Where are the opportunities for new SaaS ventures?

Almost four years ago, I wrote a post that argues that SaaS will eventually win over on-premise software. At the time, Larry Ellison, Oracle CEO, still argued that SaaS was a fad.

Now, in 2015, it’s clear that SaaS has won the “delivery”. What’s more, SaaS has also created new markets, penetrating customer segments for which an on-premise software solution was cost prohibitive in the past. Dozens if not hundreds of successful SaaS vendors are hitting the market and seem to be covering every single business need in every vertical.

Are there still opportunities for new SaaS ventures?

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Why you should NOT listen to successful entrepreneurs in successful companies?

Once in a while, I bump into some good-sounding advice from an entrepreneur who built a successful business. For example, I recently reencountered an old post by HubSpot CTO and Founder, Dharmesh Shah, titled Failure Is Not The Worst Outcome, Mediocrity Is (which spurred debate back then). Or, I recently read an interview with an entrepreneur arguing why employees’ after-hours activities are important to a company’s success.

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Why are SaaS (B2B) companies significantly different than B2C companies?

In the last few months, since I left my full-time position at Webcollage (and our acquirer, Answers), I’ve had the opportunity to work with many entrepreneurs and early-stage companies — both business-to-business (B2B) and business-to-consumer (B2C).

While B2B and B2C ventures share several areas of commonality (company and leadership values come to mind), it is interesting to notice deep areas commonly different between the two: all the way from the business perspective to the (somewhat surprisingly) technology perspective.

The recent write-up by Michael Eisenberg at Aleph VC highlights one of the key differences and eloquently explains why in many cases the product matters more in B2B companies. The write-up is written from the viewpoint of an Israeli VC (and hence references challenges in hiring B2B/SaaS executives) but the merit of the write-up is agnostic to geography.

See here: Israel’s Subscription Challenge.

Are small businesses doomed to fail, or can SaaS help?

According to the Bureau of Labor Statistics in the US, only 44% of small businesses successfully make it through four years of operation. One reason is that because of their size, small businesses cannot master the skills that larger organizations have (such as marketing, sales, service and technology). So, it should not be a surprise that they have a hard time competing in the marketplace.

One of the areas that has been a weak spot for small businesses is the use of technology in general and software in particular.

From a software vendor standpoint, small businesses were traditionally overlooked as a target market. In fact, in the 1990’s, common wisdom was that successful software vendors should focus on large enterprises, where the money resides, and apply the direct sales model, with a $100K+ price tag. The wisdom at the time was that smaller price tags did not justify a direct sales force, and required indirect selling. Selling through resellers, however, was and still is hard to crack. It’s hard to get resellers to commit to sell a product before it gets traction. And even later, it’s hard to educate resellers to sell a product proficiently.

From a small business point of view, buying software is—simply put–not easy. How can a small business be expected to have the skills to evaluate new software? How can they be expected to master how to operate the software? How can they be expected to integrate it with other software? And, when it comes to on-premise software, how can they afford to deploy and manage the software?

But then SaaS came along.

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Why Facebook was willing to pay $19b—and maybe more—to get WhatsApp on board?

In the last few days the acquisition of WhatsApp for a stunning sum of $19b was the most popular discussion topic in the tech business community.

The reaction to the acquisition cost ranged from criticism (like this Tumblr post suggesting that Iceland may be cheaper, at $14b) to thoughtful analysis of the economic value of WhatApp’s 450 million users (like this CNN Money article) or its SMS volume.

I believe most critics and analysts are missing the point.

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Product Excellence 2013 in Airport City, Israel

On Dec. 5 I plan to deliver a talk on managing product requirements in an agile environment. The talk is planned to cover practical aspects and discuss how we (at Webcollage) manage product requirements and product launch while delivering new software releases to Fortune 500 clients every two weeks. If you’re interested this topic, feel free to come over – take a look here: http://www.productexcellence.co.il/.

 

Answers Acquires SaaS Platform Webcollage

After almost 14 years since founding Webcollage, it is now public information that Webcollage was acquired by Answers (http://www.answers.com).

More information about the acquisition and some of the thoughts around this opportunity are available in this press release.

Without delving into the specific thoughts and opportunities in this merger, I would like to point out the potential in powerful combinations of B2B (SaaS) businesses and B2C (consumer web) businesses. As one example, LinkedIn, which is generally known as a “consumer” (or “personal”) business, generates its revenue by selling its services to (other) businesses (for recruiting and similar purposes). It thus leverages its consumer scale to generate revenue from businesses, essentially operating as a SaaS company.

Similarly, the combined Answers/Webcollage company will have a strong B2C arm with broad reach and strong advertisement-driven revenue (Answers.com is a Top 20 site in the US), alongside with a solid B2B platform and team (coming from our own Webcollage), and with many potential areas of cross-leverage.

More to come…