How to Build a SaaS Business That Outlives You

Growing a subscription business is hard work (really hard). You only have so much time, and you should spend that time focused on your customer and your product. Profitwell delivers outcome-centered products that reduce churn, optimize pricing, and grow subscription business end-to-end.

Mr. Campbell opened the discussion by saying, “Two big lessons that we're going to talk about: finding leverage and seeking truth.”

Finding Leverage

About this topic, Mr Campbell said, “A lot of us have very little background or frameworks when it comes to actually understanding and increasing our leverage, [which] I've found to be extremely important, especially as a ROI driven, resource-constrained company. What I mean by leverage, is using as little or using as [many] creative resources in order to get some sort of an outcome. Because oftentimes what happens is in our business... there are so many different things that happen that are really good and there are so many things that happen that are really bad.

The model that I like to use is this “breakout” cycle rather than the “freak out” cycle when something bad happens. No matter if there's a really big thing that you're having a problem with - like growth is slowing for the third quarter in a row - or you have something that's super small - like a support ticket [issue] - I really like to use something called: Problem, Cause, Solution. If we take that problem, and we break it down into the different causes, we can align those particular solutions to those causes and we can evaluate, and then figure out, what the proper solution is, to the largest cause, so we can push things forward.”

He continued by saying, “So, this is an example from ProfitWell...all of a sudden a company called ChartMogul came out - and a bunch of other companies [like ours] came out - and because we were all building on Stripe, initially there were 35, 36, 37 different companies that were as brilliant as we were. And, to make matters worse, Stripe actually invested into Baremetrics. Our one business and integration partner invested into our competitor!

We started to explore the problem, rather than just building more stuff to push into the market. So we went out, we collected some data. We found out that no one was really happy with the accuracy of these [analytical] products. And, people really just don't want to pay for a lot of SaaS metrics.”

About the graph, Mr. Campbell said, “Analytics products essentially exist on a spectrum that goes from data products, analytics products, products that help with insights and then products that help with outcomes. What we found is that on the left side of this particular graph - if you weren't an infrastructure product - you weren't really making that much money. And, on the right side of the graph, you were actually in a good place because willingness to pay increased. NPS also increased with the products that were further on the right of this particular spectrum.

Because of what we found - the unhappiness, the problems that were out there and those particular causes that play to our strengths - we ultimately made Profitwell free. We focused on accuracy for 18 months - meaning no new features; just getting things to be accurate. Then we started to execute on this particular continuum, and worked to push all of our paid products essentially to the ‘outcomes’ and the ‘insights’ piece.

This was a problem that we had... one that most of the folks in the space handled by just shipping stuff or going up market, like every analytics product under the sun. We wanted to focus on the actual causes and where we could solve those particular causes.”

By taking a different approach than the competition, Profitwell was able to leverage their strengths and grow their company exponentially.

Truth

Mr Campbell approached this topic by saying, “I need to play a little bit of a game with the audience. It's a psychological experiment. I'm going to show you a couple of prompts and I want you to emotionally take into account how you feel about those particular prompts. If you believe them, if you don't believe them, if you're rooting for them, if you're not rooting for them, but just listen to your emotions for these next particular prompts.”

He made four statements: 1) Founders who sleep less than five hours a night, grow slower. 2) Companies with institutional funding have higher churn rates than those who are bootstrapped. 3) Founders with hobbies or who score high on a work life balance index tend to have slower growing companies. 4) Remote companies have considerably worse growth and worse retention than those companies who are co located.

As much as you may not believe them, all of those statements are true. If you feel some resistance to accepting these facts… you’re not alone.

About this Mr. Campbell said, “A lot of you fall privy to what's called the ‘backfire effect,’ which is basically a psychological phenomenon... that when data or information disagrees with your natural inclinations, your brain actually fires as if a giant bear was attacking you. It's the exact same receptors within the brain that go off.

And the problem is... if you're a founder, or you're an executive, and this is how you react to things - you only agree with the data or the information that supports your claims - you're screwed.

There are so many things where you get hopped up on your vision and in reality those particular things aren't necessarily the pieces of your business that ended up being the actual truth. And these are the things that cause you to overreact to your team. These are the things that cause you to ruin your personal lives with your loved ones or your friends. Because we don't look for truth. We simply look for the things that replicate the views that we already have.

And so as a founder pursuing truth within a business, how do we do this?

The thing that's really helped me is this concept of the most charitable interpretation principle. Which basically means that when someone comes to you with something - whether it doesn't sound that well-thought-out, whether it's a piece of data, whether it's an idea that you just inherently think is stupid - assume that they have good intent. Assume that they're smart. At least start the conversation that way because there's so many things that are going to happen in your business.”

In closing, Mr Campbell said, “I really looked into what I actually wanted [for ProfitWell], and what I wanted was to build a company that solved problems better than anyone else; and to the ‘final truth’ of subscription growth.

Many of us ebb and flow between what we want, based on the people around us. Our investors, our advisors... you have to find your central, confident truth of what you're trying to do. So... two lessons: leverage and truth. And last thing I'll leave you with is... you are the only person that can solve this for yourself; ultimately, as the steward of your company.”