All posts by Mukund Mohan

My discipline will beat your intellect

Going from product market fit to traction – What works in SaaS?

If you have a few early customers for your SaaS application, the next question typically is to get to $1000, then $10K and then $100K in MRR (Monthly Recurring Revenue) – which most people will call serious traction.

The biggest criteria I have found in looking at the 3 SaaS companies I have invested in is price of the product determines the customer acquisition technique.

There are 3 bands of pricing for SaaS products. I am going to look at monthly prices for all the products.

The first band is if your product is an individual purchase on a person’s credit card. Typically most people get uncomfortable at more than $99 per month. The sales cycle could be anywhere from 2 to 6 weeks.

The second band is when a department purchases your product for use, or if your product is highly specialized for a role which makes it between $99 to $499 per month. The sales cycle is typically between 2 to 10 weeks is my experience.

Finally, the last band at $499 to $999, is when you typically need approval from your manager. In many cases a “corporate wide” approval may also be required at > $999 per month. In most cases the sales cycle is greater than 6 weeks and for products > $999 per month might take 3 months or more.

Marketing Techniques for SaaS companies
Marketing Techniques for SaaS companies

These are when you are selling to an enterprise B2B market. For those targeting SMB markets, the bar is lower for the amount of money, because you typically find the owner approving most purchases over $299.

If you have a few ( say 10) customers for your product and are making between $1000 (for $99/month product) to $5000 ($499/ month product) and are trying to get to traction – $10K and then $100K per month, there are only 2-3 techniques each that work.

For lower cost products, SEO and Search advertising are predominantly the only viable models.

For more expensive products, since the sales cycle is typically longer, you will need to “start” your customer acquisition with one technique (Content Marketing, with Social Engagement) and will probably “engage” the customer (cold emails, inside sales engagement after signup) via phone and likely have a face to face meeting for products that cost > $25K per year.

What does not work for early stage, pre-traction companies?

Events, especially those that feature a lot of companies and several large organizations in your space, dont work at all.

There are 2 techniques that many people claim work to your “brand” front and center with customers, but does not drive leads – blogging and podcasting.

While both are largely easy to do and require much less investment than other techniques, they might be used in conjunction with other mechanisms, but will not drive much in terms of signups, even if you have a “freemium” plan.

What I have also noticed is that engaging potential customers via  webinar (where you get 20-30 participants) and they can ask questions and learn about the problems you solve work much better than even search marketing and touch-less signup.

Going from Product Market Fit to Traction – What works in Mobile Apps?

There are 3 numbers that determine if your mobile app has reached product market fit. The “Time to Wow”, “Time to Refer (TTR) and Viral Coefficient. Once you have achieved product market fit, your TTW should be short (preferably in minutes or hours), your TTR should be hours or days and your viral coefficient should be greater than 1.2 to 1.5.

Time to Wow
Time to Wow

Most entrepreneurs start with their friends and family to be their first “beta” users for mobile apps. While that’s the best logical point to baseline your TTW, TTR And VC, you might not become “big” quickly enough to generate VC-level interest for your startup if that’s your goal.

There are multiple marketing methods available for startups. Many of the mobile app companies I know have tried Facebook Ads, Social Media Engagement, some have even tried SEO and still others have tried extensive PR and Blogging

The only thing that has worked very well for non-gaming productivity apps is influencer marketing.

Over the last 1 year, at Microsoft, there have been 3 acquisitions of top mobile productivity apps – Accompli (Email client), Sunrise (Calendar) and Wunderlist (Task Manager). I had a chance to talk to the folks who were at the companies during the early days.

The only thing that worked was “Word of mouth” for marketing. None of them spent money on advertising – they did market, but they did not advertise.

The only marketing technique they adopted was influencer marketing.

Influencer marketing is the approach to get influential early adopters to try the product, then tweak to get their feedback and have them spread the product via word-of-mouth.

It is important to realize that influencer marketing begins with identifying, engaging and building your influencers way before your product is ready or even before you have a beta product.

Emailing your influencer when you need to have them try the product will not suffice.

You have to engage with them, comment, work their egos and build your credibility with them long before you launch your product.

Influencer marketing helps your increase your viral coefficient, and it may increase your time to refer, but it does not help with your time to wow.

You will get a lot more people trying and using your product if influencers recommend it, but dont expect that to be the only technique you should adopt after your product has a viral coefficient greater than 1.5

You might want to then adopt partner app referrals (when another popular app suggests your app as an add-on).

The other technique that works later is bundling – this is when you are part of a “suite” of apps which act together as a bundle and perform complimentary tasks or have a similar goal, but aid in different parts of the goal.

