December 17, 2024 • 48 mins
What makes marketers and agency professionals natural SaaS founders? In this episode, David Hart, author of Productized and co-founder of ScreenCloud, shares his journey from agency ownership to building a successful SaaS company with over $20M ARR. Learn how to transform creative skills and strategic thinking into a scalable business model.
What you’ll learn:
- Turning agency challenges into scalable product opportunities.
- The importance of understanding customer needs and validation.
- How content marketing drives growth on a limited budget.
David’s journey offers valuable lessons for marketers aiming to create lasting impact. Don’t miss this chance to learn practical strategies for building your own success story.
Competition time 🏆
Want a free signed copy of Productized by David Hart?
All you have to do is email us at unicorny@selbeyanderson.com and let us know why you should get a copy.
About David Hart
David is the 'Agency-to-SaaS' guy. Having started his own agency which he sold to focus on his SaaS business, ScreenCloud which today is delivering north of $20m in ARR, he's uniquely qualified to talk about the opportunities and challenges involved.
David has since stepped away from the day-to-day of his SaaS business and is working with companies who have a product idea that they want to spin out into a standalone business. He is also a NED of several early-stage SaaS business, an investor and the author of the book, 'Productized: Stop Selling Time and Transition to Selling SaaS'.
Links
Full show notes: Unicorny.co.uk
Watch the episode: https://youtu.be/dL1q94I0CUw
LinkedIn: David Hart | Dom Hawes
Website: davidhart.io
Sponsor: Selbey Anderson
Other items referenced in this episode:
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
I think we spend a lot of timethinking about the answer and not
really much time thinkingabout the question. We're taught
to kind of like, you know, thequestion's easy, just what's creative
is the answer. But actually ifyou put more effort into what the
question is, so what are youreally trying to solve for the ultimate
end user? And actually, if youcan spend more time thinking about
that than saying, hey, I'vegot a great idea how we can use this
(00:21):
technology.
Rule number one, you are notthe customer.
Because of my background,they'll say, oh, I've got this great
idea for a SaaS business. CanI show it to you and you can tell
me what you think? Yeah, youcan do, but it's kind of a relevant
what I think because I'm notyour customer, you know, I could
blow smoke up your ass if youwant me to, but actually you'd be
much better off talking to anactual customer than me. For B2B
SaaS, unless it makes peoplemoney, saves people money or keeps
(00:43):
them compliant, anything elseis a nice to have and you're never
going to scale that.
Hello and welcome to theUnicorn Marketing Show. Now today
I've got a real treat for you.I'm going to talk to you about how
you could be the next SaaSleader and how you can build your
(01:07):
own software business and makemillions. Now, the reason I can do
that is because today, todaymy guest is the extraordinary David
Hart. Now, David Hart has beenthere and he's done it. He's written
a book about it calledProductized. And he is coming to
us today to talk about whymarketers make excellent entrepreneurs.
I first met David about 25years ago. We were actually competitors
(01:29):
at that time, but we got toknow each other and liked each other.
We worked together for a yearand then we went in different ways.
He went off to start an agencyand from that agency he built a business
called ScreenCloud. And thatbusiness grew to 20 million ARR and
is still going. And when Davidgot back from the usa, he and I got
back in touch and I thoughtthat you might like to hear from
(01:51):
him. So this is how ourconversation went down.
Happy to be here.
Back in the day, like beforethe millennium, if anyone can remember
or if you, if they were bornthere, we were. We were in opposing
companies in London.
Yeah, we're kind ofcompetitors in a kind of industry
that wasn't particularlycompetitive because there was so
much money floating around.And it was the, yeah, the dot com
(02:13):
boom before its inevitablebus, the Incubator world. Yeah. So,
yeah, my company was Brainspark. And you. I don't know who invented
the park or the spark thing,but you were Gorilla Park.
Gorilla park, yes, indeed.Yeah. I noticed actually these days
a lot of people who were mycolleagues at Gorilla park have airbrushed
it from their CVs, really,where it's like the whole incubator
(02:33):
thing was a slightlyembarrassing thing to admit having
belonged to, because it was so mad.
Yeah. I mean, we were talkingearlier about some of the money that
was, the budgets that we weregiven to do parties and things like
that. And I remember at thetime thinking, this is absolutely
cr. I love it, but I willnever see anything like this again.
And sadly I never have becauseit was so much fun at the time. But,
yeah, really unrealistic as asort of sustainable way of going
(02:57):
about things.
It was. But you see, what Iquite enjoyed, though was I think
we started 16 or 17 businessesat Gorilla park and seeing all of
those things go from ideathrough to almost viable business,
I think. And it was aportfolio game. So I think we were
saying earlier. I think weboth each had three or four businesses
that went on to do really well.
Yes.
So the business model actuallywas perfectly good. Yeah, we just
(03:20):
ran out of money gettingthere, I think.
Yeah. And, you know, sentimentchanged and. Yeah, we managed to
IPO, actually, just. We justIPO'd just before sentiment changed.
So I think you hadlastminute.com and about two weeks
later we floated and I thinkeveryone at the time was going, hang
on, lastminute.com is worthhow much? And it. Yeah, it was kind
of the beginning of the end,really, but blimey.
(03:41):
And then we had a very shortperiod where we sort of coexisted
in almost an agency.
We kind of had this notionalidea, hey, we should come together
and create a bit of an agency.I think I had, had. I had one client
that was Pearson and I waspretty much just working for them
and then just billing itthrough the company. But it was,
you know, I think you and Iboth probably felt the same. It's
like we. We want to kind of dosomething on our. We want to build
(04:02):
our own thing. Yeah. I thenactually went to work for an agency,
so I kind of went back, wentto work for a company called Reading
Room, which people might haveheard of. They were soho based agency.
I met my two co founders there.
Okay. For Cogent.
For Cogent, which was theagency we. We then started in 2004.
It was a good agency. I mean,I was following, following it, saying,
(04:25):
shit, why didn't I just hangon to his coattails? But I remember
following. I rememberfollowing. You did some really cool
work there, but you at onepoint then decided with your co founders
to change the business model.
Yeah.
Away from being an agency,towards being a product company.
Talk to me about that.
Yeah, So I think we flirtedwith products from quite an early,
early stage, actually. We. Ithink the thing that worked well
(04:48):
for us to start with wasmobile apps. And it was just because
we had a team that werebuilding in Flash and if you remember,
Flash kind of disappeared andwe were like, what do we do with
them? Do we make themredundant or do we kind of do something
else with them? So we said,right, you know, learn how to do
mobile apps, because that wasthe thing that was coming along.
And they did. And just to, youknow, they just launched a kind of.
(05:10):
It was a phrasebook app. Wecalled it a language app. It was
called Learn Thai because wehad a load of developers. We had
an office in Bangkok and.
It did really well, reallystrategic. You thought about, where's
the market opportunity here?
Yeah, accidentally. It didquite well.
That's fantastic.
And we also, because we'vedone quite a lot of work in the agency
for CBeebies, we also decidedto create some kids apps as well,
(05:32):
and they did pretty well. So Iremember there was one time at Christmas,
it was a Christmas thateverybody had been bought iPads,
and we came back afterChristmas and suddenly our revenue
had gone through the. Throughthe roof. And I kind of like, man,
we've. We've made more moneyfrom these products than we actually
pay ourselves individually asowners of the company. I was like.
And it gave me an insight, Ithink, into the potential for scale,
(05:55):
the potential for generatingrevenue when you're not necessarily
in the office doing stuff soyou could sell. It didn't make any
difference to us whether wesold one app or a million apps. It
didn't make any difference. Itmade a difference to us in terms
of revenue, but in terms ofthe costs to us were negligible.
So, yeah, I think that was thething that it started the bug, if
(06:17):
you like. And initially wekind of thought, well, we'll just
build a portfolio of products.And it was kind of this idea of great.
It can level out some of thepeaks and troughs and it's another
revenue stream. And didn'treally think much beyond that. And
then I think, yeah, as timewent on, we decided we were kind
(06:39):
of done with the agency worldand we really loved product. I think
I said, yeah, I think we did15 products in all. And we saw really,
wow. We. So, yeah, but a lotof them were rubbish. But we sold
four of them, which is good.To private equity company. To some
private companies. And then wewere kind of thinking, well, maybe
(07:00):
this is what we do. We becomea product studio and we have a portfolio
of products and we startedtalking to investors. And I remember
taking this investor out. Imet an investor somewhere, I can't
remember where. I said, can Itake you out to lunch and buy you,
you know, buy you lunch andpick your brains? And I'm thinking,
I'm going to tell him thisgreat idea. And he just went. I said,
yeah, so we're going to. Canhave all these products and we're
(07:20):
looking for funding to investin all these product ideas. And he's
like, no one's going to investin that. I was like, really? Because
why would I, you know, whywould I give you the money to go
and decide what you're goingto. That just doesn't work. So I
was like, oh. And it made uskind of think, you think again. And
eventually we said, look, ifwe're going to do this, I think that
probably the way to do it isto focus on one thing and sell our
(07:44):
agency and just focus on thisone thing, which was ScreenCloud,
which was a SaaS business. Weended up.
That's a big decision.
Yeah. And it, and it makes itsound like it happened overnight
and it didn't. I think the bigthing that we decided was that we
were going to be a productcompany and not an agency. That was
the first thing that wedecided. I think once we had that
decision made, then that wasour kind of North Star and we were
(08:07):
just focusing on that. We'regoing to be a product agents, product
company. We don't quite knowwhat that will look like, but that's
where we're going to end up.And I think as we had more discussions
with people, we realized itwill always be a side project. If
it's a side project.
Yeah.
And we. One of the products wehad was a SaaS company tool called
Twillert, which is a Twittermonitoring tool. And it got up to
about 30,000 pounds in monthlyrecurring revenue, which is great.
(08:32):
But, you know, it just nevergot beyond that. And actually it
started to go plateau and gobackwards and it wasn't really until
we properly went for it thatthings moved. And that's what happened
with ScreenCloud and it, youknow, today, ScreenCloud's like,
north of $25 million in annualrecurring revenue. It obviously the
best financial decision weever made. It is scary because you're
(08:54):
kind of. There's a point aswell at which you kind of. There's
no going back. So we wereraising money and we went to see
a VC and they were like. Andwe decided we were going to sell
the agency, but obviously youcan't just sell an agency overnight.
And we were kind of. So hesaid, this is interesting. ScreenCloud.
So what's this cogent thing?And you're like, ah, don't worry
(09:15):
about it, we're selling it.And he's like, interesting. I need
you to sign a side letter thatsays you haven't sold it by the time
I put my money in. You have toclose it down.
Oh.
So, yeah, so it was kind oflike, okay, well, this really is
the point of no return at that point.
Wow.
But, yeah, so those kind ofmoments were quite scary.
When you made the decisionthen to switch, did you, did you
(09:36):
have recurring revenue or wereyou still on in development and kind
of early market?
I don't think we were atrecurring revenue by the time we
made that decision, if I'm honest.
Big leap then. Big leap.
But we were, we were prettyconfident that this was a good idea.
And I think we'd also got tothe point where we said, you know
what, we're done anyway. Weeither close the agency down and
go and work in a pub or we goand do this other thing. Because
(09:58):
I think we were just done withthe client stuff.
That's really good foundation,I think, for what we're going to
talk about today. Now, thereason I asked our team to get in
touch and bring you back in.You wrote this book, Product Ice.
You talked about the wholestory. We have four copies of this
which we're going to give awayat the end of today's show. And you've
very kindly signed them. Thankyou very much. I actually have a
(10:20):
fifth copy, but I've read it,so whoever gets that one, it's already
read. Productization is muchon everyone's lips at the moment.
