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PaaS: Why I Am So Excited

Posted on Tuesday, Feb 11th 2020

I have spent a decade already on One Million by One Million with the mission of helping a million entrepreneurs reach their first million in revenues.

The journey has led me down many corridors of technology.

The one that excites me the most is Platform-as-a-Service (PaaS).

Today, there are easily 200+ B-to-B SaaS companies out there, including 50+ public ones. The IPO market for cloud stocks is rich and we will see many others go public in due course. These are solid companies, nothing foo-foo about them.

At least 10-20 of these are also exploring PaaS in a serious way. Some of these have particular focus on the startup ecosystem whereby entrepreneurs are building SaaS applications on their platforms and selling through their app marketplaces.

If you’ve been reading my commentary on PaaS, you have already encountered several such players including Atlassian (NASDAQ: TEAM), Twilio (NYSE: TWLO) and Shopify (NYSE:SHOP), as well as Salesforce.com (NYSE: CRM), the market leader.

There is clear evidence that each of these platforms are capable of supporting thousands of app entrepreneurs through their PaaS marketplaces.

So why am I excited?

Let’s run some numbers.

If 200 PaaS marketplaces mature over the next two decades to support 5000 startups each, that amounts to a million entrepreneurs. And if each reaches a minimum of a million in revenue, then just on the wings of 200 PaaS platforms, our mission of One Million by One Million can be accomplished. 

Each platform would facilitate $5 billion in revenue, and therefore, each platform would make a billion or two themselves.

Within each PaaS ecosystem, MicroVCs would find attractive, capital-efficient investment opportunities.

Within each PaaS ecosystem, exits would happen with the platform vendor buying a small subset of developers as Salesforce.com and Atlassian are already doing.

And within each PaaS ecosystem, numerous profitable, sustainable, long tail businesses would thrive.

THIS was the vision that I started 1Mby1M with.

And here, we have beginning evidence that PaaS, in itself, can orchestrate a trillion dollars of global GDP within a couple of decades.

Globally, startup ecosystems are trying to mature. 

I was recently in Kolkata, where I was born and raised. The ecosystem has taken a long time to get moving. My hypothesis is that such ecosystems would do well to ride on the wings of certain PaaS marketplaces to achieve scale.

Last year, I was approached by players in Nepal with the desire to build an ecosystem there. Nepal is much farther behind Kolkata, and yet, an opportunity to leapfrog is coming together for all these backwater places.

Let us say, a robust community of entrepreneurs comes together in Palestine, who specialize in building analytics apps on top of the Alteryx platform. Alteryx helps them find customers through their marketplace. 

Another, in Botswana specializes in HubSpot.

One in Chandigarh specializes in ServiceNow.

So on.

You see why I am excited?

I would like each of these PaaS players to use the One Million by One Million Incubator-in-a-Box to support their developer ecosystems globally. Today, developer ecosystems pay a lot of attention to supporting entrepreneurs technically. My hypothesis is that these companies need business support as much as technical support.

Else, they would be technically solid, while running out of cash and going out of business.

On the other hand, if sustainable long tail businesses can be built at scale, for every $5 billion in revenue a PaaS ecosystem facilitates, the platform vendor would itself make $1-2 billion in revenue. 

That would amount to $10-20 billion in tangible market cap increase.

Photo credit: Kurt Bauschardt/Flickr.com

This segment is a part in the series : PaaS

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