# Use These 4 Unfair Advantages for Faster SaaS Growth 🚀

Channel: Rob Walling
Video: https://www.youtube.com/watch?v=J7PewSIqwlk
Duration: 32 min
Language: English
Words: 6521
Transcript page: https://viewrankai.com/tools/youtube-transcript/J7PewSIqwlk

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[0:00] [Music] [Music] so today I actually have a short talk today for about 20 minutes maybe 25 if I'm long-winded and then just take a few questions and we'll wrap up and we'll head off to dinner and our fun evening event sponsored by teamwork what I want to cover today is I did a little bit of a research project and I looked at a bunch of the recent a lot of self funded sass that has grown unusually fast compared to the rest of the cohort and so my n is all of the the SAS EPS that I have some type of knowledge of so these are micro comma attendees who have had

[0:48] conversations with these are blog posts these are people being public with their numbers these are people in founder cafe and microphone or Academy whose that people have written in to me personally startups are the rest of us so there's thousands of founders hundreds if not approaching you know a thousand startups and SAS apps and so this is the self-funded edition there's some unfair advantages that that you could use if you're funded but we're not gonna obviously talk about those these unfor advantages I will never if I ever start another app from scratch I will never start one without at least one of these unfair advantages okay so the way I came

[1:24] to this is I was thinking about drip and thinking about over the past year you know some some things we learned more importantly I was thinking why did drip grow so much faster than everything else I've ever done okay and drip drip is doing well I mean for an update we're doing seven figure a are are nine people one of whom is is part-time and you know it's it's good like it's fun I'm learning a lot of stuff and there's four of us here from the team what the the thing that got me started thinking is I was looking at drip and thinking okay so I've done this before

[1:58] right I had hit tail I had wedding toolbox I had done it invoice none of these things CMS themer beach towels is Mike just mentioned I did I've done all this stuff over these years this decade and drip is just exponentially grown faster and so I was like well there's there's market conditions I'm a little more experienced but I wanted to quantify that a little more and so I've made a little broader because you know me sitting here talking about why drip formed my you know 1015 entrepreneurial endeavors isn't actually that interesting so then I went a little broader and I said alright who do I know

[2:29] what's a saps do we know that have done really well and then started looking at data points and figuring out why did they grow faster what was this unfair advantage that these these founders had and so you know you might recognize a few SAS names on this page a lot of them have grown fast you might recognize a few apps on this page there are some WordPress plugins here as well so some of these are here in this room and I just kept going through my notes and all the stuff from the past several years and I came up with four only four not five competitive advantages that

[3:04] I've seen the people who are on that first slide who we all know have grown to 5 maybe 10 X faster than the rest of the cohort that they've have had okay and so I'll talk I'm gonna define these and then we're gonna look at the foreign fare advantages we'll look at how I believe they are a requirement at least one having at least one is a requirement for faster than normal SAS growth and when I say faster than normal I mean to five or ten X and then talk about how to improve yours specifically right because this isn't just about my little research project it's more about how you in the

[3:38] audience as you're starting yours or as you're growing yours can take advantage of one or more of these unfair advantages because the more that you stack on the better off you're gonna be and you know there's I really like the micro conf tradition a lot of us will put up a slide of our us with our children something like that this year I decided to go the extra mile and had some kid who doesn't look anything like me and he has a little joke for you guys

[4:18] so that's it yeah so that's a nine-year-old version of a bad joke if you couldn't tell that from here right he would and you wonder where he gets it from right I think its genetic okay so let's let's define this really quickly and then I'll actually dive into the four and again you know here for another 15 20 minutes so what is it unfair advantage I really like this definition Jason Cohen wrote a blog post several years ago I think it was 5 6 years ago now real unfair advantages and he says the only real competitive advantage is that which cannot be copied and cannot be bought so to keep those two things in

[4:50] mind if you can copy it or you can buy it then it's not unfair ok so let's take an example I might have I may be an amazing developer I may have amazing UX skills but can that be copied or can that be bought like if I raised a million dollars and I have to pay someone 200 grand a year could I find someone else with equally amazing design or UX skills probably okay so that doesn't qualify I'm gonna go through a list of the ones that don't qualify later I was searching as I looked at this stuff and put this list together I was trying to figure out a way to

