Last night I read “The Next Wave of SMB SaaS: True Solutions. Priced as Such.“.
I encourage you to read the full article, but I’ll attempt to summarise it with two snippets
Get just 500 Large Enterprises to spend $250,000 a year to solve a large problem … and that’s a $125,000,000 business and an IPO. $250,000 is nothing in the Enterprise — it’s less than the cost of one person, fully burdened. So that’s where the money has been the past few years in SaaS 2.0.
So far so good.
But finally, it’s changing. […]
What I’ve seen over the past 10 months or so is over a dozen truly world-class next-generation SaaS start-ups that have, finally, convinced small businesses in specific verticals to pay $300 a month or more for a true solution to truly run their small enterprise on.
And that’s the part I have an issue with.
There’s an interesting distinction between “tools” and “solutions” in Jasons post. My reading is that a tool is something like Xero or Zendesk – solving a single(ish) specific need. Where as a solution is all-encompassing, covering everything the business needs.
I don’t know what “dozen or so” products he is referring to, but I don’t see how any solution attempting to do everything can cover accounting half as well as Xero do, or helpdesk half as well as Zendesk do.
One of the reasons KashFlow didn’t branch out from accounting was that we didn’t think we could do CRM/Helpdesk/HR/Whatever better that the companies that were already laser-focused on those specific business areas – at least not without losing the focus on having a damn good accounting product.
We’d rather have them choose us as the best accounting product and select from the best of breed for HR/Payroll/Helpdesk – ideally from within the ecosystem.
You can have breadth or depth – but not both.
I *do* think we’ll see more IPOs of SaaS companies serving SMBs – but their $125,000,000+ revenues will come from over half a million customers and an ARPU of < $300 (Xero are halfway there already). They’ll be “tools” not “solutions”. And they wont have an army of sales people calling CIOs, they’ll have a website and great marketing.