Peter Micciche has been a CEO at several top-tier, venture-funded, early-stage software companies. A long-time technology executive, he was previously president of leading business information tool provider Cognos Corporation and has served in a variety of senior executive, sales, marketing, and business development roles in the software industry. Peter sees technology stacks as a method of understanding both markets and participant influence. He believes that anyone who manages a firm that produces products or services that are part of a stack can’t look at the firm’s layer in isolation.

You have to look at all of the components to understand a technology stack’s significance. For example, in many software stacks, the core piece is the transactional data layer, which really is about the flow of money in and out of various technology users’ bank accounts. Since banks ultimately manage the flow and warehouse all of the transaction data, they are in a powerful position vis à vis technology providers. As a technology provider, you need to ask “How do I create a more powerful competitive position within a stack?” Particularly, how are you in a position where you can influence the creation of standards that vendors above you in that stack must adhere to and thus essentially...control the end product.

While this is true for virtually all technology providers, approaching a technology stack as an entrepreneurial startup is situation specific and a function of the firm and its investors’ objectives. Peter points out:

It all depends on your ambition. You can be an opportunistic participant and essentially put a band-aid on an obvious hole in the stack, or you can make a large bet with a chance to control the game board. These bets are often in the hundreds of millions of dollars, with larger payouts. You have to decide from the outset what you are playing for and how aggressively to engage.  

Peter also points out that the issue of power and influence is as critical to technology buyers as it is to industry participants:

There are also strategic implications for technology buyers in supporting various technology solutions. In selecting vendors, you are also choosing to support specific platforms and their inherent standards. CIOs typically recognize this and understand how their support shapes the future of markets. . . . The most successful CIOs are able to educate the CEO on the strategic implication of decisions. At the same time, CEOs have become much more aware of this since the rise of the Internet, which has created a greater dependence on e-business infrastructure. 

In discussing the practicalities of managing modularity, Peter emphasizes the need for organizational acumen:

Effective partnering is critical, since you need to work with other companies in the ecosystem. You need to understand not just technology integration, but what the customers require. This means that product marketing, as well as corporate development, plays a critical role.

Finally, Peter is an enthusiast of open rather than bundled architecture as a method of engaging the market:

Openness invites participation from others who can add to the value chain and fosters the opportunity to build an industry around oneself. Tightly integrated stacks discourage others from investing in playing.

Overall, he believes that one of the key roles of software executives is to focus on the complete solution for customers. This involves a holistic view of where a given technology might fit into existing systems, who needs to support it, and whether the technology is geared toward horizontal or vertical application. All of these are key considerations in defining a firm’s technology stack.

From Hunter or Hunted - Chapter 2