Last week I talked to a pre-revenue startup that felt if they could just hire another developer and add one more important feature to their product, customers would start buying. In the book Angel by Jason Calacanis, he describes this as the “feature death march” where the entrepreneur has had limited success to date and feels if they just add one more major feature, customers will start buying.
Prospects saying they’ll purchase the product when it has one more feature is often an excuse. If the prospect is serious, and the feature fits the entrepreneur’s vision, get the prospect to commit to buying the product now with a timeline for when the feature will be done. Ask for a signed contract. Once a contract is involved, and terms are negotiated, it gets serious. Too often, entrepreneurs go on a feature death march only to bring the new feature back to the prospect and have them still say “no” and ask for another, different feature or outright say they won’t buy it.
Missing an important feature can be a legitimate reason for a prospect to say “no” but more often than not, it’s an excuse and they’ll never buy. Figure out the difference and don’t go on a blind feature death march.
What else? What are some more thoughts on the idea of a feature death march?
Continuing with yesterday’s post 4 Questions to Ask Before Making an Angel Investment, and the theme of angel investing, when talking to entrepreneurs it becomes clear if they are product-oriented innovators. I call them “product entrepreneurs” and you’ll know it immediately because they’re in love with their product.
When meeting with a product entrepreneur, ask these eight questions:
- How did you come up with the idea?
- Why did you decide on building this product?
- What’s the magic moment?
- What are the main product modules? What’s the most important module?
- What aspects of the product do you prioritize? Speed? User experience? Depth of functionality?
- What do the competitors do differently in their products?
- What’s the next major milestone for the product?
- If you could wave a magic wand, what would you instantly change in the product?
Product entrepreneurs obsess over their product and spend most of the time working to make it better. Use these questions to get a better understanding of how they think about it, what’s working well today, and what they’d like to improve.
What else? What are some more questions for product entrepreneurs?
For our video of the week, watch the Google for Entrepreneurs Rapid Prototyping: Sketching & Paper Prototyping. Enjoy!
Mariam Shaikh and Melissa Powel talk about sketching and paper prototyping. Have you ever struggled with how to get from an idea to a high fidelity prototype? Every design has to start somewhere and even at Google we often start with low fidelity prototyping options such as sketching and paper prototyping. After all, the fidelity of your prototype should match the fidelity of your idea, so stop worrying and start sketching.
Forbes has an excellent article titled Starting Over: How FreshBooks Reinvented Its Online Accounting Service On The Fly. FreshBooks is a popular online accounting app (think major competitor to QuickBooks and Xero, but more focused on micro and small businesses) that’s been around for over 15 years. After 10+ years with the original application, it was clear that the product architecture and user experience wasn’t going to scale for the next 10 years.
We all know that the a full product rewrite is the kiss of death. What to do?
FreshBooks created a separate company, with a separate team, in a separate office, to build a new competitor called BillSpring. BillSpring’s goal was to build a real business with it’s own customer base, that if successful, would replace the original FreshBooks product. After two years, BillSpring was working well and customers loved it. FreshBooks made the BillSpring product the new FreshBooks product while maintaining the legacy product and not forcing customers to switch. Now, FreshBooks has a platform for the future.
Need to reinvent your company? Consider building a competing company, internally.
What else? What are some more thoughts on building a competing company to reinvent the business?
If you were to create a new startup that put the legacy taxi experience on a mobile app, most entrepreneurs would take the traditional functionality and implement it directly in version one. Expected features would include:
- Requesting a car
- Inputting the destination address
- Watching the car’s location on a map
- Paying the fee for mileage and time
- Providing a tip based on service and experience
- Bonus: rating the driver
Only now, after being in business for eight years and raising $8.8 billion (source), Uber has rolled out tipping — You can now tip your Uber driver in the app.
This isn’t a critique on whether or not tipping is the right thing to include. Rather, Uber waiting eight years to add a feature that most entrepreneurs view as standard to the product teaches us an important lesson: the offline experience shouldn’t be recreated verbatim in an app. Rather, prioritize the product functionality that delivers the best experience to the user, and that often is a subset of the traditional functionality combined with new functionality that is only possible due to new technology.
Entrepreneurs would do well to prioritize product functionality based on value to the user, not on legacy features.
What else? What are some more thoughts on Uber adding tipping after eight years and what that teaches us about product functionality?
Continuing with the theme of SaaS 2.0, there’s another important concept in that it inverts the sales and marketing process. In SaaS 1.0, a tremendous amount of money is spent on sales and marketing to take the potential buyer on a journey where they have to provide their name and email to download an ebook, watch a video, or get a piece of content. Then, inside sales reps start calling in hopes of doing a demo and taking the person through a sales process. Only, after this experience, and signing a contract to buy the software, does the buyer get to use the product. Finally, the implementation coordinators help on-board the new customer and the buyer gets to use the product, often for the first time.