I think, you know, the agencyor the client agency relationship
is changing. That kind ofdreaded in housing thing that, you
know, it's a pendulum, isn'tit, that swings backwards and forwards.
But I think agencies andclients are looking for a different
(10:40):
type of relationship. And Ithink one of the things that excited
me about what you've done isthis is we're not talking about physical
product. We're not talkingabout package time because both of
those obviously are product.So one of the big trends in agency
at the moment is to productizeservice, but that's still time based.
Even if it's, even if it'ssold as a product, it's still time
based. And, and after ourpaths diverged in the early noughties,
(11:04):
I got into product companyphysical products. And that comes
with a whole other load ofother headaches like inventory and
supply chain and all thatother, yeah, crap digital products.
Totally different, of course.And so today we're going to explore,
I think, why we think that orwhy you think particularly that marketing
people generically, but agencypeople specifically make really good
(11:26):
SaaS founders. Before we dothat, let's start with some of the
challenges that you faced inthe early days of ScreenCloud. So
we've got the foundation,you've sold the agency, you're now
100% SaaS business. You've gotto go build a market, build an audience.
Talk to me about the challenges.
One of the big challengesobviously is that we had no idea
what we were doing. And as anagency founder, I think you do have
(11:48):
certain superpowers that giveyou an advantage over someone who's
maybe just come out ofbusiness school or something like
that. But nevertheless, therewere things that we didn't understand
about SaaS. We didn't really,I didn't really understand quite
how compounding revenue wouldgrow. And I remember when we first
started and we did maybe $400in the first month and 600 in the
(12:09):
second month and I was like,man, at this rate, it's going to
take a century before we getback to the revenues that we were
generating in our agency. Andit was pretty scary. I didn't realize
quite how those things tickedup. So, yeah, I mean, the big challenges
for us was a not reallyunderstanding that much about SaaS.
When you're an agency owner,you're, you're selling in much more
of an enterprise way. You'regoing in, you're meeting the client,
(12:30):
you're kind of doingdiscovery. We were selling $20 per
screen per month product withmaybe, I think the average value
was about $60, $65. So youcouldn't afford to do that, so you
had to automate everything. Sothere was a load of things that we
had to learn around that. Youknow, your, your customer acquisition
(12:52):
cost has to be really, reallylow if you're only charging 65 bucks
a month. And so yeah, we justhad to kind of figure out how we
were Going to drive customers,how we were going to automate them
through. We gave, we did it asa free trial. Yeah, so lots of things
that we'd never done before. Iguess more of a kind of mass marketing
(13:12):
as opposed to your moreaccount based marketing that you
might do in an agency.
My experience of startingthings is there are wise old sages
who tell you it's a reallydumb idea. No one's ever going to
buy it, it's not possible. Didyou have any of those naysayers that
you had to screen out?
The unique thing about us wasthat we were coming at it completely
from a software perspective,whereas the industry as a whole was
(13:34):
hardware vendors. So reallythey were selling screens and media
players. That was their thing.And software was a bit of an afterthought.
And we were like, well, hangon a minute. The thing that got us
to think about this as aproduct is that at the time everyone
was buying these Fire TVsticks and Google Chromecasts and
making their TV SM art. And wewere like, well, hang on, we can
watch Netflix on our TV athome. Why can't we put stuff on our
(13:59):
screens in the office? Andthat was the kernel of the idea.
And so we just said, right,we're just going to build something
that works on an Amazon FireTV stick. And I remember we went
to a kind of conference andlots of people there talking about
bevel edges and pixels andstuff like that. And we were like,
oh yeah, we're just going todo these things on these weedy little
sticks. And they were like,kind of almost like patting us on
(14:21):
the head saying, good for youwith your little niche idea. Good
luck with it. You know that'snever going to work. No, you can't
run a professional digitalsignage network on an Amazon Fire
TV stick because that's aconsumer product and you need these
$10,000 commercial products.And we were like. But obviously in
our naivety we just thought,well, you know, I think, why not?
(14:44):
Yeah, let's just, let's do it.And actually what it turned out to
be amazing because lots ofother people were thinking the same
thing. And most of ourcustomers in the early days were
greenfield. They'd never donedigital signage before because it
was prohibitively expensiveand cumbersome. And they were probably
saying the same thing as us,like, hang on a minute, these little
things, can't we just do stuffon that? So there were naysayers
(15:05):
and actually, probably if we'dbeen more, if we'd known about the
industry a bit more, we mighthave been put off because we might
have thought, oh God, youknow, nobody, we look like idiots
if we try and build a digitalsignage network off these consumer
bits of hardware. But then 12months, 18 months later, everybody
(15:25):
was copying us.
That's a superpower. I thinksometimes when you go into market,
sometimes we're going to talkabout validating ideas a little bit
later. But I think sometimesyou don't want to over validate because
I was at an event yesterdayactually where people were talking
about speaking to customersabout what they want and then delivering
it. And we've had that as atheme on the podcast before. But
often customers don't knowwhat they want and they would know
(15:47):
about the prohibitive costs ofhardware. And so if you'd gone to
a customer and say, hey, wouldyou, can you see yourself using this
kind of device? They'dprobably said no. Yeah, but I think
that self belief is reallyimportant in the early stages.
At the time, the digitalsignage industry was a different
type of, it was, it wasservicing a different type of customer.
So effectively we kind ofhelped open up a different market.
(16:09):
If you looked at the Gartnerreports back then and it was saying,
well, you know, what's thepotential size of the market? It
was pretty small because theywere assuming, I think that people
would just, it would just bethis group of people that bought
these, you know, people likeMcDonald's who would have vomit proof
screens or something. But mostof us don't need those. It's fine,
(16:30):
we can just use a normal tv.
You still had to market andget, or communicate I should say,
and launch yourself in amarket with some pretty big players
and presumably you didn't haveenormous resources to do it. Talk
to me about how you went aboutgetting awareness.
I think there were two keythings. One was deliberate and one
was accidental. We didn't haveenough money, as you say, to do,
(16:53):
you know, an advertisingcampaign. We'd raised a little bit
of money to start with more ofa. We did an angel round to start
with friends and family. So wedefinitely couldn't afford to do
Google Ad campaigns oranything like that. So we, what we
did is just invested incontent and we hired a brilliant
person called Beth who justworked for us. She used to work for
our agency actually. And thenshe went freelance and started working
(17:14):
for us part time. And we justsaid, can you just write three articles?
I mean this is going back sothings have probably changed, but
can you write three articles aweek? But what we, what we wanted
to do was not write reallyabout digital signage, but write
about the use cases. So theywere very long tail and we were finding
that people were finding us.People I mentioned earlier about
it was a greenfield sort ofbunch of customers. So they weren't
(17:37):
necessarily looking fordigital signage. And digital signage,
especially in the UK wasn'treally a thing. You said digital
signage and people thought itwas PDF signatures, that sort of
thing. And so what they werelooking for with more of the use
cases like how do I show mytweets as it was on a screen using
a Fire TV stick. And so wejust wrote loads of content like
(17:59):
that around. You know, welooked at all these use cases and
then all the verticals. So wewere. Schools were using us churches
in America.
Wow.
Big, big users offices. And sowe might do something like how do
I show students work paintingson a screen using an Amazon Fire
TV streak or something likethat. And in schools.
Yeah, yeah.
And then we just write awhole, whole load of stuff like that
(18:20):
and that. It was early days,nothing really happened, but, you
know, we just kept going. AndI would credit a lot of our growth
was down to content that wedid really. We did. We did videos
as well. We kind of did againreally lo fi videos of how to set
things up. And so, yeah, thatworked really well for us. So that
(18:42):
was the kind of deliberatething, the axle dental thing, which
was enormous was I mentionedearlier that nobody else was doing
digital signage on an AmazonTV stick. And in order to use our
service, you had to downloadthe app from the App Store, from
the Amazon App Store or theGoogle one for their Chromecast.
(19:05):
And because we were the onlyones doing it and there were loads
of people that were searchingfor this stuff that was kind of wasn't
necessarily your traditionaldigital signage. We were. We were
easily found. So we were onlypeople there. So if you went onto
Amazon and said digitalsignage or anything related to digital
signage, we were the only onesthat were coming up. So people. We
were just getting discoveredfor free. And yeah, people were just
(19:30):
downloading it because it was.Because we were doing a free trial.
There was just no barrier toentry. They could just download it,
play around with it. Theyalready had the. The stick probably
for some other reason. So,yeah, that was. I think that was
massively influential for usin the early days. We hadn't planned
it, but it was.
That's great.
But I think it's somethingthat I say to people that I work
(19:52):
with now is you need to bediscoverable, you need to be where
people are looking. And itmight not be necessarily the obvious
places. It might not be thatthey're saying, hey, I'm going to
go on to digital signage. Idon't know like a new site about
digital signage because Ihaven't even considered. That's what
I wanted. I just wanted to. Ihad this particular use case.
You had that advantage for ayear, maybe.
(20:14):
Yeah.
You said that other peoplethen caught up pretty quickly. So
your point of differentiationwas technology based. Other people
were able to catch up. How didyou handle things then? Like, so
a year, maybe a year and ahalf in when there's more competition.
Because we'd alreadyestablished ourselves, we had, you
know, content was stillreally, really important. And there
(20:35):
was a direct correlationbetween traffic and trialists, which
again, as I've learned since,especially when you're doing enterprise,
the two might not be asclosely matched. But yeah, if we
could drive more traffic, wecould drive more trials and people
at scale behave in apredictable way. So we could be pretty
(20:55):
clear that the more traffic wedrove, the more trials we'd have
and the more conversions we'dhave. We'd also raised money at that
point so we could start doingadvertising. We were working really
hard on the product. In fact,we decided about two years in to
completely rebuild the productbecause we realized, I think our
investors said if you want toget to $100 million, you're going
(21:17):
to struggle if your averageannual contract value is $600 kind
of thing, you're going to haveto, you know, you're going to have
to get tens of thousands ofcustomers on board. So we realized
that we needed to startappealing to more enterprise customers.
And we also realized that theproduct that we'd built, which was
really just an mvp, we werejust trying to solve a problem, actually
(21:37):
wasn't. It didn't really workfor enterprises who had more kind
of security requirements, morecomplex workflow and permissions
and things like that. So werebuilt from scratch, which was great
in some ways, it was great. Inother ways it wasn't because it then
took us another year or sobefore we launched the new product.
So we had a load of customers,we'd spent a load of money rebuilding
(21:59):
this thing and not a singlecustomer had used it. But it meant
that we, you know, all thekind of product mistakes or things
that we'd learned we couldthen put into the new product. So
it was, it was quite a boldthing to do, but it turned out to
be the right thing to do. Sowhen that was launched, the product
(22:20):
was sort of technically hadkind of outrun some of the competition
at that point. But I alsothink, you know, we'd built a bit
of a brand. We've got areputation, we've got a great portfolio
of customers. We had somegreat case studies. Once you get
out of that kind of early bitand you can start shouting about
all the great things thatyou've done.
(22:41):
I mean I always say momentumis really important and certainly
when I was building thisbusiness, nothing like the scale
you guys have built. But thatmomentum sort of feeds, it ends up
feeding itself, I think. Andone of the challenges I've had in
the market for the last two orthree years, when confidence gets
sucked out of a market,everyone's momentum kind of slows
(23:02):
down and that then slows. Thatin itself kind of compounds the slowing
down. So I'm hoping that 2025we might see some green shoots again.
Yeah.
Let's think about marketersnow and like why people might productize
and why marketers and agencypeople in particular might be ideal.
(23:22):
What, what advantages do youthink people who work in marketing
agencies specifically are wellsuited to SaaS?
