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Investing time and money in SaaS start-ups

Stephen Bell | March 5, 2013
Q and A with investor and CEO of GeoOP, Leanne Graham

Leanne Graham left her role as country manager for Xero in December last year to invest in small businesses in the SaaS space, through her company, Cloud Rainmakers. She spoke with Stephen Bell during a visit to Wellington to scope out new investment opportunities.

How did Cloud Rainmakers come about?

I've spent 25 years in the industry working in the application space. I've seen the massive cost of taking applications successfully to market in the mid-tier; that's where I've typically been, working with Enprise and Solution 6.

I'm talking about [customers] with turnovers of up to $50 million. It's the space where people will spend between $10,000 and half-a-million on ERP solutions. We had a fantastic business in the service side of Enprise doing that type of work.

When I left there, Rod Drury asked me to join Xero, to become general manager of sales and to design their go-to-market strategy, I felt it might be a risk -- they'd already IPOed; I thought 'is this thing going to work?' But I saw it as a huge opportunity for me to see whether it was possible to truly revolutionise a cloud-based accounting system by building an ecosystem of apps around it so that it really could eat into that mid-tier market.

I put the channel structure in place; I designed it in a scalable way to enable Xero to get to market very quickly to small business in New Zealand; then I replicated that in Australia, the UK and the US.

What were the main features of this strategy?

Obviously in the SaaS space you're charging very little per month, so you need a high volume of customers. Some people put an app online and just expect people to come. That's not going to happen. You need a sales force to take it to market; but [SaaS vendors] can't afford a traditional sales force; it's too expensive.

So I chose a channel that had a need to assist their clients to change -- in an industry that was being forced to change. Instead of trying to create a channel we set out to educate a channel. We went about not trying to get accountants and bookkeepers to sell Xero, but recruiting them to educate [their clients] on the change and how they could do business differently in the cloud.

Within one-and-a-half years every accountant in New Zealand was partnered with Xero and we got it up to more than 60,000 customers. Then it was just a case of replicating that model around the world.

Now you're intent on doing it for other companies, through Cloud Rainmakers -- beginning with GeoOP, in the job-costing and mobile workforce area.


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