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The opinions of the employees of You are personal.
By Joe Haslam, Executive Director of the Owners Scaleup Program at IE Business School. You can follow him on Twitter at @joehas.
Now there are two types of businesses in the world, those who know they are a business SaaS (the acronym in English for Software as a service or Software as a Service) and those who don’t know yet. This is the message I have long been delivering to the participants in the Owners’ Scaleup program at IE Business School. If anything, that Coronavirus pandemic (COVID-19) has reaffirmed my opinion that this is the path that all businesses should follow.
SaaS and I have a long history. Twenty years ago, in the heyday of dot.com, I left the world of management consulting. Together with five other colleagues, we founded Marrakech, a SaaS solution to solve these problems Back office of E-procurement. The company raised $ 75 million in venture capital and employed more than 250 people prior to the sale. Even the people who worked there won’t believe me when I tell them the software they developed still works today. The lesson here is that it can take a long time for a good SaaS solution to reach its full potential. However, when it does, it is almost impossible to postpone.
What is software as a service (SaaS)? Here I am writing to Luigi Mallardo, the teacher who teaches SaaS classes in the Owners Scaleup program. The mistake, he tells me, is just thinking about the technical implementation of the software that runs in the cloud. The trick is to look at SaaS as a mindset. It’s not so much about setting up a SaaS platform, it’s about what you can do with that platform. It’s not so much about selling a product as it is about getting a customer for life by delivering an extraordinary experience. The real work begins after the sale.
One of my hobbies is extreme sports. I love mountaineering. I spend an inordinate amount of time reading Gearguy in the magazine Outside. The jacket hard shell Arc’teryx is getting easier next year! Will Lowe Alpine make a 25 liter backpack without the annoying crossover loop? This means nothing to a weekend hiker, but to a mountaineer these details are very, very important. And when a new product comes out, the question is what is the best place to buy it. I drive my wife crazy by checking the prices at The North Face outlet on the outskirts of Madrid.
But what if you decided to be like Alex Honnold and only use products from The North Face? What if TNF was like Netflix, in the sense that in exchange for paying a monthly fee, I could have access to an experience that is far superior to that of their retail customers? If you could talk to your product designers about what I like and what not, you could help them design the products of the future. Eventually, if I gave them some information about how I use their products, they would know what I need before I do.
A good first question in a master class is, “How did Warren Buffet get rich?” Everyone knows it is one Value investorBut far fewer people know in which industries they have invested. At least one of the answers is the insurance industry. Buffett has said that if he hadn’t bought an insurer, “Berkshire would be lucky enough to be worth half what it’s worth today.” And because? For the “predictable and recurring premiums”. The wise man from Omaha was interested in SaaS business models even before the cloud.
In almost every way, Irish retailer Primark has done what any professor in a business school would advise. Experiment until you find a formula, then reproduce it until all else is excluded. This allows it to grow exponentially. When analysts selected British online fashion and cosmetics retailer ASOS, Primark was putting queues in front of its stores on main streets in Europe. Then came the coronavirus pandemic (COVID-19) and all of their stores had to close. Without an online channel, his sales rose from £ 650 million per month to zero. ZERO.
The expansion phase of a company occurs after finding a scalable business model that can be replicated through experimentation. The main advantages result from the tight integration of an ERP (the English acronym of Enterprise Resource Planning o Enterprise Resource Planning System) with a SaaS platform. It takes patience and time, but the result is steady income, low sales, and high margins that grow every year. An excellent reference text for those new to the field is the book by Aaron Ross and Jason Lemkin From Impossible to Inevitable: How SaaS and Other High-Growth Companies Generate Predictable Revenues published in 2016.
Jason loves to chat about the rise of SaaS Deka Grains – over 20 companies valued at $ 5 billion or more. Those horns are: Salesforce $ 180 Billion, Shopify $ 90 Billion, ServiceNow $ 70 Billion, Zoom $ 48 Billion, Atlassian $ 45 Billion, Workday $ 40 Billion, Square $ 35 Billion Dollars, Veeva $ 30 billion. $ 29 billion, $ 29 billion Twilio, $ 23 billion RingCentral, $ 24 billion DocuSign, $ 23 billion Okta, $ 22 billion Datadog, $ 17 billion Slack, $ 17 billion CrowdStrike, $ 15 billion USD Coupa, USD 15 billion, MongoDB USD 13 billion, Wix USD 11 billion, Dropbox USD 9 billion, Cloudfare USD 9 billion, Zendesk USD 9 billion, Avalara USD 8 billion, Hubspot USD 8 billion and Five9 $ 7 billion. And that is just the beginning! The real benefits will come when the software world connects with the physical world. As with Apple, business also plays a role here.
Scott Galloway is Professor of Marketing at New York University’s Stern School of Business. You may know him from his bi-weekly podcast with Kara Swisher on Vox from the weekly show Prof G. or your new program No mercy, no malice on VICE TV. Scott loves “recurring income packages”. He argues that deep down, consumers want LESS, not MORE choices in their busy lives. You’re willing to bet on a brand 99% of the time if they believe the brand won’t let them down. It is actually an extension of Clay Christensen’s “jobs to do” approach. In sectors like the media, clothing, travel, and healthcare, we all want someone to do the “work” for us. For a monthly fee and your participation by applying, the “fear of missing out” disappears. A waterproof jacket from another company might be better, but no one has ever laughed at someone who wears The North Face clothing.
The more I called previous Owners Scaleup program participants to see how they were doing, the more I saw that the challenges they faced stayed the same. You still have no predictable and recurring income, there is no real customer loyalty, there is no information to make decisions about the products of the future. I am thinking of a specific case. Let’s call him Pierre (because that’s his name). Pierre has been successful in most of the things he’s done, but he never had to deal with anything like the coronavirus (COVID-19). He started the call by bringing me up to date, but then the usual problems came up. When the time ran out, he told me the call was very helpful and I wonder when we can talk again. I said, “Pierre, man, I love you, but I’m not in love with you. Call me when you’re ready to admit you’re a SaaS company, until then, don’t waste my time.”