
Ask HN: Is it worth starting a SaaS in a niche that already has a clear leader? - iDemonix
I&#x27;ve been wanting to make a SaaS business for years. I&#x27;ve done PHP freelancing for years for some cash on the side of my full time Systems Engineer job, but rather than develop stuff for other people I&#x27;d like to take a break from that and make something for me.<p>My work, and several of my clients I&#x27;ve had, pay for and use StatusPage.io. I&#x27;ve always thought I could make something similar (obviously not as fully-fledged as SP.io) as it would interest me. At work I play with stuff like Redis, Galera clustering, VM management (Puppet etc) and outside of work I play with PHP - so this seems like it&#x27;d be a good project to bring them both together - I get to build&#x2F;develop a site and also make it autoscale with AWS (never used AWS) etc - fun all around.<p>Is it worth doing months of research trying to find an &#x27;untapped&#x27; niche or something that doesn&#x27;t have a major leader, or is every niche going to have competition and I should just give it a go regardless if I&#x27;m looking to learn. I would love to learn, I&#x27;d class it as a success if it paid for its own hosting and made me more than say $100 a month.
======
petercooper
Unless you're incredibly smart (i.e. not me), you _should_ be going for niches
where money is already being made and there are clear leaders you can go
after. Otherwise you don't know if people will pay for your thing and don't
have any people to use for research or as customer personas.

That out of the way, an area like that covered by StatusPage will cause you
grief, at least with doing it at 'business scale'. People expect a status page
to never go down and to be available even when The Worst™ occurs. It's not
merely a software challenge but a huge operational and customer service one.
Good luck though!

~~~
thenomad
Absolutely!

The only exception to that rule, which I feel is worth mentioning, is the
infamous two-sided marketplace or network-dependent business.

In both cases market leaders have clear lock-in and it's very hard to compete
with them without a huge pile of money.

But obviously the StatusPage idea discussed here doesn't have that problem.

------
karmajunkie
Others have pointed out that A) the particular market you're looking it is
somewhat tricky because of reliability requirements; and B) that a market with
competition is a market with customers who will pay money, which is very true.

I want to offer a counterpoint to B, which is that a market with a clear
leader is a market that isn't nearly as big as you think it is. The reason for
this is that peeling customers off an incumbent is a lot more difficult than
it seems at first. The temptation is to tell yourself, "This is a success if I
get even a little bit of the market." That may be true for a market that's
wide open, or that doesn't have a clear market leader. But if there is one,
then your market size is really more like 20% of the addressable market, and
your little slice of success has to be a lot larger than you think it is. And
if its a good market, you've probably got a LOT of competitors thinking the
same thing, and you're fighting it out over the slice of the market you can
actually get to. I've experienced this in the event registration space, where
a few companies like EventBrite dominate, and 300 other ticket companies fight
it out for the 10% of the market that's actually up for grabs. Your marketing
costs skyrocket, the customer acquisition costs are dramatically increased,
and you're looking at a long slog to get to profitability.

All of that said, this doesn't mean don't do it. I'm a big fan of niche
products, and being able to do the technical side means you've got an
advantage over some potential competition who have to hire or contract out
that part. But be aware that business success in a venture like this is harder
than it may seem at first.

------
kureikain
I'm in a very similar position. I build a product[1] to monitor website server
and send notification.

I think that no matter what your idea is, it always has some other competitor
already establish in that industry. Think of it this way: we have car, Toyota,
Honda, Ford,...Lots of car company. We have beer, bunch of beer. So I don't
see why we shouldn't build a product even it's already has a clear leader. Why
do Gitlab build their product when Github BitBucket is so big...

At the end of the day, business is all about finding client. All you have to
do it build a product, good enough, find some client, and go from there. You
can even pivot your product to something completely different. You may gain
more experience, knowledge deal with the system which may leads to other
production.

You gotta start something first. The purpose is to have a sense of what is
going on. No matter how good a product is, I always see someone complains
about some aspect of it. That means it has room to improve, it has another way
to do it, to make it better and sell to those people.

So, yes. Go ahead. Build it. And let it know when you launch it.

[1]: [https://noty.im](https://noty.im)

~~~
brianwawok
Have you had any success?

