The concept of Software as a Service (SaaS) is quite self-explanatory. We owe the quick development of this model of distribution to the growing popularity of cloud computing. It’s the cloud that holds the entire app, and is shared to the users with the help of the Internet. The Internet forms an interface between the user and the entire facility of the supplier. The end user does not have to install the app on his device, and receives the same results of its operation, acquired on external servers. All changes, updates and technical service fall within the remit of the SaaS developer.
Contrary to purchasing a license, the user pays only for access to ready-made solutions. He doesn’t have to pay for an extended IT structure. In most cases, if the tool we are using is able to set off any internet browser, then it’s also able to handle a SaaS app. The purchase of a classic software license is usually a big, one-off spend. In the SaaS (Software as a Service) model, the client pays only for access to the app, most commonly in the form of a low, monthly subscription fee.
Why does the future belong to SaaS?
The clear advantage of SaaS (Software as a Service) is the possibility to launch the app on various computing platforms. The development of the Internet, its growing standardization and availability cause that the app in this model may be used not only in stationary, but also mobile form. The integration of such a software is not dependent on the platform and the operating system, but what follows, it gives the users great freedom in using the app.
SaaS (Software as a Service) makes it possible to work in any place with Internet access. We don’t need a spot with a network information infrastructure. The only purchase, is the purchase you’ve already made long ago: a computer, phone or tablet.
Using SaaS (Software as a Service) allows you to save not just precious space. Paying subscription for the service, you do not bear the costs connected with updates and software maintenance. Servicing classical apps, particularly with a big number of devices, might prove to be quite an expense for the company.
Despite certain concerns related to work with data that is not located on local devices, users more and more often appreciate the safety that SaaS (Software as a Service) apps offer. Important information located on the servers of the service provider are not just properly secured - the developers put much great attention to security than your average user. Information can also be made available to whoever we wish, wherever we want, which is not so easy with the use of classical apps with local data entries.
SaaS applications are resistant to negative effects of nonauthorized copying. This causes that all users are full-valued clients, which mobilizes the developers to constant work on the software, frequent updates and fast repair of errors detected. Unlike classical apps, in the SaaS (Software as a Service) model errors are often fixed as early as the date of their detection.
Global reach and simplified distribution of the SaaS app allows to find solutions easier, and find ones that actually meet our needs. Creating specialized software, developers may reach out to specialists who hold solutions tailored to them. Thanks to the Internet, even niche products may prove to be profitable.
Let’s take a look at the first 5 of 10 popular companies that are the perfect example of how decent SaaS (Software as a Service) should be made!
Intercom
A startup founded by the Irish living in San Francisco, who set themselves a goal of creating a platform that would allow for more intimate communication in comparison to the tools available at that time. Their inspiration was a local café, where the founders Ciaran Lee, David Barrett, Des Traynor and Eoghan McCabe often met to discuss their ideas.
Intercom allows to track and analyze the data of our clients. Using, among other things, the conversation history, previous purchases and prior payments of the client, companies are able to trigger precise ads with the use of marketing automation of third companies.
At first, the founders had some trouble with securing means for their activity’s further development, but there was a breakthrough in 2012. The firm grabbed the attention of Twitter cofounder, Biz Stone, who became the first Intercom investor. In a short time, the company saw investments of, among others, David Sacks and Andy McLoughlin.
In 2013, the Firm announced its first series of financing from Social Capital in the striking amount of 6 million dollars. In 2014, Bessemer Venture Partners offered 23 million dollars in the B series. In turn, Index Ventures brought in 50 million dollars. In 2018, the company announced another series of financing thanks to Kleiner Perkins with the participation of Google Ventures for 125 million dollars. At present, Intercom has over 25,000 users that pay a monthly subscription, which costs 155 dollars in the Essential pro version and 181 in Pro.
Hubspot
HubSpot became famous for propagating inbound marketing, through the years becoming one of the most important sources of knowledge in this field for many. The company was founded by Brian Halligan and Dharmesh Shan in 2006.
