Episode 735 | The 8 Levels of SaaS Platform Risk (A Rob Solo Adventure)
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Oct 15, 2024
Dive into the intricate world of SaaS platform risk as the host dissects eight distinct risk levels. He introduces a practical framework focusing on replacement availability, customer concentration, and lead flow. Recent news about open source dependencies, particularly in popular platforms, adds urgency to the analysis. Real-world examples illustrate how understanding these risks can critically affect a business's stability and growth. Tune in for insights that can protect your startup in the ever-evolving tech landscape!
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insights INSIGHT
Three Factors of Platform Risk
Platform risk involves three factors: replacement availability, customer concentration, and lead flow.
Each factor has varying degrees of risk, from easy replacements to hard and from low concentration to high.
insights INSIGHT
Eight Levels of Platform Risk
Rob Walling introduces eight levels of platform risk, ranging from almost no risk to maximum risk.
The WordPress/WP Engine situation highlights the risk of relying on open source.
insights INSIGHT
Level 2: Commodity Platform Risk
Level two platform risk involves relying on a commodity platform like SendGrid or Twilio.
Switching is relatively easy, and there's no lead flow or customer concentration risk.
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In episode 735, join Rob Walling for a solo adventure where he categorizes the different levels of SaaS platform risk. He introduces a framework with three key factors: Replacement, Customer Concentration, and Lead Flow. Rob then defines eight levels of risk according to these factors and other vulnerabilities such as relying on open source – a hot topic with recent news about WordPress, WP Engine, and Automattic.
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Topics we cover:
2:32 – Are replacements available for this platform?
4:56 – How concentrated are your customers on this platform?
5:31 – What is your lead or customer flow?
8:54 – Level 1: almost no platform risk
10:04 – Level 2: reliant on a commoditized platform
11:49 – Level 3: using large cloud providers like AWS
15:33 – Level 4: deeply tied to open source software like WordPress
18:11 – Level 5: high switching costs, but replacements exist like in no-code
20:00 – Level 6: 100% lead flow risk
21:44 – Level 7: a friendly app ecosystem
23:24 – Level 8: aggressive platforms, few replacements, customer concentration
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
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