
This is the final market we look at in our Creative Destruction 7 Act Play series.
Enterprise software is a huge market – $222.6 billion in 2009 according to Gartner. Put that in perspective. The online advertising market in the USA is only $50 billion. Even assuming the global online ad market is 2x the US market, enterprise software is 2x online advertising.
That $50 billion online ad market has come from nowhere in the 15 years since the start of the web. That is why online advertising has been the fun growth market in the last decade.
And most VCs have shunned the enterprise market in that same decade. They have had two reasons. One is the perception that the enterprise market is locked up by a few giant firms such as SAP, Oracle and IBM; actually they dominate their market far, far less than Google dominates online advertising. The other is that the cost of sale is too high; that remains true in most cases.
That lack of VC attention is a blessing for entrepreneurs! The market is less crowded. And customers do want innovation. They do not want to be reliant on a few large vendors; they know that these vendors will exploit that position at the customer’s expense.
Even a small slice of the enterprise software market is big. Most VC want an addressable market that is $500m. There should be plenty of $500m niches within that $229 billion! And a bootstrapped entrepreneur does not even have to get that big a market; they could get a very healthy $10m business in a tiny $50m market.
And enterprise softwate is a market where ventures have historically not needed a lot of capital. Most of the current giants were bootstrapped.
So, at the macro level, enterprise software is a good place to be. But start-ups don’t live or die at the macro level. They live or die by having a stunningly strong value proposition to overcome the corporate risk aversion. Think 10x. You have to be better, faster, cheaper by 10x orders of magnitude. That is the only way to get cost of sales to a reasonable level – or even to get to the point where you worry about cost of sales!
The question is, can Semantic Web technology have a 10x scale impact on enterprise software?
Image courtesy Flickr and BirdOfTheGalaxy.

This is the final market we look at in our Creative Destruction 7 Act Play series.
Enterprise software is a huge market – $222.6 billion in 2009 according to Gartner. Put that in perspective. The online advertising market in the USA is only $50 billion. Even assuming the global online ad market is 2x the US market, enterprise software is 2x online advertising.
That $50 billion online ad market has come from nowhere in the 15 years since the start of the web. That is why online advertising has been the fun growth market in the last decade.
And most VCs have shunned the enterprise market in that same decade. They have had two reasons. One is the perception that the enterprise market is locked up by a few giant firms such as SAP, Oracle and IBM; actually they dominate their market far, far less than Google dominates online advertising. The other is that the cost of sale is too high; that remains true in most cases.
That lack of VC attention is a blessing for entrepreneurs! The market is less crowded. And customers do want innovation. They do not want to be reliant on a few large vendors; they know that these vendors will exploit that position at the customer’s expense.
Even a small slice of the enterprise software market is big. Most VC want an addressable market that is $500m. There should be plenty of $500m niches within that $229 billion! And a bootstrapped entrepreneur does not even have to get that big a market; they could get a very healthy $10m business in a tiny $50m market.
And enterprise softwate is a market where ventures have historically not needed a lot of capital. Most of the current giants were bootstrapped.
So, at the macro level, enterprise software is a good place to be. But start-ups don’t live or die at the macro level. They live or die by having a stunningly strong value proposition to overcome the corporate risk aversion. Think 10x. You have to be better, faster, cheaper by 10x orders of magnitude. That is the only way to get cost of sales to a reasonable level – or even to get to the point where you worry about cost of sales!
The question is, can Semantic Web technology have a 10x scale impact on enterprise software?
Image courtesy Flickr and BirdOfTheGalaxy.
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