Attack on Excel: 3 startups coming for the spreadsheet throne
I have a frustrating childhood memory of playing Pokemon Red on my flea market GameBoy Advance at 5am. Right after you start the game, thereâs the Viridian Forest. I encountered lots of cool bug type Pokemonâand one of the hardest challenges to 7 year-old Finnâs resilience:
Metapod and Kakuna are Pokemon whose only move is Harden, which ups their defense, making them take less and less damage from my Charmanderâs (the correct starter choice, sue me) only offensive move, Tackle. I had to tackle them, over and over and over and over again, barely chipping away at their seemingly infinite health bar.
Thatâs what itâs like trying to disrupt Excel. Excel is the Metapod of software: No amount of SaaS startups, venture funding or disruption seems to dent Excelâs dominance. It sticks around with its 750 million users in tow, impossible to beat into submission.
This is happening even while much of Microsoft Office has effectively been disrupted. I canât remember the last time someone sent me a .docx or .pptx file. Sure, much of this has moved to Office 365, but the alternatives to Word & PowerPoint seem to have a better foothold in the market than Excel alternatives. Excel seems to shake off every revolution in business software.
If you widen your perspective outside of tech companies, Excel is even more dominant. So many businesses exist on the back of a giant Excel file no one understands, takes 5 minutes to open and was created by a guy called Jerry who quit 7 years ago.
This dynamic has turned Excel as a reference point for startups: Want to build a SaaS app? Find something people build complicated Excel files for, then build a SaaS app that makes that easier. This has created enormous enterprise value:
This graphic is a few years old, so you could add many more. But this unbundling of Excel has also created a problem: So. Many. Dashboards. If you work in a product/growth function, you know what itâs like to jump between 7 (often mediocre) dashboards just to write a 500 word memo.
Itâs clear that Jerryâs master monster spreadsheet that takes minutes to open isnât optimal. But itâs also clear that spreadsheets arenât going anywhere.
Today, weâre looking at 2 startups doing exactly that. To start, weâll analyze Excel as a product, then weâll look at how theyâre aiming to revolutionize the spreadsheet. Letâs go.
(Note: Most of these articles ignore the bundling economics of being included in Microsoft's Office 365 suite, which gives it a enormous distribution and pricing advantages. In keeping with the tradition, I'll also ignore it. That's not because I'm unaware of it, but because it goes beyond the scope of this article, which is focused on products and their users specifically.)
Why Excel dominates
Iâm not breaking any new ground here. Writing about Excel is its own little genre. Tom Tunguzâs The Unbundling of Excel, Ross Simmondâs The SaaS Opportunity of Unbundling Excel and, more recently, Excel never dies.
These are great articles and I wonât repackage their conclusions. They can be summarized as: Excel is undergoing a decades-long unbundling.
But few have analyzed Excel through a product lens. So letâs do that.
Spreadsheetâs jobs to be done
At its core, spreadsheet software does four things:
- Data input
- Data storage
- Data manipulation
- Data display
Excel does all of these: It lets you enter data into cells, stores it in an .xslx file, lets you set up simple to complex calculations and displays the results either as a spreadsheet or as basic charts.
But features arenât jobs to be done. If youâre a product manager, the job to be done of a given spreadsheet might be to share your productâs good performance with your manager.
Because you can kinda-sorta do anything with Excel, this means that its jobs to be done are basically infinite.
Excel is so wide
Since most product analysis starts with jobs to be done, letâs start there. In the user assistance space, use cases are limited. Nobodyâs using in-app messaging for project management. Excel is the opposite. Its use cases are practically infinite.
You can use Excel for inventory management, financial planning, marketing analytics, project management, CRM, calorie counting, wedding planning⌠you name it!
While I suspect few are using Excel for calorie counting nowadays, this makes it hard to call yourself an âExcel alternativeâ without just building an Excel copy with fewer functions.
People like Excel
The typical SaaS startup goes something like this: Find an incumbent product disliked by its users (or at least a segment of its users). Build an alternative that serves those usersâ needs better.
At Command AI, weâre trying to disrupt the digital adoption space with user assistance. We look at what users dislike (annoying pop-ups, useless guidance) and how that affects companies (lower retention, activation, engagement).
So weâre building something better for users and companies. This is based on understanding jobs to be done: Once we know what people want to do, we can design a solution to cater to those needs.
