Just Enough Design for B2B SaaS

Posted: December 25th, 2016 | Author: | Filed under: Design, Product, SaaS | Tags: , , | No Comments »

For decades, design in B2B software has been an afterthought. There are products making billions that were designed with no taste and no thought. Those who have been around the game for a while will tell you “Design in B2B software doesn’t matter!” and based on history, they have a leg to stand on. These design haters will go on to list successful companies that have what many would consider poorly designed software – Peoplesoft, Salesforce, Taleo, the list goes on.

Design in B2B SaaS matters less than Consumer

“Consumer Products” are bought and used by the same person. In the B2B world, this isn’t always the case. Since the Buyer may never use the product they are less likely to feel the pain of poor design than the end user. B2B software is more likely to have upfront costs – setup costs, integration costs, training costs, etc. These upfront costs immediately make the software more sticky, sunk costs be damned, the buyer will have a tough sell to their manager if they bail on a product after incurring the upfront costs.

Design matters more in B2B SaaS than it use to

The world is shifting, as people grow up using consumer-grade (better designed) software, expectations for design become higher. Even the buyers, who may never use the software, are becoming more critical of the appearance and this impacts their buying decision.

Furthermore, the SaaS model typically has lower upfront costs than on-premise B2B software. This lower cost decreases the buyer’s reluctance to switch if the end users complain. The low cost SaaS model makes it easier for a small team to adopt a product in an organization and let it spread from there.

Slack is the best example of this phenomenon. From a feature list standpoint, Slack is not much different than its IRC predecessors. Where Slack differentiates itself is through superior design – both aesthetic and usability. Slack’s free tier allows small teams to try it risk-free, and once they fall in love, it becomes viral within the organization.

Design & SaaS metrics

  • Close Rate & ASP. Looks matter. If your product looks “professional”, buyers are more likely to believe it’s a more expensive product and pay more.
  • Churn & NPS. Usability matters. It may look pretty but if it is difficult to use, the end users will complain and this increases the chance of churn
  • CRC (Customer Retention Cost). Intuitive software cuts down on training and long term support. Ideally, a user should learn the product without personal hand holding

When making a case for a design overhaul or adding more effort to your design process, these are the metrics that can be valuable when establishing your goals and measurable results.

Design & Market Factors

  • Buyer = End user. Design, particularly usability, will be more important to reduce churn.
  • Self-Serve SaaS products. Making your product intuitive becomes more important if you will not have a salesperson explaining its value or a Customer Success Manager training the end users.
  • Competition. The more competitors in your space the more likely design will become the differentiating factor. When I worked at Jibe, design became our core competency. Jibe provides a consumer-grade experience for applying to a job on a company’s career website. The incumbents – Taleo, Kenexa and SuccessFactors, are weak at this and Jibe is taking that opportunity and running with it.
  • Age of end-users – Older users, although generally less savvy, are more tolerant of poor design. They’re use to it. A younger user base is more likely to demand a well designed product.

For the past six years I’ve worked at venture-backed SaaS companies. In my experience, we don’t have time or money to design products in the thorough, methodic fashion many product people would like to. It’s tempting to read the latest design book and want to implement all of the suggestions but it’s not practical at an early-stage SaaS company. Does design matter in SaaS? Absolutely. Know your market, track you design efforts with measurable results and invest your time and money wisely.


Measurable Results for SaaS Products

Posted: November 15th, 2016 | Author: | Filed under: Product, SaaS | No Comments »

what-is-a-product-manager

Whether you’re doing OKRs, GSCs, KPIs or some other 3 letter process, a generally accepted good practice when building a product and company is to tie measurable results to goals. Try to keep these goals “SMART” – Specific, Measurable, Achievable, Relevant and Time-specific.

My manager, Derek Haller, spoke about the importance of using measurable results when Driving Business Outcomes during our last ProductTank Meetup. Derek and I work at a SaaS company, Social Tables, and we identified the main types of Measurable Results that are relevant to those managing a SaaS product.

Types of Measurable Results for SaaS products

  • Behavior (click paths, engagement)
  • Business (active users, conversion rate)
  • Financial (ASP, billings, time to close)
  • Performance (load time, uptime, crashes)
  • Operational Costs (storage, hosting)
  • Go To Market Costs (acquisition, programs)
  • Sentiment (NPS, surveys)
  • Environment (PR mentions, comments)

Goals may have a variety of types of measurable results. Depending on the stage of your company, some of these types, such as Operational Costs and Sentiment, may take a back seat to Business and Financial results.

