Slack’s valuation soared to $2.8 billion in less than two years, and has doubled in the past six months alone — all without any big marketing campaigns. The startup’s adoption curve and rave reviews are something many founders and investors dream about, but few actually achieve.
Enterprise startups in general have been on a tear over the past few years as the “consumerization” trend continues to churn and the ascendance of Big Data continues to transform the way business gets done. Slack is by no means the first enterprise collaboration tool to gain serious traction, but the startup has made strategic choices — from product design to enterprise contract structure — that have put it on track to generate massive adoption and add value to companies across verticals.
So while Slack has become the model after which all other enterprise startups pattern themselves, it’s imperative this new class of startups think critically about a few key factors that will shape their product offering, and ultimately position them to be the next unicorns of the enterprise.
While not all young enterprise startups have the hype of Slack, there are many taking on equally big opportunities and standing poised to become winners in their category. For example, HighFive is tackling video conferencing, which is critical to running remote teams in today’s business world. However, most current solutions are limited in their adoption because they are expensive and hard to use.
Startups today are proving that they can appeal to and handle the needs of enterprise organizations.
HighFive’s hardware sets up every conference room for remote meetings with an “instant on” feature, at a fraction of the price of traditional solutions ($800 per room versus ten times that). Its Apple-esque design makes its camera attractive and its software addictive — quite a change from fighting with your overpriced Polycom.
Quip is what you wish you were getting from GoogleDocs — a modern productivity suite that makes it easy to create content in documents and spreadsheets. It’s best on mobile, and users can create, edit and communicate about content from any device, then collaborate via chat, checklists and more. Redefining collaboration for mobile is definitely a billion-dollar opportunity, and Quip already has 10,000 businesses (versus Slack’s 30,000) and millions of individuals using its service.
A Better Database
A majority of 2015’s most promising enterprise startups have built solutions that help manage, understand and capitalize on Big Data. Big Data’s impact, although well documented, cannot be understated. However, the explosion of data also raises some architectural challenges. Delphix offers data-as-a-service, “virtualizing” databases so that one database can look like many.
Having one database lets businesses more rapidly manage data that moves around between databases. This approach saves a huge amount of time — according to Delphix, it can accelerate application project schedules by 50 percent — and time means money. In addition, Delphix has strategically attracted large enterprises by showing its value with a single database, then expanding to own all the databases.
Business Intelligence For Real People
The explosion of data also poses challenges as enterprise organizations struggle to make sense of it. There is no shortage of business intelligence (BI) tools to address this very challenge, but most are not used by real business people because they are hard to deploy and seem no better than Excel.
Looker is exciting because it focuses on data exploration. Its technology helps data analysts create and curate custom data experiences that enable everyone across the business, in any department, to get the answers they need to make decisions. The company started by focusing on early-stage e-commerce startups, and today works with an elite list of customers, including Yahoo!, Warby Parker, Asana, Instacart, Venmo, Upworthy and Gilt. It experienced 400 percent growth in 2014.
Beckon is BI and planning focused solely on marketing. They are perfectly timed alongside a fundamental shift in the CMO role, with the largest companies in the world now using data to drive all their marketing spend. Companies like Coca-Cola, Gap and Microsoft have seen value in organizing all their marketing campaign information across channels into one system under Beckon, and owning the system-of-record for marketing is going to be a unicorn-sized business.
Customer Acquisition And Success
Enterprise startups are having a particularly marked impact in sales and marketing departments, where they are leveraging data to turn mass targeting, cold calling and chasing weak leads into relics of the past.
For example, Radius’ marketing intelligence platform connects to your CRM and analyzes social media activity, web presence, advertising spend and other metrics to identify the prospects that are most likely to say “yes.” The product pitch is not unique, but its solution uses technology in a novel and powerful way to help companies that sell to small businesses find more new customers.
Rather than helping businesses find prospects in the wild, Intercom helps B2B businesses capture the customers that come to them. The buying process for B2B products is shifting entirely online, and SaaS companies need better ways to convert those browsing users into real customers. Intercom uses a freemium model that lets companies run analytics to see who is coming to their website, and how often. The paid service lets a sales team use a live chat to talk to prospects directly on the website, when they may be ready to buy.
Once a customer has been nailed down, the next challenge is to retain them. According to Hubspot, it costs about five times more to acquire a new customer than it does to generate new business from an existing customer.
With this realization in mind, VP of Customer Success has become the fastest-growing new role on executive teams from Yelp to New Relic. Gainsight’s software helps customer success executives and teams maximize the lifetime value of their customers. Gainsight was not the first startup to create software for customer success, but it is defining the role with thoughtful (and persistent) offline and online marketing and community management, including helping companies hire VPs of Customer Success and hosting regular conferences and community events that cover the category.
This puts it in a position to be the solution for all customer success. Gainsight is also a great example of a company that has met with success by selling to a single role within a company, which simplifies the message and allows the company to focus on building the best product for its user.
Ten years ago, gaining ground in the enterprise sector as a startup was a major challenge. Large enterprise customers often have needs that outscale the capabilities of small startups, and the enterprise sales cycles tend to be long, which can wreak havoc on a fledgling company.
However, startups today are proving that they can appeal to and handle the needs of enterprise organizations with the promise of a little investment for big returns. The explosive growth of Slack, and the other companies listed here, show just how ready for innovation the enterprise is.
Which enterprise startups do you think are poised to be the next unicorns? Let me know below in the comments.