What startup entrepreneurs can learn from Donald Trump

I am not a fan of Donald Trump and dont agree with many of his positions, but he sure is entertaining to follow. I do actively follow politics, so I am keenly interested in campaign strategies, tactics and political news.

There’s a lot to learn from Donald Trump, in terms of startup strategy. There’s a great piece about him on Business Week, which is a good read.

Trump parapheranalia
Trump paraphernalia
Trump Mar A Lago Club
Trump Mar A Lago Club (ht: Business Week)

Here’s the TLDR version – he inherited a lot of money from his dad, started building and did some real estate development, lost a lot of money, bankrupted his companies and then started fresh again. Instead of risking a lot with loans, he instead, created a “branding and merchandising” entity which lends the Trump name to real estate companies. This licensing is how he makes a lot of money – risk free.

The 3 most important lessons I learned from him so far are:

  1. Disrupt the incumbents and “insiders” by creating a new set of rules to play by. Political campaigns, we are told are about issues, depth of knowledge and having strong positions on those issues. You need to be broad and deep on the issues – know who the president of Syria is, as well as the unemployment rate in rural Iowa and the daily working class problems of a single mom in Florida. Which realistically most candidates don’t have.

Trump, but no means is an expert (for most of the things that you need to be an expert on to be a President). In fact, he is the antitheses of an expert. He has forced all the other “institutional candidates” with pedigree and great backgrounds to make illegal immigration the #1 issue for the election. Which, in itself is surprising, given how little impact it has on the economy or social well being. It does though, have a huge cultural impact.

The incumbents, now have to play by his rules and are falling all over themselves, looking like fools, and giving answers that indicate that the solution to every problem is to build a wall.

2. Make your competitors biggest strength their biggest weakness. Most political campaigns are about fundraising. You have to bring enough via small donations, contributions from rich investors and retail money (think $1000 private dinners). Most of the competitors have been trying to do that, just like the establishment of the Republican party – which is confused as to how they can “checkmate” Trump. Well, their biggest strength (fund raising) is now inconsequential. Trump has spent no money (not really, but much less than his competitors) but has been constantly getting the attention and the coverage to be “in the news” all the time.

The rich Republican donors who want to stop him on his tracks are a loss to figure out how to do so, given that their money (with which I presume they can buy attack ads) is not going to buy them much at all.

3. Being an outsider in an industry helps frame everyone in that industry as “old school” and “dithering” to potential customers. Most customers like new approaches from other industries, even though they understand that 100% of them may not work . Trump’s solutions for building walls, making Iran “pay if they violate the contract”, etc. are unlikely to work in the political arena, which are purely business ideas, but he has framed them well enough for people to think there’s a shot it might work.

I actually am among the few people who think Trump will will the nomination of the Republican party, since the rest of the crowd (save Marco Rubio) are just not that exciting. If, he does that, then he has a great shot at being President.

Imagine that. That’s the startup equivalent of an Unicorn. Very little chance of happening when you started, but going against an existing set of players in a predefined market, making it easy pickings at times.

The 3 numbers that determine if your mobile app has reached product market fit

In talking to 4 new mobile (non gaming), mostly productivity , app developers, I understand now that there are 3 metrics the founders breathe, eat and sleep: Virality coefficient, Time to Wow (TOW) and Time to Refer (TTR).

A viral coefficient is a number which tells you how many customers each is your present customer bringing to you on an average. 

Time to Wow is the amount of time from when a user downloads the app, uses it and gets enough value to get the “wow” effect.

Time to Refer is the amount of time it takes for a user from the time they use your app, get a wow effect and tell others about your app.

The first metric to optimize that is completely within your control is the “Time to Wow”. For most games, it has to be in minutes, but for productivity apps it can be a few hours or days. The longer the time to wow is, the less likely you will grow organically.

What can you do to reduce your time to wow?

First: Fit the product features to the user’s usage model as opposed to your initial definition of the problem. For example if your app is a calendar management automation AI product, the first time a user gets a WOW is when a calendar invite is sent to them and without their intervention it schedules it automatically. You could give them “examples” of calendar appointments on their calendar, but its not the same as their own use model.

Second, understand your users trigger points to Wow. Do they get a wow when they see an appointment scheduled, or when they get a notification? What triggers them to get immense value from your app.

The second metric to optimize is Time to Refer. This is a word of mouth metric, both offline and social. If a user has a wow effect with your product, they will likely tell others. How long does it take for them to tell people is important. If they tell people after a month of using your product, then you still have work to do. If they tell people only if prompted for a problem associated with the solution your product offers, then you will have a lot of work to do.

