Talk to Amy Hoy - her time tracking app grosses more than all three of my businesses combined and is growing like something growing very fast.
The real work then would be blogging a lot, going to conferences, socializing, to maintain the fan base.
and the product: http://letsfreckle.com/
I make my living exclusively in "over-saturated" or "nobody will pay for that" markets. Which so far has worked out just fantastically.
My first foray into an "over-saturated" market was a Mac news, opinion & tutorial site back in the late 90s. Every single person I talked to said the market was over-saturated, that nobody would read it & more importantly, I wouldn't get any advertisers. They were all wrong.
Beautiful design (niche for those who marvelled at apps by their design).
Figure out SEO.
I think Amy and her husband are quite popular internet celebrity among bloggers. Turn these into your customers. This is important: if you have quite a few readers, think of how to turn them into money (let's not go into argument about purity, don't be evil, and that kind of bull-shitake).
On the flip side: whether her number is for real or not, I cannot say until I see the accounting by my own eyes. When it comes to money, pageviews and whatnot, I don't believe 100% as-presented. I might believe 95%, but definitely not 100%.
1. New business are opening all the time. Every. Single. Day.
2. Most businesses go looking for solutions only when something is very painful. Convincing them of the need is something a lot of existing SaSS businesses don't do as there's so much low hanging fruit around still. If you can send a salesperson in, you win by default. You'll be amazed at how much you can charge for something.
3. Lots of businesses (the majority) are 5-10 years behind in the computerization of their business compared to any business you find mentioned here or any business you'll ever speak to at networking events for startups. That's pre-SaSS.
4. There are a lot of businesses where the internal IT dept wrote all the 'apps', they usually suck and are broken. More and more businesses are giving up on this model and buying the app off-the-shelf. A little customisability (logo, maybe colours, even name) goes a long way.
5. A lot of businesses still rely on some crappy Sharepoint or even Lotus or [insert unwieldy enterprise system here]. The internal people hate dealing with them and will switch to your system if you find someone with enough clout to sidestep 'the rules'. A 'department trial' is also a handy way in, some companies have very autonomous departments.
6. There's no such thing as an established SaSS businesses outside of the echo chamber of HN. Many businesses will not have heard of Salesforce, let alone basecamp. There's no such thing as an established time tracking tool for example.
7. Some 'great' apps are far too generic. New to do apps still come out every month
8. Marketing and designing your app for a particular market sector can give you a huge advantage over others. Just knowing the right words, phrases and acronyms to use gives you huge credibility with that market. Compare 'Project Management' to 'Project Management for Architects with full support for Drawing Issues and Revision Tracking'.
Before you embark on doing anything though, you have to accept that any business app you write is going to be incredibly complicated and you're going to have to fight to keep it simple as everyone wants to use it oh so slightly differently.
The difficulty with vertical markets is cutting through all the jargon/assumptions and figuring out exactly what the business logic should be. Everyone knows what they want, but very few people can actually explain it to the uninitiated.
Think Power Builder, etc. Our company has purchased software with a Power Builder front end (mid nineties interface) to an Oracle backend for roughly a million up front and $100,000/yr in licensing.
We've subsequently built a web front end to this app in house.
Sometimes there is no good substitute for clunky software.
Employees are also potential customers. They're usually expected to track their own time and enter it into the company system on a regular basis.
If you basically do the same job every day, showing up at 9 and leaving at 5, it wouldn't be for you. If you are working on multiple projects, it's a lot more useful. Especially if your employer has an SAP type time tracking system where the charge numbers are so ridiculously complicated. As a contractor for those kinds of companies, I've always struggled with keeping track of how much time I've spent on any given day among the projects I was responsible for.
Then there are other types of professionals, like lawyers, who have to keep track of multiple tasks on any given day for billing purposes.
Point being, there are still plenty of potential customers for time keeping apps. Maybe not enough to get rich, but enough to help make a living.
Think about it: 500 people. That's fucking nothing. My upcoming niche project management tool has more people than that on the pre-release list (granted - only a percentage of them will turn out to be paying customers), but it's a great start.
Simply find some pain that needs to be solved, build a product around it, create an offer (give me $X and I'll give you Y) and profit. Take Amy's class if you want a kick in the ass to help realize that.
You're assuming that variety means people are satisfied. But as a rule, people are never satisfied, and rightfully so since most software is crap.
Harvest (look at the size of their team; and for web apps, they are old!)
Mite (the last time they posted about revenue, it was more than double ours, presumably that trend has continued)
Freshbooks (they do more than just time tracking, but they are a chief "competitor" if you want to call it that… and they make bank)
I strongly suspect that RescueTime and Intervals have greater revenue than us as well.
…and probably many more… these are just the "cool" ones which I know about. I'm sure there are many tools for specific industries or who are otherwise entrenched who make ridiculous amounts of money.
It is the easiest thing in the world to dismiss something by saying "nobody would pay for that" or "they must be unusual if they're making money" or "it must be because they're famous." None of these things are true. But they sure are easy to believe and even easier to say, discouraging yourself and others.