SsaaS

SsaaS, Stock Software as a Service, is a company I just made it up :). We make software for Stock Advisors to analyze a stock. Below are the Objects and Key Results for SsaaS –

Objective

Successfully Launch MVP Stock Analysis Tool with a Free Two-week Trial Period

Key Results

  • Establish ASP of $5,000 / year (Financial)
  • Receive press coverage in 5 publications, including TechCrunch (Environment)
  • Net Promoter Score > 50. (Sentiment)
  • Engagement: 75% of users analyze > 5 stocks. (Behavior)

Time Frame – Q1

Objective

Sunset Two-week Trial Period and Launch Freemium Product

Key Results

  • Deliver 1000 new Product Qualified Leads (Go To Market Costs
  • Reach 500,000 Daily Active Users (Business) 
  • Improve user sign up by 10% (Behavior)

Time Frame – April

Objective

Launch Product Rewrite and Sunset old Product

Key Results

  • Cut down hosting costs by 30% (Operational Costs)
  • Achieve 99.7% uptime (Performance)
  • Decrease support inquiries by 10% (Operational Costs)

Time Frame – Q2

Timeboxed Results

It’s nice to set key results and work backwards to figure out when you can achieve those results but some organizations prefer to set OKRs on a timed basis (usually quarterly). Some goals take longer to hit the more traditional key results (i.e. engagement and revenue). For example, if you are embarking on a six month product rewrite that will not have active users in the first quarter you must come up with other ways to validate your product/decisions along the way. You may accomplish this through internal validation and surveys.

Objective

Validate New Stock Comparison Product

Key Results

  • 75% of current customers confirm the features on the road map would meet their needs (Sentiment)
  • 5 prospects have signed letters of intent to purchase (Financial)
  • 90% of the Sales team believes the product is sellable (Sentiment)

Time Frame – Q3

Always Be Learning

Finally, when setting measurable results, it’s effective to have goals and results that are focused on learning. Create a hypotheses to help validate your vision and develop experiments around that hypothesis.

Objective

Determine if Stock Advisors want to display a portfolio publicly

Key Results

  • 75% of Stock Advisors surveyed confirm they would like to have their portfolios displayed (Sentiment)
  • 50% of Stock Advisors provided with embeddable portfolios use them on their corporate website (Behavior)

Time Frame – December


First 90 Days at Social Tables

Posted: February 16th, 2016 | Author: | Filed under: SaaS, social tables | 1 Comment »

ST_Headshots-230 (1)

Gut check time. It’s been three months since I left my job as Director of Engineering at Jibe and started working as a Senior Product Manager at Social Tables — did I make the right move? Do I enjoy Product Management? Do I enjoy Social Tables? Do I enjoy the people I work with?

Yup, Yup, Yup and Yup.

For me, Product Management is the shit. I’m enjoying getting in the head of our users — performing customer interviews, making surveys, observing their behavior through tools like Heap and FullStory. I’ve (kinda oddly) really enjoyed making product-tradeoff decisions. As an engineer, I many times felt the features we were working on were half-baked and I questioned the prioritization. I’m now the PM being questioned by bright engineers and it’s been a fun exercise to be able to diligently score each feature, prioritize them in as an objective-way as possible and convey my reasoning to my team to ensure buy in. I think I’m doing pretty good here but I hope to get much better.

I’m not sure what I’m enjoying more, the new role or the new company. Social Tables embraces transparency – weekly updates from Marketing, Sales, Product, Customer Success and Engineering, rich updates filled with no-bullshit metrics. We do a monthly “Global Takeover Meeting” where the founder and CEO, Dan Berger, covers a wide range of topics, including numbers that reflect the positives and negatives (room for improvement?) of the company during the previous month. After each board meeting, the memo to the board is available for all “Tablers” to read. I love that we’re trusted with not-so-encouraging information at times and treated as adults. The transparency has made me trust the Exec team (called “Staff” at Social Tables) more than I have at any other company.

