Monthly Archives: February 2013

Don’t Call It a Pivot, We’ve Been Here For Years

The following is a guest post by Mark Trang, CEO and Cofounder of SocialPandas.

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Don’t call it a comeback, I been here for years
Rockin my peers and puttin suckas in fear

– LL Cool J, “I’m Gonna Knock You Out

Why businesses buy technology solutions (especially enterprise software) hasn’t fundamentally changed in our industry. Sure, there are more servers in the cloud, more SaaS subscriptions, and more smartphones in the workplace, but when you strip away all the technology advances and pricing models, the universal need of all businesses to grow revenue and manage costs remains unchanged.

So why has there so much attention around the “comeback” of enterprise-focused companies the past few months?

The enterprise space hasn’t gotten any sexier; the consumer web space simply became less sexy. Maybe even ugly.

This consumer web “un-sexiness” was led by the fall from grace of a number of high-profile companies like Facebook (when it didn’t achieve it’s stratospheric IPO goals), Groupon, Zynga, and others. The previously invincible “So-Lo-Mo” tagline of many B2C companies has become Not-So-Hot. And the “traction” bar required for follow-on funding (e.g. Series A, Series B) has been raised for consumer web companies.

Modern media (including Silicon Valley media) and financial markets (including startup investors) abhor a vacuum and have compensated with more attention and investment in more favorable markets, specifically the enterprise category. Even the talent pool of startup engineers and designers is also reflecting this shift of sentiment; I’ve recently spoken to dozens of candidates that are now open to roles at enterprise-focused companies like ours because their consumer web companies have hit a wall. These same folks would have shunned us 6-12 months ago in favor of founding/joining a pick-your-flavor-of-consumer-web startup. This phenomenon isn’t necessarily because these candidates love enterprise software but because they are now skeptical of ad-supported and e-commerce business models; they simply covet greener grass.

This field of greener grass has been shaped by a list of top performing 2012 IPOs led by B2B-focused companies including Workday, ServiceNow, Palo Alto Networks, Eloqua, and Splunk. 2013 is shaping up to be no different as many B2B leaders are all on the path to an IPO. The result? Early-stage investors are shifting their energy to enterprise-focused startups. Some have been investing in enterprise startups all along; others are now compensating (read: pivoting) for being overweight on too many struggling consumer web companies. This is causing a chain reaction where some startup teams are focusing on/pivoting towards the enterprise space to avoid the taint of “being a consumer web company” and has a secondary effect of a frothy rise in enterprise startup valuations.

What makes enterprise so different and seemingly resilient when compared to the consumer web world? I’d argue….nothing extraordinary.

The Business of Helping Businesses

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Abacus: first enterprise mobile device

Believe it or not, Apple didn’t invent the first enterprise mobile device and Excel wasn’t the first spreadsheet tool.

Many people forget that enterprise-focused tech companies of today have been doing what thousands of others have been doing for thousands of years: delivering tools and services to help other companies grow faster, cut costs, keep customers happy, and ultimately outperform competitors. Nothing special, right?

In fact, the business of providing tools and infrastructure for businesses is as old as the concept of business itself; in some cases, those supplying the proverbial “picks and shovels” in support of new industries end up as successful as the companies they sell to.

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Economic tablet: first accounting app

The earliest business “apps” date back thousands of years to support the most basic of business functions: accounting. Whether it was was counting crop yields or livestock, the practice of keeping track of stuff for business purposes exists today in the form of databases and ERP applications. In fact, many of the largest software companies in the world provide some form of accounting functionality. Coincidence?

So if enterprise apps have such a long history, how and when did consumer-oriented businesses become en vogue?

Who’s B2C’s Daddy?

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Trade and commerce has been the foundation of modern civilization. Societies specialized in the production/distribution of certain goods/services which were traded with neighboring societies.

Over the past century, a shift from agrarian/industrial to information economies occurred in most of today’s first-world countries. Fewer and fewer people were tending fields and working in factories. Instead they joined the “white-collar” ranks of today’s information workers. This shift allowed for more people than ever to have both the increased time and income to enjoy discretionary goods/services, giving rise to the world of mass consumerism. Much of this shift was made possible by workplace automation which led to higher labor productivity. Only then did advertising and ad-supported business models (e.g. TV, radio, newspapers) become necessary, possible, and commonplace. Modern day ad-supported and e-commerce consumer web apps are an evolution of this. Because more people have more time than ever to be consumers, a whole host of products and services sprouted up around them to capture their time and money. And in the past decade, the internet has become the ultimate place where consumers could do both.

In a world where we are brainwashed as individual consumers to embrace things that are entertaining and trendy, we favor tales of overnight winner-take-all success vs. stories of ordinary accomplishments. We are addicted to home runs, not high on-base percentages. We celebrate the feeling of hitting the Powerball jackpot, not achieving modest but consistent returns from a mutual fund. We’ve been trained to be lean hackers, not pursue the longer conventional path.

