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An interesting question to ask is why do unprofitable SaaS companies get bought for very large amounts of money by other enterprise companies? The answers to th
by cwilson 13y ago
An interesting question to ask is why do unprofitable SaaS companies get bought for very large amounts of money by other enterprise companies? The answers to that question are going to be my goals when building a B2B tool (because my ultimate goal is to make myself rich, let's be honest), not profitability (why would it be, when it's so hard to do and acquirers seem to not care).
- kmnc 13y agoPrimarily for talent (the big guys are dying for innovation and they are paying for it) and client lists (prove your end user customers actually like using your software versus just being a business need). Sometimes it indicates the potential of an "untapped" market and I would see these acquisitions as getting a horse in the race (when Gamification/Social Enterprise blew up for a bit and you saw everyone buy a horse). Prove people love using your software and you can get acquired if you want.
- matlecu 13y agoActually if you push the reasoning in the article a bit it can make sense. When they buy the company, they buy: - the users and the revenue (which may be losing money for growth as explained) - and also a product that should be easier/cheaper for them to sell to their existing customers. So they can have a very cheap batch of customers that grows their revenue a lot without increasing their upfront cost too much -> it's like the up-sells/upgrade in the article: it's much cheaper to acquire but makes the same money ( eg: - you have 1M clients - you lose money because it costs you 1.5R to acquire a customer and you're growing - the company buys you with 10M clients, and it's only 0.1R for them to sell it to these clients because it's an up-sells/upgrade -> they'll make money with your product even if you can't! )