Consumer vs enterprise startups

I was at an event last week and the subject of enterprise vs consumer startups came up.

Feels like it comes up all the time these days.

My firm makes consumer and enterprise investments. In both cases we look for extraordinary founders, building beautiful products and we highly value network effects, marketplace dynamics and bottoms up distribution.

Looking back on my past 8 years as an investor it’s clear I am drawn to consumer areas even though my first investment and exit was a b2b/saas company.

Many folks bristle at consumer businesses as being a hits based business. With the exception of games, I don’t believe it’s true.

That’s not to say consumer startups are easy to build or easy to back. They are crazy difficult. The bar is high and getting higher. It’s not easy to build something that delights the end customer every day.

One difference in my mind is that consumer products sound crazy if you describe them without seeing or touching them. The best ones have crazy concepts and assumptions. A real time information network limited to 140 characters ? A mobile photo sharing app? A site to upload user generated videos? A chat app where the message goes poof after a few seconds? I could go and on.

On the other hand, enterprise apps sound completely reasonable. Web services for purchasing, security, expense reports , customer support, data center apps, human resources, payroll, salespeople etc. they all sound perfectly useful.

And that is the rub for me. I am drawn to the crazy ones. The ones that require a conceptual leap of faith. But in this area, often when I least expect it, I meet someone that tells me or shows me something that takes my breath away and keeps me up all night with excitement.

As I said in the beginning of this post, our firm will happily continue to invest in both categories. And who knows perhaps an enterprise startup will come forward with a ridiculous idea that change my mindset.

But in the meantime my heart belongs to in the consumer world. Even if we are the minority.

(Really enjoyed this post on the consumer vs enterprise investments over time. http://tomtunguz.com/consumer-web-investing )

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I’m writing this on my phone so please excuse the lack of links. I will update this post later.

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  1. jshapins reblogged this from bijan and added:
    One of the better descriptions of enterprise vs cosumer I’ve seen in a while.
  2. seanabel said: My experience with startups and software product development has been primarily in the B2B and Enterprise spaces. Marketing B2B seems inherently different (and more complex than consumer marketing).
  3. aspartanlife reblogged this from bijan
  4. gamalan reblogged this from bijan
  5. bijan posted this