Enterprise User Acquisition & Consumer User Retention

In thinking about a product's user acquisition, the nice thing about enterprise products is that when you get one customer you get a lot of users. You just need to sell one CIO on your product and you’ll quickly pick up thousands of users.

The not so nice thing about enterprise is that you’re going to lose about 20% of those users every year due to employee turnover. Your entire user base is going to turn over every five years. Acquisition scales in enterprise. Retention does not.

The not so nice about consumer products is that, unlike enterprise, you have to acquire users one by one. You don’t have the scalable distribution channel that you have with enterprise. In consumer, user acquisition is expensive and really difficult.

But the nice about consumer products is that once you get users you can keep them forever (you don’t have the turnover problem).

It’s interesting to note that some companies have figured out how to take the good from enterprise and the good from consumer.

One example is eShares, an enterprise product that digitizes paper stock certificates and options and warrants and rolls them up into an easy to use cap table to help startups and startup employees manage their equity. Employees generally sign up for the service just before their start date when they receive an option grant from their new company (to sign the option grant employees need an eShares account). If the employee leaves the company they keep their account open to manage their equity and they can add subsequent option grants from subsequent companies to keep all their documents in one place.

eShares is brilliant in that they have morphed an enterprise product into a consumer product and have reaped the benefits of both models. This is a super powerful way to quickly build a huge set of engaged users and is a great way to get ahead and build a platform rather than just a useful app. I’m sure eShares investors are taking note.