On Day 1 at SaaStr Annual 2016, Hiten Shah, co-founder at Quick Sprout, and David Cancel, CEO at Drift, were joined on-stage by Alison Wagonfeld, Operating Partner at Emergence Capital to discuss finding product/market fit (PMF) for SaaS companies. Below is a recap and key takeaways from their discussion
Willingness to Pay and Unsolicited Positive Feedback Are Key to PMF
David Cancel noted that in the B2B world, it’s easy to find signs of PMF — money and repeatable revenue are the major metrics to look for. The amount doesn’t necessarily matter, but getting someone to use something for free vs. using for a nominal charge is a big chasm.
“Willingness to pay is key.” — David Cancel
Hiten countered saying that willingness to pay is great, but in a freemium SaaS model, the first thing I look for is inbound emails, tweets, and things like that reflecting that we’re solving the problem. Unsolicited positive feedback and alignment on solving the problem you’re trying to solve are great indicators for PMF in freemium products.
Assume You’re Wrong
David noted, “When thinking about PMF, assume that you’re wrong.” You need to put your ego to the side and realize that most of your assumptions are wrong — get out there as soon as possible to start validating those assumptions.
Hiten went on to say that PMF changes as something better comes into the market. It can even go away over time. His piece of advice was to pay attention to where customers are switching to and from at all times.
Customers > Competitors
“Try to obsess around customers, not competitors.” @dcancel #SaaStrAnnual
At Drift, David noted that they are focused on everything that happens after go-to-market and sales. They are focused on what happens after you sell a customer and learning from them.
“If you don’t have a way you’re going to retain your customers, you don’t have a business.” — Hiten Shah
At Quick Sprout, they are designed around learning. Everything they do is to maximize learning. They hire more generalists to be able to rapidly iterate and experiment in the early days. When you don’t need to scale the product yet, keeping the team very small and generalist is extremely helpful.
Another way they maximize learning (and one of my biggest takeaways from all of SaaStr Annual) is to have everyone be part of the “support” team — especially engineers. In the early stages, Hiten has been head of both product and support in his previous companies. There is no better learning than from talking to customers calling in for support issues.