Will 2013 be the year of the enterprise startup?
Business, Leadership, Marketing, Technology

Is 2013 the Year of the Enterprise Startup ?

There has been a lot of talk about enterprise startups becoming ‘cool again’ , ‘the place to invest’ and so on. So what has really changed? How have enterprise startups, long considered boring and ‘un-scalable’ become sought after again? Here are the top three reasons

1. Tremendous focus on ROI at enterprise level
– The one common thread across all enterprise startups is an unwavering focus on ROI. This focus has particularly come in the spotlight in the wake of the global downturn that hit the World Economy in 2008. After this, there has been a definitive shift towards optimally using all resources, without exception, at an enterprise level. This has created newer opportunities and startups are exploiting those.

2. B2B outreach is easier than before – The biggest problem for a B2B startup is marketing. For example, an Accenture advertisement at best serves as a branding tool in the minds of 99% of the advertisement viewers. After all, mass media is definitely not the way to reach out to the enterprises. However, with the advent of channels like Google, Slideshare, Linkedin etc, this process has become simpler and inquiries through these channels are increasing for enterprise startups.

3. The advent of the cloud – Cloud, the ease of access and lowering costs of storage has meant that enterprise startups can stay afloat longer by curbing their expenses to the minimal. It wouldn’t be far fetched to say that enterprise startups owe a lot to services like AWS ( Amazon Web Services) for actually enabling their business models to go afloat at a lower cost than before.

Given all these factors, it is natural that enterprise startups are doing all sorts of innovative things and most importantly, at scale! Here are a couple of areas in which enterprise startups are totally cracking the whip –

(a) Analytics – A huge area where startups are innovating big time is analytics. An analytics backbone is a huge plus across sectors, be it in the ad network domain or in the enterprise effectiveness domain.

(b) Cloud storage – Startups like GitHub, Box, Dropbox, Diablo, Messagebus, Gridstore etc are all innovating on the cloud storage front and evolving new business models that are not only sustainable, but also scalable. And, they are well supported by Angel/VC money as well.

(c) CRM – Salesforce has literally become a common factor across almost all major companies today. The scale that Salesforce has been able to achieve has proven the scalability of B2B Startups. However, in the field of CRM, Salesforce is not alone and is closely followed by competitors like SugarCRM.

Given this, its natural that top VCs are entering the fray here –

KPCB is investing $200 mn

Kleiner Perkins Caufield & Byers will invest at least $200 million this year in mobile applications and cloud computing services for corporate users, investment partner Matt Murphy said. The Menlo Park, California-based venture capital firm, which boosted its enterprise-technology investments in 2012, will also seek security-startup investments, Murphy said in an interview.

Startups focused on corporate users are benefiting as employees adopt personal smartphones and tablets for work. That’s triggered increased investment by companies in new tools to manage mobile and cloud-based computing, Murphy said.

“The traction in our enterprise portfolio really surprised us,” Murphy said. “We view the timing and opportunity as even better than in 2012.”

WSJ Articles about enterprise startups

When Andreessen Horowitz VC Peter Levine looked around a conference room Thursday in San Francisco and saw 10 reporters sitting next to five CEOs of enterprise tech startups, he could barely contain his glee. “There’s a renaissance in enterprise computing – if this were five, six or seven years ago, to get one person to show up in this room would have been quite difficult,” he said. Perhaps he was calculating how much those exits would be worth. After all, 80% of tech IPOs next year are expected to be from enterprise startups. Andreessen Horowitz has invested more than $100 million in the startups in the room.

An India view

In India as well, there is an unquestionable need for enterprise startups. In fact, a lot of Indian startups focused on the enterprise have made global waves too – Zoho being one such example. Will India react or adapt to this boom in Enterprise Startups? What enterprise startups will emerge from India in 2013? Have your say below.

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Business, Finance, Strategy

Telecom – Airtel vs Reliance Communications

Two giants of Telecom, one of the fastest growing industries in India, one of the fastest growing economies in the word, are Airtel and Reliance Communication. Airtel declared its yearly results on April 29th followed by Reliance Communication on April 30th. Both the results are very good with Airtel doing better than RCom probably.

  • Airtel has a net profit of Rs 7,859 crores vs RCom had a net profit of Rs 6,147 crores for the year 2008-09.
  • For Q4, Airtel made a net profit of Rs 2,049 crores vs RCom had Rs 1,516 crores.
  • Overall the verdict in the newspapers has been that Airtel has come out as a big winner!

In the statements made by Airtel they have explained their strategy going forward. They are giving importance to rural penetration and high end users. Now this is an interesting strategy by a company like Airtel, which is looking for growth in customer base and generating revenues through the existing userbase as well. By emphasizing rural markets they are paving way for the future, expanding their network throughout the country further and gearing up for the next wave of users. In the last quarter they added 8 million subscribers. In the cities they are dropping the unviable schemes offering free minutes to users, allowing competition to grab these users but instead are focusing on their core stengths, their high end users! They already have a huge userbase and now they are generating the profits from them. A very good strategy indeed!

Reliance on the other hand seems slightly on a different track. They completed the world’s largest network rollout ahead of schedule, according to Anil Ambani. They also spent $2 billion creating a GSM network in major cities. They gave out lots of free minutes to users to create an existing userbase, which Airtel said they discontinued. Reliance is cutting down on Capital Expenditure since it already has the network and now believes it also has the userbase and will be able to generate good cashflows.

It seems the 2 giants are competing but at different levels. RCOM has completed the network and Airtel is trying to expand it further. Airtel has started milking its userbase while RCOM is just about getting there. I believe both the giants have deep enough pockets, great infrastructure and rich userbase to be a great telecom company. Looking forward to even better quarters.

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