The #1 Biggest Issue for SaaS Startups In The End
When I look across my investment portfolio for past 11 years , the #1 issue I think isn’t pricing, or TAM, or making a terrible mishire, or competition.
Those all matter, but the best founders fight through them.
No the #1 issue ends up being waiting too long to truly go multi-product.
No matter what you do, if you are too slow here, growth stalls. ?I’m seeing all across my investments that are 5, 8, 10, 12+ years out. ?That’s the one that ends up slowing growth. ?They’re not truly multi-product. ?They don’t truly have 2 or more products that are each large, and each sell ideally to different buyers or at least sell into very different, distinct budgets. ?Otherwise, you often end up with just add-ons, which are great but not truly second products. ?Add-ons don’t on their own expand the number of customers you serve, not really.
Parker Conrad, founder CEO at Rippling, has done a great job including at SaaStr Europa talking about building compound startups.
In an ideal world, many of us would do just that. But he’s also clear and honest how expensive his approach is. We can’t all be Rippling.
But what I think all of us probably have to do is make a Clear and Big Second product Bet earlier than planned.
An experiment or two helps, but it’s not enough. What I mean is going all-in on a Big Second Product that doubles your market or more.
Not in Year 1 :). But almost always earlier than planned.
And for most of us, that Second Big Product has to be even bigger than the First. This makes it even harder. Because if it isn’t, the first one just keeps growing even bigger.
领英推荐
Look at HubSpot. CRM is probably bigger than Marketing now (HubSpot doesn’t break it out anymore). If not, it will be soon. ?And HubSpot is still growing its new customer count > 20% at $2.5B in ARR.
They started making that CRM bet way back in 2013 or so, maybe earlier.
If nothing else, the minute you start to feel growth slow due to market penetration — start really getting that Second Act, that Second Big Product going. ?
Even though it’s often the hardest time of all to do it, because the First Product still needs so much attention. ?But that’s the job. ?No one said it was easy.
In the enterprise, it might be $50m-$100m ARR. ?With SMBs, it could be much earlier, even $20m ARR. ?It will vary. ?But you’ll know once things start to scale … and then, once things start to slow just a smidge due to crossing double digits market share in your core TAM.
Again, this is hard. ?But in the end, nothing in SaaS is really more sad than finally getting to $50m, $100m, $200m ARR … which is so rare and hard … and then finding out growth has slowed down not because the product wasn’t great. ?But only because you just have one of them. ?It then takes you years and years to pull out of that. ?If you really can at all.
More here:
consultants any type work other company's & office admin, HR, account Executive & purchase and supply chain & Projects
3 周Interesting very nice ??
Solo is sales engagement tech for anyone. Test drive it for 60 days free sign up at gtmsolo.com. You can be making calls and sending emails in seconds.
1 个月What do SaaS companies feel they don’t have to diversify? I’ve seen this on the inside, company is rapidly dying and diversifying isn’t even a whisper. Maybe the way these companies are funded prevents them from thinking outside of the box.
Really good post, totally agree. Painful at first but so very important. We are into our third product already. What happens is that you get 10x the amount of new product ideas and you increase your TAM and secure long time growth at the same time. The bigger problem you solve, the more relevant you become.
Building content machines that get attention | Founder @ Narrativ
1 个月Interesting. I would imagine in depends on how you approach building and your goals. If you're bootsrapping and happy to cash flow, not looking to sell for hundreds of millions, I'm not sure this model works well. But if you're on the VC wheel, very applicable
Daily Tips from a Business Lawyer | ?? IT, SaaS, and Fintech | Building My Legal Firm | Sharing My Learnings from 400+ Successful Projects (And Counting)
1 个月Thanks a bunch for sharing this!