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The One Who Defines the Category Wins the Category

sacks.substack.com · 1,793 words · saved by 1 readers

No objective is more important for SaaS founders than early category leadership. Over 75% of the market cap in a software category typically goes to the category leader. VCs know this, so funding disproportionately flows to startups that can lay claim to early category leadership. Perception often becomes reality, as the startup with the most resources to spend on sales and marketing builds the largest subscriber base, which gives it more resources. This virtuous cycle causes most SaaS categories to accrete to a big winner over time. It’s not just VCs who want to back the category leader — it’s customers too. The reason is a variation on the old saying that “nobody ever got fired for buying IBM.” Nobody ever gets fired for buying the category leader. The category leader wins the easy sales — the order taking — while also-rans must sell hard to win every deal. The category leader wins the easy sales — the order taking — while also-rans must sell hard to win every deal. If you’ve ever so

The One Who Defines the Category Wins the Category How SaaS Founders Can Create Category Leadership David Sacks Dec 16, 2019 50 1 Share No objective is more important for SaaS founders than early category leadership. Over 75% of the market cap in a software category typically goes to the category leader. VCs know this, so funding disproportionately flows to startups that can lay claim to early category leadership. Perception often becomes reality, as the startup with the most resources to spend on sales and marketing builds the largest subscriber base, which gives it more resources. This virtu

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