------
MattRogish
If a vendor leaves an umbrella under which you can profitably compete, then
there's a business there. Or if you can differentiate enough. Heck, why not?

That said, the risky thing about this in particular is infrastructure products
like StatusPage and PagerDuty and Runscope _have to work all the time, every
time_.

If your site is down and PagerDuty doesn't alert you - you're an ex customer.
If Runscope gets bogged down and you miss out on metrics for 10-20 minutes,
and your clients start leaving - you're an ex customer. If StatusPage goes
down in the middle of your outage, you're an ex customer.

And in all those situations, you're going to make noise on your way out
(twitter, medium, whatever).

This is incredibly difficult for a solo, bootstrapped operation to achieve. It
costs real money and takes real expertise to get that level of performance and
availability out of your infrastructure (not to mention what you need to do in
the application). This stuff is completely orthogonal to, say, writing the app
itself. You can be an amazing Rails/Django/whatever developer and totally mess
up your infrastructure - it's super easy to do so.

On the other hand, being a generic SaaS operation charging reasonable fees -
no one has expectations of 100% availability, and if people can't access your
invoicing app or recruiting backend or whatever for 20-30 minutes in the
middle of the night - no one is going to complain.

What are your goals? To build some income? To learn AWS, PHP, etc? It sounds
like you've got a couple of different goals here.

~~~
iDemonix
I suppose my goals are a culmination of all of them. The end goal would be to
have some nice passive income (i.e. $1000/mo) but that would likely be income
from multiple projects etc. This specific post was about taking that first
step.

I suppose there's a lot more than a software problem behind SP.io, the 24/7
availability infrastructure etc. I'm not tied to that idea at all, it was just
one of a few things I use in my day job that I thought I cold re-create with
some improvements to areas I find annoying/lacking.

------
arielm
I think going into any market knowing you won't have any advantage (tech or
otherwise) is how you waste time (and potentially money).

A few years ago I saw a keynote at a game development conference talking about
how on the app store most developers copy successful games. The presenter
(David Whatley) called it mining for gold where others have already turned up
every nugget possible (paraphrased because it's been a while...).

I think that's a good way to look at this as well. As a user of statuspage.io
I can tell you that they leave a lot to be desired + their pricing isn't
attractive. They have however a pretty robust and compelling solution.

Can you do something that will make me leave statuspage.io (after spending
hours customizing my page) and _need_ to move over to your service? If so the
answer is GO FOR IT and don't look back. I have a feeling the answer is no,
and that's why you're unsure, at which point I'd start looking for other
problems to solve.

Peter Thiel makes a good argument in his book Zero to One that every company
needs to be designed to be a monopoly. While I disagree with some of that
(competition is healthy), as a founder I know the importance of your
differentiator being leaps ahead and not just an update away.

P.S. - The reason we pay for statuspage.io is because we don't have to build
(and maintain) the whole management system and don't want to worry about it.
For any legit company it's worth it.

------
ricardolopes
There's only one way to find out if you can get the level of success you want
:)

Unless you wanted to try your luck in the social network space, because
there's no way anyone could achieve anything against the clear leader MySpace.

------
charlesdm
If people are paying for it, that means there's a market for it. Most products
fail because they don't solve a problem, and not because they don't get built.

So, if you can find sufficient differentiators (or the market is big enough),
I'd say yes. Otherwise no.

------
encoderer
Having done this in a small niche to some success, here is my advice:

\- start with a product that solves one or two pain points of the incumbent
tool.

\- compete on price in the beginning and as you add value, raise prices for
new users.

\- you can do things that don't scale early on like offer great support. Your
big customers have the founders phone number. That sort of thing.

\- find some shelf space you can own by targeting seo in chosen, winnable
verticals. It's hard to do successful sem when you're small. You don't even
have enough traffic to split test easily. Acquiring free traffic sources is
necessary.

\- remember, saas is a ramp up. 10% month over month growth gets pretty big
before too long.

------
NetStrikeForce
One thing I'm learning on a similar adventure is that either you make money or
you don't make a penny.

Breaking that "first paying customers" barrier is difficult. Don't get
discouraged when you show your project and no one pays attention, because
that's what's going to happen and that's when you will really have to work
hard for your dreams.

Programming is easy. Keeping your morale high is extremely difficult.

------
thekevan
"...I should just give it a go regardless if I'm looking to learn. I would
love to learn, I'd class it as a success if it paid for its own hosting and
made me more than say $100 a month."

I think you've made up your mind but are just looking for a bump on the right
direction. Go do it! You know you want to try. At worst, you learned some new
stuff.