[5:18] quantify it and this quote would summarized it so we'll look at copied and bought as we walk through each of these so the first one is to be early and this is actually the most common one that we probably think of right it's to be early to a space exam a good example of this is a Josh Pigford with parametric's right he was early to displace he was first to that space of one click SAS analytics for stripe and bunch people came after him but he had that advantage of getting out there and and you know and being early one thing to keep in mind with being

[5:50] early it is a really good advantage but it is temporary your only early until your competitors flood in ok it is only feasible in small or emerging markets and what I mean by that is we can find maybe you know a market for a wordpress plug-in that does something for pet sitters manages their scheduling and you could be early to that market still because it's just really small right an emerging market is an example of what Josh did he got into stripe was fairly new he kind of caught the curve up right if you were to do something today in VR or in you know wearables or whatever like Dez

[6:26] was talking about these are all emerging markets and even like marketing like Mar Tech or marketing technology stuff is kind of new but by definition if you're looking at a mature market you can't be early because the thing is mature right unless you have some type of cool innovation in which case you're creating kind of a new market segment it does require you to move quickly right because if as soon as you see it if you see it someone else sees it as well and so trying to do trying to enter a trying to be early when you are building if you're building a fairly complex

[6:55] project and you're doing it on the side it's pretty tough because you can't move as fast as you know the two-person team would raise a little bit of funding and they're doing it full-time okay so there's there's pluses and minuses and the question that I mulled over is can being early be copied or can it be bought obviously the answer is no and so this does qualify as an unfair advantage and here's some examples of SAS apps that grew very quickly based on their early advantage these are you recognize all of these okay we had Josh like I mentioned with Baer metrics balsalmic pep LD launched do you know seven eight

[7:24] years ago he was early maven him in longer than that he did five hundred thousand dollars in his first year which is just a Cinderella story right and that's what every example I'm gonna give you today is gonna be an outlier and a Cinderella story that's the point is we're looking at well how did they do it what were the takeaways so you guys know I mean I'm into blocking and tackling fundamentals growing but right now we're talking about what's that two five ten x advantage okay so Pell D launched and he was early to the it was like what is it it's like mock-ups and you know building

[7:52] a really easily usable tool to build mock-ups bid sketch actually some of you may not remember but Rubin from bid sketch who's actually been to every Michael combin Vegas until this year because he has a new new baby round of applause for bid sketch he was the first proposal software that was SAS and so he got an early and caught a nice little there first one I remember there may have been one before him but he cut a nice little little wave up there woo themes same thing eighty who was a ATP NR who's a former micro comp speaker was the first premium team seller and he

[8:30] rode that up as well they grew very quickly and then of course prototypical example right Basecamp I mean they were early in SAS and they were the first product management project management tool that I know that was a web-based so the question then that I have for you that really expect to you is so where do you stand on this with either your current idea or the ideas that you're mulling over because at this point if I was trying to choose from ideas and one of them was earlier it's a little risky it's a little more of a gamble because if you're early you don't know if that markets gonna take

[8:58] off but where do you stand on scale of 1 to 10 with the ideas you're evaluating or with the idea that you're currently launching and let's say one is a one and maybe base camps earliness is a 10 so sad you know put yourself on that scale in terms of reality unfair advantage - it's who you know okay so this is your network it's the people it's people you know who are willing to go to great lengths for you they're willing to endorse you they're willing to promote your product to their folks even if it's casual mentions they're willing to advise you you wanted to intro you to

[9:32] people who are willing to do that so you meet a lot of them here at micro comp you mean a lot of them if you have a you know if you live in a tech hub or whatever but these are really deep relationships and it's very helpful to know people who your competitors cannot access because if they can and it isn't really an advantage right if everyone's accessing them so the question I have of course who you know can it be copied can it be bought not really definitely can't be bought pretty hard to copy someones network right this is a huge advantage and some examples of startups that that

[10:05] launched and groove way faster than the rest of us based on their network was absent and it's not well it's not a SAS app Noah Kagan when he first started was just making connections he called me he was no one knew his name right I mean he had been at mint and he was employed 30 at Facebook but when he started appSumo 25% of their first bundle because they used to be a bundle community 20% the first sale went to micro partner Academy members and so he saw micro partner comm is the referral and he calls me on the phone and I don't like the phone at all

