Transcript
A (0:00)
No one likes doing like these crazy tasks inside of Workday. No employee likes interacting with Workday. No one wants to go into this portal. And so if you can go out there and solve these problems, there's a huge pie to go after. If you think about where you have to go capture these customers. If someone has already become a customer of Workday or already become a customer of ServiceNow or Salesforce, it is so hard to rip them off. That's why these gross dollar retentions are what they are like. They're the gold standards for a reason. We're seeing the like cracks in the most defensible businesses in the world. And it's a really exciting time and the race is on.
B (0:36)
What does it take to replace one of the most entrenched systems in enterprise software? For the past two decades, platforms like Workday have become the backbone of how companies manage people, data and operations. They're deeply embedded, highly defensible, and nearly impossible to rip out. But platform shifts change the rules. Just as cloud transformed enterprise Software in the 2000s, AI is creating a new opportunity to rethink how these systems work and whether they should exist in their current form at all. The question now is not whether these systems are valuable, but whether they can evolve fast enough. Elena Berger speaks with Joe Schmidt, partner on the enterprise team at A16Z.
C (1:23)
Hello everyone and welcome to Monitoring the situation. I am here with Joe Schmidt the fourth. Joe is a.
A (1:32)
Thank you for making that delineation.
C (1:34)
I appreciate it. Joe is a partner on the enterprise team at A16Z and we are here to actually, I think first just answer a big important question, which is why has the enterprise team been writing so many obituaries lately? Me so many eulogies lately. And what have these eulogies been for?
A (1:57)
Yeah, no, thanks for having me on. Excited to be here. Yeah, it's funny calling them eulogies and I think that this piece was intended to be much more balanced than maybe people have have taken it to be. But I think that, you know, if you just think about where we are in the cycle right now with enterprise software, a lot of the biggest businesses that are, that are out there today were kind of built in the last kind of technology shift, which was obviously the shift from on prem to cloud. And that's really the big opportunity for most companies that are being built. Selling to big enterprise buyers is basically adopting some big shift and then building their platform around it. Once those kind of core primitives have been set, basically these markets end up moving into a different type of innovation which ends up being point solutions that are built on top of some kind of core backend system. And the reason for that is if you think about what these systems are actually doing, and if you take Workday, obviously it codifies kind of your HR business processes and a bunch of business logic internal to your company inside of one relational database. And there's a bunch of really complex stuff that happens there, but the actual experience of that, an actual employee or an HR administrator or someone in IT experiences, is fundamentally the same today as it was in 2005. And so if you come in and you say, hey, I'm going to rebuild Workday, and you tell, you know, chro that, or you tell, you know, the CIO that they're going to be like, okay, but like, what does it actually do differently than what Workday has done previously? And you're going to say, you know, until now it would have been very hard to say it was going to do something different. And so what many companies have been doing, you know, over the past 15, 20 years, and this has been basically all of enterprise software, has been building little point solutions on top of that. So you'll be seeing a bunch of things in recruiting, a bunch of things in finance and so on and so forth. And Workday has become the home for a lot of those businesses over time. Obviously, we talked about some of their acquisitions. And so what's really interesting about this moment in time and why we're writing so many obituaries, which I hate calling them, that it's like these are opportunity pieces and it's an opportunity for Workday, just the same as it is for startups, is that for the first time you can actually go to a Chro or you can go to a CIO and say, the way that this core system works for you today can be so fundamentally different. And we can change the actual way that the work is being done by your team and the way that these platforms are actually interacted with by your employees or your customers, that's the opportunity. I see that in, in, in hr, we're seeing that in itsm, we're seeing that in CRM, we're seeing that in the biggest and most defensible categories, historically defensible categories. And I think we're going to see a replatforming. And that's why you see obviously what's happening in the, in the, in the stock markets happening today, because a lot of investors are talking about that and are worried about that, and a lot of, and a lot of incumbents are too. So that's why we're writing these pieces. And that's the opportunity.
