Dan Martell - How To Create The Perfect SaaS Business

If you ve ever struggled with trying to figure out what your roadmap should look like as you start your idea and expand and add new features, or you re currently in a start-up and you re struggling with figuring out the right next category to go into in regards to serving your customer, this episode is for you. In this episode, I talk about what I ve seen working with thousands of entrepreneurs building software companies, personally building my own, and investing in 30+ others, because there s a pattern. There s 5 characteristics that all the best SaaS and software companies have, and there s really 5 characteristics I m gonna share with you in this video.

00:00:00.260 Ah, I need to Shazam. 0.96

00:00:02.100 Well, it's that, you know the song I'm singing.

00:00:03.880 I know, I just, I wonder if it would recognize you

00:00:05.700 if you were just singing.

00:00:06.540 Like if I just sang that?

00:00:07.380 We just makin' love, bah! 0.98

00:00:17.480 How to create the perfect SaaS software business.

00:00:20.380 Now, I know that's a big promise,

00:00:21.760 but if you've ever struggled with trying to figure out

00:00:24.460 what your roadmap should look like as you start your idea

00:00:27.220 and kind of expand and add new features,

00:00:29.420 or you currently have a start-up

00:00:30.980 and you're trying to figure out the right next category

00:00:33.820 to go into in regards to serving your customer,

00:00:36.400 this video is really gonna just talk about

00:00:38.760 what I've seen supporting thousands of entrepreneurs

00:00:42.200 building software companies, personally building my own,

00:00:44.340 and investing in 30 plus others, because there's a pattern.

00:00:47.880 There's certain characteristics that all the best SaaS

00:00:52.100 and software companies have, and there's really five

00:00:54.520 I'm gonna share with you in this video,

00:00:56.320 and at the very end, I'm gonna share a tip

00:00:59.180 to help you get going because it's going to be

00:01:00.940 a little overwhelming and some of you are going to go,

00:01:02.580 well, I don't have three and five, what do I do?

00:01:05.620 At the end, I'm going to share with you guys

00:01:06.680 how to overcome that concern.

00:01:09.260 But, you know, I was blessed that I started

00:01:11.860 building software companies when I was 17.

00:01:14.060 I mean, pretty, you know, 20 years now of iterating,

00:01:17.440 building technically product marketing, scaling, engineering.

00:01:21.800 You name the challenge, I've faced it.

00:01:23.900 But I've also been super lucky to be around and interact

00:01:27.780 and have conversations with the founders

00:01:29.440 of some of the iconic internet gems, you know?

00:01:32.760 Guys like Mike McDermott at FreshBooks

00:01:34.920 and Ben at MailChimp and Owen and the team at Intercom.

00:01:39.200 You know, I'm just super lucky

00:01:40.520 to have been an early investor there

00:01:41.900 and seen their growth from just this, you know,

00:01:45.060 super raw product that they focus on,

00:01:47.240 they obsess on, like truly obsess, to finally scale it up.

00:01:50.660 And what I've seen amongst, you know, base,

00:01:53.600 you know, even early days of Basecamp,

00:01:55.340 being able to go to Chicago and spend time

00:01:57.680 with Jason Fried and the guys there in one of their workshops

00:02:00.780 and seeing the way they think, I've really distilled it to five

00:02:03.920 characteristics that I think all SaaS companies,

00:02:06.920 great SaaS companies have.

00:02:08.200 The first one is the product is core to the customer's business.

00:02:13.860 And what I mean by this, if you think of products like Intercom

00:02:16.400 and FreshBooks and Basecamp and Slack, they're great, you know,

00:02:21.180 B2B SaaS businesses because at the core of their value,

00:02:25.600 It is part of their customer's workflow.

00:02:28.600 Like they use it on a daily basis to actually produce value

00:02:33.340 and or run the business.

00:02:34.960 And that is an incredible place to be as a software.

00:02:38.300 So that's number one.

00:02:38.900 Two is their cost and value proposition

00:02:42.700 is super straightforward.

00:02:44.000 I can't tell you how many founders,

00:02:45.500 when I sit down and I do a quick coaching call with them

00:02:48.080 to try to help them with positioning or their pricing

00:02:50.740 page, the value proposition, how they create value

00:02:55.560 and how they capture that, how they price their product.

