Props to Kelly for the title (I never heard the phrase before).

Towards the end of the conference, one of the moderators mentioned that he noticed a recurring theme that SaaS vendors are moving up-market as more and more enterprises adopt SaaS. As a company that services “true” small businesses, we lend a keen ear.

Let’s assume for a moment that big players really are moving up-market. For a company that provides solutions to true small businesses, this appears to validate our market analysis that larger SaaS crm vendors (SalesForce, RightNow) have out-priced the true small businesses (relative to the feature-set they get), and the lower-end (Act!, Goldmine) don’t provide the functionality required to really automate small business. As I sat in awe of SalesForce’s beautifully branded PowerPoint presentation and the nice numbers they were flashing, a few questions came to mind:

1. Can we sustain competitive growth given the fact that our sales/support overhead is several times (proportionally) that of the big boys? (We have to sell/support 1,000 customers to equal 100 larger SalesForce clients.) Or is this “Death by a thousand duck bites”?

2. Does this get us to “The leading provider of active crm software for small businesses?

I think the first question is answered by asking another question: When we say competitive growth, who are we competing against? Is it SalesForce and RightNow? or is it Act and Goldmine? Or is it another SaaS-based company out there? From everything I can tell, it’s none of the above. We appear to be the lone wolf in the land of automated crm software for true small businesses. The big boys can’t afford to come down to service true small business, and the small players can’t provide the features and SaaS platform small businesses need. For SalesForce to increase their revenues by 5% in Q3, they would have to sell around 83,000 seats PER MONTH on their current small business pricing model. I would imagine it’s the same for the other large CRM vendors. And that assumes that their current pricing structure would include the equivalent feature-set of ours (which it doesn’t come close to).

So, looking around - I don’t see another player in the true small business space that can provide the feature-set we provide for the price we provide it. Our sales guys said that we just don’t lose sales to SalesForce, RightNow, Act!, or Goldmine. We don’t really lose sales to anybody! In fact, one of the sales guys with years of experience working for a huge software company they said that our close rate on people who attended a demo is higher than anything he’s seen!

And if there are no other competitor in our space, then instead of asking ourselves if we can sustain “competitive growth”, we should be asking ourselves how fast we can grow and if we can sustain margins. Because if we can sustain margins - there are millions to be made.

And I think I answered my second question.