In view of the recent hot CONCEPT of PLG in the SaaS industry, Leifeng network specially opened “PLG ten people talk” series of interviews, invited investors, SaaS enterprise founders and technical experts, to share actual knowledge, this is the second “PLG ten people talk”.
“We are very fortunate that our concept, product, team and track have been recognized by our investors.” Zhou Ran, founder and CEO of LigaAI, is confident and calm in the face of the rapid completion of three rounds of financing within one year.
Recently, LigaAI, A new generation of intelligent RESEARCH and development collaboration platform, announced the completion of tens of millions of DOLLARS of round A financing led by Jingasia Capital and oversubscribed by SIG and Xunlei founder Cheng Hao and other old shareholders.
“LigaAI looks like Jira, but it’s much more than Jira.” “If there were no disruptive bright spots, we might not have come up with a brand new product,” Zhou told Leifeng.
Atlassian (NASDQ: TEAM) is Atlassian’s (NASDQ: TEAM) development collaboration SaaS tool, which is unique in China with a market share of around 40%.
Forty percent is not a small number. The ToB market is different from ToC, where the ToC market is usually distributed in a 721 way: 70% for the first place, 20% for the second place, and 10% for the third place and the rest. It’s winner-take-all and very brutal. However, the competition environment of ToB will be relatively fragmented. Even giants such as Oracle have only 20% to 30% market share in China, and Salesforce has only about 20% global market share in CRM. It’s not hard to see how strong Jira is.
But Zhou ran doesn’t think so. “Jira is an older tool that only solves the ‘offline to online’ problem, not the efficiency gain.” He told Leifeng that the biggest difference between LigaAI and Jira is that when Jira moves the development process from offline to online, developers need to input information by themselves, including a lot of boring, mechanical and repetitive information, which is not only time-consuming and laborious, but also inconsistent with people’s working habits, and data distortion is inevitable. LigaAI replaces 20 to 50 percent of manual data entry with automated technologies such as RPA and AI, and also provides intelligent analysis. “In today’s digital transformation of enterprises in full swing and increasingly high talent costs, online collaboration is no longer enough, we must improve efficiency.”
After a conversation, “efficiency” became a frequent word, running through zhou Ran why to start a business as a developer SaaS, where is the difference between the US and China SaaS market, and what is PLG in his eyes and a series of empirical thinking.
1.After more than ten years of CRM, Zhou Ran decided to “change track”
Jobs once mentioned in a Stanford university speech the story of “connecting the dots”, a calligraphy course he learned in college that inadvertently led to the design of Apple products. This kind of experience, which follows the inner love and finally finds that the past experience is connected, also happened to Zhou Ran.
More than 10 years ago, after graduating from Cornell University with a master’s degree in computer science, He joined Siebel Systems, one of the top ten software companies in the world, and started his career in enterprise services and SaaS. He then joined Sugar CRM as senior Director of Research and Development. After more than 10 years of experience in SaaS, Ran Zhou was invited to return to China in 2015 to serve as CTO of SALESeasy in the wake of the SaaS entrepreneurship boom. In 2020, he couldn’t resist the entrepreneurial impulse to start his own company and founded LigaAI.
With more than ten years of experience in CRM, why do you want to switch to intelligent development tools? Not afraid of “waste”? In fact, he argues, there is what Jobs called “connecting the dots”.
“The perfect thing about life is that the choices you’re making right now are connecting your past experiences. Although I spent most of my time in A CRM company, I was mainly responsible for product technology and managing the R&D team. I was very concerned about how a SaaS product could improve the r&d efficiency, and also had a deep understanding of the pain points. “That’s why LigaAI received feedback from users that the product was’ right on the spot ‘when it launched.”
In addition to the pain point, more than ten years of precipitation in the SaaS industry, but also let Zhou Ran on the “SaaS how to do, what are the similarities and differences between the Chinese and American SaaS market, what can be used for reference, what repeated pit do not step on” and other issues, know clearly. “I can say that LigaAI is a combination of my years of experience in SaaS and R&D management, as well as my experience in the two major markets of China and the US.”
In his opinion, one of the most important success factors for SaaS products is a deep understanding of users and the industry. During the years of sales yi, Zhou Ran deeply realized the diversity and complexity of domestic sales logic. Different categories often have different sales logic, such as the logic of selling FMCG and medical equipment is not the same.
“The product logic behind CRM in China is very complicated. On such a complicated basis, it is difficult to succeed. From a non-sales perspective, it’s much harder to create an equally good CRM product.”
