Bundling redux 🍱

What HubSpot and Rippling have in common, a choice all B2B startups contend with, and a public SaaS CEO on learning to love sales.

Aug 30, 2023

Welcome to the 80th edition of The SaaS Baton.

A fortnightly newsletter that brings you hand-curated pieces of advice drawn from the thoughtful founder-to-founder exchanges and interviews taking place on Relay (curated with 💛 at Chargebee for Startups) and the interwebz. So, stay tuned! And thanks for reading!

In this edition, you’ll find the following instructive and inspiring pickings:

#1: Nira’s co-founder and CEO, Hiten Shah, surveys some major (old and new) SaaS bundling plays, notes how the idea is brought back anew every few years, and concludes why it propels few companies massively forward and not others.

#2: Alloy Automation’s co-founder and CEO, Sara Du, logs with great clarity, the signals that led them to a focused vertical at first; and then distills how they decided to go beyond that initial position and “unverticalize” recently.

#3: Amplitude Analytics’ co-founder and CEO, Spenser Skates, relates how he learned to value sales as a technical CEO, the wrong (engineering-minded) ways to approach it, and how they’ve harboured a culture where product people celebrate closed deals as much as GTM teams.

Finding these discerning founder takes valuable? Please consider sharing this edition with an ever-curious teammate or a much-cherished SaaS friend. 🙂 New readers can sign up here.

🗞 Recently on Relay:

➡️ Heuristics and Hunches (August 18th) — “I Think I’m a Historian” — Pivots vs Hops, HubSpot’s Singular Self-Awareness, Why Bundling Gets Rebranded Every 3 Years, and Other Discerning Lessons with Nira’s Co-Founder, Hiten Shah

— The learning muscle that must inform pivots
— Operating with Hiten’s unmatched historical context on tech
— Rippling, HubSpot, and how bundling actually works
— How market timing dictates enterprise sales
— Building new, different, and right products

➡️ Heuristics and Hunches | First operators series (August 25th) — “No One Can Represent All Sides of an Argument Better Than You Can” and Other Instructive Notes on Early-Stage Product Marketing with Vanta’s VP of Marketing, Sarah Scharf

— Joining Vanta as their first product marketer
— Finding a (research-driven) window into what customers really felt
— Achieving product marketing’s customer-led, cross-team impact
— Where emotionally resonant (and cohesive) messaging comes from
— How a founder can set the first product marketing hire up for success
— How to make measurable sense of a first PMM’s first 90 days

#1: Bundling redux 🍱

(From: Nira’s Hiten Shah) (Source: Relay)

Someone rebrands bundling every 3 years.
[Rippling’s] Parker Conrad has very successfully rebranded it — as compound startups — recently. While HubSpot, since about 2006, has understood bunding better than any other company I’ve seen.
Companies like Freshworks and others have had their attempts. And they worked for a while when things were good, but they don’t work for them any more.
Why??
Why does bundling work for some and not for others?
That’s where Parker’s recent insights come into play. I think he’s also sharing them now because he knows how difficult it is to do things the way he’s describing them.
The way he’s talking about bundling is exactly how HubSpot did it. Probably less knowingly. Everything is in hindsight, anyway. Basically, what Parker is saying (which, I think, is very accurate and also challenging) is that it isn’t just about bundling features.
Freshworks did that. Zoho did that. Many others have done that.
And they’re successful to some extent but they’re not HubSpot or Rippling.
According to Parker, you need a core, almost a system of record that everybody gets to easily adopt and give you data for.
Salesforce’s system of record is: These are all your customers. In this tool. Nowhere else.
HubSpot’s is: These are all your contacts. In this tool. Nowhere else.
…
The idea, then, is to have a core dataset that these companies can do tons more on top of. That tons more on top of — and this is the nuance — is just that much better than any other tool because it’s all 1 system of record.
The idea is to keep stacking up methodically.
The sum and the parts would be better for it.
…
The qualifying question is: Do you have a bunch of features/products simply strung together? Or do you have a core compounding aspect that ties them together? Something that makes it so that customers wouldn’t want to use point solutions anywhere else?
Rippling’s thesis is to build a similar thing for employee data.
But, if you think about it, how many such systems are there?
How many such opportunities exist?
Yeah, not enough!
Hence it’s among the hardest things to land on. I can’t imagine Parker coming in with a thesis, that solid, early on. I’m damn sure the early HubSpot, beginning with inbound marketing, doesn’t point to where they eventually got to.
As Parker has pointed out, they’ve created a culture where builders and founders want to work. An environment where they can innovate. A place where folks with that aspirational mindset to build better get promoted.
Here’s the thing, though, if we figure out something like this at Nira, we wouldn’t tell anyone until it’s obvious. Exactly what Parker did at Rippling. He didn’t tell anyone until it was self-evident that this thing was working.
The Nira add-on works so well because it’s connected to the core of what we’ve built and to the value prop that people have to come to us thus far.
Is Nira a system of record yet?
I wouldn’t tell you if it was.
Because I don’t think anyone should be talking about this stuff as it’s so hard.
Not because someone is going to copy. But because there’s so much to develop, there’s no point speaking of it. Because people would think you’re crazy!
If Parker had raised this framework earlier in their journey, people wouldn’t have bought it. If HubSpot had proclaimed, 15 years ago, that they would compete with Salesforce one day, most people wouldn’t have believed them.
I would have believed them because I know they’re incredibly good at strategy. If they say they want to do something, I would bet that they’re going to do it.