Its profit grew from 255,000 dollars in 2007 to 15.6 million in 2010. At the same time, HubSpot was taken over by a startup Oneforty, expanding its offer with an app for personalizing websites. In 2014, the company debuted on the New York Stock Exchange. Another loud event was HubSpot’s takeover of a startup called Kemvi, dealing with AI and machine learning. Starting 2018, HubSpot tools saw an integration of the pay-per-click Taboola advertising network.
HubSpot mainly deals with marketing in social media, content marketing, web analytics, creating landing pages and SEO optimization. The company offers integration of its tools, including from Salesforce, SugarCRM, NetSuite or Microsoft Dynamics. An important branch of HubSpot’s activity as an expert in marketing are consulting services, organizing conferences trainings and online certification.
The company operates in line with the principles it preaches, promoting its activity through sharing many resources and tools for free. Starting 2014, HubSpot has been providing free CRM software that allows to track interactions between the company and its clients, forecast profit, measure productivity of sales teams and report profit sources. HubSpot CRM allows for integration with, among other things, the G Suite package, Gmail or Microsoft Office.
With the increasing popularity of HubSpot, there also came voices of criticism. Many accuse the company of triumph of form over substance and lack of advanced functions. In 2016 Dan Lyos added fuel to the fire; the company’s ex-employee published his book “Disrupted: My Misadventure in the Start-Up Bubble”, telling of his adventures with HubSpot. Attempts to hack the author’s mailbox and threats from the company’s CMO at that time, Mike Volpe resulted in a 14% drop in value after the book’s premiere. Ultimately, despite certain controversies, the company’s condition was not really disrupted.
The firm ended 2017 reaching a profit of 375,6 million dollars - 39% more in comparison to 2016. The first two quarters of 2018 brought 114.6 million dollars in Q1 and 122.6 million in Q2. At present, the firm has over 48,000 paying users in more than 100 countries.
Atlassian
An Australian company famous for its software that tracks the process of creating and implementing software, Jira. Atlassian’s portfolio also includes products such as tools for cooperation with Confluence and Trello as well as software tools like Bitbucket, Sourcetree and Bamboo.
Founded in 2002 by Mike Cannon-Brookers and Scott Farquhar, two students from the University of New South Wales in Sydney. For many years, they financed the company using their credit card debit for the amount of 10,000 dollars. When the gained their first investor in 2010, Accel Partners Found, he supported the company with 60 million dollars. Next year, the enterprise reached income at a level of 102 million dollars. In 2014 it was 215 million, which is nearly 50% more compared to 2013 (144 million)! Year 2015, in addition to an income of 320 million dollars, also brought the first public offer and a debut on NASDAQ, giving market capitalization at a level of 4.37 billion dollars.
Starting 2002, the company had been developing its flag product, Jira. In 2004, Atlassian introduced a software for Confluence teams. Subsequent positions in the portfolio are the merit of acquiring Cenqua in 2007 (FishEye, Crucible and Clover) as well as Bitbucket in 2010. Expansion of the offer resulted in creating Atlassian Marketplace, an area where clients can acquire additional plug-ins for their tools. The Stash repository was made available that same year, with its name changed to Bitbucket Server with time.
In the subsequent years, Atlassian continued investing in more companies. 2012 was the purchase of a startup responsible for the HipChat communicator, which in 2015 was merged with another acquired tool - the Hall communicator. A small startup Dogwood Labs expanded Atlassian’s offer in 2016 with its tool StatusPage. The company made its greatest purchase in 2017, taking over Trello for 425 million dollars. The following year was the premiere of another product prepared by Atlassian, Stride communicator.
In less than a year, Atlassian decided to give up a part of its offer, reselling Stride and Hipchat. Slack became the buyer - the foregoing competitor on the field of communicators, who planned to put off both services with the end of the next year.
For years, the company has been growing to an enormous size, currently handling 60,000 active clients with 2,200 employees. Atlassian clearly communicates its products, their service and price using websites, allowing for free testing of all solutions.
