What makes for a truly NewCo business? I’ve been giving this question a lot of thought the past six or so months, leading to posts like Maybe The Best Way To Change the World Is To Start a Company, Living Systems and The Information First Company, What Makes a NewCo, and posts on NewCos like MetroMile and Jack.
But lately I’ve noticed a strong theme running through a number of interesting and successful businesses: Integrations. From Acxiom and sovrn (where I am a board member) to Slack, Gecko and Zapier (where I am a happy customer), these companies are thriving because they have built a platform based on the integration of many different products and services. At NewCo, we call this “being platform’d” – an inelegant but apt descriptor.
Four years ago I wrote File Under: Metaservices, The Rise Of, in which I posed a problem:
…heavy users of the web depend on scores – sometimes hundreds – of services, all of which work wonderfully for their particular purpose (eBay for auctions, Google for search, OpenTable for restaurant reservations, etc). But these services simply don’t communicate with each other, nor collaborate in a fashion that creates a robust or evolving ecosystem.
The rise of the app economy exacerbates the problem – most apps live in their own closed world, sharing data sparingly, if at all.
In 2015, the problem is coming to a head, and there are huge, proven opportunities for companies willing to do the hard work of managing complex data and services integrations. In fact, I’d go so far as to claim that in the NewCo economy, an unfair advantage will accrue to those businesses that excel at delivering seamless, effective integrations of complex services.
It’s already starting to happen. Why, for example, has Slack taken off so quickly, when there were already a raft of seemingly successful collaboration tools (Yammer, Basecamp, HipChat, etc)? As a user of Slack, my answer is simple: Slack has a super elegant approach to integrations. It “just works” with Google Docs, YouTube, Trello, MailChimp, and about 100 other services. It creates an intelligent “metaservice” for effective group collaboration outside of its core use case. It’s not easy to make these integrations seem effortless to the consumer, but Slack got it right.
Another example can be found in what’s known as the programmatic or adtech industry. For the past four years I’ve been very close to this industry, steering FM into the purchase of an at scale programmatic advertising business (Lijit, now called sovrn), and serving on the board of Acxiom, a public data and marketing services company. With sovrn, we’ve noticed that the hardest, but most rewarding work comes in integrating new partners onto our platform. We’ve got nearly 100 integrations now, with several more coming online each quarter. These are not easy to pull off, each takes from three to six months to get done. It’s messy and hand-crafted, and it involves human to human negotiations all along the way. But once done, adtech integrations open a flood of data back and forth between partners, and when that happens, money gets made.
Adtech and data businesses that have acquired a lot of integrations, like Acxiom, AppNexus, OpenX, and sovrn, are valuable precisely because those integrations take a lot of time. If a large, well heeled tech business wanted to enter the adtech industry, they’d have to buy their way in. Doing 40-50 integrations from scratch would take years. It’s one of the reasons Facebook bought LiveRail, Twitter bought MoPub, and Apple bought Quattro.
Another class of integrators can be found in companies like Zapier, which is playing directly in the mobile app data market (and as such, is a direct response to the problem I posited back in 2011). Zapier gives developers the ability to tie together all their siloed apps, and to manipulate that data on one creative canvas. Another example is GeckoBoard, which at present is mainly a dashboard for disparate and discrete information sources, but even that limited functionality delivers a “holy shit!” set of insights.
Once I started noticing these integration-driven businesses, I saw them everywhere. Sure, Facebook and Google (and all the platforms) have been integrators forever, but they fail to solve more specific and/or bespoke problems inherent to individual use cases. Across online marketing, for example, tools like AppBoy, ZenDesk, and MailChimp lead with their metaservice-based integrative approach. So do hundreds more, in dozens of categories, far too many to mention here.
But I’d like to call the ball right now: Metaservices is here to stay, and the best and fastest integrators will win.
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If you want to get inside great companies around the globe, come to a NewCo festival. Next up is New York, then Austin and Silicon Valley.