Prisoners of context

One of the elements of my job that I love is the ability to connect and talk with some of the top executives in the technology field.  While I like to think its my cheerful personality that allows that to happen, I know that in reality its driven by my role as a VC.

I have had a chance in the last few months to talk to quite a few senior software execs from a variety of software application companies.  A constant theme appears:

• The software business has changed irrevocably and has matured
• The glory days of growth are over
• Technology does not matter; its all about maintenance revenues and consolidation
• No white space remains in the software landscape

Hearing all their lamentations reminds me of an episode from my salad days when I had a real job.  I was at Microsoft in the mid 90's and was lucky enough to be one of a few microsofties invited to have dinner with Bill Gates and Mike Maples (they had a program in which they selected 30 odd employees every month to have dinner with the big cheeses.)   After dinner, Bill and Mike would run a 30 minute question and answer session.  I asked Bill that day if he was starting out his career in the 90's and he wanted to create a big company what would he do?  Bill earnestly said (and I felt he was being very honest) that the big opportunities in technology was done and that he would do something in Biotech.  He felt then (this is 1993) that the software industry has matured and there was not going to be much growth anymore.  Mike Maples also agreed.  Obviously in retrospect they were wrong.  They missed the Internet.  They missed BEA, Siebel, Veritas, Verisign and other countless B2B software companies that created billions in value. 

The moral of the story is that even very smart people can be blinded by the context of their environment.  To most senior software execs, they are living in a tough environment of long sales cycles, even longer implementation cycles, impossible to non-existent upgrade capability and a 3-5x services budget to implement their license software.  And they are right - that market is DEAD!!!! Customers don't want that anymore. 

What they are not realizing is that the new opportunity is exactly to sell and make software in a manner that has shorter sales cycles, very fast implementation time-lines, easy to upgrade and easy to maintain software, and a small amount of services.  The new software companies will do exactly that and they will eat the legacy players alive as history has shown many times.