SurveyMonkey
If you’ve ever filled out an online survey, there’s a great chance that it was done through SurveyMonkey. It’s a SaaS that has existed on the market since 1999 thanks to its founder Ryan Finley. The basic product of SurveyMonkey is free, but the company offers a series of paid solutions that include data analysis, sample selection, elimination of critical read disruption and tools for data representation. SurveyMonkey offers many more services tailored to big enterprises and companies concentrated around in-depth data analysis. The portal handles 20 million survey inquiries daily.
Until 2009, most companies belonged to Ryan and Chrin Finley, up to the moment of selling shares in the consortium to a private equity. That same year, the company was joined by Dave Goldberg, the new CEO, who started with a 12-person startup and in a short time made it a company with 500 people. In 2015, he was replaced by Bill Veghte after Goldberg’s unexpected death. The new CEO resigned from the position after less than 6 months of work due to differences of opinion between him and the investors. At the beginning of January 2016, he was replaced by Zander Lurie, who serves in this role today.
The first serious financing of the company after its sale took place in 2010 as a result of 100 million dollars acquired from the funds of Bank of America Merill Lynch and SunTrust Robinson Humphrey. In 2012 it launched its new tool Audience, which allowed to collect and analyze respondents’ data. Further development brought more investments and 800 million collected in 2013. At that moment, SurveyMonkey had 15 million users and was valued at 1.35 billion dollars.
In 2014, it attracted investors such as Google Capital, Tiger Global Management, Baillie Gifford, T. Rowe Price and Morgan Stanley, which resulted in gathering an extra 250 million dollars. In 2015, additional funds made it possible to prepare a new platform Benmarks, allowing to summarize survey results against the competition.
In 2013, SurveyMonkey began been integrating its solutions with tools such as Eventbrite, MailChimp, Zendesk, Pick1, or Zignal labs with the use of API from the Masher platform. Since 2014, the company’s partners are also Salesforce and Marketo. In its history, SurveyMonkey has acquired a few competitive firms dealing with online surveys: Fluidware, Precision Polling, Wufoo, Zoomerang, and it also holds 49.9% of the shares in Clicktools.
Slack
One of the most popular tools for collaboration was created as a solution for internal communication in Stewart Butterfield’s firm. He wanted conversation history to be available for everyone as a valuable source of knowledge. The idea turned out to be a bull’s eye and in 2013, Slack was made available to a wider circle of users. In the first 24 hours from the launch, there were nearly 8,000 users who had signed up for the service.
Slack’s way of operating resemble the classic IRC, with general channels grouped by theme, and private groups, direct messages between users. The most important trait is the possibility to browse conversations in terms of selected phrases, files and users. Slack operates in a freemium model, where every user is granted access to the most recent 10,000 messages without any additional fees.
We can join a conversation with a special link or via a mail invitation sent by the founder of a given channel. There is also a public channel available; it can be joined by everyone. More and more users are using this tool as an alternative to theme groups and forums, which significantly increases the audience.
At the beginning of 2015, the company could boast with a daily increase of new active users at a level of 10,000 and 135,000 paying clients. Currently, the tool is used by over 8 million people every day, from whom 3 million have a paid account.
Slack allows for integration with popular portals, such as: Dropbox, GitHub, Google Drive, Heroku, Trello, Runscope, or Zendesk. Beside the network client, creators of Slack share the app for Android, iOS, Windows, macOS and Linux platforms. There is also an additional, special and simplified app for Apple Watch.
After the acquisition in 2015, Screenhero integrated its screen sharing service with its software. Another acquisition was the aforementioned buyback of HipChat and Stride communicators from Atlassian.
In 2014, the firm received two financial rounds, 43 million dollars in April and 120 million at the end of the year. Two subsequent rounds brought 160 million secured in 2015, which resulted in the company being valued at 2.76 billion dollars. The recent funds acquired by Slack are 200 million dollars in 2016.
Shopify
The beginnings of Shopify reach as far back as 2004. When Tobias Lütke, Daniel Weinand and Scott Lake decided to set up their own online store. They suffered from lack of accurate tools which they could use in its construction. In two months, Tobias Lütke opened up a store for Snowdevil snowboarders. Solutions prepared by him became the foundation for Shopify, for the first time made available in 2006. The portal was expanded in 2009 with a dedicated App Store, broadening the platform’s possibilities with the use of additional apps.
