Kreatik talks – Luke Szyrmer about how to start and grow a SaaS business

Joanna, UX Designer at Kreatik talks to Luke Szyrmer – a podcaster, the author of 2 books “Launch tomorrow” and “Managing remote teams” and Product Manager at GetResponse, about changes in management and technology, SaaS strategy, and why post-pandemic work will never be the same as before.

Luke, I am extremely pleased that you accepted my invitation. Please introduce yourself a bit more.

– Of course, I work in GetResponse where I am responsible for the back-end functionalities of products. Besides, I spent a lot of time in London, where I worked for a financial technology company. The two main topics I deal with are landing page MVPs and managing a team working remotely in my writing.

Let’s start with the Gartner prediction. They claim that by 2026 public cloud spending will exceed 45% of all enterprise IT spending, up from less than 17% in 2021. What is your view on this forecast?

– I like the statement that the best way to predict the future is to create it. In my opinion, cloud spending is related to running a business, e.g., variable costs or product development, not the technology itself. I think that cloud spending is just playing out longer-term secular trends that have existed in tech like Metcalfe’s Law, Moore’s Law, etc. where it’s easier to have everything centralized but also available network resources for people. It sounds plausible.

20 years ago many Saas products were innovative solutions. Today, user adoption of digital solutions is almost immediate. Everyone expects all apps to be useful, beautiful, easy, and quick! How do you find Saas products changed over the years? What advantages have SaaS solutions over-hosted traditionally?

– I could say from GetResponse’s perspective. It was initially founded in 1998. At that time, the term SaaS did not yet exist. I think technology is changing rapidly, but users are interacting with software faster and more efficiently than they used to. What else has changed? The understanding of software, which is now more than just a presentation on a website, was typical in the 1990s. Most of all, however, users have changed, as they have begun to use the software in different ways or with different devices.

What do you think, was it the technology that users changed, or did users have to adapt to the technology? In your opinion, what was the order?

– I think in the beginning we have a certain technology, which is changed over time to meet users’ needs.. A good example here is GetResponse, which was SaaS before the term SaaS even existed. Our initial product was autoresponders, and later this technology was expanded with other products. 

Another good example is Webvan, which began selling groceries online in the 1990s. They invested huge money in infrastructure, logistics, and advertising during the Superbowl, for example. They had sales in 10 cities in the United States. When the Dot-com crash occurred the value of the company began to decline and the company declared bankruptcy. Today in many countries such businesses exist and are doing well. This is due to the changes that are taking place among users. 20 years ago, online shopping was done by people who had money and were not afraid to spend it online. Now basically everyone is eager to use online grocery shopping. 

I believe that users have a huge influence on how technology develops because by noticing their needs we can change our product, but also use certain functionalities or modules for a completely different purpose. I think the worlds of technology and users are constantly merging and influencing each other.

SaaS is a hyper-competitive business space, where many new solutions appearing. SaaS is required to develop all the time. I would like to ask you about the strategies of SaaS companies. Are there any golden rules to follow?

– In terms of competition, let’s say 10 years ago, there were maybe 20-40 companies that would be identified as SaaS marketing technology, last year it was 8000. This is influenced by several things. First, is the low barrier to entry that results from low development costs. Secondly, we are creating an online product where we have a global audience, which of course has pros and cons. I believe that the strategy for any company should focus on finding a place in the market and specializing in a particular thing or industry. In my opinion, the SaaS business model has largely reached from subscriptions, for example, if we create a magazine that is published monthly then we care about attracting a customer and then retaining a satisfied customer with excellent quality issues. The SaaS model is similar. The goals of the company and the customer are closely aligned – the customer wants to use the best possible service, and the company wants to provide the best possible service to satisfy the customer and keep him or her happy. The most important thing is to have some kind of concept and then depending on the company, the strengths of the business, and the needs of the market, determine the details.

In your opinion, are there any strategic differences when we talk about b2b and b2c SaaS?

