🌱 The evolution of app ecosystems

A high level overview of the past, present and opportunity of app ecosystems.

Hi friends!

Today’s issue dives into the past, present, and opportunity of app ecosystems.

What is an app ecosystem?

But first, some definitions! An app ecosystem is a network of applications revolving around a foundational digital platform.

Some examples include mobile app ecosystems such as the Apple App Store and Google Play Store, gaming platforms like Xbox and PlayStation, and, my personal favorite which is also the focus of today’s issue, B2B software ecosystems – exemplified by HubSpot, Shopify, and Salesforce.

A look to the past with SalesForce

Salesforce was an early example of a B2B software ecosystem, their AppExchange launched in 2005. Numerous companies have soared to billion-dollar valuations by building within the Salesforce ecosystem (see list below).

Source: Base 10 substack https://base10.substack.com/p/the-rise-of-new-software-ecosystems

Despite being more mature compared to newer ecosystems, Salesforce's success serves as a powerful example of the opportunities and impact that the right ecosystem integration can offer.

The next wave of lucrative ecosystems

Salesforce is a juggernaut in the B2B software ecosystem space, but it's worth noting the success of subsequent ecosystems. Shopify and Hubspot’s ecosystems launched a few years after Salesforce and now generate $12 billion and $5 billion in revenue respectively.

A sampling of large SaaS companies and when they launched their app or integration marketplace.

The last 5 years have seen an explosion in new app ecosystems so it’s likely we’ll see even more mini-economices built on top of platforms.

A growing opportunity for SaaS companies

Software companies can find growth opportunities in various ecosystems, not just the biggest ones.

D-IDs early entry into Canva

For example, after Canva launched its app ecosystem in 2023, early partner D-ID saw rapid growth, gaining a new user every 15 seconds from their Canva integration. Their early, strategic move and a product tailored to Canva's needs led to substantial benefits.

Cycle’s strategic integration with HubSpot and Linear

Similarly, Cycle recently shifted away from product-led/freemium growth and ramped up investment in integrations. Now 80% of new signups originate from integrations with HubSpot and Linear ecosystems. By prioritizing ecosystems lacking direct integrations with their largest competitors, Cycle carved out a distinct advantage.

These examples show that the right ecosystem strategy can unlock significant opportunities, no matter the ecosystem's age or size.

That’s it for now! Which ecosystems are you eyeing for 2024? I'd love to hear your thoughts.

Have the happiest of new years!
Lola