THE CHURCH OF KAWASAKI'The Art of Evangelism' In the SaaS World

“Think different. Don’t do better sameness. Don’t be content with doing things ten or 15 percent better. Do things ten times better.” - Guy Kawasaki, “The Art of the Start,” TieCon, 13 May 2006, at 12:31 of his speech


I had the great ego stroke of appearing on a panel at the Software Business Transformation Summit a couple of weeks ago, and, since then, I keep coming back to Guy’s words: Don’t do better sameness.

I’ve been preaching essentially the same thing about Software-as-a-Service (SaaS): Think different. And: Listen to your customers. Seems to me, these are the two most important aspects to pioneering a new business model.

Thing is, I’m not Guy Kawasaki. He’s preaching from a taller pulpit and to a vastly larger congregation. He gauges his blog from the top of the Technorati list; mine is measured from the opposite end. He’s a bit better known than me for a few pretty obvious reasons.

Still, the same day Guy delivered his “The Art of Evangelism” sermon to several thousand attendees at eBay Live!, I had the opportunity to try my hand in front of a couple of hundred software executives down the street at the Mirage. It was rewarding because the feedback I got proves the industry is baptizing more than a few converts and atoning for the right sins.

Nevertheless, there is still a lot of work to do, and Guy’s comments serve as a great reminder of some critical points.

“Bringing the Good News”
At 7 minutes, 40 seconds of his eBay Live! speech, Guy says, “Evangelism is about bringing the good news. … That’s what you do.”

There is a lot of good news in the transforming software industry. There is a lot to evangelize, but this is where we need to start thinking differently. SaaS gives us a different way of improving business processes, so we need to talk differently to our customers about what we do. We’ve got to stop talking about source code and architectures and middleware and interoperability and data integration and the inevitable features and benefits. Frankly, customers don’t give a crap about all that.

For SaaS users, it’s all about the WIIfM, the What’s In It for Me? They want to hear about how your service is going to improve their business, their day-to-day activities, the quality of their lives. Step One to The Art of Evangelism is “Make Meaning,” and to do that you need to “increase the quality of life.” (9:07 of eBay Live!)

When you’re marketing and selling your SaaS app, you should be Bringing the Good News, talking about how your service makes your customers’ lives better. Not “what does your software do” but “what does your service contribute.”

“Fix Something Bad. Right a Wrong.”
Increasing the quality of life is but one way Guy suggests you Make Meaning. Another way is to “fix something bad” or “right a wrong,” and the software business presents great opportunities for that.

SaaS will succeed for the same reason any other revolution succeeds: The movement is demand-driven. Customers have been abused by traditional perpetual license vendors for too long.

• They’re tired of paying hundreds of thousands of dollars every year for applications that are impossible to install and support just so they can pay an additional 25% per year to “maintain” and “upgrade” what should have worked properly in the first place.
• They don’t trust ROI projections because it’s impossible to generate a return on shelfware.
• They’re looking less for “features and benefits” than they are for solutions to their problems.

Given that environment, why would you try to sell them software?

Instead, fix the myriad of wrongs delivered unto users by the likes of Oracle and SAP and Seibel and Microsoft and the hundreds of independent software vendors (ISVs) whose main goal was to generate a lot of sales so they could be acquired by the likes of Oracle or SAP or Seibel or Microsoft.

Monetize Your Expertise
One of the things I said during our panel discussion – which was called “Moving to a Subscription Business Model” – is that SaaS companies need to realize that their application is merely a way of monetizing their expertise.

Think about that for a second…

Let’s say you’ve built a really cool application that helps users optimize operations at their really cool widget manufacturing facilities. Your software coordinates raw material inventory and pending sales orders, notifying the supply chain when resources dip too low; it reports out-of-spec milled parts and monitors widget assembly; it coordinates maintenance intervals with equipment life spans; it even tracks the build-up of toe jam in the processing line and navel lint in executive offices and alerts the cleaning crew when these problems approach critical tolerance levels. It does all these things over a fully-integrated, data transparent, secure, and cross-functional platform that produces SAS 70- and SOX-compliant financial statements, sales reports, customer testimonials, and sudoku for the now under-worked widget company CIO.

