Linear #009: Beyond the Subscription, Ben Franklin's 13 Principle Framework, The Story of Slack
Linear #009: Beyond the Subscription, Ben Franklin's 13 Principle Framework, The Story of Slack
One vSaaS breakdown. One 'how-to'. One business story. In your inbox once a week!
Happy Sunday folks!
Another episode of the linear newsletter here.
Let’s dive in!
One Vertical SaaS Breakdown:
Beyond the Subscription
The era of solely building SaaS isn’t good enough anymore. When building a SaaS company, you must think about product opportunities beyond a typical SaaS Model such as:
InsureTech
FinTech
Commission based fees
Let’s go deeper:
For the last two decades, b2b technology businesses have mostly thought horizontally: add more software products to capture more revenue. Roadmap looks like this: Launch product A, charge $X per user, per month Launch product B, charge an additional $X per user, per month
Now, more and more technology businesses think about SaaS as simply an entry point, with a low cost, to ultimately add InsureTech, Fintech, or other offerings that can scale revenue exponentially.
Let’s look at a few examples:
Example #1 Climate Corporation
Know David Friegburg (@friedberg) from the All In Podcast? Of course you do, he’s a legend. David started Climate Corporation, a vertical SaaS business focused on farming technology.
Climate Corporation provided SaaS to farmers that helped them understand weather patterns to better estimate crop yields. As they achieved a critical mass of farmers on the platform, a HUGE unlock was adding an InsureTech capability. Now farmers could use their software to:
1) report to their insurance agency in a few clicks
2) automatically insure what they plant / harvest
3) get faster claim payments from their insurance agency
I estimate this drove A TON of revenue on top of their SaaS offering.
Example #2: Tithely A vertical SaaS for churches.
Tithely has taken the approach of providing SaaS tools for almost nothing, as long as end users use their FinTech / payments offering.
They charge $100/mo for their ENTIRE suite. And $0 for the “Giving Platform” (payments system). That’s a skin-in-the-game type of offering, where they just want you to commit to implementation. They likely lose $$$ on the software—BUT it basically serves as their CAC! 🙃
They require you to use their payments product to get the $100/month pricing . This is where they scale like crazy, by taking a big transaction fee ON EVERY donation/payment made to a particular church.
Example #3. ReUp Education
ReUp had a brilliant commission-based success model. They would ink SaaS deals with universities and then take commission on every student that dropped out that they were able to re-enroll. Taking a commission on a massive fee like tuition is big $$$
To build billion-dollar vertical SaaS companies, it is likely that you will need to add products and revenue models beyond traditional SaaS fees. This is why many companies are beginning to offer low cost SaaS tools as a way to just get in the door.
We haven’t seen a lot of examples of this, as we’re still in the very early days of vSaaS. There are only a few public companies we can study via their S-1’s: Toast and Procore are two of them.
If you’re building in vSaaS, think about TRIPLE THREAT businesses:
Is there a FinTech opportunity?
Is there an InsureTech opportunity?
Is there a Commission opportunity?
If you’ve got two, you’ve got yourself a big company All three, and it can be a billion dollar biz.
One ‘How To’:
Ben Franklin’s 13 Principle Framework & How It Can Change Your Life
One Biz Story:
The Story of Slack
