Startups are Going Vertical Instead of Selling Off Technology
The new trend in the startup world is to build a business around a layer of technology. This is referred to as a full stack or whole product company. In the past, software would be created and sold off. But, now many innovative companies will instead take a specific piece of technology and build a business around it. This is happening in various industries ranging from education to communications to transportation. Babur Habib, co-founder and CEO of Portfolio School and founding CTO of Kno Inc., published an article in Forbes that looks at the positives and negatives of this trend.
Habib’s article asks the questions: Why are so many startups going full stack? Wouldn’t it be easier to sell off technology to a larger company and move on to create the next thing? The short answer is that it’s an innovative approach that incorporates the whole experience – creating the software and/or hardware and adding in the customer perspective to develop a vertical business. It allows freedom for innovative product development.
Tesla is a prime example of a full stack company. The startup began at the high-end automotive market and has worked its way down to median-priced automobiles. While some people in the industry couldn’t understand this type of thinking, in the long run this move has allowed Tesla flexibility with costs and innovation regarding manufacturing the components needed for their automobiles, which translates into operational efficiency.
For additional examples of how startups have become full stack companies, check out Babur Habib’s full article in Forbes, “We Need to Build More Startups like Tesla”.