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Startups Andreessen Horowitz Social Media

Can agencies become 'full stack' startups?

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By Leo Ryan, global head of social innovation and partnerships

February 12, 2015 | 5 min read

In the post 16 things, venture capital firm Andreessen Horowitz outlines the 16 categories of companies that its analysts are observing or thinking about, including The Full Stack Startup.

Leo Ryan

Chris Dixon, one of its general partners, defines the full stack startup trend as follows: “The old approach startups took was to sell or license their new technology to incumbents. The new, 'full stack' approach is to build a complete, end-to-end product or service that bypasses incumbents and other competitors.”

The example he gives is ride sharing services like Lyft and Uber who rather than trying to apply software to an existing industry have chosen to build the entire services using their software as the core of it. No longer at the mercy of incumbents to adopt their software, they have instead taken on the entire industry with a fully vertically integrated service.

Which led me to wonder what that might look like in my own industry: what would a full stack social media agency look like?

Ogilvy, where I work, is in a reasonably good position to offer such a service: with agencies across every aspect of the marketing services spectrum Ogilvy can reasonably claim to provide end-to-end social media that encompasses content creation and distribution, social CRM, influencer management, social shopping etc. etc. What Ogilvy doesn’t do however is own the software that enables all of this.

On the one hand it means that we are able to pick and choose from the best in the market at the time of an assignment. But it puts us in the reverse position of an Uber: we don’t have complete control of the enabling software.

This appears to be the case across the agency landscape, with none of our competitors owning all of the various elements of the enabling software. There are sound historical reasons for this. Agencies are notoriously bad at developing and maintaining software. The few attempts that I have seen are not able to compete with dedicated software product teams who spend every waking hour developing their software.

And it’s not just the software that needs to be developed. As Dixon points out, the challenges are manifold. Full stack founders care about every aspect of their product/service, so they need to get good at many different things besides software – hardware, design, consumer marketing, supply chain management, sales, partnerships, regulation etc. It takes a special kind of founder to do this.

The end result however is that agencies are forced to bolt on software as and when it is required, facing issues of end-to-end integration and being at the mercy of the quality and variable service levels of the software vendors.

If we look at just the suppliers in the listening software area (the tools that enable us to monitor what is said online in social channels) the issues of this are clear: the tools are all developed from the POV of the vendor, they are frequently not fit for purpose and once they have realised their exit (being bought by a larger software vendor) their product development slows to a crawl. At this point we see see all kinds of lag issues as they fail to maintain their APIs, are slow to integrate new channels or to develop new services that match the changing demands of our end customers – brands.

At the more technical end of the marketing services spectrum there are plenty of examples of the large tech consulting businesses trying to develop or buy-in agency-type services: IBM is growing an agency called IBM Interactive Experience and Accenture last year bought digital agency Fjord, but both of these are bolt-on service arms to fairly heavy legacy computing businesses. It’s hard to see them successfully creating or maintaining the kind of culture that agile creative digital agencies thrive on.

It might therefore be reasonable to expect social software vendors to attempt to ‘do an Uber’, developing the creative and strategic services that enable their software. A college of mine recently left our New York office to become the head of landing for a social media management service, but that only serves a single component of the entire social service stack. For this to work the software vendor would need to operate at every level of the social stack and to be able to credibly replicate the strategic and creative services of an integrated agency. They would also be taking a big bite at one of the hands that feeds them: agencies…

Dixon predicts that “we’ll start to see many more industries that have mostly resisted technology finally stop resisting now that startups have figured out the right approach to take here”. He cites education, healthcare, food and transportation, but doesn’t mention the marketing services industry.

As brands become increasingly reliant on software to collect, mine and act on customer data, agencies must get their heads around the issues of developing their own, or remain at the mercy of the likes of Salesforce and Adobe.

Leo Ryan is group head of Social@Ogilvy. He tweets @LeoTwit

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