- Something special is happening in software right now,
particularly in SaaS.
And this only happens once every 10 years
if you really time it out.
First there was cloud, things that you sold on CDs
were moving to a website.
Then there was mobile.
Things that you only used on a desktop,
now you could use anywhere.
And this completely transformed how businesses
bought and used software.
This is happening again with AI.
Now, for any one of these shifts, there were false starts.
But thankfully with AI we already went past the false starts
and now there's something real.
AI is really transforming how software behaves
and the expectations from users are dramatically shifting.
This means there's massive new opportunities,
new SaaS ideas that you can now bring to market,
even though there are existing players that are there.
And so on this episode I'm gonna walk you through
the three principles that you absolutely need to know,
along with key SaaS ideas that I'm excited about,
so that you can take advantage
of this massive platform shift that's happening.
And you can apply them to your existing SaaS business
or you can pivot your existing SaaS business
to take advantage of the shift,
or you can start a brand new one.
And when you apply these key principles
you'll be able to accelerate your path
to that next stage of growth for your SaaS business.
Intro.
(upbeat music)
What's up, everybody?
Welcome to Unstoppable.
I'm TK.
And on this channel, I help SaaS founders like you
grow your SaaS business faster with an unstoppable strategy.
Now if you're new to this channel, welcome.
I drop an episode every single Sunday
with actionable strategies and tactics from the trenches,
having been a founder, still am a founder,
and now coaching over 250 SaaS founders
on how to grow your SaaS business faster.
So be sure to hit that subscribe button and that bell icon,
that way you'll get notified every single time
I drop an episode with the TK energy.
Now, if you're already part of this community,
if you're part of my SAAS go-to-market coaching programs,
my people, welcome back.
It's really awesome to see you over here.
So I remember when I first got started in SaaS,
relatively speaking, SaaS was easy.
All you needed to do was take something
that could only exist on your desktop computer,
you had to install it with a CD or download it,
and then install it on your computer,
and you needed to offer that same solution from website.
That was it.
And so my first startup was a company called HipCal.
We were one of the first calendars
that were available online.
You could sign up for a website.
This was before Google Calendar.
And you could have a networked calendar,
and you could share your calendar.
It was amazing, but relatively it was a lot easier.
Fast forward to today and maybe like six months ago
before OpenAI came out and ChatGPT-3 came out,
SaaS got a lot more competitive because everyone offers
their services times 100 on a website,
and you can just get access to it by signing up.
You don't have to download anything.
And you can get it for nine bucks a month.
If you really wanted to use the shittiest,
cheapest software out there versus the premium ones.
You have options.
And so in order to win in SaaS,
you actually had to focus on niches.
You had to focus on specific subcategories
where the bigger players or other entrenched players
weren't playing, and you had to serve it
in a differentiated way.
Now, that's six months ago how you could win in SaaS.
But today you actually have one more way.
We are going through a platform shift.
And anytime there's a platform shift,
whether you think about your first push to the cloud,
when the subscription billing model
started to become popularized,
when the App Store came online,
the first set of people that take advantage
of platform shifts are the ones that build
massively great companies because in this shift
existing players don't quite know how to compete.
We're on an even playing ground between startups
and big players.
And so as everyone's trying to figure it out,
you have an opportunity to beat the well entrenched players.
So all of a sudden you don't have to go
after super niche places.
You can say, look, I wanna be the next CRM for everybody
and let's go figure out how to do it
given this platform shift that's happening around AI.
And that's the power in this.
So in this episode, but having gone through
multiple platform shifts, having a core thesis
on exactly how I think SaaS businesses work and are built,
and having built my own, I'm gonna walk you through
the three principles that you absolutely need to know
to actually take advantage of this AI shift,
whether you have an existing SaaS business
or you're about to start a brand new one.
And when you follow these principles you'll know
exactly what you need to do with whatever you're working on
right now to actually take advantage of this macro trend.
So if you're excited to dig into principle number one,
go ahead and smash that like button
for the YouTube algorithm.
Just loves it when you do that.
Let's go to principle number one.
Now, principle number one is I wanna outline in B2B SaaS,
business to business SaaS.
That's what I primarily focus on.
Because honestly, there's little to no companies
that are B2C SaaS, they don't make any money.
'Cause you can't compete against $9 a month of Netflix
and the economics never work.
So B2B SaaS is really what I focus on
'cause most successful software companies are B2B SaaS.
In B2B SaaS, the first principle that you really need
to know is that there's really four key departments
that you can sell into.