In 2010, Shopify shared a free mobile app that made it possible to manage stores founded on the platform in Apple App Store. That same year was the announcement of a contest for the best entrepreneurs. On top of a cash prize, the award was mentoring by, among others, Richard Branson from Virgin.
The first financing from venture capital funds brought Shopify 7 million dollars in 2010, and the next 15 million in 2011. In 2012, the company increased its composition with new talents after taking over a developer of mobile apps Select Start Studios Inc. Another acquisition was a design studio Jet Cooper in 2013. That same year, Shopify’s offer was expanded by an internal online payment system and Points of Sale. Another round of financing brought the company 100 million dollars for further development.
2015 turned out to be a breakthrough for Shopify. The first important event was a stock exchange debut which, thanks to its large price, brought the company over 130 million dollars. Another success was Amazon.com announcing the closure of Amazon Webstore and recommending a migration to Shopify.com, which resulted in a 20% increase in shares’ value.
Over subsequent years, Shopify took over two developer studios: Boltmade and Tiny Hearts, and announced a partnership with a payment supplier Paystack. Introducing integration with Amazon and making available the sale of products in shops operating on Shopify resulted in further increase of shares’ value in 2017.
Zendesk
Zendesk is a Danish startup with its headquarters in San Francisco founded in 2007 by Mikkel Svance, Morten Primdahl and Alexander Aghassipour. The founders had previous experience in customer service and saw great potential for SaaS (Software as a Service) in this branch. The potential of Zendesk itself was quickly seen by investors and already in its pre-seed phase, the founders acquired a grant thanks to funds from investor Christopher Janz in the amount of 500,000 dollars.
Zendesk focuses on providing coherent SaaS (Software as a Service) solutions for various topics related to customer service. Using the platform from the level of one user account, we have access to all data and many tools: Support, Guide, Connect, Explore, Chat, Message and Talk. The company bets on integration with various apps and CMS systems, it is also the initiator of the Networked Help Desk initiative - an open start of data exchange for platforms dealing with customer service.
Support allows to track, prioritize and solve customer applications, collecting all information in one place. Guide is an automated solution for customer service, backed by machine learning and the Answer Bot. Connect is an analytical software used to handle targeted campaigns and increase customer engagement. Explore is a tool for analysis of customer behavior on the basis of data collected in Zendesk’s systems.
Zendesk Chat, formerly known as Zopim. Using the livechat widget, we can hold a conversation with customers on our website. An addition to such software is Message which combines various communicators of famous networks such as Twitter and Facebook allowing for their service from the level of the Zendesk panel.
Another way for direct communication is Talk, a SaaS call center. This versatile tool allows for resignation from a physical call center for the benefit of transferring calls to indicated tools of a given company’s representatives.
It is also worth mentioning Embeddables. It is a solution that allows developers simple implementation of customer service in external mobile apps and websites. Owing to this, contact takes place without the client abandoning a given app, which has a positive influence on their reception.
The company offers two price plans for their subscribers, 89 dollars a month for a Professional account and 149 for an Enterprise account with prior access to a free trial version. At present, Zendesk has over 125,000 regular clients in 160 countries, and their income for 2017 has exceeded 430 million dollars, giving growth of 37.5% in comparison to 2016.
BaseCamp
Basecamp was founded under the name 37signals upon the initiative of Jason Fried, Carlos Segur and Ernest Kim in 1999 as a company that designed websites. After a few years, they began creating aps, which resulted in the creation of Basecamp, and later in apps like Backpack, Campfire and Highrise. This software was created in an open technology, namely Ruby on Rails, created by Basecamp CTO. The Ruby on Rails framework is used by, among others: Twitter, GitHub or Shopify. The aforementioned CTS, David Heinemeier Hansson is a very colorful figure - coauthor of bestsellers REWORK and REMOTE - two of many publishing houses which have strongly promoted BaseCamp, racing-car driver and great speaker.