This isn't really marketers somuch, but agency owners or anyone
who started their ownbusiness. You have that entrepreneurial
DNA. You've kind of built yourbusiness, you've probably built it
without any financial help.And I do think sometimes we underestimate
how much that puts us in arelatively small club. People who've
(23:44):
built their business fromnothing on their own, you know, not
everyone does it and you kindof just take it for granted because
everybody else around you hasdone it. But actually that puts you
in a, you know, quite aunique, unique position. So I think
having that kind of, that gritand those battle scars I think are
really important. You're alsoprobably capital efficient by nature
(24:04):
because you've had to be,especially if you haven't raised
money. You've had to kind ofreally make sure that you've used
that money wisely andinvestors increasingly are appreciating
that it's a double edged swordas well because I think it can have
a negative impact when you'reresponsible for a fast growth VC
backed technology company. Butnevertheless it's still a good thing
(24:25):
to have. You probablyunderstand the vertical maybe probably
better even than people whowork in the vertical because you
might have, you know, I'mworking with a company at the moment
called Pixelate and they havea product, they're an agency, but
they just work for membershiporganizations. So they know everything
that every membershiporganization probably better than
(24:46):
people who work in Membershiporganizations themselves because
they're seeing tens and orhundreds of organizations. So you've
got that kind of insight thatI think gives you a massive advantage
depending on type of agencyyou are. But you might have a team
in a box already. So like us,we were mucking around with ideas
in our downtime, which I thinkis fine. In the early stages, you
(25:10):
have to kind of move it fromjust stuff in the downtime to making
it more specific or more, youknow, putting more effort into it
than just when you haven't gotother stuff to do for it to really
fly. But early stages, whenyou're just, just experimenting and
doing MVPs, imagine if you, asI say, if you just came out of a
bank as a career in a bankerand you write, I'm going to. I've
(25:32):
got this great idea for a SaaSstartup. You wouldn't, you, you couldn't
just kind of do things in yourdowntime unless you were personally
a coder or you would probablyhave to go and hire a team or outsource
it or whatever, like. Butyou've just got that thing kind of
there. So I think, yeah, thekind of the entrepreneurial grit
and, and just having thatknowledge, I think gives you a massive
(25:54):
advantage over others.
We're taught to experiment,right. You take an idea, you test
it, you validate it, and if itworks, you scale it. And we talked
already a little bit aboutScreenCloud was your 15th or 16th
product, which implies you dida lot of experimentation before deciding
that's the one.
Marketers generally, they'repaid to be creative and to come up
(26:18):
with ideas and to try andsolve gnarly problems. And also,
I think, think also bringingtheir A game to lots of things at
the same time, I think, whichagain, lends itself to that idea
of coming up with ideas forproducts or trying to identify problems
that you could solve in adifferent way. So, yeah, for sure.
I think if it does put you ina good position, I think I'm not
(26:43):
disparaging of otherprofessions, but I think you are
kind of, you know, you'reexposed to that kind of thing on
a daily basis. Like, we've gotthis product, we've got this product
that we need to sell and weneed to have an innovative way to
sell it. So you're constantlybeing ambitious. Thing like that.
Yeah.
And there's a good history ofagencies creating pretty famous products.
Yeah.
In the book, you name a few.
(27:04):
The ones that people alwaysbring to mind are people like 37signals
and Basecamp. So they had anagency for a bit. They had this product
project management tool anddecided to productize it and then
thought they'd give it a go.They'd say, well, let's see if we
can get $5,000 of monthlyrecurring revenue by the end of the
(27:24):
year. I think they hit itwithin two or three months and eventually
thought, well, let's do thisand stop doing the agency. Mailchimp
is another good example. Youknow, he had the. Ben Chestnut had
an agency that was buildingkind of ads, you know, small digital
ads and things like that, andrunning email campaigns for their
clients. And then he automatedit. It realized that he could turn
(27:46):
it into a product.
Yeah.
But then, you know, closer tohome, I mentioned Pixelate earlier.
They were a digital agency, 20years old. They productized the sort
of functionality that theybuilt for membership organizations
and sassified it, and it'scalled Ready Membership, and that's
its own standalone SaaSproduct now, still with a lot of
(28:08):
professional services on topof it.
Okay.
Another company I'm workingwith called Studio Graphene, which
is an agency, they've justlaunched an IoT food monitoring SaaS
service, which is really earlystage. So Pixelate are quite a long
way down the line. They'redoing a significant amount of revenue
from Ready Membership Telson,which is the product that Studio
(28:30):
Graphene has spun out. When Imet them, they were at the idea stage
and now it's revenuegenerating. But it's still early
days and you.
Seeing still then people,they're building a product and they're
focusing on that, but wrappingservice around it.
Well, in Pixelate's case, it'svery much an enterprise sale and
you can't really. They haven'tmanaged to disentangle it yet with
(28:50):
Telson and Studio Graphene,it's a completely different product.
So it's standalone.
Okay.
There aren't reallyprofessional services. There's a
little bit, but it's not to dowith the agency thinking about.
Setting up or productizingsomething you do. Or let's just say
if you're thinking aboutstarting a SaaS company, what are
some of the early steps you'dadvise people to take?
(29:11):
I think we spend a lot of timethinking about the answer and not
really much time thinkingabout the question. And what I mean
by that is we're taught tokind of like, the question's easy,
just what's creative? Is theanswer. But actually if you put more
effort into what the questionis, so what are you really trying
to solve for the customer? Theultimate End user, what ultimately
(29:35):
is their problem. Andactually, if you can spend more time
thinking about that thansaying, hey, I've got a great idea
how we can use thistechnology. By the way, we didn't
do any of this. So this iswhat I've learned post. But you think
about, we used to be quitehappy with the way that you took
a taxi. Uber came along andcompletely changed the way we thought
about riding taxis. And whatthey did was effectively said, well,
(29:56):
look, I think, you know, whatare the steps currently for taking
a taxi? You have to go andfind the taxi. You have to tell the,
get in, tell the guy whereyou're going, get to the other end,
make sure you're there, paythe amount of money, work out what
the tip is, take the receipt,claim it back, all that kind of stuff.
And Uber just said, actually,all you have to do is say where you
want to go and then, then paythe tip. So they've taken out what,
(30:18):
six or seven steps withinthat. So I think that's where the
innovation comes from. It'slike thinking about that, really
understanding the question andthen trying to figure out how can
you use technology to removesome of those steps. The other thing
for me is, which again, wenever did, is it's really important.
There's two ways I think, thatI talk about in my book actually,
(30:39):
of validating an idea. One islike internal validation, which you
can do for free reallyquickly. And you know, really, that's
one of the, one of the waysaround that I think is really asking
yourself the question for B2BSaaS, unless it makes people money,
saves people money or keepsthem compliant, anything else is
a nice to have and you'renever going to scale that. So you
(31:01):
have to be brutally honestwith yourself when you're, when you're
thinking about the things thatyou want to produce genuinely, is
it going to make someonemoney, save them money, or keep them
compliant? If it's. Well, youknow, doesn't quite really do any
of those things is probably anice to have. So that would be the
first thing. And the secondthing is, does it keep the CEO awake
at night? Is the problem thatyou're trying to solve or unlock
(31:23):
keeping the CEO awake atnight? And with ScreenCloud, we didn't
realize this, but we thoughtthe problem was that there were blank
screens. People had screens,they're either blank or they were
showing Sky News on mute.That's what we thought was the problem.
But actually the reason why westarted ScreenCloud is because I
wanted to put KPIs. We had anagency, I wanted to put the KPIs
on a screen in our office andwe couldn't work out how to do it
(31:44):
other than having a Mac minigaffer take to the back of the screen.
And the reason I wanted to dothat is because I perceived that
when we were doing our kind ofmonthly updates, the team, that they
weren't really engaged. And Iremember at Reading Room, actually,
we used to have a flip chartwhere we used to write how much money
we generated that month andhow close we were to our targets.
(32:04):
And for me, it was a real kindof compelling way to get everybody
behind what you were trying todo as a company. Like, hey, look,
we're 20,000 quid off hittingour targets this month. What can
we do? What can we invoice?What product can we finish? What
project can we finish? So Iwanted to kind of install some of
that because I was worriedthat people weren't caring and it
was having an impact on ourrevenue. So the thing that was keeping
(32:27):
me awake at night as the MD ofour agency was we're not hitting
our revenue targets and nobodyseems to care. ScreenCloud of did.
It was unlock, to my, to mymind, unlock some of that opportunity.
So it's, it's, it wasn't thatI was looking at screens and going,
I'm really annoyed thatthey're blank. That's. That would
be a nice to have. But I waslooking at those screens and saying,
(32:49):
I think they can actuallychange something within our agency
and that's that. And it canmake us more money effectively. So
it's unlocking a particularproblem. So I think that's really,
really important. And you'vegot to be brutally, brutally honest
with yourself. If it doesn'tdo either of those things, it's probably
a fantasy. So. And then thesecond part of product validation
is actually talking tocustomers. It really is about. I
(33:10):
mean, I recommend a great bookcalled the Mum Test here, which I
don't know if you've heard ofit, but it's a re. The thing that
you can't do is go out and go,hey, I've got an idea for a business
and show them a kind ofwireframe because they're just going
to tell you, yeah, that'slovely. I like it, really like it,
what you really need to do.And again, working with a few people
recently about this. So I wasworking with one company, they're
(33:32):
an agency, like a datacompany, and they built a product
which was a benchmarking tool.
Okay.
And I was like, and. Butnobody, none of their customers were
really using it. They'regiving it away for free for a year,
hoping that then they couldturn around and say, hey, do you
want to use it?
Yeah.
And they were like, yeah, no,they're just not really engaged.
And I was like, have you askedthem the question, do you benchmark
(33:53):
your data against yourcompetition? They were like, no.
I was like, why? And really itwas because they didn't want to hear
no, they don't want to hearno. I was like, you've got to come
up, We've got to come up nowwith two or three questions that
absolutely terrify you becauseotherwise you won't get the information
that you need. And also thosekind of questions might reveal something
that you hadn't reallyunderstood before. So it's really,
(34:16):
you've got this validation,you've got some of it in your own
head that you can just do. Andthen you've got this free resource,
which is customers. Butweirdly, we don't ask customers.
We just hope, fingers crossed,that we've kind of figured something
out and they're going to loveit. But actually the customers are
out there and by and large,they'll happily talk to you for free.
And if you do it in the rightway, you can get some real massive
(34:39):
insights.
It is a special skill, though,speaking to customers, isn't it?
Because, I mean, I thinkcertainly my experience of doing
it as, not as a startup, butif you like, as an incumbent and
asking about service standardsand service improvement is what they
tell you they want isn'talways what they actually want. Want.
Yeah.
So I think you have to focusin on their problems rather than
(35:00):
offering them a solution andsay, would you buy this?
I mean, I was, I was doingsomething with a customer recently
and their, their brandingagency had come in and said, right,
this is. We've got this greatidea is. And they'd come up with
this kind of concept. And Iwas like, have we talked to customers
about this concept? I couldn'tsee how that would relate to customers
particularly. But I was. So Isaid, right, let's go and have these
(35:21):
conversations. And I waspushing the kind of conversations
I was having was, what was itlike before you use this product?
Okay.
And they were like, wow, youknow, it took me so much time to
collate data. And I was like,well, wow, wow, that. Okay, what
was the, what are the impactof that? Well, I didn't have any
time to be really strategic. Isaid, okay, I kept pushing, kept
pushing, and eventually hesaid I missed out on a promotion.
(35:43):
And I was like, oh, yeah,okay, well, tell me about that. So.