And it's very important to understand exactly
who you're selling into in a business,
so that you can actually orient your software
and position your software, and message your software
the right way.
And because SaaS is matured,
there are these specific categories.
So the first department is sales.
You can sell into the sales team.
The second one is marketing, the third one is R&D.
This could be development, design, product, that whole area.
Or it could be GNA or finance.
These are broadly the different departments
that you can sell into.
Anytime I'm working on a go-to-market strategy
for a company, one of the biggest things we focus on
is who's your ideal customer profile?
And specifically, we need to get to the title of the person
who would be paying for your software.
And typically it means that if they pay for your software,
it'll come out of their budget, but they can do the math
on if they spend this money out of their budget,
here's how their compensation plan
will be more likely to be paid out in full.
And so it's super important to understand
what department you're selling into.
This is nothing new, but this will line into exactly
how you can use the platform shift
to actually differentiate in SaaS,
which is the biggest thing that you're trying to figure out
for your SaaS business.
So that's principle number one.
Now, principle number two is there are different
kinds of SaaS platforms that you can create.
There's essentially three golden types that exist.
The first one, and these are all systems.
Systems of.
And the first one is a system of record.
So what's a system of record?
This is essentially the core layer.
This is where all the data gets stored
for this department for.
So for sales it's essentially the CRM,
for marketing it's the marketing automation platform,
for R&D, it's usually the repo,
for FPNA and for GNA, it's usually the ERP system.
So you get the picture.
This is where all the data is stored
and these are the most valuable.
These are the most valuable because they're the hardest
to replace because all the data is stored
and no one's gonna rip that out.
They're like, look, we're just fine with our ERP system.
We're not gonna go for some startup for the ERP
because it's so important.
But that's why they're so valuable.
The second type of system is your system of engagement.
Now, examples of system of engagement
is your sales engagement platform.
It's say, your landing page platform, or your chat platform.
For R&D depending on whether it's product or engineering,
it could be the code editor, like Visual Studio or Figma.
And you can see how those are valued really incredibly.
And so let's just say Figma over here for an example.
This is where the work gets done.
Or for finance, it could be essentially a spreadsheet.
And there are more specialized tools,
like forecasting tools that people can use.
So this is the engagement platform.
The engagement platform,
it sits on top of the system of record.
And this is where a lot of the work gets done.
The workflows are run over here.
And this is the second most valuable
because it's not quite the system of record,
but it's just as important because people are living in it.
And it's sits on top of the system of record
so it's a little bit easier to rip out.
You could switch systems of engagement,
but it's important enough where it has to be really good
for people to make a switch.
So it's still valuable.
The final type, and this is before AI came to be,
is your system of decision.
This is essentially your BI tool, business intelligence,
or your analytics tool.
There are a lot of these, but these are,
or traditionally have been the least valuable.
What they do is they sit on top of the data
for the system of engagement
and on top of the data for the system of record.
And they're essentially doing analytics to help
you understand how to make decisions in the business.
And over time, because SaaS has matured so much,
the systems of record have started to biop
systems of engagement.
So if you buy a HubSpot CRM or Salesforce CRM,
they have some form of a sales engagement tool.
Even though Outreach and Salesloft
are still trying to go public at some point.
But they've kind of built out these features as well.
Similarly, systems of engagement and systems record
all have some sort of an analytics tool.
So when you have one SaaS company
that's doing just analytics,
they're never gonna be worth a billion dollars
because these companies are already eating their lunch.
One example you might say is like,
well, TK, what about Snowflake?
And interestingly enough,
Snowflake became more of a system of record where they said,
look, we're just gonna store the data of everything,
and then we'll make analytics on top of that,
which is why they became so valuable.
They took the data from across everything
and became a system of record for the entire company.
So you can start to see how the value
of these different tools vary.
Now, these are the first two principles.
And I wanted to lay this out because whether AI
is a platform shift, whether you believe that or not,
and I think we all believe it at this point,
because we've all used amazing products
and we're starting to see how it's changing things.
But regardless of that, these are the three golden types
of SaaS platforms that you want to build.
And depending on what you're building,
what department you're going after,
and whether you're a system of record,
or a system of engagement, or a system of decision
that is going to determine how valuable of a company
you're going to be.
Now, this is where we get into principle number three
with AI, okay.
This is where the opportunity now lies.
Because here's the thing,
if you were to start a SaaS company today,
and let's just say AI doesn't exist,
and you're just thinking about these pieces,
you're gonna have to figure out like,
oh my God, there is a system of record,
a system of engagement, a system of decision,
and times 100 for each one of these cases.
How do I compete?
