5 Lessons from Two Cloud Leaders: Aaron Levie and Jeetu Patel
“Every company is now a software company.” That observation, popular in recent years, captured the essence of a recent panel discussion I moderated at the Cloud Leaders Forum between Box cofounder and CEO Aaron Levie and Jeetu Patel, senior VP of platform and chief strategy officer at Box. Jeetu placed an even sharper point on the proceedings when he predicted that “the next 10 years of software businesses, including ours, will look very different from the past 50 years.”
There’s little argument that software is now crucial to just about every company’s current and future business prospects. It’s critical to what companies do now and it will be critical when the time comes to reinvent themselves. And this urgency spells opportunity for innovative software creators that are stepping into this dynamic landscape. Software startups are well positioned to play the role of go-to source for technology as they rethink processes, especially processes of old-line businesses.
I’ve been involved in the enterprise software world for 17 years, as operator, investor and board member at companies, such as Cornerstone OnDemand (CSOD), WageWorks (WAGE) and Engagio. In this time, I’ve seen a serious shift take place, as next-generation software makers displace legacy vendors, such as Salesforce and Veeva ousting Siebel, Workday ousting PeopleSoft and SAP HR, and Coupa ousting Ariba. It’s hard for incumbent software players to innovate as they need to prioritize customer needs related to their existing legacy products. Meanwhile, the next-gen makers are helping old-line companies leverage software that enables larger market opportunities and more rapid go-to-market efforts.
History is always a good benchmark to underline the difficulties many old companies face in successfully surviving fundamental changes. Take a look at the companies on Fortune 500 list of 16 years ago and you’ll immediately notice that fewer than half (48 percent) are still on the list today. Old-line companies are being challenged by the rise of software, new technology, and need an injection of innovation to prevent being left behind. Think Uber for taxis, Airbnb for hotels.
“The traditional oligopoly of Microsoft, IBM, SAP, Oracle and others has been blasted open,” Levie said. “This has forced these incumbents to think they need to build everything on their own. No one wants to buy products from one or two companies,” he added.
During my discussion with Levie and Patel, I jotted down five points that stood out for me. They’re worth thinking about, especially for software startups that are seeking to live long and prosper in the new era of software.
1) Know your true users. Sometimes the buyer isn’t the user and sometimes feature requirements are prioritized by the buyer even if the user doesn’t need or want them. Don’t assume that more software features mean a better product. Software startups bringing product to market should focus on the majority of the end users, not on the traditional target of “power users,” who often make up only about 5 percent of the total customer base.
2) Remember the “10X rule”. Keep in mind that before customers will make the move to new software, they must believe that the new software is 10X better than their existing solution. Incremental improvements don’t move the dial.
3) Think like a customer. Put yourself in the shoes of your customers and understand what they’re trying to achieve. They’re vying to grow their bottom line quickly to keep up in fast-moving markets.
4) Be transparent. Box’s vision looking ahead is to become embedded in all businesses, so much so that only a small percentage of enterprises actually know they’re running Box.
5) Target reinvention. Companies need to reinvent themselves and this creates opportunities for new players.
The future is bright for software opportunities and now is the time to start thinking hard about the dramatic shifts and changes ahead. A larger software ecosystem is being built, which will benefit both makers and customers and it’s better to be a part of the transforming forces than watch them disrupt your business.
A highlight reel from the event may be viewed below.
Norwest Enterprise Cloud Leaders Forum from Norwest Venture Partners on Vimeo.