I recently got to chat with Harry Stebbings on the 20 Minute VC Podcast, covering a range of topics including:
- How what it takes to be a great CEO has changed over the last 30 years
- Whether “management upscaling is the most important role a CEO can do
- How “the old school CEO approach is upside down and backward?”
- What the fundamentals are to ensure your executive team are aligned and working in tandem
- Why transparency across the organization is fundamental to both efficiency and culture?
- Why cloud companies have to be customer-centric like never before
If you’d like to check out the full episode, that can be downloaded here. I also wanted to share a few key highlights from my conversation with Harry in the following Q&A four-part blog series. If you haven’t already gotten a chance to read my first, second, and third post, be sure to read those before starting part four below!
Harry: I want to finish our discussion today on arguably the most important elements in terms of SaaS business as a success today…
You’ve said to me before that cloud companies are customer‑centric companies. Tell me, what do you really mean by this?
Rob: A cloud company differentiation versus an on‑premises company is that in the past with on‑premise, most software companies got 80 percent of all the revenue up front when they sold the solution ‑‑ they sold their software ‑‑ and then typically about 20 percent through maintenance over the following years.
With cloud, you get it day‑by‑day, month‑by‑month, year‑by‑year. Most cloud companies have a yearly or an annual subscription. If you haven’t done a great job for that customer, they drop you and don’t renew.
Also, what’s very common with cloud companies, is that it usually takes one to two years to get your money back for the investment you’ve made in just sales and marketing from that customer.
If they drop you after one year, you haven’t even covered your initial costs, let alone your full P&L. It is imperative that a cloud company stay close to its customers in making sure that they are in it for the long haul.
we know the customer lifetime value in a cloud solution is typically between two to five times more revenue than an on-premises solution. By staying close to your customers’ needs you’re going to be wildly successful and make a lot more money.
The cloud approach really gets you thinking about the customer and also about long‑term relationships as opposed to the old way. I did on‑premises software for about 25 years in my career. It was all about just getting new customers, selling them, and then figuring out where you’re going to find the next new customer.
It was rare that you spent a lot of time figuring out what else can we do for our current customers. You’ve already gotten 80 percent of the revenue that you are ever going to get from them up front.
That’s the superiority of the cloud‑business model which prioritizes your current customer over potential new customers. It is really putting the company on the same side of the desk as the customer. If the customer doesn’t have wild success, the company won’t have wild success.
Harry: What do you know now that you wish you’d known at the beginning of your career?
Rob: I wish I had known: figure out how to develop a great culture and draw in the teams as fast as possible and hire great talent. Great talent will get you through the best of times and the worst of times. I wish I had learned that earlier in my career.
Harry: To wrap this up, can you tell me a moment in your life that’s really changed the way you think about life going forward?
Rob: My mother really focused on making sure that I had the right values. She instilled in me the golden rule, “Do unto others what you have done unto yourself.” About 10 years in the business, I actually found out that there was a better rule. It was called the platinum rule, “Do unto others as they would want to have done unto them.”
Find out what is important to others before thinking about what you think you would like. In this particular situation, find out what they would like and then do that. Too many times, we concentrate on ourselves. I’ve just learned that if you concentrate on others, you can have wild success, not only in business but in your personal and family relationships.
That concludes my four-part blog series with Harry Stebbings. Want to connect further? You can find me on Twitter @sageintacctrob, and you can find Harry on Instagram @hstebbings1996.
Thank you for joining me for this blog series, and don’t hesitate to leave a comment below with any thoughts or questions you may have for me.