Phew! SaaStr was so phenomenal it’s taken me some time to distill the key ideas and strategies for our business. This summary covers some of the interesting presentations we attended, and many of the ideas we heard reinforced for us that our approach to supporting exporters is the right one – find the pain points, solve them, and continue to have laser focus on how we can drive success for our customers. Whilst SaaStr is aimed at the Software-as-a-Service community, we think many of these concepts are transferable to consumer product developers and exporters. For this post I have chosen a micro-blog format, where I try and take just a few sentences to describe each key take-out, and what they mean for us as a start-up insights business, how they relate to the exporter community and why we have built the lessons into our strategic approach.
1. Continuous drive for product-market fit
It’s the universal truth for SaaS companies – if you don’t have a product that people need because it solves a problem they’re trying to overcome, then your product will bomb. End of story. So, with that in mind a few of the presenters helped focus us on being obsessive about product-market fit. Justin Wilcox shared how to use problem interviews to listen for product opportunities, without mentioning your product once! We have done several of these interviews, but we’ll be going around again (contact me if you’d like a free ‘counselling session’ about understanding your Chinese export market opportunity)
SaaS companies rely on a subscription-based revenue model, and as such are having to act more like FMCG brands – where customer loyalty is hard earned and easily lost. Achieving differentiation in a crowded market becomes all about understanding the deep customer drivers and delivering against these, coupled with continuous product innovation.
Mark Roberge (formerly of HubSpot and now Harvard lecturer and VC) reminded us that our goals during this phase are to target the early adopters – those that are actively looking for a solution, and to drive solely for customer success. Only when you reach product-market fit will revenue start to grow, you’ll hit key metrics around Annual Revenue Retention (ARR) and Annual Customer Retention (ACR) and you’re ready to move into Go-to-market fit.
Access Mark’s presentation slides here https://www.stage2.capital/
2. Great data about your customers can drive
We’re big proponents of being data driven, and it turns out that almost everything in business can be measured and tuned to maximise success. Thomas Tunguz is a partner at Redpoint capital and author of Winning with Data, a how-to guide to help organisations shift their culture to embrace data. His presentation at SaaStr used statistically significant survey results from 590 SaaS personnel to help orientate the audience of founders and execs on what data tells us predicts success. Here are 7 key take-outs in very brief summary:
Aim for an annual contract length
Strive for 90% logo retention (customer retention rate)
Aim for net dollar retention of 100-140%
Short trials of 7-14 days are best (conversion is the same as a 30+ day trial) – engagement is always best early on, and time kills deals
Sales – 75% of companies have a sales person following up leads, driving a 3x conversion rate than without sales people. Aim for 4% unassisted conversion and 15% assisted conversion
Measuring a lead’s activity during free trial doesn’t necessarily predict conversion (as the annual contract value (ACV) goes up, activity scoring is less predictive of conversion)
Only 12% of companies request payment information up-front, but those that do have a higher unassisted conversion rate – so it’s worth considering
Relying on assumptions about your customers and what makes them buy your product can stifle your growth. Great data and analysis can find the ‘needle in the haystack’ customer insight that transforms your go-to-market strategy
Access Thomas’ slides here https://tomtunguz.com/top-10-learnings-from-the-redpoint-free-trial-survey/
3. Why wrapping great service around great
products differentiates your brand
Karen Peacock, COO of Intercom shared her 5 strategies for driving your next wave of growth. She provided some great common-sense reminders of how to maximise growth by expanding up- and down-market, being careful about which opportunities you pursue, and some of the watch-outs when scaling to service enterprise customers. I loved her analogy of the expectations you have when eating a $10 meal versus a $100 meal – and why the ‘service’ part of SaaS is critical to success. Building the products that are ‘right in front of you’ is really easy when you are geared towards finding product-market fit again and again – you will always be listening for the problems. This quote summed it up perfectly for many of us:
‘Fall in love with the problem not the solution’
For consumables this might translate to ‘Fall in love with the problem not our product’. Having a ‘service’ oriented mindset can also benefit exporters. In practical terms this means taking every opportunity to ensure that customers get the best from your product, providing additional relevant content for example on how to prepare a food product, solving problems around your product – such as providing travel packs or helping deal with the ‘last mile’ problem. If you are a premium brand, aim to explicitly understand the expectations your customers have about your product – it’s taste (if appropriate), functionality, presentation, packaging – the overall experience can be made or broken on the merit of these factors.
