Dear SaaStr: How Does a B2B Startup Break Out in a Crowded Market?
Find one segment of the market to win in. Where you can build a 10x feature, and then a 10x solution, that solves a niche problem that customers will pay for.
Most B2B markets are crowded today. In fact, in many categories, in the Age of AI there are often 100x more competitors than just 24 months ago. Legal, support, etc. used to be sleepy B2B categories. With AI, they are on fire.
But the thing is:
- As Bigger B2B companies cross $100m in ARR, and then $1B in ARR, they stop focusing on smaller niches. They might give up on SMBs, or freemium, or higher churn segments. But you might be able to do well there.
- Many Bigger Cos aren’t vertical-specific. There can be room for a vendor focused just on e-commerce, or healthcare, or contact centers, or other large markets. For example, Mailchimp is very strong in general email but Klaviyo is worth $10B doing email for e-commerce. Gorgias did the same for contact center in e-commerce. Veeva built a pharma-specific CRM on top of Salesforce and that product took them all the way to IPO.
- Many Bigger Cos aren’t invested deeply in a particular platform. E.g., their Shopify or HubSpot integration might be weak. Or not even exist.
- Most Bigger Cos are 10+ years old. Do something important they don’t do well. Maybe they don’t integrate with newer vendors. Maybe they don’t do mobile as well, or social as well, or whatever. 10+ year old platforms are powerful. But they were architected for a different age.
Another way to look at it is any vendor sort of has to ignore any market segment that is < 10% of their revenues. It’s just immaterial.
And as so many B2B leaders now have crossed $1B-$10B+ in ARR, from Shopify to Figma to Zendesk to HubSpot to Shopify to Twilio and more … that leaves a $100m+ of customers each of them … just aren’t that focused on.
A bit more here:
