Sequoia: “Why the next great SaaS company will look nothing like Salesforce”

Interesting article by Aaref Hilaly on “Why the next great SaaS company will look nothing like Salesforce,” distinguishing between Systems of Record (e.g. Salesforce, Workday, etc.) and Systems of Engagement. Where the latter take existing data and add value by making them available, integration, and analytics. And Aaref warns against trying to provide the next SOR and says that those franchises have been taken.

There’s a valid point there. Starting a new venture for e.g. wall-to-wall CRM would indeed be a bold undertaking.

But, and that is a big but, there are two wide open areas of opportunity here:

IT-poor environments that do not have the skill set to select and deploy a grown-up solution. They can benefit tremendously from a highly specific offering that gets the instant initial business value right and then grows footprint in a way that is manageable for the customer. Think of something like Shore, which starts out offering appointment management for very small businesses and then builds a more feature-complete CRM and analytics experience around that first, immediately valuable, functionality.

And while wall-to-wall SOR opportunities for the enterprise may have become limited, the game is wide open in those areas that have not been equipped with genuine SOR solutions. If you look in the e.g. HR, strategy, M&A, sourcing, planning etc. departments in the big enterprises, then 90+% of the IT stack is Excel and Sharepoint or some legacy ECM. There is a boatload of opportunity here for introducing new Systems of Record that support documentation, communication, and organization non-trivially. And where the products and companies that are successful will look a lot like Salesforce.

The rule of thumb here is: “Every spreadsheet shared in a business is an angel announcing another SaaS app still needs to be built.

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