In the early days of SaaS, launching a product or platform was regarded as a “land grab” (Sounds like the late ’90’s calling). It makes sense as many successful models were broad: Slack, Facebook, AirBnB Salesforce, Uber, etc. Revenue was not a key driver. The hypotheses was: get as many users onboard, and then monitize the platform. For broad, well-known, horizontal product platforms, it worked. In fact, their successes are so amazing, the hypotheses became the norm. Market conditions, and funding conditions change. As stated in previous blogs, going deep in an industry vertical is where to find value. Below are three reasons why getting early wins and building platform revenue is paramount:
- Keep you eye on the ball, it’s all about revenue.
- Stay focused on product strength
- The Uncertain upgrading path
First, SaaS startups can maximize a) chances of success, b) funding and c) value by building paying customer count. Simple as that. Once you have established a product/market fit, some call MVP, stay focused on building revenue.
Second, branching the roadmap d to build another version : freemium, requires significant effort and time. What portions of the product are left out?, which services are throttled back? At that point, what is the user experience with the product? Is it good enough to build referenceable customers? Or is it a disappointment soon realized that sours the user and discourages them from upgrading? It is not clear that free users will convert to the paying service, yet they require all or most of the effort of a paying customer. Onboarding, customer service, responding to issues, all eat up valuable company time. Will they ever convert to the paid service?
Three, the upgrade path to the paying service is not usually a straight line. If the product was throttled, or limited for the freemium members, what is the user experience upgrading?
What are ways SaaS startups can validate the business value of the product in market without a “freemium” option:
Experienced leaders will create and deploy a focused on a robust “Early Adopter” program. A well designed and executed “Early Adopter” program will help determine the adoption, value, effectiveness, stickiness, and churn in your platform. More on that in my next blog. ..

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