Ten Fb Pages To Follow About Startup Knowledge
When I meet entrepreneurs and startup founders in my Lean Startup-focused MVP workshop, startup meetups, and conferences it seems like the vast majority of their ideas or business focus is geared toward the consumer. I’m more likely to hear "we’re the Tinder for dog parks" than "we’re the Salesforce for law firms."
Knowing firsthand what it takes to build enterprise-focused products and help sales teams work on six and even seven figure deals, I decided to help startups get some insight into what it takes to develop, market, and sell enterprise products and solutions. So at the end of 2015, I launched a new General Assembly workshop focused on the enterprise.
In preparation for the class I wanted to provide some current data that showed the success of enterprise startup education, http://puer.world/wiki/User:MaiOverstreet8, companies in relation to consumer-focused ones. Strangely, there wasn’t a lot of comprehensive stats or quotes from tech and business media sites.
Sure, I found quotes from Aaron Levie of Box, who often exalts that enterprise software is "sexy." His wording, not mine; trust me. But surely the industry needs more than one cheerleader. Why didn’t I run across a plethora of articles to pull quotes and stats out from?
My personal theory is that the tech media focuses more on the Snapchat or Peach type of companies versus the Palantir Technologies or Cloudera enterprise-focused companies because we live in a world of clicks and ad revenue. People click on and read articles about companies they know, use, or see mentioned frequently. This disproportionate focus on consumer tech companies results in a form of self-perpetuation of the same type of articles being generated and clicked on, giving a rather distorted view of the tech industry as a whole.
I pulled together what I could for my first class, but for my next class in 2016 I was determined to get more enterprise-focused data to share even if it meant doing that research and analysis myself. I ran across CB Insights’ Unicorn List that is published online, and thought it might be a good foundational resource. If you aren’t fully versed in startup and venture capital speak, a unicorn is a startup whose valuation is at least a billion US dollars. I guess they are dubbed unicorns because they are supposedly rare.
The rarity of these companies is probably as questionable as the method of clumping them into a broad category just because of their valuation amount. Broad categorization is often done for convenience especially in the media, hence the popular usage of references to lists like Fortune 500 or Forbes 400.
The snapshot of data I used from CB Insights’ Unicorn List was collected on January 10, 2016 when the list contained 144 companies. That doesn’t seem that rare to me. 144 unicorns seem like a sizable herd.
Despite the recent mumblings about market readjustments and StartupGrowth reassessing startup valuations, the number of companies on the list has actually gone up slightly since I initially grabbed the data set. The list on CB Insights is updated frequently, and will always be in flux so I am sticking with the data set of the 144 I captured earlier this month. But I thought it was interesting to see the number of companies rise despite the fact that a lot of the media attention on the subject might have given you the impression that companies were falling off this list, whereas companies are actually being added.
From the list I wanted data that could show which companies had some focus on the enterprise versus the ones that were purely consumer. My own assumptions going into this based off of the tech media and those startup founders I have talked to was that maybe a third of them would be enterprise-focused. It ends up I was pretty far off. But first I had to dig a little to find out which companies were enterprise-focused.
Along with short bios of each unicorn company, CB Insights provides industry sub-categories such as Mobile Software & Services, eCommerce/Marketplace, and FinTech. When trying to suss out if each company had some focus on enterprise these categories weren’t actually much help. FinTech is a good example of this. Financial Tech (FinTech) industry offerings can vary greatly from Stripe who provides online merchants the ability to do credit card transactions, which I consider enterprise-focused, to Avant who specializes in personal loans and is clearly consumer-focused.
Without the existing sub-categories to provide adequate guidance I had to dive into the descriptions of each company’s bio that CB Insights provided and then augment it with my own research by going to the company’s sites, their Wikipedia and CrunchBase listings, press releases, and news articles. I purposefully simplified things for my own usage and created two basic categories: consumer and enterprise.
I classified a company as "consumer" if there wasn’t an indication that a company’s products or services were targeted at anything other than consumers. The "enterprise" bucket was slightly broader to contain companies focused primarily on enterprise, B2B, and also companies that have an enterprise offering of their product or service line.
Once I tallied the two categories from the 144 companies on the Unicorn List they ended up:
75 enterprise-focused or have enterprise offerings
Surprisingly, over half the unicorn companies were enterprise-focused in some way. My assumption of a third was clearly surpassed.
Yet perhaps I shouldn’t be surprised when the number of companies that have some focus on enterprise is getting larger by the day. Many high profile companies on the Unicorn List that launched as consumer-only have begun providing enterprise services and Startup Growth pricing, including Uber, Lyft, Airbnb, Pinterest, Spotify, DropBox, and Evernote. [Links to their enterprise-focused sites are included for reference.] These company’s consumer efforts might be what you are familiar with but they indeed have dedicated marketing and sales resources focused on enterprise organizations.
Still, if the majority (although a slight majority at 52%) of the companies on the CB Insights list are focused on the enterprise in some way, http://mad-snail.ru/index.php/component/k2/itemlist/user/161787 than why aren’t half of the entrepreneurs and startup founders I meet dreaming of being the next Domo Technologies instead of the next Blue Apron? Both of their valuations were at $2 billion dollars.
I’ll admit that saying you are building the next great SAAS-based intelligence platform (like Domo Technologies) doesn’t sound as straightforward or relatable as stating you are delivering groceries for home cooked meals (like Blue Apron). At some point, we do have to explain what we are doing to our moms.
But the world needs both services that help us make home cooked meals and we need SAAS-based intelligence platforms. And maybe this analysis of the CB Insights Unicorn List shows us that things have a way of balancing themselves out with about half focused on each revenue source despite the skewed media attention on consumer companies.
I can’t claim that one path will make your company more successful or if you’ll be happier in pursuing one market segment rather than another. I don’t have any data on the number of startups focused on consumer vs. enterprise and startup Growth their success at getting funding. Or how much their seed rounds are for each industry. Or how much more likely one type of company is to be acquired. All of these would be nice data points to have though!
CB Insights’ Unicorn List certainly doesn’t reflect the whole picture of the tech industry. But it is an interesting set of data pointing to enterprise’s importance in the industry that often gets overlooked.