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Great Tech Companies Don’t Sell Technology – They Sell…

The SaaS (Software As A Service or perhaps better named Software As A Solution) industry is a rather new business model in terms of how long it’s been a thing, but in a lot of ways, the SaaS model is really just the re-skinning a very old business model into something new and shinny.  At the end of the day, the SaaS business model is really just an agency model backed by a core piece of technology.  Clients pay what is essentially a retainer (a subscription fee) and in return, they get a deliverable.  In the case of a well designed SaaS model, that deliverable is ultimately defendable ROI – not technology as many believe.  Really good SaaS Models don’t just do this lightly, they do it at a level that no one in their right mind would think about cancelling their subscription to build and maintain their own solution.

That being said, technology is rarely the difference between competing SaaS Vendors that cost $200, $2000, and $20,0000 per month.  Instead, it’s the level of service and after a certain point – it’s the defendable ROI.

A few months ago I was in the process of vetting potential new vendors for something fairly commoditized.  I won’t go into the details, but it’s a type of technology that 99.9% of online business use.  It’s nothing revolutionary or really that complex, but put in the hands of the right people, it one of the most powerful sales channels available and yet, it’s very rarely fully utilized.

The $200 Per Month Solution.  Technology!

The sales engineer for the $200 per month solution harped on the technology of their product. The pitch was pretty simple; their company was creating a better tool and offering it at a lower cost. They saw themselves as true technology providers in a world were clients were adapting their core technology to solve all kinds of issues for a fraction of the cost.  I would have to dedicate significant resources from within my department to run it, but they were absolutely right in that the raw materials were there to make this a monster ROI driver even with using my own resources to make it sing.  Best of all, the license to use the product would only set me back $200 per month.

The $2,000 Per Month Solution.  Pedigree + Service.

The next sales engineer focused on the pedigree of their company and the level of service they would provide. This particular vendor provided a variety of related services and they are arguably a ‘leader’ in the industry.  And unlike the first technology only solution – they did most of the day-to-day work too.  Like the first sales engineer, they focused their pitch significantly on how this particular software (or set of software) under their expert guidance and account management could drive a lot of raw revenue.  And unlike the first sales engineer, we actually dove into the numbers over a few meetings.  The numbers were impressive when we backed into them: 6 figure revenue numbers for $2000 per month.

The $20,000 Per Month Solution.  Defendable ROI.

The last sales engineer also focused on understanding my issues just like the others.  And of course, we went through the ways their software could help alleviate my pain points and how their accounts team was built to provide best-in-class service.  They also spent the time to back into some numbers with me.  In fact the numbers we backed into where nearly identical to the $2,000 per month vendor!  But a few days later when the sales engineer came back to me with a price – $20,0000 per month – they then asked me if they thought that was a reasonable price considering the revenue I would be driving. My answer was pretty clear – I didn’t have an issue with the ROI multiple (5x is well more than I would get if I just spent more on driving traffic), but they were exactly 10x more expensive than another well established vendor providing almost the exact same output.

The sales engineer agreed, but then asked me if I could deliver explicit proof that the piece of software was driving such a high ROI.  And if I could – how much of my own time (the most valuable resource any of us posses) would I need to do so?  They were rather forward questions – but the reality is the sales engineer was right.  At $24,000 per year – I better have a very good answer to those questions.  I knew how I could do it, but it was going to require quite a bit of my time and something I’ve learned to truly dislike – solving issues by stacking code on code.  If you are a non-developer, firstly learn to code and two, that’s what avoidable nightmares are made of.  Don’t do it.

When I answered I could figure out a way to back into an incremental ROI number, the sales engineer agreed, I could build a way to provide clear proof of the ROI of the $2,000 per month solution, but was that the best use of resources?  That’s a tough call, but a fair question.  The sales engineer then opened up to me and point blankly informed me their company doesn’t really sell technology.  They sell defendable performance that delivers a clear ROI.  At the end of the day, this sales engineer new I would have to defend my decisions.  And their product did just that.

 

You Don’t Code? You Should.