But people like Excel. Check out this G2 grid:
This is also true anecdotally. People I know in finance/consulting donât see Excel as a sclerotic incumbentâs tool forced upon them by their employer. They see Excel as a great tool for their job.
Many incumbents dominate because theyâre bad. But some incumbents dominate because theyâre good.
Thatâs one part of why itâs hard to disrupt Excelâmost of its core users donât want an alternative.
Excel is higher stakes
Excelâs use cases are usually higher stakes than those of Word and PowerPoint.
Getting something wrong in a press release (Word) or missing a bullet in a deck (PowerPoint) is a temporary embarrassment. Getting your companyâs financial model wrong can mean permanent bankruptcy.
This makes switching from Excel feel riskyâwill the 5 dependencies between different formulas hold if I switch vendors (especially when that vendor is a startup)? Compare that to text processing: You can paste a Word document into Notion and know the content is the same.
Weâve seen the same at Command AI. Early on, many prospects liked our product, but didnât want something as crucial as onboarding to be provided by a young startup. (This has gotten much easier to handle as weâve grown and got more proofpoints like customer logos, SOC 2 status, etc.)
But this is just a subset of the fact that Excel has higher switching costs.
Why Excelâs switching costs are high
As mentioned before, Excel does a lot of things. It stores your data and houses complex calculations with interdependencies. Those files can become practically impossible to replace. This creates switching costs.
Note: Switching costs are a competitive advantage described by Hamilton Helmer. They describe how hard it is to switch from a product to a competitor. To-do list apps have notoriously low switching costs (just finish your list and switch). Infrastructure has high switching costs because switching infra means rebuilding your entire product.
Because you can build almost anything in Excel, this isnât true for all Excel use cases. You could use Excel as a to-do list, which gives it low switching costs.
Switching costs increase retention, but also have a downside:
Switching costs as an Achilles heel
High switching costs make product categories in slow motion. Even dissatisfied users stick around, so markets move slowly. When cohorts stick with your product for years (for better or worse), they wonât switch within weeks.
But if a cohort prefers the upstartâs alternative, it means theyâll use that product forever. This undermines a strong market position over the long run. Old cohorts might be cash cows until they retire. But without new cohorts, a product can look like landline phones: The old generation never stops using them, but the decline is unstoppable.
As long as new investment bankers are still trained on Excel for 80 hours a week, itâs probably fine. If that changes, Excel could be in trouble.
The fact that bankers are my go-to example for Excel users is a sign of thisâExcel is no longer the standard for startupsâ calculations (weâll look at some replacing it).
Excel has no opinion
If Carta miscalculated an investorâs equity, you could complain about it on Twitter and squeeze an apology out of their marketing team. If you tweeted at Microsoft about your homegrown Excel sheetâs miscalculations, youâd be ridiculed until you apologize.
Excel is the antithesis to what Linear calls âopinionated softwareâ. Excel doesnât care what you build. It spits out the result according to your input. This makes Excel look more like a programming language than an app: If you have a data dump, a table of calculations and a page with visualizations, thatâs a database, backend and frontend.
Microsoft has no idea (and doesnât care) what people build with Excel. This positions it similar to Figma: You can build anything, so itâs hard to replace.
When your users realize âOh I can just use this tool I already knowâ, retention and engagement increase.
But itâs precisely this market position that startups exploit.
The startups coming for Excel
Excel has infinite potential use cases, but isnât perfectly suited for most of them. Thatâs why âthe unbundling of Excelâ creates so much enterprise value: Excel is a passable to-do list, but not as good as a tool specifically for that purpose.
This is classic disruption theory. From The Product of Lenny:
Clayton Christensenâs theory of disruptive innovation is simple:
Incumbents create âsustaining innovations,â which meet most peopleâs needs okay-ish. The incumbentâs scale advantages mean theyâll generally win against startups. Some people have higher standards the incumbent wonât meet. Thatâs because their scale makes the opportunity is too small to pursue. Startups can beat the incumbent by meeting that segmentâs needs better and then shooting past the incumbent.
Wherever Excel is okay, but not perfect, a purpose-built app can disrupt that specific Excel use case. Thatâs why Excel has already been effectively disrupted for B2C use cases (when was the last time you heard someone use an Excel sheet in their daily life?)
