Modern economy is all about specialisation and efficiency. In the past, businesses had to build, scale, and maintain their IT infrastructures and services with exponential cost. Today, a much better alternative is at hand. At any moment, we can immediately subscribe to one of many SAAS (software as a service) platforms and use the Internet as a shared infrastructure. It is no longer acceptable to try to re-invent the wheel every time a product or a business is created.
Simply put, the time wasted in solving a problem that is not the core problem is actually lost. This way, businesses focus on what matters to them. Anything else is a distraction.
With SAAS platforms, enterprises are always a step away from an empire of micro tools that address the everyday problems and silent the noise around their main product.
SaaS is a great business
The hardest part of building a SAAS product is getting deep into customers’ pockets and getting them to hand over their credit cards. But once this happens, money will come, every single month.
This is so different from the one-time sale process, and it can grow exponentially in time if there is a solid product.
Also, SAAS products can be built with a very low headcount. They don’t rely on massive operational processes, which makes them relatively easy to scale once a scaling formula has been thought out. Furthermore, they grow without huge investments.
That sounds inconceivable? PushBots, our company, was built with a team of two (or three, occasionally) members, and today 50 million people around the world depend on our infrastructure to receive messages on their phones on behalf of the 20,000 customers we serve.
Location is irrelevant
When running a SAAS service, amenities such as a location or an office are not an issue. In our case, our customers come from over 167 countries worldwide and we have been proudly 100 percent remote, decentralised, and office-less from day one.
Traction is great, but money is greater
Some start-ups get so stoked on creating hype that it sometimes conceals the important metrics for business. This happens because all entrepreneurs are looking for validation.
We have been victims of this too at times, wasting time to generate enough free users whom we can convert later into paid ones. This is validation, right? This is probably our biggest mistake so far.
As the founders of Baremetrics, a startup that provides analytics for subscription-based companies, put it: “There is only one type of validation, when building a sustainable business: Money. No money? No validation.”
Charge from day one
Pricing can be one of the hardest tasks for a SaaS product, because it is different from classical economics of traditional business where price is linked to the cost of the product itself. In SaaS, this is hardly ever the case.
Pricing is linked to the estimated value it gives to customers.
Hence, trying to please everyone in SaaS doesn’t really work. Free users add some validation to your SaaS, but they can be costly at times. It is increasingly important to understand the user for whom the service is specifically targeted. The primary business objective is to generate profit, but we can often forget that this will never happen unless we are able to provide a value.
What we have learnt is that if we focused on creating value first and foremost, money was bound to follow. Show the subscriber how the product helps them save time and generate more money, and they are more likely to hand over their wallet willingly. Focusing on making money entirely is probably one of the biggest mistakes in SAAS.
Shipping, as frequent as possible
Our first paid customer paid for a product that was completely buggy. In our early days, we even had major outages every now and then. The product was unstable and basically my job for a while was just apologising in every possible way. But that doesn’t matter. We know we will never have a “perfect” product. It is only by continuous shipping and incremental improvements that we are able to reach satisfaction and growth.
All in all, SAAS is certainly the future of business. SAAS platforms are also great businesses to pursue if the focus is on value, constant shipping, and charging customers from day one while focusing on the key metrics.