Saasu’s slow but steady rise
Considering the break-neck speed the modern business world travels at, it’s tempting to think that the faster a start-up grows, the better.
After all, stories abound of near-overnight Silicon Valley success stories. The technological ease and low cost of starting up is taking hold in Australia, where it’s now possible to create a new company in a mere 54 hours.
However, this quick-fire approach has been shunned by Mark Lehmann. The founder of online accounting software company Saasu has taken a more considered approach to growth since starting the company in 2000 with Grant Young.
With Young acting as chief technology officer, it took three years of gradual tweaks and improvements before Sassu’s online system was at its optimum, allowing it to take on big-name clients.
“I knew it would take time and I was prepared to build it slowly rather than hire 20 coders and spend millions of dollars,” Lehmann explains.
“We had to raise awareness, get it into the hands of early adopters, tweak it and then ramp it up. The thinking was if we were in 90% build mode and 10% sales mode, rather than the other way around, we will hit the ground running as sales improve. That’s the theory.”
Big spending opening
In all, Lehmann ploughed $5 million into the development of the business, aided along the way by early investors Pan Global Nominees and Cooper Sydney.
“It was an expensive exercise, but it was a fifth of the cost of some of our competitors,” he says.
“A fast approach can work if you have deep pockets like MYOB, but then you can’t compete when it comes to the cost of sale. We can drop our price and be flexible. We were profitable a few years ago and haven’t had to frantically claw back cash burn.”
Lehmann was working at Deutsche Bank in 1998 when it had the germ of an idea that was to become Saasu. While the bank’s traders were increasingly moving online, their accounting was left behind.
“The traders had huge piles of receipts on their desks which they would give in a big bag to their secretaries,” he recalls. “One guy had $50,000 of receipts on his desk. It was insane.
“I could see that people were struggling with it and that things were moving to the software world. I could see that we could target high net worth individuals and, especially, SMEs because small businesses were more likely to do monthly accounting, which suited a monthly subscription model, which we put in place.”
Deciding that he wanted to “reinvent” himself after a career in banking, Lehmann made the leap to entrepreneurship, playing the long game to ensure his solution was as advanced as possible.
An early problem for Saasu, even if it had plunged headlong into client acquisition, was the reticence of businesses to place all of their financial information in what is now known as the cloud.
“The market wasn’t sure about the safety aspect of it, so a lot of education had to be done,” says Lehmann. “They would also worry about how hard it would be to move everything across.
“People would say ‘How safe is it online?’ and we would just say ‘It’s safer than keeping it in that file in the corner of the room.’
“We refined that message so that our sales process was more of an education process. The key message was to get people into online.
“Accountants are really important to that shift. They’re actually moving people to new systems. There are two types of business owner – one who believes anything their accountants say and the other, which is a bit more tech savvy and will take the lead in choosing their software.
“We target both of them, but it’s actually easier to sell to the tech-savvy owners because if you can show that you can save $60,000 by automating data entry, that’s an easy sell.”
Saasu is regularly compared unfavourably to Xero, a leader in the cloud-based accountancy field when it comes to design. But Lehmann is adamant he’s never been keen on a business beauty parade.
“Xero looks very nice, but when you dive down into it, it doesn’t have the payroll function we have,” he says. “We do the real nitty gritty stuff. We spent a lot of time learning what the real pain points are for business owners, such as cashflow, and do something about it rather than trying to be too cute.
“The trick is to not listen too much to a noisy minority. The online community had a go at us because we didn’t look as nice but we said that we wanted speed and engineering rather than worry about this colour or that.
“We had to sacrifice a bit of online love to get it as efficient as possible for business owners. Now we have to get the online look right.”
It’s a strategy that has paid off for Saasu in recent years, adding major clients such as McDonald’s and Jim’s Franchise Group.
The business also enjoyed a stunning 200% growth spurt during the global financial downturn in 2008 as businesses looked to switch to a cheaper solution. With Saasu’s focus on low prices, the company reaped the rewards although, perhaps ironically, struggled to keep pace with the extra demand on its partners that sell and implement the software for businesses.
Sticking to the gameplan
Even throughout this period, Saasu shunned the opportunity to aggressively market itself – a strategy Lehmann admits was tough to stick to.
“You see an ad on the side of a bus and your natural inclination is to do the same, but we had to do it a different way,” he says. “We used guerrilla marketing tactics, such as at events for tech people or the sponsorship of an SME seminar. We need to be a bit more cluey about those dollars.”
Lehmann is cagey about the revenue of Saasu, other than to say it is in the “millions of dollars”, and has doubled each year.
Now with 20 staff, Lehmann feels the company is primed for international growth, with a 2012 IPO the most likely option, rather than external investment, to fuel this expansion.
Not that Lehmann is getting carried away with the success of the business. He is a realist regarding the pace at which Saasu should progress.
“The next five years should be a good time for us as there are still a lot of pain points that need to be solved for customers,” he says.
“But I don’t expect Facebook-like growth. People expect to put a video online, go viral and see everything go nuts. It just won’t happen.
“The best approach, I think, is to talk to the community, start up and run the business for no cash outlay. When you do the product launch, that’s when to get funding.
“I see too many people get excited, have a dream and then it explodes on them. I always say ‘Slow down, do it properly and get your product right.’ It can take two or three iterations before you get it right.”