Startup Best Practices 17 – Strategic Planning Using Your Startup’s Fundamental Equation

“What is the one equation that describes our business?” asked Scott, our new director at Google, during one of our first meetings. I had been there only for a few quarters, so I was startled when he asked. I had never viewed our business this way, but after he asked the question, I wondered why I hadn’t. It seemed obvious in retrospect. What started as a simple question became a complex and insightful exercise.

How We Bootstrapped A SaaS Company To 4 Million Users — And Why Google Owes Us €400,000

IOU At 7 PM on February 7, 2007, MindMeister went live in private beta. Today, we have almost 4 million users worldwide, and have become the market leader in online mind mapping. It’s a story we haven’t told often (too busy working, I guess), but we think it has a few valuable lessons for SaaS founders, especially the ones interested in bootstrapping a profitable business. Read More

What 10x More Seed Capital Means for Founders

Today, 70% of startups in the US that raise a Series A have raised a seed round. That’s up from 50% ten years ago. In the same period, the amount of seed capital invested in the US has increased about 10x from $200M per year to $2B. What does this imply for early stage founders? First, it implies greater competition at the Series A. Larger seed rounds enable a seed stage company to achieve more - more growth, more revenue, more hiring.

Data Network Effects in SaaS Enabled Marketplaces

SaaS Enabled Marketplaces benefit from a unique advantage in their go-to-market. They have a panoptic view of their market place, which over time provides them an unassailable competitive advantage. SEMs provide software to suppliers and consumers, and then make a market between them. The first SEMs flourished in advertising. Google manages one of the world’s largest advertising market places. They provide software to publishers, the supply side, which manages available ad inventory with a product called DoubleClick for Publishers, or DFP.

Finding SaaS Product-Market Fit

saas product market fitFinding product-market fit is a central, early stage challenge of every startup. SaaS startups, however, have unique advantages. Unlike consumer Internet products, SaaS products are essential business tools. SaaS customers take them very seriously. SaaS customers want to provide feedback and they want to see that feedback acted upon in a timely fashion. In other words, SaaS customers want product-market fit as much as the SaaS vendor. Unlike offline B2B products, the SaaS product creates an always-on connection between the SaaS company and the SaaS customer. By leveraging that connection, the process of getting and acting upon SaaS customer feedback can be automated and accelerated.

This is the fourth post in a series that explores the importance of SaaS customer alignment. Previous posts in the series have focused on establishing SaaS customer alignment throughout the SaaS customer lifecycle, creating a list of SaaS Customer Alignment Tips along the way. This post continues that list, but take us back to the earliest and arguably most important stage of SaaS customer alignment: finding SaaS product-market fit.

Try, try, try again

There have been many great books and articles written on the topic of product-market fit. Surprisingly though, you are unlikely to find any better advice than Continue reading "Finding SaaS Product-Market Fit"

Data Design Patterns – The Building Blocks of a Data Driven Culture

In 1977, a British polymath named Christopher Alexander, who studied Math and Architecture at Cambridge and was awarded Harvard’s first PhD in architecture, published a book titled A Pattern Language: Towns, Buildings, Construction. This book would transform the architecture world, and more surprisingly, forever influence the way computer scientists write software. A Pattern Language prescribed rules for constructing safe buildings, from the layout of a region of 8M people, to the size and shape of fireplaces within a home.

The Importance of Payback Period for SaaS Startups

One of the most powerful levers for SaaS companies to master is payback period. Payback period is the number of months a company requires to payback its cost of customer acquisition. The median SaaS startup has a payback period of 15 months on a gross margin basis. A short payback period confers two massive advantage to a startups: smaller working capital requirements and a consequent ability to grow much faster.

Do Vertical SaaS Companies Benefit from Higher Sales Efficiency?

When writing the post Vertical SaaS Startups Require Different Go To Market Than Horizontal SaaS Companies, I realized that there is a perception on my part and perhaps more broadly that vertical SaaS companies enjoy greater sales efficiencies than horizontal SaaS companies. After all, vertical SaaS companies target a smaller number of potential buyers. The marketing team concentrates their media buys to target this audience, the sales team focuses on a smaller lead list.

Vertical SaaS Startups Require Different Go To Market than Horizontal SaaS Companies

Vertical SaaS requires a different go-to-market than horizontal SaaS companies. Vertical software companies, a recent important trend in SaaS startups, pursue customers only in a particular industry. They trade a more narrow customer base and consequent reduction in market size for a competitive advantage in that market segment. The most salient example, Veeva, sells software to the largest life sciences companies, which are subject to a unique regulatory regime in their sales processes.

“Sit” Your Team Up for Success

gcs.jpgYou’ve spent hours interviewing, training, and coaching your inside sales team to help them hit their goals. But are you truly ‘sitting’ them up for success?

While open floor-plans in offices are in vogue, we shouldn’t always succumb to every trend. (Clogs, jeggings, mullets… need I say more?)

The New Yorkerin a review of research on this nouveau workplace design, determined that the benefits in building camaraderie simply mask the negative effects on work performance. While employees feel like they’re part of a laid-back, innovative enterprise, the environment ultimately damages workers’ attention spans, productivity, creative thinking, and satisfaction.
  - Lindsey Kaufman, The Washington Post

Inside sales reps, in particular, need to be able to make calls in a calm, quiet and controllable environment. Can you imagine prospecting while 5, 15, or 50 of your closest colleagues hold their own conversations? This makes no sense

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