Enterprises Get Appy

Loic Le Meur has always been a consumer tech guy.

Seesmic, the company he founded, rose to recognition by helping users manage their various social media accounts like Facebook and Twitter. And Le Meur himself has been a high-profile fixture at various Web 2.0 and social media conferences.

So it came as a shock when Le Meur recently decided to abandon consumer technology. Seesmic, which recently raised $4 million in new venture funding from Softbank Group and, bring its total capitalization to $16 million, is focusing all of its efforts on the burgeoning market for mobile apps in the enterprise.

Yes, Le Meur is excited about the enterprise.

“Basically, I went to the Android App Store to check out the business category, and I was shocked by how few choices there were,” he explains. “The enterprise is a wide-open space. The opportunity is incredible.”

While developers have created hundreds of thousands of consumer apps, ranging from the sublime to the ridiculous, they have mostly ignored business users. But that is starting to change as smartphones and tablets invade the corporate world. And it only stands to reason that employees will soon be clamoring for business apps to use on them.

“Many organizations are switching their employees to mobile devices,” Le Meur says. “And you know what? There are no apps. They have nothing to put on them.”

Well, not exactly nothing. Seesmic’s first business app, built specifically for smartphone and tablet users, is called Seesmic CRM for Salesforce. The app allows salespeople to look up leads, update accounts, and follow the newsfeeds and Twitter streams of prospects.

The app also lets people to log calls and emails on the go. And it will soon include a mobile notification feature, so if someone is about to land a new million-dollar account, the folks at corporate headquarters can be notified in real time. Seesmic is getting ready to raise its next round and hopes to attract somewhere between $5 million and $10 million, Le Meur says.

Just how big the enterprise app industry can get is uncertain.

“Mobile apps have the chance to be a sizable chunk of the overall enterprise software spend,” says George Zachary of Charles River Ventures. “CRM alone will be a $24 billion market by 2014. There is no question that mobile applications are going to make their presence felt in this segment, especially among field sales professionals.”

Terry Garnett, an angel investor who has focused much of his career on the enterprise software space, is also surprised by the relative lack of activity in business apps.

“I’ve looked closely over the past 12 to 18 months for app companies that are doing cool work in the enterprise space, because that is a big need,” he says. “And frankly I haven’t seen too many startups going after this.”

Recently, however, Garnett found very promising companies that he has invested in. The first is called MeLLmo, a Solana Beach, Calif.-based company that has created a native iPhone/iPad application called Roambi that makes business data and reports easy to access right from a mobile device.

Many organizations are switching their employees to mobile devices. And you know what? There are no apps. They have nothing to put on them.”

Loic Le MeurFounder and CEOSeesmic

Garnett says that Roambi’s secret sauce is its amazing graphical elements. In the past, he notes, enterprise software was all about features and functions, and not so much about the actual user experience. But in a world of smartphones and tablets, where rich graphics and interactive touchscreen capabilities rule the day, the user experience is vital.

“Roambi excels at bringing charting and graphing to life, because that is what users want from the iPhone and iPad,” Garnett says.

The company appears to have a bright future. After raising a total of $20 million in angel funding, Roambi just secured its first institutional capital. It closed on a $30 million funding round in September that was led by Sequoia Capital.

Garnett’s other enterprise app investment is called Taptera, which is creating a suite of mobile business apps. The San Francisco-based company in August raised $2 million from Garnett, and former Hewlett-Packard executive David Murphy.

Taptera co-founders Chris O’Connor and Dan McCall previously worked at Genentech, where they were in charge of building 30 mobile apps for internal users on the Apple platform. Now, they are extending that know-how to the rest of the corporate world. The company’s first app, Colleagues, is expected to launch this fall. It is an employee directory that has been optimized for the mobile environment.

But the question remains: how do you get mobile apps into the enterprise to begin with? After all, IT departments are accustomed to buying big software packages and then rolling out the software to users on its own terms. What IT personnel are not accustomed to is employees finding cool apps on their own and then bringing them into the organization, which makes it hard to administer, control and secure.

