🏷️ Broke Target Markets

Selling software specifically to early-stage startups means selling to customers who have no money and are highly protective of cash.

Sorted (YC W23)

• What they built: A pure software, automated SaaS management platform. It promised to instantly plug into a company's backend and automatically track, manage, and eliminate unused third-party software licenses without relying on messy spreadsheets or employee surveys.
• The Failure: They built a highly frictionless tool that was perfect for tiny startups, but they immediately hit a fatal structural wall. Small startups don't have enough "software sprawl" to justify paying a premium for a dedicated management tool. Conversely, the massive mid-market and enterprise companies that did have massive software bloat required complex, highly secure integrations and legacy compliance features that the tiny, early-stage Sorted team mathematically could not build fast enough.
• The Outcome: Squeezed in the "valley of death" between small businesses that wouldn't pay and enterprise buyers they couldn't serve, they failed to find product-market fit. Unable to catch up to heavily capitalized incumbents in the SaaS management space, the founders quietly threw in the towel. The company domain is now entirely inactive, serving as a rapid casualty of a misaligned target market.

💡 Key Takeaway

For startups in this category, the core challenge is not the code but the surrounding market dynamics. Ensure you validate this bottleneck before scaling.