In contrast, intelligent development tools are SaaS tracks that have accumulated over the years and have a relatively high degree of product standardization. More importantly, the market is huge for the future.
In recent years, digital transformation has swept the world, and the demand for developers from all walks of life has been rising, and the salary level has been rising, which has become the main cost of the company. If the development is inefficient, the whole company, the industry, and even the regional market will be greatly harmed.
“In the past, the labor cost was relatively low, with engineers paying thousands of yuan a month. Many companies adopted the strategy of ‘piling people’, but now the labor cost has been rising all the way. It is imperative to improve the efficiency of individual and team as a whole.” Twenty years ago, an American computer engineer earned 10 to 20 times as much as a Chinese engineer, but now it’s about 3 to 5 times as much, zhou recalled. The cost gap is narrowing.
In addition, the inefficient work pace and work experience makes it difficult to impress talented people, which makes it easy to slide into a vicious cycle of increasing inefficiency.
It is out of the sensitivity to human cost and talent thirst, R&D SaaS this track set foot on the fast track of development.
“At the moment, the market is expanding and the data is fast. In 2021, we made an estimate that the annual repurchase amount of Jira, a sub-r&d collaboration tool, is about 6 billion yuan.”
Zhou Ran told Leifeng, “The repurchase amount can be understood as your ARR (an indicator of annual recurring revenue, which is a key indicator of SaaS or subscription business), and now the valuation of SaaS companies is generally dozens of times ARR, so Jira tool alone can run several companies with market capitalization of hundreds of billions. Not to mention six billion and it’s going up every year.”
2,Entrepreneurship is about disruption
“We are not copying Jira, but the next generation of it.” Zhou ran told Leifeng that Jira, as a traditional development tool, has an “anti-human” pain point: it requires developers to input their own work information and progress, and about 20 to 50 percent of the content is mechanical, repetitive information.
This “synergy, but not enough” design is clearly not enough for today’s developers. “Engineers, whether overseas or domestic, are often unwilling or forget to fill in the blanks. Therefore, some companies will even send someone to check on them every day to ask them whether they have filled in the paperwork and how the progress is, and the engineers are harassed.”
In view of this pain point of Jira, Zhou Ran went one step further and replaced part of manual input with RPA and AI technology when developing LigaAI intelligent research and development collaboration platform. By automating information collection, machine entry, upload synchronization, and intelligent analysis, not only saves manpower and improves efficiency, but also better promotes synergy.
“Let the talent focus on what it does best, and let the machine do the rest. This is our product design concept. Especially when the accumulation of original development data more and more, through intelligent analysis can make the data become active, feedback business. Once this scenario is closed, it can lead to a disruptive efficiency gain for the enterprise.” “He stressed.
Although he has innovative planning in terms of products and technologies, he is also keenly aware that doing SaaS entrepreneurship in China will face a completely different business soil and market environment from Europe and America. “The SaaS industry in China is not at the same stage of development as it was after the 2008 financial crisis in the United States. After all, Salesforce had been going public for four years and it was doing well.”
In Zhouran’s view, the main reasons for the differences between the two SaaS markets are as follows:
One is that American companies are more willing to pay for SaaS because of the high labor costs.
According to his introduction, a US company may use nearly 80 SaaS tools, with high willingness to pay, because of the high cost of manpower, European and American companies prefer to use tools to improve corporate efficiency, save manpower, and make people spend all their time wisely. This has contributed to the maturation of the SaaS market in the United States.
However, China has not yet developed to this stage. First, pirated software is common in the past, and the awareness of paying for software has only started in recent years. Second, many domestic enterprises came from the crowd strategy before, and the human cost is not high, leading to many managers are not sensitive to individual efficiency, and the motivation to use tools to improve efficiency is not strong.
“It will probably take at least a decade for China to reach the same level as Europe and the US in this regard, and we as practitioners and entrepreneurs need to catch up efficiently.” Zhou Ran said.
Second, there are many domestic enterprises that prefer private deployment rather than cloud SaaS.
In zhou Ran’s view, the main reason lies in the current stage of domestic business trust foundation is relatively weak. After decades of construction, European and American credit systems are relatively perfect from individual credit to enterprise credit, while China is still on its way. “One interesting aspect of the integrity of the credit system is that there are fewer frauds in the US but more ‘big crooks’.”
