Is there a youth vacuum in enterprise software?

M.R. Rangaswami, one of my favorite minds in enterprise software, has penned a guest column on Om's blog (another fave) where he reflects on the aging of enterprise software's leaders:

Enterprise Software's Youth Drain

One need only look at the hairlines of today’s software leaders. The current wunderkinds are not looking to create the next wave of corporate computing applications, but are instead gravitating toward emerging fields, such as web 2.0, biotech, and anything “green.”

Bill Gates was 19 when he founded Microsoft (MSFT). Steve Jobs started Apple (AAPL) at 21. Even Marc Benioff was in his 30s when he founded Salesforce.com (CRM) — and at 42, he remains one of the industry’s youngsters.

Software companies need to do more to attract the next generation of business leaders who will drive the evolution of the industry for decades to come...[continued]

M.R. goes onto talk about how he looked around his famed Enterprise 2007 conference and saw the average age of the crowd (50 years old) and then expounds on his recommendations for how enterprise software can re-ignite the youth movement.

I couldn't make this year's Enterprise conference; but at 32 years young I guess I would've probably dropped the average age to 49; would that have mattered? :)

In all seriousness, I think M.R.'s recommendations for attracting young talent are generally well thought out, but I'm not sure I see the aging issue as a real problem. One, we have to remember that the INDUSTRY is maturing. When Bill Gates was founding Microsoft (as M.R. mentions in his column), the concept of "enterprise software" was still very much nascent. Today a big chunk of IT spending is on software; the industry has grown up. It's that very maturity which is driving the wave of consolidation we all have talked about so much lately.

On top of the clear industry trends; it seems hasty to dismiss the very potent youth movement. Take a look at the software companies that have gotten major funding of late. Or those startups that have garnered exits. The Keiden guys (bought by Salesforce) are barely old enough to drink. The biggest VC exit of the last 12 months, YouTube, has extremely young and fresh faced founders. Sure, YouTube isn't an "enterprise software" play per se, but I think that speaks to the broader issue of where the innovation opportunities really lie.

Give it a year or two. With VMWare trading at ungodly valuations and just about every investor dying for "other ways to play virtualization" (a friend and fellow fund manager's words, not mine), you can be sure we'll see more young people venturing into that arena. We're also going to continue to see younger engineers make pushes into SaaS-y models.

Maybe I'm getting old, but I'm much less concerned about the AGE of people in the industry as I am the underlying factors which drive and encourage INNOVATION. To that end, one could argue the industry is better off than it's been in some time. With the stock markets (domestic and abroad) doing well, the IPO market back open, and plenty of global liquidity; plenty of people are feeling the itch to try something more entrepreneurial. And that's what really matters...not whether they're old enough to drink legally.

Note: This is not a recommendation to buy or sell any security, but is merely a personal analysis to foster discussion for informational purposes only.

mrrangaswami ommalik gigaom sandhill.com talent investing software woodrow enterprise irregulars

Comments

[vinnie mirchandani]

Jason, I think the face to the customers - sales and consulting are in their 30s and 40s and mirror customer demographics. If anything when companies look at the avg age of an SI as 24-25 they worry about lack of business knowledge, gray hair etc

But products in enterprise sw...now that is scary...version 8, 10, 12 - 20-30 years old, many inevstments in acquiring mature product rather than investing in R&D...clearly long in the tooth

[Dennis Howlett]

I'm pleased to hear that Jason - I feel positively ancient. I do hope there isn't some sort of ageism in play here. ;)