This is a really strong piece, with some great insights on culture, marketing and business.
One thing I’d add is that it’s really important, critical even, that marketing is operating across the business - supporting customer success, sales and even product and engineering.
Very often marketing sits in a silo as a kind of production house and actually loses track of what is happening in the rest of the business. They end up producing stuff that sales cannot use, they’re not connected to actual customer pain points and they lack detailed knowledge of the product.
For marketing to operate at its best and to be really useful, it needs to act as a support function to other areas of the business, as well as delivering world-class campaign and brand execution. This isn’t ‘knowing HTML and CSS’ but it’s definitely getting involved in other areas of the business.
Great points—I 100% agree. While at Buildium I actually built our three marketing teams—acquisition marketing, product marketing, and corporate marketing to support many of the different functions you mentioned.
The MIT Entrepreneur course on EdX also mentioned dominating a beachhead market. Their definition is, "A beachhead market is the place where, once you gain a dominant market share, you will have the strength to attack adjacent markets with different opportunities, building a larger company with each new following" [1].
Nice to see an example of that in real life. Did Buildium eventually target adjacent or new markets?
Buildium stayed pretty true to their original market, focusing mostly on serving that market with a greater level of depth through additional products and services. RealPage, the acquirer, sells to a number of adjacent markets and is moving into the market for small, residential property managers via the acquisition.
I specialize in vertical specific SaaS marketing (Zenefits, brightwheel, etc), and this is a really solid article - just emailed it to a bunch of SaaS folks I know.
"What they did effectively early on is bring other hugely talented people onto the team before they could afford to pay them their market worth. They did this by paying several of their early employees in sweat equity that they accrued at the same rate as the founders for time spent working on the business. "
But Buildium is quite a few decades in the making, does this attitude exist among the new startups of today? I doubt that.
Thank you for the article Geoff. Fantastic insight. And one that's very well written, I enjoy how much focus you put into the article around culture, especially one of your finishing paragraphs.
"If you have a high-functioning and aligned team that can respectfully disagree with each other yet still make decisions and execute, you can overcome just about any challenge in business. On the flip side you can have every market advantage in the world, but if your organization isn’t healthy it’s only a matter of time until you reach your demise. I believe this to be true."
I'll make sure I read 'The Advantage' at my earliest opportunity. Thanks again!
Thank you so much for the kind words! Buildium found a good market opportunity and built solid technology, but culture and how the business was run was definitely part of its special sauce and a major contributing factor to this sort of outcome. The Advantage is a great read! -Geoff
Excellent write-up and interesting story - thank you for sharing. I'm wondering about whether Buildium had to restructure itself from LLC to C Corporation prior to the first VC round (or subsequent rounds). VCs very rarely invest in LLCs ...
"A huge percentage of Buildium’s revenues come not from subscriptions, but instead from pay-per-use payment processing revenues when tenants pay their rent online."
So Buildium makes money off of normal subscription payments like any SaaS business does by charging a monthly fee to property management companies for access to their software. They also make money by taking a small percentage of rent payments that are processed online via the platform. These are rent payments that tenants pay to their property management company, not Buildium itself. Said another way, the tenant has no obligation to pay Buildium whatsoever—but with rent payment being regular and recurring, Buildium captured predictable revenue by capturing these payment processing fees.
I believe Buildium's subscribers are the landlords, but, for a fee, they have a portal that renters can use. There is no subscription, but as the author acknowledges, these rent payments were considered as regular and recurring by some investors.
Rent is a recurring payment, but it sounds like Buildium only made a cut when these payments occurred online. I assume renters sometimes pay the property manager directly in cash.
SaaS: Software with a subscription model, that’s it.
All these “market experts” and PR people extolling the virtues of the radical idea of paying people for a service remind me of all these dumb cryptocurrency bitcoin shills.
That's not it. Adobe CC is an example of simply software with a subscription model. Or lots of other perpetual software that is complex and requires a support subscription.
SaaS is a lot different than that. SaaS runs on someone else's computer, with all the plusses and minuses that brings.
The article is mostly from the prospective of a B-school grad seeing SaaS's and the particular one was based on property managers which is more concrete as a topic. I didn't get much transfer of the experience to software SaaS's.
[+] [-] kristianc|6 years ago|reply
One thing I’d add is that it’s really important, critical even, that marketing is operating across the business - supporting customer success, sales and even product and engineering.
Very often marketing sits in a silo as a kind of production house and actually loses track of what is happening in the rest of the business. They end up producing stuff that sales cannot use, they’re not connected to actual customer pain points and they lack detailed knowledge of the product.
For marketing to operate at its best and to be really useful, it needs to act as a support function to other areas of the business, as well as delivering world-class campaign and brand execution. This isn’t ‘knowing HTML and CSS’ but it’s definitely getting involved in other areas of the business.
[+] [-] geoffroberts|6 years ago|reply
[+] [-] j_z_reeves|6 years ago|reply
Nice to see an example of that in real life. Did Buildium eventually target adjacent or new markets?
[1] https://executive.mit.edu/blog/launching-a-successful-start-...
[+] [-] geoffroberts|6 years ago|reply
[+] [-] cm2012|6 years ago|reply
[+] [-] geoffroberts|6 years ago|reply
[+] [-] LilBytes|6 years ago|reply
But Buildium is quite a few decades in the making, does this attitude exist among the new startups of today? I doubt that.
Thank you for the article Geoff. Fantastic insight. And one that's very well written, I enjoy how much focus you put into the article around culture, especially one of your finishing paragraphs.
"If you have a high-functioning and aligned team that can respectfully disagree with each other yet still make decisions and execute, you can overcome just about any challenge in business. On the flip side you can have every market advantage in the world, but if your organization isn’t healthy it’s only a matter of time until you reach your demise. I believe this to be true."
I'll make sure I read 'The Advantage' at my earliest opportunity. Thanks again!
[+] [-] geoffroberts|6 years ago|reply
[+] [-] hartator|6 years ago|reply
Well, that’s a mistake. You don’t have to be good at it but if you have to understand 101. In any executive role in a web SaaS.
[+] [-] geoffroberts|6 years ago|reply
[+] [-] ablekh|6 years ago|reply
[+] [-] prawn|6 years ago|reply
Aren't rent payments typically recurring though?
[+] [-] geoffroberts|6 years ago|reply
[+] [-] sambroner|6 years ago|reply
[+] [-] markdown|6 years ago|reply
[+] [-] all-out-of-hope|6 years ago|reply
All these “market experts” and PR people extolling the virtues of the radical idea of paying people for a service remind me of all these dumb cryptocurrency bitcoin shills.
[+] [-] jiveturkey|6 years ago|reply
SaaS is a lot different than that. SaaS runs on someone else's computer, with all the plusses and minuses that brings.
[+] [-] g82918|6 years ago|reply
[+] [-] geoffroberts|6 years ago|reply