How the “no code” design paradigm is revolutionizing enterprise software
David Peterson

This past week, I published a new essay on how I think the “no code” design paradigm is revolutionizing enterprise software. You can read the whole thing, but I thought I’d share some more free-flowing, editorial thoughts with you all here.

What I’ve noticed is that companies like Figma, Airtable, Notion, and Zapier are all consistently trotted out as outstanding examples of the “product-led growth” strategy come to life. But I think they’re doing something different, and much more interesting, than vanilla PLG.

The reality is that the basic features of product-led growth that made Slack and Dropbox successful in the early days (e.g. self-serve onboarding, viral growth loops, freemium pricing) are necessary, but not sufficient, ingredients for runaway success in enterprise software.

This latest batch of fast-growing enterprise software companies have one thing in common: they’re “open-world” products. In other words, they have a low barrier, but an extremely high ceiling. And they’re designed with building blocks-style primitives that empower users to build their own solutions.

This enables them to circumvent some of the critical challenges of product-led growth. That’s why I think that this approach, which I’ve taken to calling “customer-built growth,” represents a massive opportunity for new entrants into the world of enterprise software.

As with past paradigm shifts in enterprise software, my guess is most incumbent players won’t be able to make the transition, leaving open opportunities for investors and entrepreneurs alike. I shared a few ideas for opportunities in the original essay, but wanted to elaborate on those here:

First, I’ve been thinking a lot about verticals/problem spaces that are currently dominated by PLG or traditional B2B incumbents and could potentially be disrupted by a “low barrier/high ceiling” product experience. Some examples that I’ve spent some time on already are: data modeling (check out Causal or Decipad), CRM (check out Attio), machine learning (check out Levity* or MonkeyLearn), financial compliance/security (check out Unit21), and neural net design (check out Tensorleap*).

There are undoubtedly countless more examples here. I’m really interested in bringing this design approach to more niche problem spaces and technical extremes (i.e. making the latest technical breakthroughs available to broader audiences). Anybody working on this?

[*Angular Ventures portfolio companies]

Second, I’ve been thinking a lot about companies that are building the picks and shovels for customer-built growth. A few areas that come to mind are community management (e.g. Commsor or Circle), new-age CRMs (e.g. Calixa), or novel analytics tools (e.g. HeadsUp). But I also think there could be a huge opportunity to leverage web3 (I’m thinking social tokens, but maybe even a full-fledged DAO) to align incentives between the company and early evangelists/builders. Maybe? Who knows. I’m excited to see how this evolves over time as well and will be tracking it closely.

Third, I’ve been going deep on the history of the open source software movement recently, and notice a lot of similarities. What if a customer-built product made it possible for end users — even non-technical end users — to design the building blocks themselves? Excel has kind of done this with LAMBDA, though it’d be even more powerful if users could publish their formulas in a marketplace. Who will be first to figure this out? If executed well, this could create the opportunity for tight incentive alignment between the company and early builders (e.g. builders earn tokens based on how useful what they built is for the community) and network effects (more builders = deeper, more expansive, more useful product).

I’ll be continuing to write and think on this theme over the coming weeks and months, so if you have any thoughts or ideas, please follow me or shoot me an email ([email protected])!

— —
Angular in Copenhagen. Gil will be in Copenhagen on Wednesday, Thursday, and Friday of this week. On Thursday, Digital Hub Denmark is hosting Angular at Warm Up Bar at Matrikel, and Gil will be participating in the CPH Tech Townhall at VOLUME (tickets here). If you are anywhere in Europe (but particularly Denmark!) and want to meet up, drop us a line.

EVENTS

Oct 27 / Open Source and Category Creation
Emil Eifrem, Co-Founder & CEO of Neo4j

Nov 10 / Product-Led Partnerships
Andrew Edelman, Head of Strategic & Platform Partnerships, Zapier

Dec 8 / Fireside Chat with Leigh Moore, VP of Marketing at Snyk
Leigh Moore, VP of Marketing, Snyk

FROM THE BLOG

How the “No Code” Design Paradigm is Revolutionizing Enterprise Software
Companies like Figma, Airtable, Notion, and Zapier are doing much more than vanilla PLG.

