Breaking Apart the Startup in the Cloud - A Dramatic Shift in Company Building

Sequoia Made 15 PC Investments Early On

Don Valentine, legendary Sequoia  founder and investor (Apple, EA, Cisco, etc.) mentioned that when PCs came to the forefront Sequoia made 15 investments in all the other subsystems, components, and peripherals that needed to exist for the PC to be a success.  In other words, due to the new market, lots and lots of great companies were created in parallel.

A Huge Shift - Startups Who Will Break Up a Business Into Hosted Services

A similar shift is now happening as multiple services move to the cloud, and in parallel every major company has a set of web services they need to provide their customers.  Things that many websites do not consider core are being outsourced to a new breed of startup.  These startups take one main service that most companies don't want to build themselves, and provides it to any company that needs it.

SaaSification of Your Startup

This is accelerating as more and more components that businesses used to run themselves are being broken into SaaS services.  Startups can benefit from it as now not only can you use open source software to build your stack quickly, but you can also outsource many of the components needed to actually run your business, customer service (e.g. Zendesk), and even IT ops (e.g. PagerDuty) day to day.  

You can call this the "SaaSification of the startup", and I am sure this will increasingly hit large entreprises as well.

We are still early days for these sorts of services, and this is a very big opportunity area for entrepreneurs (as both inventors and users of this new type of software).

Example Services:

• PagerDuty:  IT Ops alerting and workflow

• Optimizely, MixPanel, KissMetrics: A/B testing, web analytics

• ZenDesk: Customer feedback and support 

• WuFoo: Online form builder

• SurveyMonkey: Customer surveys

• Zuora and Chargify: Billing systems, Payment collection

• JobVite: Recruiting pipeline management

These services make it easier and faster for a startup to get up and running, and in parallel are potentially great businesses for an entrepreneur to found in their own right.

Any other services you think will be especially promising?  Add them in the comments section!

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