That has certainly been the case with some of the most popular business app developers like Evernote, Smartsheet and Matt McIlwain, a managing director at Madrona Venture Group, calls it the BYOA (bring your own application) phenomenon.

On the one hand, he says, it is great that some of these innovative, mobile apps are sneaking into the enterprise as individual employees and small teams start using them, and start telling their colleagues about them. On the other hand, the IT department could simply decide to shut them down at any time.

“The trick for these startups will be to make themselves as palatable to IT departments as they are alluring to individual consumers and small teams,” McIIwain says. That means incorporating more sophisticated security and administration functions, as well as being able to integrate the app with existing back-end systems and data feeds. It also means having a sales team that can go directly to the IT department and sell enterprise-wide licensing deals.

That has been the case with McIlwain’s investment in Smartsheet, which makes an app for online project management. At first, individual users began experimenting with the freemium version of the app, and it gradually took hold in various organizations. That allowed Smartsheet to target organizations where it knew it already had some kind of toehold. Today, enterprise sales are the fastest-growing segment of its business.

This is quite different from the approach taken by MeLLmo and Taptera, both of which are selling directly to the IT department.

“Our hope is we can show up with a cool app that you don’t have to bring it through the back door,” Garnett says. “We are going direct to IT and saying wouldn’t it be nice if everyone had this.”

DoubleDutch, which raised $1.2 million from CRV and Lightbank (the investment fund started by the Groupon co-founders) is taking yet another approach. The company, which is creating its own suite of apps for the enterprise, has been able to gain some traction selling directly to lines of business.

“While IT approval certainly plays a role, it’s the business units that are actively looking for ways to make their teams more productive,” says Zachary of CRV. “At the end of the day, if the vendor can show ROI, companies will find budget for them.”

Our thesis here was that, yes, Evernote could move from consumer to the enterprise, but the far bigger opportunity is consumers, and that is still our primary focus.”

Gary LittlePartnerMorgenthaler Ventures

Mobile apps can also provide a big upside for IT managers, explains Jason Green, a general partner at Emergence Capital Partners.

“In the past, IT had to make decisions about technology before they knew whether it provided value to end users,” he says. “That’s why earlier generations of software often turned into shelfware. Organizations would spend millions of dollars implementing the software, and nobody used it.”

With mobile apps, however, companies can get a pretty good feel of what their employees want to use, before they formally adopt them in the enterprise.

Green says his litmus test for funding a business app is whether it can ultimately crack the enterprise.

“The ideal product is one that has the potential to move upstream from the smallest business to the largest Fortune 100 companies,” he says. “That is what we are betting on.”

So far, he’s gotten his money in good with fast-growing portfolio companies like mobile file storage firm

But not everybody is relying on an enterprise sales strategy. Evernote, which makes a mobile app that allows users to capture and archive random ideas and notes, recently surpassed 10 million users. Though the app is highly useful in a business setting, the company has yet to build an enterprise version and prefers to go directly to consumers.

Gary Little, a partner at Morgenthaler Ventures, which co-invested with Sequoia Capital, in a $50 million investment in Evernote, loves that the app can be used in both a personal and professional capacity. “Our thesis here was that, yes, Evernote could move from consumer to the enterprise, but the far bigger opportunity is consumers, and that is still our primary focus.”

The majority of Evernote users have chosen the free version of the app, but a growing number are starting to pay the $49 annual fee for the premium model. Evernote reported that paying customers doubled from over the first six months of this year from 200,000 to 400,000.

Another big challenge for these new enterprise app companies is the threat posed by the traditional software players in the market. SAP, for example, wants to build its own ecosystem of apps and has already announced new apps in six areas: CRM, workflow, retail execution, general worker productivity, field service and analytics. SAP says it plans to unveil 30 more apps within the next six months.

But investors, such as Garnett, aren’t too worried.

“Sure, SAP and others will bring their own mobile apps to the market, but they will be viewed as more of an extension of their back-end apps, rather than a native app that is built specifically for the mobile environment,” he says.

If anything, the startups that get it right will be highly coveted by the likes of SAP and others.

“I think there will be a huge appetite to acquire these companies,” Garnett says.

Tom Stein is a Palo Alto, Calif.-based contributor. He can be reached at