Chris Dixon: The consumer Web has gotten too good, enterprise companies are cutthroat
It's hard to tell now, but there was a time -- just a few years ago, actually -- when the consumer Internet wasn't seen as a nascent industry just waiting to morph into the menagerie of photo-sharing, social networking, and casual gaming startups we have today. A time when, according to Andreessen Horowitz partner Chris Dixon, people would "literally laugh in your face if you didn't think that the Internet was stupid."
Before the Google IPO, Dixon said, the consumer Web was seen as something that would end up something like air travel -- a market where a few people might compete but no one would actually make any money. Then, once the search company showed that there might be a little bit of cash available to consumer software makers, the industry started to grow and expand.
"It's a really different climate now, on the consumer side especially, because there's so much noise. Back then the supply and demand was out of whack -- there was a lot of demand pent up, but there wasn't enough supply to keep up," Dixon said. "One of the challenges now is that consumer tech is really good. You go home. You use your iPad. You check Gmail and your Twitter, and you look and everything in the world is really great… It's just harder to say 'Let's take something and make it five times better.'"
Yes, you read that right: One of the biggest problems consumer Web companies face is that everything is just so much better than it used to be. On the list of problems most people would consider "good to have" (which is kinda asinine, given that no problem is really good to have, but whatever) high quality would probably be somewhere near the top.
Enterprise companies have an entirely different set of problems, Dixon said. Where consumer Web companies are forced to compete with their own success and users' attention spans -- "competing against the person," as Dixon put it -- enterprise companies have to compete in a cutthroat market.
Many enterprise startups try to emulate the business model of companies like Box or Yammer, Dixon said, relying on lower-level engineers adopting a problem and then pushing it up the ranks until everyone at a company uses a tool without some decree from the corner office. "That can work in terms of getting some traction," Dixon said. "But the way that enterprise companies work today, you still need to get a sales force and to get a million-dollar check, which is how businesses actually get to scale."
It isn't enough to have a good enterprise product; companies "basically need to become a political campaign" with sales people who act as "political operatives," Dixon said. Consumer companies are competing with the quality and scope of their competition; enterprise companies are competing with zealous salespeople, stodgy executives, and the category's arcane customs.
[Disclosure: In addition to being a personal investor in PandoDaily, Dixon is a partner at Andreessen Horowitz, the partners of which Marc Andreessen and Jeff Jordan are also personal investors.]