So perhaps it’s not unreasonable to consider the way our preferences and tastes in our personal lives and modern popular culture are influencing and reinforcing our opinions of startup markets. This may explain why popular media (and frequently the VC community) been enamored with consumer web startups, despite their relative youth (in terms of the history and the actual age of founding teams).

When consumer web startups realize they won’t ever get an Instagram-type exit or can’t explain how they will ever generate revenue, their world starts to look more like Bravo’s “reality-show” version of Silicon Valley than the true story of how Silicon Valley really got it’s name. This isn’t a surprise since unlike Marc Zuckerberg, Robert Noyce never had a Hollywood movie made about him.

Living and working in the heart of this startup community in San Francisco, I’ve overheard many recent grumbles from consumer web entrepreneurs that it’s time for them to “go B2B” (meaning “back-to-business” or “back-to-basics” in their parlance) so they can “get traction” and raise their next round of funding. Their assumption is that pivoting towards the “ordinary” world of enterprise apps is less-risky and therefore easier to get traction/generate revenue. This couldn’t be farther from the truth (which I will cover in a future post).

For many of us in the B2B world, there is no “back-to-anything” since we’ve been here all along. And it’s not a pivot if you’ve always been moving in the same direction.

About Mark
Now CEO and Cofounder of SocialPandas, Mark started his software career as a webmaster at a time when many believed the world would end because of the Y2K bug. More recently, Mark was an early member of Salesforce.com’s platform team where he helped launch the Force.com platform and grow the AppExchange ecosystem. Mark was also VP & GM of Platform Technologies for LivePerson, where he launched and grew their API business. Mark was also an early employee at several SaaS startups and an enterprise software consultant at Deloitte. If there was a Noodle-of-The-Week Club, he’d be their supreme chairman and create a Michelin Star-equivalent rating system of the world’s top ramen joints. Mark holds a BA and MBA from UCLA.

 

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Rebooting the Knowledge Navigator

The following is a guest post by David Gleason, Silicon Valley veteran and storyteller extraordinaire.

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Disrupting the Enterprise Experience by Starting with the User

After 30 years in the high-tech industry, I’ve come to believe that one of the great disruptions has been the transformation of the computer user, from someone who needed assistance, to the one who is calling the shots. No longer the passenger, the user is now in the driver’s seat and is setting the course. Successful entrepreneurs are those who, like the old joke about leadership, see a parade and run to the front of it, yelling, “follow me!”

In today’s enterprise, the user has evolved from being the source of input to the recipient of any desired output, anywhere, anytime without “directions.” This is part of what makes enterprise software so sexy at this stage – you can do almost anything with it, and you don’t need hand holding to get your work done.

When I entered this world as a technical writer in the 1980s, a knowledgeable friend, Rich Miller, told me: “The best way to create software is to start with the user manual — write what the program is supposed to do first, and then make the software conform to that.” He emphasized that this almost never happens, but it should — and the result would be a wonderfully easy-to-use product.

Today, the manuals are mostly gone, and in their place we are seeing an incredible explosion of user-centered design in areas that have long been hostile to the non-technical user. Giants like IBM, Oracle and SAP are improving the user experience on their systems, hosting content and forums on their websites,  and releasing smart phone apps that are snappy and cool and easy to use.

Small companies are carving successful businesses out of niche markets that once were the hidden domain of IT departments, like the help desk (Zendesk), travel and expenses (Concur), file sharing (Box), social collaboration (Jive) and many others.

Three decades ago, the question an entrepreneur was likely to ask was: Which markets or functions are most underserved by enterprise software?

Today those wishing to disrupt the enterprise software world are asking: which users are underserved by this same software, by the user experience, in fact, by the overall methodology used by the big enterprise software providers?

My personal experience tells me that the user has been put in control with the rise of the Internet, the browser and most recently, the smartphone with its apps, ecosystem, and “always on and at hand” availability.

Making Sense of Command-line Applications

My first job in the early 1980s was as a technical writer at ASK Computer Systems, a disruptive company in Silicon Valley that provided software for manufacturers to track costs, parts and projections. Customers included startups Compac, Sun Microsystems and Kurzweil.  The product, called ManMan (for manufacturing management), ran on HP 3000 and VAX 750 mini-computers which you accessed through terminals. Mini-computers were the disruptive hardware of their day, requiring far less expense than mainframes.

Using the ManMan system involved command-line data entry and multiple choice options, and the documentation was critical to understanding the product, how to use it and also how to track the constant software upgrades. Our pubs group cranked out thick binders of documentation, and we shipped updates to customers with individual pages containing edits that could be inserted into the binders.

