524: How to Acquire and Cross-Promo SAAS Apps - The Startup Chat with Steli and Hiten Recap

Podcast: The Startup Chat with Steli and Hiten

Published: 2020-08-19

Duration: 0 min

Summary

Steli and Hiten discuss the complexities of acquiring and cross-promoting SaaS apps, emphasizing the importance of a conservative approach and clear objectives to avoid common pitfalls. They highlight that many initiatives fail due to misaligned expectations and lack of a clear strategy.

What Happened

In this episode, Steli Efti and Hiten Shaw dive into the nuanced world of acquiring and cross-promoting SaaS apps. They recognize that as the SaaS landscape continues to evolve, more companies are attempting to buy smaller apps with similar customer bases for cross-promotion. However, the hosts caution that this strategy is not as straightforward as it seems. Hiten shares his experience and emphasizes the need for founders to be conservative in their expectations when acquiring these products. Instead of getting caught up in optimism, he advises doing the math and modeling the potential outcomes of such acquisitions.

Hiten elaborates on the importance of clarity in the acquisition process, stating, "the devil's really in the details." He points out that teams often face alignment issues regarding the reasons for acquisition, leading to confusion and miscommunication. Founders should focus on establishing a single clear goal for the acquisition, as this allows for more precise calculations and expectations. The discussion also touches on the implications of branding and how companies like Facebook and Google approach rebranding acquired products, with Hiten noting that successful integration often hinges on how well these brands resonate with their audience.

Key Insights

Key Questions Answered

What are the common pitfalls in acquiring SaaS apps?

Hiten highlights that many founders fall into the trap of optimism when considering the acquisition of SaaS apps. They often focus on the potential positive outcomes without adequately assessing the risks. This over-optimism can lead to initiatives that ultimately fail, as the reality of integrating and promoting new products can be far more complex than initially anticipated.

How can teams ensure alignment on acquisition goals?

To achieve alignment, Hiten suggests that teams should clearly document the reasons for the acquisition and the expected outcomes. By laying out a single, concise goal, teams can create a framework for evaluating success and ensure that everyone is on the same page. This clarity helps mitigate confusion and miscommunication that often arise during the acquisition process.

What role does branding play in the success of acquired SaaS products?

Branding is a crucial factor, as it can heavily influence how customers perceive the new product. Hiten discusses how companies like Facebook and Google manage their acquisitions, often opting to rebrand new products to fit their existing brand family. This approach can either enhance or hinder customer reception, depending on how well the new product's brand aligns with customer expectations.

What strategies should founders consider when evaluating potential acquisitions?

Founders should adopt a conservative mindset when evaluating acquisitions. Hiten emphasizes the importance of modeling potential outcomes and assessing how the acquisition aligns with existing business metrics. This analytical approach helps clarify the potential impact of the acquisition on their overall strategy and customer base.

How does opportunity cost factor into acquiring new SaaS products?

The hosts discuss the importance of considering opportunity costs when acquiring new products. Hiten notes that integrating a new app requires time and resources, which could detract from existing projects. Founders need to evaluate not only what they can gain from the acquisition but also what they may have to sacrifice in terms of time and focus on their core business.