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I believe enterprise-SaaS and micro-services/open-source are on a collision course. Buckle up.
Much VC ink has been spilled on the startups birthed at the last crisis - Airbnb, WhatsApp, Venmo, Instagram, Pinterest, Slack — all 2009/2010 vintage https://twitter.com/jaltucher/status/1246477137927966731
The last decade has seen Silicon Valley go full-stack. Instead of selling software to banks, our startups step in to lend, issue cards and transfer money.
Instead of selling software to transportation companies, we have built transportation companies.
Why sell software to hotels when you can be the alt-hotel? Why sell software to a telco when you can be the SMS-killer?
Another team with a definite idea of the future saw the CAPEX massacre at every tech shop — large and small — and decided to step in to help the “little guy with a big dream”. Those who are building things.
When Netflix decided to abandon the “CD-by-mail” business and disrupt themselves, they went to AWS. Twitter trained a generation of engineers on AWS with their fail-whales. https://twitter.com/caro/status/463756421339701249?s=20
2009 also birthed an open-source startups Cloudera and Hortonworks, which defied the odds stacked against open-source by winning the love of developers, breaking Red-Hat’s snowflake status as an open-source winner. Both came out of Yahoo (one before the other).
Since then cloud majors — FB, GOOG, NFLX, LinkedIn — have spawned open source successes — Confluent, Cockroach Labs. Others like Mulesoft, Elastic, Mongo came out of smaller dev communities finding resonance with enterprise engineers dealing with “big-company” problems.
The last decade has also seen the rise of SaaS selling directly to the line of business developer. Everything from IT infrastructure monitoring (Datadog, AppDynamics) to telephony (Twilio) to payments (Stripe / Square) was made available for a subscription as a business service.
These incumbents tackling massive markets grew with their customers into behemoths.
But that’s about to change in a big way. If the GFC was a crisis of CAPEX, the current crisis is a crisis of OPEX.
Engineers at big and small companies will realize the rent to "new incumbents" is excessive. With engineers deeply embedded within operations, security, product management, sales, marketing, HR, accounting, FP&A, supply chain paying for SaaS will seem like the expensive way out.
Kubernetes and micro-services means that anyone can today run code on their premises, but have it managed by someone else / with someone else. Version-controlling aint no big thing with CI/CD. Suddenly on-prem and off-prem are same-same but different.
They are already hearing what their peers in “tech" are doing on Discord and Slack.
This trend invariably follows the “engineering-ization” of these roles in cutting-edge early-adopter startups and organizations. Engineers embedded into IT (DevOps), Security (SecOps), and BI teams (BizOps) kicked it off for everyone.
DevOps: Elastic emerged as the alt-Splunk. Gitlab emerged as the alt-Github. Mattermost as the alt-Slack. Grafana as the alt-Datadog. There’s a few alt-Viptelas around today.
Biz Ops: We are seeing BI visualization tools disrupted by open-source (like Apache Superset and Preset). The venerable data-warehouse by competitors like Clickhouse and Pinot.
SecOps: Is it too early to declare Zeek / Corelight a winner for network analysis to logically follow open-source Snort / Sourcefire for network IDS? How about osquery to take on the endpoint systems market?
(h/t Rami Malek rocking Dior)
(h/t Rami Malek rocking Dior)
We already see competitors emerging in markets as diverse as data-integration (alt-Segment), product management (alt-Mixpanel?) and finance (alt-Square?).
Look deep within the operations of an Uber or Airbnb or WeWork and you’ll find developers in many many functions — sales and marketing (RevOps / sales operations engineer), finance (payment operations engineer), supply chain (Data engineers) and HR (people operations)
No longer just a Bay Area joke https://www.reddit.com/r/bayarea/comments/6517d6/are_engineering_titles_a_bay_area_thing/
How soon before we see that an alt-Ariba, alt-Square or alt-Workday? Can we imagine what an alt-Salesforce would look like?
During the GFC, the strongest investors doubled down on companies with a "definite idea of the future". Buffet taking that Goldman stake in Oct 2008, or DST with Facebook between May-August 2009. https://fortune.com/2011/09/30/peter-thiel-and-the-definite-future/
This collision between SaaS and open-source/micro-services is a definite idea of the future. I’d love to speak to founders building it.
/fin
/fin
