What are Modern Product & Data Companies

Modern Product & Data companies outcompeting legacy providers will lead to a wave of disruption in the business tech stack

Updated

Mar 23, 2025

Reading time

7 min

We believe the next decade of innovation will revolve around the business stack, as a suite of Modern Product & Data companies emerge offering 10x better user experiences (Product), or 10x greater business capabilities (Data), to disrupt the legacy market.

The majority of business tech stacks are in need of innovation. ~40% of German businesses still regularly use fax1, ~40% of compute is still on-prem (down from 60% in 2017)2 and 43% of banking systems worldwide are built using the 65+ year old COBOL language3 (this is not a rule of 40 joke).

By ‘tech stack’ we mean the core tools that businesses rely on to operate, innovate and scale, encompassing everything from databases to CRM’s, ERP’s, accounts receivable software, payment providers and beyond. Much of the innovation here has been historically driven by consumers - Dropbox famously started out as a consumer app before pivoting to enterprises. Evernote, Airtable, Slack and many other companies founded in the 2010’s followed this well trodden path of identifying consumer use cases and building enterprise products off the back of them. However, today we see deep innovation originating within enterprises, as AI reduces the barriers to entry and non-technical users can solve problems organically. Look no further than Klarna developing their own AI-system based on ChatGPT which replaced 700 full-time employees, or the rapid growth in companies like Lovable and Cursor empowering everyone to become a product builder.

Demographics + Technological progress = Catalysts for change

There are two fundamental secular growth trends at work here, shaping the modern business stack - demographics and technology.

Digitally native millennials and Gen-Z’s will account for more than 60% of the workforce by 20304. These generations have grown up with technology, smartphones, best-in-class consumer apps. They live their whole lives surrounded by high quality product experiences and demand the same at work as at home. Pen and paper is being replaced with web applications and the legacy tech stack is being forced to innovate. Feature parity is easier than ever to achieve and business tools have no excuse for not delivering experiences consumers love.

At the same time the unrelenting march of technological progress continues and businesses find themselves having to adopt new tech or die. In the past 10 years alone we’ve seen remarkable developments in cloud infrastructure, data management, API’s, and connectivity. Continuous cycles of innovation are pressuring enterprises to quickly adopt these new technologies in the hopes of driving business success. We view AI as a feature more than a platform, however the principles remain the same - every business needs to have AI on their roadmap and part of their core competencies, otherwise if not, they will be displaced by their competitors who do.

Modern Product Companies

Modern Product Companies offer 10x better user experiences than their legacy competitors.

The old adage goes ‘the customer is always right’ and for modern product companies the customer is sacred. These companies embody product excellence and a relentless pursuit of delivering the best possible experience to their users. Purchasing habits as a result are driven by user experience, and often made by non-technical users (Product managers, ops, sales etc.).

Examples of established Modern Product Companies are the likes of Atlassian, Ramp, Airtable, and Toast. Startups in this mould include the likes of Attio, Linear and Lovable (amongst a long list).

We identify Modern Product Companies as having several of these core four attributes:

Rapid time to value: Immediate value to the user, within minutes of onboarding
- E.g. Attio automatically syncs with your email and you are up and running within minutes with a fully functioning CRM system
Moments of magic: An ‘aha’ moment, where something that was previously considered impossible is made accessible to the user
- E.g. How Lovable enables non-technical users to develop programs and create code
Consumer grade UX: Polished, well designed, seamless UX
- E.g. Linear’s branding, onboarding and overall product experience is a delight and something most Apple designers would be proud to be associated with
Product Velocity: Constant iteration where the core product improves over time and customer feedback is embedded within the loop
- E.g. Ramp’s speed of execution and feature development helped them become one of the fastest SaaS companies ever to $100m of ARR (2 years)

Modern Data Companies

Modern Data Companies offer 10x greater capabilities than their legacy competitors.

At the other end of the spectrum Modern Product Companies are more focused on functional capabilities and how they can unlock productivity or efficiency gains for their customers through improving the tech stack. This is typically a result of directly or indirectly interfacing with core business data to enable their customers to keep up with the innovation cycle. Think Cloud, API, LLM’s - multiple technological breakthroughs over the past decade which level-up a businesses capabilities. Purchasing decisions are made by technical users (CTOs, developers etc.) and focus on the company's technological, product, or operational capabilities.

Examples of established Modern Data Companies are the likes of Snowflake, UIPath, Stripe and Vercel. Startups include the likes of ElevenLabs, SurrealDB, and Decagon (amongst a long list)..

Similarly we identify Modern Data Companies as having several of these attributes:

Data first approach: Helping users tap into their own latent data, understand their business and derive value. This also captures companies who generate or leverage proprietary datasets
- E.g. SurrealDB’s provides a multi-model database, enabling customers to manage multiple data types under one roof
Superior operational efficiency: Existing workflows, product features and organisational functions can be improved through adopting these tools
- E.g. Decagon’s AI agents are able to resolve 80-90% of customer support tickets, freeing up internal resources and improving efficiency
New capability enablement: A whole world of new opportunities can be accessed as a result of the underlying technological innovation
- E.g. ElevenLabs enables every business to generate human-like speech output which would have been costly and inaccessible to most users via legacy routes (voice actors)

Product and data converge for success

Most companies start out as either a product or data company, however the lines can be blurred and they often converge. Indeed, many of the most successful B2B startups have evolved to embody both aspects.

Taking each in turn - Modern Product Companies initially win adoption through business-user appeal and product accessibility. As they grow however, deeper technical sophistication is required to maintain competitive advantages pushing them to pursue attributes common in data companies. Similarly modern data companies initially gain traction through technical superiority and new business capabilities. However as they mature, they invest heavily into UX / brand to broaden adoption beyond purely technical audiences.

This duality is evidenced in many of the most recognised B2B SaaS/Fintech companies in the world. Two examples - Notion initially a Modern Product company recognised the need to deepen their technical capabilities and expanded into integrations, automations and AI-enabled features for further lock-in. Or Vercel, initially a Modern Data company evolved their product to include non-technical users features such as dashboards, guides and general usability improvements. Similar evolutions took place at Stripe (Data to Product), Shopify (Data to Product), Figma (Product to Data), Snowflake and many others, leading to our central hypothesis and investment focus at Defiant:

Companies who can master both aspects - product (experience) and data (capabilities) - have the ability to become category leaders defining their sector

In our prior roles we’ve been lucky to support several Modern Product & Data companies - from Marqeta and Forter to Pigment, Travelperk, Juni and more. Seeing these companies scale first hand has given us unique insights into the journey and helped formed our core beliefs. We hope to use to support many more founders building in this space in the years to come and ask any reading this and feeling resonance to please get in touch.

Footnotes

Bitcom.org - Company Digitisation report, 2024

Synergy Research Group - On-Premise Data Center Capacity Being Increasingly Dwarfed by Hyperscalers and Colocation Companies, July 2023

Importance and Application of COBOL in Banking Sectors. International Journal of Advanced Research in Science, Communication and Technology (IJARSCT). June 2022

US Bureau of Labor Statistics