~~~
andys627
Another reason to do it is you will look a lot better to many prospective
employers.

------
cj
> I'd class it as a success if it paid for its own hosting and made me more
> than say $100 a month.

Then yes, absolutely!

Even if you were driven by revenue opportunity, it can still be worth starting
a SaaS in a niche with a clear leader as long as you can clearly beat them in
a few ways (ie. undercutting price, better UI / UX, etc).

~~~
pmtarantino
Your "Then yes, absolutely" makes it sound like it is easy to make a SaaS with
a monthly $100 revenue. Is it so?

~~~
vinceguidry
It's not hard at all. Find a company with a problem they're willing to pay
$100 a month for. Tailor the product to their needs. Sell it to that company.

Can you turn it into a _viable_ business? Depends on how hard you hustle.

~~~
pmtarantino
> Find a company with a problem they're willing to pay $100 a month for.

That doesn't seem easy at all.

~~~
vinceguidry
Why wouldn't it be? There are companies all around you. From the gas station
down the street to the finance businesses downtown. They all have problems,
and they all have money. Some of those problems can be solved with software.
All you have to do is keep talking to them until you find one.

$100 a month is practically nothing on an American company's budget. To many
of them, $1K a month and $100 a month mostly looks the same. They'll happily
pay either amount, so long as the solution provided actually does what you say
it does and it isn't a hassle.

------
persona
Not sure if you'd consider StatusPage.io as a "clear leader". They claim to
have around 2000 customers ( [http://blog.statuspage.io/introducing-private-
status-pages](http://blog.statuspage.io/introducing-private-status-pages) )
which I consider a small number of a potential target group. From some other
posts, their revenue is around $3M/annually.

So if this is a $5M potential market, probably there is a clear winner. If
this is a $100M potential market, things are just starting.

------
programminggeek
It is a great idea to go after an existing niche with an established leader.
Why? Because people have already figured out how to acquire customers and make
money.

For example, t-shirts were invented forever ago. Plenty of people start
t-shirt companies and make money doing it. Hanes sells WAY more t-shirts than
you will. It doesn't matter.

An established market is a better place to play than a totally new thing. You
can be a very small operator and still make a very good living for yourself.

Think about Basecamp as another example. Microsoft Project owned project
management. Basecamp came into the same market with a different angle and made
a business out of it.

Traditional wisdom says stay away from existing big fish. I would say swim
right next to them or in their wake. There are always little subniches and
different ways you can sell the same basic solution in a different way.

Another way to look at it is software is a bit of fashion. People get tired of
the same thing. So, sometimes they go buy a new thing that might have one
feature they care about that the old thing didn't.

Most huge products you know about, use, and love started in niches that had
established leader. This is true for iPhone, iPod, Mac, MacBook, Chromebook,
Github, Facebook, Google, Twitter, MySql, Firefox, Chrome, Android,
BlackBerry, Galaxy S, Xbox, Playstation, GoPro, and on and on and on and on
and on.

Do yourself a favor, make a pitch page, have a beta sign up form, and start
finding people to sign up for your beta. It doesn't even have to be a built
product yet. It can be unfinished.

