Live from New York! It's enterprise! (Sort of)

By Erin Griffith , written on December 18, 2012

From The News Desk

After the brutal public market performances of Groupon, Zynga, and Facebook, consumer tech is no longer in vogue.

Now it's all about the enterprise. Perhaps you've heard. Enterprise is so cool that The New York Times even caught wind of the trend (just before breaking the story that people are purposely wearing ugly holiday sweaters -- to hilarious results!!).

Enterprise fever is so bad that every startup that's not a social network is calling itself enterprise. Hell, the NYT thinks Hotel Tonight, Uber, and Grubhub are enterprise technology companies, never mind all three market and sell to consumers. When I mentioned my plans to attend an enterprise meetup to a techie friend, his response was groan-worthy: "Oh enterprise, that's like a big thing now, isn't it?" Yes, my friend. A big thing indeed.

So naturally, I'm curious to see how New York's unsexiest startups have been handling their sudden surge in attractiveness.

It's particularly of interest because New York has often been accused of (or celebrated for) its emphasis on soft consumer tech. Aside from 10Gen and vertical niches like adtech and fintech, we don't have much in the way of large, horizontal enterprise tech companies. It felt a little ironic that, after months of intending to check out the New York Enterprise Tech Meetup, the one I finally made it to was keynoted by Fred Wilson, the Godfather of New York tech and a huge investor in consumer Web.

He caught enterprise fever over the summer, or perhaps helped spur it when he blogged about his interest in enterprise deals. (Interestingly, Wilson has not led a single deal for his firm this year.) Tonight he made the case that Union Square's network philosophy applies to enterprise companies, noting that Union Square has invested in the category since its deal for InfoNgen in 2004. Around one third of the firm's deals are for enterprise companies, he said.

The key to his and Union Square's philosophy is that enterprise software companies with built-in-network effects can't be as easily disrupted by "ankle-biting competitors" in the form of two Y Combinator kids in a garage. Union Square portfolio companies Workmarket and Return Path have an advantage over any new market entrant because of the value of their networks.

But it's a delicate balance. Consumer Web users are often willing to give up privacy or data in exchange for using a free service. Enterprise companies are a little more wary about contributing their data to the betterment of the network. "Enterprises are not going to be as naive about data as consumers have been," Wilson warned. "Facebook was able to take all our data, and we didn't realize it until it was too late. I'm not sure that game could be played in the enterprise. Enterprise people are smarter."

Why yes, yes we are, the audience of 150 enterprise enthusiasts laughed. Well played, sir.

The contrast between tonight's gathering and the standard, 28,000-member New York Tech Meetup was night and day, starting with the venue. The New York Tech Meetup is hosted in an 800-person NYU theatre downtown, bordering drug dealer hotbed Washington Square Park. This evening's event was in the 45th floor conference room of a slick midtown law office, bordering a touristy Bryant Park holiday market. Each attendee had to do one of those look-at-the-camera security photo deals. There were more suits than t-shirts in the audience.

The meetup's content was (no shocker) less breezy than that of the New York Tech Meetup, too. For one, because you can't really do a live demo of enterprise software. And for two, because it was pretty deep in the technical weeds. As for that pesky NYTM policy of booing any question about business models -- there was none of that, either.

Lastly, I got my answer about New York's enterprise scene: It's very nascent. While everyone in the audience was in some way interested in enterprise, not many of them had enterprise companies. In fact, none of the three presenting companies were even from New York. SoMoLend is the closest -- the company recently moved here from Cincinnatti. Meanwhile Tracx was founded in Israel but is now headquartered in New York, and the very cool energy management software company JouleX is based in Atlanta.

Meetup organizer Jonathan Lehr explained that he strives to find companies that vary by sector and by stage of growth, so he often has to look outside New York for that. Enterprise tech in NYC is fairly young, so he sees the role of the meetup to educate people and get them excited about it. If it requires bringing in non-New York companies, so be it.