There’s been a tremendous amount of noise on low-code and no-code the past few months. At this point it can be hard to tell low/no-code products apart from just regular software. Regardless, we’re big believers in this trend, so we thought we’d share a simple framework we use to help us better understand the overall market.
There are a bunch of interesting pieces about why low/no-code exists and how it fits into the future of software. It boils down to three trends:
- the workplace has been digitized, we’re living in a cloud and API world;
- a new generation of professionals is accustomed to using software for everything;
- we don’t have enough software engineers (and, in turn, enough software).
Low/no-code products address this gap by creating products that are flexible and allow for more customization.
To be clear, this isn’t a new thing. There have been multiple waves of these types of products, most recently with companies like Appian, Outsystems, and Mendix. They got to some reasonable outcomes, but nothing earth shattering. So this new wave needs to be materially better than the last by either opening up new markets or building much better products.
A quick note on the terms no-code and low-code. From a functionality perspective, the two terms are not distinct so much as ends of a spectrum. In practice, the real difference comes down to how a company wants to market itself. Products aimed at devs often market themselves as low-code and products aimed at business users are more likely no-code. The lines continue to blur as more companies broaden their appetites to support both user types.
The User x Use Case Framework for No-Code and Low-Code
We look at the developing low-code/no-code market along two main dimensions. First, the type of user the platform targets, broadly either developers or (non-technical) business users. Second, the target audience for the products built on these platforms, broadly internal users (employees) or external users (customers).
Structuring the market this way helps simplify this world and gives us the following matrix:
Business Users & External Use Cases. These products are largely focused on enabling a new persona to create the customer-facing applications that required devs before.Companies like Webflow, Bubble, Glide, Softr, Stacker, and Airkit allow the non-technical to build websites, mobile apps, onboarding flows, and so forth. This quadrant is where we see a lot of passion economy folks, solopreneurs, and the like. There are horizontal products (e.g., website builders), functionality-specific solutions (e.g., voice and chat), and vertical products (e.g., onboarding for financial services).
Advice to founders: While there’s a lot of potential here, many of these categories are newer markets. Founders need to ask themselves how many commercially successful creators can exist in that category? Your customers’ success will be your success, so it’s all dependent on how many customers you can help become successful on your platform. And as your early customers grow, they’ll want to customize more; to prevent them from churning, plan on balancing ease of use with power on the platform.
Business Users & Internal Use Cases. This is also a newer market with several names (e.g., citizen developers), but these products all serve a similar market: they enable non-technical/semi-technical folks to build workflows and automations. Companies like Clay, Parabola, Alloy, Actiondesk, Causal, and Tonkean allow these users to turn what was previously manual work in Excel into automated and structured workflows. Most of the startups here are horizontal tools today but, over time, there will be a section in this quadrant for each individual function (e.g., sales, support, etc). I’ve purposely left out RPA, process discovery, and the like as it’s a large enough category to warrant its own write-up.
Advice to founders: This is a really exciting area and there’s tons of opportunity here with the spreadsheet getting unbundled, Microsoft Office getting rebuilt, and previously unstructured processes getting codified and automated. The surface area is quite large and startups have a chance to make a big impact if done right. But many companies here will struggle to find the right use case to break in as the scope of the product is too broad. Founders have to remember to sell narrow but build wide: find the first markets where a use case really resonates, focus messaging, onboarding, and product on that one thing, and then expand from there.
Dev Users & Internal Use Cases. The bottom left is where we see a lot of the legacy players still active. These products help developers build internal tools better by making creation and maintenance much easier. Companies like Retool and Turbo Systems help their customers build easy-to-use software that fits custom workflows while syncing data back to (sometimes old) internal systems. This market has historically been dominated by big legacy enterprise money but now also has a newer market of tech-enabled service companies utilizing these products to help automate internal processes.
Advice to founders: This is a really promising area to play within. The questions here are what slice of the market to focus on, what is the best product to build for that segment, and then how to reach those customers? The answers to these questions will dramatically differ for, say, a vertical field service use case where the product will be focused on mobile with esoteric features like barcode scanning versus a horizontal use case that may just be a web app with a broad swath of integrations.
Dev Users & External Use Cases. Here we see products that help developers ship products to customers faster by providing an entire function. There are incumbent platforms to build on top of (e.g., Shopify); new ways of building software like Budibase and Wasp; and products like Refinery that help make writing and deploying a feature faster. Narrow product approaches like Stripe or Checkr have been wildly successful but I’ve left them out of this for now as those are worthy of their own write up.
Advice to founders: Historically, horizontal products have had a tough time because developers are picky and making a product full-featured, extensible, and portable is a tough needle to thread. We’ve seen open source approaches resonate with developers to solve the portability issue. Either keep it simple and broad, or very narrow and highly opinionated.
More to Come in No-Code & Low-Code
There’s more to come in low/no-code. It enables a new type of user the chance to create, build, and work with software in a way that they haven’t been able to before. There’s huge potential both for companies and individuals to leverage these products to build new things. Get in touch if you’re working on anything in the area!
Chris Yin is a Principal at Scale. Reach him at chris@scalevp.com.
