The “Purple Ocean” strategy has the best odds of success for SaaS startup founders who want to grow efficiently without big VC funding.

It’s a twist on the Blue Ocean strategy of creating a new category and the Red Ocean strategy of competing in an established category, as described in a popular business book 20 years ago.

Purple Ocean is creating a product in a well-known category but adapting it for specific markets, especially vertical markets.

I heard about this term from my friend Melissa Kwan last month. She isn’t inventing a new category at eWebinar, but they are completely focused on a specific market with specific needs. Purple Ocean.

I started my career in the CRM industry when it was brand new–a Blue Ocean market. There were few competitors and we were teaching salespeople to use computers for selling back then. Really.

Creating new categories is usually very expensive and can take a long time. But you don’t have hundreds of competitors or commodity pricing yet.

Now there are multiple large CRM companies and countless small ones–that are all growing steadily. Differentiation on features and price is difficult in the Red Ocean of horizontal CRM solutions, but it is possible

There are thousands of industry-focused CRM solutions that are growing successfully with a vertical focus: just for insurance agents, digital agencies, doctors’ offices, or whomever.

They didn’t invent CRM in the first place, but they do have specific features, messaging, integrations, pricing, education, designs, terminology, reports, and workflows just for that industry. They speak the industry language and have insider relationships and credibility.

Tiny bootstrapped CRM companies easily compete and win against Salesforce or Hubspot by providing a complete solution just for that industry right out of the box.

“It’s like __________, only it’s specifically for _________” gets the message across quickly.

These vertical SaaS companies are not inventing a new category (Blue Ocean), so they have far less education work to do.

Nor are they competing in the crowded horizontal CRM market (Red Ocean), so they have few direct competitors in their niche.

These vertical markets usually don’t attract VC capital, so savvy practical founders can grow efficiently and patiently–at the pace of their market.

Vertical SaaS and specialized Purple Ocean solutions can be extremely efficient to build and grow relative to their Blue Ocean and Red Ocean peers.

Purple is usually 10X easier than Blue or Red to create a valuable software company worth $50 million.

50% of all software companies on my Gregslist of 6000 companies are industry-specific solutions. Purple Ocean SaaS companies are the most common overall.

#practicalfounders