Variables For Enterprise Software

Most enterprise software incumbents deliver a suite of products.  You want to use one bit of their product?  Well your only option is to buy it all.

Incumbents predicate their success on this model.  It’s the way they got to the top and that’s how they want to keep it.  They like to work in verticals – selling their suite of products to different enterprises.

New startups in the enterprise software space can leverage this to their advantage.  They can take something which is painfully broken, make something which elegantly solves the problem and sell it.  The larger incumbents haven’t fixed this problem already because they either haven’t realised it exists or because it’s not lucrative enough for them to fix.

However, what startups can do is work the horizontal axis.  If this product can be sold to a lot of people and can result in a platform, then you’ve started to disrupt the incumbents.  As the platform grows so does the value of your product.  Incumbents don’t have a chance of competing as their business model won’t allow it*.

*There are a few examples of some incumbents who have been brave enough to change their models and remain the winners, but these are very rare.

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Being Young, Poor And Unkown

In large organisations and large businesses the state of technology is generally far behind the consumer world.  I think that in the next decade the enterprise world is going to be revolutionised with software in the same way that the consumer world has been.  Enterprise software is also a lot more lucrative than consumer software as companies are willing to pay a lot more than consumers for services.  Just to put this into context, people spend about $35 billion on consumer apps every year and about $135 billion on digital advertising.  This sounds like a lot until you realise that global enterprise software expenditure is $3.7 trillion.  It’s very likely that within the next decade we’re going to see lots of new billion dollar companies appearing in this space (and possibly  trillion-dollar companies!).

I have always been struck by how bad enterprise software in the NHS is.  So much of it is so obviously bad and painful to use that I am surprised a lot of it hasn’t been shelved for better products already.

There are the obvious reasons why this is the case – industries don’t like change and once software has been chosen and invested in, organisations want to build ecosystems around them rather than causing unnecessary disruption.

However, there’s another really overlooked reason why enterprise software is really really bad.  it’s because the majority of people involved in procuring enterprise software are so damn old!

I remember when I went to the NHS Innovation Expo earlier last year.  I must have been the only person at the whole expo with a full head of hair!  These were meant to be the movers and shakers of the NHS, the companies that were going to revolutionise healthcare in the UK and they were all 50+!  I’m not saying being old is bad or that older people lack insight, however if we look at history it’s generally younger people who can “live in the future and create what’s missing” (as Paul Buccheit once said).

A major reason for this is that young people have a naturally large advantage over older people just because of their age.  Being young allows people to intuitively envision the upcoming trends as they have grown up surrounded by the newest technologies.  What is painfully obvious to young people really is not obvious to older people.

I’ve noticed this with my own startup.  It’s so darn obvious to me that what I’m building should be how things are done.  But when I speak to older doctors and people involved in procurement they really don’t seem to get it until things are explained to them point by point, with plenty of data to back up my claims.  What seems blatantly obvious to me clearly is not blatantly obvious to them.

My experience kind of echos what Marc Andreessen said.  He said (to paraphrase) that most startups are not too late – they’re often too early for the times.  The reason entrepreneurs start a startup is because they have a clear vision of what the world should look like and so start a company to create that reality.  It seems so obvious to the founders that they are right that founders (including myself) feel like they started too late and that another company is going to come along and kill them.  However, in his experience this never happens.

Younger people who can see the trends and have a better idea of the what the future should look like can solve needs which no one is even thinking of yet, but which they intuitively know will occur in the not too distant future.  This is allows younger entrepreneurs to create startups which have no competition!

I’ve said it before, but it really does seem that being young, unknown and poor are some of the greatest things you can leverage in your start up.

Time

If you look at an exponential growth curve close up, it looks linear.

I’ve found that time distorts reality in a number of ways.  If only you could zoom out and look at that graph over a larger period of time, then you could clearly see if you’re on to something big or not.

Time also distorts your perception of what’s important and what isn’t.  It only becomes crystal clear further down the line.

I’ve noticed that in a startup it’s really really hard to stay focused as there seems to be so much to do.  It becomes easy to forget about what’s really important.  In these instances it’s always good to go back to first principles:  Make something that your customers love.

That’s it – nothing else.

That meeting with the VCs can wait if you’re not actively raising money, you don’t need to go chasing that partnership if you haven’t made an awesome product yet, you don’t need to go to networking events if it’s going to distract you.  Just make something your customers love.

The Market Doesn’t Care…

The market doesn’t care about what colour you are.

The market doesn’t care about where you came from.

The market doesn’t care what sex you are.

The market doesn’t care if you think you’re clever.

They market doesn’t care what you look like.

