10 Ways Build a Moat in SaaS (Updated)

Let’s take a look at moats in SaaS:
Brand. Brand can be a big moat in SaaS. Most customers just want to pick the app they’ve used and heard of. We all underestimated this in the earlier days of SaaS. There may be 100+ CRMs today, but most of us just want to pick the one we know.
Data. Data lock is real. LinkedIn owns the human record.
Structured Data. Even if data resides in many silos, structuring makes it unique. Exporting your Customer records from Salesforce is a huge task.
Partners + Ecosystem. The top partners in the Salesforce, Shopify, etc. ecosystems do get most of the leads. And this compounds over time. The AEs, the biz dev folks, tend to send deals to the partner everyone trusts and knows.
Integrations. Most vendors only integrate one third party in each category, maybe two. Zapier is integrated everywhere. Maybe 10x more than anyone else … So also, build more of them. Before someone else does.
Agencies and Implementation Partners. Third parties want to specialize in helping customers deploy just a handful of leading apps. This is a big part of Hubspot’s GTM, and of many in the Shopify ecosystem. Own the agency relationships, and it’s really tough for others to break in, absent strong organic customer demand. No one ever got fired here for deploying a market leader …
Long-Term Contracts. Yes, we hate this. But getting customers to sign 3+ year contracts does work. Not perfect. You can buy out these contracts, and break them. But 3-year contracts are a partial moat.
Using Massive Amounts of Capital To Play In Every Segment. Dominant-dominant strategy is tough to play well, but being in every single segment when the competition can’t afford to be is a form of moat.
“Most Enterprise” Vendor. If you are the most secured, most trusted, most 2FA, most HIPAA, most SOC-2, most everything vendor … you will win where that matters. And it matters a lot in the enterprise.
No Contract At All. Yes, a long-term contract is a “stick” moat. But there’s a “carrot” flip-side: making it 10x easier to onboard than the competition does.
So the meta-point is there are actually a lot of moats in SaaS, of various strengths.

[@alitaghavi4430]

Love it! I find this a great Lens to look through for strategy planning. Of course, network effects are moats too. Eg, many service providers and entities using the same system would provide moats. If the core software architecture is different enough I can see situations that leads to features that are simply not possible for the incumbents to copy because they are sitting on legacy infrastructure. I love #10 (and I loved Canva), but the moment I see that the only way to get onboarded is through sales, I see opportunity to eat some of their lunch. Connected to #1 is also authority on the topic. Or perceived relationship built through social media adds to the moat. Thanks a lot!

[@harishdeivanayagam]

Great Video

[@Jasonlk]

Thanks!

[@willpulier]

“Not at all, then all at once.” I’d take very seriously the implications of “user generated software” becoming exponentially better within the next 18 months. A massive amount of software subscriptions becomes indefensible when text-to-software becomes more robust by the week. The idea that you can hire a designer internal to build your marketing materials makes sense. Soon to will the idea that much of the software you need, even as a non-technical company, is available easier and cheaper if handled internally by the smart intern. Or at 90% the price any company with many employees could afford to compete with. There’s a lot to unpack and debate, but I would advise everyone to be extremely openminded around just how solvable most caveats to this claim are by simply applying the same general intelligence to solve it.