Business opportunities well-funded startups cannot take from bootstrapped businesses
October 07, 2018
When well funded, growing, continually hiring startups are in a market, it’s not necessarily bad news for bootstrapped companies. After some time, a pattern emerges on their pricing pages: High prices with a lot of emphasis on reaching out to the sales team — Or even no publicly available pricing at all.
This move upmarket is reasonable: As the product becomes more powerful and sophisticated, you get opportunities to close larger deals. Those new clients have much larger LTV, better retention and have more up-selling opportunities. They also require longer and more complex sell cycles, but that’s something a well-funded company is more equipped to handle. And of course, enterprise clients can make more sense financially: A single enterprise client can generate revenues equal to 1000 smaller ones.
Serving enterprise clients is very different from serving 30€ / month clients. And because you cannot serve those two categories well at the same time, the smaller ones get discarded.
That’s great news for small bootstrapped companies. As a solo founder, you can realistically have a product in the same category as a “unicorn”. Discussions with leads won’t be about “why are you better than the leading service“. They will be about knowing if their needs are in the specific niche you are serving.
So next time you’re searching for a product but only seem to find expensive super powerful solutions for your more straightforward need, there’s an opportunity there.
Personal note: News are understandably centered around the largest companies, around the unicorns, and around the market leaders. But it doesn’t mean those are the only companies that exist or should exist. There’s some charm in the boutique service, responding correctly to a niche and providing a good living for a small team. I firmly believe it makes financial sense for those companies to exist. And as a bonus, they’re fantastic to build.