– I think there are a lot of differences, and they come from the way the purchase decision is made. However, this does not only apply to SaaS. In a B2B business, there often are multiple stakeholders who make the decision – some may agree, and others may not. In addition, we have completely different criteria that determine whether a product or service is attractive to a customer. In b2b, it’s important to increase revenue, reduce cost or risk, or improve UX. They only buy what they need. Sure, the solution is a strategy based on product growth, where some product is used by some employees, e.g. one department, and then this spreads to others. With the B2C model, sales are based more on promotion, and decisions are made more impulsively. In this case, it is more important who buys and how they buy than the product itself. These differences are very important in building a strategy, choosing sales and promotion channels or ways to grow the product.

More talks with inspiring people: Kreatik talks – Darek Knopinski about the importance of users in product development

Is there a framework for building SaaS? How to start and develop this type of business?

– In the first phase of product development, there are three important things that influence the product idea: defining the user group, the offer, the value proposition and the landing page of the so-called Launch Tomorrow Triangle. This involves testing the elements of the triangle and receiving feedback from the target group and, based on this information, verifying or modifying our idea. 

In terms of how to allocate time and resources at this point, the rule of thumb I like to use is a 50/50 split of time: half for marketing and customer research, half for product development. This way we develop all areas a little at a time and don’t get stuck with anything. The metrics of the business idea as it develops into a business are very important. 

I’ll talk first about those related to marketing. It starts with acquiring users using as many iterations as you can around the Launch Tomorrow triangle, until you get a combination that works. Later, you have to activate them and create a path, or rather a whole customer experience, which will be satisfied and recommend the product to others. 

When it comes to financial metrics I think Customer Lifetime Value and Monthly Recurring Revenue are very important. We can compare these data with the cost of acquiring a customer or the cost of producing service. Once we have this data then we can move on to more detailed analysis like comparing customer acquisition cost and conversion rate and then to even more detailed analysis. However, I think these 3 are key to early-stage marketing and product development, in most industries and definitely in Saas.

A lot of knowledge! I’ll check these metrics later. I would like to ask about GetResponse. Could you tell me how this product has changed over the years?

– As I mentioned earlier, in the beginning, we offered autoresponders for small and medium-sized companies. At that time, the Polish market did not exist, so the offer was mainly aimed at English-speaking countries: the USA, Canada, UK. Over time, we expanded our marketing offer, and our goal became to create a single marketing tool that would have many features previously offered by single tools, for example, the ability to send mailings, SMS, PUSH messages, conduct webinars, etc. At some point, we decided to open up to large companies – this was the beginning of our Max offering for larger companies, which had similar functions, but also took into account the needs of a large company, such as email list size or performance scaling.

So what are the biggest challenges for GetResponse right now?

– I think internal complexity. I mean, this may look very complicated from an internal perspective, but the difference between going from a triangle to a square, three to four, 50 to 51  it’s just one extra step. Adding each extra thing means you’ve got to connect lots of other things that already exist in some kind of sensible way for example for all kinds of different clients and all considerations and all of that’s at a high level. This complexity affects the entire business scaling growth operations, what’s developed, how the technology needs to look, and the architecture. It touches almost everything. This will be a challenge!

What opportunities do you see?

– Given the current context: the pandemic, or the war, Saas companies are relatively counter-cyclical in terms of revenue relative to other types of businesses that are still stable. At this point, if the economy does move into a downturn, the opportunities are probably more internal in terms of optimizing things, for example focusing on the most attractive customer segments, focusing more on likely costs and efficiencies.  Because it’s a SaaS model, it does mean that there’s a really good offering at the lower end of the pricing scale, while staying attractive to multiple different customer types. I think figuring out exactly “how to position” is part of hitting that sweet spot. Even if the conditions aren’t so great in the market, it’s still quite an attractive offer considering the quality and price

The second thing is to deepen cooperation with existing customers and make them satisfied with our offer. It is important to constantly solicit the current customer.

