November 4, 2012

First, apologies for the lack of links – I’m writing this on my phone.

I’ve been thinking quite a bit about the recent shift we’ve seen towards more startups and investors focused on the enterprise. I’ve blogged about it before, and in a way, I think it’s just the result of everyone chasing the tail of innovators and piling in one after another.

But I think that the shift towards the enterprise is indicative of where we are in the current innovation cycle. On this point, I tip my hat to Mike Maples and Roger Macnamee who have written some excellent stuff on this.

In short, I think the areas of opportunity today lie in two areas.

1. High Friction areas disrupted by the first Internet revolution.

2. Platforms and enabling services powering/capitalizing on the next Internet revolution.

On #1, these are verticals that haven’t been touched by the Internet as directly because of some combination of:

– high cost of sales vs revenue
– old school / conservative buyers
– immature distribution channels
– government regulation

That’s why education and HIT are starting to take shape now, as well as software that services SMBs and some non-revenue generating enterprise categories. In general, these are enterprise facing opportunities. The exception is high-consideration commerce, which is a theme we’ve blogged about before. We have gone after these areas aggressively, though our investments in IS2, OBJL, TurningArt, Plastiq, Mojo, to name a few.

On #2, these are opportunities that are built on the building blocks of the next Internet revolution. Namely:

– the social graph
– an Internet connected computer in everyone’s pocket
– distributed and connected data transmitters and sensors
– advanced human/computer interfaces

As Roger and Mike point out, the application layer is a little later to develop in a new innovation wave. What you see are more enabling services and platforms.

So, add these together and you get more interest in enterprise vs consumer. It makes sense to me. But consumer applications take hold all the time. And some consumer applications end up really becoming platforms themselves. So I think it’s dangerous and silly to just forget consumer altogether, or even to paint such a simplistic dichotomy between the two areas.

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