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Why SaaS Founders Should Take Marketplace Listing Optimization Seriously



SaaS Founders

I wrote about the 3 things to do before your SaaS product launch to increase inbound leads before and also talked about How you can use Marketplace Listing Optimization (MLO) to increase your inbound leads for a SaaS product.

One of the things I forgot to mention was why you should take MLO seriously. I will outline that in this post.

The market for SaaS applications will be about $130 – $150 Billion by 2020 according to IDC. That compares to $5 Billion for IaaS (AWS, Azure – compute, networking, storage, etc.) and $12 Billion for PaaS (Meteor, Angular, etc.)

The second way to segment this is by size of company purchasing SaaS solutions. Enterprises greater than 1000 people will account for 48% of this spend, Mid-sized companies 100 to 999 people will account for 28% of this and 24% by companies with 1 to 99 people.

Another way to segment this is by type of SaaS application. Customer facing applications (eCommerce websites, etc.) will account for 59% of this spend and 41% towards internal, employee facing applications (ERP, etc.)

Yet another way to segment this spend is by location. The US is expected to be 37% of the spend, Europe about 29% and the rest of the world about 34%.

Finally if you segment by the “cost” of the application purchased by user per month, then SaaS offerings that cost < $25 / mo / user will account for 61%, $26 – $100 will account for 31% and > $101 per user, per month will be about 8%.

So, any way you cut it, SaaS is a large market, with global purchase capability focused on your clients customer, and for smaller $ per user per month.

One segmentation that none of the analysts cover is the segmentation for the SaaS provider by channel of opportunity. What I mean by that is what % of that spend will be direct, versus through a channel.

If you look at the top 100 software companies overall, in the B2B space, 64% of their revenues come from direct customers and 36% from channels (VAR’s, resellers, SI Partners, etc.)

In SaaS currently, that’s the other way around. Thanks to SEO, Google based search results, direct marketing and online digital marketing, 70%+ of the purchases are direct to customer. VAR’s, channel partners and others have yet to figure out how to sell and partner in this new era.

That will change though. There is a new class of larger partners (Salesforce for example) who have a large base of installed customers and can help SaaS and other companies sell “through” them.

The value add to the customer (buyer) is obvious – they get to buy from a trusted brand (Telstra, Microsoft etc.) and they have an existing relationship with the partner.

The value add to the SaaS provider (seller) is also obvious – instead of having to go through a lengthy process of getting on the vendor list and get empanelled, etc. they can sell using the existing relationship the brokerage or large company has with the buyer.

This is what many of the analysts predict will happen by 2020.

So the Direct vs. Indirect business will again get to 70-30 mix.

Which means if you the SaaS company has a good relationship with the brokerage or listing provider, you can expect 30-40% of your revenues to come from that instead of direct.

This will lower your cost of sales, support and service.

Which will help you grow faster and bigger with lesser capital raised, and hence more profitable.

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Creating Artificial Constraints as a Means to Innovation




Artificial Constraints

Many of the entrepreneurs I know have created new innovative startups thanks to real constraints they had. For example, I was hearing AirBnB’s Brian Chesky, on the Corner Office podcast and he mentioned that when he and his cofounder were trying to get some money to get started and the only way to keep afloat was to “rent” their air bed they had in their room. That, then led to Air Bed and Breakfast, which is now AirBnB.

This was a real constraint they had – no money to “eat” so they had to make it happen somehow.

I have heard of many stories of innovation where in the protagonists had real constraints of either financial, technology, supply, demand, economic, social or any number of other characteristics.

The interesting story that I have also recently heard of how Facebook has “pivoted” from being a desktop offering to getting a significant part of their revenue from mobile is how they were given the arbitrary constraint of only accessing Facebook via the mobile phone.

So there are ways that you can create “artificial” constraints to force innovation to happen.

Most larger companies and some smaller ones as well, have to constantly find ways to create artificial constraints – to find a way to innovate and be more be a pioneer.

While some constraints are good – lack of funds at the early stage for example and lack of resources, there are entrepreneurs that are stymied by these constraints and those that will find  a way to seek a path to go forward.

