a16z Podcast SaaS Go-to-Upmarket
May 29, 2020
SaaS companies have a unique advantage when moving upmarket, allowing them to outpace incumbents. Founders often struggle with pricing strategies, frequently undervaluing their offerings. The shift toward larger clients requires adapted sales tactics and a keen sense of market timing. In a remote work world, the importance of customer retention strategies is heightened, alongside flexible contract terms. Exploring the evolution of pricing models, the discussion includes insights on effective trials and customer feedback, essential for scaling successfully.
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Upmarket vs. Downmarket Movement
- It's easier for SaaS companies to move upmarket (selling to larger clients) than downmarket.
- This is because upmarket movement allows companies to learn and adapt to higher price points, while downmarket movement requires cost-cutting that can hinder support.
Freemium Model Disruption
- Established SaaS companies struggle to adopt freemium models due to perceived revenue cannibalization.
- This creates opportunities for bottom-up SaaS startups to disrupt the market with free or low-cost offerings.
Slack's Bottom-Up Success
- Slack's success demonstrates the power of bottom-up adoption, even in enterprise settings.
- Initially dismissed as unsuitable for bottom-up, Slack spread organically within organizations, proving the model's viability.