Linear #019: vSaaS App Store Strategy, Iraqi Refugee To Successful Tech Entrepreneur, Mistakes In Enterprise Sales

One vSaaS breakdown. One Biz Story. One 'How To'. In your inbox once a week.

May 08, 2023

App Store Strategy in vSaaS

The App Store is one of the best business models we've seen in the last 15 years. We're now seeing it play out in vertical SaaS.

Here’s how a few vertical SaaS companies are building massive businesses by taking a page out of Apple's playbook

The App Store launched in 2008. With a toll road business model, Apple takes 30% of revenue generated via third party apps. In 2021 alone, it generated $85B in revenue for Apple.

The App Store has skyrocketed Apple to become one of the worlds most valuable companies. Its lock-in via Hardware, and monopoly on the App Store model via the iPhone, requires EVERY mobile developer to play their game and pay their fee. It's pretty brilliant, honestly.

There are some murmuring that Steve Jobs was adamant about NOT OPENING it up and only including Apple native applications. It's a good thing he changed his mind. It's brought us incredible innovations like Uber, AirBnb, and Venmo, to name just a few.

Vertical SaaS companies that have developed Operating Systems (OS) for specific industries have been taking a page out of Apple's playbook. They are layering in their own version of the App Store to build multi-billion dollar businesses. Why?

#1. App Stores create an incredibly strong moat

It seems counterintuitive, but enabling third party apps to sit on top of your platform makes your offering that much stickier. When you are the 'foundation' or 'platform' you can't be replaced.

#2. App Stores can enable a company to scale revenue astronomically fast

When you don't have to build everything on your own and can have an army of developers build on top of your platform, you achieve escape velocity. Everyone who creates an App is creating $$$ for Apple.

Let's look at a few examples of vertical SaaS companies running the same playbook...

#1. Shopify

Shopify Launched it's App Store in 2009, the first iteration of the Shopify App Store had less than a dozen apps, many of which ended in “-ify” to match Shopify’s name.

The Shopify App Store didn't blow up over night. These things take time. "From 100 apps in 2013 to over 2,000 apps today, the Shopify App Store and its corresponding ecosystem of developers has become critical to solving the increasingly complex problems of Shopify merchants."

#2. Procore

The leading vSaaS solution in the construction industry, launched their App Store in 2016. Procore's President said, "With the App Marketplace we're able to extend the value of our platform by integrating apps, solutions, and processes that our clients want to use."

#3. Canvas

Canvas LMS is the leading vertical software for higher education. Students, Teachers, and Administrators at college institutions across the globe log in to Canvas everyday to administer tests, collect homework, and run lessons.

Canvas launched their App Store in 2013. Enabling a whole suite of education Apps to sit on top of the Canvas platform. Their goal? For users to never have to leave their App for ANYTHING.

In vertical SaaS, you can become the operating system for a particular industry. Whether it's for auto dealerships, salons, gyms, whatever!

When you become that, a great playbook to achieve massive scale is to launch your own App Store.

What other companies are doing this?

One Biz Story:

Iraqi Refugee To Successful Tech Entrepreneur

One How To:

9 Biggest Mistakes In Enterprise Sales

Jason Lemkin | SaaStr

Learning enterprise sales for the first time leads to a lot of mistakes. A lot of them. Then you learn the playbook.

A list of some of the bigger ones I made learning how to sell into the enterpriser:

Not mapping out — and getting to know — all the stakeholders in a deal. And after the deal. This is a skill you need to learn quickly in the enterprise. The person that contacts you often is just one of many stakeholders in the purchase. Don’t assume whomever you are currently talking to you is the buyer, or even in the end, the decisionmaker. Every deal is at renewal risk if you don’t get to know, and map out, all the key stakeholders.
Not being responsive to every key concern. I remember my CTO once arguing with a Fortune 500 company on a “security” concern they had which really made no sense. It literally made no sense, and in fact their app did the same thing. But that didn’t matter. They were concerned. That meant we had to be concerned. You can’t do everything. But you can be responsive to every key, top concern. If you have to build a check-the-box feature for a top enterprise customer, just build it. Another top customer will also want it.
Not visiting enough customers in person. I never lost a customer I visited in person. But the ones I didn’t, were the ones that silently churned. Even / often when the usage was high. More here: I Never Lost a Customer I Actually Visited | SaaStr
Not hiring a full-time RFP person. If you are going to do a lot of RFPs, they need an owner. They are too much work to just dump on a product person, success person, sales leader, etc.
Not hiring a full-time Chief Security & Compliance Offer. Hiring a CSO way early if you are truly going enterprise. It just makes the customers so much more comfortable. And then security audits, reviews, etc. go so much faster and easier.
Not opening an EMEA/London office and field offices earlier. Enterprise customers expect you not just to get on jets (see the point above), but to be there. Wherever you have $2m or more in revenue — you should have an office.
Not investing more earlier in customer marketing and corporate marketing. Enterprise customers expect a brand to be presented in a certain way. You need to be at their events, sometimes with a red carpet. You need to pamper them the right way. You need the right types of collateral and case studies. The quicker you do this, the more comfortable prospects and customers will be that you are “enteprise-grade.”
Not getting the company to move to a Big Customer-centric culture faster. This is #1. If you go upmarket, if you move from SMBs into mid-market and then the enterprise … your culture also has to change. From one of users to one of the broad needs of 1000s of customers to one almost of … clients. Your very big customers aren’t just customers, they are clients. They deserve client-level service and attention. Many of your team that hasn’t done that before won’t enjoy it. They’ll bristle at their seemingly one-off requirements. They’ll struggle to deal with the drama around the big deals. But the folks that have been in that environment before and know what to do will solve most of the problems above for you.