- Payable with a credit card and not require board approval. VC's like sales models that have a fairly regular and low barrier to entry. Some examples include subscription pricing because it targets operational expense instead of capital expense (i.e. no need to go to the board).
- Easy to consume and work like what's on the web. These new offerings, service or products, must follow more consumer user experience models. Because most of the power in the cloud beats what an enterprise has, users are now more accustomed to paradigms on the web and not the legacy apps they replace. More importantly, they must mitigate IT dependencies in not only decision making, but also support.
- Drive a sense of community and free user generated content. Content remains king but not if you have to pay for it. The drive towards UGC continues and the more successful offerings have a community component. This also applies to ancillary technology services and related knowledge based companies where the users and their communities create a self service ecosystem.
The bottom line.
While we may be in the midst of an economic slowdown and even headed towards a recession, VC's continue to have faith in models that put more power to an individual user or a small team of users. Lower price points, captivating and easy to use functionality, and thriving ecosystems remain the critical success factors in receiving funding. The era of funding on-premise start ups and large consulting firms may be over. This could explain the great interest in SaaS and of course the tremendous explosion of growth in the upcoming SaaS Con event.
(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by R Wang. All rights reserved