I would choose. And again - most startups don’t scream stability.
What, you don't trust getSplashy.io, the tool for swimming through your data lake, to be around for the next fifty years?
This site can’t be reached
Check if there is a typo in getsplashy.io.
DNS_PROBE_FINISHED_NXDOMAIN
🤣
A gold mine for the taking
This is the hard truth
Thank you for talking some sense into me.
Excellent assessment. Was this inspired by Airtable?
No, I don't really know anything about their business. But, it definitely wouldn't surprise me if this has been part of their story.
I think it's all of their story.
As I read every paragraph, I could not get out of my mind the current dumpster fire that is Airtable's financial situation. But, this is not uncommon. Many SaaS ventures are worth 20% or less than their original preferred investment.
https://impertinent.substack.com/p/airtable-financial-dumpster-fire
If all that's true, that definitely seems like a particularly aggressive version of this, but a story that I'm sure is all over the place in some form or another.
welp, that's depressing
It's not, uh, fun? But honestly, I think the worst part of it is if you don't expect it (it's the waiting for Godot part). Which was part of the idea behind writing this - it's much easier if you know it's coming. (Eg, I'd imagine med school is hard but not that depressing, because you know it's going to be hard.)