Enterprise Startups and Y Combinator

http://blog.rmorrison.org/enterprise-startups-and-y-combinator

by rmorrison • 12 years ago

69 14 12 years ago

blog.rmorrison.org

I do a lot of Enterprise Startup evaluation for the company I work for. I read hacker news regularly, but consider it entirely separate from my job. I don't see much about Enterprise at all through YC or discussed here.

Perhaps it's just me, but I find it odd that I share so much in common with my job evaluation and hackernews as a concept, and yet I consider reading and viewing here a personal activity that has no relevance to my work.

I think that has something to do with Enterprise startups not being considered sexy, or on the radar of most people.

Perhaps it's that people who are most likely to build startups through YC are people who haven't been in Enterprises for years, and thus don't have visibility to the needs or considerations.

If I were creating a startup today, I'd target the Enterprise sector because there are needs that aren't filled, and being bought by a large company is a quite reasonable exit strategy.

Selling it to Enterprise can be expensive, but you only really need a few successful hits as opposed to generating a massive hockey stick of users.

mathattack• 12 years ago

It's also that many enterprises are afraid of startups. There are rational reasons for both organizational and personal risk aversion at large firms.

capkutay• 12 years ago

I see enterprise discussed on HN when its related to scalable infrastructures or NoSQL databases. However, it'll only be 'sexy' ones like open source solutions, something amazon built, or something ex-facebook/ex-googlers came out with.

btrautsc• 12 years ago

Our team put a lot of thought into deciding whether YC was a good fit for Ambition (YCw14) - well, after it was a possible option - as my cofounders actually didn't know I'd applied to YC for us until we were invited to interview.

We thought (as many do) YC was largely for consumer, idea stage companies, and that B2B was not a focus.

Demo Day was yesterday; YC has been an incredible experience and value add for Ambition. The partners are incredibly smart and apply product/ market/ sales expertise across various industries Cumulatively they have seen everything, so the knowledge base is deep.

Targeting customer segments, simplifying product, meeting investors, and being strategic about marketing, partnerships, and media.

Bottom line: our company is probably years ahead of where we were in Dec 2013. We now have a backlog of customers, relationships with a great group of investors/ partners, and our product is delivering.

If you're doing enterprise or B2B, I would strongly recommend looking at YC.

corry• 12 years ago

"The future is already here — it's just not very evenly distributed."

Nowhere is this more true than in enterprise / gov, which is gradually being pulled out of the tech dark ages. It's inevitable - even if it's 5 years behind the rest of society, the tech profiles of these organizations WILL shift (ARE shifting).

Enterprise startups get a lot of hate, but I encourage everyone to consider what a joy it is to blow the mind of an enterprise user by solving their problem in a way they didn't realize was possible.

It's like being a doctor and a magician at once.

sdesol• 12 years ago

My product is aimed at the enterprise and I actually thought about applying to YC and may still, but it was really off putting seeing the video requirement. I really don't understand the purpose of it. Once you know my name you'll be able to find my linkedin profile with my picture:

http://www.gravatar.com/avatar/ab5e41c4c804017c36e071b54cb20...

What is the purpose of the video?

I like to think I'm pretty articulate but I really hate speaking into the air with no visible recipient. It is the same reason I despise leaving voice messages. Maybe their is a technical term for this, who knows.

brd2• 12 years ago

I think the lack of enterprise startups boils down to one simple issue, most people interested in startups have no understanding of enterprise.

As an enterprise guy, I read HN discussions on subjects and there is just a lack of understanding about why enterprise companies do what they do, why they're so risk adverse, what they look for in tech, etc.