Works on the flag product began in 2003, and in 2004 the project saw the light of day. Due to its popularity (currently - nearly 3 million users) the company abandoned its previous name 37signals, to acquire a new name with time - Basecamp. This Internet tool for project management saw a few subsequent versions: Basecamp Next in 2012 and Basecamp 3 in 2014.
In 2006 Jeff Bezos engaged in the firm’s development with his purchase of minority interests with the participation of Bezos Expeditions. The Campfire software was made available that same year. It was an advanced online chat which, with time, became a part of Basecamp 3, which is why it is not available as a separate tool for new users.
The founders of BaseCamp value simplicity, seeing their success precisely there. In contrast to their competition, they do not attempt to stuff up their software with additional functions, but rather try to maximally simplify it. Their offer is very simple, too - 99 dollars a month for a team, regardless of the number of users.
DocuSign
The startup was founded in 2003 by Court Lorenzini, Tom Gonser and Eric Ranft. Their first serious client appeared in 2005, when their solution began to be used by zipLogix that dealt with document circulation in real-estate sale. DocuSign came up with a way to authenticate digital signatures proving, that it can be legally equivalent to a document signed by hand. With the end of 2010, DocuSign had 73% of the shares in the SaaS market dealing with electronic document signing.
In 2004, DocuSign acquired its first funds from Frazier Technology Ventures in the amount of 4.6 million dollars. Further investment rounds between 2006 and 2009 raised a total of 30 million. In 2010, 27 million was acquired thanks to the investment of Scale Venture Partners. In 2012, DocuSign received 56 million from two rounds of financing. In 2014, the company was valued at 1.6 billion dollars and acquired another 85 million from investments. These numbers were quickly multiplied, and their valuation in 2015 was at a level of 3 billion dollars.
An important event in the history of the company was the release in 2011 of a free app for mobile devices called DocuSign Ink. It was downloaded 100,000 times only in the first month of its release. 2011 is also the year when offices in London and San Francisco were opened; the latter is currently the company’s headquarters.
Its 350 partners include: PayPal, Salesforce.com or Google. Starting with 2018, the company has been listed on the NASDAQ stock exchange, with over 400,000 paying customers. The cheapest subscription costs 15 dollars a month with special plans upon longer periods of payment and a larger number of users. The company is considered one of the ten biggest global technological firms.
Marketo
Marketo was founded by Phil Fernandez, Jon Miller and David Morandi, previously connected with Epiphany (currently Infor). They set themselves a goal to create a tool that would allow marketers to easily present return on investment to their customers. Marketo presented its first product, Market Lead Management in 2008, Marketo Sales Insight in 2009 and Marketo Revenue Cycle Analytics in 2010. In 2012, the company acquired Crowd Factory, which allowed it to perform integration in its marketing tools in social media channels. That same year, the LaunchPoint ecosystem saw the light of day - connecting an app and portals of third companies with Marketo solutions.
Subsequent milestones were listing on the stock exchange in 2013 and acquiring Insighter, an Israeli company specializing in personalization of websites for 20 million dollars.
Another takeover was the acquisition of Marketo itself by Vista Enquiry Partners for 1.79 million. Gartner Magic Quadrant was titled Marketo the best CRM in managing Leads for 6 years straight; the company was awarded prizes and distinctions for years, including from: Forbes, CRM Market Leaders Awards, Wall Street Journal, AppExchange Customer Choice Awards, CODiE Awards, EMEA Awards, SLMA 50 Most Influential, Inc. Hire Power List.
Currently Marketo’s offer features tools like Marketing Automation Email, Mobile, Social, Digital Ads, Web, Marketo Sales Engage and Content AI. The company employees over 1,000 people with offices in San Mateo, Tokyo, London, Paris, Munich, Atlanta, Sydney, Melbourne, Tel Aviv, Denver, Portland and Dublin.
These few examples of “success stories” in the world of SaaS (Software as a Service) give us a certain overview of this market so far. But the cloud is still evolving, and the entry threshold for developers is decreasing. True success will belong to those, who will apply the best practices in a clash with competition. Apps must be even more available, with a simple and certain authorization for users on all tools. The more the platforms and APIs are open, the greater the benefits for the customer.