Ten Key Lessons from SaaStock 19
The 4th SaaStock conference took place at the RDS, Dublin on October 14–16. Yet again it did not disappoint — delivering an outstanding event for SaaS attendees from all over the globe. The following represents some of the top lessons I have learned from the two days.
1/ Sales: Focus on Making Marginal Gains on Your Core Metrics
The event opened with a presentation entitled Sales as a Science by Jacco van der Kooij, Founder & CEO, Winning by Design.
He argued that marginal gains can have an exponential impact on results and that it was better to focus on making 10% incremental improvements in ‘the system’ rather than to simply task the marketing team to ‘double the leads’.
My take: There is no doubt that the more steps in a sales process, the more opportunities exist to make marginal gains that will compound. Ensuring that all SaaS team members have clear goals / Objectives and Key Results (OKRs)/ metrics helps to incent the right behaviours.
2/ Marketing: You Need to Talk to 6 Different Groups in Your Early Years
In a very insightful presentation entitled, What Happens after Product-Market Fit?, Des Traynor, the Co-Founder, of Intercom talked about the fact that there was an obsession with product-market fit to the neglect of other areas.
“If your customers aren’t happy, engaged, profitable and sticking around for a long time the last this last thing you want is more of them.” Des Traynor
He went on to suggest that there were six key groups to talk to:
1/ New customers — what are they looking for?
2/ Churned customers — what doesn’t work?
3/ Trialists — what is their definition of value?
4/ Shoppers — how do they measure things?
5/ Active customers — where are we most solid?
6/ Inactive customers— what caused them to stop using you? Why does the job go away?
My take: Yet again Des is very much on the money here. The challenge is of course that most early-stage SaaS businesses are resource-constrained so ideas like this often go on a ‘nice to do’ list. Splitting customers into different cohorts is, of course, a smart move. Again it represents a stark reminder that most SaaS businesses neglect to have enough real and meaningful conversations with different customer buckets.
3/ Sales: Be Clear on the 4 Forces That Influence a Customer Switch
Des Traynor went on to talk about the characteristics needed for prospects to switch from an existing supplier to your application. In short, the green arrows (push and pull drivers) need to be more compelling than the red arrows.
My take: Those looking to switch out an incumbent must be fully au fait with the switching costs, and likely inertia as well as the fact that switching out a solution is rarely straight-forward. Does it mean the initial decision to use the other incumbent supplier was a bad one? Are there marginal gains or is there a 10 X difference between your product and theirs? What motivation will the chief decision-maker have to switch when set against the higher priorities on their plate?
4/ Product: Obsess About Addressing Customer Pain Points
Jos White, General Partner, of Notion Capital delivered an insightful presentation on the Art or Science, Looking Through the Lens of a Saas Investor. In the talk, White suggested there were 4 key things Notion Capital looked at when evaluating SaaS entrepreneurs:
- The qualities of the founder and team
- The disruptive nature of the idea
- The obsession the company had with addressing customer pain
- The touch and feel of the product
He went on to describe the Key Data Signals from analysis of their portfolio companies that help them identify companies that are attractive to them:
- Founders who have lived through the pain they are trying to solve
- Founders with experience of both high growth startups and corporates
- Companies with top quality investors
- Founders showing ability to hire high calibre people before they have any right to
“My best investments are at the intersection of art and science. I want to feel an emotional connection and I also want to see factual analysis and representative datasets to demonstrate market-leading potential.” Jos White, Notion Capital
My take: As one of the lead B2B SaaS investors in Europe, and as someone with significant experience on both sides of the table, White always offers great insights for SaaS companies looking to raise. It is hard to argue with any of these points.
5/ Strategy: You Can Still Win in Crowded Markets
There is no doubt that most verticals are seeing increased competition as more and more SaaS companies enter the market. In many instances, companies will face better-funded US competitors who can crowd smaller players out. However, rather than counsel entrepreneurs to steer clear of crowded markets a panel consisting of Guillaume Cabane, Founder, Growth Ex Machina (Moderator), Jason VandeBoom, Founder & CEO, ActiveCampaign, Alonso Bustamante, Special Projects, Cloudflare and Briehan Burke, Investor, Keen Venture Partners argued that crowded markets remain attractive options for SaaS startups.
The challenge of educating a new market was viewed as one of the main drawbacks of seeking to create a new category. At least with other participants, it was felt that there was a recognised problem and solutions to solve for it. In some instances, larger better-funded competitors focused upmarket ceding the SMB space to others. It was also argued that smaller SaaS entrants were more ‘fleet-of-foot’ and could use this to their advantage, staying close to the customer and being better able to solve customer pain points.
My take: There is no doubt that market saturation is becoming the norm for most SaaS businesses. Many US VC’s in particular view many sectors as having ‘winner takes all’ characteristics and are thus prepared to invest heavily in companies in markets with large addressable markets, and thus better-funded US SaaS companies appear in most SaaS verticals. The secret for non-US competitors is to avoid going ‘toe to toe’ against these better-funded companies and to seek to identify areas to compete on, be it utilising different channels, geographies, markets or pricing points to win customers.
