Where are the opportunities for new SaaS ventures?

Almost four years ago, I wrote a post that argues that SaaS will eventually win over on-premise software. At the time, Larry Ellison, Oracle CEO, still argued that SaaS was a fad.

Now, in 2015, it’s clear that SaaS has won the “delivery”. What’s more, SaaS has also created new markets, penetrating customer segments for which an on-premise software solution was cost prohibitive in the past. Dozens if not hundreds of successful SaaS vendors are hitting the market and seem to be covering every single business need in every vertical.

Are there still opportunities for new SaaS ventures?

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Why you should NOT listen to successful entrepreneurs in successful companies?

Once in a while, I bump into some good-sounding advice from an entrepreneur who built a successful business. For example, I recently reencountered an old post by HubSpot CTO and Founder, Dharmesh Shah, titled Failure Is Not The Worst Outcome, Mediocrity Is (which spurred debate back then). Or, I recently read an interview with an entrepreneur arguing why employees’ after-hours activities are important to a company’s success.

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Why are SaaS (B2B) companies significantly different than B2C companies?

In the last few months, since I left my full-time position at Webcollage (and our acquirer, Answers), I’ve had the opportunity to work with many entrepreneurs and early-stage companies — both business-to-business (B2B) and business-to-consumer (B2C).

While B2B and B2C ventures share several areas of commonality (company and leadership values come to mind), it is interesting to notice deep areas commonly different between the two: all the way from the business perspective to the (somewhat surprisingly) technology perspective.

The recent write-up by Michael Eisenberg at Aleph VC highlights one of the key differences and eloquently explains why in many cases the product matters more in B2B companies. The write-up is written from the viewpoint of an Israeli VC (and hence references challenges in hiring B2B/SaaS executives) but the merit of the write-up is agnostic to geography.

See here: Israel’s Subscription Challenge.

Are small businesses doomed to fail, or can SaaS help?

According to the Bureau of Labor Statistics in the US, only 44% of small businesses successfully make it through four years of operation. One reason is that because of their size, small businesses cannot master the skills that larger organizations have (such as marketing, sales, service and technology). So, it should not be a surprise that they have a hard time competing in the marketplace.

One of the areas that has been a weak spot for small businesses is the use of technology in general and software in particular.

From a software vendor standpoint, small businesses were traditionally overlooked as a target market. In fact, in the 1990’s, common wisdom was that successful software vendors should focus on large enterprises, where the money resides, and apply the direct sales model, with a $100K+ price tag. The wisdom at the time was that smaller price tags did not justify a direct sales force, and required indirect selling. Selling through resellers, however, was and still is hard to crack. It’s hard to get resellers to commit to sell a product before it gets traction. And even later, it’s hard to educate resellers to sell a product proficiently.

From a small business point of view, buying software is—simply put–not easy. How can a small business be expected to have the skills to evaluate new software? How can they be expected to master how to operate the software? How can they be expected to integrate it with other software? And, when it comes to on-premise software, how can they afford to deploy and manage the software?

But then SaaS came along.

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Why Facebook was willing to pay $19b—and maybe more—to get WhatsApp on board?

In the last few days the acquisition of WhatsApp for a stunning sum of $19b was the most popular discussion topic in the tech business community.

The reaction to the acquisition cost ranged from criticism (like this Tumblr post suggesting that Iceland may be cheaper, at $14b) to thoughtful analysis of the economic value of WhatApp’s 450 million users (like this CNN Money article) or its SMS volume.

I believe most critics and analysts are missing the point.

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Product Excellence 2013 in Airport City, Israel

On Dec. 5 I plan to deliver a talk on managing product requirements in an agile environment. The talk is planned to cover practical aspects and discuss how we (at Webcollage) manage product requirements and product launch while delivering new software releases to Fortune 500 clients every two weeks. If you’re interested this topic, feel free to come over – take a look here: http://www.productexcellence.co.il/.

 

Answers Acquires SaaS Platform Webcollage

After almost 14 years since founding Webcollage, it is now public information that Webcollage was acquired by Answers (http://www.answers.com).