For B2B-B2C hybrids, this has happened in project management, to-do lists and so many other vectors. But no startup has succeeded in coming for the B2B spreadsheet itself, and most have stopped trying. But not all.
A few startupsâ products now argue that itâs not just some spreadsheet use cases that deserve disruption, but the spreadsheet itself. Letâs look at 3 of them through the lens of Excelâs core use cases: Data input, storage, manipulation and display.
(Note: I could writ a full essay on each product below. To keep this from becoming a novel, Iâve omitted numerous UX improvements and features that distinguish them from Excel.)
1. Equals: Internet-native Excel
Craft Ventures GP David Sacks described Equals as âwhat Excel would be if it were built todayâ. Itâs powerful and clearly caters to people who work with spreadsheets. Look at their home page messaging:
As a creative guy, I can assure you thereâs no spreadsheet Iâve always wanted. And I derive as much comfort from my spreadsheet as I do from stepping on Lego bricks.
Equalsâ positioning harkens back to the fact that Excel is mostly reduced to sophisticated B2B use cases. While the product is universal, it clearly aims at data, finance and operations teams.
Equals accomplishes Excelâs use cases differently:
- Data input: You can input data manually (like you would in Excel). But this is one of the core pain points of Excel users. Thatâs why the main way you get data into Equals is via integrations. The product manually integrates with analytics platforms, data warehouses and many others. Or, as they put it on their website: No more downloading CSVs or copying and pasting queries. Thank f$ck.
- Data storage: Dumping tons of data into a giant Excel spreadsheet slows the product down, which makes UX worse. Equals has an advantage here: It only imports the data it needs from connected sources. This improves the UX while still giving you full access to your data.
- Data manipulation: While Iâm not Excel power user, I imagine Equals at least has parity with Excel on formulas and other manipulation. Connecting disparate data sources does enhance manipulation by making data more composable: Without a tool as well-connected as Equals, itâs hard create formulas that incorporate both LinkedIn ad performance and Salesforce data.
- Data display: Excel can generate many different chartsâand Equals rivals its functionality. But Excel visualizations are somewhat more clunky and require opening the Excel file. Equals directly integrates with Slack, Email and Slides and can automatically share charts there.
This final point reveals that Equals understands an important truth about the spreadsheet category: Spreadsheets do these four things, but they affect more. Even the best dashboard is pointless when itâs not distributed and doesnât drive decisions.
Thatâs ultimately where businesses derive value from data: In improved strategic decision-making and execution.
2. Rows: Work better with numbers
If Equals is a spreadsheet for data, finance and ops professionals, Rows is for teamsâno matter how sophisticated they are.
- Data input: Rows also integrates with various data providers, but also offers the RowsX Chrome extension, which lets you add data from any website (e.g. a Y Combinator search) and directly turn it into a spreadsheet. This enables teams to work with public data they never had because itâs so hard to source. Here's an example:
- Data storage: The integrations give Equals the same advantage as Equals: They provide access to all the data without the responsibility of storing all the data. But RowsX offers an extra advantage: RowsX data is hard to obtain, so Rows gains an advantage in making it easy to store that data (which is unlikely to be so much that it slows the whole app down).
- Data manipulation: The benefits here are similar to Equalsâ, but Rows seems to cater slightly more to sophisticated users by offering simple wizards for complex calculations. This means power users feel at home without alienating people who arenât Excel wizards.
- Data display: You can embed live Rows visualizations anywhere by simply posting a link. This makes it easy to share reports with your team without having to manually update them or version-control your screenshots.
Rowsâ product vision seems to argue that Excelâs complex use cases made spreadsheets inaccessible to many segmentsâeven when a good spreadsheet would create massive value for them.
3. Causal: Financial planning as a beachhead
Causal takes a different approach. Instead of building general-purpose spreadsheets from the get-go, their product is a point solution for financial planning. This is an astute strategy: Causal is starting with Excelâs power usersâfinance and operations professionals. In contrast to Rows and Equals, Causal is opinionated and spells out specific use cases.
This makes sense: As discussed previously, most of Excelâs non-finance/modeling use cases are already disrupted.
While the input-storage-manipulation-display model fails us here, I wanted to include Causal because theyâre taking a different approach that could lead to the same outcome.
This means their initial use case is that with the highest switching costs. It attacks Excel where itâs most entrenched. Gaining these users is hard, but has two advantages:
- It offers the highest rewards: Switching costs and a high-stakes use case make this the most valuable segment and implies a high willingness to pay.