And then he starts saying,well, yeah, they didn't think I was
strategic. They thought I wasa kind of data monkey, but I am strategic.
I just didn't have time. Andso you kind of think, okay, that's
a massive insight there. Sowhat can we do? Maybe the messaging
is around how we make you ahero amongst your bosses and how
we make it really easy for youto produce really insightful research
(36:08):
documentation or somethinglike that. I wouldn't have got there
if I'd said, hey, I've gotthis idea for a product that allows
you to do, I don't know, niceresearch papers. He wouldn't have
told me anything that wasuseful. But it's just, yeah, getting,
pushing, pushing and pushingwithout leading. That's. I think
that's the challenge. Don'ttell them, what do you think of this
idea? Because they're going totell you, they're going to say it's
(36:31):
nice, which is just becausethey want to get off the call, you
know. And also, people don'tlike to hurt other people's feelings.
So this reminds me, actuallyfun enough sort of back where we
started. But these are some ofthe conversations back in the incubator
days that I used to have withstartup founders. And one of them
is like, being really clear onwho the customer is, like who's actually
(36:51):
paying. And you're mentioningof Uber makes me think of that. So
I was involved with a smallgroup of people in about 2013, 2014,
and we were trying to solvethe wrong problem. So we were looking
at taxis, we were looking atminicabs and thinking the problem
with them is they're alwayshalf of their time they spend being
empty. So can we create apiece of technology that allows them
to get paid in bothdirections? So Uber solved that problem.
(37:12):
Yeah, but they solved a biggerproblem because the customer isn't
the minicap company. Thecustomer is the person taking the
car. Car. So their customerwas more powerful than ours and they
were solving a bigger problem.So I think part of the challenge
when you're thinking aboutdoing something new is being really
clear on who the customer is.Because if you're like. In our case,
we were looking at drivers andminicab companies thinking that they're
(37:32):
the ones that have the power.Actually, it's customers that have
the power. They pay the bills.
We were exactly the same. Webuilt one product, it was called
Get Dash, it took us a year.We had this idea, or rather Luke,
our CTO had this idea and hejust went off and built it and we
didn't talk to a singlecustomer. And then when he did the
ta da, it was like, you know,it wasn't different to what we thought
(37:53):
as co founders, what it wasgoing to be. And then we'd all fallen
out in fluff with it becauseit would have taken so long and never
saw the light of day, really.We spent over a year and God knows
how many thousands of pounds.But yeah, if we'd involved customers
and actually had conversationsearly on, it's still. It's weird.
I don't know why, but asagency owners, we probably, and marketing
(38:13):
departments as well, weprobably advocate customer research.
That's part of the thing thatwe do. But when it comes to our own
thing, we're like, nah, I'mnot gonna do that. We know the answer.
We know the answer.
Yeah.
Rule number one, you are notthe customer. Right.
Quite often people say to me,you know, because of my background,
they'll say, oh, I've got thisgreat idea for a SaaS business. Can
I show it to you and you cantell me what you think. And I kind
(38:35):
of say, yeah, you can do, butit's kind of irrelevant what I think
because I'm not your customer.Like, I could, you know, I could
blow smoke up your ass if youwant me to, but actually, you'd be
much better off talking to anactual customer than me. Me than
me. There's only a limitedamount of value that I can add.
Huge value.
Well, I can some areas, but Icould add value in terms of how you
(38:55):
might go about launching theproduct, but I can't really necessarily
tell you whether the productis valid or has legs. You have to
talk to an actual customer.
And so we're talking mainlyhere about, I mean, I mentioned earlier
digital products, butspecifically we're talking about
SaaS. And I noticed recentlySalesforce has announced they're
going to change or they'rethinking of changing their billing
(39:16):
model, I think away from a perseat to a usage model. A bit like
Azure or aws. Do you thinkthat that puts in doubt the future
sustainability of the wholeSaaS model, or do you think that,
I mean, is this was SaaS amoment in time or do you think that
there's still legs for thatfor that model?
(39:36):
Again, I think it all comesdown to the customer, ultimately.
So, I mean, do you rememberwhen we used to. To have mobile phones
and you used to have to payper text and per. Which is kind of
annoying, right?
It was really annoying.
Aren't we happier now that wehave? And the reason is because you
have a kind of I know how muchit's going to cost me each month.
And so for some customersthat's really important. And for
(39:57):
some customers the usageelement is actually scary because
it might be something they'vegot no concept of. So we within ScreenCloud
one of the things that we didwas a tool that allowed you to live
stream. And for us the cost ofthat was directly related to, you
know, how many people werewatching it and how long the stream
(40:18):
was and all that kind ofstuff. And so we were like struggling
with how are we going to dothis? And we thought about a kind
of usage model. But we thoughtactually for customers it's really
complicated. They just want tosay it's X dollars per screen per
month because then they canbudget for it. If they're kind of
saying, well it's this. But ifyou have, if suddenly one month your
(40:40):
CEO does a live chat and loadsof people log in, then that's going
to cost. And they were like,well we've got no way of knowing
what this is going to cost usin that case. And so I think there's
room for both really. I meanit makes sense I think especially
where it's very direct, thevalue you're getting as a customer.
So for example, we used to usea tool in our billing which would
(41:01):
do automated dunning, creditcard checks. This is again when we
were a product led growth,self serve type product. And the
way they build was the amountof money that we save you from people
churning and not being ableto. We'll charge you a percentage
of that. So for me that waseasy. That was a no brainer. It's
like, okay, so I'm gonna loseless money and I'm gonna give you
(41:24):
some of that. That's that thatmakes. That doesn't kill my budget
if something sort of takes offlike actually weirdly aws. Like we
got stung a few times withaws. Yeah, but obviously you accept
that. But it's just a lot ofcustomers aren't necessarily technical
or don't necessarilyunderstand the usage basis. So it
might not work for them but Ithink with all these things it's
(41:45):
going to evolve. And yeah, theother model that I've sort of seen
is 37 signals have brought outthis thing called once. Did you see
that?
Okay, no, I haven't seen that.What's that?
They've repackaged, I think itwas Campfire, which is a product
they had a SaaS product had awhile ago and said, look, instead
of subscribing to it, you justbuy it. Okay, 250 bucks. And it's
(42:05):
a sort of, it's like, they sayit's a bit like Slack. So instead
of paying $20 a month perperson or whatever it is for Slack,
which if you're a hugeorganization that can ramp up, you
can just buy this bit ofsoftware once and you host it, you
install it, you run it, but itdoes all the functionality that's.
It's a sugar.
CRM did that as well. Yeah,they've got a. Yeah.
(42:27):
And so you say, okay, wellthat's an interesting model as well.
I mean it makes sense. It onlymakes sense if you're a company that
feels confident enough to kindof host your own SaaS product. And
also it has to make sensecommercially for the people building
the software. And I think forthem, obviously they've got a big
reach so they can sell lots ofthese things. And I think a bit like
(42:47):
the old days when Adobeupdated Photoshop, you'd go and buy
another cd. I think it's a bitlike that. Like they might say, well,
if you want to upgrade to thenext version, you have to pay again.
But again, it might work wellfor some products and not well for
others. So I think we probablywill see emerging models like that.
But I don't think it kills.
It's not going to kill it, isit? I mean, I think in Salesforce's
(43:10):
case, maybe their per seatlicense, certainly enterprise license,
unless you're really using allthe functionality, is pretty chunky
these days. And maybe this isa reaction to allow to try and grow
the audience because they are,are de facto the gorilla in the marketplace.
So how are they going to grownow? Yeah, they have to change something.
And P price, being One of thefour Ps is an obvious place to look
(43:32):
at. Can we change the waypeople perceive about, you know,
perceive price?
And the other thing to thinkas well is that, you know, the, the
outcomes are shared in as muchas if you have low use, even if you're
playing per seat, if you'vegot low usage, if no one's actually
using your product, they'regoing to churn anyway. So it's in
your interest as a SaaScompany to ensure that people are
(43:52):
using the product all the timeor as much as possible. So again,
I think it just comes down towhat is most valuable to the customer
and makes most sense to themand doesn't kind of put them in a
situation where they suddenlyend up with a massive bill they weren't
expecting.
Right, let's talk about yourbook. What made you want to write
a book that's a labor of love?
Yeah, yeah, it's interesting,actually. At ScreenCloud we did.
(44:14):
Me and my co founder startedwriting. We wanted to create a new
market category and thought weshould write a book, which is kind
of what the guys at Drift did.
Okay.
They wrote a book calledConvers Marketing and that created
a whole new category. Andwe're like, let's do that for ScreenCloud.
So we kind of signed up for acourse and it was like an online
course and sort of learnedabout how to structure a book. And
(44:35):
as we were writing it, I waslike, this is tough. This is not.
You know, it's an interestingidea, but I'm not sure what we're
writing is going to be thatinteresting. And so we never actually
finished it. But in my head Iwas thinking, God, if I was doing
this, but if I was doing it,about that journey from agency to
SaaS, I've got so much to sayabout that. And so, yeah, I guess
that was a kernel of it. Andso I just. Yeah, just started writing
(44:56):
it. And in my head I wasthinking if I'd like to write all
the things that I wished I'dknown when we started ScreenCloud
and avoid some of the crazymistakes that we made and, you know,
the assumptions that we'd madeand the things that I just wasn't
aware of. You know, I didn'tknow anything about raising capital.
I didn't really know anythingabout SaaS metrics and the importance
(45:19):
of that. I didn't really knowhow to validate an idea. I didn't
understand how to structure aSaaS sales team, how to kind of make
sure that you're trackingthings in the way that kind of can
allow you to improve resultsand things like that. So that was
really the kernel of it.
It's good work. It was a goodread, certainly. And one of the things
(45:39):
I really enjoyed on LinkedInis seeing people who are talking
about the book, like randompeople I know have found their way
to the book and they'retalking about it online. It's kind
of cool.
I've had a few instances whereI met someone, someone a couple of
weeks ago or maybe a month agowho'd read the book and I didn't
know him. I'd never Met himbefore and he said, I've read your
book, and then started quotinganecdotes from the book to me.
(45:59):
Really?
And then this morning I wokeup and had a really nice LinkedIn
message from someone saying,hey, I've read your book. And you
know, everything. You'reevery. I can't remember what you
said. Every paragraph. I'mliving exactly what you're talking
about.
Oh, really?
And those sorts of things,that just makes sense.
And he wants to find a way out.
Yeah, exactly. And I have amassive fondness for agency owners
(46:20):
because I was one. And alsokind of think, oh my God, you know,
the difference between I don'twant to slag off agencies and I know
you don't want to talk aboutagencies, but the difference in terms
of financial value that you'recreating as a consultancy and it's
a multiple of EBITDA. Comparethat to multiples of ARR when you're
valuing a SaaS. And it's justlike you could, you know, you could
(46:44):
make something so much more significant.
Yeah. A totally differentgame. So if anyone does want, if
you're listening in an agencyand you do want to sell it, come
speak to me because you can. Icome by your agency and you can go
on and build a, build aproduct with David.
David. Yeah, yeah. It's justkind of like. It's perfect. Joined
up. We should start abusiness. We should do that. SaaS
business.
Look, if people want to get intouch with you now, if they want
to get your help or whatever.How do they do that?
(47:06):
Either go to my website, DavidHart IO, it's got everything on there.
I write a weekly newsletter aswell. Sign up to that if you don't
want to shell out for a bookjust yet or buy the book and then.
Yeah, if you want to. Youknow, I work with people in different
ways. I'm a non exec directorfor about seven or eight.
Okay.
But obviously I probably can'tdo that anymore. There's a limit
(47:28):
to how much you can do ofthat. But I, I kind of. Yeah, I.
