These one sentence killed more promising startups than any competitor ever could.
Last year I spoke with a founder who'd built a brilliant product for SMBs. £3M ARR. 200+ happy customers. 85% gross margins. But somehow, that wasn't enough.
"Our investors say we need bigger deals," he explained. "Enterprise is where the real money is. We're leaving millions on the table serving small companies."
Fourteen months later, they're now "right sizing" the business.
Zero enterprise customers. Original SMB base shrunk. £3.2M burnt chasing a mirage.
This isn't an outlier. It's an epidemic. And it's time we talked about why the "enterprise upmarket" strategy is usually a spectacular way to destroy a perfectly good business.
On paper, enterprise makes perfect sense:
This maths has seduced thousands of founders. It's also completely wrong.
Because it ignores the hidden mathematics of enterprise sales:
Suddenly that 20x revenue multiple doesn't look so attractive, does it?
The theory: Big companies pay more and churn less.
The reality: Enterprise customers often destroy unit economics.
I analysed 50 B2B startups that went upmarket. Here's what actually happened:
Why? Enterprise customers don't just buy your product. They buy your soul.
They demand:
That £120K deal? It's actually costing you £180K to deliver.
The theory: Big companies are stable. They don't churn.
The reality: Enterprise risk is different, not lower.
SMB risk is distributed:
Enterprise risk is concentrated:
Plus, enterprise customers churn too. They just do it differently:
When they leave, it's catastrophic.
The theory: Just add SSO and SOC2. Done!
The reality: Enterprise readiness is a complete transformation.
Your SMB product succeeded because it was:
Enterprise products need:
You're not adding features. You're building a completely different product.
And here's the killer: Your SMB customers hate every "enterprise" feature you add. You're literally making your product worse for your actual customers to chase imaginary ones.
The theory: Keep SMB while adding enterprise. Best of both worlds!
The reality: You'll fail at both.
SMB and enterprise are different businesses:
Trying to serve both is like running a restaurant that serves both fast food and michelin-star cuisine. You'll deliver neither well.
Your SMB customers feel neglected as you chase enterprise. Your enterprise prospects see you as an SMB tool playing dress-up. Your team gets whiplash switching contexts. Everyone loses.
Let me share three stories from the enterprise graveyard:
The Project Management Startup
The Marketing Automation Company
The Sales Intelligence Tool
See the pattern?
Going enterprise doesn't just risk failure. It fundamentally changes your company:
Your scrappy startup culture dies. Enterprise sales requires:
The builders leave. The bureaucrats arrive.
Every enterprise deal demands custom features:
Your elegant product becomes a frankenstein monster.
Enterprise support isn't just "more" support. It's different:
Your support team goes from helping users to managing politics.
SMB companies ship weekly. Enterprise companies ship yearly.
Why? Because every change requires:
Innovation doesn't just slow. It stops.
Here's what nobody tells you: The startups that succeed in enterprise were built for enterprise from day one.
Salesforce didn't start SMB and go upmarket. Workday didn't begin with small companies. ServiceNow wasn't an SMB tool that evolved.
They were enterprise-first because enterprise isn't a market you grow into. It's a market you're built for.
The skills, culture, funding, timeline, and patience required for enterprise are fundamentally different from SMB.
Trying to transform from one to the other is like trying to transform a speed boat into a cargo ship mid-ocean. Theoretically possible. Practically suicidal.
Instead of chasing enterprise fantasies, what if you dominated your current market?
Option 1: Go deeper, not bigger
Option 2: Go wider, not upper
Option 3: Build a different company
While everyone chases enterprise, massive SMB opportunities go unserved:
Build a £100M business serving SMBs well instead of dying trying to serve enterprises badly.
If you're still considering enterprise, ask yourself:
If you answered no to any of these, stop. Fix your current business instead.
The enterprise upmarket myth persists because it sounds logical. Bigger deals = bigger business, right?
Wrong.
Bigger deals = different business. And different isn't always better.
Your SMB customers chose you for a reason. You solved their problems in a way enterprise vendors couldn't. That's not a limitation—it's a superpower.
Own it. Double down on it. Build the best bloody SMB solution in your category.
Let the enterprise vendors fight over Fortune 500 logos while you quietly build a profitable, sustainable business serving the millions of companies they ignore.
Because here's the final truth: A great SMB business beats a mediocre enterprise business every time.
And most startups that chase enterprise become mediocre at best.
Don't be most startups.
Still thinking about going enterprise?
Let's talk through the real implications for your specific situation. I've guided dozens of companies through this decision—some went enterprise successfully, most found better paths to growth.
Ian Spencer, The Revenue Nomad, helps B2B companies find sustainable growth paths without following the herd off the enterprise cliff. Based between the UK and Brazil, working with founders globally who value profitable growth over vanity metrics.