00:02:57.800 It's not clear and if it's not clear to me,

00:03:00.300 it's definitely not gonna be clear to a customer

00:03:02.160 that just envisives a page and gives you three seconds

00:03:04.300 before bouncing and deciding to go check out

00:03:06.400 somebody else's solution.

00:03:07.540 So that's the second thing, just clear value prop

00:03:10.540 and it's super straightforward.

00:03:11.700 The third thing is you need to make sure

00:03:14.420 that it finances its own growth, okay?

00:03:17.680 And this is a part of the pricing structure.

00:03:21.680 I've seen many companies that I've worked with

00:03:24.020 where they might have a low tier product,

00:03:27.260 you know, $27 a month, and they don't realize

00:03:29.960 that the value they're creating,

00:03:31.060 they need to move up market.

00:03:32.420 So they've got to figure out a way

00:03:33.640 to capture more value sooner

00:03:35.240 to be able to finance their growth.

00:03:36.780 Typically, that's by raising prices.

00:03:38.460 For the most part, most companies can raise the price

00:03:40.420 by 20, 25% and not have a significant drop

00:03:43.340 in customer adoption.

00:03:45.640 And then the other big thing is really looking

00:03:48.220 at the way that they charge for setups.

00:03:53.220 I mean, if you have a product that has a bit more complexity

00:03:56.360 in signing up a customer, especially in an enterprise

00:03:58.300 businessy world, then having an option,

00:04:01.920 it doesn't need to be mandatory, but having an option

00:04:03.800 where a customer can, you know, invest $5,000

00:04:06.600 to have a consultant come in, set it up, configure it,

00:04:09.000 train their team, just make it part of the registration

00:04:13.300 process, make it an upsell.

00:04:14.700 I mean, one of the fastest growing companies right now

00:04:17.420 in the SaaS space, ClickFunnels, that's part of their funnel.

00:04:20.940 It's crazy, they use their own product

00:04:22.820 for the registration of their product,

00:04:24.560 and part of that funnel is a high-end consulting arrangement,

00:04:28.720 really because they wanna just make sure

00:04:30.020 if somebody needs that,

00:04:31.200 because a lot of people signing up for products,

00:04:32.940 they may not have the time to invest in getting it successful,

00:04:36.840 so you giving them that option

00:04:38.040 is a great way to finance the growth.

00:04:39.860 The fourth thing is they have an efficient sales model, okay?

00:04:44.240 And really, and I've taught this before,

00:04:47.140 you either have high price and high complexity,

00:04:50.540 and that's kind of where you wanna be.

00:04:52.320 you don't wanna have is high complexity and low price

00:04:55.280 because then you can invest in the right sales model

00:04:57.660 and that could be a content marketing strategy

00:04:59.700 for really qualified high volume inbound,

00:05:03.660 especially if you have a low touch, no touch,

00:05:05.200 low price point SaaS business or it could be

00:05:08.700 really intelligent and beautiful and non-spammy 1.00

00:05:12.840 and super personalized outbound email strategy

00:05:16.780 to build a bunch of opportunities to kick it off

00:05:19.940 to your account exec to do the demos

00:05:21.580 and enroll those customers eventually to customer success.

00:05:24.440 So there's really two different ways at scale

00:05:27.360 that I've seen this happen,

00:05:28.380 but you just need to focus on it.

00:05:29.720 You need to have an efficient sales model

00:05:32.460 to predictably acquire, convert,

00:05:35.360 and onboard those customers as fast as possible.

00:05:38.640 That's definitely a characteristic I've seen.

00:05:40.600 And then the fifth, finally, is market leadership.

00:05:42.860 You know, I was fortunate enough to become a formal advisor

00:05:45.380 to a company called Hootsuite in the social media space,

00:05:48.500 and one of the things that Hootsuite really did well

00:05:51.320 from the very beginning is own that market leadership position

00:05:55.700 and really look at how the market was developing

00:05:58.200 and own the language and how it interacted

00:06:01.900 with their channels and the messaging.

