Over the last decade, the barriers to creating an internet company have been drastically reduced and almost anyone can launch a new business on a shoestring budget. With the advancement of technology, entrepreneurs are now able to create hundred million dollar companies with a few talented engineers and, thanks to “software-as-a-service” business models, entrepreneurs can get up and running for less than a thousand dollars.
In fact, right now is arguably the most accessible the free market has ever been thanks to the efficiency of the internet. Hosting providers like Amazon Web Services offer pay-as-you-go cloud servers that scale with your business. Thousands of other freemium tools are readily available making your first transaction incredibly simple. As larger corporations increase their appetite for these external products and services, the market supply expands to create thousands of specialist service providers.
For the traditional brick and mortar industries, the changes – although disruptive – haven’t been as transformative as online services. While offshoring production and outsourcing is nothing new for the offline world, it’s inability to fully take advantage of economies of scale are still prohibitive to launching new companies on a bootstrap budget.
There are 3 reasons for this difference. One, in SaaS, entrepreneurs can launch a prototype and attract real users extremely quickly and almost at no cost. There’s no shopping around for manufacturers, no big expensive equipment necessary and no sales reps and implementation experts to hire to get started. Customers can simply sign up online and get started on their own.
Furthermore, the proliferation of advanced and powerful APIs have allowed for the SaaS model to flourish. Connecting new software with existing infrastructure can be done in an afternoon, not over the course of 3-6 months under stressful integration procedures.
Lastly, most of these Software-As-A-Service companies use a freemium-pricing model. This means that there are literally zero starting costs. Since the price only increases in direct correlation of the amount of use your company has for the new product, managers are quick to sign an approval order for new solutions that match their needs.
Consequently, the hardware and customized “offline” producers have effectively been locked out from these benefits as the cost of taking on a new customer that needs a custom-tailored solution prohibits the ability to scale.
Change is in the air
However, we’re beginning to see the first stages of disruptive outsourcing arrive to the brick-and-mortar landscape. Take restaurants for example. Typically, they operate like a one-man-band with their own website, social media, delivery vehicles and physical locations. But what if this could be broken down outsourced just like in SaaS?
Expensive delivery drivers and vehicles can be swapped for services like JustEat.
Websites, mobile apps and social media can be handed off to local specialists.
Even the cooking itself may someday be completed by “off-site kitchen providers,” leaving only the brand name and recipes as proof of their existence.
The Demise of the Grocery Store
Another industry getting a taste of the “as-a-service” trend are grocery suppliers. Companies like Instacart have the opportunity to actually create the last grocery store chain without ever actually building or operating a grocery store. Instacart uses the existing infrastructure of grocery stores as their “warehouse”, and put 100% of their focus on the delivery and customer service-side of the business.
Instacart is a great example of how “Everything-as-a-Service” is disrupting the brick and mortar world. They were able to skip years of setting up supplier agreements, warehousing problems and purchase order minimums by simply hiring a few “personal shoppers” to use the current landscape of grocery store chains as their inventory.
What’s to come?
This is an incredibly opportunistic time to be an entrepreneur in the physical world. Just like SaaS businesses proliferated the last decade, real-world startup costs are about to disintegrate at breakneck speed. As the tools and funding necessary to start a new business drop off, now is perfect time to start a new company and solve real-world problems.
In Mobile Jazz we like to think we are the right external development partner that offers you a skilled team available instantly, ideal for creating the basis of your new startup company.
If you’ve any kind of feedback, comments or questions please contact us here.