The cost of software development is falling faster than industry researchers can effectively measure. So, by the time someone can calculate the cost to develop enterprise software or to start a software-centric startup company, next year’s numbers could easily be 10-20 percent lower.
Reasonable software costs and access to sophisticated cloud infrastructure are just two reasons why venture capitalists are saying that there’s never been a better time to start a software company.
What used to cost $1 million in hardware, software, web hosting, infrastructure and engineering salaries to build a minimum viable product (MVP) could cost as little as $200,000 today. And some entrepreneurs say it’s only $15,000 for a niche product.
Indie developer trend
Not only does lower cost of software development welcome more innovation, it also means that great companies can be built anywhere. Some people call this the ‘indie developer trend.’ Telecommunications infrastructure is exploding outside of cities, providing broadband access to more people in more locations.
Highly sophisticated cloud infrastructure and software services are available for less than a hundred dollars a month, enabling small teams to build and launch a product quickly and inexpensively.
This means an IT student in Pakistan with no access to Silicon Valley can build something at home with minimal capital risk to prove the concept and attract customers. In Kenya, for example, a small team started Apollo Agriculture to give smallholder farmers a mobile app to manage crops and get higher market prices.
When we started our cloud hosting application platform in 2018, we knew our early customer base would be entrepreneurs at venture-backed startups in big cities in North America and Europe.
It did start out that way, but over time, it’s usually the case that customers become more diverse, both in geography and personas. Following this, the goal should be to make progress in eliminating Digital Deserts, and enable more companies and products to make a significant impact – regionally and globally. Here are just a few examples:
Engineers in war-torn countries. Before the Russia-Ukraine war started this year, the New York Times reported that Ukraine had 200,000 engineers who generated approximately $3B in revenue while serving Ukraine-based countries as well as the Global 2000. This year, we have seen a huge uptick in Ukrainian accounts, as well as other war-affected areas including Afghanistan, Ethiopia and Yemen. Modern cloud services enable developers to earn livelihoods and generate value even if their local economies are under pressure.
Salespeople at large companies. Render was always built for developers, so I did not expect to see new accounts and services being created by sales engineers at large companies; surprisingly, this trend is going strong. It’s often much easier for sales teams to have their own cloud resources to build live demos and test applications than to ask their internal IT departments for access to the same resources in house. Not only does this mean sales teams can move faster, but it also empowers them to contribute to their company’s innovation portfolio when they can validate solutions with customers on their own without waiting for a new feature to be built.
Product design teams. Companies like Figma and InVision have sped up the ability for teams to create wireframes and digital designs to express new product ideas. Carrying this trend further is the new ability for product designers to put these ideas into production environments to further speed up ideation and overall time to market. It’s one thing to look at a wireframe on a screen, it’s another thing entirely to see a new product feature with real data and real bugs and use it like an actual user would.
An explosion of India-based entrepreneurs. While Indian software talent has contributed greatly to tech innovation at foreign companies since the advent of business computing, India has relatively fewer large tech companies based in the country. But this is changing fast. Given the widespread success of IT serves firms like Wipro, Infosys, and TCS in the last two decades, and recent IPOs like Freshworks, Zomato and Paytm, tech entrepreneurship in India is flourishing like never before. We see many instances of hyper-local companies being built, especially by recent alums of prominent companies.
Startups requiring little or no venture capital. 2021 was a record year for the amount of venture capital raised, and yet, there are more entrepreneurs than ever building a company and a product before taking institutional investment. This can save founders another 10-30% of company equity, increasing employees ownership over the long term. We also see strong growth in companies that have no plans of ever raising venture capital. The reality is, only a small portion of companies are right for the venture capital model, but there are tens of thousands of bootstrapped, software-centric business ideas that can generate enough income for a small team, all the way to thousands of employees.
Software is thriving
All of these trends can be rolled up and summarized by saying: software innovation is alive and well. When I started my career as a software engineer many years ago, the possibilities seemed endless.
Today, with economic factors being even more favorable to software innovation, and given all this power and flexibility, I’m even more optimistic and inspired.
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Anurag Goel is the founder and CEO at Render, a modern cloud platform for developers. Before Render, he built and sold Crestle, which pioneered GPU-backed Jupyter notebooks in the cloud. He was also the 5th engineer and Head of Risk at Stripe, where he helped launch the company and grow it to over 400 people.