As someone who is building a B2B SAAS company and made the decision to not focus on large-enterprise, I think you're both right.
At the end of the day, it's just plain hard to create a clean effective product that can be used by 5,000+ person organizations.
Regardless of use-case, boatloads of data will be collected in large-enterprise software and it has to be transferred and presented to many end-users in a clear way. And very rarely will it be one exclusive universal data-type. Usually it will contain varying types of information that will be needed by multiple teams and maybe across several different office locations. And that's just the product issues, let's not talk about sales or compliance.
This gets closer to the underlying truth. Even if you had smart procurement people who understood the benefits of great UX, another issue would be that enterprise problems are typically sub-scale compared with today's consumer products. There is one or two orders of magnitude more complexity and one or two orders of magnitude less users than in the consumer space, or even less for niche industry needs.
Even if you make it up with additional willingness to pay per user, the market isn't always there for spending a lot to design, develop and iterate on the perfect UX.
I think a lot of SaaS companies end up failing fast when they focus on the enterprise. The sales cycle is longer, and having a massive client can end up putting their individual needs over features that would make the product more attractive to the market as a whole.
SaaS makes the most money when users can self-service in large numbers at relatively low transaction costs, which typically means SMB should be your first market. The enterprise channel is where you go only once you have a mature product and a healthy revenue base to do the enterprise payola scheme with consulting companies.
At the end of the day, it's just plain hard to create a clean effective product that can be used by 5,000+ person organizations.
Regardless of use-case, boatloads of data will be collected in large-enterprise software and it has to be transferred and presented to many end-users in a clear way. And very rarely will it be one exclusive universal data-type. Usually it will contain varying types of information that will be needed by multiple teams and maybe across several different office locations. And that's just the product issues, let's not talk about sales or compliance.
It's just plain hard.