The right path.
How many ways are there to build a B2B WealthTech start-up?
Each company is unique. There are as many ways as there are companies.
But there are two main paths:
Option 1 – Do you build a single code base product that is used in the same way by all clients? Software as a Service (SaaS).
Option 2 – Or do you build a tech stack that’s customizable and changed each time, for each client?
Which is the ‘right’ way? Well, it depends on who you ask.
Ask a VC and 100 times out of 100 they will say Option 1. Single code base. Pure SaaS.
High margin. VCs don’t like Option 2. It has ‘implementation revenue’, which is one-time revenue. This is seen as ‘bad’ revenue. Only slightly better than no revenue.
So surely just do Option 1. The problem is it’s harder than a hard thing on a national hard day. Creating a product that clients want to use exactly as you have built it, with no changes, takes incredible effort, thought, work, experience, and luck. For sure it can be done but it’s super rare. Yet it is the ‘right’ way.
But it’s just crazy hard.
Indeed if you ask any founder, we all want that SaaS product, with 80% margins, etc. but Option 2 can be very tempting because it has a magical quality. You can get revenue much quicker by going down that road.
Option 2 also enables you to say yes to more clients. When a large financial institution sees your product and asks “Can it do X?” and “Can I add Y?”, if you say yes, you get the deal. So it’s very tempting. But by saying yes, you are building something that is added to your product and may not fit all other clients. So you end up maintaining separate lines of code. This inhibits scales and takes focus away from doing option 1. But the client offered you a lot of revenue to do the customization, so you said yes. And it can be a great business if you go all in on it.
Option 2 generates revenue much quicker. Option 1 has way better margins and is more scalable but it’s harder.
We have done both. We have Bambu Build which is the customizable product line. We now have Bambu GO which is pure SaaS. But it took 7 years to get to Bambu GO. There was so much to learn about what to put into it, and what not to. I am sure we could not have nailed Bambu GO right out of the gate.
So if any of you reading this want to start a B2B WealthTech, call me. I’ll share all the stories. I don’t have all the answers, but I can share my wealth of experience.
I hope it helps.
Founder & CEO