CornerFour

Let’s Start Focusing on SMBs

With the recent string of tech meetups (e.g. TC Disrupt, Dreamforce, etc.), there has been a plethora of interesting topics to dwell on but Jim Goetz of Sequoia Capital made the most poignant one.

Entrepreneurs are not only leaving billions of dollars on the table with regards to enterprise solutions but hundreds of millions on the table by not addressing the needs of SMBs (Small to Medium-size Businesses). In the past twenty years, as we have been ushered into the digital age, many SMBs have been hesitant to adopt new forms of bottom-line impacting web and mobile-based innovations for a multitude of reasons. However, they have slowly found out that in order to compete in this new digital era, they are going to have to at least try these new forms of innovation.

There’s one problem though:

For once, tech entrepreneurs are late to SMB solutions party.

Now I’m not saying entrepreneurs shouldn’t try to create the next multi-billion dollar company by focusing on enterprise or whatever else. But what I am saying is that big name companies aren’t going to adopt 99.99% of new solutions (at least not at first), so why not start by targeting SMBs.

• They’re more likely to adopt new solutions given the current competitive market
• They’re more willing to provide valuable insight and feedback on the solution
• They don’t expect a perfect solution right out of the box

Some individuals within the entrepreneurial ecosystem have started to realize the value of serving a monetarily smaller (and worthwhile) customer base but there is still a lot of room for growth. One of these entrepreneurs is Dave McClure (technically he’s a VC but he’s innovating the hell out of the VC game so I consider him an entrepreneur, but I digress). Dave has always said, “…we [500Startups] like to hit singles and doubles, occasionally we’ll hit a home run.”

Many of the companies he has invested in at 500Startups are doing exactly that. They are trying to provide simple solutions for smaller addressable markets. This isn’t to say that they don’t want to hang with the big boys (and girls), but they realize the path to that ballgame is by batting in the minors first. 

I don’t know about you guys, but I would much rather have a higher OBP (On Base Percentage) than have a couple game winning homeruns. What do you think? Are we about to see a wave of innovation for SMBs or will they be left behind to deal with bloated enterprise solutions?