The New Way to Distribute Enterprise Software
(Shout out to @davemcclure for letting me use the pic! Sorry if it might be a bit dated. I really wanted the t-shirt ;)
We constantly hear about distribution strategies for consumer apps such as the Bowling Pin Strategy coined by Geoffrey Moore in his book Crossing the Chasm and through Chris Dixon's post which emphasizes this strategy and points to companies like PayPal, Facebook, Foursquare, Stack Overflow as great examples of how to distribute your product.
I haven't yet heard of an enterprise product that has distributed their software virally or in an innovative way that others could admire. Usually, it's about building a great sales team, and the company that can build the better sales team is the company that historically has a better chance of winning. One of the first questions an investor will ask you if you are building a consumer-oriented startup is -- how will you get to a million users? For an enterprise startup -- how will you get to a million businesses? The answer is usually we'll build a great sales team. (Note: this is by no means a shot at sales people. Recently, I had a great conversation with Yujin Chung, Partner & BD at Andreessen Horowitz and he has directed me to some great books like Spin Selling that explain the true sophistication behind enterprise sales. However, I'm curious whether the sales function will evolve overtime, similar to how say marketing has become less about straight advertising and more about feedback loops, metrics and analytics).
Very few enterprise products (that I've tried at least or heard about) focus on ways in which B2B derive value from the product. It's typically why and how everyone in one organization should use your product and less about why and how multiple businesses interacting with each other should adopt your product. Shouldn't there be an easy way in which businesses can invite other businesses? Are there viral hooks you can build into your software? Is there such a thing for enterprise software? Again, it's easy to understand why people within one organization will invite their colleagues to use it, but I'm referring to other businesses. Perhaps, this doesn't apply to all enterprise software, but usually with consumer products, it's only valuable to you if your friends or other people are on it. I would love to see a product that is valuable to me as other businesses use it.
I believe the bottom-up approach needs to be applied more rigorously towards enterprise products vs. the traditional top-down approach that legacy software companies like Microsoft and IBM abided by with a huge sales force. Kenny Van Zant, newly hired COO at Asana, has written in his series on The Consumerization of IT, about the idea of consumer-oriented technologies and behaviors being further adopted in the realm of the enterprise. The days of having to convince a CIO of why your product is great and why the firm should pay you millions of dollars for it is quickly disappearing (in my opinion). Is there still a need to build a massive sales force? Can your product convince an employee at XYZ company to use it and then have it bubble up from there? Is there a way for that employee to easily invite other employees from other companies? I wonder if the new sales force can be the employees themselves? Are the incentives aligned between those employees? Some enterprise software is so valuable to one organization, there's actually no incentive for them to share it with others.
So, what are some B2B viral / distribution strategies?
Here are two that I'm currently aware of:
1. Creating hybrid software that integrates with other widely used products -- having a way for your product to be used within tools that already exist is something that consumer-oriented apps do all the time (e.g.. creating hooks into Facebook and Twitter). What's the equivalent for enterprise software? A couple examples come to mind:
(a) Asana, which seems to have implemented (see their demo) a very clever bi-directional email bridge that allow users of Asana to collaborate with others who aren't using Asana, through the most widely used enterprise collaborative product we know of -- email;
(b) Box.net with their recent release of ECM Cloud Connect that offers a bridge between on-premise content such as current management systems like Microsoft SharePoint and Box, providing essentially a hybrid solution for users.
2. Empowering "doers" of organizations to spread your product -- who are the doers you may ask? Well, developers are the doers, right? They're the one's actually building the product. Developers are the new recruiters. Developers are evolving into the new sales people. There are two great examples that I know of who focus on developers to spread their product:
(a) Twilio, the cloud communications company that powers the new wave of messaging apps like GroupMe, FastSociety, Beluga and Yobongo. Twilio has reached over 20,000 partners, not through sales people, but through developers. Even if their title reads sales, Jeff Lawson, co-founder and CEO of Twilio explains in this Mixergy interview -- it's a developer that you're really speaking to;
(b) Palantir, the Jack Bauer of business software, that employs 250+ engineers and claims they will never have a sales or marketing team. Evelyn Rusli at TechCrunch questioned this approach in her piece entitled "Palantir: The Next Billion-Dollar Company Raises $90 million" by saying, "It's hard to imagine a billion-dollar company without a sales team, but then again Palantir is getting pretty darn close."
I think we'll see more examples like this in the near future. Perhaps, they're already out there and I haven't yet heard of them. If so, please do share.
In any event, however, I should probably spend less time writing posts like this, and more time learning how to code so I don't become displaced at some point ;)
Cheers,
Andre
