What would our ideal SaaS business look like?

Profitable, not too cutting edge, vertical utility SaaS

Mac took a sip of his Best Day NA Kolsch and set it back on the table by the fire pit. It’s 1:00pm, and we’re sitting outside on a wonderful October afternoon, having lunch down the street from our office.

“We should just define the absolutely perfect SaaS”, he says.

I’m very down for this discussion.

“To build or to acquire?”

“Both.”

“Good idea. Hmmm… yeah, we define our ICP for sales purposes all the time, but I’ve rarely heard about mapping out the ideal SaaS business to own.” I whip out my iCloud Notes app. “Let’s talk it through and I’ll write it down as we go?”

And so, we bring to you our still-evolving rubric of what emerged from the discussion!

The Perfect Product

Knowing that we’d likely never get ALL of these things perfectly in one place, these criteria are roughly how we think of an ideal SaaS company to own:

1. Has existing competition

2. Sold to businesses (B2B), not consumers

3. It’s easy to adopt but hard to leave

4. Addressable market is below the size VCs care about

5. Product has virality potential built in

6. Customers are 50-1000 employee companies

7. Distribution is primarily from organic search

8. Not built with cutting-edge technology

9. No third-party platform dependency

10. Serves a well-defined need that is not a fad

11. Serves a core utility, not a nice-to-have

12. Doesn’t serve a mission-critical need with occasional urgent flare-ups (e.g. PaaS/IaaS)

13. Priced at or well above $100+ per month per user

Sizing Up A Medium Niche

Some of these are obvious. But others not. For example, why would we intentionally try to serve a market smaller than what most VC-backed startups want? Wouldn’t we want to sell to as large a market as possible?

Well, maybe if we’re extremely well-resourced and looking for huge scale, yeah. But if we’re looking for cash flow? A venture-sized market is actually a drawback.

We don’t prefer to go against companies like Hubspot, or ServiceNow, or Relativity. The average customer of a venture-scale SaaS looking at alternatives expects so darn much that it’s difficult to please them enough to justify a reasonable price point.

Another examples is: why would we avoid cutting-edge technology—isn’t that what we should be going for, to have the newest and greatest? Again, maybe if you want to be the next OpenAI! But not if you want to grow a predictable, profitable business. In fact, tech that is somewhere between “legacy” and “current state of technology” is ideal.

When you’re a small team and the ground is shifting under your feet, it’s hard to plan—but if you can come in and make improvements to a tech stack that is built on well-trodden ground, you’re in good shape and not constantly under fire from customer expectations. We don’t really want Experimental Revenue (ERR), we want true recurring revenue coming from well-defined customer budgets, not “shiny object pilots”.

But… What About GenAI?

All of these criteria mean that—right now, at least—we are unlikely to invest in, start, or acquire a product that is completely AI-native, such as an AI agent building platform. That ground is just changing too fast. It’s shaking under our feet. And so the risk-reward ratio doesn’t suit us.

In 2025, and probably 2026, we’ll leave hardcore AI products to the true hackers, the experimenters, and the brave and deep-pocketed venture investors.

Remember, our goal at Wildfront is predictable cash flow with medium potential for growth. We trade some degree of extra revenue growth potential, passing on what could otherwise be hyper-high-growth opportunities, and we get more predictability in exchange.

Fortunately, that’s exactly what we want.