Building an enterprise software company is a difficult but lucrative option due to the massive amount of money spent on IT every year, and with the advent of cloud computing, startups have a huge opportunity to serve both small and large businesses with new technology stacks for personalized experiences and on-demand services.

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  00:00

  💻: Aaron Levie explains why building an enterprise software company is a better option than consumer space, covering Box's history, major changes in enterprise software, and patterns to recognize and exploit.

  • Aaron Levie, CEO and co-founder of Box, gives a presentation on how to build an enterprise software company.
  • Create a concise TLDR in one sentence.
  • The lecture discusses why building an enterprise software company is a better option than going into the consumer space, covering the history of Box, major factors that have changed in enterprise software, and patterns to recognize and exploit.
  • Box is used by 240,000 businesses and 27 million users, serving a wide range of industries, including healthcare, media, and manufacturing.
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  04:14

  Box.net was created in 2004 to make it easy to store and share files from anywhere, and received angel funding from Mark Cuban before dropping out of college and moving to the Bay Area.

  • In 2004, the internet was a barren and boring landscape with limited activities and platforms like Facebook and Snapchat did not exist yet.
  • In 2004, it was difficult and expensive to share files, even in corporate networks, and USC only provided 50 megabytes of online storage space per email account.
  • Box.net was created to make it easy to store and share files from anywhere due to the dropping cost of storage, more powerful browsers and networks, and the need for more locations to store and share information.
  • Look for changing technology factors in a market because it indicates a significant change is about to happen, and Box was fortunate to launch a quick version of box.net that made it easy to share files in the growing importance of data in the cloud.
  • Received angel funding from Mark Cuban, dropped out of college and moved to the Bay Area.
  • Dropping out of college doesn't guarantee success, but the speaker and their partner dropped out and moved to Berkeley and Palo Alto to open up their product for free.
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  09:33

  Building an enterprise software company is difficult but lucrative due to the $3.7 trillion spent on IT every year with a focus on productivity and performance.

  • Box.net had a free version of their product with one gigabyte of file storage space, but they struggled with having too many features for consumers and not enough security for enterprises.
  • In 2006, the speaker and his co-founder had to choose between two paths - consumer startup or enterprise - and they ultimately chose the latter despite it being a thankless battle against large incumbents.
  • Consumer market has limited monetization options with $35 billion spent on mobile apps and $135 billion on global digital advertising, while enterprise market has $3.7 trillion spent on IT every year with a focus on productivity and performance.
  • Building an enterprise software company was difficult due to slow software development and sales processes, despite the importance of maximizing value with limited resources.
  • The enterprise software industry is complex, lacks good user experience, and requires a sales intermediary, but the speaker's company wanted to use the power of the internet to sell their technology directly to customers.
  • Despite being an inexperienced team with a young-looking CFO, they decided to give it their best shot and pursue their goals.
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  17:49

  Cloud computing is changing the game for enterprise software, making it easier for startups to offer low-cost solutions with on-demand access to servers and applications.

  • The company aimed to bring the consumer experience into the enterprise by changing the rules of software complexity, sales process, and design for the user.
  • The speaker discusses how they made the decision to focus on enterprise software and how changes in the technology world have made it easier to build a successful enterprise software company.
  • Most application categories are moving to the cloud, eliminating the need for technology to be implemented in every single customer location.
  • Cloud computing allows for on-demand access to servers and applications, and while it may seem obvious to startups, large enterprises are now making the shift from investing in their own infrastructure to utilizing cloud services.
  • Low-cost on-demand computing creates a massive opportunity for startups as it becomes easier for customers to adopt new solutions with lower barriers.
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  22:49

  Software companies have a huge opportunity to serve both small and large businesses with new technology stacks for personalized experiences and on-demand services.

  • Enterprise software companies can now serve small businesses and large companies due to the availability of open platforms and user-led IT models, which has led to larger markets and a better economic proposition.
  • The rise of smartphones and the increasing number of people online creates a massive opportunity for software companies to build the technology stack for the next generation of work and enterprise data usage.
  • Enterprises need new technology to adapt to disruptive changes in their industries caused by companies like Uber, Instacart, and Lyft.
  • Retail, healthcare, and media industries require new technology stacks to power personalized and predictive experiences for consumers.
  • Industries are shifting from linear programming to on-demand experiences, requiring new software and technology to power distribution and marketing automation.
  • Water is essential for the future and every company in the world will need software to power it.
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  30:53

  Companies must partner with the technology industry to leverage data and work smarter, faster, and more securely.

  • Every industry will need to have a technology component to survive in the future, and companies will need to partner with the technology industry to leverage data and use new tools to work smarter, faster, and more securely.
  • Spot technology disruptions to build a successful enterprise software company.
  • New enabling technologies and fundamental trends create opportunities to build new technology and solve problems, as the cost of computing drops rapidly, changing what enterprises can do with their data and business models.
  • Planned Grid is a mobile application that manages construction projects and aims to reduce the $4 billion spent annually on printing blueprints by utilizing iPads for easy access and collaboration.
  • Start small by finding a gap in the market where you can create a product that solves a specific problem and has the potential to expand over time.
  • Startups struggle with the complicated and outdated payroll process, but a new solution has emerged to simplify and digitize the process.
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  38:14

  Find unique opportunities and build platform-agnostic technology to disrupt incumbents and succeed in the market.

  • To build a successful new company, find asymmetries that incumbents can't or won't do due to economic or technical limitations.
  • Build platform-agnostic technology to work across all platforms and find ways to monetize customers that are unique and economically infeasible for incumbents.
  • Zenefits offers a unique business model where insurance companies pay for their platform, disrupting the health and benefit space for small businesses, and they target unique characteristics of early adopters.
  • To spot trends and patterns about disruption, find customers who are working in the future and build technology that supports new use cases, like Sky Catch, an enterprise drone company that worked with early adopters to establish their platform.
  • Listen to your customers' problems and distill them into the best and simplest solution, modularize instead of customizing, and focus on the user when building enterprise software.
  • To ensure product adoption and success, incorporate consumer DNA into the product development process, leverage the internet and users, and utilize consultative sales individuals to navigate the competitive landscape and ecosystem.
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  45:26

  Read "Crossing the Chasm," "Innovator's Dilemma," and "Behind the Cloud" to start an enterprise software company, and if it doesn't work, consider working for the speaker's company.