Asset-light Software Businesses: The New Paradigm for Startups

But as technology shifts to the cloud, there’s a complementary shift happening in favor of opex over capex. Operating expenses bear the advantage of a pay-as-you-go model for services used with comparatively little to no up-front investment. Not only is this a greater value prop, as a business is getting exactly what it pays for, but it’s also a st

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Both low CapEx and high CapEx companies can reach multibillion-dollar outcomes. Although in my dataset the high CapEx billion-dollar startups were on average 25 percent less capital efficient than low CapEx ones, many capital-intensive startups became very successful companies, generating billions of dollars in shareholder value and creating lifesa

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For most software businesses in the US, the problem isn’t technical knowledge anymore. The problem is getting a wedge into distribution — also known as marketing.

Startups are increasingly building product features that depend more on a balance sheet of capital to differentiate themselves versus customer value that is unique and defensible. This creates feature wars that quickly become balance sheet wars when other startups or incumbents decide to copy these features. Free stock trading, hi-rate savings acco... See more

These tools make it possible, for the first time, to effectively get work done without physical co-location — at scale. The last truly significant fixed cost for many startups today is an office lease. Multiple scaled startups (Automattic, Zapier, Invision, Gitlab) have demonstrated the fully remote model, negating the need for an expensive office ... See more