In the age of the Internet and cloud computing it is easy to access and use technology of almost any shape or form. This has made life a lot easier especially for start-ups who no longer need large investments for hardware and infrastructure or software licenses. Most IT services can be used out of the box and can be freely combined to create just the package a company needs. Ideally, these solutions can also be scaled up easily and cost-efficiently with no major CAPEX investment being necessary. This development has led to a point where even start-ups, which we usually view as being technology companies, do not pay much attention to technology. Many technology start-ups just seem to combine existing, out-of-the-box technologies in new ways or try to build success on just a new business model, relying on available technology. More often than not this can mean that start-ups miss a real differentiator and do not reach their full potential as they miss the chance to use the power of technological innovation to boost their business.
This holds true even for industries which are usually not perceived as especially tech savvy, e.g financial services, where my own expertise lies. PLUS500 has seen itself as a tech company right from the start, and technology has been at the core of our rapid success. But why is it so important to develop your own technology?
It starts with the fact that no one knows your (potential) clients as well as you do. A third party may have a software package that comes close to the functionality you have in mind to offer to your clients but a perfect match is virtually impossible to find. This is especially important in an age where customer experience is a core factor to success. Even if you take a look back at the past – the initial success of a company like Google is built on the fact that it provided search results without any fuss or distractions faster and more accurately than its competitors. All its later services and offerings were made possible by this initial success based on superior technology and a great user experience.
Also, having your core technology in-house and paying no external license fees provides you with the highest possible flexibility to further extend your lead over the competition. This can mean e.g. that you can offer your potential clients a temporarily unlimited demo account, because you are not dependant on earnings from such an account to pay for license fees. In this way you can build trust and convince users of the quality of your service. Also, you are able to react to changed market conditions much faster, more flexibly and without additional costs if you want to, for example, add a new feature or support an additional or new operating system. Last but not least, if you keep your core technology in-house it allows you to use and control it as a core part of your brand. In particular, all elements of the user interface can form an integral part of your brand image, and your brand value can rise or fall with its quality and ease of use.
I recommend that all companies, and especially start-ups, take a close look at which technology they should buy as a service and which they should keep in-house. Back-to-basics for technology companies is my advice. Build your core business on your own technology and you will be able to provide your clients with a better service, keep full control of your financials and invest in new features when and where your clients need them.
Elad Even-Chen, VP Business Development, Plus500
