Defensibility in SaaS

News, insights and updates from the team at Bloom Equity Partners

Happy Friday Founders & Friends!

Thanks for joining us for another edition of the weekly bloom. We’ve got a weekend’s worth of content for you. Let’s jump right in!

The Most Important Moats in SaaS

What differentiates Salesforce or Snowflake from the thousands of other enterprise software companies trying to target the same customers and solve the same problems… It’s their ability to understand, build and strengthen their business moats.

For traditional enterprise SaaS co’s traditional economic moats include switching costs, network effects, and process power.

We wanted to share another perspective on SaaS moats. The Lock-Expand-Improve strategy.

The Software Signal breaks down this flywheel in the following article 👇

📚 The Most Important Moats

Here is our quick take:

1. Lock- In

   • Make it very difficult for customers to switch to a competitor

   • Tactics: high sunk costs, deep integrations, business logic and workflows

2. Expand

   • Multi product strategy: expand software offering for other product areas and use cases

   • It’s a lot easier for a business to adopt another product from a vendor that they are already using v.s. adopting an entirely new product from a competitor

3. Improve

   • Use customer data to provide benefits that can drastically improve their businesses

   • Focus on using customer specific data for individual use cases as well as data from your entire customer ecosystem

   

If you are enjoying our bit-sized insights make sure to subscribe

---

What We’re Reading and Listening To…

📚 Scaling to $100 Million

📚 How to define and track SaaS Activation Rate

---

News from the Industry: deals, deals, and more deals 💰

Zendesk is exploring a potential company sale

Software maker Datto to be taken private by Kaseya for $6.2 bln

Thoma Bravo wraps up growth investment in Circle CVI

---

Favorites from the Ecosystem

Investors👇…..

Orlando Bravo @OrlandoBravoTB

The tech community way underestimates all you can do with your company when you generate lots of free cash flow.

Jay Vasantharajah @jayvasdigital

Great story telling reduces cost of capital. A lower cost of capital can improve business operations. Even though you won’t find it anywhere on a financial statement, the perception of a company matters because it ends up moulding reality.

Founders👇…..

Marshall Haas @marshal

I scaled my bootstrapped agency from 0 to 100+ employees in 24 months. 📈 Here’s 10 things we did to scale fast:

Eric Bahn 💛 @ericbahn

There is definitely a correlation I’m seeing with 1) quality/consistency of investor updates, and 2) the best performing companies in our portfolio. Founders who write transparent, thoughtful, and consistent updates are winning. Be that founder.

Operators👇….

Jason ✨BeKind✨ Lemkin #ДобісаПутіна @jasonlk

So is Square a SaaS company?  It’s not even Square anymore as a company … it’s now Block.  Most its revenue is now from crypto transactions. And yet … and yet … its margins are all software and really SaaS.  At least still for now. 5 Interesting Learnings: 🔽🔽🔽🔽🔽

Shreyas Doshi @shreyas

4 stages of maturity as a manager (trigger warning: might feel too real) 👇🏾

End Note 🔚

As always, if you're enjoying The Weekly Bloom, we'd love it if you shared it with a friend or two. We try to make it one of the best emails you get each week, and I hope you're enjoying it.

And should you come across anything interesting this week, send it our way! We love finding new things to read through members of this newsletter.

---

About Bloom Equity Partners

Bloom Equity Partners is a lower mid-market software-focused private equity firm, leveraging deep operational and commercial experience to create enduring market value for the benefit of our investors, founders, and their companies.