Venture Capitalist at Theory

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2 minute read / Jan 14, 2015 /

The Rising Table Stakes in SaaS

Christoph Janz, one of the best seed stage SaaS investors, published a great tweetstorm on the state of the SaaS ecosystem yesterday. I’ve copied it below.

There’s no excuse for not understanding your metrics, for not providing great customer service, for not understanding the role of customer success, for not doing intelligent lifecycle marketing, for not doing great content marketing…What was hard and innovative 5 years ago is #tablestakes now.

The mechanics of SaaS startups are becoming better and better understood as the community and sites like Jason Lemkin’s SaaStr and David Skok’s For Entrepreneurs and Christoph’s own blog curate the stories, explain the complexity and reveal the metrics behind the fastest growing SaaS companies of our time. And as Christoph points out the marketing, sales and customer retention benchmarks have been well analyzed by things like the PacCrest Survey among others.

Reading through Christoph’s brief tweetstorm reaffirmed for me how managing complex SaaS startups can be. Founders must understand the unique financial characteristics of SaaS companies, how to market them, how to sell the product, how to retain customers, and all the benchmarks and metrics and execution complexity associated with them. And they must be able to hire the right people to manage those operations as the company grows. There’s lots of data out there, but to be great, one has to read it all, internalize it and leverage it - no mean feat when operating a fast-moving, high-growth company.

As the tablestakes for SaaS companies evolves from the discovery of fundamental SaaS startup mechanics to how to erect differentiated and exceptional SaaS companies, the challenges facing founders only increases because the sophistication of the entire ecosystem has increased one notch or two. Thankfully many founders have created businesses solving the SaaS complexity problems for other SaaS companies; Zuora for billing, Gainsight for customer success, Infer for sales prioritization, Looker for Analytics. In so doing, they eliminate complexity for a SaaS company, enabling them to focus on higher leverage areas.

And that may be the most important point of all. Today, there is a vibrant, bustling community of people passionate about SaaS, passionate about the next generation models of acquiring and retaining customers and passionate about building the fundamental software companies of the future. If we succeed, it will be because of this wonderful ecosystem of founders and operators, salespeople and marketers, striving every day to make something exceptional - and then telling everyone else how they did it. That’s the engine of Silicon Valley, increasing the table stakes every day.

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