- It front-loads effort: Building sophisticated use cases is hard. If you were to bolt on these sophisticated use cases later requires long lead times for something uncertain.
In Crossing The Chasm jargon, this would be a âbeachhead segmentâ from which Causal can expand. This strategy is similar to PayPal starting with eBay power sellers before becoming a universal payments provider.
Itâs easy to imagine Causal expanding to other use cases within companies and replacing them that way, becoming a more universal spreadsheet over time.
The world after Excel
All of these startups differ from Excel in a major way: Theyâre dispensing with being a crude programming language and are âjustâ **spreadsheets.
Rows and Equals are decidedly not data storage platforms. They unify data from different sources and let you turn it into spreadsheetsâincluding mixing data. Theyâre not replacing Excel, but creating a universal custom dashboard.
This turns them into a single source of truthâexactly what Excel became, but without all the things we donât need anymore.
Take marketing analytics as an example. The current world looks like this:
In a post-Excel-disruption world, that might look like this:
If this strategy succeeds, this would make novel spreadsheet software a complement to many SaaS products: Users can dispense with dozens of dashboards while software companies can skip building visualization and dashboard features.
This is similar to something we pursue at Command AI: We want to build a universal interface layer, at least for whatâs standardized across software. This creates a net benefit for everyone involved. Users have a great experience with software tools. Software companies donât have to spend years building great UX. And we get ever more data to build ever better interfaces.
Can this post-Excel model work? The biggest question is whether companies are willing to make user-generated data available via API. While the software world becomes more and more interconnected, itâs easy to imagine a company restricting access to the data its users generate.
Not having to build visualization/analytics is great for some companies, but it could also be risky: If users build nonsensical spreadsheets and get bad results from their data incorrectly, that might mean they incorrectly conclude they need to cancel one of the products producing that data.
This is where apps like Causal have an advantage: When users have to build a specific use case, theyâre less likely to mess it up.
But can they cross the chasm?
These startups are gaining traction, mostly within tech. But being a startup with traction isnât enough to disrupt something as massive as Microsoft Excel.
To become a billion-dollar success usually requires going mainstream, you need to cross into the mainstream, which requires entirely different skills than selling to other startups.
Itâs great if a trendy startup uses Equals for their spreadsheets. But disrupting Excel means becoming the default for HVAC companies in Idaho, accountants in Bangalore and dentists in Frankfurt.
In the tech industry, we have the resources and interests in new and elegant solutions. Weâre genuinely interested in new software. Most people arenât. They view software like we view hammers, buzzsaws and garlic presses: Tools to get something done.
Both Rows and Equals have an advantage here: Their core UI patterns mirror Excelâsârows, columns, formulas.
Small businesses donât have 7 data sources they want to look at more efficiently. But they do want an overview over their business. And even small, local businesses are using more and more SaaS tools: Squarespace, Quickbooks, etc.
If Equals/Rows can make it easy to become that single source of truth, these cloud-native spreadsheets might succeed in becoming the new default.
Will this kill Excel?
Predicting the death of Excel is like predicting the death of email: An article about it goes viral, people become more and more certain itâll happen⌠and then it doesnât.
Microsoft Office is still the standard in many companies big and small. Hordes of banking interns and junior consultants spend 80 hours a week in Excel (maybe hoping to compete in Excel as an eSport).
Yet, like the cocoon Pokemon in Viridian Forest, each little tackle wears them down. And so does the SaaS industry chip away at Excelâs dominance. With each tool better suited for a certain task, thereâs one less market segment defaulting to Excel.
My guess is that what the internet is doing to most incumbents will happen to Excel: It moves to the extremes. Those with super simple needs (e.g freelancers) will use Excel, as will those with incredibly sophisticated needs (e.g. financial analysts).
If startups start in a niche before expanding to fill ever more space, Excel is a reverse startup: Starting as the default for everything and retreating into ever smaller niches.
Excel wonât die anytime soon. But itâs also clearly a software of the previous generation, built on the primitives of relatively small, locally hosted datasets, single player usage and on-device installation. Microsoft has remedied this to an extent (e.g. by making MS Office available in the cloud), but these foundations are still in Excelâs âgeneticsâ. Can those genetics evolve enough for a cloud-native software landscape with big data? Weâll see.