How do I differentiate?
Why would they go with me?
And you have two options.
One, you could go for a specific niche.
Like, I wanna focus on sales teams
that are purely doing door-to-door sales,
like that's a very specific niche.
Or you could come to find some sort of creative technology
that you created that no one else can do.
For some reason you created it
and no one else has thought of,
not at the 100 competitors in any of these stages.
And you can go compete, try to compete and differentiate.
Or you could tell a different story, you could position.
This is what go-to-market work is all about.
And that's hard.
Back in the day when I started my first SaaS company,
all we needed to do was just create
a calendaring application for the entire organization.
That was easy enough.
Now, you have to get some really, really specific,
until this third principle came by.
Because now AI creates a huge technological shift,
all of these systems of record, systems of engagement,
systems of the decision are up for grabs.
And this is where principle number three comes in,
on how you can use AI to rethink each of these.
Now, there's a very specific way to do this
because let's also be very clear.
Let's just say, you start approaching businesses
and saying, hey, listen, we are the next generation CRM.
We are powered by AI.
We're better than any CRM you have.
Do you wanna switch to us?
They're not gonna switch to you,
they're not gonna believe you.
Because also HubSpot and Salesforce
are creating their own AI integrations.
But, but there is still a way to break in
with this platform shift.
There's a way to actually manage that narrative
and sell it in a different way.
And that's what I'm gonna talk
about in principle number three.
But before I go to principle number three,
let me just pause here for a second.
Are you starting to see the power in this?
First of all, we get really lost in our unique little idea.
And so often I meet with founders
and they're trying to figure out how to go to market.
If you start with this core principle, these just these.
So I'm like, look, what department are we selling into?
And are we the system of record, the engagement,
or the decision?
Who are the competitors and how do we differentiate?
If you just start there, you can start to see
how you can already think more strategically
about how you're gonna bring your product to market.
If you're starting to see the power in this,
can I just get a yes in the comments below,
and also smash that like button for the YouTube algorithm.
It really likes it when you can do that.
Also, if you're in this stage where you're trying
to figure out what's my strategy to grow my SaaS business.
Then I encourage you to check out
my five-point SaaS growth strategy guide.
It's completely free.
I'll link to it below.
I'll tell you more about it at the end of this episode.
For now, let's go to principle number three.
And also smash that like button for the YouTube algorithm.
It really likes it when you do that.
And so do we, because my team and I,
we put a lot of love in these videos.
Okay, so this is where principle number three comes in.
This is where the money is.
This is where the platform shift
really helps you differentiate.
Because now there are these large language models
that you can take advantage of.
And specifically with OpenAI and GPT-3.5,
which I think you can access now,
and then there's four coming out.
What you're able to do is you're able to say,
look, right now you have your system of record,
system of engagement, your system of decision.
Totally get it. We're not telling you to switch any of that.
What we're actually gonna do is we're gonna create
a system of intelligence.
Why?
Well, what you can actually do with AI,
with these large language models is you can say,
hey, look GPT, I want to actually give you some data,
and I want you to train a model on my behalf.
And then I want to query that data
and I want to give certain outputs.
So right now, ChatGPT-3 as you're chatting with it,
it consumed the entire internet
and they build this language model.
And now you can ask it all kinds of things.
Where the money's gonna be made in B2B SaaS
over the next few years are companies that say,
cool, I have this large language model, I have access to it,
but also I can build my own model.
And what I can do is I can go into companies and say,
hey, give me access to your system of record.
Give me access to your system of engagement.
Heck, even give me access to your BI systems,
whatever analytics you have.
I'm gonna use that to collate all of that data
and I'm gonna use GPT-3 to actually combine these models.
And then I'm gonna query it.
I'm gonna give it prompts based on that model
and then I can actually do predictions.
I can do insights
I can actually do tasks.
I can do all kinds of things based on this overlay model
that I'm training.
And all of a sudden this, and this, and this, and this,
and your own creativity on how you train these models
given all the data from here becomes your opportunity.
That's principle number three.
So everyone says you should get into AI.
I get it.
And guess what?
All of these companies with their unlimited budgets
are already adding AI features.
They're primarily adding things like auto generate.
If there's a text box, they can auto generate
some text for you.
Maybe they're doing some predictions.
They're doing some predictions with ML.
Maybe they're automating some tasks.
All of this is great and that they're probably going to do,
so that's table stakes.
Now, it's almost table stakes.
So you're like, how do I differentiate?
But if you start to think about, well, how can I build
my layer of intelligence on top of all of this?
