🔥 What: Benn Stancil discusses something I would summarize as “now we got a bunch of cool new tools, but turns out, they all cost a lot of money and we feel like it’s not really worth it…”. He talks about the modern data stack which brought us all a long way, but also into the hands of dozens of companies. It’s a fractured space and the costs of data become quite diffuse. Benn thinks one of two things will happen: Data will become really valuable and we will all simply stop caring about the cost. Or two: market consolidation, a bloodbath of companies.
🐰My perspective: On the part on what will happen I am pretty convinced that the “bloodbath” will happen, and it will happen again and again for one simple reason: All these companies will at some point engage in a bunch of major networking-effect controlled markets which will inevitably lead to a bloodbath as I’ve outlined a bunch of times in this newsletter.
But then again, I don’t think you think about Google as some bloody slayer of Search Engines (which it is following this analogy). So that will feel just fine. But it’s not gonna solve the cost problems, because
1) Winner-takes-all-markets create temporary monopolies and at least it’s not clear that this is a good thing for the consumers.
2) I don’t think the market structure is the problem!
I am much more concerned with the general idea. I think something very different will happen: We will start cutting technologies & data apps horizontally, alongside business lines, not on central technology lines anymore. Then the question simply becomes “how much does the marketing support data system cost?” which is easy to answer, because it will be wrapped into one thing!
That does not mean that I think in the future there will be an ETL tool just for CRM data, on the contrary, I simply think today’s solutions are too fat.
That means I don’t think the centralized data lake is a concept to last. Neither the centralized data warehouse nor the centralized data orchestrator.
What is a concept that is there to last might be “ETS” — extract, transform, serve technologies — things that I’ve not seen much on the market yet as a replacement for all this technological centralization. Technologies roughly the same size as the current “data lake” just cut very differently allowing for a whole business component to be wrapped into one.
But also simply smaller technology pieces, like a “miniLake” and a “mini-airbyte” which allow me to build a component just for the “marketing support system” where:
- my “mini-airbyte” allows me to choose on configuration just the 2–3 connectors I need and itself is a really small piece of technology (without GUI,…)
- my “miniLake” manages itself and is not accessible from anywhere else
- my “miniHex” allows me to have a small webserver serving just my 5–10 dashboards containing the marketing support system which then is integrated into my marketing automation tooling.
I hope you realize that this would be a 1–1 translation of what happened in software engineering. Now we are nowhere close to this world, but I do think it’s the step necessary to truly unravel the problem Benn is outlining.