SMBs Won't Scale You: The Hard Truth About Expanding Upmarket to Win Enterprise Customers

High-growth software companies often transition from serving small and medium businesses (SMBs) to targeting enterprises as a strategy to achieve significant scale, despite the associated challenges such as longer sales cycles and heightened security and compliance demands. Companies like Amazon Web Services (AWS), Gong, Box, HubSpot, and Shopify exemplify this shift, investing heavily in security, compliance, and infrastructure to meet enterprise standards, which in turn facilitates larger contracts and faster revenue growth. Enterprises demand robust product capabilities, including fine-grained access controls and auditability, along with strong operational support, such as dedicated customer success managers and mature processes to handle complex contracts. The shift to enterprise customers presents risks like higher customer acquisition costs and the need for product adaptation, but also promises durable growth if vendors can offload undifferentiated infrastructure and focus on unique product features. In this context, services like Oso provide a unified permissions layer that enables companies to maintain enterprise-grade security and authorization without diverting resources from product innovation, as demonstrated by companies such as Webflow, Intercom, and Productboard.

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