Dan Martell - April 26, 2021


What You Need To Build a Two-Sided SaaS

Topics
marketplace dynamics and B2B challenges early adopters and innovation departments
Hosted by
Dan Martell
Mentioned
Leon Jeffrey Moore Michael Moore Google Apps
3 Powerful Ways To Improve The Quality of Your Thoughts How To Close SaaS Customers Using Online Chat

Episode Stats


Length

24 minutes

Words per minute

173.1

Word count

4,296

Sentence count

85


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode of the Tech Money podcast, I chat to the founders of Handshaker, a software company that helps connect SMB technology companies with enterprise organizations in the telco sector. In this episode, I speak to them about their business model, the challenges they face in the market place and how they plan to get their product into enterprise environments.

Transcript

Transcript generated with Whisper (turbo).
Topics generated with Qwen2.5-3B-Instruct.
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.000 and you know you got them when they lean in and they start giving you advice
00:00:04.440 leon good chatting with you man i am really excited about this i've been watching uh the
00:00:21.880 youtube uh channel i've listened to the pods it's kind of surreal being here i have to say
00:00:27.000 dude we're gonna have some fun i appreciate uh the opportunity i'm excited to dive in
00:00:31.720 um let's start off what what's the business who do you serve and how do you serve them
00:00:36.280 uh the business is software that helps connect smb technology companies with enterprise uh
00:00:42.600 organizations um we serve mainly telco sector and what's it called handshaker handshaker cool
00:00:51.960 we are in kind of a niche b2b space with a high arpu so all that sort of comes with a significant
00:01:04.520 challenge in that sales cycle is a little bit longer and we also have this kind of marketplace
00:01:11.960 dynamic which is we have two customers we have a buyer and a seller buyer being large enterprise
00:01:17.400 looking at innovation seller being a tech company trying to get the eyes and ears of the big tech
00:01:25.000 company so got it so the model is um correct me if i'm wrong uh new startup technology wanting to
00:01:32.360 get in front of more established fortune 2000 clients you know uh both for distribution for
00:01:40.520 them to get innovation so the motivation for the big company is innovation access to early kind of
00:01:46.600 differentiator unique value the startup obviously getting reference accounts revenue that kind of
00:01:54.040 thing some case studies potentially um do i got that right yeah yeah absolutely um and what are
00:02:00.840 the big challenges that you have that you want to discuss today yeah so there's three um the first
00:02:07.400 is marketplace dynamics in that um we have this complex by buyer and seller two-sided um software
00:02:15.240 as a service and you need inventory on one or the other to actually make the thing fly uh in other
00:02:22.200 words inventory meaning customers one has to be bigger than the other the second is um forecasting
00:02:29.400 uh for purposes of fundraising um you know i've been doing um sales forecasting for a number of
00:02:35.880 years but there's an element of blue sky that's involved and i don't want it to be beyond
00:02:41.720 credibility um and then the last piece is the pricing element so um figuring out what our
00:02:50.580 pricing structure would be i've got an idea but it's it's again it's it's gut feel uh more than
00:02:58.580 it is researched and what stage are you guys at today so we're just under 3k mrr um we're on track
00:03:07.300 to get to around about 5k in the next couple of months are targets to get to 10k by the end of
00:03:13.140 this uh this year and uh what is the use case today that people are paying for walk me through
00:03:20.180 kind of a traditional use case so the key thing is is eyes and ears on a new product or a new
00:03:26.420 technology um the right eyes and ears in the big enterprise for the enterprise it's an optic on
00:03:33.300 innovation it's it's actually getting visibility of all the really cool tech out there without
00:03:37.940 having to go to these big conferences and um and then actually putting that in front of functional
00:03:43.220 leaders not just an innovation function in a large company so what's the offering like use
00:03:48.100 case in regards to give me examples of people that are currently paying you for the the to be in the
00:03:55.780 marketplace and what do the companies pay to get access to those companies so we have um quite a
00:04:03.060 wide-ranging set of sellers that have got technology that helps fix specific problems
00:04:08.660 in the telco operators so they have a piece of technology that'll help understand customer
00:04:14.420 experience they've got something quite unique that measures both subjective and objective
00:04:20.420 customer experience type metrics and they're trying to get that into a big operator that
00:04:25.220 probably has you know lots of people shouting at them to be seen and heard and maybe they can't get
00:04:30.420 the right person to hear them out um so i understand the seller wanting to get in front of
00:04:35.780 the telco what do you do to enable that transaction what do they pay today what does the telco pay