More information about the acquisition and some of the thoughts around this opportunity are available in this press release.

Without delving into the specific thoughts and opportunities in this merger, I would like to point out the potential in powerful combinations of B2B (SaaS) businesses and B2C (consumer web) businesses. As one example, LinkedIn, which is generally known as a “consumer” (or “personal”) business, generates its revenue by selling its services to (other) businesses (for recruiting and similar purposes). It thus leverages its consumer scale to generate revenue from businesses, essentially operating as a SaaS company.

Similarly, the combined Answers/Webcollage company will have a strong B2C arm with broad reach and strong advertisement-driven revenue (Answers.com is a Top 20 site in the US), alongside with a solid B2B platform and team (coming from our own Webcollage), and with many potential areas of cross-leverage.

More to come…

Planning and Launching Software Products in an Agile Environment

This week, I had the opportunity to speak in the Agile Practitioners 2013 conference. The topic of the talk was Product Roadmap, Planning and Launch in an Agile Environment.

The talk was around approaches to modern product management, and specifically considerations due to agile methodologies and short product release cycles.

Fundamentally, old-style product management assumed software releases are done infrequently, something along the lines of this diagram:

 old-style-cycles

Whereas modern product cycles rely on shorter cycles, something along the lines of this diagram:

 modern-cycles

The assumption in modern approaches is that the road to good software is shorter when making smaller steps and frequent turns than when making large steps and more radical turns. (This is geometrically true in the diagrams…)

Old-style product cycles consisted of three main steps: planning (negotiation, prioritization, scheduling), development (design, coding, testing) and launch (alpha/beta, release, outbound marketing). The main question I was trying to tackle in the talk was how the corresponding activities map to product cycles with frequent releases.

On a side note, some organizations use old-style product cycles (infrequent software releases) while using “agile development” techniques internally (that is, frequent internal releases). While perhaps better than nothing at all, this approach misses—in my mind—much of the benefit in agile software development. In the end of the day, the biggest benefit is adapting to customer feedback, and without the software reaching real customers, value diminishes.

The areas I was trying to tackle in the talk were:

  • How does planning occur in an environment when there’s no defined period for planning (“beginning of the release”)? When the working assumption is that many of the details (and associated effort) will be revealed during the development process. And, how do roadmaps look in such an environment?
  • How do product launches occur in an environment when there’s no defined period for launch, but—instead—software is ready in chunks? How and when does customer feedback get incorporated into the cycle?
  • How does one integrate new approaches and opportunities brought about by agile development? Mostly, agile approaches facilitate experimentation through proof-of-concepts and such (with various variants such as MVP, MSP, and lean).

Here are some of the practices we’ve come to follow over the years:

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Product Planning in an Agile Environment – Talk @ Agile Practitioners 2013 Conference

In case you’re in the Tel Aviv area on Jan. 30, 2013, you’re most welcome to drop by the Agile Practitioners 2013 conference. I plan to deliver a talk titled Product Roadmap, Planning and Launch in an Agile Environment.

The talk will revolve around the fact that in an Agile environment, predictability is knowingly sacrificed for flexibility. Agile practitioners assume that what’s being development changes along the way, and that the true effort associated with each new development is only revealed during the development process. They  knowingly release new product functions in smaller chunks. And, they empower individuals and let them drive the process. This essentially makes traditional approaches for managing product roadmaps and launches obsolete.

I plan to cover some approaches and techniques in managing a product in an Agile environment, highlighting some examples from our experience at Webcollage, delivering a SaaS product to a large number of high-profile customers. The current plan is to touch various angles of the conflict, from planning (internal vs. external roadmaps, hard vs. soft commitments), conflict resolution (emergency and time-sensitive issues), release and rollout management (soft vs. official launches, gradual rollout, alpha/beta cycle and feedback management), as well as some additional areas as time allows (documentation).

 

SaaS Adoption Accelerates, Goes Global in the Enterprise

Here’s a recent write-up in Forbes Magazine, which summarizes a Gartner study published last week.