Three years ago, I started a company called Fundability. There is little about starting a company that’s easy, but one of the easiest decisions I made was to embrace the Software-as-a-Service model.
SaaS (pronounced “sass”) is the new cloud computing model that represents the largest shift in the software industry in decades. Instead of running software on your own computer servers, you rent access to software, servers and data storage via the web or “the cloud”. The basic idea is that computing has evolved from an essential in-house function to being a business utility that is readily available via the web. As businesses revisit their operational models, CEOs and CFOs are asking the question, “If IT is not one of our core competencies, why do we need to maintain it in-house?”
The Case for Cloud Computing
SaaS is a classic no-brainer for a startup. Let’s stack up the positives. No capex. Unlimited scalability. Pay-as-you-go pricing. 24/7 availability. Access from wherever you can get to the internet. We built Fundability as a pure play SaaS business. Our own software was deployed to customers via the cloud and we also relied exclusively on SaaS to meet our own business needs. We used Salesforce.com for CRM, Quickbooks Online for accounting, OneBox for our virtual PBX, GoToMeeting for online meetings and Mingle for project management. We ran our business like a Swiss watch; we just rented the watch instead of buying it. Fundability is a modern efficient business, which was part of the attraction when an acquirer came in and bought the company late last year.
Startup companies such as Fundability enjoy the advantage of a brief history. Nimble entrepreneurs can exploit the latest technologies and business models without rocking the boat. The most successful startups set out to rock the boat but end up burning the boats and creating billion dollar markets. Think Amazon, eBay or Google.
For us, SaaS was clearly the only way to go. Why would you hold a company back by using last century’s computing model? It’s the right call for a startup, but does the SaaS model make sense for established businesses like newspapers? I repeat, why would you hold a company back by using last century’s computing model? Truthfully, all of the cloud computing benefits apply to any company that seeks operational efficiencies and competitive advantages. Newspapers certainly qualify and they wouldn’t be alone. By the end of 2009, 76% of US organisations will use at least one SaaS-delivered application for business use, according to IDC, a global provider of market intelligence. The economy is driving companies into the cloud. IDC recently revised its 2009 SaaS growth projections from 36% to 40.5% due to the economic downturn.
Cloud Computing: the next revolution in newspaper publishing
You can count the major publishing technology milestones on the fingers of one hand: Gutenberg, Computers, Colour, the Internet and now Cloud Computing. Over the past thirty years, we have experienced the most dramatic and revolutionary era in the history of the industry.
As a witness to history, I feel like the Zelig or Forrest Gump of newspapers. In my first job out of college in the 70s, I was thrown into the revolution from hot metal to computerisation. I rode along with the rest of the industry during the prosperous 80s when we all thought the ride would never end. In the early 90s, I was in the vanguard of the internet for newspapers when I started MediaBridge at SII (System Integrators, Inc). Unfortunately, newspapers were always more interested in cutting costs and treated the internet like a temporary fad instead of a burn-the-boats opportunity.
I see cloud publishing as transformational as what I saw firsthand during the conversion from hot metal to cold type back in the 1970s. The business transformation required risk taking, a sizable investment and an understanding that the short-term pain would yield long term business benefits. The industry is facing a similar once-in-a-generation opportunity today with cloud computing.
Newspapers are far removed from their entrepreneurial business roots. They are more likely 19th century businesses with a rich history, but are now facing an uncertain future. It’s not too late for publishers to adopt entrepreneurial thinking. Embracing SaaS and the cloud computing model is a new way for newspapers to think and act like a startup. The cloud computing model can streamline and re-energise newspapers and reinforce the industry’s still considerable competitive advantages.
I have been hearing predictions of the imminent demise of newspapers for thirty years. I even made some of my own. Now the predictions are getting closer to the edge. The risk is real but I've learned to recognise, as VCs do, that that's where you find the bigger rewards. As an industry, we’ve travelled a long way from Gutenberg to Google. For the next big transformation, we need to look to the clouds.
