…or are they? at least that is what Aaron Levie the founder of Box would want you to believe. I did not get a chance to write about the 12th lecture in the How to Start a Startup class. Aaron Levie gave an entertaining and humorous lecture on why startups should go after the Enterprise market. I think there is some merit to this, the only challenge in building for the enterprise is that there is very little room for error. There is very little time for the discovery process in the development and we all know that Startups are not a small form of a large organization. Startups are experiments to build products and to find repeatable business models. Here is the lecture video:
I think Aaron was pretty convincing in making all of us want to start enterprise software companies. Here is my reasoning for why Startups have a great opportunity to build startups that can be salvation to enterprises. I would even go to the extent of saying Iceland is probably one of the best places to do enterprise software companies. Let me start with the most basic reasons why startups have a distinct advantage as captured by Steve Denning based on Peter Thiel‘s Zero to One book (did I mention that I love that book?):
Agility: “Bureaucratic hierarchies move slowly.” This kind of innovation needs speed and agility.
Size: Established firms are just too big to do anything really bold. “Small size affords space to think.”
Risk: Innovation is risky. Entrenched interests in big organizations shy away from risk.
Values: The wrong qualities are prized. “In the most dysfunctional organizations, signaling that work is being done becomes a better strategy for career advancement than actually doing work.” (If this describes your company, Thiel’s advice: quit now!)
Personnel: The kind of people who get to the top of mega-corporations are not the kind of passionate founders who know what they are talking about and believe in their vision. Instead they are glorified bureaucrats or accounting types who lack the personal skills or vision to achieve breakthrough change.
Passion: In a workforce in which only 12 percent of workers and only 20 percent of senior managers are truly passionate about their work, it will be hard to find the drive to do the hard work to create breakthrough technology. There will be too many temptations to take the easy way out, with incremental and efficiency innovations, or worse, simply buying back shares so as to boost the stock price, without making any innovations at all.
I have seen it from the inside, I used to work for Capgemini and before that with Ernst & Young, Management Consulting team. I had a great time being a consultant because most enterprises that we worked for were dysfunctional and because the consulting teams were on time and material there was a pressure to get stuff done and we got stuff done really fast. It made everyone look good, the person within the enterprise that brought us onboard, the engagement partner who assembled the team and the team that got stuff done in a pressure cooker. All looked like winners when the project was done. I was really surprised how any of the enterprises that we worked for could be in business at all. Anyways, all consultants would lose their jobs if Enterprises got their sh#t together. I think software based startups are a big threat to consulting companies but could also be the biggest opportunities.
Coming back to Iceland, I have made the case before why Iceland is the perfect place to do software based startups. I would refine that a bit to state that Iceland is the perfect place to do enterprise software startups. The biggest challenge a startup has with regard to solving a problem for the enterprise is getting into the door of the enterprise and to work on a small prototype to solve a small problem and see if there is a product to market fit. Given that Iceland is a country and everybody knows everybody, a startup can relatively easily get into a representative company and start working on a solution. There are hardly any enterprises in Iceland, but they are representative of enterprises. Knowing how to distribute to enterprises globally is by far the biggest challenge startups have in Iceland once they figure out the product to market fit. It does not matter which industry sector, given Iceland is a country we have almost every sector within a 10 square km radius, we have stock exchange, advertising agencies, fashion and design, media and entertainment, telecommunication, technology, construction, insurance, retail outlets, food and beverage service companies, pharmaceutical companies, biotech companies, universities, banks, transportation companies, shipping companies, hotels and hospitality, education etc. So, what is stopping you from starting on this journey?
About the points Personnel and Passion. Aren’t these two things that could be fixed quite easily in a large company, or that are not even relevant to the size of the company? Similar problems can be found also in young companies or the large companies might have very passionate and skilled leaders.
In my limited experience nothing can be fixed easily. Larger the team harder it is to get alignment as the team members are part of the large company for different reasons. In a smaller team like a startup it is easier to get alignment or let go of people who dont align without disrupting the team dynamics
I agree changes are not easy to do. When growing from a start-up to a enterprise there certainly is the danger of losing the initial passion that was there in the beginning. Thanks for the answer!
You are welcome, not only that. It is difficult to gauge the reason why someone joins the company once it is a large enterprise. A lot of companies get it wrong, they try to “build” a culture, you cannot build a culture, the company is the culture.
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