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How To Create The Perfect SaaS Business

How To Create The Perfect SaaS Business


– Aw, I need to Shazam. Well, it’s that… you
know the song I’m singing? – [Jared] I know, I just
wouldn’t recognize if you… – Like if I just sang that? We just making love, pow! (upbeat music) How to create the
perfect SaaS software business. Now, I know,
that’s a big promise. But, if you’ve
ever struggled with trying to figure
out what your roadmap should look like
as you start your idea and kind of expand
and add new features, or you currently have a start up and you’re trying to figure out the right next
category to go into in regards to
serving your customer, this video is really
gonna just talk about what I’ve seen
supporting thousand of entrepreneurs
building software companies, personally building my own and investing in
30-plus others because there’s a pattern,
there’s certain characteristics that all the best SaaS
and software companies have and there’s really five
I’m gonna share with you in this video
and at the very end, I’m going to share a
tip to help you get going ’cause it’s gonna
be a little overwhelming and some of you are
gonna go, “Well I don’t have “three and five, what do I do?” At the end, I’m
gonna share with you guys how to overcome that concern. But, you know, I was
blessed that I started building software
companies when I was 17. I mean, pretty,
20 years now of iterating, building, technically
product marketing, scaling, engineering,
you name the challenge, I’ve faced it. But I’ve also been
super lucky to be around and interact and
have conversations with the founders of some of
the iconic internet gems. Guys like Mike McDerment
at Freshbooks, and Ben at MailChimp and
Owen and the team at Intercom. I’m just super lucky to have
been early investor there and seen their
growth from just this super raw product
that they focused on, they obsessed on,
like truly obsess. To finally scale it
up and what I’ve seen amongst, you know,
early days of Basecamp, being able to go to Chicago and spend time with
Jason Freed and the guys there in one of their workshops
and seen the way they think. I’ve really distilled
it to five characteristics that I think all SaaS companies,
great SaaS companies have. The first one is the product is core to the customer’s business. And what I mean by this,
if you think of products like Intercom and Freshbooks,
and Basecamp and Slack, they’re great
B-to-B SaaS businesses because at the
core of their value, it is part of their
customers’ workflow. They use it on a daily
basis to actually produce value and/or run
the business and that is an incredible
place to be as software. So that’s number one,
two is their cost and value proposition is
super straight forward. I can’t tell you
how many founders, when I sit down and I do a
quick coaching call with them to try to help
them with positioning or their pricing page,
the value proposition, how they create value
and how they capture that, how they price their
product, it’s not clear. And if it’s not clear
to me, it’s definitely not gonna be clear to
a customer that just visits the page and gives
you three seconds before bouncing and
deciding to go check out somebody else’s solution
so that’s the second thing. Just clear value prop
and super straight forward. The third thing is
you need to make sure that it finances
it’s own growth, okay? And this is a part of
the pricing structure. I’ve seen many
companies that I’ve worked with where, you know, they
might have a low-tier product, you know 27 dollars a month,
and they don’t realize that the value that they’re creating, they need to move up market. So they’ve
gotta figure out a way to capture more value sooner to be able to
finance their growth. Typically that’s by raising
prices, for the most part, most companies can raise
their price by 20-25 percent and not have a significant
drop in customer adoption. And then the other big
thing is really looking at the way that they
charge for set ups. I mean, if you have a
product that has a bit more complexity in
signing up a customer, especially in an
enterprise businessy world, then having an option, it
doesn’t need to be mandatory, but having an
option where a customer can you know, invest $5,000 to have a consultant
come in, set it up, configure it, train their team, just make it part of
the registration process, make it an upsell. I mean, one of the
fastest growing companies right now in the
SaaS space, Click Funnels, that’s part of their funnel. It’s crazy, they
use their own product for the
registration of their product and part of that
funnel is high-end consulting arrangement,
really because they just wanna make
sure if somebody needs that, ’cause a lot of people
signing up for products, they may not have
the time to invest in getting it successful,
so you giving them that option is a great
way to finance the growth. The fourth thing is they have
an efficient sales model. Okay, and really, you know,
and I’ve taught this before. You either have high
price and high complexity and that’s kind of
where you want to be. What you don’t want to have is high complexity and low price. Because then you can’t invest
in the right sales model. And that could be a
content marketing strategy for really qualified,
high-volume inbound, especially if you have
a low-touch, no-touch, low price point SaaS business. Or it could be a really
intelligent and beautiful and non-spammy and
super personalized outbound email strategy to build
a bunch of opportunities to kick it off to your
account exec to do the demos and enroll those
customers eventually to customer success. So there’s really
two different ways at scale that
I’ve seen this happen but you just
need to focus on it. You need to have an
efficient sales model to predictably acquire, convert, and onboard those
customers as fast as possible. That’s definitely a
characteristic I’ve seen. And then the fifth,
finally, is market leadership. You know, I was
fortunate enough to become a formal advisor to a
company called Hootsuite in the social media
space and one of the things that Hootsuite really did
well from the very beginning is own that market
leadership position. And really look at how
the market was developing and own the language
and how it interacted with their channels
and the messaging. I’ve seen Hubspot do this well, so I was lucky to
have Dharmesh as a mentor to me in the
early days when I built my company Flowtown
and seeing how Hubspot said we’re gonna
own the word “inbound.” When a lot of people at the time called it content marketing
or social media marketing. They said no, it’s
called inbound marketing. It’s different than outbound. And the whole
purpose is to build quality content that adds a
ton of value to your customers. I mean, they went as far
as writing a book together, Brian and Dharmesh
wrote the Inbound Book. They run a
conference that has tens of thousands of
people that visit it every year called Inbound. They’ve created
communities, their blog. I mean, if you wanna talk about a company that
really owned the leadership in their position, I can’t think of a better
company than Hubspot. Salesforce,
obviously, anybody in SaaS, including you,
if you’re building a software in the SaaS business,
just so you know, if you’re young-ish,
if you’re below 30, you probably don’t
realize that all of us exist because of the
marketing dollars of Salesforce. Prior to
Salesforce in ’95, ’94, ’95, really marketing and
producing and convincing big companies, enterprises
to host their software on a server, many of
the products was installed, it was on premise,
it was on the servers. That’s an incredible
challenge to have a big business say, “Well I’m gonna
trust you to go from “installing all
this data and the server “and the software on my servers “and put it out in this
thing called the cloud.” So we owe a lot to Salesforce. And finally, I told you,
I want to leave you a tip on how to overcome this. But before I do, I wanna review. One, you need to make sure that your product is core
to a customer’s workflow. Two, you need to ensure that the cost-value proposition is clear. Three, you wanna
ensure that it has an efficient sales model. Four, you want to ensure that it can finance its own growth. And then five,
is you want to aim for market leadership position. Now, if you’re
concerned that you don’t have those, what should you do? I’m just gonna say, start small, start focused, build
a tool that generates a result and just think about if I can start here and
I call that a product hook. If you can build a product hook in a market, you can expand. It’s like
getting a toe-hold when you’re climbing a
mountain, once you get that toe-hold then you can start strategizing about
the next positions, move your hands and your
feet to get up that mountain. That is my advice to you. I’d love to hear from
you below in the comments, let me know which
one of those strategies do you feel you need
to spend more time on to really
perfect in your business. Below in the comments,
can’t wait to interact and read them there. As per usual,
I wanna challenge you to live a bigger life
and a bigger business, and I’ll see you next Monday. If you like this video,
be sure to subscribe to my channel for
other tips and tricks on how to scale and
grow your software company. And I also encourage
you to join my newsletter for exclusive invites,
free training and other
community contests and also if you wanna keep
going, I’ve got two videos queued up for you,
I will see you next Monday.

