Non-Software Startups — Everything as a Service

Apropos of my comments about Warehousing and Distribution as a service, check out  This is cool stuff, not because custom-printed t-shirts are anything new in the world, but because it shows the creeping start-up-ification of the non-software world.

The magic of the software world for the last 20 years or so has been that companies that have somewhere between five and five-dozen employees have been able to compete with mid-sized companies that employ thousands at least well enough to get investors to take a chance on them.  My old employer, NetSuite, was going up against SAP with its accounting/ERP software, and succeeding.  The advantages of being small, nimble, and investing in more recent, more powerful technologies can, in software, outweigh the advantages of being big, recognized, rich, and having lots of raw manpower.

In the rest of the business world, that hasn’t been nearly as true, and small companies have mostly been confined to being little boutique businesses that can not compete in the mass market, whether that means a mom and pop corner store in a location not deemed profitable enough for a big box retailer, or a provider of top-end brands to a market too small for the big guys to target.

That’s at least partly because, in the wide world of physical goods, the advantage of “lots of raw manpower” has been a huge, huge deal.  You might have better market-sector knowledge than Walmart, you might be able to pivot to the latest trends in your space faster than it can, and you might have an innovative idea that it doesn’t, but it can get lots of goods to lots of locations better than you could hope to, and that’s pretty decisive.  (And, equally, things like “having institutional expertise in supply-chain management” or “good store locations” are a big deal with physical goods, perhaps a bigger deal than your innovative idea).

But if you can compete at least in the same league as the big boys in all those important skills for dealing with the big boys, then you get a chance to compete on the merits of your core business innovations.  If your incredible idea is that you’re going to combine widgets and gizmos, then you don’t get sunk by your inability to get your widgets and your gizmos into the hands of customers quickly.

If your core idea still stinks, you’re still fail — start-ups are not generally wildly successful.

The parts of this that are changing for the real world are not just X-as-a-service, but also business products like NetSuite and its competitors, rapid prototyping and other micro-manufacturing, and outsourced non-micro-manufacturing.  Put all that together, advance it down the decades, and what I think you’ll see is not a sudden shift, but just a slow movement towards smaller companies being able to compete effectively with larger ones.

And that’s a big deal even if you’re not like me and don’t want to work at a tiny start-up.  Start-ups force larger competitors to stay more nimble, and notice that even tech giants distribute a much higher share of their equity to their non-executive employees than their peers in other industries do.


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