As a payment enthusiast, I’ve been researching the ins and outs of building a digital wallet that stands out in a crowded market. One thing that’s become clear is that payments themselves are a commodity – everyone wants to offer them, and they’re an essential part of any business transaction. However, the real value lies in what you can build on top of those payments.
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In recent times, SaaS solutions built upon Open Source Software (OSS), commonly referred to as Commercial OSS (COSS), have garnered significant attention. This growing trend has made it much easier to develop a comprehensive and scalable web application without resorting to expensive SaaS offerings. Now, all that is required is a team of 3-5 skilled engineers who possess the ability to navigate through extensive code bases. With the aid of tools such as cursor.sh or GitHub Copilot, these engineers can immerse themselves in solving the business or technical challenges at hand, without getting overly fixated on opinionated technology stacks. As someone who tends to get caught up in such stacks, this shift allows me to focus more on the task at hand and avoid unnecessary distractions.
Working for a few years in the ever-evolving insurtech industry, I have had the opportunity to simultaneously oversee the technological and business aspects of insurance. This has allowed me to grasp the intricate yet straightforward nature of this industry. After hearing Varun’s honest(podcast linked below) and straight-from-heart reflection on the Insurance landscape which was packed with learnings and insights, I couldn’t hold but start typing my experience about the space less from a technology but more from a product lens which is a birds eye view of my experience.
How Cloud Native Applications are Transforming Digital Businesses
Cloud native applications (CN apps) are revolutionizing the way digital businesses operate. Gone are the days of having to rely on bulky, outdated software that takes forever to install and update. Now, businesses can take advantage of the power of cloud native applications to quickly and easily access the latest technology. In a nutshell cloud native applications are born on public or private cloud in a packaged (read containerized) manner that makes their development and launch into the real world environment radically different than traditional .net, php, java applications. This means that they can be deployed quickly and easily, and they can scale up or down as needed. Plus, they are often more secure than traditional applications, since they are hosted in the cloud.
I have been reading about data-driven development productivity and effectiveness for quite some time now and trying to visualise it both from a developer’s shoes, as I have been one for a large part of my career and then from an engineering manager’s eyes where continuous improvement, effectiveness and productivity are a constant topic when it comes to ‘achieving more with less’
As a person who likes to be in the trenches, I was geeking out on captable economics in the past few weeks and wanted to share more about it in this blog.
Measuring the performance of investing in private markets has always intrigued me as little information is available in the public domain. So I spent the last few weeks reading more about this and thought of sharing my understanding
I listened to 2 podcasts this week that really got me thinking clearly about the economics of an early-stage business and how it is perceived in the eyes of an investor and how it also impacts the founder and employees.
I thought it would be good to lay down the dots first and then try to link them just enough so that when the jig-saw is put together although each piece may not make much sense but together will give a clear picture for an entrepreneur from the shoes of an investor.
For both private company directors as well as CEOs as you begin to think about liquidity choices for your company you normally think of an IPO. There is, of course, another alternative you may want to discuss with your boards which is Direct Listing.
In the traditional IPO route, new shares are created and sold to the public. In this scenario, the company works closely with underwriters/bankers.
Underwriters/bankers assist with regulatory requirements, deciding the initial price of shares, and working to sell the shares to investors in their network. Prior to the IPO the company and underwriters go on a “roadshow” so the top execs can present to institutional investors to create interest in purchasing the stock once it goes public. This process may be lengthy and costly.
However, there is an alternative: Direct Listing. The Direct Listing is emerging as a popular alternative to the IPO, and while it does not come with the “safety net” of an IPO it does have many benefits. In a Direct Listing, no new shares are created. Only existing, outstanding shares are sold. This is particularly beneficial if a company does not want to dilute existing shares by issuing new shares. A direct listing enables willing buyers and sellers to directly transact with minimal lockup and bureaucracy. Existing investors and even employees who hold shares can directly sell their shares to the public. This is a fantastic option for companies who perhaps cannot afford the service of underwriters or do not want to be restricted by a lockup period.
I recently attended a presentation by Colin Stewart of Morgan Stanley on this emerging phenomenon, and here are some takeaways from the presentation:
- Private markets are more robust and accessible than in the past. In the current market landscape the time to IPO’s is becoming longer and deal sizes are smaller.
- Direct Listings may lead to an accelerated time line. In large cap companies Direct Listings may offer larger access to capital and can lead to lower volatility.
- There’s an emerging trend that institutional investors will be more familiar, comfortable and accepting of Direct Listings.
Historically, smaller companies such as food and biotech have gone public via a direct listing. Typically during a regular IPO 10-15% is sold. Spotify broke the mold being a massive tech based consumer company to go the direct listing route. Spotify sold 17% of their outstanding shares on the first day of their direct offering. Slack, another notable software company that opted for a direct listing, sold 22% of their outstanding shares, and were the 5th lowest in volatility for massive tech IPO’s. Despite the risk associated with Direct Listings, both Spotify and Slack experienced less volatility than smaller float IPO’s such as Zoom.
Some benefits of a Direct Listing include: less share dilution, being able to circumvent mandatory lock up periods and other regulatory requirements. These items may be increasingly attractive enough that companies may begin to favor Direct Listings over customary IPO’s.
This emerging trend is something that companies considering going public may want to review before hiring underwriters and going through the task of going on a roadshow, and meeting all of the regulatory requirements associated with an IPO.
Here is a great podcast by Bill Gurley
This article was written based on an article by @betsy_atkins and first appeared on Forbes