The Unicorn’s path is paved in software

by Mitchell Tweedie, Apr 06, 2018

The path to become a Fortune Global 500 company has never been more clear; build a scalable, custom software application, and then scale, scale, scale. This is how Airbnb and Uber, which are less than 10 years old, became the world's largest hotel and taxi companies.

So how do you become a unicorn? That is, how do you increase your startup’s value to more than a billion dollars? Simple - do as Uber and Airbnb did and become a hotel with no buildings or a taxi company with no vehicles.

Ok, so it’s not so simple. How can you make your company a unicorn?

The answer is software.

Apple, Alphabet (Google), Microsoft, Amazon, and Facebook are no longer ‘tech giants’, but ‘giants’, period.

Software is the future of work.  Airbnb disrupted hotels, Uber disrupted taxis, and Deliveroo disrupted delivery (and even impacting which outlets we eat from). And then there are the autopsies on those disrupted to death: Border and Blockbuster. These companies were murdered by Amazon and Netflix.

And unlike Apple (computers and phones) and Google (phones and search), there’s nothing inherently technical about hotels, taxis, delivery services, book shops or video rental shops. Maybe your industry is non-technical, but history suggests it’s only a matter of time before you’re disrupted by a technology outsider (or an innovative insider).
It’s better to be the disruptor than the disrupted.
But what can you do?

Understand what’s enabling technology companies to be so disruptive: the cloud and the business goals that cloud service models enable.

Cloud service models

There are three common cloud computing services models:
  1. Software as a Service (SaaS)
  2. Platform as a Service (PaaS)
  3. Infrastructure as a Service (IaaS)
Usually, these service models are layered. So IaaS runs directly on hardware, PaaS runs on IaaS, and SaaS runs on PaaS. And each of these layers represents an opportunity. 

Good examples of each of these models in action include Gmail for SaaS, Codebots for PaaS, and Amazon Web Services for IaaS. Each of these businesses and their cloud service model demonstrates an opportunity taken.

Floating alongside these cloud service models, the cloud enables new and innovative software licensing, which causes disruption.

Software licence models

Some of the main types of software licenses are:
  1. Proprietary licence
  2. GNU General Public License
  3. EULA
  4. Specific use licenses
Proprietary licenses, where the licensor retains IP rights, are your classic software licenses. If you bought it on a disk, it’s probably sold under a proprietary license.

On the opposite side of the spectrum are GNU General Public License, a core component of which is copyleft. This allows people to modify and distribute copies of the original, so long as these copies are also designated copyleft. Linux is a good example of this license.

EULAs are those annoying legal documents no one reads. “The biggest lie on the internet is ‘I have read and agree to the terms and conditions’,” says security expert Mikko Hyppönen, who proved his point by adding the following a line to his own EULA: “the recipient agreed to assign their first born child to us for the duration of eternity.”
“The recipient agreed to assign their first born child to us for the duration of eternity”. -  actual EULA
Specific use licenses are an umbrella for a bunch of separate licenses, including workstation licenses, concurrent use license, site licenses, and more. These licenses tie access rights to a specific condition, such as the number of computers or workstations allowed to access the software.

Why is software such a big deal?

Versatility represents a big deal in regards to the cloud and specific use licenses. An application that delivers SaaS, and licensed its software to create a smooth user experience, makes acquisition easier, and scaling faster.

For Google Docs, access is as easy as creating a free Google account and typing in a URL. There are no disks, or upfront payments, or restrictions of use.

How do Uber and Airbnb scale? Building new cars and homes? Nope. Maintaining existing cars and homes? No again.

Uber and Airbnb scale by recruiting new drivers and homeowners, capturing new users through marketing, and improving their server capacity. They can focus on their app and website (including potential issues such as UX and performance) because software is their business. Finding a new supplier for auto repair parts? You’re dreaming.

How can I build a unicorn?

Uber and Airbnb’s business models are called two-sided marketplaces. But most businesses will be either B2B or B2C - they sell to other businesses only, or customers exclusively. This may appear to change the rules of the game, but software remains king.

Cloud service and software licence models create agile business models with low overhead and less friction for users.

So look for cloud-based technologies you can use. Where your search comes up empty handed, that’s a gap in the marketplace. You could create something yourself to fit that gap. Your software could not only improve your own business, but could become another product in your inventory.

Solve problems with software, because if you don’t, someone else will.