How to Scale a SaaS Productivity Business

Max Shiau
4 min readAug 20, 2021

As my summer internship at Elementz Ventures comes to an end, I want to take the time and reflect on my learnings. This team has graciously allowed me to focus on the SaaS productivity space, one that has changed my life and one that I strongly believe has the potential to change so many more. I’ve had the pleasure of speaking with countless founders about their startup journeys, scrutinizing pitch decks to evaluate business models, and crafting investment memos that compile all of my findings.

It’s clear that COVID has set our society on a new path. Yes, there has been a lot of uncertainty, but this uncertainty has also made us more receptive to change. More specifically, it has forever changed the way we work. Companies have adopted a hybrid workplace, increased their usage of automation solutions, and prioritized employee engagement. With these new priorities, an explosion of SaaS productivity startups have emerged, looking to be the next big solution for our post-pandemic world.

After diving deeper into the startups that Elementz ended up investing in, I generalized four similarities that I believe serve as key drivers of growth.

Short term focus on reputation, long term focus on revenue

It seems that in today’s day and age, there is a SaaS business for every solution out there. To compete against the many businesses, both big and small, that operate in the same space, it is crucial to first focus on building brand reputation. That means picking one need and meeting it better than anyone else. It’s kind of a “Hey, this is what you should use our service for and why we matter!” Customers will give the product a test run, get hooked, and even form a community of die-hard fans.

Now with a sound customer base, the startup can think about how to best monetize them. The hard part has already been done: earning their loyalty so that they are more receptive to any additional services implemented in the future. An example path I’m seeing many startups take is becoming a one-stop shop, which allows them to trap customers in their ecosystem. Whatever path they decide to choose, they now have a reputation that can be leveraged to expand into other services and even industries.

Industry agnosticity

One of the biggest risks SaaS productivity tools face, especially B2B, is their success’ dependency on their clientele’s success. Companies adopt these tools in expectation of higher performance, whether that takes the shape of higher employee productivity or sales. If expectations are not met, they run the possibility of losing customers.

The best way to curb this risk is to develop an industry agnostic service, one that is tied to the economy as a whole. COVID has especially shed a light on this, as it disproportionately affected sectors in a way that businesses have little control over. Thus, the optimal position to be in is to have a diverse portfolio of clients.

In addition to the benefit of providing risk aversion, industry agnosticity opens up multiple paths in the future. More times than not, startups end up with an entirely different target customer compared to what they started with. In fact, it is estimated that 65% of startups transform their business models sometime between investment and exit. Prior to choosing the ideal target customer for the long run, startups will thus have the chance to evaluate who they best serve.

Maintenance of customer feedback loop

The significance of this valuable data is overlooked. I’ve ran into startups that saw no light at the end of the tunnel, built an entirely new business after talking to their current customers, and took off. First of all, customers want to be heard. In exchange for their loyalty, they want to have a voice in where founders take their businesses, especially when it comes to feature implementation. Listening to them will only strengthen relationships and increase loyalty even more.

The most common way for SaaS productivity startups to add value to their customers is by providing additional features. The feedback received from customers is crucial to guiding the decision-making process behind this, as the service is being built for the customer. Polls, on-sight activity, live chat transcripts; these are just a few of the many ways startups can collect feedback.

At the end of the day, customers are top priority. They should be listened to with open ears.

Minimal dependency on third-parties

Getting a startup idea off the ground has never been easier. As you can imagine, mapping out a startup’s vision is just 10% of the work; execution is the rest. However, the barriers of entry associated with execution, whether it be launching a website or developing the back-end, have drastically been reduced thanks to the emergence of SaaS productivity tools.

Once startups develop a dependency on these third-party applications, that’s where the danger comes in. Let’s say a SaaS company uses one to develop its technology. Most likely, this is its most defensible differentiator. Third-party applications can implement restrictions that the startup has no choice but to abide with and face system failures that the startup has no choice but to cope with. As a result, SaaS companies should have maximum autonomy, if not 100%, over their operations.

Frictionless mobility is key to allowing startup scaleability.

I see these findings as just the beginning to my involvement in the SaaS productivity industry. As I speak with more founders and uncover the startup landscape, I hope to understand what it takes to scale these businesses and most importantly bring as much value as possible to their customers.

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