What's 🔥 in Enterprise IT/VC #221
The developer first dilemma, the value of patience, and why going enterprise too early can be hazardous to your health ⚠️
Ed Sim | Jan 23 |
What's 🔥 in Enterprise IT/VC #221The developer first dilemma, the value of patience, and why going enterprise too early can be hazardous to your health ⚠️
Talk about paying it forward on price? Yes, it’s getting bonkers out there and some folks using 2022 and beyond ARR to justify pricing now. So top of mind for me this week besides the peaceful transition of power, thankfully, has been the multiple conversations I’ve had with developer first founders and working backwards from their A round to the start of the company. The common theme that really struck me is something I’ll call the “developer first fundraising conundrum.” In particular, what are the metrics to go from first round to Series A? Do I focus on winning the ❤️ and 🧠 of developers or enterprise design partners? Can I do both? The more you spend on one, the more it takes away from doing the other as we must all remember that time, focus and resources are finite, especially at the very beginning. So here goes… 2/ Enterprise 1, then Enterprise 2 knocks on your 🚪
They ask for all the enterpriseready.io features you will need
You have limited cycles + need to manage resources appropriately
Each new enterprise design partner + feature takes away from user ❤️
Which path to take? By the way, these are happy problems to have - when a developer finds you and escalates it to the enterprise level in which case you are sent for a security review and you learn the only way a larger company can consumer your service is with SOC 2 compliance and an on-prem version. There are ways around this but as you can imagine this can be a massive distraction and not every customer is the right customer for you. My two cents is if you can pull it off and if you have a “true” developer first product versus one that is really for operations and you’re trying to shoehorn into a dev first motion is to be patient. Read the 🧵 for the rest… To be clear, I don’t want to be prescriptive, just sharing the different paths. If you decide to go more top down, my two cents is to focus on fast moving tech companies who can make quick decisions. And while nice to get some validation like this, investors want to see the engine and momentum when they write a check - where will the next 5-10 come from and what is your engine to deliver those leads. Which goes back to my point, if you can build that developer ❤️, that is one of the most incredible engines out there. In order to get there, there will be no shortage of 💰 for your first round but as JJ, founder of OSS Capital, says:
This initial 💰 from the wrong partner could also lead you to destroying longer term value by monetizing too early. There are so many amazing examples of companies that stayed the course and focused on true developer ❤️ before going enterprise too early from MongoDB to Twilio to Elastic Search to Github to HashiCorp to Snyk and more. Trust me, all of them were faced with the developer first fundraising conundrum and held off as long as possible and focused on winning the ❤️ and 🧠 of developers before focusing on the enterprise. Patience matters - case in point 👇🏼 11 years ago today I pushed the first commit for Vagrant. I didn’t know what a virtual machine was, I barely knew Ruby, I had never done any ops, I was still a 20 year old university student. Follow your dreams, it isn’t easy, but it can be done. As always, 🙏🏼 for reading and please share with your friends and colleagues. Scaling Startups
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