What to do if you have SaaS Brain

   

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What to do if you have SaaS Brain

Do you find yourself suffering from the following symptoms:

Your sales are starting to slow.

Your cancellations on the rise.

Your lifetime value (LTV) is shrinking.

Your cost of customer acquisition (CAC) is at an all-time high.

Your board meetings have taken a Game-of-thrones-like turn, and no one can recommend a way out of despair.

You may be suffering from SaaS-brain:

SaaS brain: the muscle memory and worldview developed by Millennial-era tech industry people who have no work experience prior to 2010, who believe that all revenues will be recurring and that all growth will be up-and-to-the-right. SaaS companies with SaaS-brained investors are particularly at risk without the business cash flow discipline to recommend a meaningful defense plan in turbulent times.

What to do if you’ve been suffering SaaS-brain:

Call an elder for advice: ideally, someone who lived through 2008, 2000-2001, and maybe even the 1990s. Their fiscal discipline has been dormant for a decade, but they have lived experience of what you might be able to do.

Reconfigure your value proposition: much of SaaS tooling was built on solving the types of problems businesses experience when they are scaling rapidly to meet pent-up demand. But we’ll see the jobs-to-be-done change when businesses move in the opposite direction. We learned this in 2000: a whole sector of the economy was built to support the first internet builders, only to collapse with the dot com bust. Time to see what pain points need to be solved, today.

Reevaluate your customer segments: your most profitable cohorts might be the most at risk when they have to defend their spending this annual planning season. Consider which of your customer segments see your offering as solving mission-critical problems, and which see you as dispensable.

Reconsider good old services: Your investors have encouraged you to go all SaaS, no services. Services only move at the scale of humanity and have lower margins, they told you. Well, that was well and good before your valuation collapsed. Take on some consulting and services to keep that cash flow moving.

Pause the SaaS Model KPIs: CAC: LTV levered ratios and J-Curves are on ice for the time being. You won’t be rewarded for spending on growth if there is no growth. Rather than amping up your marketing spend, open up the front door of your product offering as a freemium service.

Finally, if all else fails and your business collapses, take a shop class: Learn how to make things and understand the business levers when you have tangible assets on the balance sheet. The next 10 years will be more about relearning manufacturing, with country-wide investments to reestablish industrial sectors in semiconductors, energy, building retrofits, and transportation. You might find it’s not as high margin as SaaS, but it will likely be more rewarding.

If you find yourself suffering from any of these symptoms and need cash flow strategy from folks who lived through a few of these pre-SaaS cycles, contact us for help.