Shekhar Kirani, Partner, Accel Partners in conversation with Nishant Rao, Global COO, Freshdesk & Sudheer Koneru, Founder & CEO, Zenoti
SaaS is a rage. It can create “corporate happiness” - helps companies engage better with customers, and ease CEOs’ burden.
Horizontal SaaS can solve challenges across industry verticals and purely from that standpoint, the product has to be phenomenal. The targeted market is huge, so the pain points have to be identified quite accurately. Vertical SaaS is specific to a particular industry, and usually offers end-to-end solutions.
When should one go Horizontal? If the markets are established and one wants to create a major impact, then Horizontal is a good option. It is important to nail a use case, and subsequently develop solutions for other industries (with necessary tweaks) to solve their challenges in a function.
Vertical? It is ideal when one seeks out a certain scale and is passionate about solving a particular industry’s challenges. Or even all of it. Often, deep domain expertise is associated with Vertical SaaS. Once you reach a critical mass in a particular vertical, it might be a good idea to explore horizontally.
Some popular horizontal SaaS products are in the areas of CRM, Employee Engagement, Communities & Collaboration, and Inventory Management among others. To build sophisticated products in these areas the investment required is often large. The initial focus should be to acquire the first 10 customers. Initially, it is prudent to keep a narrow focus and then build scale based on success. If one is able to secure a marquee brand, then so much the better. This will provide the much needed momentum.