Software is rapidly upgrading the world and Software as a Service (SaaS, AKA Cloud Computing) is the scalable implementation of software delivery based on subscription licensing and centralized multi-tenant delivery. Many existing software companies have already embraced the SaaS model both for their own products as well as for services they use, and enterprise companies are finally making the switch as well.
Implementing the SaaS model is typically straightforward, and the “SaaS playbook” defines a set of strategies for creating a SaaS startup from inception to acquisition. By following the playbook, you can achieve a balance of pragmatism, efficiency, and results, and increase your chances of a successful business.
- SaaS Scales
- With negligible marginal costs, and the ability for anyone in the world to sign up for your service at any time, SaaS scales well beyond what an individual can achieve with consulting and what a services-based company can achieve with teams.
- SaaS Improves Over Time
- What your customers sign up and pay for today automatically improves over time. This benefits the startup by providing an avenue to go to market sooner without being feature-complete. It benefits the customer by receiving more capability for the same price over the duration of their membership.
- SaaS is Easy to Start
- The costs to start a SaaS company are very low, and many services such as hosting can be obtained for free. Much has already been written on rapidly testing, creating an MVP, and pivoting based on feedback to find product-market fit. The challenge, like any business, comes with scaling the software for mass adoption, which is ultimately a great problem to have.
- High Gross Margins, High Multiples
- SaaS companies typically have low overheads and cost of goods sold. This equates to high margins and ability to become profitable quickly and achieve a high multiple on acquisition.
SaaS Playbook Principles
The core principles we’ve found that make a successful SaaS company involve the following elements.
- Easy On - Easy Off
- Self Serve (Automation)
- Month-to-Month (MRR) contracts (no lock-in)
- API enabled
- High-touch support (Zappos style)
- Content marketing
- Customer success
- Funding strategies
Understand the Playbook
Scharfnado regularly advises and mentors startups on the implementation the SaaS playbook. If your startup is new to SaaS or has adopted it but has hit a plateau, we can work with you to understand your problems and recommend solutions. Some broad areas we’ve helped with in the past include:
- Starting from scratch: testing the market, creating an MVP
- Converting your startup from a services to a SaaS model
- Scaling demand - recruiting developers, expanding infrastructure, content marketing, customer support / success.
We’d love to hear from you - what are your experiences with the SaaS playbook and how can we help you implement the playbook in your company?