John Hancock was said to have taken unusual gusto in signing his name.
As he stood over the Declaration of Independence, he wrote with a special flourish so that "King George can read [it] without spectacles!"
At its essence, it was an act of unbundling. Of disaggregation.
There is a saying, difficult to attribute, that "every industry is either in a state of bundling or unbundling." With a squint, the same can be said of geopolitics —municipalities merge into a single body or fracture into parts. Giuseppe Garibaldi, the general that united Italy's city-states, was a bundler. So too, King Leopold and the other rapacious imperialists that led the "Scramble for Africa." By contrast, Toussaint Louverture, the Haitian freedom-fighter, was an unbundler, just as Confederate Jefferson Davis was, in his aims to build a breakaway state in the American south.
As these examples show, there is no inherent good in bundling or evil in unbundling. Each movement has had its motivations, high-minded in some instances, malevolent in others.
In recent weeks, I wrote about the phenomenon of corporations-as-nations, meta-states with equivalent (or superior) power to traditional sovereignties. Chief among these apparats is Alphabet, parent company of Google. In some respects, it is the definitivemeta-state, both guide and destination, boasting a dominion that stretches across the web, embedding itself into nearly every online visit.
And it is being unbundled.
Over the past few years, credible insurgents have risen to prominence on the premise of taking a functionality offered by the conglomerate and improving upon it. In some instances, the improvement is one of usability. Often, it is one of privacy, replacing an ad-driven model with a subscription. That trend appears to be accelerating.
In its capaciousness, Alphabet is too broad to address in its entirety. Instead, there are five key areas in which this unbundling is seen mostly clearly: Search, Browsing, Email, and Collaboration.
As the heart of the Google Empire, recent competition in search may be most likely to cause perspiration on the brow of Sundar Pichai. Though it would be loathe to admit it, Google has an effective monopoly on search, with a market share of 91.75%. Despite that throat-hold, the product has degraded over the years, becoming increasingly bloated with multi-media results. The UX distinctions between reduced sponsored and organic results have also narrowed, driving confused clicks. "Don't be evil," has become "don't allow users to distinguish between good and evil."
Neeva, founded by Sridhar Ramaswamy, offers an alternative. As the former head of Google's ad revenue division, Ramaswamy helped build the federation he now seeks to unravel. Neeva is, quite reasonably, not competing with Google's algorithm, drawing results from Bing, Weather.com, and other providers instead. Rather than monetizing by selling user-data to sell to advertisers, consumers pay a monthly fee. The boldesness of that vision (and no doubt the caliber of the team), earned investment from both Sequoia and Greylock. Though DuckDuckGo and Startapage have offered privacy-focused solutions for over a decade, both make money through advertising. Neeva's novel model, sterling set of investors, and early buzz suggests the company may succeed in carving out a meaningful niche. In time, it may even go on to erode Google's share.
Any time I have more than ten tabs open, my Chrome browser takes a moment to think, often lasting a minute or more. I have run malware tests, closed applications, cleared caches, to no avail. I am not alone in this experience. Indeed, startups have emerged (and attracted significant financing) solely on the premise of improving Chrome's performance, a damning indictment. Still, I cannot switch. Safari is faster on my Mac, but each time I give it a test run, I find myself returning to Chrome, for some quirk or another. With its robust platform of extensions, Chrome remains the most versatile and (when not sulking) powerful browser. It's no wonder it remains the preference for 63% of websurfers, crushing the next-closest option, Safari (14.4%).
The Browser Company (TBC) is another new entrant, and though it has yet to launch, persuasively enumerates the problems of the status quo. Founded by a former venture capitalist, TBC has received investment from some of the modern internet's defining architects, including the founders of Twitter, Figma, Notion, Github, and others. One of the internet's primitives is broken —uniting the savviest builders to fix it seems like a savvy starting point.
Hey, the creation of Basecamp's Jason Fried and David Heinemeier Hansson, is another challenger to attract attention. It's also more radical in its approach to privacy, promising not to mine or sell user data. The service monetizes through an annual subscription, with some interesting status-based pricing mechanics. (If I wanted to use firstname.lastname@example.org, I'd have to pay $999/year, while email@example.com would cost just $99/year.)
Front, an application focused on business users, is another notable entrant. Designed to help teams handle customer emails, the French company has raised $138.3MM in funding from Sequoia, Uncork, and Zoom CEO, Eric Yuan.
