You have your whole life to write your first record, and only 12 months to write your second.
The trials and tribulations of going multi product
When I became an FP&A leader for the first time, I built our entire operating model from scratch. I had no context and no templates. And that blank workbook staring back at me was DAUNTING!
That’s why I’m excited to introduce our sponsor, Mercury.
Their VP of Finance, Dan Kang is sharing his personal template for building a financial forecast model.
Whether you’re preparing to fundraise, updating investors, or charting a new course for the company, you’ll likely reach a point where you’ll need to build a forecast model. It can help you align on clear business goals and understand why those goals matter.
In the record industry, there’s an old saying:
“You have your whole life to write your first record, and only 12 months to write your second.”
I’m no songwriter, but I’ve always related to this phrase. It’s not easy to come up with new shit that hits just as hard the second time around.
I actually think that’s where the term “sophomore slump” comes from…
SaaS companies can relate. A founder has their whole life to come up with an amazing idea—something game-changing and novel. But once they get some funding and show initial traction, the pressure mounts to go multi-product, become a platform, invade tangential TAM, and DOMINATE their category.
This pressure usually arises around the Series B or C timeframe. If I were to generalize:
Seed: Kickass founder with a compelling idea
Series A: Early traction
Series B: Clear product-market fit with the first product
Series C: Repeatable sales motion + TIME TO ADD A SECOND PRODUCT
I think 50 Cent produced the best debut album in the last 25 years.
For context, Jay-Z’s Reasonable Doubt sold 1.5 million copies. Kanye West’s College Drop Out shipped 3.4 million. And Eminem’s The Slim Shady LP moved 8.4 million.
50 did 12 million.
Get Rich or Die Tryin’ was an absolute tour de force. Eighteen months later, he put out The Massacre, which was still a respectable listen that managed to ride the wave of his first cultural mainstay. And then what came next? Let’s just say it was never the same.
The pressure to release a second hit is just as real for SaaS companies. For founders, releasing a successful second product can make or break the company’s trajectory. A second hit isn't just about getting attention—it's about maintaining growth, increasing market presence, and proving that the first product wasn’t a one-hit wonder.
And did I mention, it isn’t cheap?
Why is There So Much Pressure to Add a Second Hit Product?
Increase Wallet Share of Existing Customers: The customers who bought your first thing like you. But there’s only so much they can buy of it before it becomes wasteful. You can capitalize on this relationship by “attaching” another product
Take ServiceNow, for example. Their second product, IT Operations Management (ITOM), was aimed at the same buyer as their first: the IT department.
Market Size Constraints: You can’t have 200% of a market. In horizontal SaaS the market leader usually only captures ~15% (unless you’re Salesforce). In vertical SaaS it’s totally possible to get close to ~50% (see: Mindbody in the gym space, Dutchie in the Cannabis space, Fareharbor in tours and activities). But the knife cuts both ways in vSaaS - you can get more TAM but you need to be thinking multi product very early on because of the absolute size
Shopify understood this well. They didn’t stop at e-commerce software. Their second album was Shopify Payments, followed by Shopify POS—serving the same merchants but expanding beyond online sales to include physical storefronts.
Defensibility: You’re less likely to get ripped and replaced if you occupy multiple workflows for a customer. Point solutions (companies with just one job-to-be-done) are always at risk of being replaced by an incumbent who can offer their service as the fries that come with the burger.
Square released their second album, Square Capital, which complemented their initial payments product and created a deeper moat in the ultra competitive fintech space. It was a natural extension of the value they already provided, and helped box out competitors from coming after their flagship credit card swipey thing.
Wins and Losses
Just like in music, some companies manage to avoid the sophomore slump, while others struggle to replicate the success of their first product:
Successful Second Product Launches:
Salesforce (Sales Cloud → Service Cloud): They expanded to customer service, building a new fanbase within the customer support team. It was like 50 Cent's The Massacre—not as iconic as the first, but still a big hit that expanded his influence (and Candy Shop slapped).
Atlassian (Jira —> Bitbucket): Atlassian first found success with Jira, a project management tool popular among software developers for tracking bugs and tasks. Their second product was Bitbucket, a Git repository hosting service for version control, aimed at the same audience—developers.
Intuit (Quickbooks → Quickbooks Payroll): Intuit started with QuickBooks, an accounting tool for small businesses. Their second product, QuickBooks Payroll, was targeted at the same customer base—small business owners—but solved an additional and very critical pain point: payroll processing. This was a workflow worth winning.
Second Product Flops:
Evernote (Notes → Work Chat): Evernote initially gained popularity with its note-taking app. Their second product, Work Chat, attempted to turn Evernote into a collaboration platform by adding messaging features. It failed to resonate with users, who did not see Evernote as a communication tool, and the feature ultimately fell into disuse.
Dropbox (File Storage → Spaces and Paper): Dropbox launched Dropbox Spaces and Paper to evolve into a more collaborative workspace, integrating files, tasks, and team management. It struggled to gain significant market traction due to strong competition and the company's established image as a storage provider, which hindered perception as a broader workspace tool (also, there seems to a be a trend here when companies try to go from single player to multi player mode with collaboration features… just saying)
Airbnb (Experiences): Airbnb’s "second album" was Experiences, but the timing (right before a global pandemic) led to a major setback. Even though it resonated with some fans, it never reached the heights of their core offering.
Key Takeaways for Avoiding the Sophomore Slump in SaaS
Align with Your Core Fans: The best second products (or albums) stay close to what made the first successful. Whether it's Square adding Capital or ServiceNow expanding ITOM, knowing your core audience and enhancing their experience leads to success. Start (and end) with the initial customer in mind.
Timing Is Key: Release your next product when your audience is ready for more. Like an artist trying to ride the wave of a big debut, SaaS companies need to launch their second product when there's still momentum.
Avoid Dilution: Trying to switch genres or appeal to a completely new audience is risky. HubSpot managed to do so when going from Marketing tool to CRM (rare!), but many, like Dropbox Spaces, did not. Success often means sticking to what your fans know you for, while still offering something new and valuable.
In both music and SaaS, the pressure of the follow-up can be intense. Whether you’re a musician trying to replicate the success of a debut album, or a SaaS founder attempting to launch a second product, the stakes are high and the risks are real.
But the truth is, the same principles apply: know your audience, build on what made you great, and don't rush to release something just to stay relevant.
For SaaS companies, releasing that second hit isn’t about reinventing the wheel—it's about expanding your existing relationship with your customers, solving a new pain point, and staying true to your core. And if you do that well, you won't just avoid the dreaded sophomore slump, you'll set yourself up for lasting success, album after album—or in this case, product after product.
Oh, and don’t release a country album if you aren’t country.