Comment by noduerme
8 hours ago
>> BTW, I think a lot of people were/are greatly overestimating the value of coding to business success. It’s fungible from a macro perspective, so isn’t a moat by itself.
Broadly true if you have $10M to throw at it, and know exactly what you want, or if what you want isn't something involving a "secret sauce".
But between competing startups doing something novel, original software is a moat. No moat is permanent; you leverage it into market share while you have time.
And no software itself is a secret, but the business logic and real-world operations it distills and caters to may be. The software is the least obfuscated part of encoding that set of operational logic, or even trade secrets, which are the DNA of a business and dictate the tools it goes into battle with.
Software being a moat (which it rarely is for long) is more of a question for the software industry. For other industries, software that amplifies best practices and crystalizes operational flow from the business logic can absolutely extend whatever moat the company already has.
In the small bore, if you have two midsized competing $100m companies in some arbitrary industry, the one that uses SaaS may be well behind the one that invested $1m in their own in-house software from the beginning, mostly because the one with SaaS must work their business logic around certain shortcomings, while the other can devise and deploy workflows for employees that may themselves create a new advantage the other company hasn't considered.
> if you have two midsized competing $100m companies in some arbitrary industry, the one that uses SaaS may be well behind the one that invested 1m in their own in-house software from the beginning, mostly because the one with SaaS must work their business logic around certain shortcomings, while the other can devise and deploy workflows for employees that may themselves create a new advantage the other company hasn't considered.
Counter anecdote: about a decade ago I was brought in by the new to the company director to lead the modernization of their in house Electronic Medical System software that was built on FoxPro in 1999 running with SQL Server 2000 and was maintained by two “developers” who had been their for a decade.
I led another project there first that was more pressing - in house mobile software maintained by two other “developers”. It was built on top of a mobile framework by a local startup. It was used by home health care nurses for special needs kids.
After I got my head around the business, what they were trying to do - PE owned and acquiring other companies whose systems they need to integrate and their margins were low - mostly Medicaid reimbursements - I decided the best thing I could do was put myself out of a job.
I told the director we have no business trying to build up a software development department. We moved everything to various SaaS products and paid consulting companies to make all of the customizations. Meaning they sign a statement of work and come back with a finished product.
Software development was never going to be this company’s competitive moat. They got rid of the two developers maintaining the mobile app and contracted that out. The two other developers who had maintained the FoxPro app became “data analysts” and report writers.
Every company does need to know its numbers