
Bain Capital Ventures’ Kevin Zhang: The ‘Unlockable Potential’ in Lending, Investing, and Insurance
Kevin Zhang, partner at Bain Capital, assess the technological tailwinds for emerging players in lending, investing, and insurance....
Nnamdi Iregbulem~quoteblock
Stripe's mission is to grow the GDP of the internet; mine is to increase total software output. Every company is becoming a software company, but not every worker is technical.
While the ranks of software engineers, data scientists, and other technical knowledge workers have risen significantly over the years, demand for these individuals has completely outstripped supply.
As a result, we have a severe labor shortage among technical talent, a critical risk for the future of the software economy. Most companies struggle to hire developers, as the competition is fierce. Big tech companies can offer salaries that mere startups cannot afford.
If we think startups are the most innovative sector of the economy, constraints on their ability to hire developers mean less software gets shipped as a result. If we want to grow software output and shipped code, but we can't grow inputs like technical talent, our only recourse is to substantially improve the productivity of current and future technical workers.
That's why I look at every investment through the lens of productivity — how does this product or tool help organizations ship more code without more people? Better tooling also opens up software development and data science to a larger group of people, attracting more bright individuals to our industry and helping alleviate some of the talent bottleneck.
Q: What do other market participants or observers misunderstand about these categories?:
A: "Investors often underestimate how much better a new technical tool has to be, relative to the status quo, in order to capture the hearts and minds of users. Developers and data scientists are inundated with tooling. There's a new shiny object practically every day, and it's often a coin flip whether or not they actually enhance productivity rather than merely distract from the core work.
In this context, it's quite difficult to separate from the noise. It's a little bit like the mobile market today compared to when smartphones originally came out. I remember getting my first iPhone and immediately going to the App Store and loading it up with apps. I'd check the App Store every day for new things to play around with. But over time, one's app use stabilizes around a few core applications, and the rate at which you download new apps collapses. At this point, I visit the App Store once a month at best, and usually just to download a particular app, not to browse idly.
Likewise, while technical knowledge workers are often early adopters who like trying out new things, it's extremely rare that they actually change their "starting lineup" of tools. ‘10X better’ is really just the minimum in this category."
Nnamdi Iregbulem
Contrary to popular opinion, public cloud providers are unlikely to cause major competitive disruption within the productivity tooling space. Public cloud providers are mostly concerned with “infrastructure consumption, which maps most directly to compute, storage, and networking,” Iregbulem says. Productivity tools consume many fewer resources than infrastructure solutions, making them less attractive targets for the public cloud players. Those large cloud companies are also much better at architecting infrastructure services than they are at building developer-facing products. Here, companies like Atlassian, GitLab, and GitHub have the advantage, especially given their focus on building communities — an element that “continues to be a strong competitive moat for developer-centric startups,” he says.
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Technology, innovation, and the future, as told by those building it.