If however, they had a wow effect and immediately tell others about how this solved a problem for them, you have a low time to refer.

Time to Wow, Time to Refer and Viral Coefficient
Time to Wow, Time to Refer and Viral Coefficient

Finally the viral coefficient. The reason why influencer marketing works as a seeding strategy, for mobile apps and consumer Internet apps is because the influences who use your product initially have a large network (or following). When they like something (have a wow effect) and tell others, more people listen and take a second look at your product.

If your product truly has a wow effect for the lay person, it does not matter, who your seeding users are. If, however your product is niche, then it is very important to get top influencers as your first few users of the app.

The viral coefficient is the number of people each user brings with them because of their network. How many people will they tell about your product (unaided and unprompted) and how many of them take the action to download and try your product are both key.

Its a “marketing problem”, the product is actually good – the engineer’s myth

I have been clear in my preference for hacker / developer / engineer founded companies. I prefer developers since they can actually solve the problem using tools at their disposal without having to “hire” people they dont understand anything about.

The biggest challenge of backing hacker founders, though is that once every so often (more frequently than I’d like), I get an entrepreneur who falsely believes they have achieved “product market fit” and the problem they have is one of marketing.

This is especially true of consumer Internet companies and more so in mobile.

For some reason, hacker entrepreneurs believe the “problem” is solved when the product has been shipped to the App Store.

That’s usually when they start thinking about user acquisition.

There is a big difference between customer discovery, customer validation and customer acquisition.

Customer Discovery
Customer Discovery

When you are talking to customers to understand their needs, and tweak the product to their needs or discover the real problem they have versus the problem you think they have, the stage you are at is customer discovery, development and validation.

When your product has completed its customer validation there’s one thing that you should know:

“What makes customers have a WOW experience with your product”?

If you do not know why a customer likes your product or when it triggers them to tell others, you have not yet achieved product market fit.

I do get a lot of engineer founders who will come to me after launching their product in the App Store. They are unable to get good traction for their product and they are stuck at 100-500 downloads per day and a total of 3K – 10K downloads. They then diagnose the problem to be a “marketing” problem and give me these possible reasons as to why they got limited traction:

  1. They are not marketers and were unable to market the product.
  2. They tried to hire 2-3 (pick a number) marketing people but they all were unable to get traction for the product, even though the product is “great”.
  3. They have tried 5-7 different marketing tactics – SEO, Facebook ads, Social Media engagement, etc. and none of them is working.

It is usually at this point that I have the hard conversation with them about user / customer acquisition. Most times they are defensive and tell me they have been talking to customers “daily” and have been getting feedback and tweaking the product based on the customer’s needs.

They do however fail to understand that talking to customers during product development is “customer development” and not “customer acquisition”.

The easiest way to acquire customers is to have existing customers tell other customers.

So, then the only question you have answer is when and why will my existing customers tell other potential customers?

If you can answer that question, then the user acquisition is organic.

Else you have to use “marketing techniques” to acquire your initial users.

Marketing only adds fuel to an existing fire. It is not good at starting fires. Great product start fires. The fire spreads when a customer tells another person they trust about the product.

It is not a “marketing problem” you have. You have a customer acquisition problem, which you may classify as marketing, but really it is a product problem.

Building your personal brand: How I would do it 30 min a day

Personal branding is becoming more important for individuals in the Gig economy. It is important since it ensures “inbound” leads for freelancers, opportunities for individuals at larger companies and also makes it easy for entrepreneurs to raise money or hire people.

Let me outline what personal branding is:

To me personal branding is creating enough value for the set of people who you are trying to influence or persuade. Those “influencers” know about your work in a certain area, domain and would consider you to be the preeminent expert in that area. The “recall” for your name associated in that area, should hence, should be significant.

Let me also outline what personal branding is not:

I believe personal branding is not about blowing your own horn, bombarding people with messages and content that’s not unique or differentiated.

The best way to create a personal brand is to create compelling content. Or so I thought.

That’s not sufficient any more is what I have learned over the last 6 months.

The “community” or influencers who you are trying to influence are equally if not more important.

Personal Branding Map
Personal Branding Map

The 2X2 Matrix above shows the 4 types of personal brands according to me. If you have good content and build a great community you are perceived as a leader. That’s where you should aim to be.

Initially you wont have either, and so the question becomes where do you start?

The nuanced question is – where do I start if I have limited time – say 30 minutes a day?

