We’ve discussed all kinds of creative bootstrapping mechanisms in this series. My #BigIdeas2020 contribution is yet another technique that I believe would be particularly relevant and powerful going forward.
One of the most exciting trends in the technology industry currently is Platform-as-a-Service (PaaS) and Developer Eco-systems.
The company that has knocked the ball out of the park with their PaaS strategy is Salesforce.com. They launched their platform over a decade back, and many substantial companies, and numerous sustainable small businesses, have been built on it. Veeva, for example, was built this way with a small amount of capital, and today, boasts over $1B in revenue and over $20 billion in market cap.
My hypothesis is that of the 200+ SaaS companies that have achieved scale, we would see a set that would break out and become significant PaaS players.
This means, the industry would have 20-50 PaaS platforms with serious developer eco-systems and app marketplaces. The PaaS vendors would want to sell the apps developed on their platforms to their customer bases, take 30% in platform commission, and help support robust businesses while scaling themselves exponentially.
Entrepreneurs looking for a capital efficient strategy should seriously consider bootstrapping by piggybacking on these PaaS players.
[Related Reading: The year 2019 is coming to an end and here we do a review of the best performing cloud stocks of 2019 and the most promising for 2020. The criteria for making this list are a strong strategy or performance in Platform-as-a-Service (PaaS), Artificial Intelligence (AI), and robust Developer Ecosystems. Read: Top 20 Cloud Stocks for 2020]
And entrepreneurs looking at Bootstrapping to an Exit, it is a lot easier to get acquired by a platform player if you’ve built something credible on their platform. For recent acquisitions on top of PaaS platforms, see Atlassian Acquires Again From App Marketplace.