SaaS and software platforms: Moving from Startup to Growth
A key phase for any SaaS or software platform business is when they move beyond the idea, startup and product fit stages of their business to growing successfully. It’s one of the hardest transitions to make and a key hurdle to reaching real revenue and eventually profitability. To help illustrate the challenges and some of the strategies to succeed in the transition, we’ve curated nine articles plus a couple of Quora threads.
This piece, in Fortune, highlights several surprising things that can be drivers for growth. One is talent – but not just any talent – the exceptionally high performers who deliver significant value to the whole company. Another is finding the specific engine for revenue within your company and using it to provide energy and momentum to everything else. The article also includes one of the single commonest themes about making the transition from startup to growth successfully: transitioning to a more professional approach to operations.
One of Paul Graham’s often contrarian pieces of advice is to do things that don’t scale in order to succeed and grow. That seems counterintuitive, but he believes that growth comes because of a need and desire to grow, and so growth comes from pushing for it with individual effort. In other words, in order to grow through scale you have to first push your organization to a point where it CAN grow with scale – which means fixing all the issues around acquiring new customers BEFORE you make that push to scale.
The Chargify blog discusses the various stages of SaaS startup growth and takes a stab at codifying them. They break things down into four stages: pre-startup, startup, growth and maturity. Our article is concerned with the transition from startup to growth which they characterize as the point where your efforts move from process improvement to rapid scaling. But the whole piece covers a range of factors to consider in growing a SaaS business.
Tomasz Tunguz takes a look at growth rates and success for SaaS startups and focuses on growing fast in order to move past various points where software companies seem to fail. He quotes a McKinsey report that says “If a software company grows at 20% annually, it has a 92 percent chance of ceasing to exist within a few years.” In other words you have to grow at more than 20% annually.
Many organizations feel that the concept of growth hacking is one of the most successful ways to drive growth for a software business. Growth hacking is a process where an organization tries as many creative strategies as possible to grow, measures the success of them all and iterates on the most successful ones. The GrowthFunnel blog believes in growth hacking and lays out what it sees as the formula for success with a foundation built on email marketing. The article covers a range of other tactics but the real secret to success it highlights is to take the tactics that work for you and then integrate them thoughtfully.
Smart Insights is also a fan of growth hacking and this piece takes a look at the ten commandments of growth hacking from its point of view. Their approach is based around research and understanding the market and customer, trying many solutions, measuring success, and being ready to be creative and try alternatives often. To quote, “to quickly and cheaply test a marketing idea, use data to analyse the outcomes, and iterate, optimise, implement or change the experiment.”
SaaS Genius interviews Tom Gorski, its CEO, for his approach to successful growth hacking and some stories from his experience as a consultant. He advocates a cutting-edge approach in which marketers take risks and develop leading edge techniques to drive growth. A telling quote is, “Identifying new, game-changing trends before they peak is a good example [of a game-changing approach to growth hacking] .”
Jason Lemkin truly believes that customer satisfaction drives growth and that SaaS companies plateau because they are satisfying the customer in terms of functionality and core product but that they are failing to make the customer truly happy to use the product. And they will stay on that plateau until they do satisfy the customer. So it’s imperative to find a way to make a customer-focused change.
Successful SaaS growth requires not only beginning to have scale and rapid growth, but then also sustaining it. Many companies, as described above by Jason Lemkin, plateau. Getting the momentum going again after that stall is what Chargify addresses in this article, which provides twelve tips to rekindle growth. Much of the advice to restart growth is similar to that for growing in the first place but one key point they highlight is to take the time to analyze lost deals and why they were lost.
This Quora thread highlights a range of advice on improving SaaS startup growth. Quora is a great source of solid SaaS advice because many SaaS leaders use the platform and are prepared to offer concrete advice and suggestions openly. Six different founders and business leaders offer advice to this question in this thread.
This might seem to be an overly specific question on Quora, but the advice is useful for most SaaS businesses and it also gets to the value of Quora for even the most specific questions. People with real experience are prepared to share what they have found.
Finally, if you are interested in more on SaaS, software startups and how to find success, take a look at our previous series on SaaS startups. The last article, Product-first SaaS approaches, also has links to the rest of the series.