Signs of SaaS companies entering scaling phase

While this article was written for founders, I thought it would be helpful for investors to identify signs of SaaS companies entering the scaling phase.…

It’s a short article but here’s the TLDR version:

  1. Building a third-party ecosystem. “Ecosystems have many compounding benefits. They reinforce your leadership message (many companies want to work with you), inspire stickiness and retention (more reasons to stay), deepen your product’s capabilities, and produce a steady stream of success stories.”

  2. Layering in multiple products within a vertical. “…there is one thing that separates the good from the truly great in vertical software—the “layer cake”. This is the phenomenon of creating a multi-product strategy to layer in new products and cross-sell these capabilities to the existing customer base as a Second Act.”

  3. Creating value from data. “Finding a way to harness the value of this accumulated data to help customers make smarter decisions (and grow more dependent on those insights) at the growth stage makes for a great Second Act.”

  4. Having a unified vision. IMO, this is harder for investors to identify.

  5. Taking on adjacent verticals. “Growth-stage companies that have established a strong reputation in an initial industry can capitalize on this to take on adjacent verticals, in a Second Act known as “leapfrogging.””

  6. Evolving from a point solution to a one-stop solution for the category. “For companies that have already established credibility within a niche, moving across the tech stack from an initial wedge and evolving into a one-stop-solution for a category is an effective way to establish your Second Act.”



Nice post Cedric. These are good things to be looking for. We see these happening with many Saul stocks, but not necessarily all of these for any one company. However, CRWD seems to be strong in all of these.