My experience states you are better off building a community and not spending time initially creating content.

You can curate great content from others – in the form of an email newsletter, or frequent (2-3 posts and links on the topic) daily.

Spend time reading about the space you want to build your personal brand before you have an opinion or a point of view.

Learn about the different people, their points of view and the pros and cons before you start to write and speak about the topic. Engage with people on twitter, by asking questions, connecting with them and learning about their point of view first. Then spend time building relationships.

I wanted to also put my money where my advice goes. So, for the next 3 months I am mentoring 2 of my friends Marc and Nancy to build their personal brand using my suggestions and strategies. They are not known as experts in their space. They are trying to build their niche  – Nancy as an angel investor – her niche is to be determined and Marc in the SaaS space – his niche within SaaS is also TBD.

Over the next 3 months I will report once a couple of weeks on their progress, the tactics they are using and the methods they have followed.

The measure of their success will be determined by 3 specific goals they have set out for themselves.

  1. Both want to be invited to speak at a major event (which is yet to be determined) as an expert on the space they chose.
  2. They want to be interviewed by either a podcaster or a blogger on their thoughts on the space.
  3. They want to be associated with a unique piece of content (examples Dave McClure and AARRR or Sean Ellis and Growth Hacking.

They both have specific metrics on # of engagements (key influencers who know them, etc.), # of Twitter followers (which I think is a useless metric, but nonetheless) and email open rates, etc.

The one thing I learned blogging everyday for 180 days

Community first, content next.

Today marks 181 days of my journey to blog every day. Over the last 6 months I have written about entrepreneurship and technology. Most articles are about 500 to 1000 words and some are fewer. During this period my “audience” has grown from 70K subscribers to nearly 100K (Still shy by about 3000 subscribers).

Mukund's Email Subscriber Base
Mukund’s Email Subscriber Base

According to my email metrics, about 19-25% of people open my emails daily. Not sure how many actually read. Besides this I have a few thousand Twitter and Facebook readers and about 1000 app subscribers.

There are many things I have learned.

First, is that writing is not at all hard. In fact, it is pretty easy. My writing routine is pretty simple. I get up, finish working out, and take exactly 21 – 32 minutes to write a new blog post from scratch. No pre-writing, no backlog of posts etc. I start with a blank slate on 95% of the days.

Second, writing makes you focus. When you have little time, like most of us do, then it makes you concentrate and get it done, prioritizing it over other things.

Third, it teaches you discipline. If you get into the habit of writing daily, then it is rewarding to see the body of content in a few months.

Fourth, quantity does not equal quality. I have written 180 posts, but most have not hit the bar in terms of get more readership over and above my usual subscriber base.

Fifth, writing is a counter productive way to spend 30 minutes to achieve you goals of building a personal brand. There are other, better, easier ways to do the same for 30 minutes a day.

The most important thing I have learned, though is that building a community, one fan / audience member, individual, reader at a time trumps generating lots of content for many people to read.

If you are considering blogging, writing, etc. I would recommend you first understand your goal

Is it to build a personal brand?

Is it to showcase thought leadership?

Is it to share your thoughts and expect nothing in return?

Is it to build a base of followers?

Regardless of your goal, I would still recommend you engage with your “community” via tweets, commenting on their post (Facebook or Twitter), connecting with a large set of people before you start writing.

What I have observed is that people who connect with their audience get away with writing really poor content, since people really like them.

If, however, you dont spend time building and engaging your audience, you should be prepared to have “killer” content each time, which is highly unlikely given that you might have to write frequently.

In fact, only 11 of my 180 posts have crossed my own threshold of over 30K readers for the post.

The number one thing you should do if you are starting or want to start building your audience base is to engage with them. Comment, reply or write to them on Twitter, their blogs, etc. Dont start writing.

Then make sure you engage and build your base of engagement with 1-2 posts each week, still keeping up your engagement.

Then you can get a schedule as rigorous as writing daily.

To build a large audience (similar to a media property such as BuzzFeed, etc.) you might need lots of content which is good, but for an individual, that’s impossible.

The same goes for your startup’s blog.

Build your community and audience first, then build an editorial calendar to hyperfocus on a specific topic and keep the schedule.

This also changes how you spend 30 minutes a day to build your personal brand. I will share that part with you tomorrow.

Here are two other posts I have written about what’s working in B2B startup blogs and how to focus on better insights not a better narrative.

Why SaaS founders should take Marketplace Listing Optimization seriously

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.

Cloud Marketplace Brokerage Services
Cloud Marketplace Brokerage Services (image credit)

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.

