This is a first. I really try to never write about startup culture and entrepreneurship stuff. It’s my opinion, but there are already enough “gurus” blathering on and on about what it takes to be a start-up champion.
We sell our software, K3, in the enterprise software space. It’s no secret that Enterprise Software is aging itself out. There is some really nasty software out there. You know the old homegrown legacy systems that Bob and Jane built in 1995. Bob retired in 2005, Jane is now in accounting but yeah..still running. There are also a ton of what may be euphemistically be called “heritage systems.” These are vendor solutions, but really really old architecture vendor solutions.
Heritage are typically your big original client/server technologies from 25 or so years ago. You know, that one system at your workplace that gives you white hair. Maybe the kind that have not been upgraded in…well we just stopped that long ago. I’ve heard it said that sooner or later everyone will have to replace these system and it will represent a once-in-a-lifetime opportunity.
Truth is, in the absence of something else, these systems are not going anywhere. Heritage systems systems do really important things. White hair or not they are an absolute beast to replace. Listen, I’m a software person. I would love to wholeheartedly buy into the once-in-a-lifetime, everyone has to replace these. But I can’t. The cost and pain of replacement…no it’s just too big. People blow careers over this stuff. I just can’t buy into the hype.
Or so i thought…..
The Real Zombies
Toys “R” Us. Talk all you want about how they blew this strategy or that opportunity. At the end of the day…way, way, way too much debt. Debt-a-palooza is well and truly now a part of the software world, particularly the heritage software world. Lots of old software companies with decent cash flowing (but not big enough to go public) are now carrying ungodly amounts of debt.
When software companies get bought by private equity firms or get caught up in a debt merger, their competitors do high fives all around – Trust me. It’s like looking across the poker table at your competitor in a straight jacket. They will be able to execute NO meaningful strategy – just like Toys “R” Us. Think its run its course? Not even close. See Calpers.
Now that…that is a once in a lifetime opportunity. Cruddy systems that everyone hates, and a vendor that is in a fully cinched debt-jacket unable to respond to competitive pressure. That…is a perfect setup for the would be entrepreneur.
One small bit of warning for enterprise software entrepreneurs. Enterprise software requires very high subject matter expertise and it takes years to be a serious contender. But if there ever was an opportunity – this is it: GET TO WORK!