5 Steps To Creating A Successful SaaS
Working on creating a SaaS (Software as a Service) I analyzed existing successful models and found some interesting commonalities.
If this sounds like a combination of Metcalfe's Law, value of a telecom network is square its members, combined with creating a positive virtual cycle it felt that way to us too. Back in the day you created a cool tool and an adoring throng found you, made you famous and rich. Today is different. Today your tool must create its own support faster and faster or it drowns.
Fix a problem such as UI for creative commons (Haiku Deck).
Haiku Deck http://www.haikudeck.com Haiku Deck Gallery https://www.haikudeck.com/gallery/featured Haiku Deck already has a PR5 and their gallery is a PR4. The gallery is also becoming increasingly competitive. As the gallery diversifies it becomes smarter and able to make monetization suggestions modifying the original value proposition.
Anticipate an ownable trend such as content curation (Scoop.it).
If Haiku Deck solves a problem (how to use the creative commons) Scoop.it and Paper.li are surfing an ownable trend - content curation. When these tools launched the Google trends line for "content curation" was pointing north, but the speed and steepness of the subsequent adoption owes much to the intensity ADDED by these new tools. Today a successful SaaS MUST create its own community even if most of its cash is B2B. B2B without community is a nonstarter because its too exposed. B2B without community is too costly to promote and can't take a direct hit.
Mashup existing scaled systems (ZipCars).
ZipCar mashes up scaled systems like Facebook, LinkedIn, Twitter combined with a mobile app, website and a creative business model to scale without traditional advertising and at a fraction of what a similar idea / model would have cost 10 years ago thanks to the ability to used APIs and other "scaled systems".
Tools are natural community creators. Early users like to trade notes and recruit friends. The phone is worthless unless your friends use it too, thus Metcalfe's Law: value of a telecom network is square its (M)members. Not unusual to apply Metcalfe to social nets and scaling SaaS. The tool must create an increasingly competitive (and so intelligent) community reinforcing itself where every costs of new member acquisition goes down as current members recruit in order to protect THEIR investment in the scaling community.
Haiku Deck's Gallery.
https://www.haikudeck.com/gallery/featured The Haiku Deck Gallery is a great example of a rapidly scaling, diversifying and increasingly competitive community. Haiku Deck is getting much higher return for less and less work as burden shifts from the Haiku Deck team to vested community members. Where once a handful of team members curated this gallery now an algorithm plays gatekeeper and scale is faster and faster, better and better.
This chart is critical to Scoop.it's scaling community. The chart used to show the very top. Curators at the top now have over 1M views. If a curator just starting out saw Robin Good or Ana Pratas they would give u and stop. Scoop.it changed the view to only show a handful of curators immediately around a member's current race. This brilliant piece of gamification saved and sped up Scoop.it's scale.
Zipcars social, web, car rental mashup.
One thing I've noticed about mashups is they will mashup any and everything. ZipCar is agnostic about WHAT they mashup. GOOD = any mashup capable of helping them scale, lowering their acquisition costs and helping to create community. I think ZipCar is missing a HUGE opportunity to band their users together in a forum-like environment. What will a ZipCar user do if they share a story? Push social to that post. Still a genius mashup.
Community helps scale tool.
If the web isn't working for you faster and faster, better and better its time to pivot. When the web is working for you faster and faster, better and better costs go down and profits are around the corner.
Metcalf's law network value = members (M)squared
Your tool is worth square the members. Why? Easy to see why when you think of your phone. If you were the only one with a phone it is worthless. When every member of your network has a phone its priceless. Tools that create community count on the tipping point where the community becomes so valuable its members protect it with increasing investments of time and advocacy. When people are "Scooping" and "HaikuDecking" things the distance to a safe scale is closer. In a digital age SaaS developers can't take their eye off the ball and relax since even large developments like Facebook can dry up and blow away fast (can you MySpace?)
Community creates value propositions.
One "wisdom of crowds" agreement is any helpful crowd needs to be highly diverse. Diversity = speed to scale and more "intelligence" in the system. Intelligence = monetization and then monetization helps speed up scale (and so on into infinity).
Value ($) creates new tools.
Once the model is firing on all cylinders its increasing efficiency means less time and money in generates greater return out. This is generally where PROS like to get involved. VC can see the engine runing and calculate value of injection some rocket fuel (money).
Scale community more.
Now with the big injection of rocket fuel your SaaS and community are off to the races. The positive virtual cycle is set, and efficiency increasing. Wobbles happen (competitors, members begin to lose interest and reduce advocacy or other unpredictable factors), but the good news is a larger wobble is required to push a speeding scaling train off the tracks.
Self reinforcing positive virtual cycle.
It takes intense WORK, some luck and genius to arrive at this stage where everything is getting better and better, faster and faster.
Successful SaaS needs
SaaS tools that create community can feel self sufficient. They are not. Best to be as agnostic about social mashups as ZipCar and use whatever helps add members, create awareness and scale.
Huff Post Interview: http://huff.lv/18txQES
Great Huff Post interview with Haiku Deck founder Adam Tratt: http://huff.lv/18txQES
Martin(at)StoryofCancer.org Martin W. Smith on GPlus @ScentTrail on Twitter
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