In 2019, our SaaS revenue rose close to 40% while maintaining an EBITDA margin of roughly 35%.
Viima was founded in 2013 after the founding team participated in an accelerator program organized by the entrepreneurship society at our university. We actually started the accelerator program with a completely different idea, but after working on it for some months, realized that it wasn’t very good. Thus, we knew we needed to pivot to another business idea. We realized that we probably weren’t the only ones to spend unnecessarily long on working on ideas that ultimately wouldn’t be feasible and wanted to help others solve this problem.
Having fortunately learned from our previous mistakes, we started trying to sell the software right away and developed the product based on the feedback we got from the prospective customers, which helped us quickly get on the right track. We actually got our first paying customers just a few months after we had started working on the new idea and soon thereafter got our first large client, which helped validate the idea and build confidence for us being on the right track this time around.
During the first couple of years, the business and our product both gradually evolved to become the foundation for what we’re now doing: a flexible innovation management SaaS platform. Since we were able to get paying customers so soon, we haven’t actually needed to raise money and are still funded by our revenue and entirely owned by employees.
Innovation management is still a relatively young field that has traditionally been something that just the biggest companies in the world are doing. However, in recent years, the interest in innovation has exploded in companies of all sizes and these days the vast majority of leaders know that their companies need to innovate to stay ahead of the competition, or even survive.
With that background, most organizations around the world can be classified as beginner innovators. At the same time, the majority of tools are actually designed for the heavy R&D based innovation processes of Fortune 500 companies, which obviously leads to a number of challenges.
To solve these challenges, we’ve built a flexible innovation management platform that provides organizations of all sizes the tools they actually need to succeed. The key idea that separates our software from the competition is our ability to provide a robust, yet flexible solution that is able to adapt to any kind of an innovation process, but that also easily evolves with the organization as their innovation management work matures and expands within the organization.
Thus, we have a very broad and diverse pool of customers ranging from startups all the way to the Global Fortune 500. Having said that, most of our customers are so-called mid-market organizations with 300-5000 employees that are looking to become more innovative, which also happens to be the part of the market that is currently growing the fastest.
All three founders are first time entrepreneurs. Each of us have a Master’s Degree in Computer Science, but we realized already in the very beginning of our studies that the three of us shared a passion for the business side of things in addition to our interest in technology.
These shared interests led us to work together on many school projects, as well as in our day jobs at one of the fastest growing SaaS companies in Europe, RELEX. As we heard of a new accelerator program that was being organized by the local entrepreneurship society, we decided to apply. For us, the biggest motivating factors for founding the company were simply to learn and to use the skills we had acquired to hopefully make a positive impact.
My dad has actually been an entrepreneur for a couple of decades and I remember him always telling me to “not become an entrepreneur, whatever career I decide to pursue”. It’s obviously not a very glamorous or smart path to choose. Usually you end up working much more for less compensation, than you would at a large company, and you also lose most of your social security in the process.Having said that, all of our families have been very supportive of our pursuits, which has been really important for us, especially in the beginning.
As we’ve been working on this business for seven years, there are so many things we’ve learned that it would be impossible to list them here. I think one of the key insights that took us a few years to realize is that a product-market fit that you often hear both entrepreneurs and investors obsess about isn’t actually enough. To really build a business that can grow quickly, the product and market must also be aligned with your business model and the appropriate customer acquisition channels. A while back I stumbled on a great series of blog posts by Brian Balfour that explains this well.
Plus, even if you get the fit right, you still need to be able to successfully execute on all of these dimensions, which isn’t necessarily trivial. For example, it’s much easier to say that you’re going to build an inbound marketing machine, than it is to actually create one. It took us a while, but we now have all the pieces in place, which means that we can focus our efforts on scaling the business.
As I previously explained, we’ve been able to create a platform that really matches the needs of a very sizable and rapidly growing market segment much better than competing solutions. What’s more, we’ve built a software that is so easy to use that customers don’t need much support, and have been able to build a scalable business model based on inbound marketing and inside sales that allow us to acquire customers efficiently.
We, for example, offer a free version of our software that is on par, if not better, than paid versions of many competing solutions, which hundreds of organizations are signing up for every month. As a result, we’ve quickly become the most widely used innovation management software in the world, according to a recent Garner study. More than 7000 organizations from all around the world have already signed up for the service.
Together this combination of providing better software at prices clearly below the competition, also known as value innovation, provides us with a clear competitive advantage. Our main competitors have much higher cost structures related to customer acquisition and support, which makes it very hard for them to try to compete with us for the customers that are in our sweet spot.
The app we rely on most heavily is HubSpot. It’s our CRM, website hosting provider and serves as the platform for our marketing and sales automation, all of which are naturally key for our business model to work well. It saves us quite a lot of time that we can now use to actually deliver business results.
We naturally use our own software to manage ideas for developing our product and our business, which really has been a big help in prioritizing our work. In addition to these, we obviously use a number of other tools for internal communication, project management etc., but those would be much easier to replace.
I really like to read a lot and listen to podcasts all the time. It often helps us in coming up with ways to overcome some of the challenges we’re facing and also serves as a great way to step back and look at the big picture. In addition, some of my favorite podcasts include Masters of Scale by Reid Hoffman and FYI by Ark Invest.
When it comes to books, I actually shared quite an extensive list of my favorites in our blog recently, which serves as a great starting point for anyone interested in innovation.
As mentioned, we’ve managed to build the foundation for a business that is able to grow quickly while maintaining a high level of profitably. Last year our SaaS business grew roughly 40% and we still managed to maintain an EBIT north of 30%.
We now have all the pieces in place to accelerate our growth and will thus be focusing on scaling the business to make the most out of the growth opportunity we’re now seeing in the market.
In addition to investing in growth, we’re currently building a new product that we think will be quite disruptive to the industry. It’s an online innovation coaching program that will be priced at less than most consultants charge for a single workshop, but will still come with a guarantee for delivering measurable results with innovation, which is something we haven’t yet seen anyone in the market offer.
The program will naturally create a new revenue stream for our business, but more importantly, will help our existing customers achieve better results and further our mission of helping organizations everywhere make more innovation happen.
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