SaaS Founders Must Make Trade-Offs: Walk Away from Big Customers Who Demand Customization

For your reference. I think the most important thing in a SaaS startup is knowing how to make trade-offs: from a vast river, take just one ladleful. If a large customer demands customization, wrestle with the decision if you must, but then walk away decisively. Continually accommodating its changes will ultimately exhaust your capacity to innovate rather than let you build a genuinely scalable product. Imagine 15 different types of large customers, each with its own requirements and demands for customization. You would end up managing dozens of product versions or projects. You could not replicate the product quickly or scale, and would ultimately become a labor-intensive software contractor. SaaS founders should look at Basecamp; the CEO of Taiwan’s iCHEF is another good example. Stay resolute. Know what you want at this stage and who your customers are. Thank customers who are not a fit and refer them to a capable project team that can do the work. If a VC asks why you are not serving big customers X or Y, or why you are not developing this or that feature, the best answer I have heard in recent years is: “We make clear trade-offs. X and Y are not right for us at this stage. We have clear target customers and a clear sequence for product development. Those additions would only blur our product’s identity, make it bloated, and make it harder to use.”