Growing a SaaS: Avoid Confusing Dual Offers

“First, we should have focused on our strengths early on. Probably our biggest mistake was not doing this. We started out with a somewhat confusing dual offering, because we were distracted by competitors.”

Written By Sterling Sweeney: Published Sept 1st, 2019 | Updated Sept 3rd, 2019.

Sterling Sweeney is a growth hacker and the driving force behind WhalePages, a SaaS marketing agency. Today, he sits down with the team from Fanout to talk about Fanout’s approach to SaaS growth. 

8 Minute Read

Don’t Look at Your Competitors and Then Get Distracted With Confusing Dual Offerings. Focus on Your Strengths and Do That Well.

Today, WhalePages was fortunate enough to chat with the team at Fanout about their SaaS company which helps power streaming APIs. So let’s jump into the interview!

Hi and thanks for joining us today. Can you begin by giving us a little bit of background about Fanout and when / why it was started?

Hey, thanks for having us. Fanout was started in 2011 to help developers build and scale realtime/streaming APIs. Our founder, Justin, came up with the idea after working on a realtime commenting application at a previous company.

Building streaming APIs is hard for two reasons. The first is long-lived connections. Servers must maintain connections with clients in order to push data to them at any moment. This is fundamentally different from the way request/response APIs work, and is difficult to implement. The second reason is routing. Modern server architectures are comprised of multiple servers, and if a client is connected to one server, but an event happens on another server, you need to be able to get the data to the right place. Fanout handles both of these things, so our customers can save time and money and focus on their application logic.

Now let’s talk a little bit more about how you’ve approached Fanout’s funding and growth strategy. Are you backed by investors or is the company self-funded? Tell us a little bit more about the pros and cons of your funding approach.

The company’s funding is what we would call angel-bootstrapped, where our financial resources come primarily from our founder and a handful of angel investors. We participated in the Seed Sumo accelerator in 2014, which was instrumental for connecting us to angels.

What’s great about our approach, compared to, say, raising VC money, is we’re able to run a stable business on our own terms. We don’t move as fast as other companies with lots of capital, but we’re fine with that.

Tell us a little bit more about how you helped Fanout gain its initial traction. What marketing strategies did you use to on-board your first paying customers? How have your marketing strategies changed over time? How long did gaining that first bit of traction take?

Early on, we did guerilla marketing at conferences. We’d get speakers to mention us in their talks. We’d wear company t-shirts with huge print. We gave out branded candy. Through these efforts we got us our first beta signups, usually within days of the events.

We’ve been blogging since the start, which has always been a good source of traffic, especially when our posts get highly ranked on sites like Hacker News or Reddit.

By the time we launched, getting our first paying customers was somewhat easy. We already had people using the service from the free private beta, and so they converted over. We even discussed pricing models with them before we started charging.

Over time we’ve done other things like tweet, speak or run booths at conferences, create open source projects, be featured in the press, build partnerships, run online ads, and send bulk emails.

“We’ve been blogging since the start, which has always been a good source of traffic, especially when our posts get highly ranked on sites like Hacker News or Reddit.

In your experience running Fanout, what have been the most and least successful marketing channels that you’ve used to gain traffic and on-board new users?

Our most effective marketing has been open source projects, followed by blog posts. Both act as constant drivers of traffic.

The least successful was bulk emails. We spent some months doing that and only succeeded in angering people. Not a single email led to a signup.

“The least successful was bulk emails. We spent some months doing that and only succeeded in angering people. Not a single email led to a signup.

Haha! Yes, cold outreach can be a challenge. It’s a big part of what we do for our clients. Essentially we help SaaS companies improve their “findability” online by making connections with relevant thought-leaders, influencers and companies (see the service here). Virtually all of the connections we find our customers begin with a cold email! Luckily, we’re at the point now where for some of our campaigns we have a 10% t0 35% partner acquisition rate. Keep in mind, these are not customers we’re approaching with cold sales emails, but partners who can help our clients obtain customers.

