The best better way

Lately, I’ve been reading about what some people are calling ‘no stack’ start-ups. What on earth is that, you might ask.

Interestingly, the label seems to mean that instead of an emerging company trying to build everything it needs from the ground up, it should focus on its core competence and use third party services for the underlying functions and technologies it needs. It seems to fit very well with the popularity of entrepreneurship and the “faster, ever faster” time to market demands of the 21st century.

Note that the ‘stack’ in question is that composite range of functions, which include the technology, infrastructure and operations, needed to run a successful business. In effect, it can amount to the entire IT function of a business. For any company, let alone a start-up struggling to get off the ground, those IT costs can amount to a significant investment. Apart from the capital costs, IT takes time to implement and, unless it forms part of your skill set, it takes a whole lot of effort – and a whole lot more of your time and budget – to manage and maintain.

To put those costs into perspective, 75 percent of IT budgets (1) are consumed by recurrent costs, which, as a percentage of corporate revenue, have grown 50 percent since 2002. So for many established companies, spending just on ‘keeping the lights on’ is an issue. What chance then does your average start-up have?

Ideally, when entering the marketplace, where its sole focus should be on innovation, no start-up is going to want to have to struggle with that level of escalating costs merely to become established and compete. There has to be a better way.

That better way is shown by the ‘no stack’ message, which is: do not be a jack-of-all-trades. Instead, start-ups’ sole focus should be on what they do extremely well; what they do better than anyone else. The final point of this tri-part mantra is to utilise other services for everything else – for the things at which you don’t excel.

Is it as simple as that? In this era of platforms, mashups and APIs, it’s fair to point out that there are dangers inherent in building your business on someone else’s API. If you rely on say a social media platform API, the danger is that somewhere down the road, the API permissions will be removed. Of course, it depends on the provider and what it sees as its core business.

Thankfully for start-ups looking to add telecommunications features to their services, the provider has a vested interest in mutual success. When you think about it, the platform and API is the core business of the service provider. That means it has the stated intent to stick around and continue to offer its services. It will be striving all out for success in the same way as your start-up. It success will depend on the successes of all of its customers – on each and every start-up that integrates its APIs, including yours.

In the ‘stone age’, the food chain involved manufacturers, importers, distributors, resellers, and retailers. In the ‘no stack’ Internet age, entrepreneurial start-ups can sell more directly – goods or services or content – using mashed up third party service functions to help them reach and satisfy their customers.

Think about it for a moment. Your priority is to capitalise on what it is that you excel at, and grow into a meaningful business. Your focus will be on your software, and on your marketing and sales activities. How much of a distraction is it for you to take time out to develop, manage and maintain – also and instead – all the services (on which you rely) that you get from third party API platforms? Would you want to do that?

Clearly, the benefits of being a ‘no stack’ start-up are established. Cut down the development work, cut out the capital costs, and carve your way to market in a fraction of the time than otherwise it would take. Be leaner and meaner – follow the better way.

Note 1: "IT Costs – The Costs, Growth And Financial Risk Of Software Assets". OMT-CO Operations Management Technology Consulting GmbH; May, 2013.

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