33 Comments
May 7, 2022Liked by Benn Stancil

Great point. I think that part of what you note about people wanting it to just work is that the questions we want to answer or ask are never 100% clear (and in some cases we are ver wide of the mark). Fuzzy logic.

Expand full comment
author

There’s an interesting angle here that I hadn’t considered. The more narrow your solution, the more you need to know what to use it for. For a lot of data problems, you need to wander (Stephen wrote a great piece about this: https://stkbailey.substack.com/p/wander-well). The more consolidated your tooling, the more room you have to do this.

Expand full comment
May 8, 2022Liked by Benn Stancil

Tnx for sharing. I think that in any case (narrow or broad) you need to do some wandering; something that I think Stephen alludes to even when the ladder/trajectory is known. Data exhaust, as some people refer to it, has proven to be highly scalable and valuable when you find the right use case. So it circles back to what you wrote.

Expand full comment

Awesome... The idealist doesn't understand the power of capillarity and sales through channels.

Expand full comment
author

Yeah, Silicon Valley leans heavy on the product visionary myth, where nothing beats a great product. Which, for a ten person startup is probably a reasonable belief, but it doesn’t last.

Alex shared this with me, in which Ben Thompson made the same point a few weeks ago: https://twitter.com/alexdupler/status/1522626931073581056?s=21&t=kOyRhZ8ARCIcj2p1fGD5pA

Expand full comment

I would say Microsoft hasn't even put the craftsmanship aside. Their is a real product culture there and they take pride in design and customer orientation. I must say it is challenging to accomplish the larger and more complex your organization becomes.

Great analysis btw.

Expand full comment
author

Yeah, at the scale that Microsoft sells, I suspect it's almost impossible to build products in a different way.

Expand full comment
May 12, 2022·edited May 12, 2022Liked by Benn Stancil

The comment section is largely supportive of your original point. And I agree, there is a lot to like. Let me see if I can disagree though.

The examples you cite—Slack, Dropbox, etc.—are largely differentiated by *ergonomics*. This is the thing that most people in tech talk about when they talk about craftsmanship, UX, design...the "feel" of using a product. Typically this is created when form follows function in a way that required intentionality.

However, the modern data stack is—today—mostly about infrastructure. This means that the axis of competition is different. You sell to a technical buyer and that buyer often buys based on largely economic logic. What are the capabilities of this thing relative to other things like it? The cloud data platform is the most clear example of this, and at least the last time I checked, Snowflake was simply more capable (performance / cost / feature set) than Synapse. While enterprise IT buyers may not be good at valuing user experience, they are really damn good at looking at performance benchmarks and comparing feature checklists.

Now, that's not to say that that state will persist. Microsoft and Amazon and Google can invest monstrous amounts of R&D into these products and do so at a loss; eventually it is entirely possible that MSFT will catch up. EXCEPT that "multi-cloud" is actually a thing that buyers care about. This is bigger than "lock-in"--it's flexibility, availability, and risk management. This is why vendors like Confluent, Mongo, Elastic are successful even despite having hosted versions of their own open source projects sold by the hyperscalers. Yes, they're all smaller than MSFT, but they're also decades earlier in their journeys.

Anyway...I could care less about MDS values as "aesthetic principles"...I care about them because I think they actually create products with better *capabilities*. To take just one, modularity in appdev isn't done because it's beautiful (although it is), it's done because it results in a codebase with better economic characteristics. Lower cost to ship a new feature, lower cost to maintain. The same has to be true for the MDS.

Also: to be clear, there are hundreds of companies using dbt + Synapse together! :D

Expand full comment
author

I think I'm more skeptical of the reasons why enterprise IT buyers make purchasing decisions. While they're good at checking boxes and whatnot, my sense is they buy mostly based on cost and availability. Google has tech that has long outclocked what Microsoft has, but Microsoft is already in every conversation, and (to the point some would say is anti-competitive) knows how to win on price. This is a bit of an exaggeration, but I'd say people buy Microsoft to buy the buying process as much as they buy the product.

