Not that long ago, building a global company was reserved for large incumbents and heavily capitalised start-ups. In fact, it used to cost an estimated $5 million to launch a start-up and take twice as long to expand internationally. But that’s changing.
Instead of needing millions in the bank or being based in the heart of Silicon Valley, the internet — and the tools it enables — are empowering a new generation of economic challengers. Today, start-ups are more quickly becoming scale-ups, propelled by an ecosystem of cloud tools that make the fundamental aspects of going global a lot easier and affordable.
Stripe recently partnered with a cohort of Australian VCs, start-up hubs and accelerators to better understand how this phenomenon was impacting Australia’s start-up economy. What emerged was the “start-up stack”: a suite of over 150 cloud tools that are quietly powering Australia’s high-growth start-ups.
A springboard for start-ups with global ambitions
In what will come as no surprise, two-thirds of Australian start-ups reported that entering new markets is one of their greatest challenges. The good news is that many of the most complex challenges to scaling globally — from compliance and managing global teams to accepting international payments — are being solved by this cloud toolkit. Almost all respondents (97%) agreed these tools are making it easier to go global from Australia.
Not only is this stack facilitating quicker entry into new markets, these tools are helping start-ups reduce operating costs, increase productivity and accelerate product development. By automating some of the most resource-intensive parts of building a business, the start-up stack is swiftly becoming the secret sauce of Australia’s entrepreneurs — helping them reallocate precious engineering time and focus on their core product. Of course, some of these tools are understandably more mission critical than others. When we asked start-ups which tools were having the greatest impact on their ability to grow: hosting and data storage, team collaboration & communication and online payments emerged as the lead contenders.
Start-up-to-start-up
However, perhaps the most striking feature of the “start-up stack” is the emergence of a distinct trend: start-ups building for start-ups. A quarter of the cloud tools most favoured by Aussie start-ups — like Slack, Stripe and Intercom — were all launched in the past six years. Closer to home, many of our greatest success stories like Atlassian, Canva, Culture Amp and Campaign Monitor have all built products to help other start-ups thrive. In addition to sharing a growth-oriented, friction-averse mindset, start-ups are trusting other start-ups with some of the most fundamental parts of their business given that they’re often nimble innovators themselves. This contrasts with how incumbents have historically approached their technology stacks, often building on a legion of software programs synonymous with the titans of the tech industry. However, these Goliaths are starting to realise that cloud tools are the proverbial stone in David’s sling. To keep up in a mobile era, large enterprises are now gutting out their clunky, legacy infrastructure and opting to build on the same platforms as the most agile start-ups. But instead of bringing in management consultants to implement lengthy digital transformation programs, developers are increasingly calling the shots.
The full stack is greater than the sum of its parts
There was a time when one of the greatest constraints on CIOs and IT departments was to get all the pieces of their company’s software systems to not only work — but to work together. Today, this arduous manual process is being replaced by APIs. With just a few lines of code, software programs can talk to each other without human intervention, allowing companies to intuitively connect the dots between their different data sets and more efficiently run their operations. Reflective of this shift, ease of integration and interoperability between tools were ranked as the highest priority for start-ups when building their stack. Not surprising when you consider the average Aussie start-up uses 6 — 10 tools to run their daily operations.
An incomplete toolkit
While these tools are having a positive ripple effect across almost every business function, there’s still room for development. Corresponding with our research findings in the UK and Singapore, Australian start-ups cited cybersecurity, CRM and analytics as the top three areas in need of better tooling, presenting a potential business opportunity for enterprising Aussie founders. In their opinion, the lack of adequate tools increased operating costs and administrative burden and stifled their ability to scale new business models — like marketplaces, platforms or software-as-a-service.
Just seven years ago, Shoes of Prey’s Jodie Fox was lobbying the federal government to come up with a way for new business models like hers — customised fashion on demand — to easily accept payments from international customers. In the absence of sufficient third party tools, the business spent months trying to pull together solutions on their own. Today, Shoes of Prey and many other forward-thinking start-ups are no longer reinventing the wheel, and the eight year old start-up now ships to more than 36 countries.
Twenty six years into the web, we’re yet to unlock the full potential of the internet economy despite the revolutionary effect it has had on our daily lives. When you consider that Amazon Web Services — the posterchild for modern cloud infrastructure — only entered the market in 2006 and has already outpaced Google, IBM and Microsoft as the leader in “infrastructure as a service”, the influence the “new guard” of software tools will have in shaping the businesses of the future will be equally as transformative.
Mac Wang is the Head of Growth for Stripe in Australia
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