Dror Oren is the executive director at SRI Ventures.

In case you haven’t been reading technology news, 2013 is being heralded as the year of the enterprise renaissance.

And while I believe that to be true, the trend begs a bigger question of exactly what it means to be “enterprise” today. The lines between enterprise and consumer are increasingly blurred, and only becoming more so.

The conventional wisdom is that the innovative forces in the consumer market are now being redirected to the enterprise and “consumerizing” it. There is even a Harvard Business School class on the topic.

When people talk about the blurring lines, they typically think about things like ubiquity of consumer platforms (amplified by the Bring Your Own Device phenomenon) and consumerization of enterprise software’s user experience. But there’s something more fundamental going on here.

What we’re seeing today is not a swingback to the enterprise with the add-on of consumer models. What we’re seeing today is a swingback to more diversified revenue models and a refreshing change to the traditional go-to-market approaches … a head fake if I ever saw one.

Many of us have the inclination to track what investments are winning each year, pitting consumer against enterprise tech. But we’d be wrong to do that today. Over the last few years these two categories have become non-exclusive and less correlated, as once believed. To say, if one is projected to do well, it doesn’t necessarily mean the other will do poorly. So why is enterprise so appealing to investors right now?

First, this is all happening after 2012 investment levels dropped from 2011, and VC’s are being a lot more discriminating with where they’re placing their bets. That was more than confirmed according to the most recent report from Moneytree.

There’s less appetite for risk in the market.  Yet the traditionally risky investment in enterprise is, all of a sudden, the safer bet.

Here are my reasons why VC’s and entrepreneurs are flocking (for good reason) towards enterprise in 2013.

Consumer (and prosumer) first models have been fully validated

Consumer-first and prosumer-first models have shown to be very successful entries into the enterprise market over the last few years.

Prosumer success stories like Dropbox, for example, first started out as a consumer app that then later became widely adopted in the enterprise and were one of the first startups to show how you can get into the enterprise without employing a huge salesforce.

Other companies like Basecamp and Evernote have both lived very similar lives. And the list of examples goes on with Google Apps, Box, and more.

What investors are looking for is the next Evernote or Dropbox, where an app gains bottom-up traction in the enterprise and spreads quickly amongst professionals.  Most investors don’t like laying their money out for businesses that need to enlist a big salesforce. But taking the leap to the consumer-first enterprise model five years ago was even more frightening than a salesforce, so things have definitely evolved.

Now that the model has enjoyed so much success, it’s clear that investors and entrepreneurs alike have gotten over their fears, and in truth, are starting to look at enterprise as the next great, golden calf.

Consumer-first reduces risk and increases odds of disruption

While some of the assumed downsides of the consumer-first model have been disproven, there is an emerging understanding of the upsides of this new approach and why we’re all reading more headlines with the words “mobile-first, consumer-driven enterprise” in them.

The consumer-first approach creates two revenue models within one startup (over several phases in the lifecycle of the company) and allows companies to naturally expand their revenue streams when the time is right.

On one hand, you aren’t excluding yourself from the potential of hockey-stick growth and viral adoption with a consumer product. And on the enterprise side, you’re creating a direct path to near-term revenue and major long-term growth (enterprises are still spending way more money on IT than consumers).

Even more importantly, the startup can parlay early consumer traction into the enterprise offering, which is an advantage that most incumbent vendors have traditionally struggled to achieve. These startups can iterate on the product with real end-users long before they demo it to an enterprise. The time between MVP and a mature enterprise product is shrinking by the day. The new paradigm replaces a long lead time for an enterprise-level product with an early consumer product that evolves to a mature enterprise product with the help of early consumer adoption.

The consumer-first approach also increases the odds of enterprise disruption.

Typically enterprise software sales has required you to go through the CIO, which is a hard won process for even the savviest salesperson. With a consumer-first approach you immediately throw the formal processes out the window and enter the enterprise through the back door.

