The Consumerization and Developerization of Enterprise SaaS

The landscape of enterprise software has witnessed a significant shift in recent years. Companies are adopting software in a drastically different way, driven by individual users and developers who choose the products they want to use, and then those products spread throughout the organization. This trend is evident in the success of companies like Dropbox, Slack, and Asana, who have achieved phenomenal growth by tapping into the power of organic adoption.

• This “bottoms up” approach to enterprise software adoption leverages viral growth, performance advertising, and consumer-centric growth techniques alongside traditional inbound marketing and enterprise sales methods.
• This hybrid model brings together professionals with backgrounds in both consumer and enterprise markets, creating a unique dynamic in the industry.

A Spectrum of Enterprise Software Adoption

The shift towards “bottoms up” growth in enterprise SaaS creates a spectrum of go-to-market strategies. At one end of the spectrum, companies like Atlassian embrace a purely self-serve model with no dedicated enterprise sales team. On the other end, traditional enterprise companies like Oracle rely heavily on direct sales. Startups face the challenge of navigating this spectrum, deciding where they want to play and what type of organization they want to build.

The Organic Growth Goes Enterprise Podcast

This podcast episode delves into the nuances of organic growth in enterprise SaaS, examining how consumer-driven growth tactics are impacting enterprise software adoption. It features insights from leading industry experts, including Martin Casado and Andrew Chen of a16z, and Russ Heddleston, CEO and co-founder of DocSend. The discussion explores key questions about this evolving landscape.

What Does Bottoms Up Growth Look Like in Enterprise?

Traditionally, enterprise software was sold through direct sales, with companies building products based on their market knowledge and then engaging with customers through a dedicated sales force. However, the emergence of “bottoms up” growth introduces a new paradigm. Companies are establishing a significant market presence and brand awareness through consumer-like growth strategies. This organic growth seamlessly integrates with sales, often in a less traditional way. This shift has left many investors and seasoned enterprise company executives questioning the implications.

The Seamless Transition Myth

The concept of a seamless transition from organic growth to enterprise sales is often debated. Some companies solely focus on organic growth, but they may struggle to achieve rapid revenue growth. Conversely, companies that solely rely on sales might encounter challenges in scaling quickly due to the absence of a broad-reaching organic growth funnel.

• Companies that have successfully navigated this transition create a brand phenomenon that drives organic growth. They then build on this foundation by adding a sales team, which works in tandem with the growth engine.

Unlocking the Power of Consumer Growth Tactics in Enterprise

Startups seeking to enter the enterprise market face significant barriers when attempting to secure large, high-value sales. Consumer growth tactics, however, offer a unique advantage. These tactics are honed in environments where customer acquisition costs are extremely low, and companies must be highly frugal.

• By applying these tactics to enterprise value propositions, startups can break into the market in ways that traditional enterprise companies might not anticipate.

DocSend's Journey: A Case Study

DocSend, a company specializing in content sharing and management, successfully employed a bottoms up approach to gain a foothold in the enterprise market. Initially, they offered their product for free, allowing users to experience its value and build a network. This strategy led to substantial word-of-mouth adoption, with 42% of their signups originating from referrals. This demonstrates the power of organic growth in establishing a strong foundation within the enterprise space.

Factors Influencing Success in Bottoms Up Enterprise SaaS

The success of a “bottoms up” strategy in enterprise SaaS depends on various factors. Products that are horizontal, meaning they can be used by a wide range of individuals and departments within a company, tend to spread more effectively through organic adoption. Examples of this include Dropbox, Asana, and Slack.

• Products that are deeply embedded in workflows, driving frequent engagement and sharing, also benefit from viral growth. As users interact with the product, they naturally share links, assign tasks, and comment on files, expanding the network.
• Products that are more specialized, targeting specific job titles or functions, may face challenges in achieving broad adoption. Their spread is often limited to specific departments or teams.

The Rise of User-Driven Enterprise Adoption

The emergence of “bottoms up” growth presents a new phenomenon where users within large companies adopt software before IT departments make official decisions. This user-driven adoption creates a patchwork of products across organizations, blurring the lines between consumer and enterprise software usage.

The Importance of Engagement Metrics in Enterprise

In the context of “bottoms up” enterprise SaaS, engagement metrics, traditionally associated with consumer products, become crucial indicators of success. High engagement levels often translate to higher value for customers, as it indicates deeper usage and integration into workflows. These metrics serve as leading indicators for growth, acquisition, and retention, which are essential for long-term sustainability.

