“When I joined Splitit,” remembers Ran Landau, the CTO of the global card-attached installments platform, “it took me three days to realize we were not built to scale. And that’s when we started the journey.”
Change agents in fintech and software-as-a-service (SaaS) join our Maasterclass discussions to discover how to reach the next level. Independent software vendors (ISVs) and enterprise resource planning (ERP) and e-commerce marketplace providers learn from the experiences of battle-hardened experts and enjoy the opportunity to gain insights to overcome their unique challenges.
We recently welcomed Landau to discuss his experiences scaling multiple companies, including what it means to scale, how to plan for it, and the future of scale.
What does scale mean for SaaS platforms?
In the startup lifecycle, scaling describes periods of exponential growth. Scale often indicates that the software has developed beyond minimum viable product into minimum marketable product, and the market is confirming founders’ key assumptions about the product’s fit.
For SaaS providers in particular, the scaling process can be extremely exciting for revenue growth. Tech platforms often grow top-line revenue three to five times faster than fixed costs, because one additional user doesn’t create a ton of additional fixed costs.1
One key to leverage exponential growth is having a plan to monetize new users effectively.
What does scale mean to the CTO of a tech company? “High throughput, and the ability to sleep well at night,” says Landau. Achieving scale means having the ability to accommodate high throughput on transactions and anticipate and prevent failures in the process.
Three keys for achieving successful scale
McKinsey and Company recently evaluated nearly 2,000 startups, and found that 78% of new products fail to achieve rapid scale-up.2
What is the secret to getting a product off the ground and into the stratosphere? According to Landau, planning makes the difference.
“The groundwork you lay out from the beginning makes it easier to scale,” he said, “because you’ve designed your systems with exponential growth in mind.” Companies can achieve exponential growth without creating exponential complexity by adhering to three primary goals:
- Capacity – Are your systems designed to accommodate rapid growth in subscribers, users, and transactions?
- Speed – How quickly can your systems fulfill user queries as more and more customers come online?
- Resilience – How many things can go wrong at once and still provide a useful (even delightful) user experience?
Landau also talked about how scaling often starts at the top of the product process and then moves along the stations of the user’s experience. “Every time you create one system to scale, you create a problem further downstream. Once you have the loading system ready to scale, you have an exponential number of automated alerts show up in your team’s slack channel. You have to create a system to make and manage tickets. And then there’s another thing.”
What's next for scale?
Landau served as Tech Lead at Conduit when it scaled to unicorn status in the early part of this century. “When we were experiencing exponential growth with Conduit, we were putting people on airplanes with equipment to travel to our tech centers.” he says. “We weren’t ready.”
“In a good situation, 50 percent of your scaling goes according to plan,” he adds. The other half of success relies on leaders who are able to quickly and effectively manage the unexpected and unplanned challenges of scaling.
Says Landau, “Disaster recovery is essential for your ability to scale.” In the future, this looks like scalable cloud solutions that can ramp up a SaaS provider’s capacity during peak times and then scale back down to a manageable and consistent activity level.
Capitalize on your moment with embedded finance
ISVs and ERP, ecommerce marketplaces, and other SaaS providers can accelerate their revenue at the same time they accelerate their customer base with embedded finance. Embedded finance helps software providers offer their customers critical financial features, including business checking accounts, payment acceptance, and more, on their platforms under their brand. SaaS providers can unlock new revenue streams on their platform by collecting a portion of every transaction and by capturing a royalty based on the checking account deposits they originate.
Watch the full Maasterclass above to uncover even more actionable insights! Next, check out our past Maasterclasses on SaaS exit strategies and building a B2B super app. Then, find out where embedded finance can take your platform by meeting with one of our Maasters.
1 Source: Rayport, Jeffrey F., Davide Sola and Martin Kupp. “The Overlooked Key to a Successful Scale-up.” Harvard Business Review. Jan-Feb 2023.
2 Source: Jules, Claudy, Alok Kshirsagar, and Kate Lloyd George. “Scaling up: How founder CEOs and teams can go beyond aspiration to ascent.” McKinsey & Company. 9 Nov 2022.