Online marketplaces for software-as-a-service are all the rage. The big distributors have them. Many individual organizations have them, from large ones like salesforce.com to the small. Google, of course, has one. However SaaSMAX, a San Diego-based marketplace, believes that they have carved out a unique and profitable niche in the market, proactively constructing links between app vendors and app resellers.
The company was formed in 2011, and is led by Dina Moskowitz, who previously founded and ran an online data storage company, Critical Digital Data Solutions. After selling that, she looked for a new opportunity in the SaaS world, and seized upon the idea of a channel-focused SaaS marketplace.
“Before this, I didn’t understand how significant the channel was to the adoption of SaaS software,” Moskowitz said. “Very few app vendors understand the channel’s importance today. Very few apps are being developed with a knowledge of how to leverage the reseller channel out there.”
The company spent 2011 developing their platform, and began hiring an executive team with deep channel experience.
“Since then, we have been bringing on resellers and SaaS vendors, learning what pricing models would work best, and how to best engage the SaaS community,” Moskowitz said. “We launched our commercial platform last fall.” They also began extensive outreach to channel organizations like CompTIA and SMBNation, and won some channel awards.
Moskowitz said that even though there is extensive competition in this space, that competition does not serve all the channel market, and doesn’t maximize opportunities for many of those it does serve. Google may be the 800 lb gorilla of the online world, but Moskowitz said that when they contacted ISVs and vendors who were using the Google Marketplace, they found a lot of interest from businesses who were only making $5 per user per year on a Google sale.
“We are also much more proactive than Google,” she said. “We are a SaaS distributor of the future, and we provide vendors with direct marketing, like webinars and email campaigns and social media. We get to know resellers joining SaaSMAX and make introductions with appropriate vendors. We also introduce SaaS vendors to each other where there are opportunities to collaborate.
“SaaS vendors want to find advisors who can help them extend their reach, and they don’t know how to reach them, so there is a gap,” Moskowitz added. “A lot of SaaS companies got their early customers in their local areas, and they have difficulties when they have to reach out to the total available market because they don’t know those areas that are remote to them. This is a way that they get known to Main Street communities.”
All three large broadline distributors in North America now run their own SaaS marketplaces, but Moskowitz said they don’t have a major negative impact on SaaSMAX’s business because there are real differences between the SaaSMAX model and the distributors’ models.
“There is some overlap but not a lot,” she said. “We think SaaS distribution is more about the marketing and matchmaking as opposed to being in the middle of the transaction.”
SaaSMAX also works with many app vendors whose products are niche to many IT solution providers, but who have very large channels, in areas like accounting and HR.
“We do pure SaaS, not cloud infrastructure,” Moskowitz said. “We attract these vendors whose products aren’t really IT channel, but who are still sold by many solution providers. Most of our registered resellers are from the IT channel, but we’ve had good success matching up the IT channel with apps for the legal sector, and apps for making your own website.” They’ve also signed up Google App, Salesforce and other ‘born in the cloud’ resellers who aren’t typically customers of the broadline distributors.
Many of the vendors it attracts are small, but SaaSMAX has also attracted some larger vendors because they can reach the IT channel through SaaSMAX at a much lower cost than distribution for SaaS.
“Citrix joined us a few weeks ago,” Moskowitz said. “A broadline distribution model is not aligned with their low-cost SaaS model for this particular type of distribution. We have an affordable way of getting to the channels without the investment that is in distribution, so compared to that, their investment and cost is next to nothing.” AVG, a billion dollar company, is also on SaaSMAX, as is Soonr, a document management platform with hundreds of thousands of users.
“Some of these app vendors have their own marketplaces, but they still need a home and a place to be found,” Moskowitz said.
“We are focused on the range of small to large SaaS apps in an ecosystem that’s geared to maximizing the business relationships,” said Keith Newman, SaasMAX’s VP Channel Business Development. “We have a lot of SaaS companies that couldn’t afford to build a partner network, but also large SaaS companies who want to work below where their current partners are playing.”
Between 120 and 130 vendors, with approximately 150 apps, have signed up. About 500 resellers have enrolled, with another 20,000 on opt-in lists who are following SaaSMAX.
“There’s no cost to resellers to join, but we do verify their site and talk to them before we give them access, so we don’t let just everyone in,” Moskowitz said.
A community with peer recommendations is one of the things that is scheduled to be added to the site. So are automated tools, which make things more efficient. Moskowitz said that a deal management engine and a transaction engine are in development now.
“It has been surprising and gratifying how broadly accepted the SaaSMAX platform is,” Newman said. “We are getting a lot of inbound queries about everything from white label to basic relationships.”