I have my doubts that very many of the more mature startups from the 2014-2021 vintage will be able to make the transition from PLG to enterprise sales led growth. The sales motions are completely different, with enterprise sales cycles being far longer, and involving relationships as much as the technology itself. Also, the more evolved a platform is, the more work it is to get it to compliance with frameworks like SOC-2 and ISO27001. And once you clear that hurdle, what are you going to do when an enterprise customer says your SaaS platform needs to be run in single tenancy mode, in the cloud of their choosing, with private connections back to their data centers? Yeah, sure all the hyperscalers support these architectures but implementing them will require customization. If most of your customers onboard by signing up on the website and putting in a credit card, you probably don't have the solution engineering teams that can onboard enterprise customers. Sure, you can build out that function but that takes time and it will involve a culture shift. You're going to need highly experienced people that you can trust when put in front of senior enterprise tech leaders. Those people are extremely rare at startups that have mostly been selling to other startups, or have been selling directly to lower level IT and business managers whose procurement approval amounts are just in excess over the lower-level SaaS pricing tiers.
Agreed - my point above was more an observation of what's happening. Totally agree - super hard to reorient a company, product to deliver real enterprise deals - some will make it and many won't - talent needs to be changed, mindset as well
Yup. . its going to be brutal for many of these startups, particularly those that raised money from 2018 onward, with the 2020 to 2021 vintage being in the toughest spot due to completely unrealistic valuations. How many billions of dollars of dead money is out there? When I see former high-flyers like Flexport laying off 30% of staff it really makes me wonder. Its probably a coin flip as to whether they survive at this point, and yet a lot of "smart money" was putting 8 figure investments into them at an $8B valuation a few years ago. That equity is worth zero now. The Instacart IPO is similar - late stage investors took a total loss, and even those that made money got returns that were nowhere near what VC expects. 25% over 8 years on an illiquid startup investment is terrible. You might as well just buy SPY. It seems to me that there is a significant amount of pain in the startup and VC world still to come. . .
I have my doubts that very many of the more mature startups from the 2014-2021 vintage will be able to make the transition from PLG to enterprise sales led growth. The sales motions are completely different, with enterprise sales cycles being far longer, and involving relationships as much as the technology itself. Also, the more evolved a platform is, the more work it is to get it to compliance with frameworks like SOC-2 and ISO27001. And once you clear that hurdle, what are you going to do when an enterprise customer says your SaaS platform needs to be run in single tenancy mode, in the cloud of their choosing, with private connections back to their data centers? Yeah, sure all the hyperscalers support these architectures but implementing them will require customization. If most of your customers onboard by signing up on the website and putting in a credit card, you probably don't have the solution engineering teams that can onboard enterprise customers. Sure, you can build out that function but that takes time and it will involve a culture shift. You're going to need highly experienced people that you can trust when put in front of senior enterprise tech leaders. Those people are extremely rare at startups that have mostly been selling to other startups, or have been selling directly to lower level IT and business managers whose procurement approval amounts are just in excess over the lower-level SaaS pricing tiers.
Agreed - my point above was more an observation of what's happening. Totally agree - super hard to reorient a company, product to deliver real enterprise deals - some will make it and many won't - talent needs to be changed, mindset as well
Yup. . its going to be brutal for many of these startups, particularly those that raised money from 2018 onward, with the 2020 to 2021 vintage being in the toughest spot due to completely unrealistic valuations. How many billions of dollars of dead money is out there? When I see former high-flyers like Flexport laying off 30% of staff it really makes me wonder. Its probably a coin flip as to whether they survive at this point, and yet a lot of "smart money" was putting 8 figure investments into them at an $8B valuation a few years ago. That equity is worth zero now. The Instacart IPO is similar - late stage investors took a total loss, and even those that made money got returns that were nowhere near what VC expects. 25% over 8 years on an illiquid startup investment is terrible. You might as well just buy SPY. It seems to me that there is a significant amount of pain in the startup and VC world still to come. . .