The Importance of Understanding Past and Present SaaS Products: Hiten Shah Part 1

Hiten Shah, Co-founder & CEO of FYI, spoke about the importance of understanding past SaaS products to help you become successful in 2020 and beyond during a webinar earlier this month.

Shah has been building software companies since 2005 and previously started Crazy Egg and Kissmetrics. He is well known for sharing his knowledge about building software businesses with other founders, executives and has personally invested and advised companies such as: Automattic, Buffer, Clearbit, Envoy, Front, LinkedIn and over 120 others.

What Got Us Here (Past SaaS)

“As I was looking into the software businesses that have been around a long time, the one that really came to mind was Zoho.” Shah explained. “Really early on they had this whole thesis about bringing in as many different applications into one suite as possible.”

Zoho is a web-based online office suite containing word processing, spreadsheets, presentations, databases, note-taking, wikis, web conferencing, customer relationship management, project management, invoicing and other applications.

“They figured this out before anyone else,” said Shah. “Which is this idea that you have one product that people are buying and then you sell more on top of it.”

Shah explained that a lot of SaaS companies started to follow Zoho’s lead including: MailChimp, HubSpot, G Suite, Freshworks, Intercom, and Notion.

“So it’s this idea that’s driving everything about how everything’s an all-in-one.” Shah stated.

New World Class SaaS

In today’s new world class SaaS, the majority of people are working from home. This has caused a lot of companies who have adopted this all-in-one idea to become successful.

“All of us have to get really good at product development in order to be successful,” he said. “At the end of the day, you have to add more and more products in order to reach the type of yearly revenue you need from each customer to scale your business.”

According to Shah, a lot of software products that have been successful in 2020 have been remixes of different features including: Clockwise,,, Figma, Drift, and Value.

“There’s this idea that you’re just adding features together and either servicing a different type of customer or servicing a different type of need but similar features.” he said. “In the future sets, you can create something either unique or something really valuable to a certain audience.”

Although the value proposition in the messaging may look very similar, Shah explained that when you dig into the products you’ll understand they are very different.

“They’re actually a hodgepodge of different features marketed in a certain way. But you’ll notice all the similarities of the use-cases and even some of the features.” he stated. “This means that you have a relatively large product development and you’re constantly adding new features. That’s kind of what it looks like a lot of these businesses end up turning into.”

What’s Next? 

“I believe that the number one thing you need to focus on is customer obsession.” he said.

Shah explained that by following the money, building features out, building a suite of tools, going really deep into a sidekick strategy or helping departments work together, will help you retain your customers longer.

For established SaaS companies, net revenue retention typically ranges from 60 per cent (really bad) to 150 per cent (really good), while younger companies can see even higher numbers.

But what does this look like?

Bad Retention

“At some point it gets down to single digit percentages. That means this business by day 90 lost 94 per cent of their users.” Shah explained.

Shah suggests that if you have this kind of retention, you shouldn’t try to add new features. Instead, you should try to understand more about that 6 per cent, to see if you can get more than 6 per cent of those people to be successful – and still use your product 90 days later.

Better Retention

“What you’re really looking for is where does this curve flatten out?” Shah asked. “If you ever see retention graphs, you should look at the halfway point.”

Shah explained that the graphs may seem complicated at times, however, by looking at your retention curves they give you a simple way to assess whether your retention is good or not.

Good Retention

“So what does good retention get us? It gets people coming back,” he said. “Good retention also comes from people who tell their friends about it.”

Good retention means that your customers will share it on social media and will engage with your emails because they’re actually excited about the product and are using it all the time.

“Great retention is amazing, it’s kind of like the gift that keeps on giving if you can have a product that has good retention,” he said. “People keep coming back. They spread the word, and you have sort of this effect where every single customer you bring on has a high likelihood of spreading it to other people.”

According to Shah, if you focus on past SaaS products that have done well, understand your customers and your retention rates, then your product will succeed in 2020 and beyond.

“Essentially, customer obsession boils down to this idea that you’re putting your customer’s needs above your business needs,” Shah said. “You’re putting the benefits customers received from your product above all the different features that you have. So it’s needs and benefits is really what customer obsession is all about.”

Hiten Shah spoke at SAAS NORTH NOW on the topic of What the Future of SaaS Means for Your Product Strategy click here for part 2: