In March of 2016, Farhad Manjoo wrote in the New York Times about the struggles of some of Uber’s imitators; companies like Luxe, DoorDash and Postmates. In the UK, similar copycats such as Halo and GetTaxi have also struggled. Even though the Transport for London (TfL) has threatened to remove Ubers’ right to operate in the UK, Uber has prevailed where others have lost.
This got me thinking. Manjoo’s article attributes many of these companies’ difficulties to their business models. It seems that their dream of success was often tied to price and convenience. As we develop our thinking at CloudMargin I have certainly given time to the importance of price (cheap) and convenience (SaaS).
When we started our journey, CloudMargin sold an attractively-priced, intuitive solution, deployed in the cloud; this often replacing a spreadsheet and a fax machine. Our target market was the Buy-Side. But it is not just about selling a better mousetrap at a cheaper price. We have learnt this lesson the hard way. For many on the Buy-Side “cheap” actually means “free” and there is an expectation of the Sell-Side to provide solutions for them to use. And that has informed our thinking about disruption in the collateral management space entirely. We are focusing on how a financial institution either at the hub or the spoke manages the steps of its daily journey as it reviews margin calls, settles disputes and reconciles its positions on both sides of the information exchange. And that what it creates is a natural network marketplace.
For Uber copycats, it was “let’s look at any big service industry, stick ‘on-demand’ on it, and we’ve got the next Uber.” Uber has been successful not just because it is “on-demand” but because it leverages network platform economics. As a two-sided market, Uber can harness a network effect. More drivers attract more passengers; more passengers attract more drivers. Then add price and convenience and you have Uber.
CloudMargin attempts to leverage the same network economics. There have been a number of attempts where participants in the financial marketplace have attempted to build a utility to provide valuations, margin calculation, “a golden source” of data and messaging.
It is our hope that CloudMargin can succeed where others have already trod. Collateral is a multi-sided market, and CloudMargin is building that foundation to become the platform, not just a utility, to enable the market to network more efficiently than it does today.
Some technologies focus on pipes (connectivity) rather than platforms. By having the wrong focus, they have ended up with the wrong business model. CloudMargin not only has the pipes that enable connectivity but has also built a platform that enables this multi-sided market to interact more efficiently in the cloud.
That’s why we talk so much about the future and how it is important to leave behind expensive and limiting on-premise enterprise solutions tailored for and only affordable by the biggest, and embrace a platform built for and paid for by communities of users both big and small.
Thinking about the future for our clients and building the road to that future in an innovative way is why we are disruptive, and getting noticed for it. As of this post, CloudMargin has received more than 12 industry awards since 2015 for innovation and best-in-class technology.
CloudMargin has had another great year. Our annual recurring revenue has more than doubled, staff numbers have increased to manage the new clients we have brought on board and more importantly, we have started to embrace the role we can play in a networked market. Look out in the new year for new and exciting announcements, as well as customer stories on how we are helping them build a portal to engage their network.
To shift your thinking to networks and value creation, I suggest reading Sangeet Chaudary’s book “Platform Revolution: How Networked Markets Are Transforming the Economy – and How to Make Them Work for You”.
Have a relaxing and enjoyable holiday season with your families. I hope this gives you more “food” for thought.