I hear you on modularity et al being valuable for building better products, though I'm not sure I see why that makes the economics better for customers. I guess it does, in that new features (and new products) are easier to adopt, whereas a monolithic vendor moves more slowly, offers less choice, etc. But the sticker price of modular tools is probably higher in an absolute sense, and modularity put weird kinks in user experiences (just as service oriented architectures do in appdev). While there's no obvious right or wrong to me, there's a lot of revealed preference in the market for preferring the monolithic side of the deal.

All that said, the multi-cloud angle is definitely one I didn't consider. In that sense, it starts to feel even more like an app store, where vendors have to build multiple versions of their apps for different platforms. That seems like it'd do some weird things to the dynamics of the market, but I have no idea what.

Expand full comment
May 11, 2022Liked by Benn Stancil

When it comes to data tooling, microsoft and google have exactly the same strategy - keep the customer in their closed ecosystem. But they target very different customers. Microsoft targets enterprises already hooked onto its products and google has been more successful with startups. As a developer I personally feel google has an edge as its data stack makes developers way more productive than microsoft. Enterprises probably don't even notice how much more head count they need if they are on microsoft, they probably don't even care.

No matter whether you are on google or microsoft, you are bound to integrate numerous different tools that live outside of google or microsoft's ecosystems ! So, where does the consolidation ends (or begins) ? The ground reality is if your top paying customers want to use something outside your ecosystem, (in a competitive market) you are obliged to make that integration available.

It is true that microsoft is winning with the consolidation, but it does come with technical debt for its customers. However, its customers may still be winning. Only time will tell if this technical debt will play a role in differentiating between losers and winners !

Expand full comment
author

That's an interesting split I hadn't considered. For data products, you can sell to developer and data people, to IT, or to lines of business directly. One of the common criticisms of Microsoft is that it sells to IT at the expense of the other two. If Google could piece it together, there could be a really intriguing angle for them to take where they sell more or less the same suite as Microsoft, but champion a different buyer.

Expand full comment
May 10, 2022Liked by Benn Stancil

Excellent entry, you're one of only a few people willing and able to build bridges between these worlds. Incidentally I used and liked Yammer way back when, it was Slack before Slack and I was really puzzled how badly Microsoft screwed up that one (only to crush it with Teams later on!).

The whole VC-startup MDS ecosystem going out of their way to ignore Microsoft in their charts and pitches is downright hilarious, like gnats pretending the elephant is not in the room. Power BI makes more money in Guatemala than many of these startups do in the world. If your architecture is so revolutionary then SHOW ME THE MONEY, like Steve Ballmer used to yell by gleefully quoting Jerry Maguire.

I say this as a guy who worked at Microsoft in the 90s, thought they were turning into IBM-like irrelevance in the 2000s, only to make most of my consulting income in the past 5 years on top of the Microsoft stack! But I also do agnostic data architecture work and it's important to keep an eye on the valuable tech emerging outside of the borg. Whenever Microsoft feels they've killed the competition they become complacent and turn the lights off product development (destaffing Internet Explorer, LOL!).

Expand full comment
author

Thanks! And yeah, Yammer worked really well if you went all in on it. But most folks used it as a kind of company water cooler full of cat pictures.

It is weird to me how much Silicon Valley ignores Microsoft. As best I can tell, it's because buyers are somewhat segregated too, where people who buy startup tools don't often buy Microsoft and vice versa. But still, it seems like there's a lot to be learned from them, including things that go beyond be a monopoly.

Expand full comment

I really enjoyed the article, and I'm looking forward to check the other ones that are linked from it. However, there's something about thr reasoning that irks me, although I can't pinpoint exactly what. Isn't it the case that "corporate buyers" are the large majority of clients, and also that most folks just use what Microsoft offers because they happen to use a laptop with Windows on it? (I know that in Silicon Valley everyone uses Mac, but the world is very big and Macs are very expensive).

I can see where you come from when you say that users don't care about a thing being open source or not (I've been advocating this point strongly to encourage open source communities to put more focus on UX, aesthetics, marketing). But not separating corporate buyers, who buy software _for others to use_, from people that buy software for themselves, is an oversight that makes the point of the article more fuzzy I think. Even though corporate buyers are 90 % of the market, or 99 % (I have no idea).