The only thing you need to have a business is customers that pay you money.
You figure that out and it doesn't matter what niche you are in.

------
matchagaucho
Peter Thiel gave a great talk about "second mover advantage".

[https://www.youtube.com/watch?v=DLWyP83iU5M](https://www.youtube.com/watch?v=DLWyP83iU5M)

Choose an existing market/app and go after it, but _only_ if you bring a 10x
differentiator.

~~~
rfrey
I hear the "10x better" thing all the time, and it seems like an
insurmountable barrier to me. I can only think of a few products that were 10x
better than their predecessors.

Google maps - probably 10x better than the static maps before it.

Word - not 10x better than Ami. Excel - not 10x better than 123. Gmail -
different but not 10x better than what I was using.

Nope, I got Google Maps, that's it.

~~~
brbsix
Personally I don't think Google Maps (upon it's conception) was 10x better
than Mapquest. Even for a while after Maps came around, Mapquest was pretty
compelling. Yahoo Maps was also around during this time, circa 2002 I believe,
though I don't recall using it much.

I can think of quite a few products that weren't all that great upon first
release. Sometimes it takes a few iterations/generations for it to really make
sense.

~~~
vinceguidry
Google didn't have to bring a 10x differentiator to the table in order for
Google Maps to be worth it for them. They had other reasons for building it
than directly making money off of it.

If you don't have to actively sell your product then the rules change.

------
teleclimber
As someone who started a Saas in a niche market that had a long standing
leader I'd say this:

Ask yourself not whether there is a leader in the market, but whether that
industry is in flux and whether the buyers in the industry are apt to seek and
adopt something new.

If you don't get the sense that things are fluid in your target market, then
I'd recommend staying away. In some markets people just don't like change.

IMO it's not about whether there is a leader, or whether it's an untapped
market, it's all about how the market reacts to new things.

Look for reactions to other products in the same market on social media. Was
there excitement? apathy? Why? Consider this a preview of the kind of
reactions you're going to get. If you don't like it stay away.

------
atmosx
I replied a similar thread sometime ago with a short-story, if the OP is
interested here it is:
[https://news.ycombinator.com/item?id=10540657](https://news.ycombinator.com/item?id=10540657)

------
throwawaymsft
The presence of a leader means there is a market, which is a good sign.

> I would love to learn, I'd class it as a success if it paid for its own
> hosting and made me more than say $100 a month

I think you know the answer you're looking for. Go for it.

------
sharemywin
I think you need to ask your self how you'll market it. adwords? create a
landing page with a free trial link to a wuffoo form to collect lead info. on
the thank you page mention your collecting names for beta. then do the math
and see if its worth it. or create a landing page and start blogging to get
traffic. another option would be to partner with website creators and or
hosting providers and work out a partnership to split the profits.

------
dorfuss
Look at more traditional businesses like restaurants. If there is a restaurant
in the area, you might think - oh dear, no place for me here. But no, on the
contrary, businesses thrive because of the environment around them. This
existing restaurant offers "local food", so you offer Italian or "for single
mothers with little kids". The spot becomes full of restaurants and there
always will be customers to come to your place because they just happen to be
in the area.

You go to a flower market - there are tens of different vendors selling
similar quality, similar product at the same price and at the same closed
space. And they are doing fine.

Or look at a traditional marketplace - you have tens of farmers selling very
similar product. And yet they are coming together to sell their fruits and
vegetables. True, maybe there are different dynamics there, there are more
buyers than vegetable stands and if the line is longer than 5 people you move
to another stand.

But I believe the same works with software and Internet Businesses. It does
not harm anyone if there are different tools doing similar things. Look at
digital cameras - there are hundreds of them and there is a market for each.

A great example is Coca Cola and Pepsi. Pepsi was created because it was
understood that with the market saturated with one product there would
obviously be people who would buy Pepsi just because it's not Coca Cola.

Competition is a very sound and healthy environment to work at because you can
perfect your product and narrow down your target audience. As @petercooper
said: because you see that there already is a business that thrives, you save
yourself a lot of trouble testing if anybody wants to buy such a product.

Now marketing is the key.

------
rekoros
In a busy market, distribution is king. It's hard to get your name out there.

Speaking of unknown players in this space, check out the wonderfully
minimalistic updown.io. It's much cheaper than SP and really is quite good.

Here's our dashboard: [https://updown.io/szug](https://updown.io/szug)

~~~
WA
Wow this looks good, just signed up.

