JavaScript as the Web’s Integration Fabric

Ten years ago, I never would have predicted how JavaScript (code to make things more dynamic in a web browser) hosted on third-party sites would become the core integration method for the front-end of the web (see The Three Types of SaaS Integration). In hindsight, it makes sense that interactive elements and analytics would be decoupled from much of the content so that companies can deliver best-of-breed solutions for a variety of functions. Now, tag managers like Segment and Google Tag Manager have taken it one step further and decoupled the loading of JavaScript on a per-page basis to a system that uses JavaScript to load other JavaScript (very meta).

Many popular webpage features are loaded via JavaScript that comes from a third-party, including:

  • Web analytics
  • Forms
  • Live chat
  • Comments
  • Pop-up prompts that ask for an email address
  • Site search
  • Dynamic content

Going forward, look for this trend to continue and more functions on the web to be delivered via third-party JavaScript. More sites will deliver real-time personalization and richer, higher quality experiences in a seamless manner via third-party products. JavaScript is the web’s integration fabric, and growing in importance.

What else? What are some more thoughts on JavaScript as the web’s integration fabric?

API-First SaaS 2.0 Single Page Apps

Two of the core components of SaaS 2.0 products are actually related: API-first platform and rich, responsive user interfaces. Ever since Gmail made the first mainstream Javascript-heavy web experience that feels more like a desktop app, developers have been building open source platforms to make that type of “Single Page App” easier and faster to build. Single Page Apps reload only the portions of the screen that have changed, instead of the traditional way which refreshed the whole screen. And, these Single Page Apps work best against REST APIs, the same APIs that make a product API-first.

Now, there are powerful Javascript libraries like Angular (MVC framework backed by Google) and React (view framework backed by Facebook) that are popular with strong developer communities and a long list of additional open source projects that plug in nicely. By having quality, proven open source platforms, more apps are going to adopt them thereby applying more pressure to the legacy incumbents. The incumbents are going to have an incredibly hard time modernizing. Just like many software companies couldn’t make the transition from on-premise to the cloud, many SaaS companies aren’t going to be able to make the transition from SaaS 1.0 to SaaS 2.0, and it’ll be most apparent in the user experience.

Look for Single Page Apps to be a defining characteristic of API-first SaaS 2.0 companies.

What else? What are some more thoughts on API-first SaaS 2.0 Single Page Apps?

The Three Types of SaaS Integrations

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.
  • JavaScript Overlay Integrations – Integrations that are done via a Google Chrome Extension or JavaScript to override the user interface of a third-party app are UI overlay integrations. A common example is the industry of Chrome Extensions that add functionality to Gmail through the user interface and not the API.
  • 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?

Software Contracts and Traditional Business Practices

As an investor, I like seeing portfolio companies have their customers sign annual (or multi-year!) contracts and get the benefit of cash flow predictability (including prepayment) and customer commitment. In exchange for doing a longer customer contract, the vendor company can invest more in the customer acquisition process, the on-boarding/implementation process, and on-going customer success and support.

As a buyer, I dislike contracts as the needs of the business can change (need to cancel or downgrade — not possible), the vendor can provide poor service or a poor product experience for a period of time and there’s no recourse, and product usage can fluctuate (Slack is famous for only charging for users that actually use the product, not all users in the system). No contracts and more flexibility to adjust spending (specifically, spending less during certain months) is more customer-friendly.

Over time, as more next generation SaaS companies emerge, and there’s more comparable competition in the market, I believe we’re going to see more SMB software vendors not require contracts and have more flexible business practices that better align with how users want to buy. This will be a slow transition but expect it to be mainstream in the next 5 – 10 years.

What else? Do you think SMB vendors requiring annual contracts will be continue to be the norm?

Workflow App or Persistent Background Service for SaaS Success

Continuing with Characteristics of Successful SaaS Products, a friend pointed out that while workflow apps are the most common type of successful SaaS app, there’s another category of successful SaaS app: persistent background services. Persistent background services are a class of SaaS apps that once configured run automatically with little to no on-going human interaction, often via API calls.

Here are some example persistent background services:

  • Calendly – Scheduling service overlaid on Google Calendar, Office 365, and iCloud to make it easy to schedule meetings with professionals.
  • SendGrid – Email delivery as a service for bulk and transactional email messages (e.g. API to send lost password emails, customer email receipts, etc.).
  • Twilio – Telephony in the cloud to trigger phone calls, text messages, video chat, and more via API (e.g. click to call from a CRM, text messages for two factor authentication, etc.).

Add persistent background services as another class of successful SaaS app to go along with the workflow apps (the characteristics of successful SaaS apps are still applicable).

What else? What are some more thoughts on persistent background services as another type of successful SaaS apps?

Integrations as Key for Next Generation SaaS Success

Continuing the thoughts on next generation SaaS with posts on Intercom as the Next Mainstream CRM after Salesforce.com, The API Economy, and The Next Generation Competitor to Every Public SaaS Company, one of the biggest challenges for upstarts is the lack of third-party integrations. One of the strongest network effects for SaaS platforms happens when hundreds of other products build integrations to connect data and processes (see Atlanta’s MailChimp). The more integrations a customer uses, the harder it is to switch vendors.

As expected, there are SaaS products that specialize in integrating other SaaS and installed products:

  • MuleSoft – Enterprise strength integration platform that’s heavily customizable. $2.8 billion market cap (NYSE:MULE). See notes from the MuleSoft S-1 IPO filing.
  • Zapier – Huge breadth of integrations in a do-it-yourself fashion. This should be the starting point for most people looking to connect apps.
  • Cloud Elements – Write once, connect to many middleware that’s a huge timesaver for more sophisticated custom integrations.

Look for cloud integration middleware to be a key part of the solution for next generation SaaS apps.

What else? What are some more thoughts on integrations as critical for next generation SaaS?

Intercom as the Next Mainstream CRM after Salesforce.com

Four years ago I offered up the idea that HubSpot would introduce a CRM and be in a great position to capture CRM marketshare in the post HubSpot as the Next Mainstream CRM. HubSpot has continued to execute well, is approaching a $400 million run-rate (NYSE:HUBS), and launched an excellent free CRM. Originally, I thought a tangential product in the marketing space would be in the best position to enter the CRM market as opposed to one of the solid CRM upstarts like Pipedrive and Insightly.

Now, after talking to a number of companies over the last year, I believe Intercom is in the best position to succeed Salesforce.com as the next mainstream CRM (see Quick Notes on Fast-Growing SaaS Startup Intercom from earlier this year). Intercom is growing at an incredible rate, going from $1M to $50M in three years. More importantly, the product is a customer communication platform to manage functions like live chat, in-app messages, email triggers, and usage analytics. Of course, customer communication platform and customer relationship management have one critical word in common: customer.

Look for Intercom to continue their torrid growth rate for several more years and introduce functionality to manage the entire customer lifecycle, including CRM. Salesforce.com will be paying close attention to Intercom.

What else? What are some more thoughts on Intercom as the next mainstream CRM after Salesforce.com.