Signs of an Last Generation SaaS Product

Continuing with the post The Next Generation Competitor to Every Public SaaS Company, one of the questions that came up is how to identify when a SaaS product has entered “incumbent mode” and shows signs that there’s room for new upstarts. Good question. We’ve all used a product that’s solid, but unchanged for many years, and know that it’s a last generation product.

Here are a few signs of a last generation SaaS product:

  • Pace of Innovation – New features come to a halt. Product polishing continues but substantial new features are rare. The focus is on profitably scaling sales and marketing.
  • User Interface / User Experience – Interface changes are disruptive and avoided. Newer UI/UX conventions, and tools like an Angular/React, aren’t a priority.
  • Contract Terms / Flexibility – Longer term contracts are required. Renewal details aren’t negotiable. The position of strength is flexed.

A last generation product readily shows its age. Staying up-to-date with a modern UI/UX and feature set is much harder than it looks. As companies grow and scale, continuing what’s proven takes precedence over innovation.

What else? What are some other signs of a last generation SaaS product?

Video of the Week: Daniel Kahneman – “Thinking, Fast and Slow” | Talks at Google

For the video of the week, watch Daniel Kahneman: “Thinking, Fast and Slow” | Talks at Google. Enjoy!

From YouTube: @Google Talks is proud to welcome hero of psychology, Daniel Kahneman.

Daniel Kahneman, recipient of the Nobel Prize in Economic Sciences for his seminal work in psychology that challenged the rational model of judgment and decision making, is one of our most important thinkers. His ideas have had a profound and widely regarded impact on many fields—including economics, medicine, and politics—but until now, he has never brought together his many years of research and thinking in one book.

The API Economy

Continuing with yesterday’s post The Next Generation Competitor to Every Public SaaS Company, there’s a key component of modern SaaS apps that changes the market dynamic compared to 10 years ago: APIs. Application Programming Interfaces (APIs) are how cloud applications “talk” with other cloud applications. Think about exchanging data, triggering features in remote applications, and generally interacting in an automated fashion — all made possible by APIs.

Now that most apps have usable APIs, connecting apps is far more common, and more importantly, the major apps don’t have to include the full breadth of modules natively. Instead, apps are more specialized and focused. Lock-in becomes less of an issue and there’s more competition throughout.

The API economy is at the core of another round of disruption. Look for this to play out in the next several years.

What else? What are some more thoughts on the API economy?

The Next Generation Competitor to Every Public SaaS Company

Yesterday I was talking to a very successful SaaS entrepreneur and the topic came up of when the next generation NetSuite replacement is going to emerge. NetSuite, an enterprise resource planning platform (think accounting, inventory, etc.), is incredibly powerful, but has an interface unchanged for 10 years along with a very difficult customization process. Taking the idea one step further, every public SaaS company already has several next generation upstart competitors building a product that is better, faster, or cheaper (pick two).

Here’s what every next generation SaaS winner will have:

  • API-First – In lieu of a slow, cumbersome API, the next generation has fast, elegant REST APIs that make connecting to quick and easy.
  • Rich, Responsive UI – In lieu of basic web interfaces, the next generation has rich, responsive interfaces that feel like a native app.
  • Approachable Pricing – In lieu of cryptic, talk-to-a-salesperson-only pricing, the next generation has straightforward, readily understandable pricing (see Zoom).
  • Modularized Platform – In lieu of a large, monolithic platform, the next generation is built on micro-services that allow for much more rapid development and cloud-native scalability.

Technology innovation goes in waves every 15-20 years and SaaS is no different. The next generation winners are already out there, just give it a few years and you’ll start to notice them.

What else? What are some more thoughts on the idea that the next generation competitor to every public SaaS company is already out there and building momentum?

Change the World or Pursue a Cool Idea

Recently I was meeting with an entrepreneur that’s in transition and trying to figure out what’s next. Towards the end of the conversation he brought up an internal struggle: should I hold out for an idea that can change the world or pursue a cool idea that interests me but isn’t as grandiose. Naturally, this isn’t an easy question.

We debated the topic a bit and I offered up that absent a big idea now, it’s better to keep moving and pursue a cool idea that’s of deep interest. Many would-be entrepreneurs suffer from analysis paralysis holding out for the “great” idea. Yet, most initial ideas fail and require a pivot.

Pursuing an area of interest and starting the startup is better than holding out for an idea that might never come.

What else? What are some more thoughts on change the world ideas vs cool ideas?

Demonstrating Product Value in the Application

One of the on-going challenges, and opportunities, for a SaaS application is to show the user the value they’ve received using the product. At Pardot, we worked hard to show the product value through revenue generated, marketing pipeline, and campaign ROI. Of course, demonstrating product value took time depending on the volume of leads, marketing activities, and length of the customer’s sales cycle.

Here are a few thoughts on demonstrating product value in the application:

  • Revenue Generated – Connecting the product to revenue generated is the ultimate in showing value. If there’s ROI, prove it.
  • Time Saved – Most applications have a time saving element. Quantifying it can be hard but worthwhile.
  • Items/Objects Used – Reminding the users of the volume of product usage — invoices sent, contacts created, etc. — helps realize the value.
  • Email Updates – Sending product usage summary emails to the user keeps the value top-of-mind on a regular basis. Weekly emails are recommended.

Entrepreneurs would do well to ensure that the product demonstrates its value to the end-user.

What else? What are some other ways to demonstrate product value in the application?

Weekly Update Email

One of my favorite communication strategies for entrepreneurs post product/market fit is a weekly update email to all constituents: employees, advisors, mentors, and investors. Initially, the email should be pretty simple and then expand as the company grows and departments are formalized. Here’s an example format:

  • Intro
    • Quick paragraph summary of last week
  • Annual Goals
  • Quarterly Goals
  • Quarterly Priority Projects
  • Sales
    • The top three weekly metrics for the sales team, or for smaller teams, the top three metrics for every person on the sales team (e.g. calls, appointments, deals won, new recurring revenue, etc.). By having every sales rep listed with their metrics, it provides transparency and peer-pressure to hit their numbers.
    • Comments or highlights from last week (e.g. the name of a big customer win or story from the team)
  • Marketing, Services, Support, Engineering, Operations, etc. (each has their own section, just like the Sales section)
    • The top three weekly metrics
    • Comments or highlights from the week
  • Culture Highlight
    • A story or example from the week that exemplifies the company culture and recognizes one or more people

Yes, it’s more work on a weekly basis. Yes, it’s a commitment. Yet, when done consistently, this weekly update email is one of the best techniques for an entrepreneur to increase communication and transparency in a scalable way.

What else? What are some more thoughts on the weekly update email?