Cloud Stocks and PaaS - Platform vs. API Ecosystems

I’m publishing this series to discuss a topic that I follow closely - cloud stocks, trends, strategy, acquisitions, and more. Please subscribe to my Cloud Stock Analysis series and never miss an article. I like fundamentals-focused business building, and outline the principles of fundamentals-focused business building in my free Bootstrapping course.

Last month, I wrote Cloud Stocks and PaaS: Which SaaS Players Will Win in PaaS, articulating a vision for a large number of SaaS players evolving into PaaS ecosystems.

I’m going to double click down today on the trend and explore two aspects of the ecosystems we currently see: Platforms and APIs.

The Salesforce PaaS is a true platform ecosystem, and has produced a number of consequential companies. Other examples of platform ecosystems include Atlassian (25,000 developers) and Snowflake (45,000 developers). 

On the other hand, several PaaS ecosystems have emerged through API integrations. Twilio, Shopify, Wix, Zendesk, Hubspot, Pagerduty and many others are following API strategies.

The key is to have enough technical training to get things going.

Beyond that, we need to ask the question: Why do developers choose to build within a particular ecosystem?

The answer to this question is manifold: (1) To access a pre-built technology stack that mitigates the cost of building a product (2) To access customers through a marketplace (3) To access unique technology capabilities (4) To access proprietary datasets.

Platforms are perfect answers to (1) and (3), while (2) applies to both platforms and APIs. APIs don’t necessarily provide the kind of technology stack advantage that draws in developers for cost mitigation reasons. They do, however, sometimes, provide access to unique technology (3) and unique datasets (4).

Salesforce provides both a platform and a marketplace. Twilio provides an API and a marketplace, and access to a unique technology in communication PaaS. Both ecosystems are now attracting millions of developers. Twilio has crossed five million.

Zendesk is an interesting case study of a company that has some exciting startups extending their capability through APIs. Unbabel offers AI-driven translation for Zendesk customers. SupportLogic extracts AI/NLP-driven signals from Zendesk customer datasets. Zendesk doesn’t offer a platform. Their PaaS strategy, however, is definitely interesting.

One level beyond, we need to ask: How do you create an environment that produces successful companies like Veeva, Uber, Vlocity and such?

This requires enough of a positioning within the global startup ecosystem as a desirable community to be part of that brings together not only technical training and marketplace, but also business training, incubation, acceleration, and financing. 

In addition, ambitious developer ecosystems face the challenge of having to educate, incubate, accelerate large numbers of bootstrapped startups. While less than 1% of the ecosystem is fundable, over 99% would need to build organically, applying the principles and methodology of effective bootstrapping.

This is why, 1Mby1M would like to partner with PaaS ecosystems with cobranded accelerators addressing the business building aspects of global startups. This includes nurturing bootstrapped startups at scale. [Re: Incubator In A Box (IIAB)]

We will explore each of these issues in further depth in subsequent editions of the series.

Meanwhile, if you’re a SaaS company working on a PaaS strategy and would like to explore how to collaborate with 1Mby1M, please do reach out. We are uniquely positioned in the global startup ecosystem as the first and only global virtual accelerator.

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Photo by Tahir ALGAN on Unsplash