ICONIQ | The Essential Tech Stack

1675367622-iconiq-analytics-insights-the-essential-tech-stack.pdf

Key Takeaway

• For entrepreneurs: while the tech stack is crucial across all stages of a company, the specific tools and the extent of investment in them should be carefully chosen based on the company's size, stage, immediate needs and growth objectives. This strategic approach helps in optimizing operational efficiency and managing costs effectively during the different phases of a company.
• For investors: carefully evaluate if a growth-stage company's tech stack and spending aligns with their scale, priorities and work model. Underinvestment in critical go-to-market tools could hamper growth, while overspending on non-essential tools pre-maturity could impact unit economics. Understanding this nuance is critical to assess operational efficiency and make informed investment decisions.

Summary

The article "The Essential Tech Stack" by Vivian Guo from ICONIQ Growth provides an overview of the essential technology tools and platforms used by modern software companies. It is based on a survey of ICONIQ Growth portfolio companies and review data from G2, a software marketplace. The report aims to help companies make informed decisions when choosing tools for product development, data management and security, go-to-market, and internal operations.

Insights

• The essential tech stack for software companies can be categorized into four main areas: product development, data/security, go-to-market, and internal operations.
• The tech stack varies significantly based on a company's scale, needs, and work arrangement (remote vs. in-office).
• Certain categories like DevOps, security, and collaboration support multiple tools, while others like CRM and data warehousing tend to be winner-takes-all.
• Remote companies require more tools in categories like DevOps, sales operations, and project management compared to in-office companies.
• As companies scale past $100M in annual recurring revenue (ARR), spending increases in areas such as CRM, content management, collaboration, and application monitoring.
• The top categories expected to see increased spending in 2023 include BI/analytics, DevOps, data warehousing, and application monitoring.
• Highly rated tools often have qualities like ease of use, strong integrations, immediate ROI, good support, and continuous enhancements.

Implications

• Companies should carefully evaluate their tech stack based on their specific scale, priorities, and work arrangements to avoid overspending or underinvesting in certain areas.
• Consolidating tools in winner-takes-all categories can help streamline operations and reduce costs.
• Remote work arrangements may necessitate additional investment in collaboration, communication, and project management tools.
• As companies grow, they should plan for increased spending in areas like CRM, content management, and application monitoring to support their scaling needs.