There's a core set of tenets to grow and operate SaaS companies on.

1. Go to Market Science Product Engineering

Product tends to get too much focus in software companies. The reality is that product is easy to build because founding teams are passionate about their product. The real magic is demand generation and effective on–boarding. Finding channels to test, working on activating new leads and discovering where scalable levers exist is enormously important. A simple ratio we adhere to is at least $1 allocated to Marketing for every $1 spent on Product. Data is equally important. There's gold in the data — it's difficult to get it right but the entire team should be metrics driven and mining for insights in the data.

2. Success Based Investing

There's too much money sloshing around the SaaS industry. Venture Capital should be used to fund time–consuming R&D and set up capital — neither of which are required anymore for the majority of SaaS startups. Scaleworks invests where our dollars will be used to pour fuel on a scalable campaign that we know will deliver revenue.

3. Right Pricing

Too many entrepreneurs are afraid to charge real money for their product. It's an unfortunate cliche — if you have the ability to build something you tend to undervalue the price others will pay for it. Price should be constantly evolving, much like the product, market and customer. Test various prices and price models, be very careful about grandfathering, and charge for value given. Beware of the freemium. It is not a revenue model, it's a very expensive marketing tactic. Free trials are fine. Freemium should only be used if that cohort demonstrably refers paid users.

4. Centralized Team

Surely to be controversial, but the reality is that in a small company where everything is up for debate, change is constant Not being able to huddle in a room or chat over a coffee gives up a lot of what makes startups win against large companies — speed. That's not saying zero people can work remotely, but building an entire company remote just raises the already high barrier to success.

5. Installed Base Health & Growth

It's simple — acquiring new customers is more expensive, more time consuming, and more difficult than just keeping the customers you have. The Install Base has two primary factors:

  • Keep churn low by listening to customers and iterating to continue delivering value.
  • Work to create a product that's usefulness grows over time so customers will happily pay more for as it evolves.

Using this ideology, even without any new customers the business will still grow.

6. Valuable Niches

SaaS is not winner takes all. There's plenty of room to be one of the leaders and succeed, and even more to refine a sub–category and be #1 in that space. It's very important to have a clear vision, strategic direction and market position. It takes a lot of effort to figure these out — market knowledge, product and marketing creativity, and constant customer conversations.