David Cummings on Startups

White Labeled Software Strategies for Startups

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David Cummings

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Mr Dreamforce
Image by Simple Fox via Flickr

Recently I was talking to an entrepreneur with a B2B SaaS startup and the topic of white labeling his product came up. White labeling is a term to describe making the software brandable by a reseller (e.g. a reseller wants to make the product look like their own product to their clients). When the entrepreneur brought up the idea I immediately said that he should think really hard about it before doing it as there are serious long-term implications.

Here are some considerations when thinking about offering a white labeled product:

  • If you want to build a large, standalone brand, white labeling is likely not the way to go, although co-branding works well (e.g. some pieces like the logo and colors of the app are customizable but the URL, documentation, etc refers to the core product name much like salesforce.com does)
  • White labeling often works well if resellers are the primary distribution channel as well as having big companies resell it (in this case you’re helping others build their brand and you’re fine with being the behind-the-scenes provider)
  • White labeling also works well if you offer an affordable product that goes on a credit card and brand doesn’t play a role (e.g. 37signals and Campaign Monitor have great products that can be white labelled)

In general, most startups that are considering a white labeled version of their product should start with a co-brandable version and see if that meets the market demand as most of the time it does.

What else? What are your thoughts on startups offering a white labeled version of their product?

Comments

6 responses to “White Labeled Software Strategies for Startups”

  1. Sam Boonin Avatar
    Sam Boonin

    Agree that it’s really hard as a startup to pursue both a branded and a white-label strategy simultaneously.

    Along with what you wrote, another consideration is that white labeling of SaaS products is actually quite hard unless you built it from the start for that purpose. You’ll need to maintain the code base and run the service – it’s not as simple as OEMing a piece of software. That could mean a branch (or multiple branches) of your code base, which need to be updated with each release, etc.

    Reply
  2. Joe Colopy Avatar
    Joe Colopy

    Agreed. Whitelabeling is not a good idea. Co-branding is the way to go. Whitelabeling creates too much engineering / docs and marketing overhead. No really successful SaaS company has been built on that model.

    Reply
  3. Alex Sherman Avatar
    Alex Sherman

    We have white labeled a couple of our products. It really makes for more work than what it is worth. It takes away from the focus and core of the product. Also, we have had some competing SEO issues.

    Reply
  4. Adam Avatar
    Adam

    I feel like most businesses are trained to ask if they can white label your product, but they aren’t sure of the value of having your solution white-labeled. Asking probing questions of the client about why they really want to white-label your solution can usually help them realize the lack of value in going through a white label process.

    Reply
  5. Lee Avatar
    Lee

    From a cloud service provider prospective we’re actively looking for companies particularly innovative startups that offer white label multi tenant solutions we can host in our datacenter. In the B2B space many companies exist in the oem manufacturing space and don’t have a customer facing brand. We are looking for software that we can throw our techs, developers, marketing sales and brand behind and sell to thousands of our clients. I see whitelabel as a powerful way for a startup to generate a high volume of sales, by leveraging partners, that they could never achieve in a direct sales model even if they had an established brand, credibility and powerful sales/marketing force.

    Reply
  6. Lee Avatar
    Lee

    To add. I think co-branding is only attractive/ideal if the startup has brand recognition. A powered by xxxx is almost always fine. As for competitive marketing, I don’t see it as a problem. Most whitelabel partners will be packaging and selling their product with their specific client base in mind while the startup even if they sell direct will likely be targeting a wider audience. My advice would be that if you are going to sell through the reseller channel, focus your sales efforts on new partners and making it as easy and risk free for partners to engage. I’ve seen many companies who do simple per usage with no commitment sign tons of partners and do millions of seats while I’ve seen others with complicated models that require investment, on site training and tiered pricing that have struggled and ultimately failed to grow and have been dropped from resellers portfolios.

    Reply

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