Related Relay read:

Productboard’s co-founder, Hubert Palan, on how to think about building an “all-in-one” SaaS from the ground up (“To me what matters is the overall workflow and how tight that workflow needs to be.”)

#2: Dancing with vertical GTM motions 🎷

(From: Alloy Automation’s Sara Du) (Source: Sara Du)

Though we’ve become known for building commerce infrastructure, we originally started out with the much broader vision of disrupting integration work.
Like many founders, we narrowed down our Total Addressable Market (initially the billions of dollars spent on integration engineering as a whole) down to the more immediate Serviceable Obtainable Market.
While we were clear on this being our short term pursuit, the unfortunate byproduct of marketing Alloy as commerce software was that we had to constantly balance the perception disconnect between our team and the market.
…
How to choose the first vertical
We often say we stumbled into commerce with Alloy. In reality, it was one of a handful of use cases we were tinkering around with, and when the pandemic hit, the commerce opportunity became too hard to ignore.
We only had two employees, so it was easy to move quickly with a decision. If I were to approach it more methodically today, I’d consider the following, in order of importance:
Pull - Segment your website visitors by industry or research your waitlist of emails; you might see some patterns. Ideally you’ve already put out a tool or enough collateral that prospective users have started to message you with their use cases.
Timing - Do some rough math on which industry / use case could make you the most money most quickly. This is how you may prioritize subsequent verticals as well.
Rolodex - Figure out who in your network is deep in a specific vertical. The biggest unfair advantage in a vertical GTM comes down to your command of partnerships, and ultimately key relationships, in a smaller bubble.
It’s really like finding micro-PMF, where the market piece is severely pared down.
When to move on from your first vertical
The hardest part of going down this path though, is knowing when to get back on the main road. In the early days of building Alloy, I asked some folks this question and heard things like:
“You’ll want to capture X% of the market” - Not particularly helpful, because market sizing is already an art in itself and trying to concretely understand your progress in a specific vertical is nearly impossible unless you have million dollar contracts in a 50-company market.
“You’ll run out of fresh leads at some point” - A bit of a red herring, because if you’ve drained the pool of leads so fast you probably weren’t going after a worthy market in the first place.
Without many clear frameworks, we forged ahead anyway. At one point, a few things started happening in tandem:
Customers began asking for ERP, accounting, and other finance-related integrations. Industries don’t usually live in isolation; lines blur and cross-pollination can start happening organically.
Companies approached us for our thoughts on ‘integration platforms like Alloy, but not in commerce.’ They often had needs we could very easily fulfill, and we had to explain over and over that we could still serve them despite our marketing around commerce use cases. Sales was fighting restrictive marketing upstream.
We felt pigeonholed by our branding. Even friends mistakenly thought of us as commerce SaaS. Making the decision to broaden focus was easy, but with a much larger team, it took more work to execute this time (compared to when we were verticalizing).
…
It’s a lot of hassle to return to a horizontal approach. A lot of companies can just ride a vertical all the way to IPO. Ultimately, deciding when and how to “unverticalize” depends on how strong the signals are for your company. Some broadly applicable considerations:
Team composition - How industry-specialized your team is, ie are their skillsets translatable to new types of ICP’s?
Product scalability - Data & integrations aside, can your platform fulfill the needs of other verticals?
Customer & partner referrals - Would your users happily introduce you to friends in other spaces?
Diversification - Is your current market shrinking, or do you want to make sure your eggs are not all in one basket?
Undeniable opportunities - If you spot a wave, just ride it

