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Prasanna K
@prasanna_says
, 10 tweets, 3 min read Read on Twitter
Founders moving to SaaS from on-premise software products or services seem to confound a few differences that make SaaS distinct from traditional software sales.

1/
The most basic difference between the two is that in a traditional sale, it is a transfer of ownership whereas in SaaS, it's a rental

But since software is anyway an experiential good, this distinction is not easy to appreciate

2/
Personally, I would break down the modern SaaS movement into 3 distinct parts:

Deployment
Marketing
Pricing

One of these being most important for me to call it SaaS

3/
Deployment: How Products Are Distributed and Used

Marketing and Sales: How Software Is Bought and Sold

Pricing Model: How Is Software Paid For
4/
For SaaS the billion dollar question is:

How do you build a flywheel?

Key Is being able to go round & round, faster and faster, speeding up with every rotation

See Veeva, Atlassian, Zoom, Adobe, Hubspot revenues for how this plays out.

5/
IMO the key to becoming a SaaS business is to provide a software product with recurring subscription billing that scales with the customer value delivered

It may be multi-tenant on-cloud, or a mobile app, a desktop download, or on-premise.

6/
It may be a marketing-lead buyer-driven process with an Annual Contract Value (ACV) of $10, or an outbound complex sale with multiple decision-makers and an ACV in millions.

7/
On the flip-side, if your billing is NOT recurring, then it’s NOT SaaS
If billing is 20% recurring, then you’re selling licenses with an AMC.

If 1st year billing is 60% recurring subscription and 40% one-time, I hope you’re selling to mid-market or enterprise at ACV of $50K+

/8
In summary, pricing is the most critical element of SaaS - recurring revenue software product.

Everything else can be buyer-driven.

The best ways to learn?
Follow @Patticus & @trengriffin
Read monetizing innovation by @MadhavanSF

/9
Transitioning from software sales to be a #ValueSaaS business?

Hardest & most lucrative for you to adopt:

Value based pricing using willingness-to-pay
Appropriately designed plans
Customer Success to reduce churn
AM/CS for net negative dollar churn thru upsell

Profit!

/fin
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More from @prasanna_says see all

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Prasanna K
@prasanna_says
In SaaS, if you get it right with your first $1Mn of ARR, then you can grow much faster to your $10Mn. If you don't have the "right" $1Mn ARR, then it becomes impossible to grow thereafter, and harder to turn a moving ship.
1/
Assuming you have some initial PMF and some initial revenue (say ~$300K)
0. Know your customers. eg. @amitdmishra of @InterviewMocha spoke to 100+ of their customers and found that they had different use cases, and could be assigned to different segments.
2/
1. Reduce Churn (use ChargeBee/Profitwell/etc.). e.g. @jimit_ab of @socialpilot_co found immediate impact, and longer term deep understanding of monthly churn when they implemented these tools. In the first month they saved more than the cost of the tools!
3/
Read 8 tweets
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Prasanna K
@prasanna_says
To my friends & class-mates & colleagues. If you're thinking it's too late to startup - you're probably wrong :)

Age & wisdom make a startup far more likely to succeed. Even if you won't get breathless media like a 21 yr old dropout :)

/1
Step 1: Ensure you've built up a nest-egg to manage your finances for 2-3 yrs at a low burn-rate. Get your spouse to support you. It will take time to start getting serious cashflow. Until then you want to reinvest into the business.

/2
Step 1: Ensure you've built up a nest-egg to manage your finances for 2-3 yrs at a low burn-rate. Get your spouse to support you. It will take 3 yrs for you to start getting serious cashflow. Until then you want to reinvest into the business.

/3
Read 8 tweets
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Prasanna K
@prasanna_says
How can I start up a SaaS company without any money?

B2B SaaS startups are the easiest among startups to start with very limited resources. 1/
The key ingredient for a B2B SaaS startup to succeed is deep domain knowledge. The most lucrative way to get deep domain knowledge is to build software via a services model for several companies in the same domain in roughly the same areas. 2/
Typically you will do this for mid-market, or enterprise customers, who you already know and who already trust you. Alternatively you can do complete workflow solutions for an SMB, that will deliver substantial value to the SMB. 3/
Read 7 tweets

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