Building Angular Ventures:
Announcing an $80M first-check Fund II for deep tech founders across Europe & Israel.

Introducing David Peterson:
Why we are adding a second partner.

Why I’m Joining Angular Ventures:
After almost four years at Airtable, David is thrilled to announce that he’s joining Angular Ventures.

EUROPE & ISRAEL FUNDING NEWS

Israel/Remote Hiring. Deel raised $425M for its platform which provides payroll, compliance tools and other services to help businesses hire remotely.
UK/Automation. Rossum raised $100M for its platform used by enterprises to automatically process and “understand” all their inbound documents.
Israel/SW Development. SeaLights raised $30M for its comprehensive visibility of software quality risks across the entire development life cycle.
Israel/ML Tooling. Deci raised $21M for its deep learning platform to help build models that can work better with the available data and hardware.
Czech Republic/Financial Fraud. Resistant raised $16.6M for its software that uses artificial intelligence to help financial services companies combat fraud and financial crime.
UK/Remote. Hofy raised $15.2M to provide high-growth companies a quick and easy way to deploy and manage physical equipment for remote employees.

WORTH READING

ENTERPRISE/TECH NEWS

API Security. Noname Security has rapidly catapulted itself to the top of the API Security landscape, with some customers rumored to be paying in the hundreds of thousands of dollars for their technology. In this CTech article, Noname CTO Shay Levi discusses the company’s vision around three main customer pain points: “First of all, that [customers’] API[s are] mission-critical because every important pipeline in their organizations has an API involved in it, because there are two pieces of software, even in the same organization, that are communicating through that channel. Second, that the organization is scattered, they have AWS accounts, GCP accounts, they have a data center over there, and one over there, they have some sites in China, they are all spread around and are not sure where their APIs are. Third, they said API changes so fast. API became so quick, every single developer in a company can develop an API in 15 minutes. Business pushes hard to create more partnerships and deploy a new API for this partner and a new one for that partner, more and more APIs are created and security is lagging…These were the three pain points we recognized, they do not know where they are, they do not know what they are doing and they keep changing very fast.”

Moore’s law for Algorithms? New research from MIT suggests that algorithms may be improving at rates comparable to Moore’s law: “For large computing problems, 43 percent of algorithm families had year-on-year improvements that were equal to or larger than the much-touted gains from Moore’s Law. In 14 percent of problems, the improvement to performance from algorithms vastly outpaced those that have come from improved hardware. The gains from algorithm improvement were particularly large for big-data problems, so the importance of those advancements has grown in recent decades. The single biggest change that the authors observed came when an algorithm family transitioned from exponential to polynomial complexity. The amount of effort it takes to solve an exponential problem is like a person trying to guess a combination on a lock. If you only have a single 10-digit dial, the task is easy. With four dials like a bicycle lock, it’s hard enough that no one steals your bike, but still conceivable that you could try every combination. With 50, it’s almost impossible — it would take too many steps. Problems that have exponential complexity are like that for computers: As they get bigger they quickly outpace the ability of the computer to handle them. Finding a polynomial algorithm often solves that, making it possible to tackle problems in a way that no amount of hardware improvement can.”

All that glitters. What happened to Clubhouse?

HOW TO STARTUP

Gartner’s 12 Enterprise trends for 2022. The IT strategy consulting firm released its key trends to watch for 2022 recently. “If the premise for 2020 was survival, the 2021 directive for the enterprise is to get back on track, chasing the revenue and growth that stalled during the pandemic.” The trends are (1) hyper-automation, (2) generative AI, (3) data fabric, (4) AI engineering, (5) autonomic systems, (6) decision intelligence, (7) composable applications, (8) cloud-native platforms, (9) privacy-enhancing computation, (10) cybersecurity mesh, (11) distributed outcomes, and (12) “total experience.” In case you are wondering, “cybersecurity mesh” refers to the unification of security tooling beyond the traditional perimeter; and “total experience” refers (rather vaguely…) to the idea that CIOs are looking at unifying customer, user and employee experiences into one coherent whole powered by intelligence.

