peter flynn

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SaaSNet Prophet 2009

By Peter Flynn

Cofounder and MD of White Wall Web Entrepreneur (various businesses) Author of http://saaspert.com peter@whitewallweb.com @pete_flynn

About MeAbout Me

Services for businesses An opinionated (researched) view Strongly prefer models that don’t rely solely on Ad revenue Evangelist for SaaS

About My BiasAbout My Bias

Software as a ServiceSoftware as a Service

Source: salesforce.com

Why am I talking about this?Why am I talking about this?

Clients: Why is SaaS better?Clients: Why is SaaS better?

Minimizes the cost of complexityMinimizes the cost of complexity

On Premises SaaS License Hardware Network Consultants Maintenance Dedicated staff Upgrades Many points of failure

No onsite servers (software/hardware) Try before you buy Fast & easy to implement Painless upgrades Lower TCO Predictable Faster issue resolution

Single versus Multi-tenancySingle versus Multi-tenancy

On Premises SaaS

Upfront Investment & Time to DeliveryUpfront Investment & Time to Delivery

Budget AllocationBudget Allocation

On Premises SaaS

Capital Expenditure (CAPEX) or “large expenditure” budget

Operating Expenditure (OPEX) or “smaller/recurring expenditure” budget

Release FrequencyRelease Frequency

On Premises SaaS

Infrequent (annual?) releases

Frequent releases

Level of Lock InLevel of Lock In

Clients: Enables a Mobile WorkforceClients: Enables a Mobile Workforce

2007 - 20% of workers in leading South African companies were mobile enabled

Thanks to Suzanne Du Toit from Nashua WC for supplying me with this research

Mobile WorkersMobile Workers

2015 • 15-million mobile Internet users in

South Africa.• Unique cellular users in South

Africa: 42-million 

Thanks to Suzanne Du Toit from Nashua WC for supplying me with this research

Mobile WorkersMobile Workers

Investors: “Convince me”Investors: “Convince me”

Great Sales PitchGreat Sales Pitch

Favorable SaaS Environment Favorable SaaS Environment

Bandwidth proliferation

Favorable SaaS Environment Favorable SaaS Environment

Internet as a platform

Conventions widely understood Security trusted

Favorable SaaS Environment Favorable SaaS Environment

Tech advances

Cloud computing H(ardware)aaS P(latform)aaS Virtualization

Favorable SaaS Environment Favorable SaaS Environment

Downturn

Drive to save costs SaaS shares have been hurt less

Service Cash Generation Service Cash Generation

Technology Adoption LifecycleTechnology Adoption Lifecycle

Success StoriesSuccess Stories

Founded: 1999 Type: Public Current Size: 3,300 employees Revenue: $ 1.077 billion 2008 Commitment: 55,440 customers http://www.nyse.com/about/listed/crm.html

Success StoriesSuccess Stories

Founded: 1999 Type: Private Current Size: 12 employees Revenue: $ 8 million 2008? Profits: $ 6 million in 2008? http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/

Success StoriesSuccess Stories

Founded: 2004 Type: Private Current Size: 120 employees Funding: $ 104 million Revenue: $ 9.5 million 2008? Bookings: 200,000 active (1 million)? http://www.businessinsider.com/ning-blowing-the-doors-off-2009-4

Success StoriesSuccess Stories

Founded: 2007 Type: Private Current Size: 48 employees Funding: $ 25 million Revenue: N/A Users: nearly 2 million

Think About…Think About…

Investors: What to focus onInvestors: What to focus on

CMRR – committed monthly recurring revenue CAC – customer acquisition cost CC – customer churn CLTV – customer lifetime value CG – cash generation

Source: www.bvp.com

5 C’s of Successful SaaS5 C’s of Successful SaaS

“Folks love freebies!”

““Freemium” Revenue ModelsFreemium” Revenue Models

Time Limited SalesForce.com; 37Signals

Feature Limited WordPress.com

Seat Limited Intuit Quickbooks

Customer Type Limited Microsoft BizSpark

Source: http://www.longtail.com/the_long_tail/2008/11/finding-a-freem.html

““Freemium” Revenue ModelsFreemium” Revenue Models

Do you even need to know how you are going to monetize your product when you set out?

Freemium with NervesFreemium with Nerves

Investors: What does a good SaaS Investors: What does a good SaaS business look like?business look like?

SaaS = a volumes businessSaaS = a volumes business

Freemium conversions: 2%-10% of your signups will

eventually pay Average is 4%

You need lots of signups…

Source: http://dondodge.typepad.com/the_next_big_thing/2007/05/freemium_free_t.html

Compelling Need MetCompelling Need Met

Save money. Make money.

Affordability & Value for MoneyAffordability & Value for Money

“Save or make me more money than I am paying you.

Prove it.”

Self EVERYTHING!Self EVERYTHING!

Self marketing Automated sign up and payment Self provisioning Self training Self supporting Self administering (invoicing etc.) Self terminating

Users who don’t need supportUsers who don’t need support

Target regular web users If not, be aware of exponentially more support and false alarms

Cost this in!

Already a well serviced need?Already a well serviced need?

CRM ERP SaaS for agencies (web, design, ad)

Why Now? Why South Africa?Why Now? Why South Africa? For Development

Skills English Time-zone Culture

For Sales Bandwidth Cost Sensitivity Culture

NetProphecy | NetProverbsNetProphecy | NetProverbs

All software will ultimately be web-based

NetProphecy | NetProverbsNetProphecy | NetProverbs

SaaS in Africa has to include the mobile web

NetProphecy | NetProverbsNetProphecy | NetProverbs

Remember cultural nuances when internationalizing

NetProphecy | NetProverbsNetProphecy | NetProverbs

Leverage the programmable web

NetProphecy | NetProverbsNetProphecy | NetProverbs

Have one version of the code and data structure.

Say “no” to on-premise deployments

Say “no” to customer specific customizations – unless through an API

NetProphecy | NetProverbsNetProphecy | NetProverbs

Having a good service is just a health factor – commercialization is the real challenge.

NetProphecy | NetProverbsNetProphecy | NetProverbs

Sell directly for a long time before using channels. Have a dedicated, incentivized sales staff.

NetProphecy | NetProverbsNetProphecy | NetProverbs

Your clients are online. Use online advertising and marketing channels.

NetProphecy | NetProverbsNetProphecy | NetProverbs

Succeed in South Africa first. We are a microcosm of the world.

NetProphecy | NetProverbsNetProphecy | NetProverbs

Have enough capital for the long haul. Be thrifty.

NetProphecy | NetProverbsNetProphecy | NetProverbs

Get a working product out as early as possible. Get users. Get user feedback.

NetProphecy | NetProverbsNetProphecy | NetProverbs

Think bigger. Think all English geographies. Then think Mandarin.

Thanks.

Questions?

peter@whitewallweb.com

http://saaspert.com

@pete_flynn