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Home SaaS News

About 70% of SaaS Public Companies Are New Versions of Existing Categories of Software (Updated)

admin by admin
June 10, 2023
in SaaS News


Top advantages to being a first mover:

– No roadmap
– Tiny market
– Customers aren’t sure
– Limited legitimacy
– Never budgeted
– VCs don’t get it
– Many VPs don’t get it
– Tiny TAM at first
– Seems minor to many
– Why wasn’t it already done if it’s so important

It’s great

— Jason ✨Be Kind✨ Lemkin  (@jasonlk) April 26, 2022

It seems like start-ups are all about innovation. And they are. But how innovative should you be as a founder? Should you do something brand new? Or just reinvent a huge, existing category?

  • Zoom reinvented WebEx, GoToMeeting, etc.
  • Slack reinvented 100 versions of chat, including Hipchat, Basecamp’s product, etc.
  • Salesforce reinvented CRM for the web, but the paradigm was as old as software can be.
  • Datadog reinvented observability and more for the Cloud, but New Relic and others were already darlings here.
  • We now have about 1,000 SaaS payroll apps, many of which are unicorns.  They are remixing things, but in one of the oldest categories there is.

Now that there are 100+ public SaaS companies and unicorns, we can finally answer a question — is it better to start a company that remakes an existing category, or that creates a new one?

Well, actually, maybe we can’t answer that question. But what we can say is that about 70% of public SaaS companies are applications that are new versions, new entrants, in well-established categories:

You can quibble with the New Category determination.  Yes, you can argue Box isn’t new, just Sharepoint redone.  DropBox, I think, there it’s harder to make that argument.

But in any event, it does show you that most of us are remaking existing, large categories of software.  Things change.  The rise of mobile + cloud + APIs allowed a lot of these unicorns to remake categories.

Still, it does suggest most innovation comes where money is already flowing.  Communications, security, and infrastructure.  Same stuff, just done better.

I guess we already knew that.

(note: an updated SaaStr post)





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