The most important characteristics for understanding SaaS products along different spectrums. B2B vs B2C, Enterprise vs SMB, and so on.
In mathematical terms, what are the basis vectors across the space of all SaaS products? E.g., what are the best ways of describing SaaS products that encapsulate the most information? You can think of these basis vectors as the most pertinent questions to ask if you were playing a game of 20 questions to guess SaaS products.
Whenever you’re thinking about SaaS, you should always make sure you understand how things fit across these common spectrums of classification.
This top-down approach that will give you a feel for how VCs view the SaaS landscape, but it’s also incredibly important for founders to understand and internalize.
Different types of SaaS products naturally require drastically different strategies, tactics, and resources, as they target different types of customers with a wide range of marketing, sales, and funding options.
So before diving into any one SaaS product, it’s extremely useful to understand what this landscape looks like, and how your choice of product will impact the strategy, tactics, and potential funding options available to you.
Together, they form a space of possible SaaS products where certain clusters like B2B EUSE Enterprise products are really attractive to traditional investors but aren’t generally as attractive to solopreneurs and Micro SaaS founders.
Note that these classifications generally aren't binary but rather a represent continuous spectrum that’s useful to think about in binary terms. So for instance, a product may not be 100% API or 100% GUI but may be 90% API and 10% GUI or vice-versa.
- selling to businesses vs selling to consumers
- pure developer APIs
- all backend, no frontend
- DX is an important differentiator
- UI-heavy products
- some backend, heavy frontend
- UX is an important differentiator
- Enterprise (traditional, top-down)
- larger price points
- longer sales cycles
- one-on-one sales
- SMB (or bottom-up enterprise)
- smaller price points
- typically self-serve
- Industry trend around smaller self-serve SaaS being used by individuals or groups within enterprise
- End User Software Engineering
- Multi User Software Engineering
- use cases involving multiple users
- workflows that make sense to re-use across many people
- Main Dish
- solving a necessity for buyer
- higher barrier to entry
- larger value prop
- Side Dish
- extensions or plugins to platforms
- lower barrier to entry
- smaller value prop
- Traditional SaaS
- focused on growth
- requires a larger team
- likely have a headquarters
- longer to get to MVP
- often selling to enterprise
- Micro SaaS
- generally not VC-compatible
- focused on profitability
- run by a very small team
- remote / location agnostic
- quicker to get to MVP
- often selling to SMBs, startups, and consumers
- "Decentralization of SaaS" is a huge industry trend
- Micro SaaS can sometimes transition to Traditional SaaS over time
- Traditional SaaS can sometimes transition to Micro SaaS over time
- VCs usually view this as a failure ⇒ lifestyle businesses
- solutions that work across a variety of industries
- specialized solutions for a single industry (like medical or automotive)