Enterprise is sexy now. But B2D is sexier.
There’s been a lot of talk recently about Enterprise and how it is becoming a more attractive space for startups. Suhail at Mixpanel kicked off the discussion most recently, then a GP at Andreessen Horowitz wrote about it, and today Fred Wilson had a great post on it. (It’s also worth mentioning there was a great TC piece on it last month).
It seems like people are starting to wake up to the idea that startups should more closely resemble traditional businesses and actually make money by charging for a service they provide (radical concept).
With consumer now officially being declared dead, B2B/enterprise is what’s in. It makes sense for a lot of reasons. The most compelling reason for founders is that it’s less of a gamble because you know that the success of your company ultimately depends on making a sale. It’s bimodal: you’re either solving a problem worth solving (people will pay) or you’re not (people won’t pay). As opposed to betting on creating something that people may or may not find useful, depending on their mood.
What all of the recent discussions around enterprise don’t highlight is that B2D (Business 2 Developer, a subset of SaaS) is going to be the next wave of breakout startups and tech companies, even more so than enterprise. Semil did a great job of introducing the concept of B2D (regarding what transpired in the comments section: there’s a difference between selling to developers and selling to startups).
It’s already begun with the success of Heroku, Github, and newcomers like Sendgrid, Mixpanel, Twilio, Parse, and a host of others. The advantage of B2D is that the next step after developers is enterprise. Once you’ve successfully sold to the individual makers within an organization, you can sell to the larger organization.
This advantage is important because it allows these companies to take a more consumer-oriented approach. They can market like sexy consumer startups (clearly articulate what their product does, why it’s useful, and make all of it look pretty), but make money like unsexy enterprise companies. And more importantly, they can make money on their way to enterprise. Unlike consumers, developers are willing to pay for software. As long as it saves them a ton of time and/or performs a specific task better than they could with the time they have.
The “selling pick-axes to miners” analogy resonates more today, than ever before. The number of pick-axe sellers is only increasing as more and more companies (large and small) look to find ways to speed up development time and focus on their core differentiator, leaving all the plumbing to the folks that do it best.
So while all this enterprise talk is indeed warranted, B2D is still in its infancy and will be sexier than traditional enterprise in the next two to three years.
Update: Several people on Twitter have asked me what i’m working on, visit http://alpha.leanstack.io/ if you’re interested.
And there’s some good discussion going on over at HN: http://news.ycombinator.com/item?id=4829229