Consumer internet companies are notorious for selling us something we don’t really need, whether it's Foursquare telling us to check in to the restaurants and shops we enter, or Facebook encouraging us to share every detail of our lives.
It’s a different story in the enterprise. In the last year we’ve seen that the most successful business-to-business companies, and the ones that gain the most loyal followings, started when a genuine problem began plaguing their founders.
Investors have flocked to these kinds of companies, too. In 2012, Palo Alto Networks, which built a better firewall so its own employees could use apps like Dropbox without compromising corporate security, went public. Developer social network and code repository GitHub, which got its start when a few developers wanted an easy place to store their own code, grabbed $100 million from Andreessen Horowitz, the largest individual investment the firm has made to date. The poster-child company for turning problem-solving into a business is Stripe. For making collecting payments less painful, no matter where in the world you are, Stripe not only collected a few thousand customers but it has banked $38 million from Sequoia Capital, General Catalyst and Peter Thiel.
Building their businesses around solving real-world problems rather than inventing needs has helped these companies take off. Unlike consumers, enterprises aren’t looking to buy the latest technology for its own sake, says Palo Alto Network founder Nir Zuk. “They are really looking for a revolutionary way to perform the same tasks, rather than try something new,” Zuk says. Not only does it help get your startup off the ground if you can give a business something that improves its ability to perform crucial business tasks, you also get a better chance of upselling you customers later once they commit to your approach to problem-solving.
Palo Alto Networks started out building firewalls that allow employees to access applications like email and Dropbox from their corporate computers while still keeping company data safe. Zuk is betting that the groundwork he laid giving customers a thing they needed will make them more likely to buy what he’s selling later down the line. Eventually, he’d like to recreate the "Apple effect": His customers will look forward to the next big thing from Palo Alto Networks and will buy because the company hasn’t steered them wrong yet.
San Francisco-based startup Stripe also got its start by finding an ah-ha fix and selling it to people who were fed up current online payment collection services. Brothers Patrick and John Collison started the company after feeling fed up with PayPal and Authorize.Net's monthly fees and complexity and built their own payment system which can be dropped into any website with a few lines of code.
The response has been overwhelming. Witness Y Combinator’s Paul Graham praising the company and developers writing blog posts about why they ditched PayPal for Stripe.
Patrick attributes that success to building something that he and his brother wanted to use, something that solved a need for other businesses and themselves. “Payments was a fragmented mess, and every business -- large and small -- was dissatisfied with what they were using,” says Patrick. "It was such a blindingly obvious need -- a good online payments service that made life easy for the people who actually had to use it."
Workplace collaboration startup Asana was started by former Facebook engineers, including Mark Zuckerberg roommate Dustin Moskovitz, who needed a way to organize collaborative corporate projects. The company has web and mobile apps that keep track of project goals and the steps needed to complete them. Founder Justin Rosenstein says that building a company off a product that helped him solve his own problems has made it that much easier to get customers. “It’s very compelling to go to a potential customer and tell them that we built this for ourselves because we really needed it and now we can give it to you. And we’re still building it today because we need it,” he says. “We use Asana to run Asana.”
We've long rolled our eyes at the infomercial piety "there's got to be a better way." But in the enterprise that attitude has become key to whether your startup lives or dies. Companies will still try to gin up new markets in the enterprise, and several might even succeed. But for now it's worth betting on founders who craft homegrown solutions to their business headaches and start peddling them to others. It's the better way.