Every CIO on the planet struggles with consumerization, but the decision to buy back control when 60 percent of your employees are already using the free version of a SaaS application is a no brainer. Add security and BYOD to the mix, and the CIO almost has no other choice but to formally adopt a SaaS application that becomes popular.

In essence, you have a better chance of disrupting incumbent vendors by changing the rules of the game.

While they’re going door-to-door glad-handing CIO’s to get a pilot going, the savvy startup has skipped straight to end-user adoption. Hence, what seems like a shift from consumer to enterprise is just the result of a smart go-to-market decision by enterprise companies.

Lastly, barriers to entry are plummeting

Creating software, hosting it and deploying it is easier today than it ever has been in the history of technology. The inevitable merging of cloud, SaaS and mobile over the past year has caught the IT market by storm, and most importantly, lowered the barriers to entry not only for the startups but for investors too.

Ten years ago an enterprise Series A was a hefty round of funding by any measure.  Today, you can start that company for a fraction of the price.  Enterprise is finally becoming as lean as consumer.

More importantly, IT buying habits are changing rapidly.  The enterprise is getting more comfortable with SaaS and cloud technology, and the spending priorities have shifted. Even traditional and heavily regulated industries are joining the party.

Furthermore, the IT department isn’t the only group with IT buying power.

Historically, whenever the marketing or customer support department of a big business needed a piece of software, they had to literally walk to the IT department and make their case to the CIO.

Today, however, the marketing department has quickly become one of the fastest growing buyers of IT and are increasingly Chief Marketing Officers are buying the technology they need directly from enterprise service providers. In this 2013 IT spending report, it’s obvious that every budget has become an IT budget. All of a sudden, the enterprise startup is selling to a market that’s the same size as their consumer counterparts.

How this will continue to evolve is uncertain. All we know for sure is that the lines between the two will continue to blur, giving way to never-before-seen opportunities in the enterprise as walls continue fall and rules continue to get broken.

Dror Oren is the executive director at SRI Ventures, leading venture efforts from raw business concepts through to value proposition and the creation of a stand-alone companies.

Euclid has raised $17.3 million in its second round of funding to bring data analytics to physical retailers. Euclid gives brick-and-mortar businesses the ability to better understand their customers by monitoring their behavior while in the store. Merchants install a small sensor and connect it to the Internet. The sensor measures the behavior of all shoppers carrying a Wi-Fi enabled smartphone and then turns this data into understandable, actionable form.

The company refers to its approach as “Google Analytics for the real world” and seeks to give offline businesses the same advantages as online business when it comes to understanding consumer behavior. Store owners can capture information about which window displays receive the most attention, what times of day see the most foot traffic, and so forth.

Benchmark Capital led this round, with participation from NEA, Harrison Metal, and Novel TMT Ventures. Euclid officially launched in 2011 and announced $5.8 million in funding. Its founders previously started Urchin, which was acquired by Google and set the foundation for Google Analytics.

Now, the company has reportedly installed its sensors in over 30 apparel chains, quick-serve restaurants, shopping malls, department stores, and other brick-and-mortar locations. This national traction was fueled by the release of Euclid Zero earlier this year, which requires no dedicated sensors, but rather enables IT managers to turn on the Euclid feature in their Wi-Fi management console. All together, Euclid detects an average of three billion events per day.

Euclid is based in Palo Alto, California.

Photo Credit: D’oh Boy (Mark Holloway/Flickr

Consumer United applies the power of the masses to selling insurance. People join the community, and then Consumer United negotiates lower prices on multiple products and services, including auto, home, and life insurance.

“We started Consumer United because we believe that together we ordinary consumers can take control of our too high cost of living,” said CEO and cofounder Justin Dangel on the site. “We all know that too many of our banks, insurance agencies, utilities providers, and credit card companies take us for granted hit us with unfair charges, make us wait on hold for hours and run up our costs much faster than inflation. […] It’s time we all got a fair shake.”

