SaaS Marketecture: A Multi-Dimensional Technique for Analyzing Markets
I have been analyzing SaaS markets and competitors for over 25 years as a product management executive and consultant. I have developed a simple technique to gather seven facts about companies in a market to give product managers a fact based way to put their competitors into perspective.
Sample Marketecture
I recently completed a competitive analysis of ten AI customer service chatbot companies:
Analyzing publicly held SaaS companies is straightforward. SEC reports like 10-Qs, 10-Ks, and proxy statements provide a wealth of audited and certified information. Privately held SaaS companies are more difficult. The seven factors in the marketecture are all publicly available. While not audited and certified like public SaaS company reports, they provide the ability to understand a dimension of a competitor’s business. By combining the facts together, one can develop a detailed understanding of where a specific company fits into the marketplace and where it is in its corporate evolution.
SaaS Marketecture Components
The SaaS Marketecture has eight components. Each item is hyperlinked back to the original data source.
Vendor
The SaaS Marketecture starts with a list of the competitors to be studied. Industry analyst reports like Gartner, Forrester, IDC, and Ovum are good sources. User review sites like G2, SoftwareAdvice, and TrustPilot are other examples. You can always use generative AI tools like ChatGPT, Gemini, or Perplexity.ai to generate a list as well (Prompt: Create a list of competitors
to Yellow.ai. Create a table with competitor names, URLs, and a short business description.
Building the vendor list is usually an iterative process. Many names will be obvious, but in the past year I have built several SaaS Marketectures for markets I was not an expert in, and I always discovered large firms I had never heard of.
Founded
The year a firm was founded. Usually, you can find it from the company’s LinkedIn profile or a simple GenAI inquiry, “When was Yellow.ai founded?”.
The age of a company is significant. The founding year says a lot about the market environment that existed. Companies that were founded in 2021 and 2022 at the heights of the Covid-19 pandemic enjoyed the irrational exuberance of the WFH movement. Companies founded in 2001 and 2002 struggled to survive in the post DotCom collapse.
Knowing the founding year helps you to put estimated revenues, headcount, and VC funding into perspective.
Estimated Revenues
Understanding the size of a company’s revenues helps you to understand where it fits into the market. The old saying “Revenue solves all problems” is certainly true. For public SaaS companies, audited revenues are reported in regular 10-Q and 10-K filings. To brush up on how to find and interpret 10-Qs and 10-Ks, check out Why Product Managers Need to be Able to Read 10-K Filings.
Private SaaS companies do not publish financial statements, so you have to use other sources to get approximations. One of my favorite sources is Growjo.com. Growjo.com estimates a company’s revenues using a multifaceted approach that combines various data sources and proprietary algorithms. Growjo.com has analyzed the top 10,000 fastest-growing private companies and startups globally as of Spring 2024. This extensive list includes companies with employee counts ranging from 15 to 1,000, focusing on those demonstrating significant traction and growth across various metrics such as annual revenue, employee growth, funding news, and valuation increases.
Here is Growjo’s report on Yellow.ai:
There are other sources of revenue data like Latka.com or Owler.com. Check out Product Managers: How Can You Estimate Your Competitor’s Product Line Revenues? For more information.
Headcount
Headcount is a critical factor in understanding a competitor’s scale and ability to execute. LinkedIn is a reliable source of information. Yellow.ai’s profile shows:
https://www.linkedin.com/company/yellowdotai/people
The people data also shows location, education, and skills. The LinkedIn data is not perfect, it often shows information about people not currently employed, like investors and advisors, but it is more than accurate for competitive analysis purposes.
Headcount Growth 1 Year
Headcount growth is a key indicator of company health. LinkedIn’s Premium Sales Navigator shows 6 month, 1, and 2 year headcount changes. For Yellow.ai it shows:
https://www.linkedin.com/company/yellowdotai/insights
When you combine this factor with VC Fundraising, you can understand what is driving headcount changes. Significant growth may be due to an influx of VC cash. A significant headcount decline (>-5%) indicates business stress. Headcount growth of >5% with no recent VC infusion indicates business growth and success.
Revenue/Head
Revenue per head is simply estimated revenues divided by total employees. Companies in the same market tend to have similar metrics like revenue per head, operating expense per head, and profit per head. Recently VC funded firms tend to have lower revenue/head metrics than others, since they usually invest well ahead of revenue growth. Also, companies that have a significant number of employees in lower labor cost geographies like India, China, or Vietnam also tend to have lower metrics (See Ultimate.ai in the sample Marketecture).
VC Funding
VC funding is the amount of venture capital or private equity a company has raised. Crunchbase.com is the definitive source I use. Consider Yellow.ai’s profile:
https://www.crunchbase.com/organization/yellow-messenger/company_financials
Crunchbase is a paid service. You are allowed 10 free inquiries a month. You can often access Crunchbase profiles for free from a company’s LinkedIn About page;
https://www.linkedin.com/company/yellowdotai/about
Monthly Web Visits
Monthly web visits are another sign of health. I use Semrush.com (paid) and Similarweb.com (free, but more limited than Semrush). Here is the Semrush report for Yellow.ai:
Here is their Similarweb report:
In addition to understanding how a competitor’s web traffic stacks up against other players in the marketplace, I roughly estimate how it converts web visits to closed sales using some SaaS industry median metrics. It is not definitive, but can provide some context:
Conclusion
The SaaS Marketecture technique offers a structured approach for analyzing competitors in the SaaS market, focusing on seven key factors: vendor identification, founding year, estimated revenues, headcount, headcount growth, revenue per head, and VC funding, along with monthly web visits. This method provides a comprehensive view of a company’s market position, operational efficiency, and growth potential, enabling product managers and executives to make informed strategic decisions.
These insights underscore the importance of understanding each competitor’s unique market dynamics and growth strategies. By leveraging publicly available data from sources like LinkedIn, Crunchbase, and Similarweb, the SaaS Marketecture technique enables a fact-based analysis that goes beyond superficial metrics. This multi-dimensional approach helps companies identify opportunities and challenges within their competitive landscape, fostering better strategic planning and execution.
In summary, the SaaS Marketecture technique is a valuable tool for gaining a nuanced understanding of competitors, ultimately aiding in the development of more effective business strategies in the dynamic SaaS market.
Originally published at Development Corporate.