There's not really a one sizefits all. So I'm kind of doing a
bit of advisory work, like,you know, coaching type work, as
well as kind of runningworkshops and yeah, it just really
depends really how. How peoplewant to work with me.
And now we're going to lunch.See ya. Big thanks to DAV for coming
(47:50):
to the studio to see us. Thereare five copies of his book that
I have on my desk waiting togive away. Nothing fancy. Today.
No landing pages, no datacapture, nothing like that. All you
need to do is email me atunicorny@selbeyanderson.com and tell
me why you think you shouldhave a copy of the book. I'm going
to choose the five bestanswers and I will send one to you
(48:13):
if you are one of the best.Thank you very much for your time
and we will see you next weekon the Unicorn Marketing Show.
I think we spend a lot of timethinking about the answer and not
really much time thinkingabout the question. We're taught
to kind of like, you know, thequestion's easy, just what's creative
is the answer. But actually ifyou put more effort into what the
question is, so what are youreally trying to solve for the ultimate
end user? And actually, if youcan spend more time thinking about
that than saying, hey, I'vegot a great idea how we can use this
(00:21):
technology.
Rule number one, you are notthe customer.
Because of my background,they'll say, oh, I've got this great
idea for a SaaS business. CanI show it to you and you can tell
me what you think? Yeah, youcan do, but it's kind of a relevant
what I think because I'm notyour customer, you know, I could
blow smoke up your ass if youwant me to, but actually you'd be
much better off talking to anactual customer than me. For B2B
SaaS, unless it makes peoplemoney, saves people money or keeps
(00:43):
them compliant, anything elseis a nice to have and you're never
going to scale that.
Hello and welcome to theUnicorn Marketing Show. Now today
I've got a real treat for you.I'm going to talk to you about how
you could be the next SaaSleader and how you can build your
(01:07):
own software business and makemillions. Now, the reason I can do
that is because today, todaymy guest is the extraordinary David
Hart. Now, David Hart has beenthere and he's done it. He's written
a book about it calledProductized. And he is coming to
us today to talk about whymarketers make excellent entrepreneurs.
I first met David about 25years ago. We were actually competitors
(01:29):
at that time, but we got toknow each other and liked each other.
We worked together for a yearand then we went in different ways.
He went off to start an agencyand from that agency he built a business
called ScreenCloud. And thatbusiness grew to 20 million ARR and
is still going. And when Davidgot back from the usa, he and I got
back in touch and I thoughtthat you might like to hear from
(01:51):
him. So this is how ourconversation went down.
Happy to be here.
Back in the day, like beforethe millennium, if anyone can remember
or if you, if they were bornthere, we were. We were in opposing
companies in London.
Yeah, we're kind ofcompetitors in a kind of industry
that wasn't particularlycompetitive because there was so
much money floating around.And it was the, yeah, the dot com
(02:13):
boom before its inevitablebus, the Incubator world. Yeah. So,
yeah, my company was Brainspark. And you. I don't know who invented
the park or the spark thing,but you were Gorilla Park.
Gorilla park, yes, indeed.Yeah. I noticed actually these days
a lot of people who were mycolleagues at Gorilla park have airbrushed
it from their CVs, really,where it's like the whole incubator
(02:33):
thing was a slightlyembarrassing thing to admit having
belonged to, because it was so mad.
Yeah. I mean, we were talkingearlier about some of the money that
was, the budgets that we weregiven to do parties and things like
that. And I remember at thetime thinking, this is absolutely
cr. I love it, but I willnever see anything like this again.
And sadly I never have becauseit was so much fun at the time. But,
yeah, really unrealistic as asort of sustainable way of going
(02:57):
about things.
It was. But you see, what Iquite enjoyed, though was I think
we started 16 or 17 businessesat Gorilla park and seeing all of
those things go from ideathrough to almost viable business,
I think. And it was aportfolio game. So I think we were
saying earlier. I think weboth each had three or four businesses
that went on to do really well.
Yes.
So the business model actuallywas perfectly good. Yeah, we just
(03:20):
ran out of money gettingthere, I think.
Yeah. And, you know, sentimentchanged and. Yeah, we managed to
IPO, actually, just. We justIPO'd just before sentiment changed.
So I think you hadlastminute.com and about two weeks
later we floated and I thinkeveryone at the time was going, hang
on, lastminute.com is worthhow much? And it. Yeah, it was kind
of the beginning of the end,really, but blimey.
(03:41):
And then we had a very shortperiod where we sort of coexisted
in almost an agency.
We kind of had this notionalidea, hey, we should come together
and create a bit of an agency.I think I had, had. I had one client
that was Pearson and I waspretty much just working for them
and then just billing itthrough the company. But it was,
you know, I think you and Iboth probably felt the same. It's
like we. We want to kind of dosomething on our. We want to build
(04:02):
our own thing. Yeah. I thenactually went to work for an agency,
so I kind of went back, wentto work for a company called Reading
Room, which people might haveheard of. They were soho based agency.
I met my two co founders there.
Okay. For Cogent.
For Cogent, which was theagency we. We then started in 2004.
It was a good agency. I mean,I was following, following it, saying,
(04:25):
shit, why didn't I just hangon to his coattails? But I remember
following. I rememberfollowing. You did some really cool
work there, but you at onepoint then decided with your co founders
to change the business model.
Yeah.
Away from being an agency,towards being a product company.
Talk to me about that.
Yeah, So I think we flirtedwith products from quite an early,
early stage, actually. We. Ithink the thing that worked well
(04:48):
for us to start with wasmobile apps. And it was just because
we had a team that werebuilding in Flash and if you remember,
Flash kind of disappeared andwe were like, what do we do with
them? Do we make themredundant or do we kind of do something
else with them? So we said,right, you know, learn how to do
mobile apps, because that wasthe thing that was coming along.
And they did. And just to, youknow, they just launched a kind of.
(05:10):
It was a phrasebook app. Wecalled it a language app. It was
called Learn Thai because wehad a load of developers. We had
an office in Bangkok and.
It did really well, reallystrategic. You thought about, where's
the market opportunity here?
Yeah, accidentally. It didquite well.
That's fantastic.
And we also, because we'vedone quite a lot of work in the agency
for CBeebies, we also decidedto create some kids apps as well,
(05:32):
and they did pretty well. So Iremember there was one time at Christmas,
it was a Christmas thateverybody had been bought iPads,
and we came back afterChristmas and suddenly our revenue
had gone through the. Throughthe roof. And I kind of like, man,
we've. We've made more moneyfrom these products than we actually
pay ourselves individually asowners of the company. I was like.
And it gave me an insight, Ithink, into the potential for scale,
(05:55):
the potential for generatingrevenue when you're not necessarily
in the office doing stuff soyou could sell. It didn't make any
difference to us whether wesold one app or a million apps. It
didn't make any difference. Itmade a difference to us in terms
of revenue, but in terms ofthe costs to us were negligible.
So, yeah, I think that was thething that it started the bug, if
(06:17):
you like. And initially wekind of thought, well, we'll just
build a portfolio of products.And it was kind of this idea of great.
It can level out some of thepeaks and troughs and it's another
revenue stream. And didn'treally think much beyond that. And
then I think, yeah, as timewent on, we decided we were kind
(06:39):
of done with the agency worldand we really loved product. I think
I said, yeah, I think we did15 products in all. And we saw really,
wow. We. So, yeah, but a lotof them were rubbish. But we sold
four of them, which is good.To private equity company. To some
private companies. And then wewere kind of thinking, well, maybe
(07:00):
this is what we do. We becomea product studio and we have a portfolio
of products and we startedtalking to investors. And I remember
taking this investor out. Imet an investor somewhere, I can't
remember where. I said, can Itake you out to lunch and buy you,
you know, buy you lunch andpick your brains? And I'm thinking,
I'm going to tell him thisgreat idea. And he just went. I said,
yeah, so we're going to. Canhave all these products and we're
(07:20):
looking for funding to investin all these product ideas. And he's
like, no one's going to investin that. I was like, really? Because
why would I, you know, whywould I give you the money to go
and decide what you're goingto. That just doesn't work. So I
was like, oh. And it made uskind of think, you think again. And
eventually we said, look, ifwe're going to do this, I think that
probably the way to do it isto focus on one thing and sell our
(07:44):
agency and just focus on thisone thing, which was ScreenCloud,
which was a SaaS business. Weended up.
That's a big decision.
Yeah. And it, and it makes itsound like it happened overnight
and it didn't. I think the bigthing that we decided was that we
were going to be a productcompany and not an agency. That was
the first thing that wedecided. I think once we had that
decision made, then that wasour kind of North Star and we were
(08:07):
just focusing on that. We'regoing to be a product agents, product
company. We don't quite knowwhat that will look like, but that's
where we're going to end up.And I think as we had more discussions
with people, we realized itwill always be a side project. If
it's a side project.
Yeah.
And we. One of the products wehad was a SaaS company tool called
Twillert, which is a Twittermonitoring tool. And it got up to
about 30,000 pounds in monthlyrecurring revenue, which is great.
(08:32):
But, you know, it just nevergot beyond that. And actually it
started to go plateau and gobackwards and it wasn't really until
we properly went for it thatthings moved. And that's what happened
with ScreenCloud and it, youknow, today, ScreenCloud's like,
north of $25 million in annualrecurring revenue. It obviously the
best financial decision weever made. It is scary because you're
(08:54):
kind of. There's a point aswell at which you kind of. There's
no going back. So we wereraising money and we went to see
a VC and they were like. Andwe decided we were going to sell
the agency, but obviously youcan't just sell an agency overnight.
And we were kind of. So hesaid, this is interesting. ScreenCloud.
So what's this cogent thing?And you're like, ah, don't worry
(09:15):
about it, we're selling it.And he's like, interesting. I need
you to sign a side letter thatsays you haven't sold it by the time
I put my money in. You have toclose it down.
Oh.
So, yeah, so it was kind oflike, okay, well, this really is
the point of no return at that point.
Wow.
But, yeah, so those kind ofmoments were quite scary.
When you made the decisionthen to switch, did you, did you
(09:36):
have recurring revenue or wereyou still on in development and kind
of early market?
I don't think we were atrecurring revenue by the time we
made that decision, if I'm honest.
Big leap then. Big leap.
But we were, we were prettyconfident that this was a good idea.
And I think we'd also got tothe point where we said, you know
what, we're done anyway. Weeither close the agency down and
go and work in a pub or we goand do this other thing. Because
(09:58):
I think we were just done withthe client stuff.
That's really good foundation,I think, for what we're going to
talk about today. Now, thereason I asked our team to get in
touch and bring you back in.You wrote this book, Product Ice.
You talked about the wholestory. We have four copies of this
which we're going to give awayat the end of today's show. And you've
very kindly signed them. Thankyou very much. I actually have a
(10:20):
fifth copy, but I've read it,so whoever gets that one, it's already
read. Productization is muchon everyone's lips at the moment.
I think, you know, the agencyor the client agency relationship
is changing. That kind ofdreaded in housing thing that, you
know, it's a pendulum, isn'tit, that swings backwards and forwards.
But I think agencies andclients are looking for a different
(10:40):
type of relationship. And Ithink one of the things that excited
me about what you've done isthis is we're not talking about physical
product. We're not talkingabout package time because both of
those obviously are product.So one of the big trends in agency
at the moment is to productizeservice, but that's still time based.
Even if it's, even if it'ssold as a product, it's still time
based. And, and after ourpaths diverged in the early noughties,
(11:04):
I got into product companyphysical products. And that comes
with a whole other load ofother headaches like inventory and
supply chain and all thatother, yeah, crap digital products.
