Build a Startup Engagement Team Now

Startups Are Already Using the Tech Your Enterprise Clients Will Demand

“Even if you never earn another dollar from Azure, you still need a startup group because these startups are using what your enterprises will be using in five years….”?

I said that to an EVP at Microsoft in early 2022 when I was trying to convince them to bring me on to do cross company startup strategy. Wisely, he ghosted me. But I stand by that statement. And I submit that this stands for any companies selling tech. To be clear, I’m not necessarily saying that the startups themselves are disrupting the world (even if they are; remember: today’s startups are tomorrow’s enterprises). What I am saying is that the products and services these startups choose to use now are the products and services enterprises will adopt en masse in the next 5-10 years. So no matter what a company does, it needs to have a startup engagement effort. (Disclosure: I co-built the startup teams and AWS and Stripe so I may be modestly biased.)

Here’s why….

When I joined AWS in 2014, of the early stage (“Pre VC”) startups with whom we worked, approximately 100% (give or take) used cloud computing infrastructure. The ones that didn’t made something like furniture, but even most of those used cloud too. At the same time, <10% of total IT infrastructure spend was cloud. (And, according to Gartner, 83% of that was AWS’s $4.6B in 2014 revenue.) Fast forward a decade and all the startups are still using cloud computing, but cloud represents something like 50% of total IT infrastructure spend (and AWS is a $100B run rate behemoth). Why? Because cloud is faster, better, cheaper, etc. than managing your own data centers. So while startups, with no technical debt, ramped cloud adoption to near ubiquity nearly instantly, enterprise cloud adoption grew as they decommissioned and rolled off legacy infrastructure. Despite growth moderation, overall cloud adoption continues to grow. (I suppose we could conjecture that the market will still double over time.)

When I joined Stripe in 2018 (by which point it had already replaced Chase Paymentech as the payment processor of choice), the entire infrastructure was cloud based (natch) and it had a similar adoption experience to AWS, but what I also noticed was that the company’s internal applications were all Google Workspace (fka G Suite). Not Microsoft Word, Excel, Powerpoint, etc. Why? Because (cloud native) Google Workspace was faster, better, cheaper, etc. than deploying older generation enterprise applications. So while startups, with no technical debt, ramped adoption of (cloud native) Web-based collaborative applications to near ubiquity nearly instantly - and then themselves grew into large(r) enterprises - large(r) enterprises either ramped adoption of comparable products or leveraged upgraded (cloud-based) platforms like Office 365.

The two lessons here are:

1. It’s going to be easier (and faster) to sell your new tech into earlier stage companies because they blissfully lack technical debt. The breakout startups will be based on these platforms, the breakout startups are tomorrow’s enterprises, and the developers at these breakout startups will go on to other large, amazing companies and bring these new platforms with them. This is critical for startups to understand because their initial traction is what will most help secure capital required to grow. (This is also obvious.)
2. The less obvious lesson is that large(r) enterprises with large(r) installed revenue bases need to engage with startups if only to know what platforms these startups are using because these are the platforms that their existing customer bases will be using in five years. And if the large enterprise is currently the (enterprise) industry standard, it would behoove them to know which companies are destined to supplant them if they don’t move quickly.?

So what are all of the startups using now? Aside from cloud computing and Google Workplace, some more obvious ones include:

• Slack for internal (and external) comms - has blast email met its match?
• Figma for design - A for effort, Adobe.?
• Notion for collaboration - watch out Google.
• Zoom for video conferencing (duh) - Covid’s most enduring legacy.?
• Discord if you’re a gamer - and Generation Alpha is gamer native and nearing adulthood everyday.?
• Calendly for scheduling - “Here’s my calendly” is the new turbo douche email sign off.
• Clay for revops - do the letters SFDC make you cringe?
• Rippling for payroll / HR - ADP, the Oracle of workforce management.
• OpenAI - ever heard of it?

On the cusp…. coding copilots (and nearly anything AI native), GPU cloud > CPU cloud, USDC (if you can have instant settlement and half the transaction fees)…? I dunno. You tell me….

Action items:

• Comment or reply or email me (or use Slack, Discord, Signal, Telegram, WhatsApp…) to tell me what else the cool kids are using.?
• Build a startup engagement group for your org. And lmk if you want to know how to do that. I’m 2 for 2 ;-)