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The rise of the SMB SaaS solution

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Now the math gets interesting:

To build a $100m business on a $5 a month freemium tool, you need 2,000,000 paying customers.  Congrats to DropBox and SurveyMonkey.  But who else is pulling this off?  Not too many.

To build a $100m business selling to SMBs at $300 a month, you need ~25,000 paying SMB customers.  A lot.  But achievable.  If you dominate a large vertical, especially.

In fact, it’s easy to see, 5-7 years down the road — 15-20 $100m+ ARR winners here.  All selling verticalized solutions to SMBs.  It’s, finally, time.

The Rise of the SMB SaaS Solution.

via The Next Wave of SMB SaaS: True Solutions. Priced as Such. | saastr.

Written by John Gannon

July 7, 2014 at 3:03 pm

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Amen!

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Using techniques perfected by consumer web companies, a generation of enterprise IT companies will emerge that deliver a vastly superior user experience to IT professionals and employees alike. Improvements in ease of use will liberate employs from terrible software, server-side software development will increase the pace of product improvements and lower support costs, and the self-service model will change the economics of enterprise IT sales forever. Google’s success is as much about AdWords offering advertising services to the SMB segment as it is about serving consumers search services.

via Self-Service Nation: Why Targeting Small Business Is Good Business.

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Written by John Gannon

June 29, 2009 at 10:26 am

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Why Do SaaS Companies Lose Money Hand Over Fist?

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It seems pretty clear these (Salesforce.com, SuccessFactors) SaaS companies could be just as profitable as SAP if they were prepared to dial back significantly on their growth. SaaS companies spend money hand over fist because they’re engaged in a land grab. The big players like SAP are extremely slow getting to SaaS for various reasons. As long as these companies can grow like this, they should keep investing heavily in it. The likelihood an on-prem vendor will dig these customers back out again seems very low. Customers being taken this way are probably lost for good to the SAP’s of the world.

(excerpted from Smoothspan blog post)

Written by John Gannon

May 19, 2009 at 4:03 pm

SaaS squeezes the SI ecosystem

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The SaaS model squeezes the SI ecosystem. The normal meat and potatoes business around just getting on-premises software installed is greatly reduced. The business of just keeping the lights on is almost non-existent for SaaS. Yet SI’s have a lot to bring to the table. A good SI often understands the Domain, its Best Practices, and the key Business Processes better even than the software vendor. Having access to a SaaS platform makes it possible for the SI to turn that valuable knowledge into product which can then be sold. That’s why having a platform on which to do that is so important to them.

– from the SmoothSpan blog post ‘A Vision for Oracle’s Cloud Platform

Written by John Gannon

April 30, 2009 at 1:55 pm

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