SaaS products aren’t viral (preso)

SaaS products aren’t viral from Andrew Chen

I recently gave a short talk to the portfolio companies of a SaaS investor, and prepped some notes around the topic of SaaS products and virality.

It’s hard enough in consumer, much less SaaS
For consumer internet entrepreneurs that are working on big markets, getting to virality is hard enough. There are plenty of sectors, like commerce or moms, where it’s almost impossible to achieve sustained viral growth, just because of the dynamics and narrow nature of the audience. When you turn your attention to SaaS products that are narrow in industry and profession, it’s even harder.

The product is what matters
The main point I make in this talk is that virality has a lot to do with product category. You can stack the odds in your favor by choosing a product that has many of the following characteristics:

inherently social- like publishing, communication, or file-sharing
high retention with daily usage
applies to many job titles within an organization, so that anyone can use it
invites travel through a new channel with a compelling pitch
targets extroverts :)

Not every product can use virality
Of course, people don’t usually pick their product based on what they think will grow virally- so as a result, you have to analyze your own product to see what makes sense. It may be to fully embrace virality (probably not), pivot your product more towards communication/sharing, or just ignore viral altogether. For most, I think the latter option makes the most sense.

Hope you enjoy the slides! Comments welcome.

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http://twitter.com/tagami tagami

Succinct post. I appreciate how clearly you identify the friction and why it exists. I guess I need to abandon my introvert match making app now ;)
http://about.me/mikeschinkel MikeSchinkel

Not sure if I agree with you in all cases.

Let me start with a counter example: HipChat. It’s one of the few SaaS products that became instantly useful for our team the 1st week we started using it. We didn’t have to cajole people to use it, they just did. OTOH, HipChat only recognizes one organization so if I have many clients I have to put them all on our account and I cannot recommend they get their own account because the HipChat clients natively only recognize one organization. So HipChat cannot go viral.

OTOH, if HipChat were to enable multi-organization support in a manner that made sense then I’d be actively helping recruit my clients to get their own accounts because using it is so beneficial. So I think HipChat could very much work virally but they have to actually realize the lack of multi-organization support is a huge problem and I’m not sure they do.

Let’s look at another example: Podio. Multi-organization support is fundamental to their product and I’ve seen virality in action. They even have a Project Management Community set up as an organization so we can see and talk to the other users as part of using the project. However in Podio’s case there are many UX issues that are going unaddressed and I think many of them limit it’s ability to take off virally. As an aside the Podio team seem to have a world view about how their product should be used and along those lines it feels they are often dismissive of user’s needs that go against that view even if most of the active users in the community agree with the need.

So my hypothesis is that B2B SaaS can definitely be viral but needs (at least) these three (3) aspects:

1.) Designed for business collaboration across organizational boundaries
2.) Multi-organization support permeates the UX with a shared space for all users.
3.) Attention to UX so that using the SaaS is fluid, useful and painless.

FWIW.

-Mike
http://about.me/mikeschinkel MikeSchinkel

BTW, DropBox is an example of an app that really ignores cross-organizational issues and is one reason we find it far less than useful.
http://andrewchenblog.com Andrew Chen

Maybe you missed the whole point of my slides- I specifically talk about cases in communication/collaboration where it can work, but just say that it’s narrow and most SaaS products don’t fit. I even make a nice bulleted list like the one in your comment to explain it more :)
http://about.me/mikeschinkel MikeSchinkel

:-) You’ve seen this before?
http://www.useit.com/alertbox/9710a.html
http://twitter.com/webbie Lilia Tovbin

I would add a * to “Don’t bother” with a footnote *Unless you already have a large user base. Because at a certain size the economy of scale kicks in and small incremental efforts can add up to meaningful totals. I guess that’s not exactly viral by definition, but my point is that people shouldn’t completely give up on it. Also, not sure I agree with utility + one job tile = fail, some job titles represent large markets – there are 3.7 million full time teachers in the US.
mciarrocchi

I really liked the model that Rahul presented here:
http://www.linkedin.com/today/post/article/20121002124206-18876785-how-to-model-viral-growth-the-hybrid-model and based on that there is only one consideration that I’d make: in your case “Going viral” means having a viral factor > 1 which gives you the exponential growth; but there are cases when even with a viral factor < 1 you can achieve very substantial differences from having no virality at all.
http://www.VenTribe.com/ Itai Rave

Hi Andrew. Great presentation, great insight. A quick question about a non SaaS product: where would you place a group gifting platform that enables friends to chip in together for gifts online in your “Loyalty by Application Category” chart [you can compare the Group Gift platform to Kickstarter projects but for gifts with friends and family where you create a page and send our invitations - there is a social collaboration and built in sharing involved]? On that note, if frequency is not strong and therefore the viral loop time fairly slow, how would you recommend on decreasing the loop time to complement the potential of high retention in such platform?

@andrewchen