00:06:03.800 I seen HubSpot do this well, so I was lucky to have Dharmesh 0.98

00:06:07.300 as a mentor to me in the early days

00:06:08.740 when I built my company Flowtown

00:06:10.280 and seeing how HubSpot said we're gonna own the word inbound

00:06:14.280 when a lot of people at the time called it content marketing

00:06:16.620 or social media marketing.

00:06:18.340 They said, no, it's called inbound marketing.

00:06:20.240 It's different than Outbound,

00:06:21.680 and the whole purpose is to build quality content

00:06:24.840 that adds a ton of value to your customers.

00:06:26.880 I mean, they went as far as writing a book together.

00:06:29.140 Brian and Dharmesh wrote the Inbound book.

00:06:30.880 They run a conference that has tens of thousands of people

00:06:34.120 that visit it every year called Inbound.

00:06:36.460 They've created communities, their blog.

00:06:38.920 I mean, if you wanna talk about a company

00:06:42.360 that really owned the leadership in their position,

00:06:46.600 I can't think of a better company

00:06:47.640 than HubSpot Salesforce, obviously.

00:06:49.600 Anybody in SaaS, including you,

00:06:51.100 if you're building a software in a SaaS business,

00:06:53.200 just so you know, if you're youngish,

00:06:55.540 if you're like below 30, you probably don't realize

00:06:59.040 that all of us exist because of the marketing dollars

00:07:01.440 of Salesforce.

00:07:02.280 Prior to Salesforce in 95, 94, 95,

00:07:05.720 really marketing and producing and convincing

00:07:08.680 big companies, enterprises to host their software

00:07:12.120 on a server, many of the products was installed.

00:07:15.720 It was on premise, it was on the servers.

00:07:17.860 That's an incredible challenge to have a big business say,

00:07:21.860 well, I'm gonna trust you to go from installing all this data

00:07:25.840 in the server and the software on my servers

00:07:27.500 and put it out in this thing called the cloud.

00:07:29.900 So we owe a lot to Salesforce.

00:07:31.500 And finally, I told you I wanna leave you a tip

00:07:33.740 on how to overcome this.

00:07:35.140 But before I do that, I wanna review.

00:07:36.640 One, you need to make sure that your product is core

00:07:39.240 to a customer's workflow.

00:07:40.860 Two, you need to ensure that the cost value proposition

00:07:44.260 is clear.

00:07:45.180 Three, you wanna ensure that it has

00:07:48.320 an efficient sales model.

00:07:49.680 Four, you want to ensure that it can finance

00:07:52.780 its own growth, and then five is you want to aim

00:07:55.900 for market leadership position.

00:07:58.100 Now, if you're concerned that you don't have those,

00:08:00.160 what should you do?

00:08:01.160 I'm just gonna say start small, start focused.

00:08:03.240 Build a tool that generates a result,

00:08:06.400 and just think about if I can start here,

00:08:08.340 and I call that a product hook.

00:08:09.740 If you can build a product hook in a market,

00:08:11.540 you can expand, it's like getting a toehold

00:08:13.400 when you're climbing a mountain.

00:08:14.800 Once you get that toe hold, then you can start strategizing

00:08:17.380 about the next positions to move your hand and your feet

00:08:19.780 to get up that mountain.

00:08:20.620 That is my advice to you.

00:08:22.720 I'd love to hear from you below in the comments.

00:08:24.640 Let me know which one of those strategies do you feel you need

00:08:27.640 to spend more time on to really perfect in your business.

00:08:30.040 Below in the comments, can't wait to interact

00:08:31.760 and read them there.

00:08:33.240 As per usual, I want to challenge you to live a bigger life

00:08:35.440 and a bigger business and I'll see you next Monday.

00:08:37.880 If you like this video, be sure to subscribe to my channel

00:08:39.900 for other tips and tricks on how to scale

00:08:42.160 and grow your software company.

00:08:43.420 I'd also encourage you to join my newsletter

00:08:45.980 for exclusive invites, free training,

00:08:48.600 and other community contests.

00:08:50.420 And also, if you want to keep going,

00:08:52.000 I've got two videos queued up for you.

00:08:53.700 I will see you next Monday.

Dan Martell - December 25, 2017

How To Create The Perfect SaaS Business

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