Ideas and Validation June 19, 2020

Looking for a business idea? Here's three companies ready for disruption!

Kevin Conti @Kevcon80

Downmarket SaaS Opportunities

The theory behind these companies:

  • If a multi-million dollar VC-backed company exists, they have proven demand in the market.
  • However, due to being funded, the company has no choice but to go upmarket and sell to big companies.
  • I've analyzed downmarket niches where the VC-backed companies can't play.
  • For each company below, I've listed the name, one niche to compete in, a unique selling-point (USP) that beats the big company in that niche, and a clear vision for how you could build the MVP.

Opportunity 1: CultureHQ

CultureIQ Info:

  • Estimated revenue range: $10M to $50M
  • Number of employees: 11 to 50
  • Funding raised: $7.5M
  • Founded: 2014

Summary:

CultureIQ is for HR departments who want to measure and improve culture. Customers rave about it's research-based model and pre-made surveys for getting started.

Downmarket Opportunity:

CultureIQ aims at enterprise customers, with their lowest price point being almost $20,000/year. This creates an opportunity for a B2B product that offers the core of what CultureIQ sells, but instead targets companies with less than ten HR employees.

USP:

The unique selling-point of this product is that you are targeting companies who are experiencing their first growth spurt. Companies like these have money and are looking to efficiently scale their operations.

You are able to position yourself as the (relatively) low-cost software that allows them to apply a research-based model to their culture, and makes it easy to get started in monitoring changes to the culture.

As always, it can make sense to start with an even more specific industry in order to get started. Decide on what type of company you want to start with based on your personal connections.

MVP:

The MVP of the product could look something like:

  • A way to import a list of employee emails
  • Two or three pre-made, research-backed surveys that analyze the culture of a business
  • Software that collects these results into some sort of dashboard, alongside actionable insights.
  • (Bonus): A graph of changes over time

Pricing:

CultureIQ Competitors:

Ambassify: Starting at $500/month
TeamMood: Starting at $2/user/month
Clarity Wave: Starting at $4/user/month
SurveyMonkey Engage: Starting at $450/month

Conclusion:

A core product should be able to be priced at $99/month, and have room to grow as the product adds features and value.

Opportunity 2: Catalyst.io

Catalyst.io Info:

  • Estimated revenue range: $1M to $10M
  • Number of employees: 11 to 50
  • Funding raised: $45.4M
  • Founded: 2016

Summary:

Catalyst.io is a customer support / customer success software, aimed at managing customer relationships, identifying upsell opportunities, and reducing churn. It aims to be an all-in-one solution for customer success managers.

Customers who like Catalyst.io emphasize it's flexibility, integrations with other systems (notably Salesforce CRM) and ability to help customer support managers (CSMs) identify where they should focus their attention.

Downmarket Opportunity:

While Catalyst.io doesn't reveal its pricing information, we know it's raised over $45 million. This creates a downmarket opportunity for companies who only have a few CSMs, but want a software that supports their workflow.

USP:

You should target B2B companies who have grown large enough to need CSMs, but need only the core functionality and do not want to spend thousands per year on CSM software.

You can position yourself as the "Starter CSM" for companies with 1 to 20 CSMs, who need a way to manage the workflow for CSMs.

One challenge with this product will be integrations. Customers in this market want their CSMs to have a full picture of their customer, meaning that they will want to integrate with their CRM, as well as their product.

You should look to identify a single CRM to integrate with, and focus exclusively on companies who use that CRM. This way, you get the benefit of selling an end-to-end experience, without having to spend years performing multiple integrations. Some research is required to determine what CRM you should integrate with.

Similarly, you should focus on a single product integration (Segment.io is a likely option), as opposed to a larger range of application information.

MVP:

The MVP for this product is likely the most complex one in this email, due to the amount of integrations involved.

An MVP for this product could look like:
Integrate with intercom for customer support information
Integrate with CRM for customer value information
Integrate with Segment.io for application information
Gather this information together into a dashboard, which calculates customer happiness / unhappiness, likelihood of churning, etc.

Pricing:

CultureIQ Competitors:

ChurnZero: Price unknown (demo only)

Gainsight CS: Price unknown (demo only)

SmartKarrot: Staring at $499/month

Conclusion: Due to very few self-serve options, this product has potential to be sold between $99-$499/month.