I think this is a great way for you to think about innovating in a new space. If you have constraints, find a way to use it to your advantage.

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The Great Mobile App Migration of March 2020




Mobile App Migration

Over the last few weeks as many in the world have been in lockdown, there has been a temporary “mobile app migration” happening. There are new apps downloaded and they replaced existing apps on the “home screen”.

While some of these apps are likely temporary use, for e.g. I have 6 “conferencing apps” – Zoom, Uber Conference, Webex, Google Hangouts, Blue Jeans and Goto Meeting. That is because of the many people I have conference calls with – each company seems to have chosen a different web conference solution.

Other apps seem like they will have staying power – Houseparty, for e.g. which has games, networking and video conferencing all built into one app to keep in touch with friends and relatives.


The apps that have moved away from my “home” screen, which I expect will come back once the crisis will be behind us include – Uber, Lyft and all the airline apps from Delta, Alaska and United.

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Perseverance with the Ability to Pivot on Data: 21 Traits We Look for in Entrepreneurs




Perseverance with the Ability to Pivot

There are 5 key inflection points I have noticed which makes founders question their startup, to either make a call to continue working on their startup, pivot to a new problem or quit their startup altogether.

It is at these points that you really get to know the startup founder and their hunger and drive to be successful. I don’t think I can characterize those that choose to quit as “losers” or “quitters” because of many extraneous circumstances, but there is a lot of value that most investors see in entrepreneurs who face an uphill part of their journey to come out on the other side more confident and stronger.

These five inflection points are:

  1. When you have to get the first customers to use and pay for the product you have built after you have “shipped” an alpha / beta / first version. Entrepreneurs quit because they have not found the product-market-fit – because the customer don’t care about the product, there is no market need, or the product is really poorly built, or a host of other reasons.
  2. When you have to start to raise the first external round of financing from people you are not familiar with at all. Entrepreneurs quit because while it is hard to get customers and hire people, it is much more harder to get a smaller set of investors to part with their money, if you do not have “traction”, or “the right management team” or a “killer product”.
  3. When you have to push to break even (financially) and sustain the company to path of being self sufficient. Entrepreneurs quit at this stage because they have now the ability to do multiple things at the same time – grow revenues and manage costs, and many of them like to do one but realize it is hard to do that without affecting the other. So, rather than feel stuck they decide to quit.
  4. When you have to scale and grow faster that the competition – which might mean to hire faster, to get more customers, to drive more sales, or to completely rethink their problem statement and devise new ways to grow faster. Entrepreneurs quit at this point because they are consumed by the magnitude of the problem. They overassess the impact the competition will have on their company, give them too much credit or focus way too much on the competitors, thereby driving their company to the ground.
  5. At any point in the journey, when the founders lose the passion, vision or the drive to succeed. Entrepreneurs quit a these points because they have challenges with their co founder, they don’t agree with the direction they have to take, or encounter the “grass is greener on the other side” syndrome.

While I have observed many entrepreneurs at these stages at  discrete points in time, I have also had the opportunity to observe some entrepreneurs in the continuum, and I am going to give you my observations on 3 of the many folks I have known, who, have quit.

Perseverance separates great entrepreneurs from good ones
Perseverance separates great entrepreneurs from good ones

One went back to college to finish his MBA after getting a running business to a point of near breakeven, another found the business much harder than he originally thought he would and got a job at a larger company and the third was just unable to have the drive to go past 11 “no’s”‘ from angel investors.

Over the last 8 years, if I look at my deeper interactions with over 90 entrepreneurs, who I would have spent at least 100+ hours each, I would say that of the 24 people that are not longer in their startup, the one thing that stands out among the ones that persevere is that it is not “passion” or “vision” at all.

It is the inherent belief that they are solving a problem that they believe is their “calling”. They also don’t believe that there is any other problem that’s worth solving as much, even though there may be easier ways to make money.

So most of my questions of entrepreneurs to test whether they will pivot or quit are around why they want to solve this problem (which I am looking to see if they know enough about in the first place) versus any other one.

The answer to that question is the best indicator I have found to be the difference between the pivots, the leavers and the rest.

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