Salesforce is worth $113 billion. 1% of $113 billion is $1.13 billion. ServiceNow is worth $34B and Workday is worth $33B. 3% of $33-34B is $1B. Atlassian is worth $20.5B. 5% of $20.5B is $1B. Why am I doing all this simple math you might ask?
We have reached a point in SaaS where a small fraction of an incumbent is a billion-dollar company. If you start a business tomorrow that is able to cleave 1% of revenue from Salesforce, you will have built a billion-dollar business.
1% is not that much.
For every one of the 23 software companies listed in the chart above who are worth more than $5B, there is an unhappy customer segment. A customer segment that perhaps was initially well served by the company. A customer segment whose needs have changed. A customer segment that can be identified, targeted, and better served. A customer segment that can create a billion-dollar company.
For the companies worth $5B-10B, taking 10 to 20% of their customers might be a tall order today. But as they grow, the number of customer segments they serve will grow, increasing the likelihood that at least one of these groups is underserved.
the industry has been looking for ways to compete with some of these incumbents for a long time. Mobile, machine learning, blockchain. All these technologies have held some promise for disruption. I suspect old-fashioned product marketing may be the disruptive force to prise $1 billion worth of market away from some of these incumbents.
Identifying a customer segment, determining the features that matter most of them, performing a gap analysis to identify where the incumbents fall down, and then building a product to meet that market need. That playbook can be hugely disruptive. And in this environment, where there are 23 next-generation software companies worth $5 billion or more, the playbook can create a unicorn.