All of a sudden this becomes the most powerful thing
in the organization because you're ingesting in
all this data.
And it's not just to the BI tool where it's just giving you
a bunch of charts and you can rip it out.
It's actually saying, no, I'm gonna take all this data.
I'm gonna train up my own model.
I'm gonna maybe input my own special data
that I have access to, and then I'm gonna design
my own queries and prompts on this training model,
and I'm gonna deliver predictions, insights,
and tasks for any one of these departments,
or all of these departments.
And I'm gonna be the intelligence layer
for the entire organization and the software stack
that they run.
This is gonna be the most powerful idea.
And based on this core principle,
amazing multi-billion dollar companies
are going to get created.
Companies that take all of the data
from the existing stack of systems
in each of these departments or all of these departments,
train their own models along with data
that they are bringing themselves,
and then can deliver output, whether it's work done,
insights, or predictions are gonna be the companies
that build and take advantage of this platform shift.
Is it possible that some companies and some teams
will be trying to do this at these lower stacks?
Absolutely.
They're going to try.
But this is the case where startups thrive.
This is the case where your unique knowledge,
your unique data, your scrappiness,
you putting together the right pieces,
and you hacking on a weekend can really bring together
something that none of these people are gonna think about.
Because guess what?
As great as these existing companies are,
the real innovation in these companies are being done
by product managers who like to go home at 5:00 p.m.
But we're startup founders.
And we know that we have domain knowledge.
We know we care a lot more.
We have much bigger upside.
We're working a lot longer, we're a lot smarter.
That's why we're starting companies.
And we know that there's a better way to actually build
this intelligence layer.
The average product manager in an average B2B SaaS company
is not gonna be able to figure out this next wave.
They may copy from you, they may try,
or they'll try to buy you.
But this, this is where we startup founders really shine
and that's your opportunity.
This principle number three.
Take advantage of this large language model.
Use it to train your own models using your own special sauce
and deliver unique insights based on the enterprise data.
That layer, that layer of intelligence
is what's gonna create incredible SaaS companies
and I'm pumped for it.
So to recap, principle number one.
Here are the key departments B2B SaaS companies sell into.
Principle number two.
Here are the three key type of systems
that have existed up until today.
System of record, system of engagement, system of decision.
Principle number three.
Now with AI, you can actually create
a system of intelligence.
You can take in the data from all of this.
You can create your own models using your own creativity,
using your own engineering ingenuity,
and you can create unique intelligence layers
for B2B companies that drive predictions,
insights, and even does work for you.
And that's the power of this next shift.
So now you know exactly what my key SaaS ideas are for 2023
and really beyond.
Because over the next few years
all of this is gonna come together.
These language models are gonna get smart and smarter,
and human ingenuity and creativity on how we train
more models, and remix data, and create prompts
is really what's gonna drive innovation.
And if you take advantage of this
you're gonna be unstoppable.
So now you know what my three principles
are that I'm applying to take advantage
of this next AI platform shift.
What you may not know is how do you actually apply
some of these principles?
How do I actually take my different ideas?
How do I apply this system of intelligence layer
into the idea that I have, or the product that I have,
or the company that I have?
Or how do I go after a new idea?
So to really help you pull together these different ideas
and really form it into a core strategy
to grow your SaaS business,
I have my five-point SaaS growth strategy guide.
It's completely free. All you need to do is just go
to getunstoppable.com/strategy, getunstoppable.com/strategy.
When you download that guide,
I'll walk you to the five-key points you need to consider
to really craft the strategy for your SaaS business
and take advantage of this platform shift.
Also link to it below, and if you just want to click on it,
or just go to getunstoppable.com/strategy.
Also, if you got value from this video,
please smash that like button for the YouTube algorithm.
Really loves it when you do that and so do we.
My team and I put a lot of love into these videos.
Also, if you have a fellow founder,
if you have a fellow team member,
if you're part of a Slack group, a WhatsApp group
that would get value from this video,
please share this video with them.
It will just mean the world to me.
Also, I drop an episode every single Sunday
with actionable strategies and tactics
from the trenches on how to win in SaaS.
So be sure to hit the subscribe button and that bell icon,
you'll get notified every single time I drop an episode.
And lastly, remember, everyone needs a strategy
for their life and their business.
When you are with us, yours, it's gonna be unstoppable.
I'm TK. And I'll see you in the next episode
or inside the five-point SaaS growth strategy guide.
Completely free, link below.
Take care, everybody.
(pleasant music)
- Everything's running.
Let's do this.
Also.
That was a little messy.
Let me redo that part.