This document discusses the shift from SaaS 1.0 to SaaS 2.0, where companies have moved from prioritizing themselves to prioritizing customers. SaaS 1.0 companies focused on automation and treated people as leads rather than individuals. However, companies like Ford and LEGO that failed to listen to customer needs lost market share, while those like GM that adapted gained customers. The document argues that SaaS companies now need to adopt practices of SaaS 2.0 by seeking customer feedback, treating communication as important as spreadsheets, and demonstrating they are "open for business" through live support.

1. Why Half of You Will
Go Out of Business
David Cancel
#saasfest16
The move from cloud-first to customer-first

2. About David Cancel
• 5x Founder / 2x CEO
• CEO/Co-Founder, Drift
• Chief Product Officer, HubSpot
IPO: HUBS
• CEO/Co-Founder, Performable
acquired by HubSpot
• Owner/Founder, Ghostery
acquired by Evidon
• CTO/Co-Founder, Compete
acquired by WPP
• Investor/Advisor/Director to Various
Companies and VC Funds

3. The MQL is dead.

4. It’s a holdover from the days of SaaS
1.0, when companies put themselves
ahead of their customers.

5. Companies > Customers
The old way

6. Just look at what SaaS 1.0 companies
make people go through in order to
try their products …

7. SaaS 1.0

8. In that first era, SaaS companies
were focused on cloud-enabling.

9. They were only looking inward.

10. As a result, companies stopped
treating people like people and
started treating them like leads.

11. Under SaaS 1.0, databases became
more important than relationships.

12. Under SaaS 1.0, marketing teams
became content farms.

13. Under SaaS 1.0, nearly everything
became automated, including email.

14. Dear {first name},
Did you know that {company} could
benefit from this new feature …
Remember these gems?

15. “Personalization” never felt very
personal, did it?

16. These tactics worked for companies
like Salesforce and HubSpot.

17. But these tactics are not going to
work for you today.

18. Today, whoever
gets closest to the
customer, wins.

25. The secret to getting closer to your
customers ….

26. LISTEN.

27. History has shown us time and time
again that the companies that listen
to their customers always win out.

28. But wait a minute … what about that
Henry Ford quote?

29. If I had asked people what they
wanted, they would have said
faster horses.
-Henry Ford
“

30. Consider this: In 1921, the Ford
Motor Company sold more than
60% of all the cars it manufactured.

31. By 1927, that figure had dropped to 15%.

32. Here’s what happened: Ford was
laser-focused on creating a single,
inexpensive, mass-produced car
(the Model T).

33. And while that car was initially a
huge success, Ford failed to listen
to the changing needs and tastes
of his customers.

34. That opened the door for competitors
who were listening, like GM.

35. In the 1920s, GM recognized that
people were looking for something
new, something that fit their lifestyles.
They didn’t want a one-size-fits-all car.

36. So GM focused on manufacturing
cars “for every purse and purpose,”
and soon began stealing customers
away from Ford.

38. In response to his company’s
dwindling market share, Ford finally
retired the Model T in 1927.

39. It had been in production since 1908.

40. So the next time you see this quote …

41. If I had asked people what they
wanted, they would have said
faster horses.
-Henry Ford
“

42. Remember this rebuttal …

43. It was clear what people wanted,
and it wasn’t faster horses. It
was better cars, with better
financing options.
-Patrick Vlaskovits (via HBR)
“

44. If Ford had been listening to his
customers, the company likely could
have avoided that massive loss of
market share in the 1920s.

45. LEGO had a similar
experience in the
2000s …

46. In 2003, LEGO lost $300 million. Their
prediction for the following year?

47. A loss of $400 million.

49. Unlike Ford, who failed to innovate
when customer expectations
shifted, LEGO had the opposite
problem …

50. They innovated too much.

51. In the ‘80s and ‘90s, LEGO replaced
many of its veteran designers with
recent graduates from top design
schools.

52. These new designers took LEGO in
a new direction — away from the
simple bricks that made the
company famous.

53. The number of unique LEGO parts
soon skyrocketed from around
6,000 to more than 12,000, and the
designs got way more complex.

54. These things are LEGOs?

55. Meanwhile, sales plummeted.

56. The LEGO execs were confused:
These designs were cutting edge,
way more advanced than the older
ones. Why weren’t they selling?

57. Finally, LEGO asked its customers:
“What do you want?”

58. And LEGO’s customers answered …

59. We want to build!
“

60. LEGO’s new direction had shifted
the focus away from building and
creativity, which is what people had
loved about LEGO in the first place.

61. So when Jorgen Vig Knudstorp
stepped in as LEGO’s new CEO in
2004, he acted on this feedback
and made a radical decision:

62. Customers would have a say in all
new LEGO designs moving forward.
(And in 2006, LEGO held its first
design workshop to start making
this idea a reality.)

63. Knudstorp led a charge to put
creative control into the hands of
hardcore fans of the brand rather
than in those of top designers
who had skills but lacked a real
understanding of Lego's history.
(Business Insider)
“

64. In 2010, LEGO reported annual
sales of $2.3 billion.

65. In 2015, annual sales reached
$5.2 billion.

66. This is why we
need to listen to
our customers.

67. And today, there’s no excuse not to
be listening.

68. Why build a product in an internet-
connected world and not lean into
the advantages of that ecosystem?

69. With the rise of messaging
software, customers can
now easily give you 1:1
feedback in real-time.

70. There’s been a fundamental shift in
the way people communicate.

71. Today’s SaaS companies need to
adapt to reflect that shift.

72. Introducing SaaS 2.0

73. Under SaaS 2.0, we put customers
first, not companies.

74. Instead of looking inward & only
listening to internal stakeholders …

75. We look outward, and we seek out
customer feedback.

76. Customers > Companies
The new way

77. Remember what the old approach to
SaaS used to look like…

78. SaaS 1.0

79. Here’s the new model:

80. SaaS 2.0

81. In this new era of SaaS, we treat
people like people, not leads.

82. Under SaaS 2.0, email feels like a
letter you’d get from a friend.

83. Under SaaS 2.0, content is treated
like a craft, not a commodity.

84. Under SaaS 2.0, conversations are
more important than spreadsheets.

85. At Drift, we’ve been using our
messaging app to help make this
vision a reality.

86. In a world where helping is the new
selling and customer experience is
the new marketing …

87. We’ve found that being able to
communicate with our customers 1:1,
at scale, is crucial to our business.

88. And it’s also crucial to our brand.
Communication is how we create
amazing customer experiences.

89. By having live chat on our site,
we’re telling the world that we’re
open for business.

91. Is your SaaS company
open for business?

92. Check out what I’m up to at Drift.com