The golden children are "born in the cloud." What's that mean??

We just got back from the CenturyLink Channel Alliance Expo, neé Q.Marketplace, last week in Denver. In the keynote presentation, Tiffani Bova talked about how the real beneficiaries of cloud services growth are companies that are "born in the cloud." These companies don't concern themselves with margins or profitability. In fact, even asking about margin is a sign you weren't "born in the cloud."

This description sounds like magic. More accurately, it sounds like the business plan of the gnomes in South Park.


After the presentation, I emailed Tiffani to ask for a little detail on the financial model of these companies. How do they pay bills, make payroll, and fund development without paying attention to fundamental business concerns like margin and profitability?

The answer she gave wasn't very illuminating, but in all fairness she was responding right from the event. The explanation could best be summarized as "they just do." According to Tiffani, companies that are born in the cloud are hitting $100 million with margins of 60%+ in five years, and very little of that revenue comes from selling "XaaS."

Tiffani goes on to explain that the big money-makers are companies that are doing something unique with cloud services — building applications, managing aggregated cloud service offerings, providing professional services, etc. This, supposedly, is where our industry needs to migrate.

While she's probably right that people are making a killing building original and innovative applications and services on top of cloud infrastructure, I question the feasibility of the agent and VAR communities at large having success jumping into that game.

Agents and VARs typically run cash flow-sensitive businesses. They rely on cash flow to fund operations, thus don't have a stockpile of capital to invest in development of ancillary services. More importantly, agents and VARs rarely have the skills available in-house to pursue what in many ways is a fundamentally different business model. On top of that, it's not easy to come up with compelling product ideas (if it were, we'd all be making $100 million).

All this begs the question — given the realities of the business models, what can agents and VARs do to move their businesses forward? It's not an easy answer, but it's clear that "more of the same" isn't going to cut it.

We're a comprehensive technology infrastructure company providing network and cloud services, management and support solutions, and professional services to our partners and clients.

Talk to us

(813) 769-4690

  5215 W. Laurel St., Suite 200
Tampa, FL 33607

  Contact us