Are You Baking Magic Into Software?

It’s been 5 years since Marc Andreessen said Software is Eating the World, a lot has changed since then. Software still seems to be eating the world.. look at top valued private companies list, almost every company is/uses Software to solve customer problems. 

Unlike 2010, building software is much today, so is acquiring customers and making money. If you look at this picture below, there are over 1000 software companies just solving Marketer’s problem.

Marketing Tech landscape these days…HOLY COW! pic.twitter.com/FqNIlgL3I0

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So, if you are a founder/PM building Software, how do you thrive in this war? Bake magic into your software. Didn’t understand? Let’s look at the evolution of software..

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Software 1.0: Buying 1.0 software in 80-90′s is like buying insurance. This type of software is designed to improve efficiency of the business. It made users data entry folks, while Buyers/Managers enjoyed viewing/valuing Reports. CIOs are the buyers, desktop/ on-premise software with multi year contracts and huge downtime when it’s time for software upgrades. 

Software 2.0: Also known as SaaS, software that sits in the cloud – there by faster product improvements and relatively cheaper when compared to 1.0. This is the same time, consumer internet came into picture (Amazon, Yahoo etc.) and users experienced internet for the first time and everyone loved it. Software 2.0 was built keeping user’s workflow and users played a great role when it comes to buying software. With pay-as-you-go model, easy sign-up process SaaS companies enjoyed great revenues. But there was one problem and it is becoming huge one. Commoditization of Software.. remember the Marketing Landscape diagram? same is happening with Project Management tools – Asana, Projectplace, Trello, Jira etc. and a 100 other tools – everyone solving same problem with very little differentiation. Zendesk vs Freshdesk, Optimizely vs VWO, Slack vs Flock.. I can give many such examples. 

Software 3.0: If you read this year’s Founder’s letter written by Sundar Pichai he mentioned the word AI/Machine Learning 10 times! That’s how much Google believes in data network effects. If you look at Google products – they baked magic into their products – google search learns from you, so does google now – google photos automagically organizes your pictures & YouTube recommends you new videos based on your watch history and smart replies in their recently released Allo messenger are FTW! 

Software 3.0 is the new SaaS, software that learns from your usage and personalizes how you experience the product next time when you login. Software is getting better every time you spend time on the app & perform certain actions(events), that means intelligent workflows for the user. And thus making it incredibly hard for a user to churn or stop using the software. Software 3.0 can’t be displaced so easily by products that have similar features or lower price as Software 3.0 has a unique advantage with “proprietary” data they gathered from usage. 

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So, if you want to build a successful software – ask yourself how can I bake magic (AI/ML) into my software? 😉

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