Given all of that, who knows more about manufacturing widgets than you?

If you give me any of that crap about, “Well, all of my customers are different,” then it’s time for you to hang it up and find something else to do. You’ve got a perfect perpetual license ISV mentality that will lead you to over-customize and over-charge for an application with 85 features out of a hundred that no one uses.

In the mean time, your customers will never benefit from what you know about their business. You will never have the opportunity to convert them.

The DNA Transplant
At the Software Business Transformation Summit, our panel (moderated by Tier 1 Research’s resident SaaS expert, Mike Mankowski) focused on the “DNA change” needed to transform a traditional ISV into a SaaS company. (I first heard that phrase from Intacct’s Bob Jurkowski, and I may be partly responsible for infecting Mike with the analogy.) Conversations like these almost always center on predictable software industry issues:

• What about SOA, SLA, API, BPO, and ABCDEFG?
• Why is multi-tenancy?
• Is integrated data still really data?
• Can you recognize revenue if it bites you?
• How do I continue to over-pay my salespeople?

Listen: These are important ducks, and we need to make sure they’re all in a row. But they don’t represent DNA-level thinking. This approach to building a SaaS company is just doing better sameness, and there’s no guarantee it’s going to be “better.”

SaaS executives and their employees need to think different. They have to think in terms of the whole package, the entire solution, the complete product.

“A product that is complete,” Guy said (Ibid., 20:21), “is not just what’s in the shrink wrap, not just what you download, not just what’s in the box that you open up. It’s the pre-sale and post-sale support, also.”

SaaS is not about the application; it’s not about whether or not the servers are powered on; it’s not about internet connectivity or performance. SaaS is not even about the always-on technical support or the expanded, knowledgeable, friendly customer service that are foreign to customers of traditional software. SaaS is about none of these things, and it’s about all of these things, and everyone who builds and sells a SaaS application needs to understand that SaaS is about unique value. (Ibid., 26:44)

Purpose & Solutions
I was talking with someone over at Alibris, and I asked: “What business are you in?”

“Providing pleasure.” The answer came without hesitation.

Man, I loved that. There’s a person who truly understands the customer’s perspective. The software Alibris uses, it’s on-line presence, it’s partner relationships with brick-and-mortar stores and libraries around the world… Those are important pieces, but they are not the whole. That kind of answer, “Providing pleasure,” comes from imbedded DNA.

Similarly, Authoria seems to have it right. This is a company that “gets it.”

Authoria’s CEO, Tod Loofbuorrow, was on the summit panel with me; his company has transformed into a SaaS provider. Tod and his team have so successfully transplanted the new DNA, that there appears to be no vestige of the traditional ISV left in the company.

Go to Authoria’s website. It’s nothing short of brilliant. The solutions and benefits Authoria offers are clear; Authoria’s expertise is prominently displayed. Authoria knows what companies need to do to properly attract, motivate, and retain a high-quality workforce. Theirs is a service most companies can use. They know what they’re talking about and what they’re doing.

Look closer. I have. I don’t think the word “software” appears anywhere on the site (except in some executives’ bios).

DNA and Evangelism
Virtually anybody can deliver a software application that performs a particular task. So what?

Even if your software application has value to the end user, you’ll be competing on price with everyone else who has an application that does the same thing. (Listen to Guy’s section, “Niche Thyself,” at 21:52.)

Your unique value will come from the completeness of your SaaS product. It comes not only from how well you have monetized your expertise, but from how well you have thought different. Your company’s success will be determined by how well you demonstrate that thinking.

Revenue generation in the SaaS market will begin with how thoroughly your marketing organization builds credibility with your target customers. No one is going to buy a service – no matter how it might improve their lives or how many wrongs it might right – from a provider they don’t trust, so your marketing has to focus on evangelizing your solution.

That’s where the DNA transplant starts, but it must go much further. Your entire organization must understand the meaning you want to make and repeat your mantra daily. They need to be customer-sensitive and solutions-focused. Every day they must earn your customers’ business, and, when you are successful, the new DNA will infect your customers, and they will pass it on to their colleagues and friends.

So, think different. Then, go forth and evangelize.