In SaaS 2.0, the product is the sales and marketing. Everything starts and ends with the product so there are no barriers to begin using the app immediately. Once signed into the free edition of the app (often called the platform), there are marketing videos that explain the benefits of each module. Paid modules are explained and in-app upgrades made clear — the selling is done by the app, in the app. Sales reps are still available, but they’re there as consultants to answer questions and help with change management, not to get contracts signed. There are no contracts to sign.
The most powerful form of service is high quality self-service, with great people to help as a backup. With SaaS 2.0, the product is the sales and marketing.
What else? What are some more thoughts on SaaS 2.0 focusing on the product experience as the center of the sales and marketing?
Recently I was talking to an entrepreneur that’s in the process of changing their data storage architecture as the startup is growing fast and there are increased demands on the database. Only, the app is performing fine and there aren’t any slowdowns right now, but it’s clear that with the continued growth at some point there will be issues. Yet, the team doesn’t know exactly when that will occur, even after some load and stress tests against the system. Now, they’re moving forward with a heavy refactoring of code and changing of the storage architecture.
Balancing the short-term and long-term product demands is never easy. Here are a few questions to ask:
- What percentage of current customers will appreciate this change? What percentage of desired customers will appreciate this change?
- Do we have to implement this change eventually? Why? Why not? What instrumentation will help guide our decision making process?
- What does the current road map have prioritized? What will have to change to make room to implement this long-term product change now?
- Is the proposed change a temporary solution or will it support growth indefinitely?
- What are the risks? What might go wrong?
- How will this change affect our ability to compete in the market?
Balancing short-term and long-term product demands is never easy. Ask these questions and make an informed decision.
What else? What are some more questions to ask when thinking about short-term and long-term product demands?
Continuing with last week’s post titled Integrations as Key for Next Generation SaaS Success, there’s a critical point that was missed in that not all product integrations are created equal — not even close. For SaaS 2.0 startups, catching up to the depth and variety of integrations of the incumbents is one of the major challenges. When thinking through integrations, it’s important to understand the three major types:
- Native Integrations – Integrations that are developed in-house to send/receive data as well as call remote functions and expose additional internal functionality are native integrations. Native integrations are the most valuable as the quality is typically higher and the SaaS company is committed to maintain them.
- Middleware Integrations – Integrations that are written and maintained by a third-party integration platform to connect two disparate apps are middleware integrations (e.g. MuleSoft or Zapier). Middleware integrations can be more expensive and/or slower depending on the APIs of the products being connected.
When thinking through the integration landscape, it’s important to understand that there are a variety of integration types and they aren’t equal.
What else? What are some more types of integrations with SaaS products?
After talking about the The Next Generation Competitor to Every Public SaaS Company, it’s clear a better name for it is SaaS 2.0 companies. SaaS 2.0 companies are API-first, have rich, responsive UIs that are more conversational in tone, have approachable pricing models that are more flexible than the incumbents, and have a modularized platform so that customers can purchase only the features they need. With this definition in place, several people have asked for examples of SaaS 2.0 companies:
- Intercom – Customer communications platform that’s one of the fastest SaaS companies to go from $0 to $50 million in revenue (see notes on Intercom’s growth)
- Groove – Simple help desk software with a passionate following (read their blog)
- Calendly – Schedule meetings without the back-and-forth emails (an amazing product!)
- CallRail – Call tracking for data-driven marketers
- MailChimp – Beautiful email marketing
Look for more SaaS 2.0 companies to emerge that reimagine the entire experience in a new, more personal approach.
What else? What are some more examples of SaaS 2.0 companies?
Continuing the next generation SaaS discussion, I believe we’ll see more apps incorporate free trials and other mechanisms to experience the app before buying. As mentioned before, it continues with the consumerization of IT where people want their business apps to feel like their consumer apps, and trying something out is no different. Only, when it comes to trials and qualifying prospects, there are several ways to do it.
Here are four ways to qualify SaaS trial prospects:
- Free Edition – As part of the freemium model, the free edition is free for life and includes a limited number of features or module uses. Free editions are great for products that have a B2B viral component like scheduling and email.
- Demo Account – Some products are more complicated and need to have dummy data preloaded to get a good feel for the app such that it’s a demo account that is testable but not real. Demo accounts are great for products that need complex data to test like accounting and enterprise resource planning.
- Proof of Concept Pilot – Another trial approach is to require that the customer provide a credit card and sign an agreement to get access to a full instance that isn’t charged for some number of days (e.g. use the product for free for the first 14 days), and then upon completion of the free period, the credit card is automatically billed unless the vendor is notified of not moving forward. Proof of concept pilots are great when there’s some level of manual setup and integration required to make the product usable for trial requiring effort on behalf of the vendor.
- Free Trial – Many SaaS apps are easy to get going and provide a free trial that gives the user full access for some period of time before disabling the account if they don’t convert into a paid customer. Free trials are great for self-service apps that are easy to experience.
Not all free trials are the same and there are a number of ways to deliver an experience similar to a free trial. Consider the style and approach best suited to the customer experience and experiment with different approaches.
What else? What are some more variations on the SaaS trial experience?