Discover more from Aashay's Newsletter
A quick temperature check of the tech and investing zeitgeist gives away an obsession with developer tools and software infrastructure. The excitement has led to some confusion, as phrases like “platform,” “infrastructure,” “lego blocks,” and “abstraction” are commingled. I’ve meant to write a (separate) post on the nuances of infrastructure and platform companies, and their path to power, but that’s for another time.
I have a working theory that software plumbing consists of families of companies that grow up together, working in lockstep to provide the underpinning for new applications and business models. As an example, the primitives of a user-facing web application are identity, messaging, and payments. See Auth0, Twilio, and Stripe. Several new clusters are coming into the fold, and the (non-exhaustive) list is worth sharing.
Running lightning-fast queries. Conducting machine learning experiments. A/B testing and optimizing user journeys. These are all ideals for a data-driven company, but until recently, were quite difficult at scale given how nascent data infrastructure was for a cloud-native world. Now, components like Snowflake for long-term storage & analytics; Fivetran as a data pipe between SaaS applications, event streams, and more; along with modeling and transformation tools like dbt and Dataform set the stage to not only power existing companies with richer insights, but also create an ecosystem of startups with an orientation towards continuous analysis from day one.
The American financial system sits at the intersection of legacy systems (did someone say COBOL?) and regulatory entrenchment. Furthermore, the business model of a bank does not lend itself to a destiny as a growth machine. By creating a pathway to “read” bank data, Plaid spurned a generation of neobanks, wealth management tools, and more. On the other end, Modern Treasury can enable insuretechs, lenders, proptech cos, and more to “write” into the banking system by designing abstractions on top of complex payment plows that need to go through wires or ACH. As these two (and others) virtualize the banking functions, I’m intrigued to see what new business models will emerge.
I’ve written this before, but it feels like being privacy-first as a company has gone from something you take on to save-your-ass to a characteristic that is deeply aligned with customer centricity. VGS maintains compliance and privacy by removing the burden associated with handling sensitive data. Transcend provides the backbone for privacy workflows that entangle end customers and companies. I see a world where these sorts of companies work in tandem to not only “fit” privacy & compliance into current workflows, but also provide a layer on which new privacy-first businesses emerge — think social networks, financial planning, consumer media, etc.
For another time, I’d also like to work through how the cadre of development tools fits into this, whether that be the Jamstack (Netlify, Gatsby, Prisma) or instruments that allow for peace within the confines of a microservices world (Okteto, Terraform, Kong, etc.)
Many of these companies got their start by productizing an oft-repeated process or system across a gamut of companies, building for the markets of the past and present. Yet, the de novo business models that permutations of buildings blocks unleash are the most compelling. Hopefully this list provides the breaching point for exploration.