This article references a speech given by Shanil Fernando (CAKE LABS’ SVP Engineering and MD Sri Lanka) at the recent LBR LBO Enterprise Summit 2016: “Build Smarter Businesses with Smart Technologies or be Outsmarted” on the topic:
“Leverage Smart Technologies to Build Disruptive Business Models Integrated Around Customer Needs”
Through the web, smart mobile devices, smart TVs and the internet of things, a platform of constant connectivity has been formed. Currently this platform connects 3.4 Billion people 24/7 through 5.4 billion devices and is worth trillions of dollars. This platform of constant connectivity is a resource that is growing, both in the amount of people that are connected and the amount of devices through which each person is connected.
The driving factors behind this platform growth are:
Access to high speed internet at a low cost
The cost of internet connectivity when dial-up was first launched was $44 for the 56kbps connection. Today on average people pay $0.03 for a bandwidth of 56kbps.
Low cost of smartphones
Smart-phones give us the power to have a computer on our person at all times and to connect to the platform to this. Today for less than $100 you can have a smart-phone that is 10x more powerful that the first iPhone.
Growth of cloud computing
The cost of maintaining servers has reduced enormously, and the speed at which you can transfer data to the cloud and recall it back to a local device has increased dramatically, paving the way for the rise of cloud computing.
Simplicity of tech products
As technology advances in terms of functionality, so does the simplicity of its usage, transforming it into something that even an infant can use.
Companies That Have Leveraged the Platform
The power that this platform grants is the ability to bring people together in new ways. This allows us to solve our old problems in ways that are simpler, but would not have been possible before.
Companies that figured this out have risen to the status of industry leader in record time. Notable examples include
- Uber; who disrupted the taxi industry by bringing passengers and drivers together on the platform
- AirBnB; who disrupted the hospitality industry by connecting guests and hosts on the platform.
- Netflix; who brought people and content together on their platform.
- First disrupting the video rental industry
- Then disrupting broadcast television
- And now disrupting the studios that create content, by creating original content that anyone can watch.
All of these companies share certain common qualities that are the secret behind their success:
- Their products are extremely simple – solving an old problem
- They are not products that require enormous infrastructure or complex engineering. They aren’t trying to be competitive by creating something that is more sophisticated. Instead they are leveraging the platform to solve the problems of their respective industry in the simplest way possible.
- They are built by industry outsiders
- They are built by people who are new to the industry and therefore aren’t hamstrung by old ways of thinking of problems. They also don’t have anything to lose, they aren’t burdened by an enormous investment in infrastructure that needs to prove a return on investment. This means they are free to consider the problem anyway they want.
- They are becoming increasingly full stack
- The success of Uber has motivated them to change from being purely a technology company, to having cars of their own. The success of Netflix has motivated them to create their own TV shows. As these companies increase in value, they expand out through the value chain.
The Big Company Problem
What people value most is simplicity and convenience. Big businesses however struggle to understand this in their decision making process and can’t leverage the platform. This is partly due to the fact that they have established business models, and their decisions are data driven, when you try to collect customer data however, they rarely give you responses that are out of the box, and it is difficult to collect data on non-preexisting business models.
Failure is also a big problem, as it could result in an enormous loss and/or embarrassment. Conversely startups have nothing to lose, and complete flexibility. It is therefore in the best interest of larger companies to invest in startups that can leverage this platform.
The CAKE – Sysco Relationship
Sysco Corporation is an American multinational fortune 500 company, and the world’s largest food distributor. Headquartered in Houston, with 180 OpCos in USA, Canada and Ireland, Sysco employs 75,000 employees and serves over 500,000 customers. Sysco allows CAKE to leverage a large market that they already have a relationship with and operate independently. In return, CAKE provides Sysco with a way to participate in a disruptive way on this platform and a method by which to give their customers new benefits.
This is an example of the big company-small company relationship in action and is the method by which Sysco is able to participate in this platform revolution and the key to CAKE’s success.
The platform is here to stay and growing exponentially: it’s time to get good at working on it, acquire someone who is, or be replaced by someone who can.
-by Stefhan Sebastian