Editor’s Note: Semil Shah is an EIR at Javelin Venture Partners and has been a contributor to TechCrunch since January 2011. You can follow him on Twitter at @semil.
Consumer and enterprise. Software and hardware. Infrastructure operations and user experience. Products and services. No matter the focus, innovation in technology, and especially around Silicon Valley, has ebbed and flowed across these areas. Some new companies focus on building solutions for the enterprise, and perhaps nowadays it’s too easy to take the consumer route. The purpose of this week’s column is to shed a bit of light on a growing class of new startups that are not selling directly to big companies or individuals generally, but focusing on software and infrastructure developers specifically.
Selling into enterprise — going B2B — has been an attractive route for myriad reasons. There are barriers to entry in technological development, it takes real venture investment and time to build these products, and established sales channels and newer marketing avenues make the pursuit of these markets tantalizing. With the enterprise comes a promise of scale, size, and predictability, often in the form of pay-per-seat pricing models, built-in distribution, and lock-in.
The success and rapid growth of Facebook generated a flood of new companies drawn to the sexier dream of selling directly to individuals consumers — going B2C — and was romanticized by Hollywood. All of sudden, it was en vogue to build and sell directly to consumers, moms and dads, kids and grandparents. Newer, personalized platforms like Facebook itself, Twitter, Android, and iOS accelerated the scope of this opportunity, with companies such as Instagram and Pinterest benefiting from this great lift. It is fashionable among some to bring a product or service right to the consumer, like Facebook, for the opportunity to reach scale, eventually extract revenues, and perhaps the chance to upend traditional models by putting software directly in the hands of a great number of people.
And now, after public markets have exacted a “price correction” on consumer-facing web startups, and after enterprise-focused startups are getting more attention (despite the fact that investment in this area has been anything but shy over the same time period), another quieter channel has been developed: software and hardware startups that cater specifically to developers. Building solutions for this newer market — going B2D — makes sense. The web and mobile development sectors are growing, dollars from Sand Hill Road and Wall Street are swirling around, and there are significant incentives to spend real capital in order to provide better infrastructure and performance on the back end, from more efficient scaling systems all the way to snappier responsiveness. As a result, all kinds of developers, wielding their own newfound brand of market power, are eager to pay for tools and services that help them save time, automate tasks, and provide savings that could be enjoyed by their companies and/or customers.
I’m not uncovering anything new here, as some readers know well, and as Sarah Tavel observed these market dynamics earlier this year. Many of the companies that fit this “B2D” mold — way too many to list here, but that’s a good problem — are ones that we all hear about often, and perhaps we are so conditioned to hearing about them, we end up taking the larger shift for granted. And while there are legitimate questions about actual market size potential, there is an opportunity to explore if these startups cannot only build sustainable companies targeted at developers (like GitHub), but in fact create massive ones.
With the development and accelerated growth of the four big platforms, the future for new companies like these have also created opportunities to sell better tools and services to the folks who are building these products. Looking ahead, it will be interesting to see how much B2D startups push the boundaries of abstraction and perhaps even automate away some of the more redundant operations and tasks that many small startups deal with (like ifttt), either at inception or inflection points. Could B2D solutions today make certain technical jobs obsolete tomorrow? Could new software (like Twilio) actually bring app-making to the masses, where creators could focus on the design of the app and not worry about setting up development environments (like Action.io), hosting systems (like Heroku), and so forth? Is there an opportunity to provide integrated hardware solutions for growing companies to offset some of their cloud expenses with onsite solutions (like Nebula)? And, will the new solutions of tomorrow better tie together infrastructure management, development operations, and user experience (like Nutanix)?
Of course, some of this is already happening today, and a foundation has been established. This trend, as Tavel notes, is just beginning, and I believe there’s considerable room to grow as companies continue to seek operational efficiencies. With this growth will come interesting transformations. It’s always dangerous to extrapolate, but just for fun, let’s try — technical jobs could change or go away, more “things” will be created (and created faster), engineering teams could get smaller and/or more efficient by not having to redundantly replicate, and so forth. Perhaps design and user experience will be left as the creative currencies. Instagram is an outlier, but it did generate incredible growth and value with a very small team.
The future for B2D is bright, and it remains to be seen how big these companies can actually become. A company like GitHub shows the promise of this market. The question is: Will a company like GitHub blaze a path for other B2D startups up and down the stack to flood into and create a company to the size and scale of an Adobe, which paired software and service solutions for all kinds of developers? As so many technology and company builders are aware of today, the opportunity to do it is right there, within their grasp, and it will be fascinating to watch this space unfold over the next decade.
Photo Credit: John Robb / Flickr Creative Commons
Heroku is the first and best multi-language cloud application platform, or platform-as-a-service. Heroku allows developers to deploy, scale, and manage their apps without needing to think about servers or systems administration. Over one million applications have been deployed to Heroku.
Nebula is dedicated to enabling all businesses to easily, securely and inexpensively deploy large private cloud computing infrastructures. The proliferation of data in today’s world is fueling an “information revolution” across all industries. Nebula’s goal is to ignite a new era of global innovation by democratizing web scale computing, and making it accessible to every business in the world. Built on Openstack, the Nebula Enterprise Cloud Appliance enables any business to build and manage the massive computing horsepower normally reserved...
Founded in 2009, Nutanix is the first company to offer a radically simple compute and storage infrastructure for implementing enterprise-class virtualization without complex and expensive network storage (SAN or NAS). Built on architectural techniques employed in core infrastructure systems at Google, Nutanix Complete Cluster’s converged compute and storage architecture can scale to manage petabytes of data while running thousands of virtual machines and aims to disrupt the multi-billion dollar virtualization industry. Since emerging from stealth mode in April 2011, Nutanix has...
GitHub is a social network for programmers. Git is a distributed software management program created by Linus Torvalds, originally for the Linux Kernel Development. GitHub is a hosted Git repository. Github allows you to take part in collaboration by forking projects, sending and pulling requests, and monitoring development.
Twilio, the cloud communications company, is reinventing telecom by merging the worlds of cloud computing, web services and telecommunications. Twilio provides a telephony infrastructure web service in the cloud, allowing web developers to integrate phone calls, text messages and IP voice communications into their web, mobile and traditional phone applications. The company is privately held and is headquartered in San Francisco, California.
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