Comments (21)

  1. Want to grow like Slack, Dropbox, or Intercom? Then check to see if you have the 5 growth indicators in your business. I cover them in this week's video.

  2. Thanks Dan… I really like your content.
    Happy Christmas…..!!!

  3. Thanks DAN!! you are awesome. I been working all by myself as a content creator and now getting heavily overworked by so many jobs that I am changing strategy. Basically drawing a new plan to work as a team and get as many good people on board. Thanks to you I am learning how to ๐Ÿ™‚

  4. Merry Christmas Dan, thanks for the amazing content.I got some invaluable feedback from my clients over the past 6 months, so it's time to revamp my product and give them more of what they want ๐Ÿ™‚ This will have a ripple effect because I can then focus on cost/value proposition and market leadership.Enjoy the holidays Dan and all the best with your upcoming projects!!!
    Cheers.

  5. Great stuff Dan! Merry Christmas !

  6. great content Dan! thank you for helping me reflect on the pain points of my customer

  7. Great content as always Dan! How would you recommend getting a mentor and guidance in the early days as a first time SaaS entrepreneur? I am highly ambitious and I feel anxious to get started but it just feels like my inexperience and feeling I have so much to learn first is leading to inaction. You mentioned knowing a lot of big names how did you grow such a valuable network or did it come later after you had built your first companies?

  8. I'm building a SAAS model, an imitation of a SAAS model, we're running the BETA TEST starting on the 3rd Jan 2018 with 5 maybe 6 businesss who've put up their hand. I can check off all 5 points but they arent all strong. The product is already out there and I've been working it for 3 years but not at a scalable extent. Nows the time, if its ever going to be, its going to be now. I hired a coach to work with me in November. Its coming together. The product is definitely part of TM's day to day. I'm a bit sketchy about whats required for Item 4.

  9. Thank's for the advices , underrated great channel !

  10. Hey Dan, great talk. We are having after 2 months already 10 paying customer. They pay 10$ / month. Now we want to invest in content marketing and I really like your idea of owning a market space "inbound marketing" is obviously already taken ๐Ÿ˜‰

    Do you have a strategy of finding a new keyword, which we can own?

  11. Thanks Dan, Great advice for us and timely. Using Hubspot for Marketing and Sales now, such an impressive product, thanks for your help.

  12. When it comes to the progress of the company, two things are most important that one needs to keep in mind. One is constancy of Customers to the Company, and other is the Revenue generation. While one thinks of increasing costs, the customers are hit hard. When we lower the complexities and prices to provide customer comfort, the business faces an economic crisis. So, one needs to keep a balance between the two strategies to take the SaaS app performance and profit to the peak.

    Anyways, read the below. This might help.
    http://www.namasteui.com/5-ways-to-improve-your-saas-company/


    Regards,
    Sourav Basak
    Namaste UI

  13. Clearly laid out content, quite dense but each point is very valuable, great job!

  14. I like the idea of product hook, we've always looked at it as building an MVP around a compelling offer, and having the offer as complex as the channel and method of promotion. To put it another way if there are features you can't fit into your promotion they don't go into the product. If a feature is getting the most reaction the product has to revolve around that feature. I like the idea of calling it a product hook!

  15. Can anyone summarize this blah blah blah?

  16. Awesome vid! Thanks

  17. Dan I don't code but I want to build a sass product I even to don't want to hire people in-house I want to outsource developing is it possible? Which niche has more scope to scale?

  18. cuts like a knife?

  19. This man is a Gem

  20. All 5 were huge. Thanks!

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