My plan is that Social Tables will be my last job. Not because I want to be like my parents and work at a company for 25+ years, but because I hope I will have the courage to start my own company after this Tour of Duty. Social Tables is training an army of entrepreneurs. All of this transparency has allowed me to see behind the curtain, to understand much more intimately what it takes to run a software company. Dan not only gives us access to numbers that most CEOs keep behind lock and key but he also does a great job training us on the SaaS business and walking us through his decision making and thinking. This, along with the Social Table’s adoption of the Deliberately Developed Organization philosophy, make me feel like I have a job where I’m getting paid to learn, which is a hell of a bargain.

All of that is fine and dandy but if you don’t like who you’re working with it’s hard to get job satisfaction. I’m digging the peeps I work with at Social Tables. You can read about the makeup of the company here (more transparency FTW). The company’s average age is 28, making my 33yo ass the old guy :). The youth brings a certain level of eagerness and passion that I relate to. It’s tough to generalize 100+ people but I can say that I’ve been impressed with how welcoming/friendly everyone has been (I think Dan does a good job setting this tone and hiring with culture at the forefront of his mind) and I’ve been most impressed with how much people want to do well at their job. In the past, I’ve been discouraged by co-workers focused on appearance of doing well and not always having a passion to succeed. It’s been a joy to work with people that can meet, and many times exceed my intensity.

I’m happy and grateful to be a Tabler.

 


The B2B Gold Standard

Posted: December 19th, 2015 | Author: | Filed under: Investing, Product, SaaS | No Comments »

Atlassian Logo

I can’t believe it, I’m excited for an IPO for a B2B company. Maybe the past 10 years working at B2B companies has poisoned my brain but I’m hoping it’s because Atlassian is something special. Companies like SalesForce and Workday have killed it on Wall Street but I never had any interest in throwing money at them. I like to invest in companies in which I’m intimately familiar with their product, companies that are profitable and are led by founders who care. I haven’t found a B2B business that fit those requirements but Atlassian is a different beast.

The money most SaaS companies put towards marketing & sales boggle my mind. The majority of SaaS companies spend 2x on marketing & sales compared to product & engineering. For every buck put into making the product better, these companies are spending two bucks to get the word out and convince customers to fork over the dough.

Bucking the norm for SaaS, Atlassian has been profitable since year one (Note: Atlassian isn’t a true SaaS company since they allow customers to host their software). Thirteen years in, Atlassian continues to make more than they spend. The margins aren’t anything to brag about but at least they exist and Atlassian still has the killer revenue growth people expect from SaaS companies.

I’d imagine part of the reason Atlassian has been able to turn a profit is its small marketing & sales spend. Atlassian spent 21% of its revenue on marketing & sales in the first half of 2015, 16% in 2014 and a mere 12.5% in 2013. In comparison, Box spent 200% of their revenue on marketing & sales in 2013, Salesforce spent 56% and the industry standard is around 50%.

Atlassian’s marketing & sales budget has been growing but I’m hoping they keep the course of letting the product speak for itself. My ideal B2B company does the following — build a badass product that customers enjoy, those customers spend more money with you and they tell others about how great your product is, which does the sales for itself. When you get into that cycle the money goes into making your product better which accelerates it and scales better than a heavy marketing & sales approach. After a decade of using Atlassian products like JIRA, I’m of the opinion they make best of breed products and can pull this strategy off.

I dig not only Atlassian’s product-focused philosophy but all of the other things I look for when I buy a stock. I like that their founders have shown an ability to delay gratification. Scott Farquhar and Mike Cannon-Brookes could have sold out long ago but held out, these guys are in it for the long haul. They’ve been patient in building Atlassian slowly and thoughtfully. They only took funding after they had impressive traction, which gave them the leverage they needed to get a favorable deal. The values the founders run the company on jibe with me —

  1. Open company, no bullshit.
  2. Build everything with heart and balance.
  3. Don’t f*** the customer.
  4. Play as a team.
  5. Be the change you seek.

I’m going into this stock knowing the Price to Earnings ratio is ridiculous, and that is fine. The bottom line is I think this company will be around in 10 years and will be making a lot more money than they are now. I have faith that Atlassian will continue to seek profit and their low marketing & sales spend will allow them to do so with ease. The founders will keep the culture strong and ensure a long-term outlook is maintained. The product line will continue to get better, the current Atlassian customers will continue to spend more money, the Atlassian products will continue to make their way into the browsers of employees at companies all over the world and the money will add up nicely.