For us, the secret to landing these partnerships through cold emails is to personalize everything and give before you take. If you don’t take this approach, you’ll anger people and get abysmal response rates.  If anyone reading this blog post has had success with cold email outreach for their SaaS, please share your success strategies in the comments section below. I’m sure 99% of people reading this will be curious 🙂 

Let’s move on now. Many SaaS companies spend a lot of time pushing their affiliate marketing programs. I notice that you don’t have a partner program. Is this something you’ve tried before but didn’t gain traction with? Or has a partner program never been part of your marketing mix? If it’s not part of your marketing mix, why have you decided to leave it out?

In the past we spent considerable time focusing on partnerships, and we even featured co-marketing content with some API management companies. These efforts have never been a strong source of leads, although we still believe the right partnerships can be effective. The key for us is to find partners that can adequately drive sales, and this remains an open challenge.

How much of a role does SEO play for for Fanout?

It’s important. Google is our greatest source of traffic. We have numerous pages to capture various searches, including the whole realtimeapi.io website.

How big of a role does A/B testing and conversion rate optimization (CRO) play in your SaaS company’s growth strategy? I really like your homepage. How heavily has that been tested? If you’ve been testing, what are some important lessons learnt when it comes to CR optimization?

Admittedly, we don’t do A/B testing or anything super scientific with our website flow. Basically we just revise the website every once in awhile and see if our signup rate improves. The reason we haven’t done more with this is we’re still working on our core positioning. We may have been established for awhile, but our best tests are still direct conversations with potential customers.

“We may have been established for awhile, but our best tests are still direct conversations with potential customers.

Now if you’re comfortable talking about financial milestones (team size, user growth rates, monthly MRR milestones, ARR projections etc), can you tell us a little bit more about your rate of growth and company size?

We can’t get into specifics, but we are a healthy small business that operates on its own revenue. We don’t have specific growth goals. Maybe that’s a strange thing for a startup to say, but our focus is on creating the right product and ensuring our customers are happy.

How long did it take you to hit $2000 MRR?

A long time! Quite literally, this took years. The company was founded in 2011 and we didn’t publicly launch until 2014. So at least three years just to get going, and then another year or so to reach a number like that.

Lastly, if you had to start over again and do three things differently, what would those three things be?

First, we should have focused on our strengths early on. Probably our biggest mistake was not doing this. We started out with a somewhat confusing dual offering, because we were distracted by competitors. We started with a unique product, but since it was a new concept, users were having trouble understanding it. So we quickly developed a variant that behaved more like our competitors’ products. Initially the plan worked, in the sense that we had an easier time getting traction on the me-too version. But, over time we struggled to stay competitive and our users churned too easily. Eventually we figured out ways to improve the usability of our original product and we got back to our roots, with customers that stick with us and grow.

Having better usability out the gate would have been good, too. Our product was very hard to use in the beginning, no doubt leading to many missed opportunities. Of course, even to this day we are still working on usability.

Finally, we could have been smarter with time and money. In general we are frugal and get a lot done with very little, but there were some things that ended up being a waste of time. One that comes to mind is an integration we did with a proprietary SaaS database that ended up shutting down.

Hopefully these are good lessons learned for other companies just starting out!

“First, we should have focused on our strengths early on. Probably our biggest mistake was not doing this. We started out with a somewhat confusing dual offering, because we were distracted by competitors.

Thanks for taking the time to chat with us today. To our readers, if you want to learn more about Fanout please head over to their website to learn more!

If you have enjoyed this interview and would like to read more just like it, then head over to our SaaS marketing blog.

Written By Sterling Sweeney: Published Sept 1st, 2019 | Updated Sept 3rd, 2019.

Sterling Sweeney is a growth hacker and the driving force behind WhalePages, a SaaS marketing agency So, if you have a SaaS company and you’re kinda into things like website traffic and increasing your MRR, then be sure to check out our homepage. 

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1 Comment

  1. Josh

    Thanks for the insights Fanout. I agree with your comment about dual or multiple offers. You lose your focus and often end up compromising your entire vision. It might seem like an innocent enough mistake, but last year it really hurt the growth of our Edu company. We were getting excited by the opportunities out at the edges and we totally lost focus, ultimately hurting the company. We’re still recovering. Focus focus focus.

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