Expand full comment
author

I suspect that's true that a lot of software is bought by IT rather than end users (though less so now than it used to be, I'd imagine). That could suggest that people do care about all these things, but they're getting ignored by IT and being told what to do.

To me, though, that projects a lot of Silicon Valley's opinions onto everyone else. First, it assumes people care the same amount about the software they use as people in Silicon Valley do. I imagine they'd prefer something good over bad, but do they care enough to make a fuss about it to their IT teams? Evidently not. And that could be reflection of apathy as much as powerlessness. Second, it assumes that people's opinions about Microsoft is the same as Silicon Valley's - "how can they possibly think *this* is good?"

My guess is it's a combination of the two: Most people think Microsoft is fine, and don't care enough to make the fuss to force a change.

Expand full comment
May 8, 2022Liked by Benn Stancil

"The race is not always to the swift, nor the battle to the strong; but that is the way to bet" -Keough. Microsoft is relentless, as was IBM before them. It is human to fall in love with our tools. Much like Chef's who have favorite knives, IT people often favor specific software tools/web apps and the companies that make them. This can sometimes cause religious wars, my holy tool versus your blasphemous one. The danger is forgetting that most companies are not in the business of IT at all. Most companies are in the business of profitably selling products and services. IT exists for this reason, not the other way around. And while Microsoft's tools are a mixed bag, they are very good at the business of IT. But then, I use emacs, so what do I know.

Expand full comment

This is a good reminder that the best products don't always win and that most people don't really enjoy using software. I wrote about this recently too: https://arpitc.substack.com/p/data-people-non-data-people

Expand full comment
author

The points in your article also raise another kinda interesting question, which is how much *should* everyone care about the software they use? Our sales team uses Salesforce. I don't love it, but I don't live it in every day, and it works well for them. For data tooling, there's a somewhat analogous split where data people live in it, and everyone else is in it some. To what extent should the latter group worry about it? Obviously, it'd be great if everyone loves everything, but if you're a operations person, you might think data software is a 3 out of 10, but your level of care might be a 3 out of 10 too.

Expand full comment

Yeah I think most people don't care about software in general as they just want to something done and if they could get it done without having to *use* software. I think this is also why Slack made such a dent -- using Slack does not feel like using software at all. IMO, vendors of data tools should stop talking about fancy features and just focus on the benefits their product brings both for data teams as well as data-adjacent teams (product/growth/marketing/etc).

Expand full comment

Excellent point of view and congrats on the newsletter!

Expand full comment
author

Thanks!

Expand full comment

Yammer may have died, but Github has thrived under the thumb of Microsoft. The data community most certainly does use Github, and it’s ecosystem - along with vscode. Those products don’t make their way into any of the logo collages, but they are as integral as any other component.

(Or DBT cloud would have infinitely more paid editors. one or the other. shout out whoever authored the vscode-dbt-power-user)

Expand full comment
author

Yeah, things like that are a reminder (for better or for worse) of how inescapable a handful of companies really are. No one outruns Microsoft, Google, Apple, Amazon.

Expand full comment
May 7, 2022Liked by Benn Stancil

I really liked this article. I always thought Snowflake would lose out once AWS decided to put some effort into their data tools but I think AWS is happy to just take a cut from Snowflake’s cash instead of compete with them. I’ve never worked in Azure, just AWS and GCP, I guess I need to get some experience with Microsoft before it’s forced on me!

Expand full comment
author

Erik Bernhardsson had a good post about AWS and Snowflake that feels right to me: https://erikbern.com/2021/11/30/storm-in-the-stratosphere-how-the-cloud-will-be-reshuffled.html

The interesting question, though, is how much can cloud providers just be infrastructure providers? In Erik’s world, where *vendors* like Snowflake build on top of them and most people don’t buy AWS directly, I think you can get away with that. But if AWS (or Azure, or GCP) wants to sell directly to end customers, I’m not sure that’s tenable over the long term. People are going to buy infrastructure for the tooling they put on top, and I suspect there will always be more appeal to buy them together than separate.

Expand full comment
May 10, 2022Liked by Benn Stancil

That was a good read! Love his controversial predictions at the end too. Regardless, we're all in for a good ride the next 10 years as the data and cloud space evolves and settles.

