How Software Has Changed Our Definition of SMB

When small businesses can scale like industry titans, they face new kinds of challenges

Startups, the investor Paul Graham once wrote, are businesses that grow extremely big, extremely fast. That’s the thinking that birthed the app boom. With no marginal cost to distribute, the sale of one software license is just as easy as selling one million.

The speculation that has resulted from the startup ecosystem, and the money it has made, has transformed business, making the small team the atomic unit of the innovative workplace.

But it hasn’t transformed the vocabulary. Terms like “enterprise,” “consumer” and “SMB” still get thrown around in every industry. In many industries, they’ve become mostly meaningless as product categories.

With millions of “consumer” apps on the market today, software teams have gotten smart. By developing a unique technical advantage with some cutting-edge library or platform, they aim to pull off a new kind of app in a world-class way. User experience has become paramount—underlying the best apps, you’ll usually find a unique technical advantage behind the curtain, producing a seemingly magical effect.

What software has wrought

With software startups pushing the boundaries of what we expect from our workplace tools, experience has become the new currency of all business, not just software. This is especially true for what used to be called SMBs, many of which rely on software to keep costs low during the early lean years. The ever-dropping costs (and ever-improving value) of solutions provided by these software platforms gives way to the production of increasingly premium goods and services from companies of all sizes.

For their part, big and medium-sized companies of all types are reorganizing into multi-disciplinary teams that choose their own tools. Partly a response to the demands of a highly skilled, highly educated and characteristically picky Millennial workforce, this transition from a traditional, functional org chart to a decentralized model turns employees—not the CIO or CTO—into the enterprise software customers of the future.

It’s not just about cost cutting. It’s about iterating quickly to make sure the best version of a product is the one that goes to market. The new possibility of handling an unlimited customer base without a big bureaucracy gives small businesses that pull off a killer customer experience the ability to vault to national and then international scale in just a few years—without changing software vendors.

So it’s only natural that vendors of all sizes have begun to design their products with small teams as de facto audience. Today, critical enterprise software can be delivered as a cloud service across industries, most often at a cost savings overrunning something on premise and without the need for dedicated IT. Improvements in design, testing and customer feedback have done away with the need for training and constant support, making things even easier and cheaper.

Blurred classifications

With the growing popularity of agile patterns outside the tech industry, suddenly “enterprise” software is also SMB software, “business” software is also adopted in the education world and big companies aren’t necessarily big customers.

Dating apps are one category where the line between small business and startup has become especially blurred. Dating apps make for perfect small businesses. The best ones appeal to a niche, have strong ties to physical neighborhoods and engage their customers in real life, just like brick-and-mortar businesses. The same goes for food delivery startups, restaurant review platforms and social networks. Today, big centralized platforms mostly rule these domains—but they’re on track to be disrupted sooner than their keepers like to think.

When small businesses do get bigger, they often find themselves on the same growth trajectory as hot early-stage software startups. In the world of technology venture capital, the purse strings have tightened. Many software entrepreneurs have responded to tough investment terms by bootstrapping, pushing them even further into the traditional “small business” category.

For small and medium-sized businesses, the lesson is to think about scale. When your software can intelligently support millions of customer interactions, entrepreneurs of all types are left to figure out how to earn and keep those customers with an unbeatable experience, whether they arrive in groups of one or one thousand.

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