Why the Traditional Enterprise Software Playbook is Broken

An article we liked from Thought Leader Mike Vernal of Conviction:

The Death of the Three-Act Playbook

There used to be a pretty straightforward playbook for building an enterprise software company.

Act I – The Wedge (aka Unbundling)

Start with some feature or market niche that was underserved by current solutions. During a platform shift, you’d pick-off a feature of the existing platform that could be made 10x better in the new regime and use that as the wedge.

This niche needed to be large enough to scale to tens of millions of ARR quickly, but not so large that it attracted ruinous competition. Statsig started with product experimentation. Rippling started with an orchestration tool for onboarding and offboarding employees. Etc.

Most startups would spend 3-5 years building the initial product, hiring the initial GTM team and then scaling to $10-50M ARR before starting Act II.

Act II – The Suite

Act II was about launching adjacent products that let you scale past $100M ARR. Instead of a single product, you built a suite of products.

Statsig started with experimentation but then added feature flags, session replays, product analytics and more. Rippling started with payroll and HR workflows (onboarding/offboarding) and then added a bunch of HR, benefits and recruiting-specific products to…