The Rise of Consumer SaaS — Eric Stromberg, Bedrock
Apr 13, 2022
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Eric Stromberg, Founder & Managing Partner of Bedrock, discusses refining your pitch, building a moat in consumer SaaS, and the bright future of Consumer SaaS. They also delve into creating visual screenshot essays, conveying concise messages, challenges in measuring app performance, finding a niche and solving unique problems, and building a holding company of vertical FinTech businesses.
A compelling pitch is crucial for attracting investors and closing deals in the consumer SaaS industry.
Establishing a moat can create a competitive advantage and drive long-term growth for subscription apps.
Consumer SaaS businesses have significant growth potential and should not be underestimated.
Deep dives
The importance of refining your pitch and building a moat in consumer SaaS
The podcast episode explores the significance of refining your pitch and building a moat in the consumer SaaS industry. The guest, Eric Stromberg, shares his experience and insights, drawing from his own journey in building successful companies. He highlights the impact of a compelling pitch in attracting investors and closing deals. Additionally, he emphasizes the need for consumer SaaS businesses to establish a moat, which can create a competitive advantage and drive long-term growth.
The inspiration behind screenshot essays and the power of distilling ideas
Eric Stromberg discusses the inspiration behind creating screenshot essays, a format that condenses complex ideas into a single chart and a brief voiceover. He shares a personal anecdote about a mentor teaching him the value of simplifying concepts using a whiteboard. This experience led him to explore how to distill his own ideas into concise and impactful essays. He also emphasizes the skill of distilling information and the importance of being comfortable with leaving out certain details in order to effectively communicate a clear message.
The evolution of consumer SaaS and its growth potential
The podcast delves into the growth potential of consumer SaaS, highlighting how it has evolved over time. Eric Stromberg explains that consumer SaaS businesses are on a different evolutionary timeline compared to B2B SaaS businesses and should not be underestimated. He discusses the shift in perception from considering consumer SaaS as inherently smaller to recognizing its ability to scale and create significant value. He urges entrepreneurs to have confidence in the future potential and long-term growth of consumer SaaS businesses.
Understanding customer churn and its implications for subscription apps
The podcast episode discusses customer churn in subscription apps and its implications. Eric Stromberg explains that early-stage businesses often experience higher churn rates, which gradually decrease as the business matures. It highlights the importance of reaching an asymptote where churn levels off. The significance lies in ensuring that churn rates decrease over time for each cohort, rather than comparing churn rates of businesses at different stages of development. This understanding helps entrepreneurs set realistic expectations and focus on improving customer retention.
Expanding into financial services and building vertical fintech businesses
The episode explores the concept of expanding into financial services for subscription apps. Eric Stromberg discusses the strategy of acquiring vertical SaaS businesses that are adjacent to fintech opportunities. He explains how integrating financial services, such as payments, banking, cards, payroll, and lending, on the foundation of an existing productivity-based app can create new growth opportunities and offer tailored financial solutions for specific vertical markets. He emphasizes the vision of building a holding company of vertical fintech businesses to serve the evolving needs of small businesses.
On the podcast we talk with Eric about the importance of refining your pitch, how to build a moat in consumer SaaS, and why your month one churn might not be as bad as you think.
Our guest today is Eric Stromberg, the Founder & Managing Partner of Bedrock, a technology investment firm currently managing approximately one billion dollars. The firm has made investments in companies like Flock Safety, Plaid, Cameo, The Athletic, and more. Eric is also the Founder of Check, the payroll infrastructure API and Universe Software, the holding company for Vertical Fintech businesses.
In this episode, you’ll learn:
Why higher churn rates at launch are OK
How to maintain a competitive advantage for your subscription app
Why Eric is bullish about the future of Consumer SaaS
