Archives For founders

Many new entrepreneurs, especially those located in Silicon Valley / Bay Area, are drawn to the allure of consumer focused startups.  It’s easier for entrepreneurs (particularly ones with little business experience) to imagine using consumer products and they are typically simpler to design.  In addition, consumer focused Minimum Viable Products (Eric Ries’ The Lean Startup) can be enough to draw widespread attention from target customers and news feeds like TechCrunch or PandoDaily.

Enterprise focused startups are a tremendous opportunity because 1. there are fewer competitors and 2. most enterprise customers are already paying for a legacy product that is likely not web-based (SaaS).  According to Jim Goetz of Sequoia Capital, “Enterprise remains an ‘enormous opportunity’ because companies are spending  about $500 billion a year with legacy enterprise companies and those budgets are  ripe for the plucking.”

Consumer based startups may go from zero users to 100 million users virtually overnight only to fizzle out when interest wanes.  Most never figure out how to make money and have a tough time raising funds.  Enterprise startups, on the other hand, take longer to get going but have a clearer growth trajectory with real revenue.  Most venture capital firms prefer to back enterprise startups because there is a more manageable growth trajectory and usually a more lucrative exit.

Yammer, Workday, Box, Cloudera, Lithium Technologies and Nicira are a few examples of recent enterprise successes.

Value of Time

July 18, 2012 — Leave a comment

Jack Groetzinger, the founder of SeatGeek wrote an article today that puts a unique spin on the cost-cutting focus of many startups.  Many founders focused on running a lean startup are focused on minimizing what they view as excess expenditures and, as a result, effectively value their time at $0 / per hour.

For example, if it takes me an hour to get somewhere by bus for $5 and 30 minutes to get somewhere by train for $10, I only save $5 in that half hour by choosing the bus.  If my time is worth more than $10 / hour to me (which it is), I maximize my value to my startup by taking the train.

However, it is tough to put a dollar amount on intangibles associated with this decision.  For instance, I may choose the bus if the bus better exposes me to other entrepreneurs  traveling from Palo Alto to San Francisco that might help my business.

A smart entrepreneur will estimate what their time is worth and the non-dollar impact of their choices and make decisions that maximize their value.

Jack’s full article can be found here.