Today I interviewed Rick Chapman about his new book that helps you start and succeed at building a SaaS company. I also ask his to define an “entrepreneurial mindset”. Check out the interview below…
Kevin: What inspired you to write SaaS Entrepreneur: The Definitive Guide to Succeeding in Your Cloud Application Business, 2nd Edition?
Rick: I’ve written closely-focused books on software and the high-tech industries since the mid-90s beginning with The Product Marketing Handbook for Software. There’s a need for a business book that’s written specifically for SaaS companies and provides practical information and data on how to build a successful SaaS company.
SaaS Entrepreneur is not going to tell you where your cheese is, discuss being insanely great, or how to fail upwards. It’s a detailed operations manual that offers case studies, up-to-date metrics, and practical information on how to execute the SaaS business model efficiently. It’s designed to help you get it right the first time and avoid mistakes. It’s backed by a virtual DVD with checklists, spreadsheets, preso files and other tools. It covers product positioning, pricing, new models for product management, security management, implementation of multi-tenanting in your system design, SaaS product interface design and much, much more.
Q: Could you give us a quick high-level summary of your background as it relates to SaaS entrepreneurship?
A: I’ve been involved in the SaaS industry since it was first called the Application Service Provider (ASP) market in the late 90s. In 2001, the industry crashed and burned coterminously with the Dot.coms. I wrote in detail about the ASP wipeout in the first edition of In Search Of Stupidity: Over 20 Years of High-Tech Marketing Disasters. In 2004, I took over as the managing editor of Softletter and saw that the ASP market was struggling back to life under the shiny new acronym of “SaaS,” Software as a Service, and beginning to gain traction in markets such as project management, HR, collaboration tools, and in certain vertical markets, HVAC being one good example. SaaS continued to regain strength over the next three years and by the end of 2007 was growing rapidly.
In 2005, I wrote about the ongoing rebirth of the SaaS model in the second edition of Stupidity and provided an in-depth analysis of what was driving the revival. Softletter also began covering the industry more closely. In 2006, we launched the industry’s first in-depth business and operational metrics survey analyzing the SaaS model and published it as the Softletter SaaS Report. We’re currently at work on the latest iteration of this report. In 2007, Softletter hosted the first of 14 separate SaaS University conferences that ran through 2014. We’ve curated the best of the last three year’s conferences and they’re available up on http://www.saasuniversity.com.
I’ve also personally consulted with several SaaS firms over the years at the executive level and product management level and continue to do so.
Q: Delving into your book now, who would benefit most from your book?
A: At this juncture, SaaS is now the dominant model if you’re introducing a new software business application, so there are no markets closed to it. Previously, high bandwidth applications such as video production and high-end graphics were not a good fit to the model, but this is changing rapidly. No new desktop or “enterprise server” products are being introduced or funded. Most of the companies profiled in SaaS Entrepreneur are in the B2B space.
It’s important to remember that SaaS succeeded not by establishing itself in the enterprise and then convincing people and companies to abandon their existing desktop and server products, but by opening up new markets and opportunities. SaaS still remains an excellent fit to the entrepreneurial spirit.
SaaS Entrepreneur is aimed squarely at anyone who wants to start a successful SaaS company or is perhaps part of a company division or business unit that’s transitioning from the desktop or enterprise software markets to SaaS. It discusses a broad range of products, from vertical CRM to non-profit funding and management systems.
Q: What are the most important elements, messages, or takeaways of your book that you’d like readers to know they will benefit from?
A: One of the most important elements I stress in SaaS Entrepreneur is that it’s vital to integrate analytics, community, and subscriber feedback directly into your product while you’re architecting it. By its inherent nature, a SaaS system allows you to measure every level of interaction between your system and your subscribers. It also concentrates people with similar problems, challenges, and goals into an “organic” community. This is a capability desktop and enterprise software never possessed and is one of the key reasons why the SaaS model supplanted them. Immediately leveraging your system’s data collection and community input from the moment your first subscription goes live is critical.
Another important takeaway is that your company’s approach to product management needs to be completely rethought. For a couple of decades I’ve been watching various firms sell product management consulting, training, and certification and I’m still struck by how out of date much of their training and theories are.
In SaaS, product management becomes a data-driven exercise and much of the “cheerleading” traditionally associated with the job goes away. A SaaS product manager should be a data god, dedicated to providing measurable results on product usage, abandonment, interaction, marketing programs, and so on to development, sales, and marketing. This process will help make everyone in a SaaS firm accountable for their performance.