SaaS Metrics that matter. David Sacks and Ethan Ruby of Craft Ventures run through the SaaS metrics that all SaaS founders should be tracking. They also released a tool called SaaSGrid to help founders analyze their own KPIs. One interesting one you don’t see every day is the “burn multiple.” “The Burn Multiple is a company’s Net Burn divided by its Net New ARR in a given period (typically annually or quarterly). This formula evaluates burn as a multiple of ARR growth. In other words, how much is the startup burning in order to generate each incremental dollar of ARR? The higher the Burn Multiple, the more the startup is burning to achieve each unit of growth. The lower the Burn Multiple, the more efficient the growth is. For fast-growing SaaS companies, a Burn Multiple of less than one is amazing, but anything less than two is still quite good. If a startup has a high Burn Multiple but low CAC, that could indicate that S&M costs have been miscategorized.”

The rise of Hibob. Bessemer wrote about HiBob’s early stages, including a detailed look at their critical early pivot from a pension management tool to a full-blown HR suite. “Within six months it had become very clear that prospective customers could care less about pension reform, but really needed a proper HR suite that could scale with their rapidly growing businesses. Hibob recognized an untapped opportunity to sell an HR software to dynamic, growing small-midsize businesses, not the quaint small businesses that use Quickbooks…Hibob recognized that while tiny sub 50 employee organizations had several good options to choose from (even free options), small growth companies were left with little choice but to go with the old-school, expensive platforms offered by enterprise HR platforms. This was much more than the proverbial pivot. It was an immense product challenge moving from a barebones HR solution to a comprehensive HR platform that could meet the expectations and handle the myriad requirements of fast-growing companies, and the change in product strategy was therefore more akin to a restart. Undaunted, the founders said it would require a new four-year product roadmap, which industry HR software execs deemed ridiculously short and unrealistic given how much it entailed to cover so many product modules (e.g. time and attendance, on-boarding, benefits, surveys, talent management, compensation management, and more). In the meantime, Hibob would continue to sell its original product accepting the fact that this would create a ceiling on the company’s ACV. The lack of a full product suite also meant lower customer conversion rates as some prospects were growing too fast to rely on Hibob’s product roadmap. The SaaS on steroids model would have to wait.”

In defense of maternity leave. Front CEO Matilde Collin on how maternity leave made her a better leader. “When I came back, to my amazement, we were still in business! In truth, I had never expected the company to be struggling, but I was sure I’d have to immediately go back to 70-hour workweeks, put out a lot of fires, and address festering issues. Instead, I found that we were thriving. In my absence, the company had transformed and grown. Partly due to the decision delegation I outlined before my leave, and partly due to the vacuum I left, everyone found themselves with a stronger sense of ownership over their own work. The escalation framework gave people a sense of security: if things truly went south, I’d be back (in fact, nothing was escalated to me). And because 18 weeks is a long time, people were forced to make calls themselves instead of postponing until my return. This is what happens when talented people are provided with plenty of autonomy and enough room for error: overall, they did great work.”

Do you know why you raised? Probably not. Charlie O’Donnel exposes some of the hidden factors that drive investment decisions by VCs. Here’s one example: “The investor just happens to be looking specifically for the kind of thing you’re pitching. This just happened to be recently when I started noticing that I was discounting the overall size of the creator tools market — so I decided to be a little bit more open to a specific Canva/Figma/etc style version of it, and then I got a pitch from a team I really liked. This is why following and more importantly interacting with investors on social can be helpful.”

HOW TO VENTURE

Fear not. Fred Wilson does not think there are too many startups. He believes the “fast and furious” VC market we are living through now is due to more people deciding to start companies. “It could be that we are in an environment where too much money is chasing too many good deals.”

PORTFOLIO NEWS

Aspecto’s CTO, Michael Haberman, will be giving a talk on distributed tracing for Node.js using OpenTelemetry on October 28 at the Conf42: JavaScript 2021.

CruxOCM’s CEO, Vicki Knott, has been nominated as 2021 Rising Star, the best and brightest in the Canadian oil and gas industry.

Snyk announced new product innovations and integrations to further enhance developer-led security.

Sisense’s CEO, Amir Orad, shares his thoughts on the hot market and how it’s inflating values and increasing salaries.