The Hollowing Out of the Software Middle

'Software companies taste like chicken,' says private-equity mogul. 'They’re selling different products, but 80% of what they do is pretty much the same'SHOW: 726CLOUD NEWS OF THE WEEK - http://bit.ly/cloudcast-cnotwCHECK OUT OUR NEW PODCAST - "CLOUDCAST BASICS"SHOW SPONSORS:Equinix Global Data Centers and Networking Learn more and signup at https://deploy.equinix.com/. Use the coupon code CLOUDCAST to get $500 in credits to get started. Find "Breaking Analysis Podcast with Dave Vellante" on Apple, Google and SpotifyKeep up to data with Enterprise Tech with theCUBESHOW NOTES:VCs comment on how 80% of software is all the same (WSJ)218 Booths at Kubecon AnalyzedTHE MARKET USUALLY ONLY SUPPORTS THREE OPTIONSWalking around KubeCon,nearly every segment had 6-10 companies offering solutionsMarkets can’t sustain more 3 in any category (Market Leader, Market Follower, Cheaper Option)The Market can’t understand the differentiation of the 6-10 company market; 80% of the functionality is the same.We’re coming out of Unicornpalozza (2019-2022)OPEN SOURCE AND SAAS HAVE HOLLOWED OUT THE MIDDLE OF SOFTWAREOpen source typically highlights the creator, largest contributor to a projectBeyond that, open source is “integration” companies, or “lifecycle” companiesLarge companies (or platforms) can buy up the “feature” companies to fill in their gapsCompanies in the middle have to build sales and marketing around mostly undifferentiated messaging or products.SaaS allows companies to leverage product-led-growth, and micro-target to specific use-cases. The successful middle (mid-sized, decent growth) will get picked off by PEThe unsuccessful middle (great tech, bad execution) may get picked off by large vendorsThe unsuccessful middle (average tech, bad execution) will go underFEEDBACK?Email: show at the cloudcast dot netTwitter: @thecloudcastnetFEEDBACK?Email: show @ the enterprise ai show dot comeBluesky: @EntAIShow.bsky.socialTwitter/X: @TheEntAIShowInstagram: @TheEntAIShow