In the era of services like Netflix, Dropbox or Amazon Prime, it’s quite easy to forget about the times when customers were getting in line to acquire boxed digital products, like software or entertainment media, with one-time purchases. The age of annual charges started when consumer products turned into subscription-based services.
The same transformation happened approximately a decade ago in the enterprise world when enterprises reimagined ages-old solutions like enterprise resource planning or customer relationship management as ongoing services monetized via recurrent billings. Hence, the business-to-business (B2B) software-as-a-service (SaaS) model was born in the 2000s and disrupted the way enterprise technologies have worked over the last two decades.
B2B SaaS was left largely untouched by the thriving blockchain tech and cryptocurrency ecological system until a year ago, but a long-running bear market made the Web3- 1st startups realize that they should leave no stone unturned to be able to stay around the harsh market conditions and tackle increasing competition.
From supplying enterprise-level Ethereum (ETH) infrastructures to blockchain-based document storage systems, Web 3.0 SaaS (or SaaS3) corporations offer decades-old business services reimagined in the Web 3.0 environment, and fresh data shows that the business world is open to trying new ways of doing old things.
1 attempt by deal investor Tomasz Tunguz to size up the total addressable B2B SaaS3 market calculated that 57 Web 3.0 SaaS projects generated revenue ranging from $500,000 to over $100 Million in the Second half of 2022. The on-chain revenue of Web 3.0 startups, largely dominated by Ethereum (ETH), signifies a total addressable market of $231 Million in 2022.
The total addressable market, or TAM, is an admittedly optimistic chart that multiplies a project’s potential number of customers with the budget reserved for the service. It does not involve any competition or real-life limitations, hence the potential that the “addressable” part implies. TAM is the capacity market opportunity for a product or a service, and the B2B SaaS3 space had south of one-quarter of a Billion dollars of that opportunity last year.
Cashless society goals work in favor of Web3
Mark Smargon, CEO of blockchain-based payment platform Fuse, thinks that B2B SaaS in the Web 3.0 industry can take advantage of quite a number of factors, including the increasing adoption of mobile devices, the internet and e-commerce platforms, likewise as a shift towards cashless societies in numerous countries.
Inherent complications like high costs, privacy issues and geographical restrictions make traditional payment systems expensive and challenging for merchants. That’s why Smargon pointed out that Web 3.0 startups would see the most whole lot of growth opportunity in supplying services to Web2 corporations and simplifying the onboarding and usage of blockchain tech solutions, applications and payment rails. He informed Cointelegraph:
“It boils down to Web 3.0 startups giving enterprises a way to provide their customers with experiences on par with what they are used to in Web2 while enhancing efficiency, value proposition and stickiness.”
Web 3.0 startups need to begin explaining the blockchain-based way of doing business to traditional corporations with baby steps, reports by the Fuse CEO. “Salesforce users think of nonfungible crypto tokens (NFTs) less as collectibles or art and more like the following generation of loyalty programs for their finest customers,” Smargon stated. “ Non-Fungible Token (NFTs) can be changed on the fly to adjust terms and unlock physical and digital bonus as customers engage more with a company.”
Web 3.0 adoption starts with off-boarding from Web2
The real tipping point may arrive when corporations use blockchain tech solutions to manage day-to-day business activities, such as accounting, procurement and invoicing, Smargon posited.
In the case of payments services, developing countries where a whole lot of portion of the population is either unbanked or underbanked add some unique opportunities, he stated. In such countries, corporations are not entrenched in legacy systems or vendor-locked, making them “free to innovate and engage with Web 3.0 solutions from the start rather than having to retrofit.”
Onboarding corporations to Web 3.0 has another challenge for startups, Smargon noted: “ They need 1st off-board enterprises [from Web2] and then onboard them to Web3-based systems.” The key to making enterprises understand there are viable alternatives is by supplying them with compelling business and efficiency advantages, Smargon said:
“To do that, [ Web 3.0 startups] must produce solutions for enterprises to build secure products without taking on the burden of custody, reaching customers without incurring the expenses of compliance and licensing, and supplying extraordinaire consumer experiences without building wallets from scratch.”
On the other hand, it doesn’t end there: Smargon also mentioned that Web 3.0 users likewise need in order to move value within and outside their corporations without facing high charges and barriers. “Changing consumer demand drives change at the grassroots level, meaning enterprises must adapt or die,” he said.
Web 3.0 still needs its ‘picks and shovels’
On the surface, the SaaS movement and the Web 3.0 movement are quite misaligned in their interests, reports by Nils Pihl, the CEO of decentralized protocol developer Auki Labs:
“ Although while Web 3.0 is encouraging people to take ownership and responsibility for their own digital presence, the SaaS movement’s core philosophical tenet is handling the complexities of the digital realm for you.”
And once looking from the opposite perspective, on the other hand, SaaS has already won the Web 3.0 space, Pihl claimed: “Platforms like Infura and Alchemy run huge chunks of the Web 3.0 ecological system because so few can, or even want, to run their own nodes.”
As a result, a lot of the corporations that essentially make reliable revenue in Web 3.0 are essentially supplying tools (as a service, commonly) for other Web 3.0 projects, Pihl stated, adding:
“In a world where the killer applications have not is still been found, a safe bet is selling picks and shovels to those that are digging.”
He continued by saying that numerous Web 3.0 corporations are so passionate about Web 3.0 that they design by ideology instead of looking for the product-market fit. Pihl thinks, if startups begin by saying “we are a Web 3.0 company,” they limit their perspective or capacity to listen to and understand the business needs of their potential customers from the beginning.
Despite the fact that the B2B SaaS market is huge, people shouldn’t assume that “product X but on the blockchain” is a winning idea. The founder could raise money for it, but if the new on-chain “product X” does not solve the issue better than the one already in use, there is no reason to switch to the new product, reports by Pihl.
Assuming clients will be happy to embrace a Web 3.0 product because its developer finds it philosophically, ethically or aesthetically superior is not a good approach, reports by Pihl:
“ You must to solve a pressing issue for the client, or they won’t engage.”
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