------
weego
Niches with a single dominant provider are generally a hot bed of discontent.
If you know the market well enough and understand the issues that cause the
discontent then it's an excellent place to be.

------
cdelb
1) I'm currently building a product in a niche with a clear leader. Turns out
it isn't that hard to steal customers from them because they appear to be
rather comfortable and are unwilling to listen their customers.

2) Whatever niche you initially pick - please make the effort to do some basic
customer discovery. Call some folks up who are directly experiencing the
problem you are trying to solve. Even talking to 20 people will give you a lot
more to go on. People are much more willing to talk if you aren't selling them
anything.

------
lamby
> I'd class it as a success if it paid for its own hosting and made me more
> than say $100 a month.

If you can "niche", absolutely. A market leader cannot be serving everyone's
needs precisely.

------
pdevr
Give it a go. Actually doing it and learning from your failure or success is
much better than endless analysis of niches.

Just make sure to have definite goals to make sure you are making progress
along the way. If you miss goals continuously, maybe you should readjust your
goals, maybe the niche is too difficult to break into, or maybe you need a
different approach to marketing & getting traction - learning the "art" of
finding out what it is will in itself be an invaluable experience.

Good luck!

------
ThomPete
Yes of course. What are you waiting for.

However my advice would be to find something truly uniquely different to your
business, not just incrementally better or just incrementally different.

------
drchiu
If you're going into a market with an existing market leader, you need to make
sure you have a better way of attracting customers.

A lot of engineer types don't understand the sales cycle and how to design
their sales funnel to capture curious visitors and cultivate them into paying
customers.

Before launching a SAAS, look at whether you have a plan on attracting your
"ideal customer" at a rate that makes economic sense to start your business
venture.

------
mindcrime
"Never be afraid of a crowded market... just be better than everybody else."
~~ Bob Parsons

Note that "better" does not _necessarily_ mean "better product". It could mean
better marketing, better sales force, all of the above, or "other".

I suggest that you read _The Discipline of Market Leaders_ , _Marketing
Warfare_ , and _Differentiate or Die_ , and give serious thought to those
ideas.

------
pbiggar
You need to pick your niche well. Go for one where people have lots of
different opinions about how it should be done, then pick a particular niche.
Bug tracking/project management is a good example of this: there's the big
winners (say Jira) in the space, but then there are niches with enough people
who want something different to Jira.

Are there niches in the statuspage space? I doubt it.

------
merlinsbrain
If you can sell it, build it.

There's definitely a lot of sites that don't use anything like statuspage.io,
go out and convince them it'll help.

Talk to people who you think would be your customers. Good ol' fashioned
market research.

If you can't sell it, build it anyway - but don't quit your job :)

------
tony-allan
Keep your first idea simple and focused because you have a lot to learn. You
will need to integrate with services for payments, customer communications,
support, a status page :-), etc. These all take time but are fun to learn
about.

~~~
iDemonix
That's a good point, I suppose I should focus more on the learning than the
income for the first project.

------
jordansmith
I say yes. If someone else is successful you know that it is a proven market.

Depending on how big they are you might not be able to beat them, but that
doesn't mean you still can't be successful.

------
tomwhita
If you're looking for a final external "push" from a stranger, you've come to
the right place. Start it. Build the thing you envision. Don't worry about
competition in your space for now. Build the best product you can. Learn the
stuff you want to learn. Show it to people. Talk about it with clients. Life
is short and you only get one shot at it.

------
ew
Many a company has been successful simply for _not being the other guy_.

