Powering the On-Demand Economy: A Rising Tide of SaaS Companies Providing Infrastructure For Today’s Fastest Growing Businesses

December 15, 2016 Steve Cornwell

 

on-demand economy SaaS

By now, everyone has marveled at the meteoric rise of on-demand economy companies like Uber, Lyft, Airbnb and Seamless. So much has been written about the factors that have propelled them to popularity — innovative tech tools, mobile technology, the elasticity in expenses and pricing permitted by cloud computing, rising consumer demand for immediate services and the increasing acceptance of people-to-people shared assets.

Recently, though, more attention is being paid to the startups behind the startups. These are the growing cohort of sophisticated B2B tech companies that provide the support systems on-demand enterprises require to streamline operations and scale up to even greater heights. These “infrastructure” startups make on-demand economy platforms run efficiently and focus on their opportunities for growth.

Though they may not get the same attention as the Ubers of the world, these B2B SaaS platforms enable new on-demand companies to move forward without reinventing the wheel every time. Consumers and providers see a sleekly designed app connecting customers and independent contractors, but underpinning the platforms is software that helps automate the infrastructure.

In essence, the on-demand economy has spawned an entirely new ecosystem of ancillary tech companies providing services in categories including:

  • Payments
  • Community collaboration
  • Human resources
  • Integration services
  • Customer support
  • Training

Focusing on the core

This trend is similar to how companies emerged to supply parts to the auto industry. That allowed big auto brands to innovate by investing more resources in designers to create stunning design, in engineers to improve performance and in marketers to hone their message and build their audience. These investments were possible because the company no longer has to spend energy on basic parts that every car needs.

Like in the auto industry, B2B SaaS platforms are enabling entrepreneurs with great ideas for on-demand companies to get up and running faster than ever because they don't have to recreate all the core infrastructure tech from scratch.

Additionally, established on-demand companies like Airbnb and Uber can improve gross margins and profitability by beginning to outsource the legacy non-core systems they built before these offerings existed. Their success is nurturing the growth of the larger ecosystem of infrastructure providers.

Partnering with B2B SaaS companies for infrastructure makes perfect sense for on-demand startups. They are often founded on the idea that instead of a central corporate entity delivering produce products and services, the platform can facilitate the distribution of services or assets (like a home or car ride) between individuals in a decentralized fashion. So distributing activities that aren’t core to their value proposition works naturally in this environment.

On-demand economy companies focus on developing a great platform to connect consumers with the service. Their resources are better utilized concentrating on that rather than building an infrastructure system, especially when there are so many tech solutions in the marketplace that can provide those services.

The companies behind the on-demand economy

Earlier this year, a CB Insights article detailed over 50 tech startups providing infrastructure support to on-demand economy companies. The solutions provided by these companies touch on everything from background checks of contractors and HR administration to schedule management and route logistics for delivery services.

Here are just a few examples:

Payment processing companies like Stripe and Braintree, which are doing for the on-demand economy what Paypal did for eBay by reducing friction for both the customer and provider sides of platforms.

Community collaboration companies like Lithium and Jive-x, which reduce support costs by leveraging the engagement and knowledge of a company’s customer base.

Recruiting and onboarding software like OnboardIQ and Intuit Workforce, which help growing on-demand companies scale up finding the best-qualified candidates for their workforce.

Background check support services like Chekr and Onfido, which reduce compliance and security risks, critical in business models that use large numbers of providers.

Document signing software like HelloSign and Docusign, which speed up applications and approvals so providers can out in the field and earning money.

Integration services like Zapier, which help the first generation of digital-native and mobile-native companies automate their workflows.

Community support companies like Intercom.io and Zendesk, which give on-demand companies plug-and-play infrustructure for live chat, support, engagement, service and marketing.

Fleet optimization companies like Onfleet, Zendrive, Routific, Fleetmatics and Beeline, which power the delivery management, safety analytics, navigation,  scheduling, dispatching, critical to many on-demand startups.

Partnering for success

My company, SchoolKeep, a digital onboarding, training and retention solution, recently worked with on-demand economy platform Postmates, an online food delivery service, to help optimize the onboarding process for their couriers. When we first met with Postmates, onboarding new couriers took a month, which was way too long of a lag time between the complicated application and first revenue-generating assignment.

By partnering with us to implement our B2B software, Postmates’ onboarding time for couriers was reduced to just one day. Required documents were collected while the couriers were simultaneously educated and guided through a frictionless onboarding process.

All this was achieved without Postmates having to build the costly process flow themselves. Instead of spending valuable engineering resources on solving the problem, they leveraged a software optimized to support platform companies. This allowed them to focus on building new and improved features and on enhancing the experience for both couriers and consumers.

The on-demand business model is a proven economic engine of the future, and it's exciting to see these new B2B infrastructure platforms making it even easier and cheaper for entrepreneurs to bring their ideas for on-demand services to fruition. Next time you read about the on-demand economy giants, remember there’s also a growing ecosystem of infrastructure startups partnering with those enterprises to help them succeed. By reducing costs and freeing up resources for innovation, they let the Ubers of the world do what they do best — create outstanding user experiences for customers and providers and create businesses built to thrive for the long term.

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