Totally different, of course.And so today we're going to explore,
I think, why we think that orwhy you think particularly that marketing
people generically, but agencypeople specifically make really good
(11:26):
SaaS founders. Before we dothat, let's start with some of the
challenges that you faced inthe early days of ScreenCloud. So
we've got the foundation,you've sold the agency, you're now
100% SaaS business. You've gotto go build a market, build an audience.
Talk to me about the challenges.
One of the big challengesobviously is that we had no idea
what we were doing. And as anagency founder, I think you do have
(11:48):
certain superpowers that giveyou an advantage over someone who's
maybe just come out ofbusiness school or something like
that. But nevertheless, therewere things that we didn't understand
about SaaS. We didn't really,I didn't really understand quite
how compounding revenue wouldgrow. And I remember when we first
started and we did maybe $400in the first month and 600 in the
(12:09):
second month and I was like,man, at this rate, it's going to
take a century before we getback to the revenues that we were
generating in our agency. Andit was pretty scary. I didn't realize
quite how those things tickedup. So, yeah, I mean, the big challenges
for us was a not reallyunderstanding that much about SaaS.
When you're an agency owner,you're, you're selling in much more
of an enterprise way. You'regoing in, you're meeting the client,
(12:30):
you're kind of doingdiscovery. We were selling $20 per
screen per month product withmaybe, I think the average value
was about $60, $65. So youcouldn't afford to do that, so you
had to automate everything. Sothere was a load of things that we
had to learn around that. Youknow, your, your customer acquisition
(12:52):
cost has to be really, reallylow if you're only charging 65 bucks
a month. And so yeah, we justhad to kind of figure out how we
were Going to drive customers,how we were going to automate them
through. We gave, we did it asa free trial. Yeah, so lots of things
that we'd never done before. Iguess more of a kind of mass marketing
(13:12):
as opposed to your moreaccount based marketing that you
might do in an agency.
My experience of startingthings is there are wise old sages
who tell you it's a reallydumb idea. No one's ever going to
buy it, it's not possible. Didyou have any of those naysayers that
you had to screen out?
The unique thing about us wasthat we were coming at it completely
from a software perspective,whereas the industry as a whole was
(13:34):
hardware vendors. So reallythey were selling screens and media
players. That was their thing.And software was a bit of an afterthought.
And we were like, well, hangon a minute. The thing that got us
to think about this as aproduct is that at the time everyone
was buying these Fire TVsticks and Google Chromecasts and
making their TV SM art. And wewere like, well, hang on, we can
watch Netflix on our TV athome. Why can't we put stuff on our
(13:59):
screens in the office? Andthat was the kernel of the idea.
And so we just said, right,we're just going to build something
that works on an Amazon FireTV stick. And I remember we went
to a kind of conference andlots of people there talking about
bevel edges and pixels andstuff like that. And we were like,
oh yeah, we're just going todo these things on these weedy little
sticks. And they were like,kind of almost like patting us on
(14:21):
the head saying, good for youwith your little niche idea. Good
luck with it. You know that'snever going to work. No, you can't
run a professional digitalsignage network on an Amazon Fire
TV stick because that's aconsumer product and you need these
$10,000 commercial products.And we were like. But obviously in
our naivety we just thought,well, you know, I think, why not?
(14:44):
Yeah, let's just, let's do it.And actually what it turned out to
be amazing because lots ofother people were thinking the same
thing. And most of ourcustomers in the early days were
greenfield. They'd never donedigital signage before because it
was prohibitively expensiveand cumbersome. And they were probably
saying the same thing as us,like, hang on a minute, these little
things, can't we just do stuffon that? So there were naysayers
(15:05):
and actually, probably if we'dbeen more, if we'd known about the
industry a bit more, we mighthave been put off because we might
have thought, oh God, youknow, nobody, we look like idiots
if we try and build a digitalsignage network off these consumer
bits of hardware. But then 12months, 18 months later, everybody
(15:25):
was copying us.
That's a superpower. I thinksometimes when you go into market,
sometimes we're going to talkabout validating ideas a little bit
later. But I think sometimesyou don't want to over validate because
I was at an event yesterdayactually where people were talking
about speaking to customersabout what they want and then delivering
it. And we've had that as atheme on the podcast before. But
often customers don't knowwhat they want and they would know
(15:47):
about the prohibitive costs ofhardware. And so if you'd gone to
a customer and say, hey, wouldyou, can you see yourself using this
kind of device? They'dprobably said no. Yeah, but I think
that self belief is reallyimportant in the early stages.
At the time, the digitalsignage industry was a different
type of, it was, it wasservicing a different type of customer.
So effectively we kind ofhelped open up a different market.
(16:09):
If you looked at the Gartnerreports back then and it was saying,
well, you know, what's thepotential size of the market? It
was pretty small because theywere assuming, I think that people
would just, it would just bethis group of people that bought
these, you know, people likeMcDonald's who would have vomit proof
screens or something. But mostof us don't need those. It's fine,
(16:30):
we can just use a normal tv.
You still had to market andget, or communicate I should say,
and launch yourself in amarket with some pretty big players
and presumably you didn't haveenormous resources to do it. Talk
to me about how you went aboutgetting awareness.
I think there were two keythings. One was deliberate and one
was accidental. We didn't haveenough money, as you say, to do,
(16:53):
you know, an advertisingcampaign. We'd raised a little bit
of money to start with more ofa. We did an angel round to start
with friends and family. So wedefinitely couldn't afford to do
Google Ad campaigns oranything like that. So we, what we
did is just invested incontent and we hired a brilliant
person called Beth who justworked for us. She used to work for
our agency actually. And thenshe went freelance and started working
(17:14):
for us part time. And we justsaid, can you just write three articles?
I mean this is going back sothings have probably changed, but
can you write three articles aweek? But what we, what we wanted
to do was not write reallyabout digital signage, but write
about the use cases. So theywere very long tail and we were finding
that people were finding us.People I mentioned earlier about
it was a greenfield sort ofbunch of customers. So they weren't
(17:37):
necessarily looking fordigital signage. And digital signage,
especially in the UK wasn'treally a thing. You said digital
signage and people thought itwas PDF signatures, that sort of
thing. And so what they werelooking for with more of the use
cases like how do I show mytweets as it was on a screen using
a Fire TV stick. And so wejust wrote loads of content like
(17:59):
that around. You know, welooked at all these use cases and
then all the verticals. So wewere. Schools were using us churches
in America.
Wow.
Big, big users offices. And sowe might do something like how do
I show students work paintingson a screen using an Amazon Fire
TV streak or something likethat. And in schools.
Yeah, yeah.
And then we just write awhole, whole load of stuff like that
(18:20):
and that. It was early days,nothing really happened, but, you
know, we just kept going. AndI would credit a lot of our growth
was down to content that wedid really. We did. We did videos
as well. We kind of did againreally lo fi videos of how to set
things up. And so, yeah, thatworked really well for us. So that
(18:42):
was the kind of deliberatething, the axle dental thing, which
was enormous was I mentionedearlier that nobody else was doing
digital signage on an AmazonTV stick. And in order to use our
service, you had to downloadthe app from the App Store, from
the Amazon App Store or theGoogle one for their Chromecast.
(19:05):
And because we were the onlyones doing it and there were loads
of people that were searchingfor this stuff that was kind of wasn't
necessarily your traditionaldigital signage. We were. We were
easily found. So we were onlypeople there. So if you went onto
Amazon and said digitalsignage or anything related to digital
signage, we were the only onesthat were coming up. So people. We
were just getting discoveredfor free. And yeah, people were just
(19:30):
downloading it because it was.Because we were doing a free trial.
There was just no barrier toentry. They could just download it,
play around with it. Theyalready had the. The stick probably
for some other reason. So,yeah, that was. I think that was
massively influential for usin the early days. We hadn't planned
it, but it was.
That's great.
But I think it's somethingthat I say to people that I work
(19:52):
with now is you need to bediscoverable, you need to be where
people are looking. And itmight not be necessarily the obvious
places. It might not be thatthey're saying, hey, I'm going to
go on to digital signage. Idon't know like a new site about
digital signage because Ihaven't even considered. That's what
I wanted. I just wanted to. Ihad this particular use case.
You had that advantage for ayear, maybe.
(20:14):
Yeah.
You said that other peoplethen caught up pretty quickly. So
your point of differentiationwas technology based. Other people
were able to catch up. How didyou handle things then? Like, so
a year, maybe a year and ahalf in when there's more competition.
Because we'd alreadyestablished ourselves, we had, you
know, content was stillreally, really important. And there
(20:35):
was a direct correlationbetween traffic and trialists, which
again, as I've learned since,especially when you're doing enterprise,
the two might not be asclosely matched. But yeah, if we
could drive more traffic, wecould drive more trials and people
at scale behave in apredictable way. So we could be pretty
(20:55):
clear that the more traffic wedrove, the more trials we'd have
and the more conversions we'dhave. We'd also raised money at that
point so we could start doingadvertising. We were working really
hard on the product. In fact,we decided about two years in to
completely rebuild the productbecause we realized, I think our
investors said if you want toget to $100 million, you're going
(21:17):
to struggle if your averageannual contract value is $600 kind
of thing, you're going to haveto, you know, you're going to have
to get tens of thousands ofcustomers on board. So we realized
that we needed to startappealing to more enterprise customers.
And we also realized that theproduct that we'd built, which was
really just an mvp, we werejust trying to solve a problem, actually
(21:37):
wasn't. It didn't really workfor enterprises who had more kind
of security requirements, morecomplex workflow and permissions
and things like that. So werebuilt from scratch, which was great
in some ways, it was great. Inother ways it wasn't because it then
took us another year or sobefore we launched the new product.
So we had a load of customers,we'd spent a load of money rebuilding
(21:59):
this thing and not a singlecustomer had used it. But it meant
that we, you know, all thekind of product mistakes or things
that we'd learned we couldthen put into the new product. So
it was, it was quite a boldthing to do, but it turned out to
be the right thing to do. Sowhen that was launched, the product
(22:20):
was sort of technically hadkind of outrun some of the competition
at that point. But I alsothink, you know, we'd built a bit
of a brand. We've got areputation, we've got a great portfolio
of customers. We had somegreat case studies. Once you get
out of that kind of early bitand you can start shouting about
all the great things thatyou've done.
(22:41):
I mean I always say momentumis really important and certainly
when I was building thisbusiness, nothing like the scale
you guys have built. But thatmomentum sort of feeds, it ends up
feeding itself, I think. Andone of the challenges I've had in
the market for the last two orthree years, when confidence gets
sucked out of a market,everyone's momentum kind of slows
(23:02):
down and that then slows. Thatin itself kind of compounds the slowing
down. So I'm hoping that 2025we might see some green shoots again.
Yeah.
Let's think about marketersnow and like why people might productize
and why marketers and agencypeople in particular might be ideal.
(23:22):
What, what advantages do youthink people who work in marketing
agencies specifically are wellsuited to SaaS?