[10:36] so I I'm like who are you dude and he's like hey I'm this guy and he just pretty soon I was his friend you know it's like the Econo he connects and the dude knows everybody know so he grew appSumo based on his network if he didn't have a network or the capability to build a network absent would not have gotten word as as quickly as it did the other one there's a couple yeah two or three more clarity from Dan Martell also former micro comm speaker clarity is a two-sided marketplace very hard to do you gotta get entrepreneurs who are very busy to give advice to people who want

[11:05] to pay them for the advice and you take a cut purely based on Dan's mark his who you know right I mean none of us most of us in this room could I could not have grown clarity the way Dan did because isn't his network is so strong wpengine from Jason Cohen he said in an early blog post he said you know I've blogged about WP engine and it I think it's yielded as two customers but what it did yield was instant investment I was able to raise money snap of a finger I was able to find co-founders I was able to hire people made a lot of the stuff that

[11:37] that he needed to grow wpengine much much easier because of who he knew unfair advantage and the last one is an honorable mention cart actually is there not at the level of these others yet but Jordan gaol is a co-founder and he I can tell it in he knows a lot of people there in the in the e-commerce space ok so they are cart abandonment emails for for e-commerce and I think that in the next couple years we're gonna see you know I see their revenue right now I am a tiny little angel investor in their in their company and I've seen the revenue numbers and I've seen him go up and I'm

[12:14] thinking yeah it's because of who he knows I don't think I could grow cargo as fast as they are because I don't know the people in his market okay so that's unfair advantage number two question is where do you stand on who you know in terms of your market and people who can actually you know get you something who will promote who will refer on a scale of one to ten where maybe ten is you know Jason Cohen perhaps Noah Kagan all right so we're halfway done and I like to have intermissions and has a follow-up he was dressed up for a different occasion I didn't have him like dress up

[12:48] and get in front of the thing he's going to her recital alright let's see this one you're in a concrete room with the table in a mirror how do you get out I don't know how do I get out you look into the mirror you see what you saw and you grab the saw you saw the table in half - how's Micah hole you cleaned out the hole this guy's got swagger ah I need to get him a new joke book or something all right so the third advantage is so we talked about being early talked about who you know your network this is third advantages who knows you okay so this is

[13:29] your audience right whether it's you know podcast list listenership blog audience email list or an existing customer base having an existing customer base I would say is a heck of a lot valuable than just having an audience who's never bought from you and there's can be a difficult transition but who knows you is a big deal these are people who know like and trust you and it is very very hard to copy or buy an audience that actually knows knows likes and trusts you I'll say it's virtually impossible so good examples of startups that have there's a lot of these these are actually easy to come up

[14:04] with so Noah Kagan comes back on the scene here tsumo me which is a SAS app you know if Noah or pretty much most of us in here tried to launch sumo me we would have grown at about a tenth if not less of the of the rate that he did if he had tried to launch it before appSumo right so he launches appSumo he gets a list of 700 7,000 people he want to Asuma me it's like how are you know he just he built the he built the foundation to be able to grow this Edgar from Laura Roeder is a recent Cinderella story she went to gruta what

[14:37] a hundred thousand in mr are would then literally a handful of months but she has seven eight nine years of history and have a customer list of people who she was selling information and in coaching and consulting all that stuff about how to do social media and edgar is a social media platform so it was a perfect fit for her and she had a whole training company with you know seven eight you know contractors and such and she just turned that right into a SAS app and here's to 100 grand m RR and like a handful of months from launch very very unique and it was about who

[15:07] knew her right it was about her audience or her customers KISSmetrics adventure to say that after Heaton and Neil had done crazy egg they had a nice customer base of a bunch of marketers I was actually one of them I had never heard of him before crazy egg and then they launched it and it was like man these guys built a really good product this was innovative so then when you hear that the next thing they're doing is it's metrics it's like oh well of course I'm gonna try that out right so who knew them they already had the customer base lead fuse another honorable mention in

