SaaS Interviews with CEOs, Startups, Founders
Top 3 Growth Opportunities for Founders in 10 Mins
28 Jul 2023
Chapter 1: What is the main topic discussed in this episode?
I'm very excited to share this recording with you guys, which happened at our conference, sasopen.com, with over 100 speakers, all founders of B2B SaaS companies. We have a very high bar for what speakers share on stage, so you're going to enjoy this episode where we dive deep into revenue graphs, real tactics, and real growth metrics.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool.
Chapter 2: What are the challenges faced by founders in 2023?
It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com.
Well, uncertainty, recessions, and layoffs. Welcome to 2023, right? It's been a crazy year so far. But, you know, recessions are a normal part of the economic cycle. And they normally follow a fairly predictable path.
Chapter 3: How can recessions create growth opportunities for businesses?
And because of that, we can leverage that into opportunity. So recessions are fairly predictable. So every wind, every headwind produces some sort of tailwind. And so what I want to talk about today is how to catch that wind and propel your growth into 2023 and well beyond.
So at the beginning of a recession, spending drops and leaders will take a pause and maybe they'll cut back a little bit and they hope that it'll pass. Over time, a tipping point occurs. And then they really get serious about cuts. Layoffs start happening.
Chapter 4: What strategies should founders implement during economic downturns?
And as they start cutting people, they also start cutting nice-to-haves, solutions that are redundant. That gets the boot. And we've seen that in Q1 in a huge way. 389 companies. 139,000 people in the tech sector. Gone.
Gone.
The crazy thing is that with unemployment, that is a lagging indicator of recession, not a leading indicator. So when that happens, we're already in it regardless of what politicians say. So how do we leverage productivity into opportunity? Well, one of the things that happens is leaders will look at it and say, okay, in addition to preserving cash...
I'll drop prices because if I drop my price, then demand will stay the same. And that may work for a little while, but it starts to create a downward spiral. Because lower prices mean lower margins. Lower margins mean you have less to invest in differentiation.
Chapter 5: How can companies maintain differentiation in a competitive market?
Weaker differentiation creates a spiral. And as competition heats up, then margins get lower and it becomes more of a race to the bottom. And business is devalued because a business that has low margins and less monopoly control, less unique, yes, less differentiation is less valuable to acquirers. So what should we do instead? How do we keep things going in a positive direction?
We're going to talk about that. We're going to pull some lessons from Scuba Divers. So we'll talk about some lessons from the world of fish and the ocean today. It'll be very fun. We're going to create a model together. And so we'll do the first part of that. We're going to talk about the yes box. How do we position your company in what I call the yes box?
When a recession happens, if we look at this here, we look at the total cost. It's not about dropping your price.
Chapter 6: What lessons can be learned from scuba divers for business growth?
In fact, you should probably raise yours, but that's a story for another time. On that left side, we have the total cost of a solution. And this is the total cost. This includes hard and soft cost of a solution. So the people that run it, all of the ancillary things around making that solution go. And so your clients have to drive costs out of their business model.
On the bottom, they're not ready to take a step down in quality. And so what they're looking for is something that is a high-quality solution, but they have to take costs out of their business model, and that's where you come in. It's providing a solution that fits the need, that users love, and that delivers the outcome that is promised. So if we look at the thing over here with total cost...
This is all the things that are in that. And this is all, I call it, it's all the ancillary crap that goes along with a solution, what they're doing today to solve a problem. And the quality is how much of a pain in the butt is this thing to use? Because if a solution's not used and they don't get the benefit of that solution, and that's what your solution can deliver is that benefit.
So it meets the outcome, users love it, and it solves the need. And isn't this always a good idea? And the answer is, well, of course it is. But we have a unique opportunity right now because inertia has been disrupted. And anybody ride a bike on a regular basis? Ever ridden a bike?
Chapter 7: How does focusing on a niche market lead to business success?
Ever seen a bike? All right, so we got, yes, okay. Inertia is disrupted. You know, if you're riding a bike and you take your hands off the handlebars, you just keep riding going. The momentum keeps you going. If you stop pedaling, inertia just keeps you going. I was out riding one night and riding along and having a good time. Headphones, I had my earbuds in, listening to music.
And I had a speed bump. I didn't see it. One minute, life was fantastic. All was good in the world. And the next, I'm flying over the handlebars and eating pavement. And that is what is happening to your prospects right now in this economy. I mean, ask SVB. Last week, inertia was significantly disrupted. Disrupted for a lot of people in the industry.
But if you look back a month ago, if you're in banking and you're trying to get those accounts, it's a cool kid's bank. You're not going to get those accounts. They're not going to move.
Chapter 8: What makes an offer irresistible to potential clients?
Inertia was disrupted. And now they're all in play. Disruption creates opportunity. And it creates opportunity for you and your business as well. So as the recession goes on, we have the early stage, guest boxes where people are moving. And as time goes on, that gets a little bit bigger. They're more willing to compromise on cost and in quality.
But that's the place to dominate is in driving cost out of their business model and delivering a solution that users love, that meets the expectations, that delivers the outcomes.
that you promised so we're going to pull some lessons like I said if you do that out that the yes box we're actually going to build on that today and so three lessons from the world of fish the first one is to get big go small when I introduce you to one of the most fearless creatures in all the ocean actually reminds me of you entrepreneurs and that they see opportunities where others see threats and
This is the Blue Street cleaner wrasse. It has a very unique function in the ocean. It eats parasites and dead tissue off of other fish. It keeps fish clean from all over. Small fish that live on a reef, fish that live and spend their entire lives in the open ocean. Manta rays, tarpons, even sharks will regularly stop by for a scrub down.
Call these guys the shark's dentist because it's actually one of the most or one of the only creatures in the ocean that will voluntarily swim into the mouth of a shark or barracuda and is allowed to swim back out again. But everybody wins. The sharks get clean or the fish get clean and the cleaner fish get a free meal. They don't chase clients. They don't hunt. They don't they don't pursue prey.
fish actually line up for them. And so how would that change your business if clients lined up for you and you're able to deliver to them exactly what they wanted every single time in your business? You know, most SaaS marketing funnels, I mean, look like this. They're huge at the top. And so you may have an ICP. You may say, well, here's my avatar. I have these conversations all the time.
It's like, wait, who are you really selling to? And it's, well, it's small business and sometimes medium-sized companies and large companies and companies with lots of employees and solopreneurs. And then we kind of get down to it and it's like, well, okay, it's anybody I can convert from a trial or who will have a sales conversation with me. And that funnel is big and it's expensive to fill.
And the crazy thing is it's so big that not a lot of good stuff goes into it. And even more, there's less coming out on the bottom. Because a lot of times what happens is the prospects that are in the funnel don't really know if they're a fit or not. They don't have that clarity. So what do we do? We want to take that funnel and turn it upside down.
There is an inverse relationship between funneling. Big funnel thinking, giant marketing to the masses, and having a very focused, tight message that resonates with your ideal clients. Customized acquisition cost is the highest when you're general. When you get very specific, when you get really focused, it accelerates the sales cycle and CAC drops significantly.
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