The SaaS Playbook

SAAS playbook. Rob Walling. This a mishmash of tactical advice on running a SaaS biz. No big thesis here, just a lot of little ideas.

THE PLAYBOOK
- For bootstrapped, all-owned approach
- VC isn’t the only way to build a startup.
- work on your BIZ not your DECK
- (You know what’s cool? A MILLION dollars)
- Walling’s entrepreneur stair steps. 1. Simple product, single channel (eg, wp plugin). 2. Repeat that until you own your own time 3. Then make a standalone SaaS. This book is about #3 only.
- Why do a SaaS? Specific is better than general, and most Saas serve a niche. The playbook is repeatable and written. Recurring revenue is great. THey’re recession-resistant (not -proof). They are NOT 2sided markets. No funding required (if you can code). High margins. High exit multiples.

MARKET
- This section is about Market as a noun, not a verb.
- How to find product/market fit? Talk to customers. Ask good questions. Dont lead the witness.
- Customers will give you 15% crackpot ideas, 20% no brainer wins, and 65% in-between. Figuring out what to do with the in-between is the hard part, so: understand the use case they support, figure out what % of your customers the request would serve, and assess if it fits your vision for the product.
- how to compete? Congrats, a competitive market is a good sign, that means people spend money on your thing. Don’t worry too much unless you’re losing market share.
- build a moat. Integrations, brand, owned traffic, high switching costs. NOT: unique features, NOT translating the app to serve a new market, NOT white labeling, NOT underpricing.

PRICING
- ARPA = average revenue per account
- segment your customers so you people can pay you more (pricing grid: $40/mo, 80/mo, call us for price)
- enterprise software costs MORE THAN YOU THINK
- should you ask for a CC up front? Probably yes. Reduces # of tire-kickers. Unless you can handle HIGH churn.
- revise your pricing every 6-12 months. Most founders err on the low side so force yourselves to reconsider. Grandfather in your existing customers if it’s <10% revenue

MARKETING
- This is a verb now.
- nothing sells itself. Sorry.
- can you just hire this out? Maybe. But likely inefficient. It’s not so bad to just do it!
- build your funnel.
- figure out if your’e high or low touch sales. High = expensive, low = cheap. No touch basically nonexistent.
- Big 5 SaaS Marketing channels: SEO, PPC, Cold outreach, Integration marketing (eg guest blog post), Content marketing (hacker news! Media!)
- how do you know what fits for your biz? Try stuff. Think about impact and resources, speed x cost x scale.
- test your marketing (1 variable at a time pls)
‘ ‘Word of mouth’ is the same as ‘’I don’t know where my customers come from” (ouch)
- should you do live demos? Depends. Qualify the customers first. User a script. FOLLOW UP. Close the sale during the demo, just take their money now. Ask them ‘ how do you solve this problem now’ and adjust demo on the fly to compare. Find out their org size, decision process, and how sophisticated they are.
- Rob uses a hack where the user hits the ‘book a demo’ page, and they enter their email and # of users. If it’s low, they get directed to a recorded demo page. If it’s high, they get sent to calendly to book something.

TEAM
- how to structure a team? Structure with roles not tasks. EG, product/design/eng/marketing/sales/support/success/hr/legal/finance. (This is e-myth stuff baby!) Draw your big org chart even though your small team covers all the roles.
- dont invent job titles (it’s hard to hire for something specific you made up, and weird for employees)
- mgmt is 2 tasks: supervision and leadership.you can split or combine these but mgmt
- trite advice about hiring
- comp options basics (equity, profit, bonus)
- thoughts about cofounders


80/20 SAAS METRICS
Pareto rule. (20% of yr metrics drive 80% results)
- which to track?
- - 2 most important are MRR and month-over-month growth. But those are lagging indicators.
SO instead:
- - 3 High / 3 Low framework. 6 numbers to tell you how healthy biz is and when revenue will plateau.
3 Low should be as low as possible, 3 high as high as possible.
LOW:
- CAC. Rule of thumb is CAC should be < 1/3 of LTV
- Sales Effort (length of sales cycle, # of touchpoint, etc). Lower it by making it easier to buy.
- Churn. Focus on rev churn: cancelled MRR / MRR at start of month. Eg, $50 cancelled over $500 at start of month = 10% churn. Compare with MRR added / churn => that’s your max MMR. (If churn is 10% and you acquire 5k MRR, that’s 5000/.10 = 50,000 Max MRR., that’s where you plateau.
HIGH
- ACV, annual contact value (your yearly plan or 12mo of monthly)
- Expansion Rev. (customers buy more from you as they get more value. Upgrades, add ons, etc.
- Referrals. (To track this, you probably have to ask customers on signup where they heard about you)

(Cheat Codes! VIRALITY.)
Segment out your churn so you can see if it’s different (eg, users from Instagram churn at x rate, but referrals at y)

MINDSET
This is a lot of platitudes I think. Figure out what you control. Bias toward action. Develop your gut. Efficiency vs effectiveness. (Should you get funding? Pros and cons. Weird section in the middle here, but it’s mostly psychological) Get community. Find a mentor. Avoid burnout. Good luck.

Noted on August 9, 2024