There is nothing new about email client alternatives. Over the years, plenty of aesthetically pleasing options have come to market, winning share. Often, these were smaller concerns, founded by dev shops, or bootstrapped teams. What's changed is the stature of founders pursuing the space, and investor willingness to fuel upstarts. The market seems to sense true vulnerability, perhaps for the first time in a decade.
Beneath the banner of G-Suite sails an armada of applications including Hangouts, Chat, Docs, Sheets, and Calendar.
The first two categories offer the most formidable competition. Zoom has become the default video-conferencing solution, usurping both Google and Microsoft's offerings. Slack has dominated the Internet Relay Chat category, with Microsoft Teams maneuvering into position in the hopes of capping growth. To date, Google Chat has barely featured in the discussion.
Google Docs has seen increased pressure from below. The most credible challenger is Notion, increasingly used by companies as an organizational wiki and collaboration tool. Notion's last raise valued the company at $2B, with just $67MM in venture funding, suggesting the company has founded success in monetizing. Coda is another solution that takes word processing as the starting point for more elaborate interactions. Other players include Almanac, Slab, and Slite. Though more baroque (or more minimalist, depending on your vantage), Roam is also reduces the need for Docs.
With some functionality, Notion and Coda provide an alternative to Google Sheets, too. Other companies making a play include Airtable (though more strictly a database tool), and Causal, an modeling tool. A true substitute for either Sheets (or Excel) has yet to emerge, perhaps making it a space to watch.
Google Calendar is similarly under-competed, and potentially vulnerable. While you would need to tear Excel (and to a lesser extent, Sheets) out of the cold, dead hands of bankers and corporate finance departments, no such allegiances apply to the humble calendar. GCal is a perfunctory product that, again, wins by default. Clockwise, a tool that uses AI to create blocks of uninterrupted time, appears to be furthest along, raising $31.4MM. Woven, which combines multiple calendars into a single interface, is another entrant. Sunsama, Cron, and Timeless take their own approaches, focusing on task management, speed, and value-added services, respectively.
For all its foibles, in spite of its multi-front dominance, Google is a net good for the world — it certainly has been over the past few decades. And though credible insurgents are emerging, they are nascent. With the exception of Zoom and Slack these are gnats circling a grizzly: irritating, certainly, but no threat to existence. No wonder shareholders do not mind: Google's stock has grown by more than a third over the last year.
There may come a time, however, when these insurrectionaries make their presence felt. If "every industry is either in a state of bundling or unbundling," when will the scales tip in the opposite direction? When, in other words, will we begin to see the upstarts join forces?
It's an intriguing question, particularly given the likelihood of increased M&A during this period. For coronavirus darlings that trade on the public markets like Zoom, there may be few better opportunities to leverage their newfound scale to expand their feature set. An EV/EBITDA ratio of +1800x will not last forever, especially once some semblance of normal office life returns. Would they not be wise to establish a narrative as a "collaboration" company, rather than a video-conferencer?
Because of the complexity of most M&A deals and the organizational cost of integrating new teams, true amalgams may not manifest, at least in the short-term. Still, the idea of a Zoom and Slack union is seductive. Add Superhuman to the mix, or Notion, maybe even Duck Duck Go, and a fascinating bundle is born. A company that might have the strength and scale to compete with tech's goliaths in the long-term.
As we said, there is no inherent morality in bundling or unbundling. But in the particularities of the current moment, it is hard not to wish for more viable challengers. The business landscape is stalked by a handful of great beasts, happily feasting on the critters beneath them. For all the discussion of anti-trust regulation, for all the public's "techlash," there has been little chastening for Google, Apple, Facebook, or Amazon. The best we may hope for is a new titan or two.
Seventy-nine years after John Hancock signed the Declaration of Independence with such vim, a frustrated school teacher released a publication of his own. Relying on two friends that ran a printing shop on Fulton Street, Walt Whitman published the first edition of Leaves of Grass on July 4th, 1855. It was a sleepy debut, though many of his phrases endured in the years that followed, perhaps none more so than these six words:
"I am large, I contain multitudes."
In its scale, Google is home to its own multitude. Consumers may benefit as the monolith is unbundled, with each product declaring its own independence.
The Generalist’s work is provided for informational purposes only and should not be construed as legal, business, investment, or tax advice. You should always do your own research and consult advisors on these subjects. Our work may feature entities in which Generalist Capital, LLC or the author has invested.