The team at Consumer United conducts research and partners with insurance agencies to offer exclusive deals and discounts on plans, and will also help customers figure out which plans are right for them. Partners include well-known insurance agencies like Met Life, Progressive, Travelers, HSBC, and Fidelity Life. It’s primary strength is with auto, but the new financing will accelerate the growth of other verticals as well as support national expansion and product development.

Thayer Street Partners contributed $30 million of this third round of funding, with Spark Capital picking up the rest. Consmer United is based in Boston.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

To reach the young and tech-savvy market, Green Dot has released a new app that lets users open and manage their checking account from a smartphone.

The company is best known for selling re-loadable prepaid debit cards sold at stores like Wal-Mart. It is facing competition from the big banks. American Express and J.P. Morgan Chase & Co. have rolled out their own prepaid debit cards.

With its new smartphone app and GoBank account, it aims to reach people who are dissatisfied with their traditional bank accounts, often referred to in the media as the “underbanked”. “Most people today, and especially people under 40, aren’t satisfied with their current banking options,” said Steve Streit, the company’s founder and CEO in a statement.

Available today in limited release, the GoBank account will include a main deposit account linked to a Visa branded debit card that can be used to make purchases online and in stores. The main account doesn’t come with paper checks, but the app can be used to pay bills, and Green Dot can issue checks on behalf of its users. It also comes with a separate deposit account for customers to store money.

The ability to send money to friends via SMS or email and peek at your bank balance without signing in are among the coolest features of the GoBank account.

The company claims that the approach is more “fair” than the major banks. GoBank has no overdraft fees, no penalty fees, no minimum balance requirements, and no required monthly fees.

“Until now, banking is one of the few industries in the world that hasn’t yet been reinvented by Silicon Valley,” said Streit, who hopes that controlling personal finances will someday feel as “intimate and addictive as checking Facebook.”

Anyone can request an invitation to join GoBank on the company’s website. The GoBank App is also available for free from the App Store for iPhone or iPod touch, or Google Play for Android.  To use the app, you’ll need to register for a GoBank membership. To get a feel for how it works, check out the explanatory video.

Lithium Technologies has issued $5.6 million in shares to power its acquisition of Social Dynamx.

Lithium helps brands build social networks that can be used to drive sales and marketing, inform product development, and improve customer service. The idea is that corporations with large user communities and heavy product support needs can engage their most passionate fans to build brand nations.

Social Dynamx’s platform monitors social activity to help large businesses stay tuned in to relevant online conversations and manage their customer care. With this acquisition, Social Dynamx will become part of Lithium’s suite of solutions under the heading Lithium Social Web.

Lithium closed $53.4 million in January for its fourth round of funding (DD-sized Series D…). That funding was raised to expand the company into new verticals, expand internationally, and grow Lithium’s “digital agency ecosystem.”

The most recent offering lists investors from Shasta Ventures, Emergence, Benchmark and New Enterprise Associates. These firms all participated in the January round, as did SAP Ventures, DAG Ventures, Greenspring Associates, and Tenaya Capital.

Read the SEC filing.

Emailvision brought in $30 million in new funding to deliver targeted marketing emails to your inbox.

The company sells software-as-a-service to businesses looking to increase the effectiveness of their email campaigns. Its enterprise products include tools to manage email, mobile, and social marketing efforts as well as customer intelligence data and analytics to achieve the greatest impact.

Each month, the platform delivers 600,000 personalized marketing campaigns for 3,300 clients around the world. Customers include The Washington Post, Cisco, Club Med, Walmart, Mercedes-Benz, Staples, Ikea, and Rail Europe.

The investment came from Izurium Capital and enabled Emailvision’s recent acquisition of PredictiveIntent, a company that develops behavioral targeting and predictive analytics systems. The partnership is intended to further improve Emailvision’s ability to deliver highly personalized marketing content.

