Friday, October 19, 2012

The 2nd DO for SaaS startups – Build the right team

Continuing my little series using the "minimum viable" approach, here is my

2nd DO for SaaS startups:
Build the right team

I've written about the topic before, so if you've read this post from early this year most of what I'm going to write now won't be new for you and you may want to skip this article.

I'm going to assume that you want to build a modern SaaS solution for the "Fortune 5,000,000" – a great product that's easy to understand and so useful that it will almost sell itself. If your plan is to create a bloated piece of enterprise software with an ugly interface and make it up by hiring a large field sales force from the get-go you might succeed as well, but in that case please don't ask me for advice. :)

Let's start with the founder team. If you want to build a great SaaS product that's (relatively speaking) easy to market and sell you will need
  • domain expertise
  • UX/UI talent, and 
  • a great engineer who can code the application. 
The reason is obvious, you need to understand the problem that you are solving for your target customers, you need a product that looks good and feels good and can be sold online and last but not least, to say it how Dave McClure would probably say it, you need someone to get sh*t done. :) If you're a genius you might combine all of these threes qualities in one person, but it's more likely that you'll need a founder team of two or three persons to cover all three areas.

What if you don't have that SaaS founder dream team – a CEO with domain expertise, a great CPO and a rock-star CTO? If you're only missing the domain expertise that may be comparably easy to acquire. In many (but certainly not all) markets you can probably learn a lot of what you need to know within a couple of months. If you don't have product and engineering knowledge that's tough. In my opinion you absolutely have to have this in the DNA of your company. Don't even think about outsourcing product design or engineering to an agency, I can almost guarantee you that it ain't gonna work. So if your founding team consists of five MBAs who've never built a product before, don't start a SaaS company, build an eCommerce business instead (there's nothing wrong with that either).

What comes next? The first hires after the founder team usually are, in this order:
  • Developers (get even more sh*t done)
  • Someone for customer support (in the beginning the founders should do customer support themselves in order to stay as close to the customer as possible, but at some point you'll need more manpower to deal with customer questions and support issues. Your customer support person will also likely act as your first inside sales person who helps converts trial users into paying customers.)
  • One or more inside sales people (to maximize the conversion of your inbound leads)
  • A marketing person (depending on a variety of factors, this person can also come in before the first sales person)
With the exception of the developers (arguably), these hires can all be pretty junior people – young, smart, hungry people that learn fast. Later in the game you'll need people with a lot of experience, for example for the VP Sales role. But for most positions, most of the SaaS CEOs that I've talked to have a strong preference for "raw talent" and people with the right attitude.

PS: As you know, this whole series is, and will continue to be for some time, a work-in-progress. Any comments or feedback is very welcome!




11 comments:

Magnus said...

What about if the UI talent is missing? I heard that from another accelerator that they would like to see a designer on board. isnt this something you can outsource/buy?

Magnus said...

What about if the UI talent is missing? I heard that from another accelerator that they would like to see a designer on board. isnt this something you can outsource/buy?

Christoph Janz said...

Good question. You can outsource design work to a freelancer or an agency but it may be hard to get a great result without someone internally to give them direction. Also, it's easier to do this for a one-time project, e.g. to get a landing page designed, than it is for an application that is constantly being improved.

Magnus said...

sure, the agency communication should go very tightly with the product guy. But I think, if you dont have a design-centric product (eg. accounting), then it's sort of "expensive" for the company to have a co-founder seat just for a designer, isnt it?
i mean, techies might not be able to create design, but they should imho be able to adapt an existing one ;-)

Christoph Janz said...

I would say that every consumerized SaaS product is design-centric. I agree a founder seat would be very expensive it was just for a visual designer. I'm thinking of a product guy who defines the feature set, manages the roadmap, etc.

Magnus said...

ok, then this would be me ;-)

Christoph Janz said...

Perfect! :)

Stefan Debois said...

Excellent article ! I love the fortune 50000000 idea...
In my experience, the marketing person should be there before the first sales person, especially in a low-touch environment. Typically the first sales activities are done by the ceo him/ herself
I was wondering if you could share some experience on indirect channels to sell this type of SaaS products: resellers, marketplaces, etc ?

Christoph Janz said...

Thanks, Stefan!

Quick comments on your question re. indirect channels like resellers and marketplaces:

* It's not a magic bullet. Many founders think that a good channel will do sales & marketing for them. I've never seen this.
* It can be a significant source of new customers but it adds a lot of complexity and costs a lot of time.

Stefan Debois said...

thanks - I also think that you have to prove first that you can sell your product yourself before having others doing it for you

Patrick Schäffer said...

Christoph, you are totally right, when you say user-specific SaaS product is design-centric. It is a key element of business success. The product guy should always be the UI guy in one person. That's the whole key, if you ask me. This guy should also have a basic understanding of the coding principles so that he can give a coder the direction. A genius, like you mentioned before, that combines all three elements will mostly weaken slightly in one or another way. He definitely needs a second eye on coding the stuff in the most efficient way.

I am currently working on a SaaS product as a maverick but I call a coder for help. It's so important.

BTW: I am seriously toying with the idea of getting myself an invitation to the Spätschicht X-MAS Special. I need to write Fabian and must ensure that he likes my idea first, right? ;-)

Spinnakr Active Analytics