Labforward: The move towards a platform economy

In 2013 we founded the company labfolder, a laboratory data management platform that created an intuitive and affordable space to record all lab findings. Now we are joining forces with the brainchild of Dominic and Julian, the amazing laboratory IoT solution company cubuslab, to create an incredible, all-encompassing digital toolbox for managing the laboratory. We announced the merger on May 22 which was covered in Labmate (Labfolder Acquires cubuslab and becomes Labforward) and in Laborpraxis (labfolder und cubuslab werden zu Labforward, German only) amongst other media.

For experts in the laboratory automation industry, our merger is probably easy to understand from a product point of view. Connecting an IoT platform (cubuslab) for laboratory devices as the source of most of the lab’s data with a data management platform (labfolder) makes a lot of sense.

However, the broader meaning of our move might not be so clear for folk in lab IT or lab automation, nor for industry outsiders.

To get a grip on the deeper implications of why two startups in a pretty conservative industry made such a bold move, you have to understand the evolutionary state of the laboratory supplier economy.

From tribe economy to an ever-present marketplace

The lab supplier industry is still largely dominated by a clan mindset, also known as tribalism. But what does that mean?

According to Wikipedia, tribalism is characterized by “a way of thinking or behaving in which people are loyal to their social group above all else”. Economically speaking, tribalism leads to hoarding resources and the overall pursuit of autarky. In tribal times, this made a lot of sense. A lonely group of prehistoric men had to be self-sufficient. Without plannable contact with other groups, all abilities and resources had to be bundled and controlled within the tribe.

Obviously, we’re not living in tribal times anymore, and in the last few decades, thanks to the internet, the world has become so connected that you could say everyone is in the same marketplace, especially when it comes to dealing with information. The more connected people are and the more time they spend in this marketplace, the more transparent the value, prices, supply, and demand become.

The platform economy is driven by the API economy

One interesting observation of this hyper-connected, ever-present marketplace is of the sellers that give things away for free. Of course, you might instantly think of Google who monetizes the traffic they get by selling ads. But that’s not what I mean. I mean the thousands of software products you can connect to that have interfaces you can build on top of. The seller is giving you the data for free, the only thing is, you have to build something out of it.

To illustrate the power of the platform or the API (application programming interface) economy, let me list three examples:

1. In Uber, you enter your location and destination and the driver will pick you up and take you to where you need to go. However, what appears to the end customer as a core feature of Uber, is actually based on Google maps technology. Isn’t it crazy to think that a giant as big as Uber is built on top of something else?
2. Trello is my productivity tool of choice, and one reason I love it is the many integrations it allows. For example, I’m using Google drive integration on a daily basis. Having the projects and tasks I manage in Trello connected to files and folders in Google Drive saves me time and lets me feel more organized and in control during busy startup days.
3. As do many others, our product and development team is using Atlassian Jira. It is seamlessly integrated with the helpdesk tool Freshdesk from Freshworks, making it easy for us to pass on user requests and reports from our support teams to our product teams. Actually, an integration to Jira was the top requirement for selecting a helpdesk tool!

What is the motivation for giving something away for free?

Of course, it’s the expectation that you will get something back. This motivation is multi-levelled:

1. You give something away because you have a clear platform business case. Going back to the example of Google Maps and Uber, the Google Maps API business model lets you build new products for free. However, when your application is getting more successful and you need to load more maps, you need to pay. Uber probably started with the free model to build its early business but are now paying millions to run their service on top of Google maps.
2. You give something away because it’s currently a side-product and you know that others have better capabilities in this area. Basically, you offer more options to your customers by promoting an integration to another more advanced solution as part of your own side-product. Those that are happy with what your side product has to offer can use it as is, and those that have more sophisticated needs can use the advanced product but still stay on your platform. Take Atlassian and Freshworks as an example. Atlassian offers its own helpdesk, Jira Service desk. But instead of cutting off the integration to Freshdesk, they’re promoting it! Atlassian’s helpdesk tool is a side product they aren’t focussing on it. Still, there are customers that are satisfied with its capabilities and don’t need Freshdesk. I guess another reason Atlassian is not ditching its support tool is that by having some in-house product capabilities in this area, it makes it easier to offer good interfaces to external helpdesk tools.
3. The supply for what you could give away is so high that you do it because everyone else is. Not doing so would harm your reputation. Trello isn’t the only productivity tool out there. In fact, there are hundreds. To stay on top, Trello has to offer interfaces and build integrations so that someone like me doesn’t turn to one of their competitors. If Trello wouldn’t offer a Google Drive integration, I would probably move to another productivity tool.

In any case, the effect of giving something away is that the value of your offering will increase or at the very least won’t decrease. Think of it this way, the more connections you allow others to build, the more your company is being connected to the entire marketplace. The more connections, the less likely you’re at risk to fail.

Why is the laboratory supplier industry different?

First of all, it is a niche market consisting of specialists. Almost every player on this market has a unique offering. There aren’t too many balance or NMR spectrometer manufacturers out there! You can’t just say “Hey, if you’re not giving me access to your data, I’ll ask someone else.” Often there’s no one else to ask!

Secondly, in the lab supplier market, data is much more critical. The main product of any lab is data. Therefore, if incorrect data from a balance is passed on to another player, or in the event that data is accidentally changed during the transfer from one player to another, the effect will be so dramatic for the end customer that everyone in the supply chain will be affected by the loss of trust. Most likely it’s not only a loss of trust you’d also be accused of not having validated the data at every transfer.

To summarize the challenges of the laboratory supplier industry to become a platform economy:

1. Being in a niche market with unique products makes it easier to close yourself off and there is no pressure by peers to make your data accessible.
2. Being more responsible across the entire supply chain makes it more difficult to give access to your data.

So… What does Labforward stand for?

We connect a laboratory data management platform to a laboratory device control platform, closing the gap between the desk of the researcher (where you do your data management) and the actual laboratory (where you do your experiments). We can now provide the best value in each area. In the long run, our goal is to help laboratories to improve their processes to help them “improve automation through automation”.

However, the actual emphasis here is on “we’re connecting platforms”, meaning that each of our platforms is open to connecting to others. It’s not a single, combined and closed off product we’re striving for. Labforward stands for keeping labfolder and cubuslab open to integration with others; other LIMS (Laboratory Information Management Systems), ELN (Electronic Lab Notebook) systems, as well as other device platforms, individual device control software, and scientific software.

It’s more about combining great teams which share the same philosophy than just combining two products. Dominic, Julian, and the entire cubuslab team are adding capabilities and skills in IoT and laboratory hardware that the labfolder team didn’t have. The labfolder team adds a lot of knowledge in larger scale SaaS (software as a service) software, individual product features such as user and group management, as well as expertise in digital marketing.

The merger and Labforward stand for a willingness to share capabilities so that we can profit from the innovation that is built around each of our solutions.

We know that there is a growing number of LabTech startups out there that soon will reach the critical mass for making the change from a “tribal mindset” to a “platform mindset”. Labfolder will be there to support them in making this change and to welcome them into a more open and connected laboratory marketplace.

Labforward stands for being a major driver in that change.