[15:32] in the house Justin McGill some folks may not know their product eyes service to do outbound cold email for SAS so its b2b outreach and then they now have a SAS component okay so their SAS app is growing faster than usual and it's because they already have the reach into that market because they've been doing this productized service for the last 18 months or two years and then I would say drip counts it's at like the reason one of the reasons that drip has grown as fast as it does is because I have folks who follow what I do and I'm able to talk about it so the question I have for you

[16:08] again is where do you stand on this in terms of you the size of your audience or the you know size of a customer base in terms of one to ten and ten might be you know a Noah Kagan some one of the big lists of 700,000 people and lastly unfair advantage number four I started with like seven or eight on four advantages and I narrowed it to four as I went through it for is having growth expertise because I've seen people with almost no list almost no network and not being early still be able to grow stuff and how do you explain that these are

[16:44] people like you know and Noah Kagan or Neil Patel where the age have just it's Shaun Ellis who have exceptional growth experience so they know tactics they know exactly what to do they know the strategy to find new tactics when the the old ones don't work anymore because they've worked for what six to twelve months and then you got to find new ones and they have experience doing it so they haven't just read about stuff but they've actually done it probably for another company maybe as a contractor they actually have this expertise of the douve deep into it and this expertise of course can't be copied it can't be

[17:14] bought and I want to call out here you know I've given for those our own foreign for advantages if the term growth expertise or growth makes you want to vomit then don't go after that one like you don't have to have all four of these the more you have the faster you will grow but if that's not your thing that's not your thing you know if you're more about building audiences and go after the who you know if you're more about building networks I'm the opposite my I'm terrible at networking you can go after that and so examples of startups that have grown based almost purely on

[17:43] this is Sean Ellis with koala rue awesome growth marketer we have buffer Leo and Joel grew it they really didn't have an audience they really didn't have a network when they started they weren't early to the tools market it was social media right but they worked they worked the growth angles and they knew how to do it and then crazy egg so that was the precursor before Heaton and Neal had the customer base before they had the marketing expertise I'm sorry the the audience they were able to to grow crazy egg purely based on more growth hacking stuff all right so I'll leave you just a

[18:18] couple more slides where do you stand in terms of your growth expertise on a scale of maybe one to ten where ten is Shaun Ellis okay so I did look at things that I thought were unfair advantages at first and then the further I dug in it turns out they were not so I mentioned one of these earlier like great design great UX kind of table stakes if you're gonna try to grow this fast like these companies we've looked at you really need some decent design good UX but since it can be copied or bought it's not actually that unfair okay if you have technical chops design skills that

[18:49] kind of stuff that's great that's a that's maybe an advantage over someone who doesn't but it's not it's not an unfair advantage it is not such a high correlation to being able to grow quickly being able to raise money having funding a lot of people can do that again maybe a little bit of an advantage not an unfair one I'm having an uncomfortable idea was an interesting one I looked at their startups agree really quick like a Google because they have the algorithm Apple in the early days cuz Steve Wozniak was the genius and no one else could build that computer there were a couple other I

[19:19] looked at problem is I've never ever seen this in any self-funded SAS no one has ever had a none copyable idea so I've removed it from the list so that's why I'm saying it here if someone can think of an example later please tell me or if someone comes up with an uncaught people idea I want to be your co-founder no I'm just kidding Derek looks at me with shooting daggers at me but I will invest in you okay domain expertise this was one where I was thinking boy I was teetering on this for a while but having domain expertise so you're building software for psychologists or software for doctors

[19:51] just having that expertise it isn't enough you still would need either the network or the who you know or the gross expertise right so just being a domain expert and being able to build software not enough passion interest focus par for the course right table stakes so these are the four and what I noticed the more I dug in and thought about these is that these three on the bottom are the only ones you can take with you from idea to idea most people in this room I would venture to say are going to start more than one company in your life and the first one is cool and it's a

[20:23] really good advantage but so I've never been early ever with any idea I've had and it's hard to do and number two once you're early when you go to start the next one it's pretty hard to be early again right so I'm not saying that the bottom three are more valuable but they are more permanent you know the more you build that audience in the network and your growth expertise like you can kind of level up using the stair step approach if you decide to do this I've talked about this a lot I won't rehash it here but basically you know step one is it's looking at starting a small idea that

