Cloud Unicorns

Photo: Cloud Unicorns. Credit: Unplash

By Álvaro Ballesteros 

Talking about unicorns takes us to a magical place, typical of the imagination. However, in the business world, this mythological being is already very real and has been present since 2013, the year in which this concept began to be used to refer to those tech startups that have reached a valuation of $1 billion dollars without having gone public. 

For almost a decade, this species has had time to evolve and give rise to the emergence of various breeds, among them, the one dubbed 'cloud' unicorns. Their potential and the possibilities they open have turned this type of company into a center of great interest that attracts investment and entrepreneurship. 

In fact, as a recent study by Research and Markets indicates, it is estimated that the global cloud computing market will reach a valuation of $947.3 billion dollars in 2026, when at the end of 2021 this figure stood at $445.3 billion dollars. 

This is not surprising considering the value that cloud computing offers to all types of companies. According to the Spanish National Cybersecurity Institute (INCIBE), cloud services allow companies to reduce their investments in hardware and software “to evolve to an attractive pay-per-use scheme, while offering other advantages such as access to contracted services from anywhere, flexibility and scalability”. 

Andrés Arizmendi, Design Strategy Consultant at Opinno and cloud expert, also highlights the flexibility provided by these services, which help all types of companies to continue to evolve and react more quickly to market trends. “The cloud is an advantage, especially for small and medium-sized companies, in terms of cost, agility, speed and security,” he says. 

Even so, the 'cloud' is a field that is dominated by 'pure breed' companies; large corporations such as IBM or Salesforce, but which new companies are approaching to offer innovative proposals. As proof, we can mention the significant number of startups that also have a lot to say and contribute to the cloud computing business. 

What does a cloud unicorn have to offer compared to a tech giant? 

Amazon and Microsoft are well-known names, the former for being a leader in the e-commerce market and the latter, for example, for its office automation products. However, a lesser-known fact is that they are also benchmarks in the 'cloud computing' business, and that their products and services are employed by a whole host of companies. In 2018, the bank BBVA announced its alliance with Amazon Web Services (AWS), while companies such as Cabify turn to IBM to manage their data in the cloud. 

Against this backdrop, what opportunities exist for emerging companies with a cloud proposition? As Pedro Moneo, CEO and founder of Opinno, recently explained on Joseph Gelman's podcast Outliers, “we are at a point where not everyone is competing for the same thing, but we are beginning to see a market for everyone”. 

Currently, taking into account the companies identified by Failory and the list compiled by CB Insights, there are 28 cloud unicorns. And several of these names are also included in other important rankings, such as the one prepared by Forbes on the 100 best cloud companies.   

The value of these companies compared to giants such as Amazon or Salesforce lies in the expertise that each startup has in a particular area. Workato, for example, serves as a business automation platform to help marketing, sales or finance teams integrate other applications and improve their workflows. 

Arizmendi, from Opinno, also points to the paradigm shift that startups have driven. First, on the licensing side. Previously, “large companies used complex systems, whereas now a 'cloud' company has the service installed on its server and it is easier to start up the product”. 

And, on the other hand, there has also been a change in pricing models. “In traditional companies, the price depended on various departments or the market the client was targeting, whereas with cloud players there is not so much room for price negotiation,” Arizmendi explains. 

Challenges for cloud unicorns 

The cloud business, as well as the unicorns that can be seen in this field, are not immune to threats. According to Arsys, a European hosting services company, data theft or APIS insecurity are some of the challenges of the cloud. 

Similarly, cloud unicorns also have to face other specific challenges, such as the possibility of growing their business. “As a company that sells cloud, it is very difficult to anticipate demand and you don't know if in a month you are going to be fine with 100 servers or if you are going to need 500,” Arizmendi adds. 

Challenges aside, the fact is that the cloud continues to grow by leaps and bounds. Many companies have already put 'cloud first' on their agenda because the opportunities that this sector opens can be seen. And more and more companies destined to become unicorns are ready to get off the ground and into the cloud.