Comments on: SaaS Failures – The Recurring Revenue Mirage

By: Laurent Glaenzer

Laurent Glaenzer — Wed, 10 Feb 2010 14:30:08 +0000

Hi Joel. I found this view quite interesting. We are a Company that is helping IT Companies to set up and manage their channels in EMEA and in the US (we are just starting there) and we have noticed that many SaaS Companies have lost time and money in trying to approach traditional IT resellers/VARs to resell their solutions. Obviously the channel value proposition did not match and this has caused many disappointments.
As you somehow suggest, I think SaaS requires a new go-to-market with a much more flexible operational approach and new categories of partners.
Should you be interested we could elaborate on this.

By: Peter Cohen, SaaS Marketing Strategy Advisors

Peter Cohen, SaaS Marketing Strategy Advisors — Wed, 04 Feb 2009 21:19:10 +0000

Thanks for these insights, Joel. I agree that the cost of acquiring customers, while important with on-premise applications, is doubly important in the software-as-a-service model. There are, indeed, some prominent SaaS companies who are making a big bet that their customer base and revenue stream will grow fast enough to cover their sales & marketing spending.

For some, with deep enough pockets, this may work out. Unfortunately, others may end up like WIle E. Coyote in the cartoon. The too-clever predator runs off the cliff, keep his feet moving, and stays airborne… until he finally looks down at which point the floor of the canyon quickly comes up to meet him.

By: Right Here Interactive

Right Here Interactive — Wed, 04 Feb 2009 20:50:29 +0000

Joel – I agree with what you are saying. I owned a SaaS oriented business from 2002-2008, raised over a million dollars in private equity on an a weak sales forecast, then invested too heavily in infrastructure and personnel, assumed the profits came over the lifetime value of the customer, fought for every sale, had much higher support costs than expected and ultimately ran out of funding.

The net result was my loss of the company to the investor and my dismissal. A bitter lesson, but one that supports EXACTLY what you are saying about mismanagement. In the end, I like to call it “the perfect failure” because of the lessons learned. I was fortunate enough to gain incredible insight/experience into the space and am contemplating going back for more, hopefully more successfully and definitely wiser…

For those reading this who are in the SaaS space, what he is saying is absolutely true.

By: Mike Dunham

Mike Dunham — Wed, 21 Jan 2009 03:32:00 +0000

Joel – Thanks for this article! It is a point I’ve been wanting to approach for a long time.

On infrastructure – add to your arguement the point that if the infrastructure is cloud-based (which it certainly should be in my opinion) it is flexible in both directions. It can expand to meet demand growth and retract to meet slowing transactions.

On customer acquistion – if the marketing group is smart, they are investing in ways to leverage social media and the network the application rides on – the Internet! I see so many leave this on the table for a competitor to grab it is just plain unbelivable.

By: Investment management | financenewstoday.com

Investment management | financenewstoday.com — Wed, 21 Jan 2009 01:49:06 +0000

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