Access Karen’s presentation here: https://www.intercom.com/blog/5-strategies-to-drive-your-next-wave-of-growth
4. Customer obsession creates product fans
It was really invigorating to listen to some leading female figures at SaaStr. It’s all too easy to think of entrepreneurship and leadership as innately male domains, however with 57% female presenters this year, I came back feeling buoyant about the future. Claire Hughes Johnson of Stripe encouraged us to find out who our ‘forever user’ is. In Stripe’s case it is the developer community, and so everything they do is about creating a seamless and valuable experience for them – from a speedy on-ramp to documentation to on-boarding to support. Her presentation was centred around avoiding ‘trapdoor’ decisions, and she stressed the importance of not overcorrecting when things go wrong and introducing unnecessary and stifling process; and ‘preserving optionality’ – that is avoiding making decisions that are irreversible. Incidentally, she shared that today only 3% of the world’s trade is online – quite shocking! Stripe’s mission is to increase the GDP of the internet.
Claire’s presentation dovetailed nicely with another from three female leaders around user communities. They shared some fascinating insights about the benefits of engaging users, creating user communities and embedding them into your business. MVPs or trailblazers are associated with increased word of mouth sales, better NPS scores, lower attrition rates, better pipeline opportunities and larger TCV (total contract value). They encouraged setting up user groups right from the start (even offline at the beginning if necessary) and then getting out of the way! A key take-home point for me was this: you’re better to give your users a place to talk where you can leverage their feedback, rather than have them do it somewhere else behind closed doors where you can’t channel any negativity and strive to turn that passion into a positive experience.
For exporters, leveraging feedback is key to creating a dialogue between you and your customers. You’ll learn what you need to improve, ways to expand your product line, and hear the weird and wonderful reasons customers love your product – and weave them into your marketing messages.
5. Some home truths about venture capital (VC) investment
It felt a bit at SaaStr as though the path to growth is well-trodden and there is a fairly formulaic process for growing your company in search of the elusive ‘unicorn’ status (valuation of $1Bn). Start-ups strive for the fabled VC criteria of T2D3 or triple, triple, double, double, double year on year annual revenue figures. And how do start-ups typically drive that growth? Investment. So, a huge focus for SaaStr is around creating relationships with VCs, understanding what VCs look for etc etc. But there were a few sage speakers (in my opinion) who sounded a note of caution around investment.
One of the keynote presentations from Qualtrics founder Ryan Smith was a fascinating case study in playing a long game and avoiding giving away options. He famously declined an acquisition offer of $500M in 2012, only to hold out for several years, stick to his knitting, and wait for the recent acquisition of Qualtrics by SAP for $8Bn. Two really interesting points:
Having an influx of capital can lead you to shortcuts to success. You won’t spend the time focusing on your early adopters, and working out how to pivot to a better product or market. ‘You need the scar tissue to run a business in the out years that you can only get from the suffering in the in years.’
‘Your cap table is your number 1 asset as a founder and as a company’, so bootstrapping enables you to retain the value and the commitment to your business, and multiply your pay out the longer you can hold off investment.
Incidentally, Ryan founded the company with his brother and his father, and at acquisition they still retained almost 50% of shares in the company. But his biggest achievement was creating wealth for their loyal employees.
For exporters, taking a longer-term view can drive investment in the right areas, such as nurturing great local partnerships or finding opinion leaders that will work with you to get traction in a market. Looking for instant growth in a new market is risky, but relentlessly focusing on delivering for customers will always pay out in the end.
In summary, SaaStr lived up to the hype and helped bring insight, inspiration and ideas for how we develop amazing, problem-solving products to the market. Geoff and I also got some valuable face time to reflect on the coming year and cement our goals.