This isn't really marketers somuch, but agency owners or anyone
who started their ownbusiness. You have that entrepreneurial
DNA. You've kind of built yourbusiness, you've probably built it
without any financial help.And I do think sometimes we underestimate
how much that puts us in arelatively small club. People who've
(23:44):
built their business fromnothing on their own, you know, not
everyone does it and you kindof just take it for granted because
everybody else around you hasdone it. But actually that puts you
in a, you know, quite aunique, unique position. So I think
having that kind of, that gritand those battle scars I think are
really important. You're alsoprobably capital efficient by nature
(24:04):
because you've had to be,especially if you haven't raised
money. You've had to kind ofreally make sure that you've used
that money wisely andinvestors increasingly are appreciating
that it's a double edged swordas well because I think it can have
a negative impact when you'reresponsible for a fast growth VC
backed technology company. Butnevertheless it's still a good thing
(24:25):
to have. You probablyunderstand the vertical maybe probably
better even than people whowork in the vertical because you
might have, you know, I'mworking with a company at the moment
called Pixelate and they havea product, they're an agency, but
they just work for membershiporganizations. So they know everything
that every membershiporganization probably better than
(24:46):
people who work in Membershiporganizations themselves because
they're seeing tens and orhundreds of organizations. So you've
got that kind of insight thatI think gives you a massive advantage
depending on type of agencyyou are. But you might have a team
in a box already. So like us,we were mucking around with ideas
in our downtime, which I thinkis fine. In the early stages, you
(25:10):
have to kind of move it fromjust stuff in the downtime to making
it more specific or more, youknow, putting more effort into it
than just when you haven't gotother stuff to do for it to really
fly. But early stages, whenyou're just, just experimenting and
doing MVPs, imagine if you, asI say, if you just came out of a
bank as a career in a bankerand you write, I'm going to. I've
(25:32):
got this great idea for a SaaSstartup. You wouldn't, you, you couldn't
just kind of do things in yourdowntime unless you were personally
a coder or you would probablyhave to go and hire a team or outsource
it or whatever, like. Butyou've just got that thing kind of
there. So I think, yeah, thekind of the entrepreneurial grit
and, and just having thatknowledge, I think gives you a massive
(25:54):
advantage over others.
We're taught to experiment,right. You take an idea, you test
it, you validate it, and if itworks, you scale it. And we talked
already a little bit aboutScreenCloud was your 15th or 16th
product, which implies you dida lot of experimentation before deciding
that's the one.
Marketers generally, they'repaid to be creative and to come up
(26:18):
with ideas and to try andsolve gnarly problems. And also,
I think, think also bringingtheir A game to lots of things at
the same time, I think, whichagain, lends itself to that idea
of coming up with ideas forproducts or trying to identify problems
that you could solve in adifferent way. So, yeah, for sure.
I think if it does put you ina good position, I think I'm not
(26:43):
disparaging of otherprofessions, but I think you are
kind of, you know, you'reexposed to that kind of thing on
a daily basis. Like, we've gotthis product, we've got this product
that we need to sell and weneed to have an innovative way to
sell it. So you're constantlybeing ambitious. Thing like that.
Yeah.
And there's a good history ofagencies creating pretty famous products.
Yeah.
In the book, you name a few.
(27:04):
The ones that people alwaysbring to mind are people like 37signals
and Basecamp. So they had anagency for a bit. They had this product
project management tool anddecided to productize it and then
thought they'd give it a go.They'd say, well, let's see if we
can get $5,000 of monthlyrecurring revenue by the end of the
(27:24):
year. I think they hit itwithin two or three months and eventually
thought, well, let's do thisand stop doing the agency. Mailchimp
is another good example. Youknow, he had the. Ben Chestnut had
an agency that was buildingkind of ads, you know, small digital
ads and things like that, andrunning email campaigns for their
clients. And then he automatedit. It realized that he could turn
(27:46):
it into a product.
Yeah.
But then, you know, closer tohome, I mentioned Pixelate earlier.
They were a digital agency, 20years old. They productized the sort
of functionality that theybuilt for membership organizations
and sassified it, and it'scalled Ready Membership, and that's
its own standalone SaaSproduct now, still with a lot of
(28:08):
professional services on topof it.
Okay.
Another company I'm workingwith called Studio Graphene, which
is an agency, they've justlaunched an IoT food monitoring SaaS
service, which is really earlystage. So Pixelate are quite a long
way down the line. They'redoing a significant amount of revenue
from Ready Membership Telson,which is the product that Studio
(28:30):
Graphene has spun out. When Imet them, they were at the idea stage
and now it's revenuegenerating. But it's still early
days and you.
Seeing still then people,they're building a product and they're
focusing on that, but wrappingservice around it.
Well, in Pixelate's case, it'svery much an enterprise sale and
you can't really. They haven'tmanaged to disentangle it yet with
(28:50):
Telson and Studio Graphene,it's a completely different product.
So it's standalone.
Okay.
There aren't reallyprofessional services. There's a
little bit, but it's not to dowith the agency thinking about.
Setting up or productizingsomething you do. Or let's just say
if you're thinking aboutstarting a SaaS company, what are
some of the early steps you'dadvise people to take?
(29:11):
I think we spend a lot of timethinking about the answer and not
really much time thinkingabout the question. And what I mean
by that is we're taught tokind of like, the question's easy,
just what's creative? Is theanswer. But actually if you put more
effort into what the questionis, so what are you really trying
to solve for the customer? Theultimate End user, what ultimately
(29:35):
is their problem. Andactually, if you can spend more time
thinking about that thansaying, hey, I've got a great idea
how we can use thistechnology. By the way, we didn't
do any of this. So this iswhat I've learned post. But you think
about, we used to be quitehappy with the way that you took
a taxi. Uber came along andcompletely changed the way we thought
about riding taxis. And whatthey did was effectively said, well,
(29:56):
look, I think, you know, whatare the steps currently for taking
a taxi? You have to go andfind the taxi. You have to tell the,
get in, tell the guy whereyou're going, get to the other end,
make sure you're there, paythe amount of money, work out what
the tip is, take the receipt,claim it back, all that kind of stuff.
And Uber just said, actually,all you have to do is say where you
want to go and then, then paythe tip. So they've taken out what,
(30:18):
six or seven steps withinthat. So I think that's where the
innovation comes from. It'slike thinking about that, really
understanding the question andthen trying to figure out how can
you use technology to removesome of those steps. The other thing
for me is, which again, wenever did, is it's really important.
There's two ways I think, thatI talk about in my book actually,
(30:39):
of validating an idea. One islike internal validation, which you
can do for free reallyquickly. And you know, really, that's
one of the, one of the waysaround that I think is really asking
yourself the question for B2BSaaS, unless it makes people money,
saves people money or keepsthem compliant, anything else is
a nice to have and you'renever going to scale that. So you
(31:01):
have to be brutally honestwith yourself when you're, when you're
thinking about the things thatyou want to produce genuinely, is
it going to make someonemoney, save them money, or keep them
compliant? If it's. Well, youknow, doesn't quite really do any
of those things is probably anice to have. So that would be the
first thing. And the secondthing is, does it keep the CEO awake
at night? Is the problem thatyou're trying to solve or unlock
(31:23):
keeping the CEO awake atnight? And with ScreenCloud, we didn't
realize this, but we thoughtthe problem was that there were blank
screens. People had screens,they're either blank or they were
showing Sky News on mute.That's what we thought was the problem.
But actually the reason why westarted ScreenCloud is because I
wanted to put KPIs. We had anagency, I wanted to put the KPIs
on a screen in our office andwe couldn't work out how to do it
(31:44):
other than having a Mac minigaffer take to the back of the screen.
And the reason I wanted to dothat is because I perceived that
when we were doing our kind ofmonthly updates, the team, that they
weren't really engaged. And Iremember at Reading Room, actually,
we used to have a flip chartwhere we used to write how much money
we generated that month andhow close we were to our targets.
(32:04):
And for me, it was a real kindof compelling way to get everybody
behind what you were trying todo as a company. Like, hey, look,
we're 20,000 quid off hittingour targets this month. What can
we do? What can we invoice?What product can we finish? What
project can we finish? So Iwanted to kind of install some of
that because I was worriedthat people weren't caring and it
was having an impact on ourrevenue. So the thing that was keeping
(32:27):
me awake at night as the MD ofour agency was we're not hitting
our revenue targets and nobodyseems to care. ScreenCloud of did.
It was unlock, to my, to mymind, unlock some of that opportunity.
So it's, it's, it wasn't thatI was looking at screens and going,
I'm really annoyed thatthey're blank. That's. That would
be a nice to have. But I waslooking at those screens and saying,
(32:49):
I think they can actuallychange something within our agency
and that's that. And it canmake us more money effectively. So
it's unlocking a particularproblem. So I think that's really,
really important. And you'vegot to be brutally, brutally honest
with yourself. If it doesn'tdo either of those things, it's probably
a fantasy. So. And then thesecond part of product validation
is actually talking tocustomers. It really is about. I
(33:10):
mean, I recommend a great bookcalled the Mum Test here, which I
don't know if you've heard ofit, but it's a re. The thing that
you can't do is go out and go,hey, I've got an idea for a business
and show them a kind ofwireframe because they're just going
to tell you, yeah, that'slovely. I like it, really like it,
what you really need to do.And again, working with a few people
recently about this. So I wasworking with one company, they're
(33:32):
an agency, like a datacompany, and they built a product
which was a benchmarking tool.
Okay.
And I was like, and. Butnobody, none of their customers were
really using it. They'regiving it away for free for a year,
hoping that then they couldturn around and say, hey, do you
want to use it?
Yeah.
And they were like, yeah, no,they're just not really engaged.
And I was like, have you askedthem the question, do you benchmark
(33:53):
your data against yourcompetition? They were like, no.
I was like, why? And really itwas because they didn't want to hear
no, they don't want to hearno. I was like, you've got to come
up, We've got to come up nowwith two or three questions that
absolutely terrify you becauseotherwise you won't get the information
that you need. And also thosekind of questions might reveal something
that you hadn't reallyunderstood before. So it's really,
(34:16):
you've got this validation,you've got some of it in your own
head that you can just do. Andthen you've got this free resource,
which is customers. Butweirdly, we don't ask customers.
We just hope, fingers crossed,that we've kind of figured something
out and they're going to loveit. But actually the customers are
out there and by and large,they'll happily talk to you for free.
And if you do it in the rightway, you can get some real massive
(34:39):
insights.
It is a special skill, though,speaking to customers, isn't it?
Because, I mean, I thinkcertainly my experience of doing
it as, not as a startup, butif you like, as an incumbent and
asking about service standardsand service improvement is what they
tell you they want isn'talways what they actually want. Want.
Yeah.
So I think you have to focusin on their problems rather than
(35:00):
offering them a solution andsay, would you buy this?
I mean, I was, I was doingsomething with a customer recently
and their, their brandingagency had come in and said, right,
this is. We've got this greatidea is. And they'd come up with
this kind of concept. And Iwas like, have we talked to customers
about this concept? I couldn'tsee how that would relate to customers
particularly. But I was. So Isaid, right, let's go and have these
(35:21):
conversations. And I waspushing the kind of conversations
I was having was, what was itlike before you use this product?
Okay.
And they were like, wow, youknow, it took me so much time to
collate data. And I was like,well, wow, wow, that. Okay, what
was the, what are the impactof that? Well, I didn't have any
time to be really strategic. Isaid, okay, I kept pushing, kept
pushing, and eventually hesaid I missed out on a promotion.
(35:43):
And I was like, oh, yeah,okay, well, tell me about that. So.
And then he starts saying,well, yeah, they didn't think I was
strategic. They thought I wasa kind of data monkey, but I am strategic.
I just didn't have time. Andso you kind of think, okay, that's
a massive insight there. Sowhat can we do? Maybe the messaging
is around how we make you ahero amongst your bosses and how
we make it really easy for youto produce really insightful research
(36:08):
documentation or somethinglike that. I wouldn't have got there
if I'd said, hey, I've gotthis idea for a product that allows
you to do, I don't know, niceresearch papers. He wouldn't have
told me anything that wasuseful. But it's just, yeah, getting,
pushing, pushing and pushingwithout leading. That's. I think
that's the challenge. Don'ttell them, what do you think of this
idea? Because they're going totell you, they're going to say it's
(36:31):
nice, which is just becausethey want to get off the call, you
know. And also, people don'tlike to hurt other people's feelings.
