SaaS companies generate massive amounts of data. Each client subscribing to the service is running a slightly different business model withing the target industry. And this makes the SaaS company a repository of the type of information any operator in the industry would want. Add some analysis, send a weekly report or maybe a real-time dashboard of the important metrics and you have got yourself another revenue stream, and the distinction of becoming even more of an industry expert.
Google recently changed the format of their increasingly popular and dominant Gmail service. Free to individuals, and a great application for businesses, the Gmail platform dominates the world of digital, written communications. So I was excited to see the recent change in format to Gmail (which I use for both personal e-mails and for my corporate e-mail platform). Google’s explanation of the changes made perfect sense to me. I always opt in early for their changes and did this time as well. And I really like the changes that give me an Inbox, a Social Inbox, and a Promotions Inbox.
But the “Social” and the “Promotions” people and companies do not like it at all. And why would they? Gmail has essentially put them on the back burner. All those companies that send me tens of e-mails per day are not happy. Their livelihoods are threatened. And its not just that Google is putting them on the back burner. Google’s change to Gmail makes Google’s primary offering (paid advertisements) more attractive to companies. What a brilliant strategic move by Google. Not just hurt the competition, but increase the value of your product at the same time.
Forexmagnates.com has posted an interesting article on the recent actions taken by the Japanese Financial Services Authority (JFSA) regarding international brokers. In short, the JFSA barring non-Japanese firms from opening accounts by Japanese citizens or residents. This follows the actions of the United States’ Commodity Futures Trading Commission (CFTC) back in late 2010 to take similar actions. US citizens or residents can only open FX accounts with US-registered brokers.
The “retail” FX world is still relatively small compared to the institutional world. However with a CAGR of greater than 10% annually since 2002 the retail FX industry supports some hundreds of millions of dollars in corporate revenues each year, and the industry employs tens of thousands of people across the globe.
The actions of the CFTC and now the JFSA are not catching the attention of the media or citizens of either country except for the active trading communities in each country. But make no mistake, these actions are protectionism by the financial regulators of each country. I am sure there are reasons given by each regulator that justify their actions, but when governments act to “protect” citizens outside of physical security, the Big Brother effect increases its hold on the population.
Rather than barring foreign competition, the regulators could (should?) do a better job of informing consumers of the potential risks of trading or whatever activity they undertake. And then allow the citizens to take the action they choose. And receive the benefits of their decisions or suffer the consequences of their ill-informed decisions.
Cooperation + Competition = Coopertition
As part of a software development firm, we face this opportunity/challenge all the time. Our current solutions serve the needs of brokerage firms around the globe. We have always concentrated on the toughest part of our industry’s needs, and our products are demonstrably better than our competitors’, and thankfully they are in great demand.
But we focus on just a single aspect o the full technology solution that a brokerage firm needs. A number of other firms focus on other aspects of a broker’s needs. And we often work in conjunction with those firms. In the pecking order of what the brokerage firms need, our products are mission-critical; the other software tends to be value add, but not mission-critical. We have been asked to enter into reciprocal introducing agreements with a number of these value add software firms.
Inevitably these firms come to the realization that they true intellectual value is in the aspect o the technology that we focus on. And we have seen a number of firms create their own version of our software. We have yet to see a competitor’s software match the stability and reliability of ours, but they create a similar product and pitch it at half the cost of ours. (I will leave commenting on battling those competitors for another post.)
So we have yet to sign any reciprocal agreements. I am not going to purposefully introduce a potential competitor’s software to my clients or prospects. But our industry is looking at massive growth potential coming from countries for which we have no means of contact. And many of the value add software firms are based in the countries from which demand is being generated.
So we soldier on, and the scenario plays out as follows; almost as if scripted. One of our clients signs up for services of a value add provider. We are polite and work in conjunction with them. At some point their software crashes or has an issue and our support team (always monitoring our clients’ servers) jumps in and works with the value add software firm to resolve the issue. Then it happens again. And we help fix it again. Always keeping a low profile with the end client. Then we learn the value add provider is attempting to compete with our product. The next time their software crashes, our support helps resolve the issue, but we are more open and transparent to the end client that it is THEIR software that is crashing the servers, but OUR support team resolving the issue. And then it happens again. And finally the end client realizes that we do not just have great software, but that our support is top-notch. And that we play nice with others so long as they do not become competition.
The question I ask is: do we spend the time to move downstream and create and sell the value add software ourselves? Or keep the current model.
Great read this morning from Roger Cohen on the differences in morals of two countries that are economically tied together. It leads to the question…which came first? Corrupt politicians in Greece or tax evasion by Greek citizens?
In a related thought, as I listened to an NPR article this morning about the federal spending sequester affecting the US Coast Guard, I thought about our national debt. Another NYT columnist, Paul Krugman, and many fiscal liberals believe that our government has an almost unlimited supply of spendable cash because the US government can borrow money freely or print money if it chooses. Technically they are correct, but we all pay the price later on because the first item to be paid each month is the interest on the federal debt. As that continues to grow, the amount of available funds for the Coast Guard, or education, or arts, or infrastructure improvements, (etc.) decreases. So its a question of what type of America you want your grandkids to inherit. The fiscal ability to dictate how they spend their resources…..or the crushing burden of paying for a previous generation’s decisions.
Me? I would choose freedom for me and freedom for my kids.