ZapThink Startup Insights: Derisking IT technology is not a way to achieve any goal
ZapThink Startup Insights
Week of June 1, 2010
Interview: Woody Benson, Prism VentureWorks
For this issue, ZapThink spoke with Woody Benson at Prism VentureWorks, a venture firm founded in 1996 with over $1.25 Billion under management. Woody has been in Venture Capital for over a decade, with the last 5 years in digital media (platforms, infrastructure, services for the new consumer). As such, he sees this is as a massive age of consumerism – you can get what, where, how, and when you want.
Small and Medium Business (SMB) Infrastructure – The Next Opportunity
Woody acknowledges that large enterprises already have much of the IT that they need, although gaps always exist. However, he sees a bigger pain in the IT infrastructure for those in the SMB (up to $500M in revenue). They have the most work to do, the lowest budgets, and still have complexity because they are expecting the same consumer experience they get at home at work plus security and data protection issues as well as solutions tailored for their business.
Clean, Elegant Design is Here to Stay
One of the most powerful things coming out of the consumer-focused IT movement is that usability and elegance of interface and design have improved dramatically. Woody sees this as an irreversable trend that will inevitably make its way into enterprise applications. As such, tools with better overall usability and ease will trump even more powerful tools with poorly designed interfaces.
Remote access and collaboration
People still want access to their information when they’re on the road, and there’s still room for improvement, according to Woody. He sees opportunity for remote access, remote document collaboration, cloud-based document sharing,and even solutions that improve customer support.
It’s a Challenging Time to Sell to the Enterprise
According to Woody, we’ve already been through 15 years of milking the “power functions” in the enterprise (finance, sales, manufacturing) and now moving away from functionality and more to user experience in that area. As such, he feels that these areas have been played out. This is a challenging time to be selling to enterprise. This is a reduced cost mode vs. increase revenue mode, especially selling to all the non-Fortune 5000 types. The challenge now is selling to enterprises that don’t buy like enterprises — the day of the $1M enterprise license sale for startups is over.
Woody feels that there simply is not that much opportunity to build a new startup business selling developer tools. There is price pressure on the bottom from free and open source alternatives and on the top from entrenched vendor solutions. This is just not a green field for new companies.
Advice for Enterprise IT Startups
Derisking IT technology is not a way to achieve any goal
A third of the workforce will retire in the next few years. As enterprises find new employees, those new employees will come to expect that the IT computing experience will be at par or better than what they experience at home. To retain and attract employees for greatest productivity requires an inherenet embracing of risk. The existing status quo of enterprise software that is expensive, poorly functioning, with complex implementation and worse usability is no longer tenable. Productivity and innovation will suffer. Furthremore, for startups, selling to IT where IT has to pay is easy. Selling to IT where Business has to pay is much harder. The combination of user empowerment and consumer-style IT will result in a huge shift in the enterprise. There’s no room to avoid risk here.