Both sides of cloud: more standardized tools and more diverse data analytics

Abstract

What is the impact of cloud platform adoption on startups’ differentiation strategies? Despite the growing trend of accessing IT from a cloud platform, little is known about how this early-stage resource acquisition decision affects startups’ technology adoption, technological differentiation, and performance. Using panel data on app-developing startups’ web technology adoption, I find that startups using cloud platforms typically adopt more standardized development tools. Moreover, using cloud-based IT platforms and more standardized tools reduces time spent developing tools, freeing up time for startups to cultivate more diverse data analytics capabilities. When paired with fundraising data, my findings paint a picture of high-performing digital startups as standardizing development tools to remedy time-consuming fit issues (i.e., to reduce technology interdependencies and increase compatibility with the platform) and differentiating their startup with more diverse data resources.

Keywords: Data, Startups, Innovation, Technology, Cloud, Competition

JEL Classification: O30