We had a great time at the Crunchies last night. It’s always a special night, when the tech blogs to put away their daily fights and come together to celebrate the reason we all have jobs: Because entrepreneurs in the Valley build great companies.
But I couldn’t help but notice something very different this year. (Aside from, you know, the fact that Mike wasn’t there and Paul and I were in the audience.) The enterprise category was the sexiest one, stacked with some of the most exciting names between Asana, Box, Dropbox and Cloudflare. Sure they called it the “cloud” category, but that’s just packaging. Most of these companies aren’t building the next great consumer brand. They sell software to companies.
Asana is just getting going but given the team, the product and the resources behind it, it’ll be a major company to watch. Box has raised $150 million in funding and we hear their revenues are nearing a run-rate of $25 million in revenues a year. Dropbox had an explosive 2011, turning down an acquisition from Apple and closing a killer venture round with a $4 billion valuation. It was a big enough year for them to win best overall startup last night. Meanwhile, we’ve heard that investors have been begging Cloudflare for a seat at the table, with $1 billion-plus valuations from top firms already being bandied about. Yammer wasn’t nominated this year, but it continues to grow too.
I was sitting next to Drew Houston of Dropbox last night and he was a little nervous when the nominees were being announced. “It’s a tough category this year,” I said, and he agreed. This after years of TechCrunch trying to find anyone cool to put in that category and frequently copping out and adding in Salesforce.
It’s finally happening.
What makes “consumerization of enterprise” finally a reality? Part of it is the revolutionary reach of the iPad in organizations making people want dramatically new UIs, as I’ve written before. But a lot of it is who is starting these companies. The consumer kids have finally taken over the category.
The previous generation of enterprise software companies championed software-as-a-service and intuitive interfaces and the cloud, but they were mostly built by people who came from the old guard like Marc Benioff, Zach Nelson and Dave Duffield. They deserve huge credit for transforming a fundamentally anti-consumer industry, but most of their real contribution was on the business model.
This new generation– possibly the only people to start enterprise companies that have never worked a day at Oracle– are dramatically changing the game from a product point of view.
This is exciting for two reasons. The first is enterprise businesses aren’t as binary as consumer businesses. Because you are making something people will pay for, it’s easier to build a business. You may not build a home run like Facebook, but building a double or a triple is much easier if you make something that solves a real problem and execute well. Once the younger generation of entrepreneurs start to see this, I think it’ll draw even more of them into the category.
The second reason I find this so exciting is we spend more of our time at work than at home. And we might actually start getting amazing software to solve age old problems. Things that are inherently dysfunctional in organizations, like collaboration, despite billions of dollars spent to solve them. As the Facebook generation gets deeper into their professional lives, this is the relevant problem they want to solve.
That was the exact genesis behind Asana, in fact. Facebook co-founder Dustin Moscovitz and Justin Rosenstein wanted to solve the problem that was making their lives at Facebook hard. And it was a big enough desire to make them leave the hottest company on the planet.
This is going to be the next big wave for the Valley, and it’s just starting to bubble up to the surface now. It took longer than most of us expected, but this may *finally* be the year of enterprise software.
(Zach Nelson is an investor in PandoDaily.)