The market doesn’t care about your political beliefs.

The market doesn’t care about what you’re passionate about.

The market doesn’t care about what mistakes you’ve made in the past.

The only thing that the market cares about is whether you have created something of value.

It is interesting how level the playing field is in the world of startups.  If you have a small amount of capital and are able to put an awesome team together you can really make something which can have a massive amount of impact in the world.  And the wonderful thing about startups is that it lets you play in a part of the world which is actually fair.

Most people are used to artificial tests in an artificial environment such as passing exams and jumping through hoops in an organisation.  People use tricks to get ahead in these settings, like studying the answers instead of answering the questions or sucking up to people higher up in the ladder.

In startups there are no tricks.  At the end of the day you have to make something which the market i.e. people love and want to give you money for.  There is no gaming the system or fooling people into thinking they like your product or service.

If you’re ready to enter a part of the world which is fair, but will require you to put your integrity, intelligence, thoughts and words on the line, then a startup might just be what you’re looking for.

Metrics Of Life

In the startup scene there’s a saying: “You build what you measure”.

If for example your startup is measuring number of new registrations, then you’ll end up building and iterating in a way that makes that metric go up.  However, if you stop measuring this metric and concentrate on something else, you may find that the number of new registrations start to decrease.

Another good example is how large companies often only measure the growth rate of their profits.  In doing so you may forget to measure other key metrics which may have actually made the company a success in the first place!

A good few years ago I heard that people are basically thinking of three things in life: Health, Wealth, Relationships.  This seems accurate to me.  I have noticed that whenever I meet someone new all I need to do is make them talk about one of these three things and they can go on and on forever.  Also, people love to talk about themselves so that person always ends up feeling like you really “get” them at the end of the interaction.

I hadn’t realised I was doing this, but I soon realised that I was treating these three points almost like business metrics.  I always keep track of these three things and make sure the trajectory is always going up.  When you need to make a decision in life, keeping these three things in mind always help.  What I like about this system is how effective it is in drastically improving your life combined with how simple it is.  For example my health goal is to get down to 10% body fat for the summer time, my wealth goal is to finish my postgraduate training and continue to work on my startup, my relationship goal is to continue to meet and befriend successful entrepreneurs.

It’s deceptively simple, however as soon as you are aware of these metrics you can’t help but move towards the goal.

Hating Groups of People

Because of the state of the NHS, doctors are often written about in the news.  It’s no secret that working conditions for doctors in the NHS (whether junior or senior) are really bad and seem to be deteriorating rapidly with time.

Shifts where you have to cover hundreds of sick patients by yourself is not and never will be justifiable.  Patients are at risk of serious harm and I’m sure many have died as a result.  When a patient does come to harm, that single doctor covering all those patients is the one that gets the blame, jeopardising his or her career.  A career that they’ve sacrificed a heck of a lot for and dedicated an enormous amount of time towards.  A similar picture is true of primary care physicians – they have to see a patient every ten minutes, which is a totally arbitrary amount of time and obviously isn’t enough for many patients.  The GP then has to make a choice between practicing dangerous medicine or letting their clinic run into their personal time.  All GPs I know do the latter as it’s better to let your clinic run late than to jeopordise your career.

What I find interesting is the public’s attitude towards doctors.  When doctors talk about how tough they have it and how it’s making them go abroad where working conditions and pay are better, a lot of people say that this is heresy.  A lot of people have similar attitudes towards GPs – calling them lazy and incompetent, whereas if this were even remotely true they’d be struck off or investigated.  Any patient can complain about their GP for any reason and it is always investigated by the practice or referred on to the local commissioning group.  If the patient is still unhappy they can complain to the national ombudsman.

Here is my argument: If a significant group of people  are being vilified, who are not intentionally causing any harm to their fellow humans, the people who are vilifying them are always wrong.

If we look at history this has always been the case.  Whether it be the Jews in Nazi Germany, African-Americans throughout American history, or the “Untouchables” in India.

I think that this is quite an important statement to always keep in mind when assessing how true a news story is or how valid a person’s opinion is.  Whenever I hear people make negative generalisations about doctors or GPs – who consist of a large group of people whose job it is to look after others – I know that that person is just plain wrong or trying to be controversial.

Disruption In Three Simple Steps

  1. Think carefully before starting your business about a product that has the potential to grow into many different areas and eat away at the large incumbent businesses.
  2. Create a hyper focused niche product that can solve a problem for a lot of people, but not so many people that an incumbent organisation would be interested in competing.
  3. Start to grow into different areas and eat away at the competition.  They will be too far behind or have an entrenched business model that won’t allow them to compete.  This is disruption.