In those days, the IBM PC was still a very new thing, underpowered and also command-line based. There were very few apps – unless you wrote them yourself. A big part of the tech writer’s job was to understand the user as someone who was mystified by technology. This meant explaining things in clear and simple language that most anyone could understand. Good documentation and training courses were essential to making enterprise software work.

The Rise of the GUI

The next disruption came with the rise of the graphical user interface (GUI) as a new and exciting approach to making computers both more visually rich and much easier to use. The operative word became “intuitive,” meaning you didn’t need to read the manual … at least in theory.In fact, Apple’s first Macintosh User Guide actually showed the reader how to “click and drag” with red arrows and detailed written instructions, since most users had no idea what it meant.

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“Click and drag” in the first Macintosh User Guide

Microsoft was converting command-line DOS to visually richer Windows as the computing choice for millions of enterprise workers, growing its developer platform and providing programming tools that encouraged software engineers to create thousands of powerful and useful apps that were easier to use, better at displaying information, and more timely than anything that ran on mainframes or mini-computers and required dumb terminals for display.

In 1992 — 3 years after the fall of the Berlin Wall — I attended Esther Dyson’s East-West High Tech Forum in Prague, along with hundreds of excited young entrepreneurs and engineers turned business people from Eastern European countries like Poland and Hungary.  Their world had been disrupted, state enterprises were being privatized and markets were being created in front of our eyes.

At a lunchtime presentation, Bob Epstein, VP of Sybase, showed the audience a database screen full of numbers, then converted it to a map of an oil pipeline where he clicked on a location and pulled up the information on flow and volume. He said, “we have to stop making the work look like the data, and make the data look like the work.” Now this was revolutionary! And very disruptive — you could actually make data look like something in real life.

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David at the 1992 East West Conference

Soon, all the big database companies including Oracle, Sybase, IBM and others, were moving to a rich GUI for easier use but also to be able to display more data.

The World-Wide Web

By 1995, we had shed the terminals, command lines and binders. It was all about the PC, shrink-wrapped applications and paperback books as Windows 95 took center-stage. Tim Berners-Lee had created the HTTP protocol and the World Wide Web;  the Internet is poised to become the next engine of disruption.

What I find most interesting is the way so many pieces came together and coincided with key turning points in hardware, software, business and even the fall of empires and the rise of new nations and markets. A new generation of users was accustomed to computing technology from their earliest years, so software developers could  keep adding features and functionality. As the Web expanded, the skills learned on the PC were transferred to the browser and the desktop computer was the single device for most users most of the time.

Everything at Your Fingertips

Today, the shrink-wrapped boxes of application software are largely a thing of the past. PC sales are flat and smart phones and tablets are growing at many multiples faster rate. Users are demanding much more than easy-to-use apps; they want massive amounts of dynamic, meaningful data at their fingertips — data that is relevant to whatever they are doing, and where ever they are, right now.

The enterprise services that power these apps have become quite amazing in their scope and power, but once again, we are seeing the best and most successful services are those that provide the easiest, most intuitive experience to users.  A great new service like Box.com is much more than file sharing — it’s an easy-to-learn experience because it builds on what most users already understand — the Web model of file access integrated with Tasks, Message, Chat and Group Collaboration — and lets you do things that you otherwise couldn’t do, and you can do them on any device or platform.

This time around the focus isn’t so much on teaching the user, but more on catching up with what the user has been wanting now for a while. So while the User Experience is still central, it’s a much more experienced, mature and sophisticated user that is demanding these new accommodations.

What does the future hold?

Twenty five years ago, Apple created a model of what the user experience could be like when data was abundant and accessible. It was called the Knowledge Navigator and the user simply told the computer what he wanted, and the system figured out where to find what was needed.

If you look at the trajectory of the past 3 decades, it’s hard not to conclude that the power of the user will grow, perhaps exponentially. I can see a future where the user no longer has to navigate applications or websites. Rather, we could be entering an age where the user simply tells a system or network of systems what she wants to do and the smart system finds the right tool for the job. It’s the realization of the Knowledge Navigator vision, an extension of making the data look like the work – and in an age of rich, dynamic, smart data, what could be more logical and useful than a system that can take your command and execute your wishes?

What are your thoughts on where the user experience is going?

 About David
David is a writer and senior content manager specializing in developer marketing and technical content creation for platforms, APIs and mobile. He has a life-long interest in the dynamics of change. His greatest thrill was meeting Russian physicist Andrei Sakharov in Moscow in 1988 with Apple executives on the 20th anniversary of the publication of Sakharov’s unauthorized book, Progress,  Coexistence and Intellectual Freedom. Sakharov’s book was a starting point for the social, political and economic upheaval that led to the fall of the Soviet Union, certainly a major disruption in world history.