[20:59] basically has a single sales channel and a single purchase purchase price and then repeating that so you can buy your time out and then step three is doing moving on to subscription stuff so not jumping straight into SAS interesting thing is with the stair step approach you kind of build at least a few of the unfair advantages along the way you're probably going to build a network because you're probably going to come to Micro cough or another conference like it you're probably gonna build an audience because you're gonna build a customer base as you stair step up and you probably build a little bit of growth experience or expertise so it is

[21:29] it is an interesting way that those two models fit together so as I came back to the original slide of kind of like why I did what it has dripped grown so much faster than the other stuff that I've done I looked at I kind of tried to on a scale of one to ten i rated myself and to be honest like with Donny voice and all those other smaller ideas I was like a 1 and a 2 all during that time just trying to sort my way out my growth expertise was you know when to and then at 3 and then 4 the ones that are interesting our

[22:00] hit tale which was right before drip right this is a sassette that I bought I grew it to what 300,000 air R it flopped around a little bit as I started dripping and I exited last year and sold it and when I acquired hit tail in 2011 i rated myself so terms of B early on a scale of 1 to 10 I was a 1 because it was SEO tool it was 2011 and SEO there are a bunch of tools who I knew in terms of my network in 2011 on a scale of 1 to Jason Cohen I was about a 4 and who knows me in terms of my audience on a

[22:29] scale of 1 to Noah Kagan I'd say I was about a 5 and grow with expertise probably about a 5 I'm still figuring myself out and then drips unfair advantages by the time I got here we're pretty different still being early like it's email marketing like it's been around for 15 years so definitely not early to that who I knew had grown from what did I have a 4 yeah 4 to 7 who knows me I'd say my my audience has grown and then my growth expertise so when I looked at it really from a purely numerical standpoint I actually it actually played out with me so what I

[23:00] want to leave you with is you're here at micro cough you've heard those these four and four advantages which of the advantages do you want to increase today tomorrow do you know over the next week because whether you're in an idea already and you can't suddenly be early or you can't suddenly have a network in it we are all going to be starting more ideas as we go along and so which of them do you want to increase that's it

[23:33] questions for Rob there's my slides was that my slide oh yes I'm gonna slide sir what's that questions

[23:50] great presentation well and we've known each other for a fair bit but maybe not as long as some other people but I really enjoy seeing your stuff and seeing the growth of hope trip right now so youyou've kind of broken it down to those unfair advantages but can you maybe give some tips or hints on how you can accelerate going from 1 to you know 2 3 4 5 and can you maybe provide some tips on you know what you would you recommend for example how can we go over faster from one to ten oh I see what you're saying you're saying how do you get your score from one to

[24:28] ten faster how do you you're asking me how to hack the act like growth hack the growth hack is meta or and it's exponential well which one of the four do you want to get to ten on be early who you know who knows you or yeah being early as kind of a luck shot and since I'm not good at it I would be bad advice which one building the audience building the network you're a networking guy aren't you yeah I think I think you got a look here's here's what I would say look at these four things and think like Who am I like know

[25:00] yourself right I know personally no probably never gonna be early I'm just not that innovative or creative I'm not a right brain thinker so the fact that thought that I'm gonna catch some wave and like be out ahead of other people it's I'd be kidding myself so I know that about myself so I'm not gonna be early whoo I know I'm actually a pretty shitty networker I just it's just not a natural thing that comes to me I like meeting people I like talking but I don't do the thing where I keep in touch I don't there's like this madness black magic people do that makes you feel like

[25:26] yeah just I can't do it so I happen to have a decent Network just purely because I've been around for 10 years and because I'm up on stage and talking about stuff all the time but I really think that for me it's the audience and the growth expertise because the growth expertise is brain thing okay so I think that the lesson for you is like which of the four resonates with you and pick one to start with

[25:58] so I know you said you won't bet on being early by just curious to know right now what do you think what industries are what trends are sort of catching up just take your best shot yes okay so I mean there there's a lot of opportunity and marketing SAS tools right there's a lot of yeah there's just a lot of room there and there's a always people willing to spend money the other things are wearables virtual reality the drone quadcopters Internet of Things those are four off the top of my head I think there's one other than I'm missing but those are all trends but I that's the problem is I