Opportunity 3: CaptivateIQ

CaptivateIQ Info:

  • Estimated revenue range: $1M to $10M
  • Number of employees: 11 to 50
  • Funding raised: $16.6M
  • Founded: 2017

Summary:

CaptivateIQ helps companies handle commissions, as well as manages reporting for those commissions for compliance purposes.

As you can see from GitLab's handbook, enterprise sales commission structures can be quite complex. These are often calculated from an excel spreadsheet for smaller companies, or handled by large, enterprise-grade software for large companies. CaptivateIQ intends to compete with a modernized UI software that is just below the enterprise-grade solutions.

Sales reps typically praise the software for helping them see how much they are making, while accounting teams enjoy no longer having to calculate these manually.

Downmarket Opportunity:

Most of the need and pain for this product comes from enterprise-grade customers, which is why the market targets them so strongly.

However, this has the side-effect of leaving small businesses in the dust. Because of this, the downmarket opportunity for this product is to create a commission tracking software for small businesses.

Many small businesses rely on B2B sales, and have full-time BDR (business development reps). The CEOs of these companies may be looking for a better way to track, analyze, and offer visibility into the commissions these employees have.

Also, the CEOs may wish to provide a more complex pay structure that better incentivizes salespeople, but has avoided doing so due to the complexity. This is where your product can shine.

USP:

The unique selling-point of this product is that you are targeting B2B companies who have between 1 and 10 salespeople, who are looking to better manage the entire commission life cycle.

Consider offering an integration with a popular CRM, and begin your search with companies who use that CRM. This will offer an easy way to identify leads, as well as encourage them to work with you.

MVP:

The MVP of this product could look like the following:

  • GUI for creating commission structures

  • Some way to integrate sales data, either via manual entry or via CRM integration, depending on how minimal your MVP is.

  • Dashboard for analysis of how much commission reps have earned by month, quarter, etc.

Pricing:

CaptivateIQ Competitors:

Xactly: Quote-based (enterprise only)
Easy-Commission by Cellarstone: Starting at $6.95/user/month
Commissionly: Staring at $20/user/month

Conclusion:

This product can likely sit between the $49/mo and $99/mo very easily. There is also the opportunity to sell on a per-user basis, for which you could likely sell for $20/user/month.


I'm considering making posts like this every week, if there is enough interest.

If you would like (and would pay for) posts like these, reach out to me at [email protected]. I'm giving away another free post just like this one to the people who email me there!

Thanks for reading and I hope you found it valuable!

  1. 12

    I have an off-topic question.

    Is it just me, or are all of those landing pages horribly bad?

    In all three cases you get some broad, vague promise:

    "Transform Culture into Competitive Advantage" - wtf does that even mean?

    "Helping You Move Customer Success to the Center" - I kind of get it, but how exactly?

    "Smarter Commisions. Happier Teams" - What? How? What???

    And even if you read additional copy after that, you still can't literally tell what those products do without diving deeper.

    So please tell me. Does this stuff really work? I have put a lot of effort to make sure that visitors of my website know EXACTLY what I am proposing, from one view on my page, without any scrolling on clicking.

    Did I make a mistake? Should I just write some big, bold promise unsupported by anything with any merit?

    Should I just write:

    "Become the smartest person in the room"

    "Learn twice as fast"

    or "Smarter than a PhD? It's possible!"

    and only explain my product below the fold?

    I am so confused that people fall for this crap. When I see landings like that I click away immediately, because I literally can't tell what the company does.

    1. 2

      Only one way to find out. A/B test with a big bold claim and then go into detail further down.

      Why I personally see the value in big bold claims:

      1. They are more memorable (Marketing is attention)
      2. They position themselves as a transformation, not an improvement
      3. Although they're vague, they do sometimes get to the core of the product immediately e.g "Helping you move customer success to the center" straight away I knew they were a customer success tool.

      I like your "Become the smartest person in the room" It hits the first 2 of my value points very well.

      1. 2

        This would be indeed an interesting experiment.

        I think I will switch to "big, bold and kinda vague" for some time and see what happens. :)

    2. 1

      Thats just start-up lingo which is un-authentic and too "lets change the world" like. Overall though its not about a landing page. When you are making a sales demo, its about the inside of an app, rather than about the front-end of the landing page.

      1. 1

        Well in my case my product is supposed to be strictly b2c and discovered via searches on very specific keywords.