Coding. There’s a lot of recent press discussing why coding is the career skill people will need to possess in order to be competitive in both today’s job market and the job market of the near future.  As an active technologist who learned to code while serving in a non-developer technology role, I can’t argue with this.  Learning to code was and is one of the best decisions I’ve made in both my career and personal life.  How else was I ever going to build diapersdiapers.com?!?

On the other hand, I’ve also been reading somewhat contrarian arguments discussing how coding as a job is going the way of the skilled textile worker.  Being able to code at a basic level is quickly becoming table stakes as more and more people are exposed to coding education earlier and earlier in life.  And again, I can’t argue with this view.  Regardless, there is little doubt in my mind that coding is an incredibly valuable skill, but not necessary for the reason of being able to write code.  A little secret I’ll share about coding, it’s not writing code that’s valuable.  It’s the thought process behind writing eloquent and scalable code that makes learning to code such a valuable skill.

Being Able To Write Code Is Not An Instant Path To Financial Wealth.

Let’s get this out of the way before anything else.  I hinted to it earlier, but to be crystal clear – coding is already being commoditized.  Do any research on learning to code and it will be very clear that the availability of code schools, online learning, and the growth of code classes at traditional schools has made it much easier to access coding education.  And this is great.  I say this as I consider Codeacademy – an online school of sorts to be one of the many resources I recommend and use myself to sharpen my code skills.

What isn’t so great with this?  A lot of people get the impression that once they finish a 3 month coding school or an online class, the money will flow in and life will be perfect. That’s dead wrong. In my career history of technology, even the best graduates of something like the Flatiron School – one of the premier schools here in NYC – are very raw in terms of their coding skills.  What sets these guys apart (and why I adore so many of them) is their graduates are super smart, driven, and ripe for growth.  In fact – many are career changers who were successful at things other than coding in a prior life.  Most of the grads I know fit this model.  Technically I fit this model.  They understand code is just another tool and it takes practice, tenacity, and a deep love of learning to make that wonderful tool sing. 

It’s also worth noting that the reality is there will continue to be a massive shift in jobs that need people who can code – but the vast majority of the need will be in standardized work where the amount of original thought will be less and less.  Welcome to automation folks.  Think about the situation this way – in the beginning of photography having the skill and resources to take a photo was rare, in demand, and as a result very valuable.  But today, both the technology and skill to take basic photos isn’t exactly hard to come by.  It’s simple supply and demand for standardized services.

But Fear Not. Being Able To Code Opens Doors.

The best developer I know (a co-founder of Bounce Exchange) once told me, ‘anyone can write code. It’s the logic behind the code that’s important.’  It turns out he is right.  Writing code is fairly simple and generally the least challenging part of developing technology.  But writing scalable, eloquent, mature code that solves a well defined problem (and monetizes the solution) in as little code as necessary – that’s very hard.  It’s something that is only gained by writing and frequently re-writing a ton of really bad (well hopefully improving) code.  For example, for my first real coding project at Bounce Exchange, I re-wrote my code multiple times before I published it – improving it (and frequently reducing it) after each often brutal code review.  And when I look at it now – I have a deep desire to re-write it again due to what I’ve learned in the two years it’s been since I (we – it was team effort) published it.

Now days, I rarely write a line of code at work at HealthCare.com.  But the skills and the way of thinking I learned by writing and re-writing code – it has payed dividends.  In fact, I have little doubt I would be in the role I’m currently in if I didn’t have a pretty strong coding background founded in understanding how to approach complex problems via using as little code as necessary.

The Thought Processes And Disciple Coding Instills Are The Real Value.

Writing code changes how a person thinks.  It really does. Plus having the disciple to struggle and learn how to write good code – it’s value in terms of one’s career – I will argue it’s some of the best education you can gift yourself.  For that reason – adding coding to your skillset? Do it. Even if you never make a single cent writing code, it’s a clear sign to any smart hiring manager that a candidate has both a massive amount of discipline and very deep love of learning.  Those people get hired and thrive.  For those reasons, I’ll leave you with this advise: learn to code. You will not regret it.