So one thing that’s changed radically in SaaS over the past few years if everyone has realized to truly scale, you need to be multi-product. Sometimes by as early as $20m ARR, sometimes by as late at $200m ARR, or later.
But net net, the average public SaaS compay has 35,000 customers. So once you cross 3,500, let alone 10,000 — you’re starting to saturate most B2B markets. Your hitting 10%-20% market share or more, especially of your core customer base, and grow almost always slows at that point in SaaS.
So at some point, you can’t just raise prices and add enterprise editions to keep mixing it up and growing. At some point, you have to sell your customers a true second product to truly scale big:
- Datadog is pushing its customers to buy at least 6 products. More here.
- 45% of HubSpot customers now buy 3 or more products. More here.
So there’s one mistake I’m seeing founders make. Maybe it’s more a conceit. It’s confusing an add-on with a second core product.
An add-on can drive up the ACV of your customer, and that’s important to scale. But ultimately, it’s not truly a second product unless it is a true second product line. A true stand-alone, second purchase.
And what I’m seeing in many cases is add-ons while great, just aren’t enough alone. And leaders at scale see growth slow as they don’t have a true second product. One with a market at least as large as the first product. And that customers can buy stand-alone from it. HubSpot again is a great example. Their CRM / Sales Hub is on track to catch its initial Marketing Hub and be even bigger. That’s a real second product.
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Jason Lemkin, Khareem Sudlow
