Building a successful SaaS company from the ground up is NOT easy. Of course building any company from scratch is notoriously tough, but SaaS start-ups and scale-ups just seem to have their own very unique set of challenges.
Stories of hitting and overcoming these challenges were central to the recent SaaStock conference held in Dublin, Ireland. SaaS founders from all over the globe took to the stage and shared their most valuable lessons about starting and scaling in the best way you can.
Here are five of those key learnings, as told by some of the SaaS Founders who have seen the toughest of times and are still with us to tell the tale.
1. Do Everything You Can To Avoid VC Funding
Emeric Ernoult – CEO and Co-Founder, AgoraPulse
I have tried to raise money seven times and met around one hundred venture capitalists over five years, and I have now learned that VC funding is not for everyone. In my opinion, VCs don’t care about good businesses – they care about businesses that will grow to the moon, and become Unicorns. If what you care about is building a sound, profitable business, then VCs won’t care about you.
The VC route is not for you if:
- You’re more interested in freedom and independence than in becoming the next Mark Zuckerberg
- If what you need the most is guidance and advice and people who can help you grow, but without taking their money.
- If you don’t have big dreams from day one to blitzscale and dominate your market but just want to grow step by step like most companies do.
- If you haven’t figured your growth levers yet, and are growing organically.
So my take is do everything you can to avoid VC funding.
For a lot more on Emeric’s thoughts about this, check out his deep-dive Medium post on the topic.
2. Build A Strong Company Culture, But Allow It To Breathe And Evolve
Rob Nelson –CEO & Founder, Grow
When started we were very deliberate about our culture and values. But then, in time, we realised that culture changes as a company grows. As Ryan Smith from Qualtrics said, “a company culture should evolve, it should mature and change, and that’s a good thing”.
In Grow, early on our values were all about being scrappy and figuring it out as we went. Then there came a point where we had to say, you know what, that’s a great part of our history, but we’re going to set those aside and adopt a new set of values that we feel more strongly about at this point of our growth, and that are going to help us get to the next level. This meant a lot of change but there were also a lot of fundamentals that didn’t change for us as a company.
Kyle Porter –CEO & Co-founder, SalesLoft
In the first 12 months of SalesLoft I ran it straight into the ground and used up all of my wife’s personal savings. Twelve months in, I went to one of our angel investors and he decided to fund us to keep us going. I decided to do two things completely differently the second time around:
- The first was making product and engineering move at the same pace as sales and marketing.
- The second was that I wanted the people that I hired for SalesLoft to see life the same way I do from the perspective of how you treat people, and how you look at yourself and what your expectations for yourself are.
And so we created a set of core values right after that and held tightly to those. For me, the culture of an organisation is not the environment or the surroundings; culture is ‘values consistently applied’.
Our core values at Salesloft are:
- Glass half full
- Bias towards action
- Team over self
- Customer first
- Focus on results
We put those in a company creed book that we deliver to our new employees and candidates in the recruitment process, and trained all of our recruiters about how to ask questions to mine out those core values deeply. We also train all of our managers in ‘one-minute reprimands’, which involve:
- Detect and Address: When you find someone who is on the edge of values, then detect and address it quickly.
- Catch and Revere: Acknowledge when they’re doing something positive, and try to make positives four or five X the negatives. We inject that into the weekend update that I send every Sunday night with an example of values and we give out an award every Tuesday.
As CEO, culture and values are the things that I pay attention to the most. The changes I introduced into the company culture as outlined here have really worked, but you’ve got to constantly monitor and evolve them as the company and people evolve.
3. Pay Big Bucks For The Right Domain Name
Peter Coppinger – CEO & Co-Founder of Teamwork.com
In 2007 we launched a product under the domain name teamworkpm.net, which is the worst possible name in the world from a marketing perspective. Over the next few years the company made huge strides and we made huge improvements to our product. Then was time to make the next steps from the marketing side.
So in 2013 we reached out to a domain squatter that owned teamwork.com and asked him how much he might sell teamwork.com for. He said he would consider twenty million dollars. We were a tiny Irish bootstrapped SaaS company and simply couldn’t afford that.
Over following months we reached out to him a number of times. His quote fell to eight million, then to five million, and then to three million, and so on: still too expensive for a small company like us.
So one night I was in a pub in Cork, Ireland and I decided to try to buy the domain name from him one more time. I offered him 50,000 dollars. He emailed right back saying, “same low-ball offer”. To which I replied, “please just give me a realistic offer so that we can get this done once and for all”. He emailed right back with a quote of $675,000. I accepted immediately.
It took me two days to work up the courage to tell my co-founder Dan. This was basically every penny we had in the company at the time – I was betting the entire company on this domain name.
A lot of people thought we were crazy to spend this money on an address, but we proved everyone wrong. From the moment we launched the new site, things took off for us. We got a lot more strategic, our vision for the company expanded from being a one product company to having a vision for a suite of products under this one beautiful brand – something magical. We took on more people and built out a marketing team, a sales team and Customer Support team. Today we’re growing 40% annually and we’re on track to hit some very big milestones very soon.
In hindsight would have bought – ‘getteamwork.com’ instead of .net, but one-word domain names lend a lot of credibility and we wouldn’t have closed big accounts without it.
4. Use Cases Super-Charge SaaS Sales
Dave O’Flanagan – CEO and Co-Founder, Boxever
We [at Boxever] developed a platform that aggregates our customer’s data, to which maths analytics are applied, resulting in a decision. It’s simply an API in the cloud.
So ultimately we’re selling capability all the time. But it’s very difficult to sell capability because it looks slightly different to everybody. And when you’re trying to establish a predictable sales process where you fully understand the types of people you’re engaging with and the pain points you’re trying to address, it’s important that build up clear profiles. So as we evolved past our first few customers, we could start to see how they were using the platform and get a view of the kind of value we were creating for them. That then allowed us to build up a portfolio of different use cases for the product, and use that as a way to sell value instead of selling capability.
That is when we really started to unhook in terms of our go-to-market strategy. It’s a balancing act because ultimately you need to be able to sell underlying capability, but it’s very hard for sales people to sell a nebulous platform, particularly as you grow out the sales team. Clear and understandable use cases are an invaluable help both your customers and your sales people.
5. And Finally….Know That Everything Takes Longer And Costs More Money Than You Expect. Oh, And It’s All About The People.
John Thompson -CEO, UserReplay
In the late 1990s, I worked at a very successful software company in Oxford, England. The founder sold it just before the tech boom started to collapse, and made twenty-six million dollars. On the day he sold it I asked him what was the secret to his success; he answered that it is based on two simple mantras:
- Know that everything you do takes twice as long as you planned and costs twice as much money, and need to have a plan to still survive and thrive in that eventuality. If things take longer than you would like, are you set up to survive it or will you go bust? Do you have a Plan B and a Plan C? As Bill Gates says, we usually overestimate what we can accomplish in one year and underestimate what we can accomplish in ten years.
- Never kid yourself that it’s not all about people. All people decisions need to be at the very forefront of your work, and you must always surround yourself with people who are better than you. “If you’re the smartest person in the room, you’re in the wrong room”.
These have been two really great mantras that I have always remembered while building a number of successful Saas Companies.
SaaStock will return in October of this year with more SaaS founders and VCs presenting and attending than ever before. Check out SaaStock.com for more info.
And if you know SaaS then you probably know Asana – a product developed by two former Facebook people that helps teams work way more effectively. Brian Boroff left Apple to help build Asana’s operations from the ground up – he recently dropped in to Voxpro Studios to tell us why and how. Take it away, Brian.