Basic split in tech strategy

The basic split in tech strategy is horizontal vs. vertical businesses.

If you work on infrastructure, you might be familiar with “horizontal vs. vertical scaling”. This is different. Here we are talking with respect to your customers.

Vertical business

If your business is designed from the ground up to serve a single industry or customer profile, you are a vertical business. Vertical businesses typically grow by offering more and more capabilities to serve the customers they have, despite these features existing as standalone offerings elsewhere. The goal is to be a “one stop shop”. User experience can be mindblowing when it is vertically integrated- but frustrating when limitations arise.

Horizontal business

If your business can be used by customers across any industry, you are a horizontal business. Horizontal businesses typically grow by reaching more and more kinds of customers, building any integrations required, or adding knobs and configs to accommodate their use case. The goal is to “do one thing well” and be the best in the world at it. Many “API Economy” developer tooling platforms are horizontal: Stripe, Auth0, Okta, and Twilio.

The battle between horizontal and vertical business

The battle between horizontal and vertical is timeless in the history of computing. Here is how Andy Grove, former CEO of Intel, described the shift in the computing industry over his career:

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