00:04:41.940 yes so so for example um they'll uh pay to to be listed and they do a short elevator pitch
00:04:52.820 and that elevator pitch is then visualized in a a wall of innovation essentially video wall
00:04:57.860 and that video wall is categorized by functional area for the buyer so the
00:05:02.760 buyer gets a onto crowdsourced view of all this innovation and the functional
00:05:07.480 leadership in a big buyer will have visibility of an area that they're
00:05:11.360 particularly interested in they'll use tags etc keywords and that'll pop up
00:05:16.780 that'll tell them a little bit about the company the seller that's trying to get
00:05:21.860 their attention they'll have a little video that says hey we are X technology
00:05:25.700 company we can help you get visibility of both the subjective and objective data for your clients
00:05:30.600 in real time we've got track record of doing this in these places or we're a startup etc
00:05:35.280 and so that that that human touch that pitch is then attached um uh with a little bit of um i
00:05:44.020 guess background information about the company um maybe just a one pager and that's what the
00:05:49.320 buyer the big company sees but it goes directly to the right person in the business that's sort
00:05:55.160 identified an area that they're really keen to look at um so i understand the seller pays to be
00:06:01.880 listed you help do you help them with the video and help them creative okay absolutely and then
00:06:07.160 the buyers what do they pay right now so they are probably the higher end of the scale in terms of
00:06:16.600 pricing structure um and just a subscription to the existing community um they'll pay for
00:06:24.360 two things one is that visibility of the innovation and the second thing is being able to
00:06:29.320 send a requirement confidentially in a swim lane to our community to say hey guys
00:06:34.040 we've got this problem we can't nail it down um what have you got to offer and so we'll then
00:06:39.640 provide that sort of uh what do they pay a month right now for that so right now they're on on um
00:06:46.520 a 25k a year um sort of startup uh amount i i think that should be higher um but that's kind
00:06:54.920 of the level we're at so the buyers paid 25k to get access to this innovation the sellers right
00:07:01.080 now do they pay anything yeah so there's a there's a scale from uh depending on size so if you have
00:07:05.880 proper startup before you've had funding or anything that's um early on uh it's anything
00:07:11.480 from 3k to 13k a year depending on which sort of level you're at there's four levels essentially
00:07:17.000 got it how did you come up with this idea where the inspiration come from 20 years of bte um i've
00:07:24.200 spent that time um generally sort of small company trying to sell into bigger companies large telcos
00:07:31.480 generally it's a technology play uh within the networks or it functions and it's and it's it's
00:07:37.480 hard right it's i mean you you know enterprise sales it's it's a grind um my last business
00:07:43.480 i was with for 10 years leading global sales i just spent all my time on a plane and i got to
00:07:48.520 20 end of 2019 i was just i was on a red eye back from the us and i just spent four or five
00:07:53.880 weeks on the road and i was like right there's gotta be a better way of doing this there's way
00:07:58.600 too much noise out there um and the main people that you want to get in touch with in in the
00:08:05.880 enterprise you know it's it's a long process of getting their attention it's a long and
00:08:10.440 an expensive process right so um you know i i basically lived and breathed it for 20 years i
00:08:16.120 just got to the point where i was like right let's do something about this has got to be a better way
00:08:20.280 of doing this um and frankly a lot of the conversations i've had with the buy side the
00:08:25.720 telco operators the big guys um they struggle to harness innovation properly right so a lot of them
00:08:35.240 will have an innovation function a lot of them will have you know specific people that will try
00:08:40.520 and bring in startups um into their business but actually getting that into functional leadership
00:08:45.880 and actually you know making that innovation come to life in their organization is also a huge
00:08:50.520 struggle so um i wanted to do something about it and i had enough proof from my previous business
00:08:57.720 to say okay this is definitely an itch that needs scratching um and if you can do something tech
00:09:02.760 wise to make that whole process a lot easier um then hopefully you know it'll it'll be a decent
00:09:09.160 market fit so i just thought like do it let's go for it um so i mean this is and and that was the
00:09:14.360 inspiration for handshaker the way i look at it is you have two separate customers so marketplaces
00:09:20.600 are unique because it's like having twins right you have literally two separate customers you've
00:09:26.120 got to serve you have the enterprise customer that's looking for innovation and then you have
00:09:30.120 the startup that's looking for adoption, right? So I always ask myself, which one is the most
00:09:36.120 important to build demand around? And in your case, my gut tells me it's the enterprise, right?
