#9: Mid-market: The worst of both worlds? 🙅
Natalie Nagele on prioritising the team over everything else, Spencer Fry on the ever-changing nature of customer feedback, and Jason Cohen on the perils of the seemingly alluring mid-market segment.
Hi there,
Welcome to the ninth edition of The Baton. A fortnightly newsletter that brings you three, hand-curated pieces of advice drawn from the thoughtful founder-to-founder exchanges and interviews taking place on Relay and the interwebz. So, stay tuned!
In this edition, you’ll find instructive and inspiring pickings from the brains of Wildbit’s co-founder Natalie Nagele, Podia’s founder Spencer Fry, and WP Engine’s founder Jason Cohen.
#1. Natalie Nagele, co-founder and CEO of Wildbit (which is among the longest-running SaaS brands, now 20+ years in business), raises the big PRIORITY question. And opens up about why they’ve long placed their team “ahead of revenue, ahead of even profits, and ahead of our customers.” (Source: BoS)
I promise I’m not trying to say that caring about your team is somehow noteworthy. I understand that that’s an obvious proposition. But what changed for us was the decision to make our team number one – ahead of revenue, ahead of even profits, and ahead of our customers…
In my new favourite book (new to me, not new, but brilliant) – Bo Burlingham looks at these organizations that have been able to maintain their independence, their identity, their mojo, all these amazing things, but still become really awesome, really successful. And how did they get there – like what about them is different?
And what he realised was that no matter how much we know that you have to maintain an incredibly strong relationship with your customer, with your community, with your supplier. What comes as a priority to these small giants is that they pick their team as number one. Why? Because they’re the ones doing the work right?
If you focus on your team first, they’re the ones talking to suppliers and your customers and all those things. Partnerships. All of that stuff. Our job is to provide a safe environment behind them. Rally behind them so that they know that they can charge forward and make the company what it is today.
So for the last couple of years I’ve been saying like “oh WildBit exists for the team” and there’s this part of me that always felt some guilt around that. “Isn’t that bad, shouldn’t I focus on the customer first?” The business exists to make something that a customer wants to buy. Customers are number one. All these things.
But somehow for us. For Chris and I, are our priority is longevity. Sustainability. We want to be around for a long time — 17 [now, 20] years is no accident. And so for us we’ve always looked at that if we focus on the team first, that creates a future-proof organization.
Markets change, customers needs can and will change, right? But if we build a team that’s committed to each other and not to just some product, we’ll build another product. Like if everything blew up tomorrow. All our four products. I would be really sad that happened. But I am 100 percent confident that we would all sit together on a table and we would figure out what we’re going to do next together. Because that’s what matters. WildBit as a team is the important part.
Note: We’re incredibly excited to be hosting Natalie Nagele for a Relay AMA, tomorrow. With 20 years of building behind her — spanning multiple, much-loved products, serving hundreds of thousands of customers — Natalie has turned her spirited eye towards the very idea of “running a business”; what it was, what it has become, and what it can (and needs to) be. Join us for the session? If you’re a founder and not on Relay yet, drop us a note for an invite!
#2. Spencer Fry, founder and CEO of Podia, documents the ever-changing nature of customer feedback across different stages of growth and compellingly explains why we must constantly recalibrate our interpretations. (Source: Twitter)
I’m well-known for talking to lots of customers. In 2017, I spoke to 4,000+ on live chat alone. That doesn’t include the weekly webinars I do for prospective Podia customers. But as we’ve grown, how has customer feedback changed for us (and is it still valuable)?
Feedback is most valuable in the early days. As your customer base grows, there’s more noise, more divergence in opinions, and more competing interests at play. It’s still important, but I use it differently than I did when we were smaller. Let’s take a look at each stage…
0 customers. More customer research than customer feedback. Today, it’s common for founders to talk to customers before they start designing and developing a product, but this wasn’t always the case. I find it really helpful to identify problems you can start to solve.
1-100 customers. This is when customer feedback is the most important. You’re desperately trying to build a product that 100 people will love. I talked to and followed up with every customer who signed up during those days. Sad fact: due to changes we made based on the fire-hose of learning in those early days, I think we only have 3 out of our first 100 customers remaining.
101-500 customers. At this stage, feedback is still very important. Your focus is on solving the needs of your customers, but also ideally expanding who you serve. You’ll get a lot of different feedback here than previously. People will ask for more advanced features.
501-1,000 customers. Feedback is going to start being more scattered. You’ll have some customers say they like something, when others will say they hate the exact same feature. It starts to get difficult to sift through the noise.
1,001-5,000 customers. You’re getting feedback all the time. On everything. Whether you ask for it or not. Even parts of the product that you’d never expect to receive feedback on. It’s starting to become difficult to parse everything and have individual feedback be useful.
5,001+ customers. You send out a survey and easily get 1,000 responses. What do you do? At this stage, I find that customer feedback is best for one thing: a directional guideline as to what parts of the product are (1) complicated, (2) in need of updates, and (3) most popular. You will get lots of ideas for your roadmap.
How do we use feedback today? Nowadays, I use customer feedback for forward-thinking roadmap planning (versus addressing more immediate concerns). The feedback is really helpful to spot the bigger problem areas and opportunity areas. I find that customer feedback is most valuable for trend-spotting and to inform bigger-picture decisions.
#3. Jason Cohen, founder of WP Engine, cautions startup founders against stepping into the seemingly enticing “tar-pit” of targeting the mid-market segment. “Selling to the mid-market is hard. If you do it, expand into it later, after you’ve already mastered a different segment.” (Source: @ASmartBear)
The startup graveyards are littered with companies who tried to target this seemingly alluring [mid] market segment — customers small enough to be intelligent and nimble, young enough to embrace new technology, yet big enough to spend real money to alleviate real pain. It sounds like it’s best of both worlds. But the reality is: It’s the worst of both worlds.
They’re not “small enough to be nimble,” because at fifty employees they’ve already established much of the lumbering process and bureaucracy of companies a hundred times their size. Shackled by budgets and internal politics, technology changes require expensive coordination and retraining, and *fear of change trumps potential rewards of improvement.*
All this makes for an arduous sales process just like with big companies. But although they have the process and controls of a large company, they don’t have the budgets to match; there’s no large reward for successfully navigating the painful, Herculean sales adventure. Worst of both worlds.
Why is it like this? Maybe they’re stingy because they’re still being run by a parsimonious small-business founder (like me!) who is still straightening used staples to save pennies. Maybe it’s because with a few dozen people, the segmentation of teams, departments, roles, and behavior is inevitable. Whether because of physical limitations of communication or human tendency towards tribal behavior, we fall into semi-autonomous isolation coupled with formal processes to ensure command-and-control, and a bureaucracy is born, self-generating and largely inescapable.
Whatever the reason, it’s a tar-pit.
Hope you enjoyed reading this edition of The Baton. We are trying to bring you the most nuanced insights from SaaS founders across categories. And we’d love to learn which SaaS subject would you want us to cover next/more of? Let us know? :)
Until next time,
Astha and Akash