Here's something that trips up a lot of new angel investors.

You see a pitch. The product is great. Solves a real problem. The founder is sharp. Then you look closer at how they plan to get customers, and it falls apart.

Why? Because the product requires people to rip out whatever they're already using.

An amazing product isn't enough. One of the biggest considerations always has to be switching costs.

Low switching costs = fast entry

Let’s take ad products as an example.

Hustle Fund co-founder Elizabeth Yin previously ran an adtech company, and her sales process was easy. (Marketers try out different ad platforms all day long, so the friction is basically zero.)

But, there was a catch. 

If the ads didn't perform, marketers moved on just as fast. Great entry conditions; challenging retention.

Now on the other hand…

High switching costs = long, painful sales

Now look at marketing automation software. 

It's deeply integrated into a marketer's workflow, and you can't casually trial a new one because switching is a massive lift.

That's great if you're already embedded. Terrible if you're trying to sell in.

You basically have to nail the timing. Catch customers when they don't have software yet, or when they're so frustrated they'll endure the pain of switching. 

(And who really knows when either of those moments hit?)

The playbook that actually works

This is why so many successful SaaS companies target customers who don't use anything yet.

HubSpot did exactly this. Go after smaller fish who haven't adopted a solution, get embedded, then grow with them.

It's usually easier to build something that doesn't require ripping out other software. Sell in with a new angle, then expand from there.

Bonus: if you're not going head-to-head, you don't need to build as many features. 

Matching everything a competitor already has is a massive lift, and even then there's still inertia.

Before you write that $5k check, ask:

Is the startup targeting companies that don't have a solution yet?

If not, will this product require customers to replace something they already use? Or could it slide in alongside their existing workflow?

Low barriers to entry aren't a bad sign. That's often the fastest way in. 

The real question is whether the startup can get sticky enough once it's through the door.

Easy in, hard to leave. That's the sweet spot.