5 Key Trends from SaaStr Annual 2016

by Drew Beechler - Director of Marketing

Last week, SaaStr Annual 2016 fell upon San Francisco’s Nob Hill neighborhood. Thousands of SaaS founders, executives, and investors showed up for three days of learnings from 150+ speakers including Aaron Levie, Mark Suster, Danielle Morrill, Jason M. Lemkin, Lew Cirne, Dharmesh Shah, and our own Scott Dorsey. This was my first year attending SaaStr Annual and I was blown away by the speakers and content.

After returning to Indianapolis this week, I wanted to share my key takeaways and trends that wove through much of what I heard through sessions and meetings during the conference.

1. Hire Generalists (Athletes) in the Early Days

Hiten Shah noted in his session that at Quick Sprout, they focus on hiring generalists instead of functional experts so they can iterate and experiment easier in the early days.

Auren Hoffman also made the case for hiring generalists noting that you should be hiring “athletes” instead of position players early on.

At High Alpha, we agree wholeheartedly and use the athlete metaphor often when thinking about recruiting and hiring. In the early days, you are still trying to find product/market fit (PMF) and determine the true problem you are solving in the market. Athletes give you flexibility and are able to grow as the company itself is rapidly changing and growing.

2. Stay Close to the Customer

Customer success, customer happiness, and customer engagement were all major themes throughout SaaStr Annual. The “land and expand” sales methodology in SaaS has been proven to be a major success-driver for SaaS business models. Companies are focusing more on customer success and helping customers realize the full potential of the solution they’re offering. You even see this with the emergence of multiple high-growth SaaS companies building customer success management software like Gainsight, Totango, ClientSuccess, and more.

Scott Dorsey said it best in his session saying, “Stay close to the customer…Being close to the customer is so important. You can’t build everything your customer wants you to build, but you can discern what they really need the closer you get to them.”

In the early ExactTarget days, Scott McCorkle, who was the President of Technology at ExactTarget and now the CEO of Salesforce Marketing Cloud, made the commitment to talk to a customer every single day—and he kept to it. Those learnings were vital to the vision he brought to fruition in the ExactTarget product.

In his session on PMF, Hiten Shah noted, “If you don’t have a way you’re going to retain your customers, you don’t have a business.” Customer success is vitally important and I believe will continue to grow in importance in 2016 and beyond. Anthony Kennada of Gainsight told the audience — “Customer success is not a buzzword, but a business model.”

3. Focus on the Data

Along the same lines of customer success, Dharmesh Shah, CTO of HubSpot, gave an amazing analysis of how HubSpot analyzes product usage, customer happiness, and customer behavior to predict retention. He noted, “We like behavioral data. We don’t ask what they think, we watch what they do.”

“Find the customer success metrics that work for you.” — Dharmesh Shah

Dhamesh went on to say, “Don’t wait until after the cancellation to analyze the data.” Oftentimes, companies assume the absence of cancellation means customers are happy with the product, but that’s not true. You have all this data at your fingertips just waiting for you to turn it into action.

“Big data” has been in the buzzword limelight for the past few years, but a focus on the data doesn’t necessarily mean you need a data scientist on your team. The main takeaway from the focus on data at SaaStr Annual is that data is only meaningful if it’s actionable. Data should be used to drive better decision-making, not just to measure performance on a scorecard.

Leo Widrich, Co-Founder and COO of Buffer, also gave early-stage startups a warning to not get stuck on data too early when you have extremely small sample sizes.

“Most early-stage startups won’t have enough customers to rely on quantitative data — you need to be acquiring hundreds of customers a month to do that. Use qualitative data instead.” — Leo Widrich

4. Have a Passion

As I listened to some of the most prolific SaaS founders tell their stories and give advice throughout the week, you could visibly see the passion they had for the problems they were solving. High Alpha Managing Partner Scott Dorsey told founders, “Be really passionate about the problem you’re solving.”

Dharmesh Shah mirrored Scott’s sentiment saying, “For breakthrough success, it requires something more than technology and features. You need a philosophy.”

5. CAC, LTV, and Unit Economics Matter — A Lot

Being a numbers guy, I can easily spend hours looking at data and have always had a love for analyzing CAC, LTV, churn, etc. On Wednesday afternoon, we listened to back-to-back sessions with Tomasz Tunguz (Redpoint Ventures), David Skok (Matrix Partners), and Byron Deeter (Bessemer Venture Partners) that all focused on SaaS metrics.

The takeaway was clear — unit economics should be top-of-mind for SaaS companies. In the volatile market environment, unit economics and cash efficiency will become even more important. David Skok’s slide to the left gives a number of helpful tips for reducing CAC and increasing your LTV.

We heard a great deal throughout the week about the downturn in the public SaaS markets and the impact on private valuations and fundraising. The truth is, great companies solving real problems will still get funded, companies will focus more on sustainable business models (as they should), and optimizing for growth, profitability, and cash will become more and more important.

To read my recap and watch recordings of specific SaaStr Annual sessions, check out the links below:

For videos from all of the mainstage sessions, you can check out SaaStr’s livestream recordings here.