Expand full comment
May 6, 2022Liked by Benn Stancil

Wow! So timely -- I was just reading Ben Thompson's Stratechery interview with Parker Conrad about Rippling.

Here's a key excerpt:

"BT: I guess the question here is, this is a very interesting vision, and one of the reasons why I’m so intrigued by Rippling is I’ve been writing literally since the beginning of Stratechery and it’s hard to believe, but it’s been nine years now, about the need for tying together all these SaaS products, and I’m just searching who’s going to be the center of gravity in an organization? My contention is that the reason why Microsoft ends up winning again and again, is you have these SaaS startups that are in their silos, they’re going to make the best possible user experience, and then Microsoft comes along and their alternative isn’t as good and the start up says, “Oh, I feel good. No problem. Ours works way better.” But they’re looking just at their functionality, they’re not thinking about the company as a whole. And Microsoft’s like, “Look, it doesn’t work as good, but it works with everything else that you have because you’re already using a bunch of Microsoft stuff.” So the question for Rippling is, there’s this vision, there’s a mountain, how do you actually get to the mountain without going through the valley of, “I have to actually convince people to use my product”?

PC: We have two things that we do. One are the integrations that I described, but the other is that we build a lot of our own products. One of the things that we do that I think is somewhat different than other startups, is that there is some conventional wisdom in Silicon Valley that I think is wrong, that companies should be extremely focused and do one extremely narrow thing, but go very deep. It might have been advice that worked ten years ago when you could build a billion dollar SaaS company by just peeling off one small feature from one of these monolithic business systems, these on-prem business systems, and turning it into a standalone SaaS service. Now that that opportunity has been picked over and there are a million different point solution SaaS companies.

I think that now in order to really make a dent in a lot of these markets, you need to build something more like what you’re describing, which is a coordinated set of interrelated services that interoperates seamlessly, and that’s a lot of our philosophy of building products."

I just recently learned about Rippling, i love their thesis -- this one struck a chord for me https://luttig.substack.com/p/rippling?s=r

integration is a strategic differentiator.

Expand full comment
author

True, integration is a differentiator, but I think you can take that in two directions:

1. We should build integrations into lots of other systems, and be glue between other tools.

2. We should build those other systems.

The first one is what’s in vogue now, but I think Microsoft (and potentially Rippling, though I’m not sure what to make of it because that Substack article reads like a fawning puff piece full of dubious analysis) make a compelling case for the latter. That’s certainly harder to do, which is why I assume people don’t do it. If you can pull if off though - either by having infinite money like Microsoft, or being able to fundraise infinite money, like Parker - it’s probably the winner.

This bit from Ben Thompson also his https://twitter.com/alexdupler/status/1522626931073581056

Expand full comment
May 11, 2022·edited May 11, 2022Liked by Benn Stancil

more on Rippling...because I agree with your fawning puff comment 😂 ..this is a bit more fawning puff -- with some speculative numbers https://www.forbes.com/sites/amyfeldman/2022/05/11/parker-conrads-rippling-hits-1125-billion-valuation-as-former-zenefits-ceo-rebounds-with-hr-software/?sh=2bbf607d7068

Expand full comment
author

The funny thing is, a lot of this is possible because the founder can go out, make bold claims, and then raise tons of money to go after it extremely aggressively. And I'm not sure what it says about Silicon Valley that the founder of Zenefits is the person who investors trust to do that. On one hand, he seems to have done it. On the other hand, Zenefits.

Expand full comment

Good information. Thanks for providing information about The case for consolidation. I’m Mia John and I work at NFT Marketing Agency, San Francisco, California. I like to discuss and try to resolve NFTs related problems that people face normally.

Click Here: https://whalemediaboost.com/

Expand full comment

heh, I guess every acquired company thinks they’re a horny toad.

Expand full comment
deletedMay 12, 2022Liked by Benn Stancil
Comment deleted
Expand full comment
author

Honestly, the economics of Silicon Valley are a big part of the problem too. If everything is (or needs to be) venture backed, you have to expand outward. Narrow solutions just can't be economically viable, like the can be phone app markets.

Expand full comment