Running your SaaS Business in 2021: Forget the Old Way of Thinking
There is a common view outside of the tech industry that we have been untouched by Covid-19. Instead, it is believed that we have completely benefited from the impact of a global lockdown.
An article by The Guardian reports “Amazon, Apple, Facebook and Google reported positive quarterly results even as overall US economic growth fell by 32.9%.” Though there’s no question that several big players in the tech market have found new opportunities in the wake of our increased online existence, the impact of the pandemic has not been resoundingly positive for everyone in the SaaS world.
Technavio announced in its latest market research report ‘Global Software as a Service (SaaS) Market 2019–2023’ that the market will likely decelerate at a compound annual growth rate (CAGR) of over 9%. This is a fall from the projection in a report by Business Wire which anticipated the SaaS Market to grow at a CAGR of 21.2% during the forecast period 2018–2023.
But, our market is resilient. With incremental growth anticipated to be $60.36 bn this year and the emergence of AI-enabled SaaS promising to be a key driver in years to come, we are sure to recover. As the market adjusts and normalizes, SaaS businesses need to understand the evolution of the sales funnel, changing technologies, and how to secure investment in 2021.
Anna Baird－CRO at Outreach－and Karan Mehandru－Head of Venture Capital at Steadfast Financial－ challenged assumptions about the tech market in preparation for 2021. They addressed the unparalleled technological advancements we need to be aware of and revealed key trends in investing that still work!
Here are some of the myths in the SaaS industry which are tripping up scaling businesses, plus the arguments that bust them wide open.
“TAM (Total Available Market) is the biggest indicator of success for startups.”
Leaders! This one is for you…
TAM is a term that is typically used to reference the revenue opportunity available for a product or service. Entrepreneurs use it a quick metric to measure the underlying potential of any opportunity.
But don’t let TAM influence all your decisions. It only takes into account what customers currently want. Aspirational entrepreneurs are able to predict what the market will look like in the future and find nuanced ways of giving customers more value long-term. The truth is, often we don’t know what we want and many advanced SaaS companies wouldn’t be what they are today if they hadn’t thought ahead.
Ask yourself are you creating a moment of delight or are you solving a pain for your customers? You should be aiming for the latter.
“The customer defines the product roadmap”
Wrong again…The myth implies you need to demonstrate long-term value to sell your product, but sometimes your users or prospects can’t see past 90 days. You have to think about what value can you give in that window?
Ask yourself, ‘what do we deliver day 1 through to day 90?’
“The best startup CEO has to be all dimensions.”
There are three types of CEOs: Visionary, execution oriented, empathetic.
No CEO is all three and it is misleading to expect them to be. Like every human being they are flawed and failing to see this means you overlook gaps in your leadership team.
“Companies Selling to SMB’s can never achieve hyperscale.”
You can build a massive company on the back of customers that pay you less than $10,000 a year. Zoom, Slack, and Shopify are great examples of this. Yet many turn their noses up at these smaller deals, favoring larger enterprise-size deals.
Anna and Karan advised us to look at SMBs as a great way of testing new products and how it is received without jeopardizing your relationship with your whole customer base.
As the customers grow, you can go ‘upmarket’ and enterprise by adding more complexities and upgrades to your product. But, it’s difficult to go ‘down market’ because it is harder to make a product more simple.
“Salespeople are coin operated”
Salespeople have to think about the world through the eyes of the people they interact with. They’re on the front line and have real grit, intuition, and a deep understanding of what the prospect wants. “They are not coin-operated — they are goal-oriented.”
The best salespeople understand that the coin follows the goals. It is really hard to sell software, communicate a value proposition and influence people into buying a product.
What we need to do is enable our sales teams with technology to give them scalability and accelerate deals through the funnel. For example, AI machine learning could provide real-time enablement on calls with prospects. Imagine, if whilst on a call, your sales team could access data in real-time to allow them to answer the questions your prospects have immediately.
Anna predicts this technology is right around the corner in 2021 and we have to give our empathetic and hard-working sales teams the tools they need to beat the competition.
About the speakers
- Anna Baird — CRO at Outreach
Anna has a wealth of experience in finance and executive leadership, specializing in accelerating high-growth companies and leading startups through significant fundraising events. She is a Certified Public Accountant (CPA) and is Six Sigma Green Belt certified.
Anna is instrumental in managing sales & marketing development, customer success, professional services, member support, and revenue operations at Outreach (the leading Enterprise ready Sales Engagement service). They were also named one of the ‘Fastest Growing Companies In North America On Deloitte’s 2020 Technology Fast 500’, and, “in the middle of a global pandemic, the company also closed a $50 million funding round, increasing its valuation.” (Cision)
This coupled with their global expansion and VP-level execs hires, 2020 has been a year of significant growth for the unicorn SaaS company Outreach.
- Karan Mehandru — Managing Director and Head of Venture Capital at Steadfast Financial
Karan is a seasoned go-to-market-executive-turned-B2B-investor who sits on the board of 16 companies! He focuses on the Future of Work, leading investments in SaaS, big data, cloud computing, and mobile startups.
He currently leads the venture capital practice for Steadfast Financial having recently moved across from Trinity Ventures. As Trinity’s General Partner his investments have included Auth0, Cohesity, Outreach, MileIQ (Acq. Microsoft), Preact (Acq. Spotify), RJMetrics (Acq. Magento), and Simply Measured (Acq. Sprout Social). Prior to Trinity, Karan worked at Scale Ventures and spent almost a decade in GTM operating roles.
Now at Steadfast, Karan will “lead on efforts to invest in the best entrepreneurs across all stages, from product-market fit to growth, to pre-IPO and beyond.”
“The last ten years as an investor have changed my views on a lot of subjects — on markets, on what it takes to build great companies, what constitutes a great CEO and founder, the role of venture capital, and the role of venture capitalists,” said Karan. (See the full blog here)
You can catch up on-demand with Anna and Karan’s event – Myth Busters for 2021: Notions That Are No Longer Correct – here.