Over 1500 attendees from over 44 countries descended on the RDS in Dublin on September 19th and 20th last for the second annual SaaStock conference.
The following represent the key lessons I learned over the 2 days.
1. Stop Being Lazy — Talk to More Customers
Patrick Campbell from Price Intelligently spoke about the inherent laziness of SaaS startups in talking to real customers. He painted a pretty bleak picture of a much more competitive environment for all SaaS startups where:
Customer’s willingness to pay was declining
Increased numbers of competitors in all markets
Customer Acquisition Costs were (CAC) increasing over time
Switching costs have also decreased dramatically
How to fix it?
In his view, there is too much of a focus on acquisition, compared to retention and monetisation (pricing strategy).
He also argued that SaaS entrepreneurs needed to ensure features were of real value to the target market. In short, SaaS entrepreneurs needed to stop being lazy and need to get out talking to customers to ensure they were building features of real value.
David Skok, of Matrix Partners, agreed, arguing that there was not enough customer meetings set up for product validation (both before and during product development).
So the first key takeaway is to talk to a lot more customers both pre product-market fit and post product-market fit.
2. Always Be Hiring
Hiring and talent acquisition were dominant themes yet again amongst those looking to accelerate growth in their SaaS companies.
Ryan Smith CEO and Co-Founder of Qualtrics talked about the need to find people who would demonstrate resilience and who would stick with it when times got tough.
For me, I’m just trying to identify if they are a victim or not. I need to understand the hardest thing they’ve ever done. Is it everyone else’s fault? When things are hard, that’s what you are getting paid to fix. When things are going well I don’t need you. We are all getting paid for that anticipation when something goes wrong.”
You cannot afford not to be great at recruiting at a SaaS startup.” David Skok, Matrix Partners
The only word of caution to this was to avoid hiring too quickly.
What are the things companies do too early?” Philippe Botteri
Hire too fast — especially sales
People see the matrix and that they are not where they are — let’s hire more people and they end up burning more cash.
Don’t scale until the engine is not really humming
3. For Those Expanding into the US The First Sales Hire is Crucial
Hiring the first sales lead in the US was considered a key milestone but was one that was fraught with danger. After all, sales people do what they do best which is to sell themselves, making it difficult to assess how good they really are.
When the cost of a sales lead was factored in (up to 2X the cost of a London based hire) and the different employment laws in the US the cost of getting it wrong was considerable.
One tactic the panel recommended was to ask the interviewee to produce their W2 — a federal tax form issued by employers that states how much an employee was paid in a year, as a quick means to validate their claims when it comes to on target earnings and total comp (essentially the primary metric for a senior sales hire).
David Skok of Matrix Partners also stressed the importance of this key hire describing the need to hire a Pathfinder/Trailblazer salesperson initially.
These were not like ordinary sales people — who follow a play-book. These trailblazers have to create and evolve the playbook themselves being comfortable dealing with ambiguity and the absence of a defined sales process or plan.
4. Focus is the Key to Success
Davis Skok went on to talk about the various stages a company goes through in his presentation entitled the SaaS Founder’s Journey.
- Search for Product/Market Fit
- Search for Repeatable & Scalable & Profitable Growth Model
- Scaling the Business
He talked about the huge overload of topics clamouring for a startup CEO’s attention, and how you need to truly understand the SaaS founder’s journey to be clear on what matters at the different stages the business is at.
Recognize and understand where you are in the lifecycle of your startup
Know at what point you will run out of cash
Understand the milestones you need to reach for a successful fundraise before you run out of cash
5. Don’t Worry About the Competition
As SaaS starts to mature and the flood of entrants continues to increase the competitive landscape for most SaaS propositions is becoming a lot more crowded.
A number of speakers spoke about the importance of positioning themselves anchoring off competitors.
ConvertKit — The power of Infusionsoft but easier to user than MailChimp”
Using hacks like Builtwith it was possible to understand the tech stack of prospects in your pipeline which helped you understand if there was an incumbent in need of displacing. Of course, even if you had a better product the objection of switching often cropped up. Nathan Barry described how they offered a magic bullet in the guise of a “concierge migrations” offering to migrate you across for free.
They had hung all their objections to the sale on this one thing [the switching cost]. When we took this away it made it easier for us to win the sale.”
James Gill of GoSquared also wrote an interesting piece arguing that
Competition is everywhere, but it doesn’t matter. Focus on your customers, not your competitors.”
6. Have Different Processes for Different Leads
Personalisation was a big theme this year using different hacks and tools to ensure that sales reps were focusing on those with high purchase intent from the right companies.
Create a differentiated experience for high-value leads versus low-value leads.” Guillaume Cabane, Drift
It was also noticeable that there seemed to be a much greater use of more sophisticated applications to help with lead generation (ranging from Madkudu to Growbots to Clearbit).
7. Say No As A Default
Des Traynor from Intercom talked about the importance of saying no (in the context of product development). As startups start to mature feature requests come thick and fast, and it is vital that the default position for the majority was a hard no. He went on to offer a checklist for product managers to run through when considering feature enhancements:
- Does it align with your vision?
- Will the majority of users benefit from the feature?
- Can you profit from the feature?
- Is it adding value?
- Can we maintain it?
- Can we support it?
- Will it take our marketing off in a different direction?
8. Think About How Big a Pain Your SaaS Application Solves
Des Traynor went onto describe how entrepreneurs should think about the space their application occupies.
You can solve problems that are big or small. You can also solve problems that are rare or common. When people hit the walls they are in the category of a small rare problem.”
He went on to describe how you have to sell the problem first, and that there is no point selling a solution when they are not clear a problem exists. You can raise awareness of the problem through content marketing as they did (at Intercom) while linking the problem to the solution you offer the market.
9. Lead Generation is More than Just Inbound Marketing
Nathan Barry (CEO and Founder, ConvertKit) also highlighted a deficiency with inbound marketing as a dominant B2B SaaS marketing strategy arguing that it lacked a feedback loop. At least with direct sales calls, you can have conversations and understand objections.
People visiting your site can consume your content and then just hit the back button meaning you have no insights into why you’ve been rejected.
The problem with selling through content is that you are getting rejected every day without knowing why?” Nathan Barry, ConvertKit
Greg Pietruszysnki (CEO and Co-Founder, Growbots) agreed outlining how successful their lead acquisition strategy had been primarily based on outbound cold email.
10. Coming Soon
It is late here and I’m out of lessons. I’ll have number 10 live by the time you refresh the page. If you were at SaaStock and learned a valuable lesson I have omitted please let know (-;
In summary, SaaStock once again delivered in spade with most speakers offering great insights into ways to grow and to scale your business. If I had one complaint it would be that the topic of GDPR was absent from the agenda which was a little surprising given the likely impact it will have on all of us working in SaaS in Europe. That aside, I’m already looking forward to #SaaStock18 (back in Dublin on October 15–17, 2018).
Finally, if you find the above lessons of interest why not read my Top Lessons Learned from SaaStock 2016