A Year Later, What Google Drive Means for Startups
In the early days of software, you had limited distribution opportunities. You might sell your software in boxes, distribute millions of free CDs, spend heavily on advertising or do a deal with a larger partner for distribution. With the introduction of the SAAS model, the hard costs were eliminated, but the advertising spend or sales team were still a must. Recently, the growth and openness of cloud storage platforms like Dropbox, Box, Google Drive, Evernote and Skydrive have changed the distribution model for some startups significantly.
At HelloFax and HelloSign, we’ve seen a lot of growth from our platform partners. We don’t release our internal numbers, but there are some public numbers we can talk about. Since Drive launched last year, HelloFax has had over 270,000 installs with Google Drive. HelloSign, which launched in August, has had over 50,000. Our new integration, HelloSign for Gmail, which launched in January, has had almost 30,000. That’s 350,000 installs worth of Google integrations. And we didn’t spend a single cent to acquire them.
The fundamental necessity for each startup is growth. Growth changes your company from irrelevant to relevant. Paul Graham wrote an essay, “Startups = Growth,” that every founder should read.
Building on platforms is one of your greatest opportunities for growth. Historically, a lot of companies have leveraged platforms to become great companies. Not all startups have platforms that are a good fit, but if you can find the right one, it can be a game-changer. The thesis for integrating is simple. Platforms provide an audience, you provide value. The better the value, the more potential for growth.
Here are four examples worth thinking about:
- Airbnb grew on Craigslist. Airbnb added significant value to the renting experience on Craigslist. Because short-term rentals are only one of the many classifieds on the site, Craigslist provided a generic experience. Airbnb improved it with pictures, maps, ratings and more.
- Google grew on AOL and Yahoo. Google was a great company. However, Yahoo and AOL were the big Internet hubs at the time and were capable of sending massive amounts of traffic. Since the platforms didn’t see value in search, they were happy to send that traffic to Google.
- PayPal grew on eBay. EBay was one of the few places on the Internet with a high concentration of purchases. EBay didn’t provide payments in the early days, which made it difficult for sellers to collect money. PayPal provided that experience.
- Dropbox and Box see significant growth on mobile. IOS devices don’t have a file system. Dropbox and Box didn’t have to be better than the current file system, they just had to be better than no file system.
The alternative to growing via a distribution platform is to go after the growth channels that everyone is pursuing. For many startups, search engine marketing, pay per click marketing, media buys and a large sales team can produce results, but it’s difficult to produce explosive growth with these methods. They’re helpful, but often incremental. You’ll absolutely want to pursue all marketing channels in the future, but for a small team, they can be capital intensive and often favor the incumbent.
Platforms also give preferential treatment to products with a good user experience. It’s a great equalizer. Instead of paying to rank higher in search, platforms are often built to be meritocratic. Better reviews will give you a higher ranking and exposure. We worked hard to add as much value as possible and invested a lot in the user flows and experience. Instead of hitting paywalls and a dozen required fields before signing up, we built in a simple onboarding experience. Startups that understand this ecosystem, and build for it, can have an advantage against less product-focused incumbents.
If you’re a SaaS company, follow in the footsteps of these great companies that were built on platforms. There are opportunities for companies that can add value to the cloud storage ecosystem. If you work hard to create value, the ecosystem will provide the audience.