The transparency wave

Technology by and large is a powerful force for openness and transparency. One of the clearest benefits of this transparency is the ability to push decision-making authority to the front line of an organization. If smart, capable people have access to the right information and context, they can execute complex tasks far more rapidly across all functions than centralized organizations. Sales people close more effectively, marketing people allocate resources towards the highest value activities and channels, developers iterate faster on product, and the organization as a whole outpaces competitors.

Startups (and even the Marines) have realized this for a long time – but more and more enterprises are seeing the value that decentralization brings to organizational speed and effectiveness. While there are process and cultural changes that are necessary to drive decentralization, technology will likely play an important role in making this mindset change a reality. The most direct way is as a conduit of information – through BI and analytics tools, but also through lightweight means of distributing that information throughout the enterprise. Much of this is being embedded directly in popular SaaS workflow tools (e.g., leasing pipeline analytics in Hightower). But I think there will be some second order effects that are less direct – here are a few I’ve been thinking about:

  • The decline of per user pricing: while being easy to grasp and somewhat tied to usage, per user licenses often create barriers to the flow of information in an organization. I’d be surprised if more startups didn’t figure out ways to price that merge the best of both worlds.
  • The (continued) rise of HR: though organizations have long touted their people as their largest competitive advantage, the benefits of information ubiquity ultimately depend on talented team members whom you trust to make decisions. HR is not only the linchpin of the recruiting process, but also works with the management team to drive much of the organizational context (mission, values, culture etc.) that allow for good decisions.
  • Transparency as competitive advantage: Tied to the point above, talented people are drawn towards organizations that allow them autonomy, opportunities for growth, and the chance to be a part of something special, all of which is more likely in dynamic organizations. Better information flows not only increase execution speed, but also creates a talent acquisition advantage, both driven by transparency.

Would love to hear some others that you’re seeing or thinking about – you can find me @ablordesays.

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Networks and Enterprises

A prominent trend of the internet era is the tech-enabled network.  Starting with forums in the early days to Facebook today, networks are arguably the web’s “killer app.”  The most recent incarnation of this is the current crop of marketplaces and networks designed to directly facilitate transactions and social interactions (e.g., Facebook, Uber, Twitter, Etsy, Lending Club, and many others).  These networks ease transactions and connections that were previously either near impossible or highly inefficient, improve transparency in opaque industries, and generate significant consumer surplus and enterprise value as a result.  I believe we’re now seeing the network model applied not to the core transactional experience, but to enabling and enriching them.

After aggregating participants, much of the focus for network businesses has been focused on reducing friction for consumers and users (and rightfully so).  The revolution in product and interaction design over the past 5 years has done much to improve user engagement and streamline transactions.  Software and e-commerce sites have become easier to use, which, alongside technological advances and new services (e.g., AWS) , has allowed software to penetrate historically resistant end markets.   I’m excited by this shift as both an investor and consumer, and think it has far from played out completely.

But there are other obstacles outside of the usage and transaction flow that derail purchases and inhibit selling activities (e.g., prospecting, nurturing, merchandising).  For potential enterprise customers, the education required to get all stakeholders on board and the lack of relevant decision-making data (e.g., customer satisfaction) are non-trivial roadblocks that swing decisions.  Vendors still expend significant effort prospecting for leads, creating and distributing marketing content for demand gen, and distributing product information to their channel partners.  Because nearly every purchase is influenced by factors outside of the transaction flow, these costs (both tangible and opportunity) represent real lost revenue.

Over the past few months, I’ve seen more and more entrepreneurs identify interesting network models to aggregate people, services, and information to supply these gaps and create value for both sides.  In addition, these solutions tend to combine many of the benefits of traditional networks (asset light, long-term defensibility, etc.) with the revenue potential of enterprise facing companies.  I’m increasingly excited about the power of networks to make the transaction experience a smoother one – looking forward to seeing big businesses built in the space.