Marc Andreessen’s comments made people stand up and take notice when, in 2011, he said, “Software is eating the world.” His contention was that most disruptive companies, at their heart, were operating as software firms. Back then, organizations such as Airbnb and Uber were beginning to gain worldwide prominence. Yet, people continued to question the sustainability of their asset-light and platform-centric business models.
Fast forward to 2017, they continue to validate his statement. Both Airbnb and Uber created a significant impact on their respective industries. Their focus on customer experience, together with robust technology know-how, and strong emphasis on ecosystem, proved critical to their astronomical success. For instance, Uber reached a valuation of $66 billion in a span of seven years.
These start-ups are now looking at bigger pies. Uber, for example, is eyeing the mammoth market for personal transportation – worth $10 trillion a year globally. Automobile firms such as General Motors (GM) and Toyota, which have dominated this market for decades, are waking up to the threat posed by the likes of Uber.
Volkswagen, GM, and Toyota now hold strategic investments in Gett, Lyft, and Uber respectively. They continue to explore new avenues of collaboration with these disruptors. For instance, Toyota’s investment in Uber includes providing cars on a lease basis to the latter.
Role of Cloud Computing
With technology at the core of what they do, start-ups follow a modern approach to leveraging it. Their need for lean and agile technology tilted the scales in favor of cloud computing services. The benefits of cloud computing services include enabling an asset-light and information-rich operating model. Some start-ups even use enterprise app stores, facilitating easy consumption of SaaS services via an intuitive user interface.
Multiple vendor catalogues are listed on a single platform, enabling end-users to opt for a service that can be deployed on a SaaS model in a matter of minutes. Moreover, in case of public cloud, organizations need not worry about the underlying platform and infrastructure. Consequently, a new employee can be productive from day one and needn’t waste time on procuring hardware/software.
Start-ups and Cloud
It’s no surprise that cloud computing services are widely adopted among start-ups. The benefits that it provides, such as the option to pay-as-you-go, ability to scale, zero Capex, and self-serviceability, permits them to focus on what they do best: deliver innovative solutions to their customers.
This also explains why most enterprise start-ups offer their services over the cloud. Be it something as critical as cybersecurity or essential as a virtual desktop, cloud and cloud-based services are the need of the hour. A proof of concept (PoC) environment can now be spun-off in a matter of minutes and go/no-go decisions can be taken swiftly. Proov, an Israeli start-up in this space, provides an external, data-rich and secure cloud testing environment to enterprises.
All one needs to do is submit a request on the portal, which is broadcast to registered start-ups in that domain. Once a vendor is finalized, an environment is quickly commissioned and PoC initiated. What’s more, an enterprise can run multiple PoCs at any time without worrying about botched integrations and implementations.
The recent IPO success of cloud based start-ups such as Twilio and Alteryx reflects market acceptance. Today, enterprises are not averse to consuming start-up services. In fact, while talking to a global Consumer Packaged Goods customer about a cybersecurity start-up, I was surprised to find the solution already deployed in their live environment. This quashed the whole notion of a start-up not being able to deliver at scale or sustain Fortune 500 customers. It’s evident that these innovative start-ups are here for the long haul.
The Road Ahead
A change in mind-set is essential. There is an urgent need to look at start-ups from a collaborative perspective. Some of them are on the cusp of disrupting industries where leaders have enjoyed incumbency for quite some time. Much like Uber and Airbnb in the consumer space, it’s only a matter of time before an enterprise cloud start-up changes the rules of the game.