Sequoia's Jim Goetz explains how enterprise startups win by stealing consumer tactics like cohort analysis and e-commerce acquisition. He cites SolarWinds as a model and points to a decade-long shift in storage and compute as the opening for new companies. Goetz sources deals by talking to CIOs and engineers inside incumbents.
Chapters
And your name again is?
Samil. Samil, yeah, I know.
Jim Zay.
We're backstage here at TechCrunch Disrupt with Jim Goetz, partner at Sequoia Capital. Adi, Jim, thanks for joining us.
Thrilled to be here.
So we were just chatting a little bit about you're heavily invested in the enterprise and you're mentioning that actually some of the best or most innovative enterprise companies right now are actually learning some techniques from the consumer side. Can you talk a little bit about that?
I think there's some myths out there that the enterprise companies are focused on shelfware or bloatware. But there really is an enormous energy today in our better enterprise companies on identifying usage, thinking about cohorts focusing on design in a way that would compare to some of the better consumer companies. And so the notion that enterprise companies are embracing kind of consumer tactics, certainly the upstarts are, and they're using that as a wedge against the incumbents. And it's wonderful to watch. One of my favorite questions for a young enterprise company is to ask them what their cohort analysis looks like, which for a consumer entrepreneur is an obvious question, but something that only a fraction of the enterprise entrepreneurs are focused on.
And you're saying now with all the information that's out there on the consumer side, there's the younger, newer, sort of.
Surprisingly, the entrepreneurs focused on the enterprise often come to Disrupt and other conferences and they like to take literally a sampling and develop their own recipe for how they're going to go after those enterprise companies.
Got it. And any specific advice you would give to, let's say, very, very early companies that are thinking about, let's say, selling software right into the enterprise on sort of techniques or maybe even certain companies to watch of how they did handle stages of growth that would come to mind?
Well, I think customer acquisition is something that's traditionally been done with a large sales force or maybe a channel with traditional incumbents. And I think there's an opportunity to embrace other techniques. SolarWinds, which went public a few years ago, was one of the first companies to go after small medium enterprise and to do it with a recurring model. And they use modern online customer acquisition techniques that were, were arguably pioneered by E Commerce. And so it's a simple example, but an anecdote of what we're seeing right now in the enterprise space.
Great, great. So second question would be around just the period in time we're in now and like, let's look more at the infrastructure. Do you feel like these opportunities are evergreen or things will start to get commoditized where that the window is really open for the next few years and then may start to shut. How do you look at that?
Well, we always worry about upstarts competing with upstarts. You don't want a Malthusian environment where there's just too many startups to generate enough revenue, where our company can get a foothold and then begin to build momentum. There's no risk of that in the enterprise right now. There is a real need for people to attack some of these large problems. And so I think we've got years before the startup competition becomes an issue. But when it comes to the technology, we think we're in the middle of a massive transformation on the IT stack. So whether it's storage, storage or compute software architectures, the post PC delivery methodology, they're all going to shift. And so most of what's out there today in technology for the enterprise IT organization is likely to be transformed in the next decade.
So the window is going to be.
Open for enormous opportunity. We're looking forward to seeing you.
Great. And so the final question would be is I think be useful for a TechCrunch audience specifically is obviously right now there's a lot of focus on enterprise stuff in terms of sources, what do you as an investor or read or watch or talk to to sort of get your insights?
It's difficult. It's interesting. Even TechCrunch, who I think does a nice job of covering enterprise companies. If you look at the sheer number of quotes from my partner Rudolf Botha versus myself over the last four years, it's probably two orders of magnitude. It's a challenge. The blog sphere doesn't have a great group of people tracking the newer companies in the space. I spend energy talking to CIOs. There's a handful of key conferences for it. VM World has turned out over 10,000 people last couple years that are innovators in the space. And I think we'll see ongoing energy from the entrepreneurial community and that's usually where we get our best information from talking to engineers and potential entrepreneurs thinking about the space that are currently inside one of the incumbents.
Understood. Well, Jim, thanks for coming back here and congratulations.
