Monthly Archives: January 2013

In startups, MBA is a four-letter word

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yucantcode

Image courtesy of ecquire

Last week my company, SocialPandas, was part of the inaugural class presenting at the Alchemist Accelerator’s demo day. Breaking with the predominantly B2C models, Alchemist is focused solely on enterprise startups.

As we wrap up the six month program, I’ve been looking back at our journey since inception in late 2011. Early on when we considered programs like YC and AngelPad, we knew we didn’t easily fit the blueprint. Two business founders with MBAs [egads, NO!] and a CTO who has been coding for 33 yrs [is he in the computer history museum?], all well over the age of 30 building for the enterprise [oh sorry, I fell asleep]. We’re not standard accelerator material, and frankly, that’s for the best. A group fresh-faced techies need a completely different type of program than a battle-hardened veteran crew turned first-time founders. I’m confident I can learn something from any founder, but I’ll get the most relevant advice from those who’ve already walked a mile in my shoes and lived to tell the tale. I will say Alchemist delivered in spades on that front. (Kudos, Ravi.)

Like most accelerators, Alchemist’s must-have criteria for admission is a “distinctive technical founder.” Even with the new enterprise renaissance where business execution is critical, the highly disproportionate weighting of technical vs. business founders and the debate of education vs. experience remains the same.  It confounds me that these discussions exist at all because my answer to “What do I need to create a successful company?” is E) All of the above.

On the education vs. experience debate, I can see merit in both arguments. I feel fortunate to have both. I’m the first to admit I find many MBAs loathsome (and vice versa). And while I don’t go around broadcasting my four-letter word degree, you’ll never hear me apologize for it either. I worked my butt off to get from the trailer park to a Top 10 business school. The only thing I’m sorry for is those who summarily dismiss what that demonstrates about my drive, intellect, and character. Want to invest your time and money in someone who appreciates the value of a dollar and will fight to the death to make her dreams a reality? You found her.

As a business founder, I fully appreciate the impact of a strong technical founder, but I fail to see these skills as mutually exclusive nor can they exist in a vacuum. You can build the most elegant, powerful product ever, but if no one ever uses it or it can’t be monetized in a sustainable way, does it really matter? Someone can mockup PowerPoints and sell vaporware for only so long before investors and customers wanna get their hands on the real deal. Why is this the value of one over the other even a question? You can’t build a sustainable business without both.

To be clear, I am absolutely not suggesting business founders get a free pass to be technically illiterate or should go to business school. Likewise, I wouldn’t work with a founding engineer who can’t do a basic sales pitch. It’s your company, you better be able to sell it to investors and customers. And my advice to anyone weighing business school or starting a company against something else: pick the alternative.  If there’s hesitation, it’s not the right time for you to do either, especially becoming a founder.

I will say that my two year investment in grad school was a good one, as was working for multiple startups before founding my own. Business school helped me sort out and solidify what I’d learned haphazardly on the job during the boom and bust. And there is absolutely no substitute for the experience gained sitting in the front car of the startup roller coaster through good times and bad. If all that still lands me in the “nice to have” bucket until I teach myself Python nights and weekends, so be it.

Because Money is Sexy

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Denis PombriantThe following is a guest post by Denis Pombriant, CRM industry analyst, author, and CEO of Beagle Research Group.

Why is enterprise sexy again? I take a long view of the question and position it within a macroeconomic trend.  The short answer is that enterprise software is sexy again because its time has come around again.  But here are some details to consider:

  1. More than anywhere else, enterprises live and die on the saying that they spend money for only two reasons: To make money and/or To save it.  So we are witnessing a paradigm shift, which your question alludes to.  Conventional, or I suppose we must call it legacy, enterprise software was built for a paradigm whose major attributes included client-server as state of the art, manufacturing as the primary business activity and one size fits all products.  That’s all gone.
  2. We are also at the end of a macroeconomic wave often called a Kondratieve Wave, or K-wave for short, whose major attribute was information technology (IT) as a competitive tool.  IT has become so much embedded in the fabric of business that it is no longer a disruptive innovation or differentiator.  You either have IT or you go out of business.
  3. The end of a K-wave usually brings a collapse of prices as everything commoditizes.  As your products lose their ability to command high margins, your only choice is to get lean or go home.  Companies that elect to go lean use information technology to shave cost.  Big companies need more technology than any others.
  4. The end of a K-wave (which can last 50-60 years) implies a new beginning.  But it takes time for a new wave to spin up to the point where it can support the huge demands of the enterprise.  Salesforce and NetSuite are each over ten years old and only in recent years have they become successful at penetrating the early adopters of the enterprise.  Social solutions are less than ten years old.  Twitter was founded in 2006 and Facebook in 2004.  It has taken a long time for them to scale to be able to support enterprise volumes and equally long to demonstrate value to the enterprise.
  5. The new enterprise business processes that will demand increasing amounts of these and other technologies are only now being built out.  Until there were tools resident in the cloud, able to collect and crunch massive amounts of data it was futile to try to imagine new business processes but now imagination can take wing.  A great example is Zuora, which has invented subscription management.  Zuora couldn’t have been imagined until cloud computing and SaaS became successful and companies became aware of the pain of doing business in a subscription world with manufacturing oriented ERP systems.  See my book, “The Subscription Economy: How Subscriptions Improve Business” and pay attention to the last chapter on metrics.  Most of the metrics don’t even make sense if all you know is ERP.

So, why is the enterprise sexy again?  Its time has come again.  There is a new business paradigm to be addressed and there is money to be made and saved by those who get there first.  Enterprise is sexy because money is.

About Denis
Denis Pombriant the founder and managing principal of Beagle Research Group, LLC.  His work appears in most major CRM publications both in print and online, in North America and in Europe.  His new research on social media adoption and benefits with Esteban Kolsky was published in August.  His new book, “The Subscription Economy — How Subscriptions Improve Business” is available on Amazon.  Pombriant is always working on a book and he maintains an active research, writing and speaking calendar.  He lives and works near Boston.

Special thanks to Craig Rosenberg, CEO and Editor of Funnelholic Media for connecting us with Denis.