Message to startups: think bigger – the cloud is more than a distribution channel

What are the big trends in cloud and big data startups  in Europe? I think I have a clearer view of that after our recent Cloud and Big Data Summit, that I organised for the Tech Tour. All in all, we looked at 250 startups from all over Europe, Russia, Turkey and Israel. The selection committee was made of about 25 VC’s, lead by Hansjörg Sage at GIMV, and we ended up selecting about 25 of them – the best that Europe has to offer in big data and cloud to present to international VC’s and global players in the industry.

The final list was a nice mix of big data and cloud startups ranging from seed to late stage, from infrastructure as a service (IaaS), platforms as a service (PaaS), to SaaS and big data tools. In marketing for instance, it becomes easier to crawl through a deluge of data and extract value from it.

But I couldn’t help noticing that a lot of the startups are still, in some way, trying to reinvent IT. The cloud is still, for a large number of startups, still primarily a way to distribute. We’re not shipping boxes and cd’s with software anymore, we’re using the cloud for that.

But for me, the big disruption of the cloud goes beyond that. Cloud and big data are essentially a horizontal technology, that should enable massive disruption in all sorts of verticals. And I’m still not seeing a lot of that. I’m thinking about businesses like banking, insurance and health.

Part of this probably has to do with how we look at IT today. Historically, IT is the department which tells you what is possible and what’s not. They are demigods. But that is probably not going to last. I think Nicholas Carr is right when he points to the history of electricity: back in the day, if you wanted electricity for your manufacturing plant, you had to put the plant next to a river to generate electricity. You needed an army of engineers on staff, who told you what was possible and what not. They were the IT department of their time.

But when electricity moved to a distribution model, electricity not only came within the reach of the smaller businesses and consumers. But it also changed the fundamentals of business – there wasn’t a single business that wasn’t disrupted by electricity. It changed the entire economy. And I think the cloud is going to do exactly that to our economy.

Take health insurance. If I want to change insurers today, that involves a lot of messy paperwork and endless phonecalls. Where I live, in Switzerland, it probably involves an insurance agent to come to my place to chat with me and try to cut a deal. It’s very old world, because all the necessary information is not conveniently available. Imagine if you had an online folder – that is protected, of course – with your  entire profile was available, and could be uploaded anonymously to the insurer’s. You could get ten quotes in ten seconds. This is happening in India, by the way, where farmers can get an insurance by sms in seconds for their harvest. The insurance company prices the contract in real time. And they’re not even using smartphones, they’re just low cost Nokia phones.

It’s a small example, but it shows very well how many existing businesses will be absolutely shocked to their core by cloud technology. It’s not just insurance, but also services like banking. In the cloud, the cost of a transaction – moving money, concluding a contract – approaches zero. That will change a lot of businesses. And I’m frankly surprised that these big mammoth institutions like banking and insurance are not attacked by startups today.

Another example is transportation. Now that everyone carries massive amounts of computing power around, it’s just a matter of time before the smartphone and the cloud will meet and make all that data accessible and usable. You’re stuck in traffic, and you have appointments, but your Google calendar works in sync with the public transportation info to get you to your destination on time. Or you’re stranded at a train station. Today, you call a friend to pick you up. One day, you can crowdsource a ride from a driver who is driving alone. You can envision the same for home sharing. The convergence of cloud, big data and mobile will help us move to a world where we use our resources better – a greener world.

So I have to agree with Mary Meeker. Services, things we do, where we live: we have barely scratched the surface of what is possible with the internet and cloud.

See Mary Meeker’s presentation on mobile and the need to “reimagine everything”:

KPCB Internet Trends 2012 from Kleiner Perkins Caufield & Byers

Photo: Robert Scoble, Hadoop conference room at @cloudera

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About the author

Pascal Eichenberger

Pascal Eichenberger is president of the 2012 Cloud and Big Data Summit, organised by The European Tech Tour. He is also CEO of Green IT Globe.

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