Q: Do successful SaaS companies have “transformational” opportunities beyond selling more and more of their core product?
Many in SaaS do and have. And the ones that have seem to grow faster after $200m and $1b in ARR.,
As we see more and more SaaS companies cross $1b+ in ARR (wow!), Twilio being the latest, we see more and more adding new core products to their existing core products.
Twilio started with SMS. Now that’s just a piece of Twilio, and its 81%+ growth at $1b (double wow!) was fueled by its entry into email marketing by buying Sendgrid:
Salesforce just blew out its latest quarter, in large part on “inorganic” growth. But its original CRM / sales business is its slowest growing segment at just 13% now, decelerating from 17% last year. Its newer clouds are growing much faster though, fast enough to make up for the maturity in Sales:
(see the deceleration in Sales Cloud above YoY)
For Veeva, it’s Vault product, it’s #2 product, has become its engine of growth:
And fast forward to 2023, and Veeva expects its Vault product to be be far the larger one. By a 3:1 ratio:
Without new core products, Salesforce, Twilio and Veeva would not be the leaders they are today.
By contrast, Box and DropBox’s growth have both slowed dramatically. Both are wildly successful in absolute terms, but have not yet added significant additional products on the way to $1b in ARR.
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A related deep dive here: