Shulou(Shulou.com)06/02 Report--

Salesforce's market capitalization exceeded $100 billion, and Slack's valuation exceeded $7 billion, which seems to make people feel that SaaS has become a tuyere, and anyone who stands on this tuyere can succeed, although it is not wrong to say so, especially in the United States where venture capital is prevalent. But in fact, most SaaS companies don't even make $1 million in revenue.

According to statistics, only 4% of SaaS companies have revenue of $1 million, and only 0.04% of companies have revenue of $10 million. As revenue increases, that number drops further, and it's fair to say that a SaaS company with millions of dollars in revenue is about as likely to win the lottery.

What does it take for a company to reach $1 million in revenue?

According to a 2018 survey by OpenView, there are an average of nine SaaS companies competing in each industry, up from two in 2013. So, a customer might want to evaluate nine different companies when they want to buy a product. So every time a customer wants to buy a product, nine different products are evaluated. There's plenty of room for a few big companies, but it's hard to say whether startups will succeed in the same way. That's why it's important to fit the market, especially in the early stages of a startup, and it's a priority if you want to get SaaS companies worth $1 million.

So, what does it mean to meet market demand? Simply put, your product fills a huge gap in the market, and you have to be the first or second provider in that market.

If you are in a bad market, even if you have a top product and a great team, you will not succeed. And market demand will be exploited through the first viable product. SaaS companies that want to achieve their $1 million goal should not over-pursue feature-rich, big, all-encompassing products. Instead, we should strive to quickly launch a product that closely matches market demand based on our own strengths.

Sana Commerce, a Rotterdam B2B business company, has such an experience. Tim Beyer, head of the company's North American division, said that its head office once covered all retail businesses in the early stage, and the business front was too long to affect the company's development. So Sana was forced to take a hard look at its business, eliminating a number of businesses that lacked core competencies, forming the business framework it has today and successfully reaching its goal of $1 million four years later.

What does it take to reach $10 million in revenue?

Every stage of growth has its challenges, and if you treat each stage with the same mindset, the company will not grow. If the company has found the right market and met its $1 million goal, and has bigger goals, chances are you are what Verne Harnish, author of Mastering The Rockefeller Habits, calls "Gazelle: A Small Company Experiencing Rapid Growth." This will be the most execution-oriented phase of the business growth process, and the most critical of these is the establishment of evaluation and decision-making processes.

At this stage, the company is particularly interested in good teams and the excellent solutions that these teams produce, but these solutions are likely to be inappropriate for the current company. As a fast-growing start-up, decision makers need to have the courage to execute the right solution and say no to the wrong "good solution." Successful SaaS CEOs are able to set their priorities and goals and focus on coordinating all that matters, including people, funding, and execution processes.

What problems will arise if we continue to expand?

After hitting the $10 million target, businesses are likely to aim for something higher-$50 million. At this stage, SaaS companies need to improve execution capabilities while expanding their products. Continuous product development is the key to keep products from being eliminated by the market, and diversified product portfolio can further enhance the market potential of enterprises.

To reach $50 million in revenue, companies need a team to support product and implementation. However, most companies do not realize or really invest in their own brands as a sign to attract talent, so talent development has become a bottleneck in their development strategies. Because the research and development of products cannot be separated from talent support, enterprises have to recruit excellent talents as quickly as possible at this time. This is not only a headache for enterprises, but also a higher price for not paying attention to them before.

In addition, Tencent Cloud Organization structures become very complex as companies expand internationally.

This complexity creates three fundamental obstacles: an inability to develop enough leaders; a lack of systems and infrastructure of the right size; and an inability to respond to market dynamics. If the 50 million goal is to be achieved, it is important to remove these obstacles.

Frustration and opportunity coexist, and every company needs to keep working hard. Even if you stand on the tuyere, you may not succeed. On the contrary, because you are a SaaS company, you will face more intense competition. Enterprises should look at each stage of growth from a development perspective, treat it as an opportunity, and use it as an opportunity to identify which are challenges and which are opportunities.

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