So you want to start a SaaS company

In a recent interview with TechCrunch, I shared why I’m betting on the consumerization of enterprise and why outsiders (consumer product builders) are likely to build the next great product at work.

“The next generation of applications for the workplace sees people spinning out of Uber,  Coinbase  and Airbnb,” 

“They’ve faced challenges inside their highly efficient tech company so we are seeing more consumer product builders deeply passionate about the enterprise space.” Read more here.

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Prior to joining Zendesk, I was on the buy side running nearly a dozen RFPs per year and putting tens of thousands of SaaS dollars on a corporate credit card each month.

I spent 4 years at Expedia scaling from a performance marketing role into the Head of Social Media, which owned acquisition, engagement, customer support (on-shore and off-shore with a tiered escalation strategy) and community (a growing team of in-market brand managers + translation experts).

Expedia, like many high-growth tech companies, have a “do everything in house culture.” We hired SEO, SEM, FB and Customer Support specialists and gave them freedom to choose their own tools. We rarely used agencies and we taught individual contributors how to purchase tools without engaging procurement (within reason and with a goal of freeing up procurement to focus on higher profile projects).

After 4 years of deeply analyzing tools and in some cases engaging internal engineers to build our own, I made the leap to full-time B2B by joining Zendesk to scale the product portfolio from one to seven products include live chat, analytics and tools beyond the core help desk ticketing software.

If you’re thinking about building something for the workplace, here’s what you should know

⚠️ Caution: Tough feedback ahead ⚠️

  1. In the early days of the company, things will come easy.

It feels a lot like building a consumer product, but maybe better (early users pay $) Keep in mind: these users are the easiest to acquire Selling to other startups is a great strategy, but that well easily dries up

Startups churn at a higher rate & have a lower expansion rate. I wrote about the challenges of a purely self-serve business here

2. Purely self-serve businesses are easily commoditized.

Think you’re the only “product person” working on this problem?

You’ll quickly uncover others, especially as you are out fundraising.

To quote @davidu: “Good ideas comes in bunches.”

Some recent example: Tandem/Around & Linear/Height

3. Sales is an achilles heel, figure it out sooner rather than later.

Behind closed doors, every self-serve SaaS companies talks about revenue they missed by not figuring out sales sooner.

Find an advisor who has done it before and build the muscle before you need it.

Keep in mind: Dropbox created whitespace for Box. Microsoft Teams fast followed Slack with an enterprise-grade product.

4. Hiring will get harder and your company culture will change.

Self-serve is a life phase and you’ve chosen to build in a space with an evolving business model I call it “horses for courses”

The people you hire today are likely not the same people you’ll have around in later funding rounds

On the product side, product people love joining self-serve SaaS businesses. But once the core tech is built, those same people don’t want to be handed feature requests from large customers.

Read: Enterprise Products Vs. Consumer Products

On the sales side, there will always be challenges If a sale team doesn’t hit their quota, guess what? They’ll leave for a company where they will In the early days, I suggest a Head of Sales and Customer Success someone who can partner directly with founders.

But eventually, you’ll need to layer in a more traditional sales org If you’re a product person, this will feel uncomfortable Company culture will change and guess what? You’re now running a real B2B company.

As you think about the transition from consumer to workplace tech, talk to folks who have made the switch Be mindful of the changes that come with a constantly evolving business model.

5. The day-to-day doesn’t scale well, that’s the point.

Somedays it will feel like a consumer business, other days you’re flying across the country for one meeting.

But trust me, you’re not flying to SXSW… You’re going to Newark, San Jose, Omaha and Orlando for conferences

You will have to fly to meet customers, save customers and speak at industry events. Welcome to the wonderful world of B2B!

For more thoughts on early stage company building, especially SaaS business models, please subscribe to my newsletter.

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