Today’s topic is about

⛔ B2C SaaS are bound to fail

Creating a Software as a Service business is promoted to be the Holy Graal of the startup scene. As the popular saying says, “software is eating the world”, and it’s not necessarily a good thing.

Most people that look to create a startup, start from their personal experiences to look for that “billion dollar idea”, but most of the time, the most familiar experience is the consumer experience.

There is a problem with “industry unspecialized” people that have the entrepreneur spark and drive, but they don’t really know deeply enough the details of a single industry, due to having lower level jobs where they weren’t exposed to the intricacies and business internals of the industry they worked in.

So, these people have more experience being a consumer in a consumer market, so they start to look for a problem there, and then decide to build a software solution for it. That’s why we see so many apps that tackle productivity, meditation, mental health, restaurant booking, price comparators, personal assistants, etc.

Because those people start with a problem they perceive to have as a consumer, and they try to squeeze software into it.

But in most cases, these problems are there because they are too low value for the businesses to be solved, and too low value for the consumers to take their wallet out, put in their card details and commit to paying for it month by month. They are not even willing to pay for the products they use multiple hours each day, such as the social media apps that the average people uses for 10% of their day.

🙏 But there’s hope for the B2C market

There are so many consumers though, it is a sure thing that from time to time, a product appears and gets some success in the market. Some may be more short lived or smaller in scale, some might hit it big, but there is hope for the consumer software market.

To increase your chances in this highly competitive and emotional market, here are some approaches I consider beneficial:

• don’t do monthly subscription. Try to build a business around one time purchases, they are more likely to stick to consumers. Sure, it creates a more volatile and lower margin business model, but it’s more likely to succeed with consumers, as they are already familiar with this transaction model.

• build a content business instead. The subscription based consumer facing business aren’t actually really software companies, but content companies. Netflix sells access to their movie and TV shows library and Spotify sells access to their music library. If you manage to create a content library attractive enough, you might get consumers to pay a subscription to access it (one example I like in this space is Nebula).

• make it actually B2B but with a free consumer facing part, like the social media companies do. This way, you can then make your money from the companies which will be willing to pay for ad space or information.

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