Sure, a lot of enterprise sized solutions aren't that sexy. Sure, enterprise sales is a pain. But really, the kicker is that most 20 somethings just don't have a strong grasp of what makes the enterprise tick.

onion2k• 12 years ago

Very true indeed. There's an adage in the startup world that says you should try to solve a pain you suffer yourself - that's what you understand best. It's true. Unfortunately though, while startups are mostly made up of young, middle-class males, that won't include many problems you only really start to understand once you've got a good grasp of the enterprise world and the challenges there that haven't been addressed yet.

notastartup• 12 years ago

can you please write about this? I'm a 20-something looking to create a SaaS for Enterprise customers, and I'm constantly coming up dry. There's a lot of literature revolving around 20 bucks/month for a simple web app but pretty much lost and overwhelmed by the technical language behind most Enterprisey websites and the sheer number of features that seem dumped into a product which confuses the software engineering inside of me.

I've begun researching Oracle Partnership and Salesforce, but even then, I am just lost as to how I can acquire my first enterprise customer because I don't know what they want and what they are looking for.

I understand that enterprise sale cycles is long and I've posted numerous questions about hacking my way into this space with little response.

gregpilling• 12 years ago

Have you read patio11's stuff? http://www.kalzumeus.com/2013/05/23/selling-your-software-to...

brd2• 12 years ago

So just to give some quick answers to points you've brought up:

Pricing for Enterprise is tricky, mostly because there are magic numbers where you go from 1 channel of approval to another. The goal is to price yourself high enough that they take you seriously without pricing yourself so high that you end up needing approval from a guy who doesn't care about the problem you're solving (unless of course you're ready to pitch to that audience).

The long list of features is a side effect of the risk adverse nature of enterprise. One of the big things enterprise looks for is solutions to "what ifs". What if X happens, what if Y operates different, how do we know when Z occurred? Ultimately you are trying to sell them a solution that doesn't create a whole host of new problems and the feature list helps ensure that. Besides that, long feature lists help with the sales pitch.

As for finding customers, that is where the real battle exists. Ideally you already have a short list of potential customers that you can talk to and work with while you create your initial product. Creating something from scratch and then trying to sell it is a much harder path to go down. I think there are hacks to this involving partnerships with other 3rd party solution providers but ultimately getting your first customer is going to be the biggest hurdle to overcome.

Personally, I've shied away from enterprise startup ideas because 1) If I'm doing a startup, its probably to get out of the enterprise world and 2) Selling to the enterprise truly is a long, arduous experience that I'd rather avoid.

nwenzel2• 12 years ago

I'm not really sure you can say there are a lack of enterprise startups anymore. Certainly there are more consumer facing companies for many of the reasons you cite. I also don't think is just for 20-year olds. Certainly it helps to not have financial obligations of a spouse and children, but plenty of my batch mates were in their 30s (like me), married (like me), and had kids (yup, me too).

midas007• 12 years ago

TL;DR: Don't automatically write off YC bc you think you have the right contacts, mentors and/or investors.

So I've seen both sides: bright eyed startups out to change the world and enterprise startups that quit corporate. Enterprise startups are mostly about getting an early customer interested to help build out something they would use. Building to a real use-case and getting feedback on an ongoing experiment. To that end, with the experience and founders of founders and investors in that space, the value of YC doesn't seem particularly relevant to them when the path seems pretty clear. This may not be the case if particular YC partners have the exact relationships that would provide crucial leverage. (Business end-game can be a photo-finish measured in inches.) Also, access to folks that won't bullshit you is immensely important. Further, the community itself powerful and helps your venture from getting short-sticked in a business context (no matter how good is your game and network).

So don't discount YC.

nwenzel2• 12 years ago

Great post Rick! I'm thankful that companies like Comprehend led the way for enterprise companies at YC. After my batch (S2013) and the most recent Demo Day, I think it's pretty clear that YC provides a lot of value to enterprise startups.

For any B2B founder wondering if YC is a fit for your company, don't let old stereotypes get in the way of applying. YC is not just consumer. It's not just 20-year olds (I was 35). YC is a network of the smartest, most passionate people you've ever met.

Enterprise Startups and Y Combinator

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