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MenuWhat are the main challenges facing B2B SaaS startup CTOs with regard to product development?
I suppose the answer varies depending on the growth stage of the startup.
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I was just speaking with a colleague about this as we are both starting new startups and were reflecting on our previous projects together. In hindsight we recognize that one of the main challenges was proper expectation setting around adoption and engagement. If someone else is setting those expectations for you, it can be challenging to live up to them unless that person is familiar tech startup analytics. Not every business is a unicorn. You have to learn how to survive and grow when things don't go viral. Once you set expectations accordingly you're able to focus on what really matters and hone in on the user experience to identify what is sticky. You may have a long roadmap of features on your wish list, but it may not be what people want or need. Be open to pivoting and listen to your users.
One of my favorite quotes is actually by LinkedIn Founder Reid Hoffman, "If you are not embarrassed by the first version of your product, you’ve launched too late." Being in tech B2B and product development for almost 9 years now, I completely agree with this statement. There is so much you can learn from getting your product out into the world and in people's hands; invaluable lessons that you can't learn coding in a silo.
Here's a great book for user engagement analytics: Lean Analytics. Also, happy to share my experiences on this topic.
In my experience the hardest thing facing a CTO is the very nature of the ever-changing world of web applications. In other words, stuff changes real fast!
We started prototyping an MVP back in November 2015, and now since we've been looking to pivot, we've found that we're approaching our stack very differently. Frameworks have been updated, some drastically, some open source software we used is now deprecated and non-supported, other software we built our app upon has shown to not be scalable enough, and so on.
One has to just make a decision to commit to their stack and work with it, or (if absolutely necessary) make sure that the application you are building is built in such a way that you can still take it apart and put it back together again on a different stack – which we did actually.
For me personally, I like to make sure that the application is well documented from the beginning and designed first on paper (or online sketches), with a database structure clearly defined, routes documented, and the flow of the user experienced explained in human-readable text. If that is done well, then changes to the stack will have a lesser impact on the path to your MVP.
Also varies depending on product, which might be a...
1) Front facing Website
2) Membership Website
3) API
Each have their own unique characteristics.
In general though, all systems bottleneck around disk i/o, so if you have a database heavy application, ensure you have someone who understands how to design tables for extreme speed.
And if you still require more speed, run a memory resident database, which must...
1) Sync from disk to memory when database server starts.
2) Periodically sync from memory to disk during runtime.
3) Do final sync, when ever database server stops, to bring disk backing store consistent.
Memory resident databases are a bit tricky + produce blazing fast throughput.
Trying to build technology around an ever-shifting business model is super tricky.
Finding reliable help is also a common challenge.
Related Questions
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How do you get a product prototype developed in China sitting in the US?
It varies and it's very very specific to what you want to develop. The concrete design of your circuit matters. Also prototype building costs are usually a factor 10-100 higher than series. If you already have your prototype then you can shop around various manufacturing companies. To do that, you need Gerber files (your PCB design) and a bill of materials. You also need to think about casing: designing it and creating the mold is expensive. If you don't have your prototype yet, I recommend having it engineered in eastern Europe. Custom engineering is cheap there and high quality. IP protection is a problem. One thing to do is to distribute the work to different manufacturers. For the design phase you are safer if you design your prototype in Europe or the US where international patent laws apply. I could give you more specific advise in a phone call, getting to know a bit better what you are trying to build.GF
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What are the SaaS B2B expectations when paying annually - annual paid annually or annual paid monthly? Is a discount necessary (i.e. 20%)?
Most Software as a service vendors generally don't book annual deals except in highly specialized cases. Most customers prefer to be able to cancel/change anytime they choose. Also, deals done "offline" end up actually often being more trouble than they are worth to administrate especially for a $2988 ticket. Generally, companies don't view prepaying for SaaS products a year in advance as a "convenience" (to them) so if the debate is internal (not customer driven), I'd set this debate aside until it's requested by the customer. Most customers will request a discount to pre-pay annual service. Happy to talk this through with you in a call, to work through the specifics of your situation in more detail.TW
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Does anyone know of a good SaaS financial projection template for excel/apple numbers?
Here is a link to a basic model - http://monetizepros.com/tools/template-library/subscription-revenue-model-spreadsheet/ Depending on the purpose of the model you could get much much more elaborate or simpler. This base model will help you to understand size of the prize. But if you want to develop an end to end profitability model (Revenue, Gross Margin, Selling & General Administrative Costs, Taxes) I would suggest working with financial analyst. You biggest drivers (inputs) on a SaaS model will be CAC (Customer Acquisition Cost, Average Selling Price / Monthly Plan Cost, Customer Churn(How many people cancel their plans month to month), & Cost to serve If you can nail down them with solid backup data on your assumption that will make thing a lot simpler. Let me know if you need any help. I spent 7 years at a Fortune 100 company as a Sr. Financial Analyst.BD
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Freemium v.s. free trial for a marketplace?
It depends on a number of factors but I'd boil it down to two key things to start: 1) What is your real cost to provide a free plan or trial? 2) Who exactly is your customer and what are they used to paying and who and how do they pay today? When you say "online workforce marketplace" it sounds as though you're placing virtual workers. If that's the case, or if you're paying for the supply side of the marketplace, the question is how much can you subsidize demand? Depending on where you're at in the process, I'd also question how much you can learn about the viability of your marketplace by offering a free version, assuming again, that free is actually a real cost to you. I was part of a SaaS project that started charging people for early access based mostly on just a good landing page (we clearly stated they were pre-paying) and were amazed at the response. I've also run a SaaS product that offered free trials and realized that the support costs and hand-holding and selling required to convert from free trial to paid wasn't worth it, this despite the product's significant average ARR. You might be better off providing a "more information" sign-up form (to capture more leads) and let them ask for a free trial while only showing your paid options. I've been amazed at the lead capture potential from a simple "have questions? Click here and we'll contact you" This is all the generalized advice I can offer based on the limited information I have, but happy to dive-in further if you'd like on a call.TW
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What is the average pre-money valuation of a enterprise/SaaS stat-up that is pre-revenue?
There is no valuation until you sell something. An idea or a company is only worth what its sales are. Once you have your initials sales, sales strategy and forecasting length (ie 9 months from first customer lead to close) then you have a formula for valuation. Valuation for start-ups is generally 3.5 x last years sales model should be the growth factor. When you are looking for investors, you will want to have atleast 9-18 months of SALES, not just pipeline and they will be looking at 5x revenue for a 3-5 year payback.TP
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