My decade of building platform ecosystems: from Salesforce to ServiceNow (Avanish Sahai, ServiceNow)
Platform ecosystems have seen a lot of change in the past decade, and that’s led to a lot of misconceptions as people struggle to keep up.
Avanish Sahai at ServiceNow has seen it all, and at SaaS Connect 2019 he offered some insight from his decades of experience.
Avanish has eight core misconceptions that companies should address, each of which he has learned from his time building platform ecosystems.
Won’t big enterprises just copy what startups are doing?
Many entrepreneurs worry that platforms like Salesforce want to take their ideas. This simply isn’t true. A platform’s main goal is to expand its reach. While this might include adding new features and functionalities, copying other applications simply isn’t even considered for these platforms.
Why isn’t money the main focus?
Of course, money is a metric. But it’s rarely the first thing that’s talked about in the big scheme of things. Instead, platforms are focused on getting more of their product in the hands of their customers, to broaden both value and integration. Their focus is on the model, and money is considered secondary to that.
Why don’t ecosystems create winner-take-all markets?
If three or four companies are doing something similar on a cloud platform, it might be understandable to assume that the No. 1 vendor is getting all of the revenue. But this isn’t the case, and most systems know it. They continue to compete because they find a way to differentiate, and this keeps any one company from forming a monopoly in any one field. This drives innovation.
Why companies need to be thinking about sales and marketing from the first day
Some people get frustrated by the fact that not enough people are using their platform. They think that all they have to do is build the technical side of things, and people will find it. But selling and engaging audiences is just as important when it comes to business success. Sales and marketing require forward thinking and need to be considered early in the process.
There will never be another Veeva
Many companies are looking for their “Veeva,” a cloud computing company that excelled in the pharmaceutical sector. People want to repeat their success because it was quick, unexpected and staggering. But Veeva was an exception. Ultimately, Veeva succeeded because they were a portfolio model done right. And there are many more opportunities for companies to solve problems, whether they’re vertical or horizontal.
Why revenue sharing is an investment, not an expense
There’s a perception that revenue sharing models are a tax, and that tax needs to be paid to access the install base. However, “tax” isn’t the right metaphor. It’s not so much a tax as it is a marketing investment. This perspective will help to open more opportunities for the business.
Why companies don’t need VC funding to grow
Venture funding is not the only way to raise money, despite what many people think. There are so many different ways to grow a business, especially today. Many companies succeed by bootstrapping, and there are many ways to scale and build. The tradeoff is bootstrapping comes with its own risks.
Why the platform provider isn’t the only exit
If a company builds something on Salesforce or Google Cloud, then the only exit is to sell to Salesforce or Google, right? Not exactly. There’s been more activity in the private equity market, and this has led to multiple exit options for businesses looking to build and accelerate.