The Importance of Validating Your SaaS Hypothesis
“Prioritization, understanding exactly what your customers want to achieve and challenging them on this helps develop the right solution to their problem.”
Why are companies still spending like it’s 1995?
Let’s jump into the interview below.
Hi there Nicholas and thanks for joining us today. Can you kick off the interview by telling us a little bit more about Spendesk? What was it that triggered you to move forward with development and turn your project from an idea into a reality?
If you look at all the innovation happening in the B2C space already making it easy for us to pay for things in our personal life, you can not help but wonder why companies still spend like it’s 1995. Manual expense reports, shared company credit cards and petty cash are just some examples for archaic processes that everyone has experienced and that still are part of everyday life in most companies. Spendesk helps business spend smarter with the first spend management platform designed for both employees and finance teams. We want to lead the next revolution in the B2B space and become global market leader in spend management for SMBs.
How long did it take you to develop a first version / MVP? What did the MVP development process look like?
Spendesk is a software with embedded fintech technology. It’s part of our DNA to launch a product or a feature fast to get feedback from customers and learn from it.
However, for Spendesk we first had to integrate API of banking partners which is complex. It took us about 6 months to get something off the ground. The first version of Spendesk enabled people to issue virtual cards (already a revolution) and integrated an approval flow as well as the ability to link receipts to a payment in Spendesk.
We went with the “cupcake” approach delivering all of the value to prove our hypothesis that an all-in-one platform enabling to manage business spending end-to-end was what our customers needed. And this was exactly the feedback we got.
What was the single hardest development challenge you faced early on? How did you overcome those obstacles?
When you are trying to build a platform that integrates more and more payment methods while also developing a software that fits both small companies and bigger SMBs on different international markets (we’re present all across Europe today), it’s crucial to prioritize properly.
You always want to develop as many features as you can but you have to be very clear about your priorities and pick the right feature at the right time based on your objectives and the hypothesis you want to validate.
Prioritization, understanding exactly what your customers want to achieve and challenging them on this helps develop the right solution to their problem.
What have been some of the biggest product decisions you’ve needed to make as a company? Have you ever had to pivot or change your offering? How has Spendesk changed over time?
Early on, we already strongly believed in the value of one platform that integrates online payments through virtual cards but also covers expense management with smart cards and invoice management in one single place. We could have decided to stay focused on cards only but we decided to enrich the platform and that’s the main value for our customers today. Spendesk puts finance teams back in control with full visibility and control while employees have access to smart payment methods.
Are you self funded or do you have outside backing (VCs, angels etc). What are the pros / cons of your funding path?
In order to achieve our mission of helping businesses everywhere spend smarter, we had to build the best product and launch it fast. To do so you have to hire the best people and build strong teams. This is why we decided to raise money to be able to develop our product faster and serve more markets. To date, we raised €45M (Series A and Series B with Index Ventures).
Your funding path mainly depends on the mission you set for your company – if you’re ambitious and want to serve businesses everywhere, you have to put the investment behind it.
How long did it take you to hit $1000 MRR?
For the first four months our product was free, before we turned our beta customers into paying customers (and hence reached this threshold). What was incredible is that all of them continued to use the product after that shift. This was a very positive signal showing that we really delivered value to our customers.
When you were first starting out, how did you go about onboarding your first customers? What were the main channels you found your first customers through?
Very manually actually, we invested a lot of time in onboarding.
What matters at that stage, is getting these first customers to use your product and not overthinking it. You want their feedback and you are looking for your first ambassadors.
The beginning was outbound-driven. When you launch a new product on the market, and in our case even a whole new category (spend management), you have to talk to people and explain your solution and how it solves all the pains companies have with operational spending.
As time has gone on, what have proven to be your 3 best customer acquisition channels?
We are now looking at a mix of outbound and inbound acquisition channels, including content marketing, paid advertising and brand campaigns to build a predictable growth engine.
How do paid ads fit into your growth program? How have paid ads performed for you?
Paid ads are an important part of our growth program. We have seen strong performance on search and LinkedIn in particular where we can reach prospects at scale.
Paid ads also help us to move into new markets more quickly, by providing a platform to test messaging and strategy.
If you have an affiliate / partner program, how important has your program been to your company’s growth?
Partner programs are something we currently start developing and we already see strong traction. This can help both with acquisition and with evangelizing the market.
If you had to start over again and do three things differently what would those three things be?
Hiring is one of the main bottlenecks while scaling and expanding into new markets. It’s important to focus on building a strong hiring machine early on to avoid creating this bottleneck.
Also, picking the right CRM from the get go will save you a lot of time when you scale.
And lastly, what has proven to be a great asset for us is building a strong community from the very start. So this is rather something we would definitely do again. 🙂 With CFO Connect, we bring together forward-thinking finance leaders to share insights about their space.
What’s a “must read” book for SaaS entrepreneurs?
“Blitzscaling” by Reid Hofman.
Thank you greatly for taking the time to chat with our SaaS blog readers today about Spendesk. To our readers, if you’d like to learn more about Spendesk, you can follow them on Twitter or head over to their website here.
Written by Sterling Sweeney: Published Jan 19th, 2020 | Updated Jan 19th, 2020.
Sterling Sweeney is a growth hacker and the driving force behind WhalePages, a company that grows SaaS websites. So, if you have a SaaS company and you’re kinda into things like website traffic and increasing your MRR, then our SaaS growth boxes are probably for you.
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