& I’d dare to say that more competition is also on the way. Markets are bigger and faster than ever before.
In general, software markets and businesses are 10X bigger than they were 10-15 years ago. This is due to the liquidity provided by the global internet. A company that would have been a $10-$20M subscale revenue business is now a $100M revenue company, which means many more companies can now be worth $1B or more, and many more SaaS businesses have the potential to be $10B+.
More opportunity to grow means more opportunities for competitors too. Elad Gil writes in its blog
While tech clusters will only grow in importance, there will be more $1B+ companies outside of tech clusters.
Since “niche” software companies can now reach $100M revenue scale more easily, there will be more $1B market cap companies outside of the major tech cities (Bay Area, Bangalore, Beijing, etc.).
This will be confused in popular press and media as “you can start a tech company anywhere” (true) and “Silicon Valley is over” (false). While you can start a $1B+ company most places due to the recent mega scale of the internet, it does not negate the network effect that a tech cluster, or industry town like Silicon Valley has (more on this in a future blog post). The true outlier $10B to $100B+ companies will continue to be started in tech clusters like the (San Francisco) Bay Area, Bangalore, and Beijing (the “3 Bs of tech”).
The growth rate of a company is really just a reflection of its market size and ability to scale its go-to-market. In other words, how many people can I reach in a repeatable fashion? Given the scale and liquidity of reaching people online, and their willingness to buy good and services via the web, companies can now grow to massive scale faster than ever. Not only will companies be bigger than ever, they can get there faster.
Ecommerce as a category has grown from ~5% to 13% of retail sales since 2007. While not all commerce will move online, there is still massive tailwinds to the Internet.
There are 4 main reasons the author highlights:
1. Markets Are Bigger Than Ever In The History Of Humanity
2. Since online markets are bigger than ever, more $1B to $10B software companies can exist
3. Startup Companies Will Grow Faster Than Ever
4. There Is Still A Lot Of Room To Grow
The last 2 decades have seen the shift of behavior online + commerce online. The next 2 decades will see a further shift in buying behavior and expansion of the Internet as the motive source for startup expansion. In other words, startup companies will continue to grow in scale, and get there even faster. Markets are bigger and faster than ever before.