Dear SaaStr: Is a Big Market Really Better than a Niche Market? Why?

A big market is better than a small / niche market. This is the reason 70%+ of SaaS companies that IPO are just new versions of old, successful things:

About 70% of SaaS Unicorns Are New Versions of Existing Categories of Software | SaaStr

But … but …

  1. Small markets can grow into large markets if you change the market or there is otherwise disruption in the market. If that’s the case, it can be wonderful. A good example below in e-signatures.
  2. Small markets are often, though not always, less crowded. If that’s the case, sometimes starting there and then expanding into a larger market segment can work out well.
  3. A small segment of a large market is often where most of us start. That can be the best of both worlds, so long as each year you keep expanding the segment of the market you serve.

SaaS eSignature Market: From $1 Million in 2006 to $1 Billion in 2018 to $5 Billion in 2023 | SaaStr

Dear SaaStr: I’ve Been Asked to Take Over as CEO of a 1 Year Old Startup with 20 Employees. What Should I Expect?


Well, you have a daunting challenge, because the fact you ask the question shows you haven’t been through it before. 🙂

But you know, neither did any of us in some ways.

A couple of thoughts:

  • First, most of the folks at the <=20 employees phase will not be there “just for a job”. So you need to completely rethink how you manage them. They’re there for a variety of reasons, which can range from “Want to do a start-up” (whatever that means) and “Not working for the man” … to, often, wanting to be owners of what they do, and to at least some small extent, their destiny. All of these folks will leave over the coming months if you don’t continue to provide an environment that meets these goals. So learn why they are really there. Quickly.
  • Second, small start-up teams can smell incompetence, fakery, and lack of authenticity in about a nano-second. So you need to do two things. First, be honest about what you do and don’t know about the company today. And second, you need to be close to the top of the heap in one thing the company does to maintain respect. One of the best salespeople. One of the best engineers. The best product guy or marketing person. Or at least, the most successful person in the company to date based on your last gig (last co. acquired for $100m, was VP at Twitter, etc. Whatever). If you are none of these — the team will not respect a random hired gun at this stage.
  • Third, there will be turnover. It’s OK. Because of the prior reasons, you are going to lose some folks. Just accept it and try to identify them early. And realize you are going to have to spend a lot more time recruiting than you’d planned.

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