How you can use Marketplace Listing Optimization to increase your inbound leads for SaaS products

I wrote about the 3 things to do before your SaaS product launch to increase inbound leads before.

Cloud Broker Service
Cloud Broker Service

Unlike SEO (Search Engine Optimization), MLO (Marketplace Listing Optimization) for B2B SaaS has far fewer criteria to consider. Since the listing provider themselves are focused on SEO for their website, your focus and goal is to primarily show up higher if someone searches for the term or category within which your solution falls under (on page optimization), or appear on the top of the listing within a category when customers are browsing within the listing website.

So what are the portions of the listing you need to optimize?

  1. Ratings: In most of these listing and marketplace services, their internal ranking, which is comprised of multiple factors, but largely end customer ranking of the SaaS solution, tends to be the most important criteria to list higher. I would highly recommend you request, provide credits, incentives (beg, cajole, plead, request, etc.) or just ask your customers to rate your product at these listing and brokerage services. You want to ensure that customers rate you high across the criteria that you are judged. Some customers might think this is a forum for giving feedback on your product – that’s not the goal. Your goal is to rank high and be rated higher than other competing products.
  2. Completeness of profile. Most listing and brokerage services have different requirements for your profile. Similar to your own Facebook profile and LinkedIn profile, some require just your website, logo, product details, etc., while others request your demo video, high resolution screen shots, feature checklist, and in a few cases exclusive discounts or content. Find out the key things you need to complete and be as close to 100% as possible. This is the #2 criteria, but may be #1 for you to list higher, since an incomplete profile makes the marketplace brokerage service look unprofessional. To optimize your profile, ensure that you have all the profile elements complete.
  3. Billing, distribution and on-boarding : Unlike listing services, brokerage vendors actually will “resell” your product or be a channel partner – online. To that effect they will bill their customer, collect the payment, keep their rake and send you the dues. They will want to own the customer relationship, but not the support. In many cases, they will already have a billing and contractual relationship (for e.g. Telstra has over 500K SMB customers in Australia and bills them for telecommunications services anyway, so their brokerage services are an additional line item on the customer’s bill). To optimize your listing and appear higher, you will be required to bill and deliver on their platform as well.
  4. Feature checklist profiling: Most brokerage and listing services allow customers to compare features of products within a category. This means even if you dont support a few features that you competitors do, you will have to state them and if there are options to state few features that are different in your product than others, it is important to mention those. Many of these feature comparison criteria are human generated, meaning there’s someone at the listing site, putting these together – ensure that you build a relationship with them. To optimize your listing, you need more criteria you are ranked favorably for.
  5. Featured products: Once every so often, (each of them varies) the marketplace will feature certain products on their home page. Obviously they will feature products they think their customers will like or feature those that their customers already buy. These features are similar to the mobile app store feature listings, where some of it is data driven and other times it might be a “staff pick”. To optimize your listing, getting featured is important. Understand the criteria for the featured listing and find ways to get featured at least 2-3 times each quarter.

Three things to do before you launch your SaaS startup to get inbound leads

There are 3 items you should do quickly, if you are going to launch your SaaS startup or a new product that caters to a new audience.

First, get listed on SaaS marketplaces, Cloud Brokerage Services and Cloud listing providers.

There are over 120 SaaS marketplaces from telcos – AT&T,  T-Mobile and others, to large Cloud Service Providers (AWS, Google, Microsoft, etc.) and other large technology companies (Samsung, DELL, etc.) I would spend at least a few days making sure your SaaS solution gets listed in all these marketplaces under the right categories.

There are between 30 to 40 Cloud Brokerage Services, including Appia, App Carousel, AppDirect, Jamcracker, Appirio, Cloud Nation. Here is a more comprehensive list.

Cloud Services Brokerage
Cloud Services Brokerage

Then ensure that you list on Cloud listing providers such as Capterra, G2Crowd, GetApp, etc. Here is a comprehensive list of Cloud Listing Providers.

Second, focus on Marketplace Listing Optimization (MLO). Like SEO (Search Engine Optimization) and App Store Optimization (ASO), MLO will help you rank higher, which drives leads.

How do you Optimize for marketplace listing: Get real customers to review your products, ensure that you are listed in the right categories, Use the right keywords in your description, show screen shots of your application and showcase a good video for demos. I will detail this more in tomorrow’s post.

Third, optimize your customer on-boarding process for these providers. Find out their rake, the incentive cut-off structure and renewal discount rate. Ensure that a customer coming from these solutions is able to be measured, can setup their account quickly and can easily get the first few “tasks”done on your platform.