00:09:42.360 If you have, you know, 100, 200, 500 enterprises, and, you know, maybe a dozen in each category,
00:09:49.320 you know, telco, or, you know, communications, or whatever, you know, you know, water and gas,
00:09:55.800 or like different things that are similar like cousins that if you build that critical mass
00:10:01.720 then the startups will happily pay right and and i'm always looking for repeatable patterns to
00:10:07.720 match in the market so when i look at what you're doing you know maybe you're aware of this but
00:10:12.200 there's a lot of these events companies that will pitch you to sponsor or attend their event they
00:10:18.760 get you at a table and then they essentially wine and dine the executives at this these fortune 2000
00:10:24.920 companies to come to the event, to sit down, to hear the pitch, right? And they kind of pitch it
00:10:30.600 as like business networking. And I mean, it's typically, you know, five to 10, 15 grand per
00:10:36.760 company that pays to go, right? So you know that model, right? So you're trying to disrupt this,
00:10:43.660 and I would argue in a better, more eloquent way. So the good news is, is your value proposition,
00:10:52.080 the price point is high enough to support a sales process. Okay. So the way I think about it is if
00:10:59.580 that's my customer, these big companies, then I can ask myself, what's true about this customer?
00:11:05.660 What makes them a perfect fit? In my world, I call it a perfect fit customer. A perfect fit means
00:11:10.260 ready to buy. They have the characteristics, they have the values. Like what makes it that if I
00:11:16.260 approach this company, what's true about that company that would tell me that they would be
00:11:21.300 ready to buy my kind of solution. So if I ask you that question, Leon, how do you answer that?
00:11:26.680 What's true about your potential enterprise company that tells you they would easily spend
00:11:32.840 15 grand a year to get access to your platform? I would say they've got an innovation team
00:11:40.400 that's scouting. So they proactively look. Write that down. Innovations team.
00:11:44.800 I would say they have, it's a technology business and so they're going to have a truckload of problems to solve.
00:11:58.800 Cool. Technology business, innovation center. I always think about like three core areas.
00:12:04.800 What are the tools they might already have spent money on that might give you indication?
00:12:09.800 you indication what are the expert they may have hired or know of that tells you that they're
00:12:15.720 innovators or what are the events or groups or places they go and spend time that would tell
00:12:21.800 you that they would be potentially a good fit is there if you look at those three buckets right
00:12:26.120 what i i call it the three f's fund follow and frequent where would that fit in there okay okay
00:12:32.680 perfect and frankly most of them are spending a lot of time at the big telco events mobile congress
00:12:40.920 has been it's probably the big one um perfect so so check this out because i'm always like
00:12:46.840 growth hacking you hear this term growth hacking often which is like you know people kind of look
00:12:51.720 at as like marketing or you know metrics based marketing is kind of what we used to call it
00:12:56.200 it before the growth term uh came about but i always look for um distribution or like um you
00:13:05.240 know taking a wide net and really getting more spears focus um actually great book if you haven't
00:13:11.500 read it predictable revenue by aaron ross he talks about spears nets uh in there but when i hear what
00:13:18.600 you're sharing i'm hearing they go to this event which you just mentioned right what was the event
00:13:23.660 again mobile congress right so they go to mobile mobile congress mobile world congress sorry okay
00:13:31.420 so they go to mobile world congress of those people so that's the original hit list in there
00:13:37.580 you say okay of those companies which ones have innovation departments so everybody that doesn't
00:13:42.300 you take them out and then maybe within there i'm looking for something else right maybe i'm looking
00:13:47.740 for that they have adopted this technology right in the consumer space or in the b2b space you say
00:13:52.940 they have a snapchat account right if you're a business and you have a snapchat account you're
00:13:56.460 an early adopter right because what we're trying to find is the early adopters in your market
00:14:02.140 because if you do a really good job at aggregating hundreds of businesses that look like this but
00:14:09.020 they're not early adopters then the technology companies won't have liquidity they won't sell
00:14:13.980 through they won't get adopted you won't build case studies to be able to share to other people
00:14:18.940 in the market that your platform works right so that's what we're looking for what what what would
00:14:25.100 tell you if they're an early adopter versus a lagger you know and micro more's kind of innovation
00:14:31.420 adoption curve yeah and you know it's funny telco should be an early adopter of a lot of things but
00:14:38.460 but um they kind of buck the trend um i would suggest if they are uh running their own cloud
00:14:47.100 or vocally supporting a particular cloud technology or provider, then it gives you