So this reminds me, actuallyfun enough sort of back where we
started. But these are some ofthe conversations back in the incubator
days that I used to have withstartup founders. And one of them
is like, being really clear onwho the customer is, like who's actually
(36:51):
paying. And you're mentioningof Uber makes me think of that. So
I was involved with a smallgroup of people in about 2013, 2014,
and we were trying to solvethe wrong problem. So we were looking
at taxis, we were looking atminicabs and thinking the problem
with them is they're alwayshalf of their time they spend being
empty. So can we create apiece of technology that allows them
to get paid in bothdirections? So Uber solved that problem.
(37:12):
Yeah, but they solved a biggerproblem because the customer isn't
the minicap company. Thecustomer is the person taking the
car. Car. So their customerwas more powerful than ours and they
were solving a bigger problem.So I think part of the challenge
when you're thinking aboutdoing something new is being really
clear on who the customer is.Because if you're like. In our case,
we were looking at drivers andminicab companies thinking that they're
(37:32):
the ones that have the power.Actually, it's customers that have
the power. They pay the bills.
We were exactly the same. Webuilt one product, it was called
Get Dash, it took us a year.We had this idea, or rather Luke,
our CTO had this idea and hejust went off and built it and we
didn't talk to a singlecustomer. And then when he did the
ta da, it was like, you know,it wasn't different to what we thought
(37:53):
as co founders, what it wasgoing to be. And then we'd all fallen
out in fluff with it becauseit would have taken so long and never
saw the light of day, really.We spent over a year and God knows
how many thousands of pounds.But yeah, if we'd involved customers
and actually had conversationsearly on, it's still. It's weird.
I don't know why, but asagency owners, we probably, and marketing
(38:13):
departments as well, weprobably advocate customer research.
That's part of the thing thatwe do. But when it comes to our own
thing, we're like, nah, I'mnot gonna do that. We know the answer.
We know the answer.
Yeah.
Rule number one, you are notthe customer. Right.
Quite often people say to me,you know, because of my background,
they'll say, oh, I've got thisgreat idea for a SaaS business. Can
I show it to you and you cantell me what you think. And I kind
(38:35):
of say, yeah, you can do, butit's kind of irrelevant what I think
because I'm not your customer.Like, I could, you know, I could
blow smoke up your ass if youwant me to, but actually, you'd be
much better off talking to anactual customer than me. Me than
me. There's only a limitedamount of value that I can add.
Huge value.
Well, I can some areas, but Icould add value in terms of how you
(38:55):
might go about launching theproduct, but I can't really necessarily
tell you whether the productis valid or has legs. You have to
talk to an actual customer.
And so we're talking mainlyhere about, I mean, I mentioned earlier
digital products, butspecifically we're talking about
SaaS. And I noticed recentlySalesforce has announced they're
going to change or they'rethinking of changing their billing
(39:16):
model, I think away from a perseat to a usage model. A bit like
Azure or aws. Do you thinkthat that puts in doubt the future
sustainability of the wholeSaaS model, or do you think that,
I mean, is this was SaaS amoment in time or do you think that
there's still legs for thatfor that model?
(39:36):
Again, I think it all comesdown to the customer, ultimately.
So, I mean, do you rememberwhen we used to. To have mobile phones
and you used to have to payper text and per. Which is kind of
annoying, right?
It was really annoying.
Aren't we happier now that wehave? And the reason is because you
have a kind of I know how muchit's going to cost me each month.
And so for some customersthat's really important. And for
(39:57):
some customers the usageelement is actually scary because
it might be something they'vegot no concept of. So we within ScreenCloud
one of the things that we didwas a tool that allowed you to live
stream. And for us the cost ofthat was directly related to, you
know, how many people werewatching it and how long the stream
(40:18):
was and all that kind ofstuff. And so we were like struggling
with how are we going to dothis? And we thought about a kind
of usage model. But we thoughtactually for customers it's really
complicated. They just want tosay it's X dollars per screen per
month because then they canbudget for it. If they're kind of
saying, well it's this. But ifyou have, if suddenly one month your
(40:40):
CEO does a live chat and loadsof people log in, then that's going
to cost. And they were like,well we've got no way of knowing
what this is going to cost usin that case. And so I think there's
room for both really. I meanit makes sense I think especially
where it's very direct, thevalue you're getting as a customer.
So for example, we used to usea tool in our billing which would
(41:01):
do automated dunning, creditcard checks. This is again when we
were a product led growth,self serve type product. And the
way they build was the amountof money that we save you from people
churning and not being ableto. We'll charge you a percentage
of that. So for me that waseasy. That was a no brainer. It's
like, okay, so I'm gonna loseless money and I'm gonna give you
(41:24):
some of that. That's that thatmakes. That doesn't kill my budget
if something sort of takes offlike actually weirdly aws. Like we
got stung a few times withaws. Yeah, but obviously you accept
that. But it's just a lot ofcustomers aren't necessarily technical
or don't necessarilyunderstand the usage basis. So it
might not work for them but Ithink with all these things it's
(41:45):
going to evolve. And yeah, theother model that I've sort of seen
is 37 signals have brought outthis thing called once. Did you see
that?
Okay, no, I haven't seen that.What's that?
They've repackaged, I think itwas Campfire, which is a product
they had a SaaS product had awhile ago and said, look, instead
of subscribing to it, you justbuy it. Okay, 250 bucks. And it's
(42:05):
a sort of, it's like, they sayit's a bit like Slack. So instead
of paying $20 a month perperson or whatever it is for Slack,
which if you're a hugeorganization that can ramp up, you
can just buy this bit ofsoftware once and you host it, you
install it, you run it, but itdoes all the functionality that's.
It's a sugar.
CRM did that as well. Yeah,they've got a. Yeah.
(42:27):
And so you say, okay, wellthat's an interesting model as well.
I mean it makes sense. It onlymakes sense if you're a company that
feels confident enough to kindof host your own SaaS product. And
also it has to make sensecommercially for the people building
the software. And I think forthem, obviously they've got a big
reach so they can sell lots ofthese things. And I think a bit like
(42:47):
the old days when Adobeupdated Photoshop, you'd go and buy
another cd. I think it's a bitlike that. Like they might say, well,
if you want to upgrade to thenext version, you have to pay again.
But again, it might work wellfor some products and not well for
others. So I think we probablywill see emerging models like that.
But I don't think it kills.
It's not going to kill it, isit? I mean, I think in Salesforce's
(43:10):
case, maybe their per seatlicense, certainly enterprise license,
unless you're really using allthe functionality, is pretty chunky
these days. And maybe this isa reaction to allow to try and grow
the audience because they are,are de facto the gorilla in the marketplace.
So how are they going to grownow? Yeah, they have to change something.
And P price, being One of thefour Ps is an obvious place to look
(43:32):
at. Can we change the waypeople perceive about, you know,
perceive price?
And the other thing to thinkas well is that, you know, the, the
outcomes are shared in as muchas if you have low use, even if you're
playing per seat, if you'vegot low usage, if no one's actually
using your product, they'regoing to churn anyway. So it's in
your interest as a SaaScompany to ensure that people are
(43:52):
using the product all the timeor as much as possible. So again,
I think it just comes down towhat is most valuable to the customer
and makes most sense to themand doesn't kind of put them in a
situation where they suddenlyend up with a massive bill they weren't
expecting.
Right, let's talk about yourbook. What made you want to write
a book that's a labor of love?
Yeah, yeah, it's interesting,actually. At ScreenCloud we did.
(44:14):
Me and my co founder startedwriting. We wanted to create a new
market category and thought weshould write a book, which is kind
of what the guys at Drift did.
Okay.
They wrote a book calledConvers Marketing and that created
a whole new category. Andwe're like, let's do that for ScreenCloud.
So we kind of signed up for acourse and it was like an online
course and sort of learnedabout how to structure a book. And
(44:35):
as we were writing it, I waslike, this is tough. This is not.
You know, it's an interestingidea, but I'm not sure what we're
writing is going to be thatinteresting. And so we never actually
finished it. But in my head Iwas thinking, God, if I was doing
this, but if I was doing it,about that journey from agency to
SaaS, I've got so much to sayabout that. And so, yeah, I guess
that was a kernel of it. Andso I just. Yeah, just started writing
(44:56):
it. And in my head I wasthinking if I'd like to write all
the things that I wished I'dknown when we started ScreenCloud
and avoid some of the crazymistakes that we made and, you know,
the assumptions that we'd madeand the things that I just wasn't
aware of. You know, I didn'tknow anything about raising capital.
I didn't really know anythingabout SaaS metrics and the importance
(45:19):
of that. I didn't really knowhow to validate an idea. I didn't
understand how to structure aSaaS sales team, how to kind of make
sure that you're trackingthings in the way that kind of can
allow you to improve resultsand things like that. So that was
really the kernel of it.
It's good work. It was a goodread, certainly. And one of the things
(45:39):
I really enjoyed on LinkedInis seeing people who are talking
about the book, like randompeople I know have found their way
to the book and they'retalking about it online. It's kind
of cool.
I've had a few instances whereI met someone, someone a couple of
weeks ago or maybe a month agowho'd read the book and I didn't
know him. I'd never Met himbefore and he said, I've read your
book, and then started quotinganecdotes from the book to me.
(45:59):
Really?
And then this morning I wokeup and had a really nice LinkedIn
message from someone saying,hey, I've read your book. And you
know, everything. You'reevery. I can't remember what you
said. Every paragraph. I'mliving exactly what you're talking
about.
Oh, really?
And those sorts of things,that just makes sense.
And he wants to find a way out.
Yeah, exactly. And I have amassive fondness for agency owners
(46:20):
because I was one. And alsokind of think, oh my God, you know,
the difference between I don'twant to slag off agencies and I know
you don't want to talk aboutagencies, but the difference in terms
of financial value that you'recreating as a consultancy and it's
a multiple of EBITDA. Comparethat to multiples of ARR when you're
valuing a SaaS. And it's justlike you could, you know, you could
(46:44):
make something so much more significant.
Yeah. A totally differentgame. So if anyone does want, if
you're listening in an agencyand you do want to sell it, come
speak to me because you can. Icome by your agency and you can go
on and build a, build aproduct with David.
David. Yeah, yeah. It's justkind of like. It's perfect. Joined
up. We should start abusiness. We should do that. SaaS
business.
Look, if people want to get intouch with you now, if they want
to get your help or whatever.How do they do that?
(47:06):
Either go to my website, DavidHart IO, it's got everything on there.
I write a weekly newsletter aswell. Sign up to that if you don't
want to shell out for a bookjust yet or buy the book and then.
Yeah, if you want to. Youknow, I work with people in different
ways. I'm a non exec directorfor about seven or eight.
Okay.
But obviously I probably can'tdo that anymore. There's a limit
(47:28):
to how much you can do ofthat. But I, I kind of. Yeah, I.
There's not really a one sizefits all. So I'm kind of doing a
bit of advisory work, like,you know, coaching type work, as
well as kind of runningworkshops and yeah, it just really
depends really how. How peoplewant to work with me.
And now we're going to lunch.See ya. Big thanks to DAV for coming
(47:50):
to the studio to see us. Thereare five copies of his book that
I have on my desk waiting togive away. Nothing fancy. Today.
No landing pages, no datacapture, nothing like that. All you
need to do is email me atunicorny@selbeyanderson.com and tell
me why you think you shouldhave a copy of the book. I'm going
to choose the five bestanswers and I will send one to you
(48:13):
if you are one of the best.Thank you very much for your time
and we will see you next weekon the Unicorn Marketing Show.
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