SaaS companies can grow to $20M+ ARR by selling exclusively to developers

With more than 200,000 customers, a market cap of nearly $56 billion, and the recent acquisition of Segment for $3.2 billion, Twilio is a SaaS behemoth.

It’s hard to imagine companies like Twilio as anything but a giant. But everybody starts out small, and you can usually trace success back to key decisions made in the early days.

First, you need to have a product that developers can actually sign up for. This means ditching demos for real-time free trials or freemium tools.

For Twilio, a big differentiator was being one of the first technology-focused SaaS organizations that focused on empowering and building for the end user (which in their case is developers) with a self-service function. Another differentiator was, the executive team designed the organization to create tight feedback loops between sales and product with national roadshows, during which CEO Jeff Lawson frequently met with users.

Moreover, Twilio’s “secret sauce” per their S-1 is a developer-focused model and a strong belief in the future of software. They encourage developers to explore and innovate with Twilio’s flexible offering, which led to an incredible 155% net-dollar expansion rate at the time of the IPO.

Most importantly, Twilio put the product in the hands of teams before the sale happened, standing by to answer hard questions about how Twilio would fit into their infrastructure. This was pretty rare at the time — sales engineering resources aren’t cheap — and it was a strong differentiating factor. So much so that when the company went public, they were growing at 106% annually.

Twilio sells to developers at large enterprises by solving a problem that developers come up against regularly: Getting in touch with customers.

But as more successful public software companies emerge, it’s clear that Twilio’s secret sauce can and will be replicated.

Why traditional marketing doesn’t work on developers

Before I started looking at successful developer-focused businesses, I understood the developer-focused playbook to look a little like this:

  1. Don’t hire marketing (or sales, either). If you do, hire someone super experienced from an enterprise sales background. And then fire them within three to six months.
  2. Just hire someone who’s passionate about the product to “manage the community.” What is community management? Lots of swag. Cool meetups. Publish 1–2 articles as a stab at content (bonus points if they’re listicles). Oh, wait. How can we show the ROI here? Make the community manager do that until she quits. Repeat.

So why not hire marketing? Because marketing doesn’t work on developers. The stereotypes include: Developers don’t answer the phone or respond to emails; developers have a strong B.S. meter and don’t like being sold to; and developers would rather build their own tools than buy them.

I won’t say these stereotypes are completely wrong — they’re popular for a reason. But after interviewing 50+ developers on how they like to buy software, I can confidently say that’s not the whole story. More than a handful of companies have cracked the code of creating products that developers love and pay for.

Developer-focused companies impress the market

Image Credits: Sam Richard

These top developer-focused companies represent nearly $400 billion in market value, and they didn’t get there by hacking together “community management” and shunning sales teams. There is a playbook, and these companies have paved the way for new and innovative players to grow. So if you’ve got a developer-focused business, now’s the time to level up.

Part of managing growth for a developer-focused business means focusing your resources on the touch points throughout the user journey that matter most to your buyer.

I like to use Chris Miller’s 3D framework to think through this in a shorthand way. This framework emphasizes:

  • Discoverability: How someone finds your tool.
  • Desirability: Someone’s level of interest in your product once they find it.
  • Do-ability: Whether someone can find that “aha!” moment and take action on it quickly enough (Warning: This timeline is even faster for developers).

Discoverability

Discoverability for developers can happen in a few ways: Word of mouth drives the need for “community” and “developer relations,” because these folks talk to one another. Also important is organic discovery in developer workflow, which can be as simple as a developer going on a deep dive on Stack Overflow or Googling a niche problem they’re having.

So, who leads the pack from a discoverability perspective?

Most up-and-coming developer-focused brands attempt to recreate the GitHub community magic, and for good reason — it works.

GitHub’s cool cat logo? That comes from knowing their users inside and out. They courted open-source communities and strong contributor-influencers to join the platform for years.

The swag unboxing videos and the watch parties don’t just happen overnight. It takes a strong, multiyear investment in supporting community growth. This is not a set-it-and-forget-it approach. GitHub started their community-focused approach by hosting small, locally focused meetups of existing users by messaging them on their platform. They then expanded to courting entire open-source projects and communities and helping them move to GitHub. This understanding and empathy for their audience eventually led to their strong and loving fan base over the course of the next decade. Community and that type of popularity isn’t something that a brand can do quickly.

Another notable company is Snyk. This firm took discoverability to the next level with its recent investment in the Snyk Advisor tool. This tool is is an excellent example of programmatic SEO, an evergreen way of remaining discoverable in a developer’s workflow.

This isn’t Snyk’s only investment in SEO either; they also have a vulnerability database with regularly updated security coverage. If a developer needs to know if a certain open-source package is safe (hopefully this is every developer everywhere), they’re going to search for that answer. Who will be there when they search? Snyk. The long tail is limitless.

Desirability

Once a developer discovers your product, they still have to take a leap of faith to sign up. Building that desirability is best done by those marketers you didn’t want to hire.

First, you need to have a product that developers can actually sign up for. This means ditching demos for real-time free trials or freemium tools.

Packaging of public developer-focused companies

Image Credits: Sam Richard

Developers want to use the product before they buy

Image Credits: Sam Richard

Do-Ability

It’s no secret that free-to-paid conversion rates are pretty low for freemium products. How can developer-focused tools launch themselves into the top quartile? Your best bet is to increase activation, or the discovery of value in the application. Pull that “aha!” moment forward for users and you’ll see an increase in the number that eventually pay you — especially if they’re paying based on product usage.

The majority of developer-focused tools require a heavy lift or integration to get up and running and provide real value to teams. Often, unless a user sees real value and is motivated by the promise of how a tool can make their life easier, they don’t take this step. One way that Logz.io attempts to solve this is by spinning up a mock version of the application with faux business data so that users can better understand the look and feel of the tool, and how it will work for their business.

Logz.io spins up a mock version of their app with faux data to demonstrate the look and feel

Image Credits: Sam Richard

Cypress also has a unique approach to guiding users to value: documentation. Developer documentation is an often-ignored side door into discovering value in your product. For Cypress’ Dashboard product, continuous integration is a key part of deriving the most do-ability, and they encourage developers to take that step throughout the documentation for their Dashboard product.

Cypress' approach to appeal to developers

Image Credits: Sam Richard

I’ll say it again: Selling to developers is different from the standard B2B playbook, but it isn’t impossible. There’s a considerable amount of opportunity to create real value for this persona.

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