00:14:53.660 a really good idea.
00:14:54.620 That's the one. And then cloud. So here's what's cool. And I meant Jeffrey Moore,
00:15:00.300 not Michael Moore. I think Michael Moore is the movie director. Jeffrey Moore is the innovator
00:15:08.460 and genius. So for example, I was working with one of my portfolio companies that I invested in,
00:15:15.980 and they were building a payroll software in Manila and they were having a hard time getting
00:15:21.340 in front of their early adopters. So same exercise went through one of the three Fs, fund, follow,
00:15:27.820 frequent. And one of the things they came to was, well, most of these SMBs use Google Apps for
00:15:34.620 Domain. This is before it was called Google Suite, but Google Apps for Domain. Now, Leon,
00:15:39.260 if you're technical enough to know that, and I ask you, okay, if I got a list of 100 companies,
00:15:45.020 how would I know if they use Google Apps for domain? If you know, you would say, oh, well,
00:15:50.540 you could check the DNS records to see if their mail record is set to Google mail server. Does
00:15:56.900 that make sense? Yeah, it makes a lot of sense. And there's this great site called Built With
00:16:02.540 that can potentially provide you with that information. So Built With, I think will tell
00:16:07.880 you the cloud provider they're using, the technology stack, the MarTech stack, the email
00:16:12.380 tools so you can almost use built with to give them a grading score of early adopters so if you
00:16:17.500 take people that attend the mobile world you know expo people that have a cloud and an innovation
00:16:25.580 team all of a sudden now you're you're you're making sales to you're using a sphere to go after
00:16:32.620 those accounts to get them which is going to queue you up to build the demand side of your marketplace
00:16:37.340 so that there's liquidity on the startup side does that make sense makes perfect sense yeah um
00:16:43.820 so that would be the first thing um you had a few other questions about pricing
00:16:47.900 and what was the other one so maybe the the forecasting for fundraising so i don't know um
00:16:55.580 maybe the forecasting comes next but yeah so the first thing is enterprise uh pricing so figuring
00:17:01.340 out um a pricing structure without it being um uh you know maybe i guess uh well it's a kind of a
00:17:14.380 rule of thumb type approach rather than it being yeah i mean here's here's the truth in in most
00:17:20.940 startups pricing is not something you should optimize for i think you need to capture value
00:17:26.220 You need to be able to support your growth. You need to be able to cover your costs. But in the
00:17:31.820 early days, your first 10 accounts might get your service at cost. Or even you might be even more
00:17:38.140 generous with your time and say, look, we're not trying to make 85% gross margin. We're just trying
00:17:43.740 to learn and experiment and we're just going to price it aggressively in the market to get those
00:17:49.180 first customers. If we're successful, we're going to get the case study. We're going to get the
00:17:53.100 testimonial. We're going to get some, you know, we really need them to bootstrap the marketplace
00:17:57.820 anyway. So don't worry too much about pricing. I think what you should look at is, is there
00:18:04.220 similar type products that companies that size pay for, right? It could be consulting retainers,
00:18:09.740 it could be innovation retainers, it could be whatever, right? And if they have them,
00:18:14.140 then you could easily use that as a kind of a benchmark, right? And say, look,
00:18:19.980 companies are already used to spending X amount of money on innovation, consulting, etc. Maybe
00:18:25.420 they pay for an account for Deloitte, not Deloitte, but maybe they pay for an account for
00:18:32.780 Gartner because they're giving them innovation and research and all that stuff.
00:18:38.700 And you can look at that price point and say, if they're paying for that, then they would pay for
00:18:42.300 this because we actually are more a tangible implementation version of that. And then using
00:18:47.500 that to kind of build out your forecast and your sales process but at the end of the day
00:18:51.660 you need to build demand generation maybe it's through these events buying those lists
00:18:56.620 filtering them through your qualifiers that make them a perfect fit customer and then
00:19:01.660 building some kind of knowledge around you know is this a 60 90 day 160 day sales cycle right
00:19:08.860 big companies typically are longer the reason why is because teams need to go through budget
00:19:13.980 approval right when you're a big company you can't just decide to spend 25 grand like it's very few
00:19:18.460 people in the org that's allowed to do that so then there's some pricing strategies there like
00:19:23.180 trying to keep it below a certain amount per month right and that gets into the discretionary budgets
00:19:27.500 for a team potentially right but i would say if you pattern match against something they're already
00:19:31.580 used to paying for then then people will be like okay yeah you're right they do pay you know 15
00:19:37.340 grand a year for this or 25 grand we're only pricing at 15 our products differentiated because
