Dan Lyons talks with Sanu Desai about the tsunami about to smash into the enterprise software world. Desai is looking at one end of the formula — the value of the new companies destabilizing the market:
I was having a drink in San Francisco with Sanu Desai, a longtime Silicon Valley investment banker whose track record includes helping Amazon go public back in 1997. We were talking about how attention has been shifting away from business-to-consumer companies and back toward the business-to-business sector, when Desai said something startling: “We’re about to see a trillion-dollar transfer of wealth in Silicon Valley,” he said. “We’re still in the very early days of this.”
What he means is that if you add up the market valuation of the old-guard companies selling to the enterprise — Oracle, SAP, Microsoft, Cisco and so on — you’re looking at about $1 trillion in total. And those companies are about to get hit with a tsunami of competition as smaller, more nimble rivals rush into the market offering solutions that outperform the old guys at a fraction of the price.
Little by little, those upstarts will tear away market share held by the old guard and rob them of their market value. “A huge amount of wealth is going to get transferred over,” Desai said.
Yes, sure. But the big story is unspoken here: what is the new model of computing and communication for the enterprise, after the smoke clears? How much more agile will companies be? Will collaboration across companies be simpler? Will we be able to do something cheaply and easily that today is expensive and difficult, or perhaps unaffordable and impossible?
That is the end of the formula that we should be focusing on, not a bunch of would-be world-beaters becoming wealthy.