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What can we learn from born-on-the-cloud start-ups?

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Enterprises are increasingly turning to the start-up ecosystem for lessons on how to compete faster, smarter, and more cost-effectively. Unlike incumbent organizations (including IBM), many of these start-ups have never had a fixed IT or infrastructure presence—leading us to think of them as being “born on the cloud.”

On July 30, I spent time at the York Butter Factory along with several other IBMers. We had the opportunity to talk to start-ups and entrepreneurs about the role that cloud computing plays in powering innovation and what the born-on-the-cloud phenomenon means for the enterprise.

The roundtable brought to life a range of concepts that are starting to percolate into the broader business environment. Anyone who has read The Lean Startup or The Hard Thing about Hard Things would recognize many of our discussion threads. These included questions about scale, the tools used by start-ups, their attitudes towards risk and failure, and the big poser: How does an existing company get “reborn in the cloud”?

Here are some of those insights from the founders, developers, and investors who took the time to join our discussion:

· Being “born on the cloud”means less capital expenditure–but start-ups take this further by converting it into a higher appetite for innovation and risk.

· Access to, and collaboration between, global talent is made much easier when your data and apps run in the cloud. So too is expanding to new markets.

· Start-ups measure themselves on customer satisfaction and service, not numerical KPIs.

Perhaps the most telling quote came from Indiegogo’s Leon Gouletsas, who said the difference between enterprises and start-ups is that enterprises say, “I do x,”while start-ups say, “I create x.” That focus on generating value and solving problems seems, to me, to underpin how start-ups approach everything from testing (short, iterative cycles with regular user feedback) to failure (learn from it, don’t blame the individual). Start-ups like ThoughtWorks, bugwolf, and Platformer.com are using this focus to challenge the status quo, and the companies that represent it, with only a fraction of their competition’s resources.

If anything, it is the values touted by cloud computing –flexibility, scalability, and focus on service –that make a difference, rather than simply the technology itself. For us at IBM, the goal is to make sure that our cloud capabilities retain and even accentuate these values to help enable our clients to operate at the speed of a start-up.

We already have more than 30,000 registered users of our Bluemix cloud platform for developers. Our next challenge is to make accessing the IBM Cloud marketplace, Softlayer, and all our offerings just as easy. That’s going to be tough for a company as big and covering as many local markets as IBM. But making that pivot is, just like for many of our enterprise clients, essential to our future success. The conversations we held with start-ups in July have given us a lot of food for thought –but they’re only the first of many to come.

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