I CRY FOR YOU SAN FRANCISCO
In a city marked by contrast and constraints there’s an even bigger world of opportunity
Last week my Bidhive co-founder and I travelled to San Francisco for a week-long immersion as part of the River City Labs Accelerator program powered by Muru-D. Bidhive is a bid management platform to help business development teams win more work through competitive tendering. Our US visit was timed to our early stage to make us think global from the outset — a mindset inspirationally delivered by San Francisco-based Muru-D Portfolio Manager Mick Liubinskas upon our arrival.
The week involved attending workshops, mentoring sessions with successful entrepreneurs, meetings with venture capitalists and angel investors, as well as networking events with Australian investors and Australian founders who have ‘flipped’ their head offices to the US.
Product market fit
Our objective before we left Australia was to learn more about the US market and whether there would be a product market fit for our platform. By the end of the first day we had validated our first assumption that the practice of bidding is truly global (with some slight terminology differences such as the preference for ‘proposals’ versus ‘tenders’). Next, our quest to find fit with Salesforce was verified, however the greatest revelation of all was the unmet need to help companies navigate the complex US government procurement process and corporate compliance requirements.
Bidding and the billion-dollar opportunity
From the moment we mentioned ‘process’ and ‘government’ we piqued interest in what was to be a significant market gap in the US proposal automation software category. After meeting with executives from LinkedIn, Salesforce, Instagram, Facebook, Airbnb, 99 Designs, Safety Automation, Safesite and Okta, we rewrote our pitch, describing Bidhive as a SaaS platform that enables vendors to navigate the complexity of responding to government proposals to secure supply contracts. Once we had a clearer elevator pitch, eyebrows raised, and polite conversation shifted to deep discussions.
There’s no doubt that US public sector agencies and the start-up sector want to do business together, but this is where the proposition falls short and becomes theoretical for now. Despite the $477 billion US federal government contracting market (10X Australian government spend) — of which $82 billion dollars is allocated to government technology spend alone (or 8 times what Apple spends on R&D); and legislation introduced across the country (including the State of California) to ensure supply-chain compliance and diversity, the uptake of opportunities, and therefore acceleration of innovation in government, is painfully slow. We wanted to know more, and after a session with Javid Jamae from Skipcard on Customer Development, we began to ask ‘why?’
Big player dominance and the glass ceiling
Our San Francisco experience was seen through a different lens beyond being a start-up — we’re domain specialists (20+ years’ experience helping companies grow by winning tenders). Our ‘big’ clients never started that way, which is why we empathise with underdogs. We want to solve the problem of helping companies win business with governments so that they can make an impact — on business, and on society.
Start-ups are disrupting virtually every segment of the US (and the world) economy yet San Francisco’s start-up and tech world share challenges strikingly similar to small business and female founder imposter syndrome (2% female founders and 4% female venture capitalists in the US; with 0% start-ups represented on the top 200 government contractors list).
We learned that there’s a real and perceived “boy’s club” between US government agencies and the big vendors. With the exception of lobbying campaigners Uber, Lyft and Airbnb, for example, smaller players and start-ups simply believe they can’t compete against incumbents, so they give up before they even try. Others who have tried and failed don’t pursue the fight, so they look elsewhere for commercial contract opportunities.
Knowledge is power, so let’s start teaching
Our learnings are consistent with our Australian and UK market insights, as well US research into deterrents of government contracting and why start-ups don’t bid. The lack of participation — or even knowledge around how to connect with prime contractors and government agencies in our opinion has ultimately led to a complacent supply arrangement from governments everywhere — where ‘innovation of methodology’ (rather than innovative outcomes) prevails. ‘Winners’ offer ‘solutions’ to legacy problems which are nowhere commensurate to the hefty contract values they command, and government is given little choice in the market — and therefore minimal incentive to vastly improve civil or civic services. US sentiment is that frameworks are lacking, however Commonwealth countries have been applying them for more than a decade.
Start-up acquisitions and slow to innovate government outcomes
Unlike consumer applications that have enjoyed massive growth and profit, the enterprise ecosystem been slower to make true impact on government project outcomes. This observation can probably be explained by the fact that start-ups sell out on tech before they can even arrive at a position of influence.
Start-ups sell out on tech before they can even arrive at a position of influence.
Nothing is more evident than walking through District 6 of San Francisco where close to half of the city’s 7500 homeless reside. There is a huge disparity between the vibrant start-up culture, the growing wealth of the venture capital world and the confronting homeless situation of the city where 58% of the homeless population have no shelter.
One only needs to conduct searches on Crunchbase to see that smaller companies are constantly swallowed by middle size companies that are then gobbled by the giants. While we know nimble start-ups are tackling big problems, few seem to have the opportunity to rise up to equal playing fields where they can grow to shape future business and government practices and effect change to public policies and improve program outcomes.
Big businesses appear firmly focused on gaining incremental competitive advantage through acquisition of start-up innovators. Ironically, managing the due diligence and resulting cultural growing pains distracts and diverts these businesses from their original goal.
Our visionary roadmap to become a major marketplace
While our San Francisco experience revealed that the future of work belongs with enterprise process efficiency solutions, it also highlighted need for enterprise systems to deliver greater strategic value through transformation.
The opportunity for a two-sided marketplace to stimulate business is there, but not before the market itself can be corrected to open up access and competition within shorter cycles. Additionally, minority groups also need to be empowered to join the contracting supply chain so that they can bring innovation and capabilities not previously harnessed.
Bidhive returned to Australia with a much broader view of the world and the problems it can solve. We are ready and looking forward to lifting the glass ceiling and empowering big and small; and mature and young businesses to work better together, and with government. By teaching others how to reduce contract and supplier risk with education and guidance around corporate governance and teaming we will solve the problem of participation. The market is ready for disruption and Bidhive is brave enough to create a buzz.
Nyree McKenzie and Aaron Godde travelled to San Francisco as part of the River City Labs Accelerator powered by Muru-D from November 10 to 18, 2017.
We wish to thank the River City Labs Accelerator and the Muru-D Program Managers for their tireless work and logistics behind the scenes as well as the many generous people and companies who gave their time, advice and connections to make the trip truly transformational.
Bidhive (www.bidhive.com) is a bid management platform that enables business development teams to better manage their enterprise tender and proposal processes so that they can win more business.
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