6/ Marketing: Prioritize — Over Invest in a Couple of Things
Kieran Flanagan, VP Marketing, HubSpot spoke about A Framework for Growth: Three Decisions to Scale your Business
In his presentation, he spoke about the importance of:
- Ensuring there was a common language between sales, product and marketing
- Utilization of cross-functional teams to support growth
- Aligning the team around the same metrics and the most significant growth opportunities.
My take: For me, the key point here was the importance of prioritisation. It remains one of the biggest challenges for those working in SaaS marketing. How do you parse through the ever-growing list of things to do. Most SaaS startups tend to be under-resourced when it comes to marketing (particularly in Europe). It was a reminder that even in larger companies like Hubspot prioritisation is a key skill. Utilising tools like Trello or Teamwork to help ensure that the team are focused on a narrower set of objectives rather than trying to do everything remains a key lesson for all.
7. Finance: Bootstrap as Long as You Can
There was an informative panel discussing whether or not to raise VC funding, featuring Marvin Liao, Partner, 500 Startups (M) Andrew Jenkins, Co-Founder & CEO, Conviction Investment Partners Peter Coppinger, Founder & CEO, Teamwork.com, Daria Dubinina, Co-Founder & CEO, Crassula.
Peter Coppinger, a long-time advocate of boot-strapping argued that it was cheaper than ever to start a SaaS business and that entrepreneurs should seek to delay a raise as long as possible. He cited 4 main scenarios when he would recommend a raise:
- When there is a pretty binary option of building a rocket ship or failing spectacularly: take the money
- If you need finance for cashflow
- If it is a very capital intensive business (not usually the case when building SaaS businesses)
- If you have built a lean mean machine — when great unit economics and you want to grow faster
My take: There are no right answers to these sorts of questions — there are so many variables at play and motivations can vary from one founder to another. I do buy the core argument that where possible it is preferable to get as far along as you can before looking to raise. It is also important to go into any investment with your eyes wide open as you cede control which makes your position much more vulnerable than if you can control your own destiny.
8/ Strategy: Remember There is No Blue Print
Again this was a theme across several panels with Drift Co-Founder, Elias Torres arguing: “The secret sauce is there is no secret sauce.” He did, however, cite a number of traits that he felt were important amongst successful SaaS companies.
1/ Bias for action
2/ Ensure you build and maintain momentum
3/ Think big — have ambitious goals
4/ Solve real problems
5/ Work hard
My take: B2B SaaS is complicated with so many variables at play. Luck plays a huge part too, not that most founders will ever claim that. There are lots of questions with no obvious playbooks that can be followed — instead it is important to be comfortable making decisions in a context of profound uncertainty.
9/ Sales: Break The Sales Roles Down into Different Functions
Nazma Qurban, Chief Revenue Officer, of Cognism, one of the fastest-growing SaaS startups in the UK (disclosure: they are a client of mine) talked about their high powered sales team. They hire graduates and give them early responsibility, quickly identifying high performers and promoting them well ahead of what would be the norm in other companies of comparable age. They also ensure a clear delineation of duties:
1/ The SDR team create opportunities
2/ BDM’s are focused on revenue generation
3/ CS focus on onboarding and on ensuring there are weekly touch-points with clients
My take: Cognism continues to impress, marrying a strong product focus (which is powered by AI), with a young sales and marketing function delivering strong year-on-year growth. At the very start when cash is tight I’d advocate sales people covering a number of these roles, but once product-market fit has been achieved and cashflows permit, hiring dedicated people for each of the roles is indeed preferable.
10/ Marketing: Be Provocative to Stand Out from the Crowd
Finally, I happened across Patrick Campbell of ProfitWell and Nathan Latka, of Get Latka having a fireside chat covering a range of topics. It was pure gold dust and I recommend all those interested in SaaS check these guys out. Nathan talked about how he managed to generate significant interest by dint of him seeking to entertain, but also by asking the questions others did not.
My take: It is late and I am tired. If you got this far well done. You’ll have to click the applause button and share this link with 5 friends if you want my take on this last one.
Summary
Yet again SaaStock delivered in spades, great attendees, plenty of valuable lessons, fantastic networking and a perfect venue. See you all in 2020!
Key Resources from SaaStock
Marketing Metrics Playbook for Early Stage B2B SaaS Startups (Cognism)
Report: SaaS Commerce Trends 2020 (Paddle)
Industry Insights into 5 Growth Levers to Scale your Company
The Unicorn Trajectory (Notion Capital) — Available via their newsletter.
2018 State of Software (SaaS): Revenue Data From 1000+ SaaS Companies
About Alan
Alan Gleeson is a B2B SaaS Marketing Consultant based in London with a passion for helping SaaS businesses to grow.
Follow Alan on Twitter or visit Work With Agility to learn more.
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Found this of interest? Why not read one of my other recent posts:
A Simple Sales Methodology for B2B SaaS Startups