There are two main things that SaaS vendors can do to promote trust ecology: one is to have enough technical strength to prove to customers that their information security can be guaranteed; The second is to make SaaS products from the cost of far lower than private deployment, from the technical security and cost advantages to impress customers.
Third, in addition to customer and market reasons, talent shortage is also hard to ignore. In the golden age of mobile Internet in the past decade, many excellent engineers and product managers will most likely choose to develop mature and profitable consumer Internet companies rather than enterprise service companies, resulting in a relatively small talent precipitation in today’s SaaS industry.
Last but not least, the SaaS market in Europe and the United States is extremely demanding in terms of product power. “After more than 20 years of development, there are many excellent products in Europe and The United States with more than 90 points, and 70 or 80 points have no chance at all.” Zhou Ran admitted.
Domestic market due to a late start, less accumulation, we have a lot of room to polish the product force. But for new startups, it is easy to emerge with excellent product capabilities.
“Generally speaking, the gap between the SaaS industry in China and the US is still large, but fortunately, the gap is narrowing. We are very optimistic about The Chinese market, both in terms of market opportunities and room for improvement.” Zhou Ran said.
3,PLGS are not new, but they are not easy
PLG was first proposed by venture capital firm OpenView in 2016 and became popular in China last year. However, Zhou Ran’s contact with and understanding of PLG mode took place more than ten years ago.
“When we started doing CRM overseas in 2012, we started doing it in a traditional way, but we soon found it was not going well. After the customer purchases the product back, but the login data is very little, indicating that the following sales are almost not in use, do not want to use.
We were like, no, it’s not going to happen the next year. That’s when you started doing things that focused on the end user and used the product to drive the decision making process.”
In zhou Ran’s view, for SaaS, do not renew, means the collapse of the business model, it can be said that PLG and SaaS have a natural fit. Traditional software can ignore PLG, but SaaS cannot.
“My understanding of PLG is that it needs to be product-driven from design, promotion, acquisition, trial, paid conversion, retention and fission from start to finish. PLG works a lot like To C Internet, it’s all about the user.”
While PLG is good, it is not easy to make. First, PLG is not a perfect fit for any domain or product, for example, when the path between the user and the decision maker is too long. The best scenario for PLG is for users to make decisions directly, have the right to purchase, or have a very strong right to influence decision makers.
Second, PLG products should not be too complex, and users should be able to learn quickly and get value instantly and easily. “A company like Salesforce is not a good fit for PLG,” he says. “Their products are powerful but complex, and users can spend a whole day doing configuration and not even get the hang of it.”
The high decision weight of front-line personnel and the simplicity of the product are the basic characteristics of the developer SaaS track. In Zhou’s eyes, developers are a very “picky” group: they’ve seen too many great tools to consider anything less than 90 points. This extreme demand for a product, in turn, leads to high barriers on the developer track.
At the same time, PLG is not only a product issue, but also involves the transformation of the company’s philosophy, organization and whole business process.
Product presentation is often just the tip of the iceberg, the real hard work, hard work, are under the water. For example, we must understand the industry, have rich industry experience, grasp the industry’s problems and pain points; Another example can not go step by step, but like a “big product manager”, before knocking on the first line of code, has formed a stereoscopic image of the product in the brain, and then put the image bit by bit.
Zhou Ran told Leifeng that LigaAI’s bid for Jira, apart from its market share of the first place in the industry, impressed him the most: first, LigaAI has high requirements for products and invests 40% of its annual income in r&d; second, LigaAI has verified the success of THE PLG model in r&d. “Jira is a tool that generates over $2 billion in annual sales using the PLG model.”
For him, the growth paths of Jira and Atlassian are also comparable. Zhou Ran that Jira continues to build ecological stage at present, can be thought of as the “base”, “building” after “to build the park” : first, through a tool to capture the user’s mind, and then with the aid of brand advantage, develop the second, three, four, five, tools, or through merger and acquisition of other companies, or the research, in order to form a platform product matrix and ecological.
The advantage of this is that the enterprise will constantly create new growth curves, otherwise there is only one product, sooner or later will hit a bottleneck. “That’s why Atlassian has been able to maintain a high growth rate while accumulating more than 10 billion yuan in sales.”
As for LigaAI’s next planning, Zhou Ran told Leifeng that an intelligent and personalized RESEARCH and development collaboration platform is an inevitable trend. LigaAI is born at the right time and is constantly polishing its products. It is believed that LigaAI will bring you a brilliant new experience in the near future.
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