Navigating the Spectrum of Growth Strategies

The debate about the appropriate approach to evaluating “bottoms up” enterprise SaaS companies from a consumer lens is ongoing. While some metrics overlap, the unique nature of enterprise software requires consideration of factors such as procurement processes and the need to maximize value for large accounts.

• In the traditional enterprise model, sales cycles can be lengthy, involving extensive account management and education. With “bottoms up” growth, customers often educate themselves through product usage, and much of the value realization occurs after initial adoption.
• This shift necessitates a closer collaboration between sales and customer success teams, as customer success plays a significant role in maximizing account value.

The Role of Sales in “Bottoms Up” Enterprise SaaS

While organic growth can drive substantial user adoption, adding a sales team can significantly enhance revenue generation in “bottoms up” enterprise SaaS companies. Sales professionals are adept at navigating procurement processes, maximizing annual contract value (ACV), and securing budgets. These capabilities contribute to higher value per customer and support the scaling of the business.

• The trend toward “bottoms up” growth often leads to a shift towards enterprise-focused products and services over time. Large companies offer greater stability, larger budgets, and lower churn rates compared to smaller businesses.

The Evolution of "Bottoms Up" Growth

Companies that initially focus on organic growth often evolve to include sales as a key component of their go-to-market strategy. This transition can occur organically as the company scales and interacts with larger customers.

• The key signals that indicate the need for sales include an increase in interest from larger companies, significant demand from enterprise accounts, and requests for enterprise-specific features.

The Role of Customer Success in Expansion and Renewal

In the context of “bottoms up” enterprise SaaS, the role of customer success becomes paramount in driving account expansion and renewal. Effective onboarding and engagement strategies ensure customers quickly derive value from the product. This approach fosters a positive experience that leads to further adoption and expansion within the organization. Customer success teams are often instrumental in driving growth by identifying opportunities for wider usage within the company.

Balancing Organic Growth and Sales: A Balancing Act

The integration of organic growth and sales in “bottoms up” enterprise SaaS presents unique challenges, particularly in determining the optimal allocation of resources. Traditionally, enterprise companies prioritize sales until they establish a consistent pipeline and then invest in marketing. The “bottoms up” model requires a different approach, balancing brand building, product focus, and sales efforts to achieve sustainable growth.

• The key to success lies in understanding the timing and leverage of each growth strategy. It's crucial to recognize when organic growth reaches a point of diminishing returns and to prioritize investment in sales or other growth channels.

Pricing and Packaging in the “Bottoms Up” World

Pricing and packaging strategies in “bottoms up” enterprise SaaS differ significantly from traditional models. The availability of free or low-cost versions to drive organic growth presents unique challenges. The temptation to offer a free version to maximize user adoption must be balanced with the need to monetize the product. Experimentation with pricing becomes more difficult, as the product is publicly available, and the consequences of pricing errors are amplified.

• It's crucial to carefully consider pricing and packaging early in the company’s lifecycle, recognizing that any pricing adjustments are immediately visible to the market.

The Importance of User Experience in Enterprise Software

The rise of “bottoms up” growth has elevated the importance of user experience and design in enterprise software. Employees expect the same level of polish and usability they encounter in consumer-facing applications. Companies that fail to deliver a compelling user experience risk losing employees to alternative solutions.

• Organizations are increasingly demanding software that is user-friendly, intuitive, and visually appealing.
• The competition for employee attention within the enterprise space is fierce, and companies must strive to provide a delightful and seamless user experience.

The Power of Growth Teams in Enterprise

The success of “bottoms up” enterprise SaaS companies highlights the significance of dedicated growth teams. These teams are responsible for driving organic growth, leveraging marketing strategies, and optimizing user acquisition and engagement. They play a vital role in building a strong brand, reaching new users, and ultimately, propelling the company's success.

• The emergence of “bottoms up” growth has created new job roles and organizational structures within enterprise companies. These roles often bridge the gap between product management, marketing, and sales, requiring a deep understanding of user behavior and growth strategies.

Adapting to the Evolving Enterprise Landscape

The shift towards “bottoms up” growth in enterprise SaaS necessitates continuous adaptation and innovation. Companies must be prepared to adjust their strategies, organization, and product roadmaps to stay ahead of the evolving landscape. The success of this approach relies on a deep understanding of user needs, the power of organic growth, and the ability to leverage the right tools and strategies to achieve sustainable growth.