Podcast note: 2. SaaS too popular, what is that

This blog is the note and review about the podcast for SaaS 太热闹,教你看尽门道 in 疯投圈.

Podcast link

to C business: feature design, know the demand of people, user experience. Focus on Free, traffic.

to B business: More than the statement of to C business, it is clear to compute whether it can be profitable and when will we start to break even. Selling problem -> actively selling the product since the business can buy product.

The critical keys to succeed of to B business:

Technical skill

selling skill

selling team (directly sell, channeling), CSM ( custom succeed management) (improve customer surviving, provide up-sell, cross-sell to the customer) -> Both are occupied 50% in the whole company.

preciseness

toC: targeting on population based, age, gender…. (Graininess big)

toB: (Graininess small) -> more specific -> easy to compute because the market is more specific. -> fixed cost is large, but if it succeed, the reputation is expanding and more stable.

small toB business usually change the whole product in every 3 years and hard to survive.

How is the valuation? Is it smaller than toC? Not really!

In the United State, toB cloud computing business is very big.

the growth rate :

toB business requires longer time to the market.

Difference

IT: Buying computers, hardware, software from other companies and do operation. (EARLY)

SAAS: buying the service from cloud -> transfer capital expenditure to expense.

Key factors between small business and big business

small business:

making money >> saving cost > efficiency

big business:

management (1 more) and making money ~ saving cost

trade off between management and efficiency

Even SASS can turn fixed cost to variable cost, but if the variable cost is too high for small business, it is not good.

big business: operation cost high, but price is not sensitive and maintenance cost is more higher

small business: do not charge too high cost try to get money from traffic

Vertical industry

Once selling to the big company and figure out the other software to keep selling. Because the fixed cost is already high and big company is not price sensitive.

key demand difference between small business and big business

small business: core service, product must be top -> can be standardize

big business: more bigger the business is, the more customized

SaaS -> the customer need more demands -> need much more flexible

SAP has much more flexible configurations

Salesforce: PaaS platform -> generalized components -> open source -> more plugins -> satisfying customized requirements

How to run SaaS ? Key Point

SaaS -> first standardize items -> it is better not to do much more customized items -> better to reject 1 super big company bill (all resources depends on it -> no efforts to do other things)

In China, among all successful SaaS companies, at most 10% revenue coming from only 1 biggest company . Most of them are 3% at most. That means it is better to not rely on only 1 big bill.

non-core services -> out souring (recruiting, customer service, accounting)

technical more on toB -> tech driven and combining tech and transaction scenario, ex: applying tech (big data) in making money (credit, Ads) because the total revenue is fixed

tool coordination -> first strong and best tool -> add 1 additional feature to generate more users — -> do recruiting, ecosystem

new customer -> requiring customer cost

survive of customer -> how many customer loss? (< 2% ****)

making money from the customer -> long term cycle value of the customer

SaaS Fixed cost turns from customer to the business

At early stage, getting too many customers leads too much fixed cost would loss for many years. But after breaking even, it will be much profitable.

survive of customer is most important -> because we have to get much more new customers, even get them in but fixed cost will be much higher.

monthly revenue = new customer money + old customer money — money from losing customer

CSM (customer success manager): up-sell cross selling for current customer to make sure old customer money — money from losing customer > 0 (PM + test, selling, marketing) 
(20% — 25% in the whole company)

PM + testing -> trouble shooting, debug and come back to engineer to fix it

selling -> sell the new feature

marketing -> told them how does other company do better with our product

The opportunity of SaaS

marketing + selling: help company marketing and selling

HR: the demand of small business and big business are different -> sourcing + recruiting

tool coordination

IT: Docker (PaaS, IaaS) -> improve efficiency of operation

security: data is the asset ( Finance ( affordable))

vertical industry: few customers (precisely marketing -> requiring customer cost low), potential market is not big (it is easy to dominate), domain knowledge (once getting domain knowledge, it is much easier to cross-selling)

in medical CRM: Enquire > Salesforce

overall: Salesforce >> Enquire

What kind of cofounders is good at toB business

if vertical industry -> must expert in the vertical industry

personality -> more persistent, not require too smart (toB needs slow, hard)

CEO -> good at selling product

This podcast is very amazing!

They have the deep insight and experiences about SaaS and the toB business that is what I want to know.

Even as a software engineer, I feel like understand the difference between toB and toC is good to choose career path.

As a normal people even do not work in startup or VC, understanding toB business is always great to do investment.

An machine learning engineer in Bay Area in the United States