Reply to author on Twitter at @JDcarlu.
If you don’t know what Mattermark does: they “Research, prospect, and track the fastest growing private companies with deal intelligence.”
They focus on three main markets:
Private Market Investors: Venture capital, private equity & hedge funds
Lead Generation: Sales & business development professionals
Merger & acquisitions: Corporate development & investments bankers
With that said, let’s dive right in:
Mattermark payments plans are: $399/mo paid annual or $499 monthly.
On Christoph Janz categorization of the SaaS companies we would say that Mattermark is hunting for Deers & Rabbits. More close to hunt only Deers actually.
What I found very interesting about this blog post that relate the activity of “hunting animals” with sales, is how far from the reality of hunting they are. I agree that you should choose in advance what is going to be your prey (customer) and what strategy you will use, but the reality is that animals are not waiting for you to come (same with customers). When you hunt remember you are not the only one going for the same customers, and that they don’t behave as a shoplist that you find them and you choose which to pick.
When you are in survival mode you hunt what you found as fast as you can. If you have a comfortable market share (not fighting for survival) you will focus on hunting more deers instead of rabbits. The trap here is that we tend to approach our sales (hunt) strategy along with who we target as our customer.
But their is a difference in the attitude that you should take on approaching the hunt and the type of customers you are going for.
If you fall into the trap you will adapt and correlate your strategy with the type of customers you want. The trick is to unlearned this, and realize that not necessary the strategy will focus on hunting one type of animal, or that one type of animal (customer) will be hunt with the same strategy.
In a SaaS model, why shouldn’t you customize your product so it can be sold for different uses. In our example — Mattermark— the possible uses of the platform (product) is larger than todays strategy and payment model.
Minimum Use of Product
The Minimum Viable Product is that version of the product that enables a full turn of the Build-Measure-Learn loop with a minimum amount of effort and the least amount of development time. The minimum viable product lacks many features that may prove essential later on.
In our case Mattermark not only has built a MVP but at this moment is much more than that. It is a whole incredible sophisticated product. I have personally used it and can say its amazing. Now, for me, it was more than I needed. Why? Because there is a certain amount of information and use you can give to their platform, which is very limited compare to what it has to offer. Here is where the concept of Minimum Use of Product (MUP) comes to play:
The Minimum Use of Product is the simplest use a customer can give to your product and found value on it that they are willing to pay for.
Some examples on the Mattermark platform would be: One search for the correct angel investor, one sale lead to possible customers, one competitor that raised funding, one VC that has not yet invest in your niche, one startup that you can partner with.
So let’s try to figure out how the MUP will work when it comes to $$.
Monthly Plan — Annual Plan Vs Pay what you use
Now that we understand what the M.U.P means and stands for let’s see how this applies to our monetization strategy.
Let’s start by saying that the most surprising thing for me is that Mattermark has experienced and try other models but not applied directly to their main product. “Finding a model for sustainable paid content at Mattermark” published Danielle Morrill.
“2.5 hours and $1,000+ of pre-orders later, we might be onto something here… What if subscription fees sustained content operations and we could completely focus on turning out great content, even if it was just one piece each day?”
She is very smart. She saw the signs when publishing the reports. What she took as a sign of a “new startup journalism” is a new strategy model combined with a need for content. So how this is connected to their main product: the platform.
When you first use Mattermark you go into the free trial. Its usually a great idea. Give your customers a taste of your product, they try it, learn from it, get use to it, get addicted, can’t live without it, can’t imagine life without it, OK I will pay.
The entire user experience — from the first time the user visits your site to the moment he signs up for a free trial, through the onboarding and the exploration of the product and further on — needs to be completely frictionless -Christoph Janz
We need to understand the friction on the different stages (free trial). Let’s say there are two kinds of friction: one is psychological -what happens in your mind- and one is monetary -if it hurts to pay and you feel it in your pocket-.
The psychological friction has disappear with the use of the free trial but not the monetary one. This one appears when we need to log in with our credit card and then vanish on the month we are using the platform.
The friction comes back when you finish the month of trial, you know they have your credit card, and you remember their payment options:
$399/mo paid annual or $499 monthly.
Then you go “Wow”. I loved the product and really got value out of it but not enough to become a Deer. Let’s say I would pay between $10 -$100 for the use I got. I would be close to a mice. But there is no option to pay by hour, or by day, or by lead. This created the friction to skyrocket! But here is an idea:
What if you could pay $50 for one day and this money will go into creating content?
Just pay $50 for a day of use of Mattermark platform. Today’s daily revenue per day would be something like $400 / 30 = $13 or if you want in weekdays lets take 25 — $16. Or if you want in real hours let say 2 hours a day 6 days a week, on 4 weeks (48 hours), will give us $200 a day. But this is what VC, Angels, hedge funds can and will pay. If we are focusing on the founder of a startup we need to adapt to their reality (25% of what a VC firm can pay I think is more than a good deal). So why isn’t there a business model for pay what you use or pay by day?
To understand why (usually) SaaS companies don’t go this path we need to talk about Recurring Revenue.
They are looking for the frequency of that revenue stream, and whether or not it is recurring and easily predictable. — George Deeb on investors.
Startups (founders) have fall in love with recurring revenue. Why? Well in this case I’m going to blame investors. They have insisted that this is the right model to follow and that they will fund any business that follow this religion. Don’t get me wrong! I also believe in MRR (monthly) and ARR (annual recurring revenue) as measurements.
But falling in love with one metric can make you see only one strategy and can blind you from seeing other paths.
As a carriage horse that can only look forward and never to the sides.
I like Brad Feld take on ARR —related to valuation— which I will use to make a point of how the metric can confuse us.
A simple answer is “well — public SaaS companies are currently trading at 6x average multiples so we should get a 6x ARR valuation.” There are so many things wrong with this statement (including what’s the median valuation, how do it index against growth rates or market segment?, what is your liquidity discount for being able to trade in and out of the stock), but the really interesting dynamic is the relative value trap. What happens when public SaaS companies go up to an 8x average valuation? Or what happens when they go down to a 3x valuation? And, is multiple of revenue really the correct long term metric?
Recurring revenue is not new on business. It maybe new to tech (tech itself is pretty new on earth years) but you know for who is absolutely new? For customers (for john doe). Tech companies need to understand that you have to educate your clients on recurring revenue —instead of asking them or force them because its the only model you have— and the mutual benefits of this model.
So how do we do this? First we need to know there is a need for our product.
We all want your product
There is a real need for good data in the startup community.
Mattermark focus on VC, Angel, HR which is good when you want to go for a niche market. Own your market, monopolize it. Thats Mattermark position today. Very strong. But what about the rest of us.
I’m going to make a guess here: I believe Mattermark was build to help startups as much as to help investors. The vision is to help founders find the right investors, obtain future leads, get sophisticated info on your competitors, and build your own startup.
So if there is a need and there is a possible business model where I can pay by the day (higher than a monthly subscription) that can complement the actual recurring revenue model, why wouldn’t they go for it? Maybe they will.
PS:Let’s be clear that I have no relation with the company, apart from having tried their free trial, love their product, follow their founders on twitter, and believe they have a great future. The aim of this blog post is only to help.