As I’ve written previously, I’m not a fan of the term “playbook,” despite it being a metaphor that is used with reverence in many private equity circles. In my view, the reality facing small-scale SaaS businesses is too complex for 1-size-fits-all playbooks to be universally valuable. But I have also observed that a set of core disciplines consistently catalyzes the sustainable growth of capital-efficient SaaS businesses; and we regularly leverage several frameworks to reinforce these concepts. I was recently made aware that my enthusiasm for such frameworks or mental models had turned me into the proverbial “hammer,” to which everything looks like a “nail.” At the time, I was in a discussion with one of our portfolio company CEOs about a particularly thorny issue they were facing. As I unhelpfully tried to solve the issue with 2x2 matrices, “pattern recognition” drawn from other businesses, and a wealth of publicly available SaaS benchmarks, the business leader kindly said to me, “Hey…you know…not everything is a F8*%^&! framework.” Boom — direct hit.
This simple reminder got me thinking about situations in which a framework or mental model (or a playbook(!)) really are NOT helpful to operators of SaaS businesses. I’ve shared a few of these below. My hope in doing so is that it helps leaders of small-scale SaaS businesses to distinguish between the many situations when a pre-established framework / approach can be extremely helpful…versus those critical instances when a totally unscripted response is not only warranted…it is needed.
Hard Things: In his epic work The Hard Thing about Hard Things, Ben Horowitz argues that building a software business reveals countless problems for which there just aren’t any easy answers for leaders. Those include firing friends, poaching competitors, and knowing when to call it quits (among many others). These are very real, very important, very “anti-framework” type problems. Sometimes things are just…hard. In those situations, it’s important for leaders to stay true to their values, safeguard the company’s vision / mission, and…just keep moving forward. Particularly in situations with no seemingly pleasant options, overly analytical mental models rarely help. Instead, they can delay the inevitable and prolong the agony for all involved. Better for leaders to pull their socks up, and just get on with it.
Art & Science: Some aspects of SaaS businesses are clearly more science than art (examples include financial bookkeeping, constructing entrance / exit criteria for sales stages, and collecting statistically valid NPS data from customers). Still, others are a blend of art and science. For example, we can use a carefully researched product framework to help empathize with, and prioritize input from, customers (science). But it’s a far more artful endeavor to incorporate that input into a brand that faithfully captures the essence and a resonant market-promise that we want to non-verbally convey to all stakeholders. Art doesn’t need a framework; art needs to touch-off the right note in people’s System 1 brains. Note of disclosure: We admittedly do use a number of frameworks to assist in a carefully considered re-branding process. But at a certain point, it’s all about the output and not at all about the process imbued through framework-type thinking.
Unique Problems: It’s been written that “there is nothing new under the sun.” And while I won’t debate this point on a fundamental level, there are exceptions in small-scale SaaS businesses. Although there are a finite number of moving parts in SaaS businesses, fact-patterns often arise for companies, where they are facing challenges that present themselves in completely new and unique ways. For these situations, frameworks are relatively helpful; rather creativity is required. I’m reminded of a platform-upgrade and related migration challenge that we experienced at one SaaS business. The SaaS world has seen countless upgrades / migrations, so we looked to past precedent and roadmaps to inform the initiative. But the specific combination of business context / use-case idiosyncrasies / uptime requirements / seasonality of our customers demanded that we establish a completely unprecedented approach to the migration. A mixture of creativity and ruthless pragmatism carried the day; frameworks were unhelpful.
Make to Scrap: Software is all about efficiency, and we SaaS leaders hate re-creating the wheel. With this in mind, we err toward thoughtfully building our products and processes with attention to ensuring scalability and re-usability. But some situations demand speedy action for a pressing moment, with little thought to future needs. This might mean spinning up a (true) MVP, filling an urgent personnel need with outside resources, or addressing a surprise market condition with a one-time targeted offering. In any of these cases, one-time-only action may trump frameworks.
In closing, and to be clear, mental models greatly assist SaaS operators in countless situations. But it’s also important for SaaS leaders to leave room in their brain to recognize those less frequent situations when frameworks are less helpful, possibly even counter-productive. Where fortitude, creativity, speed, and situational decisiveness are what’s needed most…not everything needs to be a F8*%^&! framework.