It is the problem of fads. Something becomes fashionable and all the world wants to be “in style.” Now it is the time for cloud computing and SaaS (Software as a Service). Each week some new project from this field comes to us and, frequently, the model is not very viable because of a grave error in two key aspects of this area:
- The generation of critical mass and the necessity of investing in marketing to achieve it.
- A flexible “on the fly” invoicing that almost no one offers.
The projects in these fields that have experienced success have, as a common denominator, had a large investment in marketing. The first problem, you must think about several rounds of capital before reaching the critical mass and running the risk of getting stuck on the path because you aren’t capable of achieving it. In this environment, you cannot do anything with a few hundred thousand Euros. You need millions to achieve a critical mass of users. Assessments outside of Spain reflect these values, but in our country it is almost impossible to reach the first level with values typical of this environment in the USA (between 5 and 10 million dollars).
On the other hand, given how difficult it is to determine what use the client will make with your application to the degree he knows it best, you should provide very flexible billing systems that allow you to price based on the degree of perceived value for each user and to be capable of changing the prices in a number of hours when competition or a change in your business model obliges you to do so. This type of billing system is very expensive and not at all simple to develop and, in my experience, few projects take it into consideration.
Finally, these projects at their minimum size should be global from the beginning and it is improbable that the initial entrepreneurial team has the necessary experience to launch a project in 3 or 4 countries in a short amount of time.
But, yes, we are still interested in this type of project if it has the necessary dressings…
Translated by Babelic.com