Emailvision is based in New York and has 22 offices around the world.

Read the press release.

This interview is sponsored by Qualcomm.

As an enterprise-facing company, what do Qualcomm’s products mean for consumers?

We make the guts of the phone. We work very closely with our partners, like to Sony Ericsson, to deliver experiences for the end consumer. Consumers realize that you can buy a camera, you can buy an MP3 player, you can buy a navigator system, but you can just buy a phone and get all of those experiences. We work on developing those standalone device experiences such as audio, photo taking, graphics and battery conservation to create one device that is thin, light and lasts all day.

What is the biggest challenge for Qualcomm in engaging the consumer?

For Qualcomm, to launch a product that the end consumer can enjoy, we must work with a laundry list of people. Using mobile payments as an example, we spend our time interacting with partners like Google that create secure operating systems. Next we work with the operator to launch the system. We engage service providers like Paypal or Citybank to enable financial transactions. And we collaborate with phone makers like HTC to launch the app on their phone. There is a lot of plumbing that we take care of before it can reach the consumer. We create the machine.

Today, 3G is pretty widespread, but what are you doing to move the needle toward 4G?

We launched the first 4G phone, the HTC Thunderbolt on Verizon, so we have the best 4G solution out there today. We focus on how to integrate, how to pull all these aspects together onto one chip. Put it together and you get lower costs, better power. We announced our integrated 4G plus apps processor called 8960, which will support Windows 8. The next generation of 4G phones that will come out in the first half of next year will all be using integrated 4G plus apps processor.

A theme of this year’s MobileBeat is mobile payments. How is Qualcomm working within this new sub-industry?

The issue with financial transactions on mobile is the limit on how much money you can move, given security parameters. We are spending time at Qualcomm to build an infrastructure that secures financial payments and lifts the limit. The infrastructure includes hardware inside the processor and software that allows applications to run inside a secure environment, which is authenticated with by a key mechanism. You’ll see products late this year or early next.

Are you partnering with anyone exciting for the consumer?

Scalado, a European company, came up with a really exciting technology that processes images in the JPEG domain very fast. We built the hardware inside our developer platform, Snapdragon, to take pictures at high speeds and compress them into the perfect shot. Scalado then built their application to complements our hardware. The app allows the user to choose a face from those high speed-taken photos and layers it smoothly on your end picture. It’s a total solution for mobile picture taking.

Tell me about Snapdragon, your platform of app developers.

Snapdragon has processors, modems, connectivity, everything needed for creating a smartphone app. When app developers create on Snapdragon, they have access to create for any device. It is the most widely used smartphone developer platform, used by 60 percent of Android developers and has 40 percent of market share. We have single core, dual-core, and quad-core development options in Snapdragon. The quad-core will come out next year.

Rather than getting all their office apps from one vendor, he said, the best strategy in the enterprise space — and now the consumer space — is to find a service that wraps together the best apps from multiple companies that all do one thing very well.

Box.net (which specializes in enterprise cloud storage) is moving in that direction by adding the ability to access and use files from other companies like customer relationship management software provider Salesforce.com and Google Docs, an online document editor. That’s also a strategy that companies like Microsoft and Apple seem to be avoiding, Levie said.

“With iCloud, Apple’s … seeing the cloud as a way to connect their devices together and their software,” Levie said. “We think it’s moving in the direction of openness, by combining the tools together and making it work seamlessly.”

iCloud is Apple’s next iteration of MobileMe, which will include access to online mail, contacts, and calendar applications. When a user makes a new contact or calendar entry on his or her iOS device, the entry is automatically put in the cloud and then pushed to all other iOS devices. If you ever change that information, it is automatically updated on all devices. Apple chief executive Steve Jobs also talked about three other new iCloud apps — Documents, Photo Stream, and iTunes in the Cloud — when he unveiled the service in June.

