INSUBCONTINENT EXCLUSIVE:
One answer: E-commerce, Chrome extensions, mobile apps, enterprise SaaS, SMB SaaS — in that orderJulian ShapiroContributor
Julian
Shapiro is the founder of BellCurve.com, a growth marketing agency that trains you to become a marketing professional
He also writes at Julian.com. More posts by this contributorI co-run an agency that teaches a hundred startups per year how to do growth
This gives me a unique vantage point: I know which types of startups most often reach profitability.That’s an important metric, because
startups that don’t reach this milestone typically fail to raise additional funding — then die.Here’s what we’ll learn:Companies are
increasingly living and dying by ads
Because it’s the startup’s approach to customer acquisition — not its business model or market — that most determines its
early-stage profitability.E-commerce companies lend themselves best to ads, and SMB SaaS the worst
Meanwhile, most startup founders in 2019 are starting SaaS companies
They’d benefit from the data we share in this post.In fact, our agency has found that every other type of business reaches profitability
quicker than SMB SaaS, including mobile apps, Chrome extensions and enterprise SaaS.Our sampling of startups isn’t as biased as startup
valuation leaderboards, because we also see those that failed
That’s the key.You can use our experience to de-risk your startup
That’s what this post explores: How to change your product roadmap to pursue a path more likely to reach profitability.The startups that
frequently reach profitabilityHere’s the data my agency is referencing for this post:We train 12+ venture-backed and bootstrapped startups
Half are Y Combinator graduates
This is how we study early-stage product-market fit trends.We run ads full-time for between 20 and 30 mature companies per year
On average, each spends $2.5 million annually on paid acquisition
And, on average, each has 30 employees
Our clients include Tovala.com, PerfectKeto.com, SPYSCAPE.com, ImperfectProduce.com, Clearbit.com and Woodpath.com.Our students and clients
are roughly evenly distributed across D2C e-commerce, B2B, mobile apps and marketplaces.When we try to control for founder skill and funds
raised, the types of startups that first reach profitability do so in this order:E-commerceChrome extensionsMobile appsEnterprise
SaaSSmall-to-medium business SaaSOn average, an e-commerce company is more likely to first reach profitability than an SMB SaaS
company.Before I explain why, let me explain how we’re differentiating startups: I use the word “type” instead of “business model”
or “markets” because I’ve learned that business model and market are often not the best predictors of success
Instead, it’s your approach to customer acquisition
That’s what typically determines the likelihood of profitability.