[26:43] look at it and I say I don't know how to build a SAS up on those so I just throw in the towel but that gives you an idea I hope I wrap curious why why you think domain expertise and technical expertise can be bought or copied but not growth expertise what's what's unique about that good question so technical expertise is someone like a really good programmer basically that can be bought or copied because developer I mean that's that's not a turn terribly difficult one domain expertise might be more of a challenge let's say we were going into the legal field right it's like you would almost maybe have to have enough

[27:22] money to basically hire a lawyer to be or give them shares or whatever to do it and that would be expensive I guess growth expertise could potentially it's not gonna be copied right buying growth expertise from someone who really really knows what they're doing like let's say Neil Patel Noah Kagan Sean I looks like the guys who are the best or even the guys who are the guys and gals who are decent at it they don't tend to want to work for other people they are actually very hard to hire there or a couple of exceptions I could name them but it might yeah there are a

[27:56] couple but I think in general like really good developers they do in general tend to take salary gigs and hiring a domain expertise psychologist you know a marketing expert or whatever like you can tend to get them under control but where experts tend to not be that employable because they can run their own show so my question is if you Excel maybe in one area so for example you know I have the podcast for programmers so if I wanted to do a sass for programmers I would probably bank on who knows me and then some somewhat less on who I know yeah should I double down on who knows me or

[28:38] should I try and compensate for some of the other areas that's good so first of all with the who knows me that your audience basically you do have to be careful with that if you've never sold anything to them if the first thing you're trying to get them to buy from you is software it's gonna be very very hard it's gonna be an uphill battle so if you look at a lot of the folks like you know you look at Laura with with Edgar like she had already sold them stuff if you look at me with when you know Derek and I launched drip it's like

[29:02] people have already purchased a book and a conference in it you know I mean there's this other stuff so I I that be my first piece of advice is trying to go directly from an audience to a software product is a bit of a hurdle so I might try some interstitials there I think you're you're doing great Chuck runs a five or six podcasts for programmers including like Ruby rogues and other stuff she has a podcast network I think you're doing great on building the audience I would to be honest go a little bit after just knowing your specific case I would go after a little bit of the who you know

[29:31] because I I don't know how I would you know 5x your your growth of your audience but I do think that your probably 5x your who you know because you because so many people know you you know so I would compensate a little there one more one more question so based on the other companies that you add listed would you basically say that all of those earlier companies that to some degree floundered or didn't really blow up that those were pretty much necessary prerequisites for you to incrementally get to the point where you were able to make drift what it is mm I see so you're asking like for my

[30:10] particular experience I did do each of those were they necessary in order for me to grow drip as fast I don't think that all those companies were I mean some of them I owned like five or six different small apps at one point just to cobble together ten grand a month so that I could quit my job so like owning a beach towel ecommerce website and an e-book about bonsai trees and an invoicing software written and dotnet and write and it's like now I didn't need all those I learned the most from a hand there were a few of them that I learned the most from I have I've done a

[30:40] whole letter talk about that of the early things that I learned jack-shit from in the early things that I really learned a lot from so there was a mix I don't think you I don't think it needs to take you nine years to get here at all anymore you know just took me that long because I'm not that smart thank you very much Rob thanks guys

[31:04] so I think you have some t-shirts and stuff over here to give away and there's also some from less films yeah we're gonna wrap up the day so I me and and my homies at drip brought some stuff t-shirts in our luggage and stuff and we have these epic they have a tie on them with a little you know shirt printed so or a pocket printed and we have those are free to any drip customer or current trial user or if you want to become a trial user pretty in the next week or so wink wink yeah that was my growth expertise coming out boom but

[31:36] there'll they're over here and there's also a big stack of Les films shirts so there's also some stickers over there and don't forget about heating in steles office hours in the next room over here that's kind of immediately annexed Ellie is still sitting over here but you could drag him by the year I'm sure and then don't forget about the evening event tonight I think that's in the moon room which is one floor up from where it was last night so they're the same basic kind of ideas last night I did level up didn't think we can be higher [Applause] you

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