'Software companies taste like chicken,' says private-equity mogul. 'They’re selling different products, but 80% of what they do is pretty much the same'
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SHOW NOTES:
THE MARKET USUALLY ONLY SUPPORTS THREE OPTIONS
- Walking around KubeCon,nearly every segment had 6-10 companies offering solutions
- Markets can’t sustain more 3 in any category (Market Leader, Market Follower, Cheaper Option)
- The Market can’t understand the differentiation of the 6-10 company market; 80% of the functionality is the same.
- We’re coming out of Unicornpalozza (2019-2022)
OPEN SOURCE AND SAAS HAVE HOLLOWED OUT THE MIDDLE OF SOFTWARE
- Open source typically highlights the creator, largest contributor to a project
- Beyond that, open source is “integration” companies, or “lifecycle” companies
- Large companies (or platforms) can buy up the “feature” companies to fill in their gaps
- Companies in the middle have to build sales and marketing around mostly undifferentiated messaging or products.
- SaaS allows companies to leverage product-led-growth, and micro-target to specific use-cases.
- The successful middle (mid-sized, decent growth) will get picked off by PE
- The unsuccessful middle (great tech, bad execution) may get picked off by large vendors
- The unsuccessful middle (average tech, bad execution) will go under
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