Levie said that Microsoft was attempting to do the same thing with Office 365, the company’s online version of its flagship Office software. It’s a cloud-based version of Office and gives customers access to document editing, email, customer relationship management (CRM) and enterprise resource planning (ERP) software under a single blanket.

Box.net’s strategy is to do one thing — cloud storage — and be very good at it. And if Levie’s prediction of where the market’s heading plays out, the company could see a big payoff. The startup seems to have investors convinced that it’s on the right road — it just managed to raise a $48 million round of funding that it will use to double its engineering and sales staffs. On the other hand, it’s difficult to discount Microsoft and Apple’s strategies — with market caps of $209 billion and $300 billion respectively, they certainly have a lot of weight behind them.

But Box.net does currently has 6 million users. Some 60,000 businesses employ its cloud-storage software, including 73 percent of Fortune 500 companies. That figure is up from around 66 percent in February. The company is also no stranger to mobile — as of January, its iPhone application recorded more than 250,000 downloads and its Android application had been downloaded more than 70,000 times.

“We can only build so much and of our limited time we want to be the best place to store and manage your data,” Levie said. “The competition thinks very differently.”

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple’s iPad tablet may be a popular consumer device, but it will ultimately fail in the enterprise world, said Andy Lark, Dell’s global head of marketing for large enterprises in a story published by Australian CIO magazine yesterday. Dell on the other hand will ultimately win because of the company’s enterprise approach, he said.

“I couldn’t be happier that Apple has created a market and built up enthusiasm, but longer term, open, capable and affordable will win, not closed, high price and proprietary”, Lark said in the interview.

Lark’s optimism seems a bit misplaced. Market research firm Forrester predicts iPad will dominate at least for the year 2011. And Dell’s current tablet offerings leave quite a bit to be desired. Its Android-based Streak tablet (pictured), which comes with either a 5-inch or 7-inch display, is designed for the business user, but so far the reviews have not been good.

Lark seems to see pricing as a key reason his company’s tablets can compete with the iPad. While the iPad’s pricing may seem very aggressive compared to the competition, he says that’s not entirely the case. “An iPad with a keyboard, a mouse and a case [means] you’ll be at $1500 or $1600; that’s double [the cost of the iPad],” he said in the interview.

I’m not sure Lark’s on track there. It’s true that the Streak does cost less than the iPad (by about $50), but, even if enterprise users wanted a mouse and keyboard with their tablets, they’d have to pay extra for them with the Streak, too. There’s no mouse available for the iPad, but you can connect any Bluetooth keyboard to it.

Beyond pricing, Lark does make a viable point: the Android operating system is more open than the iPad’s iOS, and when you’re in an enterprise environment and need to integrate with a variety of enterprise systems, Android could quickly gain the advantage.

“Apple is great if you’ve got a lot of money and live on an island. It’s not so great if you have to exist in a diverse, open, connected enterprise; simple things become quite complex,” he said.

Integrating the iPad to enterprise systems could be complicated. At least if you build your systems in the traditional way with locally installed applications. In that case the need for Apple’s approval to install applications to the iPad via App Store will be impractical.

But that argument misses the fact that IT is increasingly becoming consumerized. According to Forrester Research 84% of enterprises are increasing the use of more consumer-style Web applications that can be used on an iPad or any other tablet. The same study also reveals that 26% of companies with 1,000 employees or more plan to implement or have implemented general purpose touchscreen tablets such as the Apple iPad.

Calling all mobile executives: This April 25-26, VentureBeat is hosting its inaugural VentureBeat Mobile Summit, where we’ll debate the five key business and policy challenges facing the mobile industry today. Participants will develop concrete, actionable solutions that will shape the future of the mobile industry. The invitation-only event, located at the scenic and relaxing Cavallo Point Resort in Sausalito, Calif., is limited to 180 mobile executives, investors and policymakers. We’ve pretty much finalized the invite list, but have a few spots left. Request an invitation.

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