It’s a good idea to study Amazon’s approach to data usage. The great thing about SaaS is that it enables your company to emulate Amazon and understand in deep detail how your system and your company work.
Q: Given your experience, what do you believe an entrepreneurial mindset consists of?
A: That’s an interesting question! Entrepreneurs are “world builders,” people driven to take an idea and create a new reality around it. They want to make money, drive fast cars, and live in fancy houses of course, but at their core, system building is their primary driver. Stephen Levy, in his book Hackers, describes this mindset well. (Anyone who wants to understand the world-builder mindset should read it.) And I think everyone in high-tech has read about Steve Jobs’ famous “reality distortion field.”
Also, to be honest, it doesn’t seem to hurt to be a sociopath, at least at some level. I’ve just released my second novel, Selling Steve Jobs’ Liver: A Story of Startups, Innovation, and Connectivity in the Clouds and I explore this aspect of the mind of the entrepreneur. Liver is about…err…selling Steve Jobs’ liver and follows the adventures of two serial-failure entrepreneurs who get their hands on the organ’s 1.0 version and proceed to “monetize” it by integrating Jobs’ real and virtual DNA into a new device, the “uLivv.” They found a company, Reliqueree, whose mission is to reposition death to the market. It’s a satire, obviously, but the marketing and technology contents are accurate and up to date. More info and excerpts up at http://www.sellingstevejobsliver.com. I was inspired to write the book by an actual recent example of a SaaS entrepreneur who attempted to create his own alternate reality (and failed).
Now, you’d think the above is completely off the wall, but I’ve had several entrepreneurs and startups who received advanced review copies of the book get back to me and say, “You know what? There’s a real business model at the core of the story.”
That’s the entrepreneurial mindset at work!
Q: Give us an interesting fun fact about your book or the research you conducted for your book.
A: Well, one thing I had some fun with was the adoption of “Cloud” and “Cloud Computing” in 2009. There are several theories about why the word and phrase became so popular, but what was clear after a bit was that “Cloud” was simply a replacement for the word “Internet.” SaaS companies started calling themselves “Cloud” firms and no one had a clue what they did. Were you were a hosting firm? Development? Applications. What?
After a while, companies started to come back to “SaaS” since it immediately identified them as application firms. Though you sometime hear phrases such as “Cloud SaaS” and “Cloud Applications,” which are nothing more than fancier ways of saying “SaaS.” But if your market wants to hear “Cloud” in your name and collaterals, you do what you need to do.
Q: Where can people find out more about you and/or your book?
A: You can learn more about SaaS Entrepreneur and SaaS University at www.saasuniversity.com and www.saasentrepreneur.com. I’ve already provided links in the interview for Selling Steve Jobs’ Liver, but if your community decides to take advantage of the promotions you’re offering, you’ll get a copy of the novel along with SaaS Entrepreneur. My email address is firstname.lastname@example.org.
Based on your analysis of the industry, what new business opportunities do you see opening up in the industry for entrepreneurs?
I think there are major opportunities opening up in what I sometime call the “independent” or “personal workspace.” The most valuable software asset any of us own (or your company supports), is not any individual program, service, or piece of hardware. Rather, it’s the combination of all of these that’s so precious. Our personal computing environment often represents years of purchases, updates, patches, customizations, macros, desktop setup, etc. Given current technology, all of this is very much tied to different forms of hardware, whether it’s from Intel, Apple, an Android device, ARM chip, whatever. If the hardware dies or changes, your environment is often put at risk or even lost, and that can be very painful.
What’s changing this dependence on devices is a growing movement to create a series of cloud-based service layers that will enable you to move your complete computing platform from one from piece of hardware to another without having to rebuild it. SaaS and the IoT are key factors underlying this movement. All the major players, including Apple, Google, Microsoft, Oracle, and others are developing initiatives in this area. SaaS Entrepreneur has case studies that analyze how companies are rethinking UI design to prepare for a device independent future and building out new service layers to support it.
I know that Microsoft is thinking very hard about this because they’re currently cut off from the industry’s fastest growing hardware markets–smartphones and tablets. We all know how well their attempt to crack into these device segments has gone. The company that once had an iron grip on the dominant computing platform is now trapped in a Wintel ghetto. Microsoft can either retreat back to being an applications firm, or attempt to regain some measure of control via the creation of a platform that makes a device an accessory, not a necessity. They have many of the pieces already in place. We’ll see how it all plays out.
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