00:19:42.300 of these things. This is the size of the market. Here's our go-to-market strategy.
00:19:48.460 Be specific. This is the way we're going to do it. And as we build that up, we're going to partner
00:19:54.220 with these accelerators to build the supply side, which is the technology companies.
00:20:02.780 If you can get people to buy what the supply has to offer, then there'll be more supply than you
00:20:08.860 can deal with right at the end of the day if i'm a taxi and you have you got fares for me
00:20:15.500 even if i'm not a taxi i'll become a taxi if there's business to be made does that make sense
00:20:19.740 yes the yes you need to build some level of supply to have liquidity so that people looking for that
00:20:24.140 demand don't come up and have a blank slate experience but you do that slowly using the
00:20:28.300 bowling pin strategy meaning that you start with one industry like you've done you make sure you
00:20:32.620 get a certain amount of coverage and then you ask yourself what's the close cousin i call it the
00:20:37.340 close cousin jeffrey moore probably has a better term for it but it's the second and the third
00:20:41.260 bowling pin right what looks the same right so if i'm going from selling to telco maybe water and
00:20:48.700 gas is similar but you also said that they have an innovation stack so maybe not right so you'll
00:20:53.180 have to understand what looks the same because those are the markets you want to go after second
00:20:57.900 and third to build the the supply or the demand side or supply side to match that right because
00:21:04.380 you always want to make sure that there's a liquidity yeah totally get it and um i think
00:21:09.900 you know you mentioned the pattern matching um phrase which i think is probably a better way of
00:21:15.340 saying the rule of thumb type approach than that i mentioned um and essentially i've done i've
00:21:20.780 looked at the type of subscriptions these guys are paying for the type of um events they're going to
00:21:26.940 and i've gone okay if they're paying 25 30 40k for those types of events then they should be able
00:21:33.580 to pay for this type of product um i i was and that methodology if i stand in front of a
00:21:41.260 potential investor and then give them that sort of pattern matching approach they're not going to say
00:21:45.500 well you know no it's it's literally what i call napkin math right where you you've mapped out a
00:21:51.020 very logical informed argument for why your pricing is in the realm of possibility right
00:21:59.820 and you've already kind of proved it out a little bit it's not optimized you're not trying to
00:22:03.660 optimize right now you're trying to build liquidity and build scale but over time you know that you
00:22:08.380 can kind of increase the prices to be able to improve your go-to-market and your monetization
00:22:13.340 that's a really good way to present it in regards to like what's aggressive versus not i mean if
00:22:18.860 you're raising venture capital and you want to build a venture-backed business you need to show
00:22:23.260 some kind of way that you're going to get to 100 million in revenue in the next seven years that's
00:22:27.260 the rule of thumb right because investors are making a dozen bets on somebody being a winner
00:22:34.860 and if that's you they want to hear how are you going to stack that growth and build out that team
00:22:40.780 and leverage their capital to to build the the marketplace right and what does that liquidity
00:22:45.980 look like at scale does that help does really help um so leon as we wrap up what are the big
00:22:52.780 takeaways for you what what what resonated the most with you from our conversation for me it's
00:22:58.620 it's uh pattern matching um you know i think that's a really great way to describe how to
00:23:05.020 show that you've got a methodology essentially a rough guy um how to hone in on your right um
00:23:13.500 your right buyer um you know the three key areas we talked about um and finally you know uh i think
00:23:22.140 I think the biggest thing is the close cousins, I think, as well.
00:23:26.140 It's also a really good thing that I took from the from the session.
00:23:30.140 If you could show you you've got some form of methodology to focus on one market and you've got close relatives.
00:23:36.140 You can go after them. It shows you've got a growth potential.
00:23:40.140 Yeah. And you just want to show the ten pins. These are the first three.
00:23:44.140 These are the ones we've already planned out. Each one is worth X amount of market share or size of revenue or potential.
00:23:49.140 and that's how we get to a hundred million.
00:23:51.640 And it just feels thoughtful and logical
00:23:54.080 and that's what investors want.
00:23:55.560 And then, you know, you got them when they lean in
00:23:59.200 and they start giving you advice.
00:24:00.860 Just so you know, the moment you stop talking
00:24:03.280 and they go, but you could also do this.
00:24:05.300 That's when you know you've got an investor on the hook.
00:24:08.420 Awesome.
00:24:09.360 Awesome, Leon, it's been a pleasure, man.
00:24:11.700 Great to meet you, great to meet you, thank you.
00:24:13.420 Have an amazing rest of the day, we'll talk soon.
00:24:14.700 Thank you, and you.
00:24:19.140 We'll be right back.