Business development wasn't working for BatchBlue Software, an eight-employee Providence startup that makes online customer relationship management tools for small business. CEO Pamela O'Hara spent a year trying to partner with another company to let her customers easily e-mail the lists of contacts they organized with her software. One e-mail marketing company bounced BatchBlue's calls around, and another was enthusiastic but never followed through.
So after failed attempts to strike a deal, O'Hara's team wrote its own code to sync its software with MailChimp, an Atlanta-based e-mail marketing company. Using MailChimp's application programming interface, or API—a set of tools that lets outside developers write programs that interact with another piece of software—BatchBlue gave its clients the e-mail function it couldn't achieve through conventional dealmaking. "That's when we realized this is a viable way of doing business," O'Hara says.
BatchBlue and MailChimp are among a tiny but growing network of small online software vendors that have committed to letting anyone who wants to build on their tools to do so. The effort, dubbed the Small Business Web and launched at the SXSW conference in Austin, Tex., in March, aims to use open platforms to help small software-as-a-service companies compete against much larger players in the industry. The group is now 20 companies strong. By enabling clients to purchase an array of software from different vendors that works smoothly together, the venture hopes to provide more value to customers than any one of these companies could alone.
Potential Competitors Collaborate Instead
Not every firm in the Small Business Web is integrated with every other company. Some even compete in the same market. But they have all committed to publishing APIs and making their products integrate easily, without locking customers into any one platform. "The difference between the Small Business Web and just publishing an API is you see multidirectional connections," says Sunir Shah, "chief handshaker" (or head of integrations) at Toronto-based invoicing firm FreshBooks. The ecosystem of interlocking software the group is trying to build will help online software companies compete with desktop software suites like Microsoft (MSFT) Office that have long been integrated but don't offer the flexibility of software-as-a-service.
The Small Business Web represents a fundamentally different way of doing business, where potential competitors open themselves to collaboration. "Networks allow us to produce and consume in different ways," says Umair Haque, director of the business strategy think tank Havas Media Lab and a Harvard Business Review blogger. He says the Small Business Web is an example of "asymmetrical competition," where small players can compete effectively against dominant companies in concentrated industries. "What we will increasingly see is networks of smaller players deciding to get asymmetrical against the bigger guys," he says. There are few cases of similar networks in other industries, though Haque does cite online advertising networks as an example of a similar strategy.
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