Slow Growth Is A SaaS Killer: Uniting Product And Business Will Help You Stay Alive

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In our industry, rates of growth that are considered normal in other sectors just do not cut it. Mckinsey found that (these stats are five years old but still hold), if a company is growing at 20% per annum–a rate most managers and investors in other sectors would be more than happy with – it still has a 92% chance of being dead within a few years. This is a sobering reminder that growth is all in our line of work: grow slow, and you will die young.

How do we avoid this? A problem many software companies have is seeing product and the business as binary: thinking about themselves as a product company that builds really well, or a non-product company that sells really well. Perfect products are built at the expense of short and medium-term revenues, or pushing for increasing revenues subordinates product innovation.

There are several ways this pans out. One that many people in our industry will be familiar with is tacking on feature after feature for individual customers, only because they are willing to pay you. Your product suite becomes sprawling, and you just hope that other customers will want the same products.

The issue is that no one will be able to understand this mess, or how products cohere, let alone explain that to anyone else. Over time, you are no longer solving a pain point for multiple customers, but merely reacting to the demands of those propping up an increasingly stringy business. And at this point, it is not just the product that has suffered, but the business as well.

How do you find a middle way? First, do not silo functions. The commercial and product sides of the business have to foster some kind of collaboration–i.e. you need to find a way for product to understand what sales are going through, and vice versa. One way of doing this is to spin up cross-functional teams, where individuals from different areas can work together on a project. Another is to run problem-solving workshops around challenges the business is facing.

And second, doing this must never be seen as a compromise–rather, it needs to become business as usual. It is still common for a product team to refuse to alter a six-month roadmap for delivery, even if there is a commercial impetus to do so. If anyone sees building a commercial product business as inimical, they misunderstand where our industry is: revenue is the only way to survive, and you can only make money if your products are superlative. And, you can only build the best products if you have the ability to make money–otherwise, it is all academic anyway.

Key to all of this is vision–the daily reminder of why, actually, at every software business, we are all working towards a far greater goal. You build a product to sell a product, and you can only sell it if you build it well in the first place. But neither of these things, even in aggregate, are the sum of the parts; they are two parts of the whole.

SaaS companies are selling now, but building for the future. We need to make sure we keep selling, in order to usher in a future we all know is possible.

I am the founder and CEO of Paddle. Prior to Paddle, I created my first software business from my bedroom at the age of 14. Having grown the business to over $1m in r...