Thursday, March 02, 2006
Venture Capital and Enterprise Architecture: Part Deuce
There is another aspect of venture capital that enterprise architects need to consider. Will continue my thinking from yesterday's blog entry...
The one thing that has always struck me as curious about the venture capital community is why they have somehwat of a club mindset. Large enterprises have venture capital arms but the two never seem to actually talk with each other. Of course large enterprises and the venture capital arms tend to invest in industry vertical specific technologies whereas other venture capitalists are interested in things of general utility which over time become commoditized more quickly.
The lack of intersection between these two communities means they can't craft value propositions or even build the right relationships for neither their portfolio companies nor the enterprises who want to buy software. Sometimes this means that they are not even investing in the right companies.
VCs are good at crafting value propositions for software and chips - alliances, the stack, efficiency, building out operations, helping slowly win big customers, investing a great deal in a small number of plays, etc. Over time their own best practices actually result in the destruction of value instead of creation of value at the point of intersection.
VCs need new blood, new ideas, new thinking and most importantly need to build a better understanding of what folks in large enterprises think about. For example, you may have noted that pretty much zero of the enterprise architects on my own blogroll are talking about Web 2.0? If we aren't talking about it, do you think we have an interest in buying it?
VCs are habitual gamblers hoping for the big payday. Why not instead invest in capital-efficient companies that show strong technical leadership early on technological shifts within markets? Companies whose concepts aren’t always “world-changing,” but that have a clear potential for early success? Why not fund and help position these capital-efficient companies in a way that makes them attractive for early acquisition. Maybe the notion of capital efficiency is something that us enterprise architects can help others think about?
Maybe all those industry CTOs haven't figured that us folks in enterprises don't need world-changing software but simply need solutions to our problems. Why not simply pick up the phone and ask what they are? There are more than enough of us willing to share...
| | View blog reactionsThe one thing that has always struck me as curious about the venture capital community is why they have somehwat of a club mindset. Large enterprises have venture capital arms but the two never seem to actually talk with each other. Of course large enterprises and the venture capital arms tend to invest in industry vertical specific technologies whereas other venture capitalists are interested in things of general utility which over time become commoditized more quickly.
The lack of intersection between these two communities means they can't craft value propositions or even build the right relationships for neither their portfolio companies nor the enterprises who want to buy software. Sometimes this means that they are not even investing in the right companies.
VCs are good at crafting value propositions for software and chips - alliances, the stack, efficiency, building out operations, helping slowly win big customers, investing a great deal in a small number of plays, etc. Over time their own best practices actually result in the destruction of value instead of creation of value at the point of intersection.
VCs need new blood, new ideas, new thinking and most importantly need to build a better understanding of what folks in large enterprises think about. For example, you may have noted that pretty much zero of the enterprise architects on my own blogroll are talking about Web 2.0? If we aren't talking about it, do you think we have an interest in buying it?
VCs are habitual gamblers hoping for the big payday. Why not instead invest in capital-efficient companies that show strong technical leadership early on technological shifts within markets? Companies whose concepts aren’t always “world-changing,” but that have a clear potential for early success? Why not fund and help position these capital-efficient companies in a way that makes them attractive for early acquisition. Maybe the notion of capital efficiency is something that us enterprise architects can help others think about?
Maybe all those industry CTOs haven't figured that us folks in enterprises don't need world-changing software but simply need solutions to our problems. Why not simply pick up the phone and ask what they are? There are more than enough of us willing to share...