Related Relay reads:

Crossbeam’s co-founder, Bob Moore, on a handy analogy for niches (“You can put your thumb over the end of a hose and it’ll cause water to come out faster, but it kind of masks how big the original opening actually is. The niche thing is like that -”)

Pulley’s founder, Yin Wu, on not building for an obviously large market (“…the thing that most people don’t realize is that this is going to be a much bigger category than it is today.”)

Butter’s co-founder, Jakob Knutzen, on taking on Zoom, Google Meet, and others by targeting a beachhead market (“So, again, why was it important to find a beachhead market? Well, if you are trying to attack everything, then the existing, generalist players will win.”)

#3: Treating sales as critically as engineering 💸

(From: Amplitude Analytics’ Spenser Skates) (Source: The Logan Bartlett Show)

The first thing is that you have to recognize its [sales’] importance to the business. If you build great product and you sell great product, the business will be successful. A lot else can go wrong. How you market or do finance or whatever. [But] build great product, sell great product, the whole thing will go.
That’s true since the beginning of B2B companies.
I knew, as a developer, how I can build a great product but I had no appreciation for how to sell a great product. And I had seen so many great product people and great engineers, not end up having success because they didn’t have an appreciation for sales.
I was like, ‘okay, whatever I do, I want to make sure I avoid that.’
That was the first order of things. Just recognizing the importance of it. Then, learning it was a trial by fire. So many mistakes!
I thought sales was: you go to a customer, you do a demo, and you ask for money. That’s the thing. [It] could not be further from how you approach it. It’s all about finding the right opportunities and understanding them. And then from there you can show how what you do matches someone’s needs.
Another big thing: I think a lot of engineers may have the [wrong] instinct…is that they’re going to learn it [sales] the same way they do engineering, which is by reading a book. I see this on Hacker News all the time. ‘Hey, I’m trying to learn sales. What’s a great book?’
My thing is: Wrong way to look at it.
The way to learn how to sell is to go out and do it.
And then get someone to coach you as you go through that process. That’s how great salespeople [learn]. That’s the fastest path. You’ll learn 10 times faster than trying to read it out of a book or flailing around yourself.
That’s how companies work. That’s the point of a sales manager. It’s to coach people on how do you drive success in your profession. That was hugely impactful for me.
The other thing…I remember… the sales coach that I hired, he would always ask me after a customer call: ‘Hey, what’s the pain?’ I’d be like, ‘well, they want some dashboards, you know, because they’re trying to do SQL queries, they want to get an automated way to do it.’
And he’d be like, ‘that’s not a business pain, what’s the pain??’
He would always ask me this after every single call. After a while it got beat into me that I should always be figuring out and getting deep on a customer before pitching anything about Amplitude or what we do….
The other thing is that it’s less about thinking deeply and going deep on a problem. It’s more about responsive to what the world is telling you.
Anyway, I learned all this as I went through the first year after Amplitude launched in 2014. Then the thing that I made sure to impress upon every single new person at Amplitude was that sales is as critical, frankly even more important to the success of the company, than great engineering.
…
That ethos has stuck with Amplitude all the way through. If you come to Amplitude as a salesperson, engineers will celebrate your closed deals…
We have this Slack channel called, Win Reports, that literally has closed deals. And then people would comment on the thread, who’re engineers, [saying], ‘oh, hey congrats on this deal.’ It’s not just sales and marketing folks.

Related Relay reads:

Pipedrive’s co-founder, Timo Rein, on what a competitive and healthy sales culture looks like (“People are at different levels of skill and are triggered by different competitions, so multiple metrics to compete on is a great way to engage everyone somehow.”)

Airplane’s co-founder, Ravi Parikh, on arriving at the deeper logic of founder-led sales (“…just the idea that a human being should be proactive in sort of getting in touch with people was sort of, in and of itself, a big revelation.”)