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How do B2B SaaS markets evolve with 10+ competitors?

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JASON LEMKIN

What you’ll generally find, if you peek under the surface, is that where there are most than a handful of successful competitors — is specialization.

Most SaaS markets are not “marketplaces” which can favor monopolies of some sort. Instead, the combination of (x) the power of brands and (y) the power of rich functionality built up over years often create oligopolies in B2B. Only a handful of folks can invest the $10m-$20m+ or more a year to keep up with the feature and brand arms race, but once a few cross that line, they can’t be killed.

More here: Why Competition Is So Bitter in SaaS: Oligopolies and Dominant…

But as a market gets big, two things then happen:

  • There’s room at the bottom. Often, the leaders abandon the bottom of the market, leaving room for cheaper editions. This is a type of specialization for new entrants. More here: Don’t Confuse Room at the Bottom with Disruption
  • Markets get verticalized and segment-atized. Veeva CRM ($6b+ market cap!) for years mostly ran on Salesforce’s Force.com platform. But it was specialized CRM for pharma. The specialization of features and support necessary wasn’t something Salesforce.com the app was optimized around.

You probably do need to be #1 or #2 in your market to win and make any real money.

But as a market grows and expands, you can be #1 or #2 in a large segment of the market. And still win big.

So maybe instead of figuring out how to be #11 in a crowded market. Figure our how to own your niche in that market. How to be 10x better at something that matters in the market. Then it will be OK, for a while, if you aren’t even 1x better at all the rest of the functionality in your app.

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Published on April 17, 2017
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