The SaaS Trap Founders Walk Into

0:00So, newer SaaS company, we help inbound sales teams improve their eliminate no shows, improve their sales off and sales efficiency. Um I [clears throat] really think the most helpful thing for me would be just you running through um really the major learning lessons you had from Alex in terms of red flags. But my my background is high-ticket education in Florida estate for some I

0:24think half of them get to it. You know. Do you have this technical co-founder? I do. Okay. How good is he? I start 18 months later. Okay. Well, that could mean that it just took you really long to find somebody who's bad. So, like um 2 years from now you're like, I should have known. Yeah. Um So, it really comes down to like has this person built a software company before? Yeah. Okay, cool. So, fundamentally like the entire game's different than the high-ticket game, right? Like it's all about revenue

0:53retention, it's all about word of mouth. It's It's a product business. There's actually a podcast I just made I don't even know when it's coming out about this, but like what business are you really in? And so, like when I got into Alex, I thought I was in the marketing and sales business because that was the business that I came from. But you're actually in the product business. So, it has to be It has to be basically like taking to its natural extreme, if people

1:14don't stick with it, it doesn't matter. So, basically marketing and doing everything else like it's irrelevant. Right. And so, like unless that's right, nothing else matters basically. And so, marketing and sales in the front end literally only serves the purpose of making the product better until there's a point where it has what I would consider passive growth where it grows on its own and then you gas the living hell out of it and then that's what

1:35makes gazillion-dollar companies. Right? Like the reason I I I I bought, you know, school um was because the passive metrics were awesome. And it took 5 years to get all of the tiny little things right so that it would grow on its own. With zero They have literally they had zero human being who works in marketing. Like not one.

1:59A co-owner. Um and so Yeah, Sam's still Sam's still an owner as well. Um and there's obviously employees that have equity and whatnot. But point being I saw that it was growing on its own and that once people get to a certain point they never leave and that's what you want to have with the business. And so, the either you go like if you want low churn, you either have to go upmarket and find the people who don't turn out or you have to help create the people

2:30who don't churn. So, like the Shopifys and the Spotifys a lot of ifys here. Um there's going to be There's cohort churn, which you're probably familiar with if you're co-founders in this. So, like you're going to have periods of time where it's like, okay, the first 6 months we churn out 80% of our customers, but the 20% after that point

2:52our retention curve's flat. And so, you have to figure out once you get to that data cohort, you're like, okay, what do these people look like? And then you readjust the messaging, readjust uh the marketing so you can get more and more of those people so you get a bigger and bigger slice of them. And funnily, that loop is what we you more or less focus on. Um and then I think about it from when I'm trying to reverse engineer the customer avatar, it's like you have psychographics, like what do they believe? You have demographics, what do they look like? Where are they from? You have geographics or where where are

3:20they? Um and then you have kind of activities, which is like what did they do? So, if I'm trying to reverse engineer what the people who spend the most money with me look like, I look through those those lenses. Who are they? Where are they from? What do they believe? What do they do? And then I try and say in my ads, "Hey, I'm looking for people who believe these things." I look in the places that they're at. Um and then once they're in, I try and get them to do the same things that the people who were successful, who look like them, who talk like them, who

3:46believe like them did in order to be successful. So, like in the beginning, you just do a ton of marketing to get traction in the door and that's literally just so you can like see if people like it, see where they're turning out, see get Basically, you just want feedback. And then once you find what people are liking, what they're successful with, obviously iterate from a product perspective on the road map to do more of the stuff that's core in terms of value, but then on the marketing side it loops back and then that's what informs who you're picking on the front end, who you're

4:14marketing to. Right. So, you're being more specific Yes. on the front end to only call the people that are just the best of the bunch. Yes. Yes. And the hard part is that your sales team won't want to do it and you won't want to say no to Mike. Yeah. But I I understand Mike's company

4:30perspective the next episode. Cool. But that's I mean fundamentally like if you look at Vista um I I became friendly acquaintances with their their head of pricing and packaging and he was just like uh if you don't Do you know what Vista is? So, they're out of Austin, $100 billion private equity. They're They'd be like the fifth biggest company like whatever they're massive. Um And they only they're private equity they build and they buy software

4:53companies. And they triple them in in in 3 years, which is their goal, and they flip them and so um the founder I can't remember his name. Now I feel bad. Um is uh Anyways, Rich did. I'll just put it that way. Um Point being, I was talking to the head of packaging and he said, "You want to know our whole secret?" And I was like, "What, man?" He's like, "We just know our our acquired companies' customers

5:14better than they do." I was like, "What do you mean?" He's like, "So, we go into the data room and we look at all the customers they have and we look at what channels they came from, we look at who they are, how they act, all that stuff." He's like, "Then we turn off all the marketing that's not those customers and we crank the living hell out of stuff that is that. We do

5:30nothing else and the company triples." Cool. Obviously, it's more than that. But fundamentally like big picture strategy, that's what they do. We get more of the people who spend the most money. But people just aren't disciplined. And that's why people just stay poor because then they they try and serve too many people, too many different avatars, they can't say no to money today, so

5:48they don't get the big money tomorrow. Cool. Appreciate it. Thank you. So, if you've hit a revenue ceiling or your entire business relies on you to grow, then I'd love to invite you out to our headquarters here in Vegas to learn how we scale. It's a my team spends 2 days with you to identify the thing that's holding your business back. And so, if that sounds interesting, click book a call and if you're a fit, we'd love to

6:08potentially see you out here in Vegas.