Know more about SaaS! Read the Canva case study!

I assume that many people at GetResponse work remotely. The pandemic has caused a lot of new remote management tools to appear, which are often SaaS. What do you think of them? What will be their future?

– There have been many innovations in the context of meetings and cooperation, and there will certainly be many more to come. Very often such tools are a kind of architecture to bring physicality to digital. A good example is a tool that allows users to interact while editing a single Google Docs file. Thanks to this software, we can see them move the cursor in real-time. Such indicators within tools can replace body language to a certain extent, although of course they will not convey emotions. 

The implementation of the tools is also important. Sometimes a lack of customization results in a tool that doesn’t fully perform its function. Therefore, it’s not only about choosing the tools themselves but about customizing them. 

Another thing is the collaborative editing tools. At the beginning of the pandemic, everyone experienced endless meetings on Zoom, where everyone in turn had a presentation. One person presents, and the rest listen. I think the alternative is collaborative editing tools, where everyone, through even different media, can engage in the discussion at any time and have an impact. It’s not easy, of course, and may seem chaotic, but I think this is the future of remote collaboration.

The cherry on the cake are more sophisticated tools that are used, for example, to create transcripts or summaries of meetings. These solutions are slowly developing.

In my opinion, collaboration tools will be more than just streaming video and will allow for greater immersion.

As it’s mentioned in your book description, “It’s increasingly unlikely we will ever return to a world of work like before.” Of course there is no doubt that it has changed because of the pandemic, but the development of solutions you mentioned have an impact on how we work now.  Do you think that SaaS solutions have influenced that?

– Yes and no. Before the pandemic, there were already many tools that performed well and were able to adapt to the pandemic market, e.g. Miro. There may have been a few new features added to  them since March 2020, but overall it is the same tool. I think the way we think about work has changed. When the pandemic started, there were 5% of people working remotely in the US, after a month it was 45%. Companies continued to run, productivity was high, but there was a shock from the change in lifestyle. The job market has also changed. Most companies now offer remote work, so this can be one of the criteria when looking for a job. Management has also changed – the employee must be able to work independently with access to results or metrics. All of this has to work smoothly, whether someone is working from an office or an exotic island. Working remotely has also cut costs for companies, as they don’t have to pay for offices. This is a good time to think about how and why we work a certain way, and the answers from before the pandemic and now are very different. I don’t think in this sense there is a possibility to return to the time before the pandemic. The next step for all companies is to think about what kind of system they want to work in – remote, hybrid or yet another.

Going back to the question about SaaS, I think SaaS certainly facilitated the changes that were forced by the pandemic and weathered it quite well, but it certainly wasn’t the direct cause of this change in the work system.

There’s always one question out of topic. What do you think the world will look like in 10 or 50 years?

– I’d rather stick to ten than 50. 😉 I’m watching how online collaboration is changing, and I’m incredibly fascinated by it. The form of collaboration and interaction is changing, but also previously available technologies are being used in creative ways such as Whiteboard. I am curious to see how this will develop.

Maybe virtual reality?

– Maybe, although I’m not entirely convinced it’s an unsound solution. Certainly, there will be the development of those tools I mentioned earlier, but there will also be the development of software that enables hybrid collaboration, e.g., collaboration when some employees work remotely and some are in the same room for a meeting. I also think that artificial intelligence will increasingly assist employees.

Thank you for the conversation about SaaS and not only!

– Thank you, Joanna.

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Luke Szyrmer

Luke Szyrmer specializes in commercialization across DeepTech, Finance, and Software/Internet. He serves as an innovation consultant that helps both startups and established companies get to market faster with new products. He is currently engaged as a Product Manager at GetResponse, the marketing technology company. Luke is also a podcaster, the author of 2 books “Launch tomorrow” and “Managing remote teams”.

12.10.2022

Joanna Tulińska-Ładomirska

UX Designer

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