        Hence having clear and informative landing is a top priority for me, thus the question. :)

    3. 4

      This comment was deleted 8 days ago.

      1. 1

        You should create a SaaS for copy testing ;)

  2. 3

    Loved this break-down and would love to see more. Would conceptualise this similarly to trends.vc by Dru, super short, to the point. Add premium opps for paid users.

    1. 1

      Thanks! I'm already talking with quite a few folks who are interested in supporting this content as a paid newsletter. If you're interested, reach out to me at [email protected] and I'll let you know the details!

  3. 3

    Hi Kevin,

    This is a great breakdown of the opportunities. I hope you continue doing these.

    This should be a website. :-)
    John

    1. 1

      Thanks John! I’m considering doing a newsletter for it. Trying to talk to interested people at [email protected] to see if it’s worth doing!

      Would love to chat if you have the time

  4. 2

    Imo, the 2nd point is not correct. Companies get funded to go down market. There are numerous examples like airtable, typeform, shopify, etc.

    They are selling their products for several bucks per month. The fund is used to dominate the market share of a mass market

    1. 2

      You’re talking about a valid but small subsection of companies.

      The more elaborated version is that those companies utilize the runway they get from VC funding to saturate the market as a loss-leader. It is, like freemium, a marketing strategy.

      You’re 100% right that this happens (great examples!) and I specifically avoid mentioning companies with those strategies for that reason.

  5. 2

    This is an interesting way to research/discover new ventures but it is missing a major piece of the puzzle: the datapoints/claims you make is based on what the company publicly disclosed/public data. I would not consider them based on that alone and would need to do way more due diligence. Case in point: how do you know none of the companies tried what you are proposing and failed because there is no market opportunity?

    1. 2

      Thanks for the response!

      If I'm getting you right, you're saying that the information above, such as the estimated revenue range of CultureHQ, is not enough to prove the existence of the market that it operates in. Is that correct?

      I don't want to misunderstand your criticism

  6. 1

    @Kevcon80 , amazing breakdown. I hope you don't mind but I'm totally looking into the company culture segment idea. I find this both interesting and exciting :)

    Looking forward to the next breakdown(s).

    1. 1

      Thanks and of course I don’t mind, that’s the whole point! One of my paid subscribers is also working on an idea from one of the premium newsletters, which lets you create and publish a blog straight from Notion: https://github.com/bnpne/noblog.

      I’ll definitely be following along on everyone who explores one of the ideas, and happy to offer more thoughts on what I consider to be the big risks if you’re interested! My email is [email protected]

  7. 1

    Very well researched! If you want additional inspiration for brainstorming, check out my generator! http://www.jensbackbom.com/businessideas/

  8. 1

    Hey @Kevcon80, nice analysis there. I'm Nicolas, the founder of TeamMood :-)

    1. 1

      Hey Nicolas, thanks for the kind words!

      I'd love to hear any thoughts on the market based on your in-depth perspective! Am I hitting the mark on your market, or am I missing a key factor?

      Seems like you aim to be the simplest, least intrusive player in your industry, which I'm sure is interesting.

      Do you found that most of your leads are inbound? Are HR departments actively looking for software like yours, or do you have to do a lot of convincing/outbound sales?

      1. 2

        Regarding the market, we don't have a lot of companies with growth issues.
        We don't target HR deps directly, too costly for our business model. It's an inbound strategy, and we benefit from word-of-mouth.

  9. 1

    I like this list very much. However, one thing I have observed for solutions targeted towards HR, Sales or Customer Success teams is that they require extensive training. Platforms that do it better win the markets. Sometimes it's okay not to have a self-serve product but you gotta have an army of trainers. Doing such ventures at indie hacker level becomes a bit tough.

    Could you also do a similar analysis for companies that target developers, marketers, product managers?

    1. 1

      Hey Pratiksha!

      I'll be doing analysis on a ton of different companies, markets, and niches. I'm trying to focus on niche categories that Indie Hackers and developers wouldn't be likely to know about on their own.

      Doing such ventures at indie hacker level becomes a bit tough.

      The HR one is probably the most difficult niche and MVP of the ones in the group. I would call it more of a bootstrapped opportunity than an Indie Hacker one.

      I am going to be doing smaller opportunities as well, though. Thanks for the feedback!

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