Fun_Ostrich_5521 The Most Powerful Framework in SaaS Nobody Taught Us in School
7 Powers: The Strategic Compass Every SaaS Founder Needs
Learn Helmer’s 7 Powers & BCG Strategy Palette to build lasting SaaS advantages, beat competitors, and scale your startup effectively.
Ever wonder why Netflix crushed it while Blockbuster faded into history?
And why having a great SaaS product still isn’t enough to win today?
💡 Time for a SaaS reality check.
You’ve built a killer SaaS product.
The UI is clean.
Your early users are raving.
Maybe you even hit Product Hunt #1.
But fast-forward six months…
Three competitors just launched.
They’re funded.
They’re faster.
Your growth? Flatlining.
Sound familiar?
Here’s the uncomfortable truth no one told us in school:
In SaaS, being first or even being the best isn’t enough.
What you really need is staying power — the kind that survives funding dry spells, copycats, and the next shiny thing.
🧠 That’s where Hamilton Helmer’s “7 Powers” comes in.
Helmer’s insight is simple, but brutal:
That’s why Netflix didn’t just beat Blockbuster by streaming faster.
They changed the game with strategic moves:
🔹 →Counter positioning (DVD by mail vs. retail stores)
🔹 →Scale economies (massive original content investment)
🔹 →Network effects (algorithms that got better with more viewers)
Same with Spotify.
It’s not just a slick music app — it’s a fortress built on switching costs and network effects.
These aren’t happy accidents.
They’re designed advantages — what Helmer calls Powers.
Market Value
🔢 The SaaS Success Equation
Helmer boils it all down into one razor-sharp formula:
Let’s break it down:
🔹 →Market Scale = Market Size (M₀) × Growth Rate (g)
🔹 →Power = Persistent Market Share (s) × Long-Term Margins (m)
So:
🔹 →Value = M₀ × g × s × m
Or in plain English:
🔹 →Is the market big and growing? → That’s M₀ × g
🔹 →Can you hold a meaningful chunk profitably? → That’s s × m
And that second part — the Power — is what separates category kings from forgotten features.
But how do you know which kind of strategic power to focus on, and when?
That’s where another powerful framework steps in — one that complements Helmer’s 7 Powers beautifully.
📊 BCG’s Strategy Palette: One Size Doesn’t Fit All
In the book Your Strategy Needs a Strategy by BCG’s Martin Reeves, the authors introduce a brutal truth:
Different markets require different strategic playbooks.
And BCG maps them across two key dimensions:
- Predictability (Can you forecast how your market will evolve?)
- Malleability (Can you shape it yourself?)
Each quadrant demands a different approach:
- Visionary: Envision the future and build toward it. Perfect for bold SaaS disruptors like Figma or Stripe.
- Classical: Optimize in stable, mature markets. Think Oracle, Salesforce.
- Adaptive: Rapidly evolve in fast-moving, unpredictable niches — ideal for startups in trend-sensitive spaces.
- Shaping: Influence the rules of the game — like OpenAI or Shopify shaping ecosystems.
While Helmer gives you the Powers to build moats, BCG shows you when and how to use them based on your terrain.
🚨 The Big Mistake Most SaaS Startups Make
We obsess over features.
We iterate on design.
We celebrate product–market fit.
But we forget to ask:
If you’re not designing for Power (s × m)
you’re not building a company —
you’re placing a bet.
7 Powers
🔹 →🔹 →Here are the 7 powers
- Scale Economies Amazon didn’t win just on tech — it scaled logistics so well that it could undercut smaller players. In SaaS, this shows up when companies like Zoom or Atlassian spread R&D, infra, and support costs over millions of users. Startups just can’t match that price-performance curve without going broke.
- Network Economies Facebook got better every time someone new joined. Same with Slack or Notion — each new team brings more shared docs, integrations, and templates. The product literally improves with usage, making it harder for alternatives to catch up.
- Counter Positioning A strategic move where a new entrant deliberately offers a product or business model that contrasts sharply with the incumbent’s, often making the old model feel outdated or irrelevant. Instead of competing directly, challengers emphasize differences that become their unique selling points.
Examples:
🔹 →Netflix vs. Blockbuster: Streaming vs. rentals
🔹 →Figma vs. Adobe: Web-first, multiplayer vs. desktop
New entrants win by:
🔹 Lowering costs
🔹 Offering unique features
🔹 Building a distinct brand
Classic plays include:
🔹 →Avis’s “We Try Harder”
🔹 →E*Trade’s low-cost pitch
Though risky, counter positioning can redefine competition.
Switching Costs
- Switching Costs Salesforce isn’t sticky just because of features — it’s months of onboarding, training, and deep custom setups. SaaS thrives on this: the more embedded, the harder to leave.
Even Apple wins this — subscriptions, AirDrop, iCloud — switching feels painful.
But beware: switching costs buy you time, not loyalty.
Keep innovating or customers will jump.
- Branding Apple made people line up for phones. HubSpot and Intercom win not just on features — but on feel, tone, trust. Brand = a shortcut in crowded markets.
- Cornered Resource Pixar had top storytellers. Grammarly has exclusive datasets. OpenAI has research talent. If others can’t get it, they can’t copy you.
- Process Power This is the silent killer. Toyota didn’t just have machines — it had unbeatable processes.
SaaS parallels:
🔹 →Fast onboarding
🔹 →Support that scales
🔹 →Shipping velocity
🔹 →Internal tooling
These are moats competitors can’t see — and can’t easily copy.
🧩 So, what’s the bottom line ❓
🔹 →Compounding Wins: Stack powers. Google combined scale + network effects = dominance.
🔹 →No Moat Is Forever: Powers endure, but moats require maintenance.
🔹 →Brutal Honesty Wins: Know where you truly lead — and where you don’t.
🔹 →Play Offense: Don’t just defend your advantage. Undermine others’ powers, too.
TL;DR: SaaS success isn’t about being first or having the best product. It’s about building moats — durable strategic advantages — that keep competitors out. Helmer’s 7 Powers + BCG’s Strategy Palette = a masterclass for founders who want to win long-term.