VC View: Tech Sold Directly to Workers

Posted by Ben Worthen

The next technologies to take corporate America by storm will be online software that workers use to make themselves more productive without ever involving the information-technology department.

Kevin Efrusy thinks the way business will buy software is changing

That’s the view of Kevin Efrusy, a partner at venture capital firm Accel Partners. Much has been written about venture capitalists’ preference for so-called software as a service — software that workers access over the Internet through a Web browser – over traditional software that businesses install on tech equipment they own and operate. Efrusy takes it one step further: He thinks the model of how businesses buy software is going to change as well.

“You used to have charismatic salespeople who drove BMWs selling very expensive software to company executives,” Efrusy tells the Business Technology Blog. That’s no longer the case. The C suite is reluctant to buy software these days. Rather than taking the charismatic salesman at his word, they’ll ask the vendor’s engineers to develop a proof-of-concept version of the software that they can test. That costs money. Consequently, “it destroyed the software business model for us,” Efrusy tells us.

Instead, he’s looking to invest in companies that make software that workers can find and buy on their own. One key: The software has to make life easier for individual workers. Most business software is designed with managers in mind, Efrusy says. Sure, it might make a worker’s job easier by giving him access to a record, but primarily it’s a way for higher ups to keep tabs on what’s happening in an organization. The first wave of online software, like sales-automation tool Salesforce.com, just transferred the manager-centric way of doing things to a new technology.

Efrusy has invested in Genius.com, which lets salespeople know when their customers are visiting the company’s Web site. It’s a simple tool, but one whose chief beneficiary is the salesman himself. The business model is that after enough salespeople start using the product, some higher up will feel compelled to buy it. The workers provide their own proof of concept.

While it might sound like software makers who take this approach only have niche appeal, Efrusy is convinced that this is how most software will get into business in the future. There’s no reason that the next big tech company couldn’t start from the bottom up, he tells us.

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