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In today’s economic climate, resources are increasingly limited and efficient productivity is critical to survival. Having the right tech stack can significantly improve your startup's ability to compete by improving your company’s scalability, enhance collaboration and boost performance. Indeed, it’s essential for every leader to stringently evaluate their tech stack to ensure each tool is well worth the investment of the team’s time and budget and avoid “technology sprawl” — one of the top ten challenges for businesses today, according to Gartner [1]. One way to help guide your decisions is by seeking the wisdom of industry leaders. To that end, the ICONIQ Growth team surveyed our portfolio companies [2] about their top-ranked tools, spend, and purchasing decisions.
To bolster our anecdotal data, we partnered with G2, an online software marketplace with over two million trusted reviews on 145,000+ software products and services. We focused on technology categories we believe are essential for fast-growing software companies to get right: product development; data management and security; go-to-market; and internal operations. The following is a summary of our findings. The full report is available here.
No One-Size-Fits-All Decisions
Your tech stack can vary significantly based on your company’s size, stage, and needs. For example, in our research we found some categories — such as marketing and sales enablement software — required substantial spending regardless of scale [3]. Others, such as machine learning/AI and workflow automation, did not see significant investment until a company reached critical scale.
We also discovered that remote companies require more tools in categories such as DevOps, sales operations, and project/workflow management than their in-office counterparts [4]. For example, sales acceleration-and-enablement tools such as Gong and Highspot are more popular with remote companies, which, due to physical distance between teams, likely demand more digital visibility into sales performance along with tools to assist in training employees who are farther afield.
Spending by Category
For earlier-stage companies, tools related to go-to-market tend to see the most investment in absolute dollars. Based on preliminary forecasts for 2023, the top categories expected to experience increased spending include BI/analytics, incident management, marketing automation, and internal operations. Conversely, later stage companies expect to increase spend in data warehouse and application monitoring platforms this year.
However, due to the convergence of factors like continued budget pressures driven by macroeconomic conditions, substantial spend in certain categories, and the increasing overlap across tools, we have already seen an increase in tool rationalization and category consolidation and expect those activities to accelerate in 2023.
Based on review data from G2, we identified 40 tools that grew exceptionally well in 2022. There are many factors that define leading tools; for the purpose of this exercise, we chose to map tools on a quadrant bounded by market reach and user experience to identify not only the tools that have reached significant scale and customer awareness, but also emerging leaders who have excelled across the various tenets of user satisfaction. Each tool was assigned a percentile score across the categories listed on the right and an aggregate weighted score was assigned to identify the top-ranked tools.
Not surprisingly, strong adoption from PLG motions and remote working tailwinds in 2022 drove the domination of revenue enablement and collaboration tools.
We were also struck by the finding that market reach does not necessarily translate to strong user experience; there are many tools which have gained broad market reach with relatively low NPS (net promoter scores). However, our high school statistics teacher would probably remind us that this counter-intuitive result is driven by the law of large numbers where scores have adjusted closer to the average as the number of users and reviews for these tools have increased on G2.
While it’s compelling to identify the fastest growing tools across all categories, we believe it’s equally interesting to find leaders by category to avoid comparing apples to oranges. So based on the same factors defined above, we identified the top 20 fastest growing tools within Product Development, Go-To-Market, Data and Security, and Internal Operations. Against the turbulent backdrop of the last year, a celebration of exceptional product leadership is perhaps even more noteworthy than other times. It’s inspiring to see the strategic foresight, laser focus on customer success, and exceptional growth these companies have displayed.
According to the reviews, a handful of qualities common across the top tools include:
- Ease-of-use and implementation
- Strong integration with supporting products
- Immediate or near-immediate ROI
- Exceptional support team
- Continuous product enhancements
For a deeper exploration of each category— including details on G2 ratings, commentary, and other emerging leaders in each space—check out the full report here. We recognize that this is a dynamic topic complicated by the nuances of each company’s journey and business needs, so we welcome you to reach out to the ICONIQ Growth Analytics team for more information on any of the categories or tools. We’d also love to learn how you are designing your tech stack informed by the key priorities and considerations you’re juggling in 2023.
Notes:
- Gartner 2023 CIO Agenda
- Full details on our methodology and data sources can be found on Page 6 of the Essential Tech Stack report. This analysis included survey responses from 19 ICONIQ Growth companies. For a full list of portfolio companies, please visit our website
- Full details on our methodology and data sources can be found on Page 6 of the Essential Tech Stack report.
- Full details on our methodology and data sources can be found on Page 6 of the Essential Tech Stack report. This analysis included survey responses from 19 ICONIQ Growth companies. For a full list of portfolio companies, please visit our website
Published:
January 31, 2023
