524: How to Acquire and Cross-Promo SAAS Apps

In today’s episode of The Startup Chat, Steli and Hiten talk about how to acquire and cross-promo saas apps.

Acquiring and cross-promo saas apps is a common strategy stirrups use to grow. However, it can get very messy when not done right. There specific questions that need to be answered before you commit to making a purtcahse so that you avoin problems or regret.

In this episode, Steli and Hiten talk about what cross-promoting is, how companies use it to grow, why it isn’t as simple as people think and much more.

Time Stamped Show Notes:

00:00 About the topic of today’s episode

00:32 Why this topic was chosen.

02:45 Why cross-promoting isn’t as simple as people think.

03:29 Why you should be conservative with your expectations.

04:05 Things to consider before using this strategy.

05:22 How to introduce the new app to customers.

06:37 Why you should be clear about buying an app.

07:38 Why you should be cautious about buying an app.

07:41 Questions to ask before buying an app.

10:03 About Basecamp’s marketing strategy.

3 Key Points:

• Cross-promoting typically fails
• Be conservative with your expectations.
• Over time, most companies rebrand.

[0:00:01]

Steli: Hello everybody. This is Steli Efti.

[0:00:03]

Hiten: And this is Hiten Shah.

[0:00:04]

Steli: And today on this [hollow chat 00:00:05], we’re going to talk about buying and cross-promoting apps in SAS, or products in SAS. So here’s the deal. As the world of SAS products has matured and grown and scaled and exploded, and there is a ton of different SAS products out there. There’s SAS extensions, mobile apps, web apps, whatever, desktop apps. Now we’re getting to the stage where we don’t just see kind of one type of company or startup that is building a SAS product, to be kind of a venture funded Silicon Valley based company or something like that. But you have single founders, you have people that build these SAS apps as side projects. Some of them are big. Some of them are small. And so now we’re starting to see kind of this trend of more acquisition happening in the space where companies buy smaller products to promote them, or to use them as lead gen for their main product. And I thought it’d be fun to unpack this a little bit for somebody that’s already a founder running a startup, or a SAS product, is it a viable strategy to buy other apps that have maybe similar customer base and cross promote? You’ve done this a good amount, you’re probably one of the more experienced people in SAS in buying apps or launching different products and doing the cross promotion. And so I wanted to unpack the strategy and kind of maybe highlight some of the unintuitive truths to this. Here’s the shit that everybody thinks would work easily, but it doesn’t. Or here’s the stuff that you think would be profitable, but most people don’t do X, Y, and Z when they do the math. So let me ask you, with kind of all the experience that you’ve had trying this, first of all, just throwing out there the big question in my mind which is, what’s not simple about the strategy of saying let’s buy an app or a SAS product that has a similar customer base that then we’ll be able to promote our main product to, and kind of do cross selling or cross promotion? What about that basic idea is what people miss? Because if it was that simple, everybody would do it and would do it incredibly successfully, and I’m not sure that that’s really the case. So what’s some stuff that we don’t know about this strategy or this idea?

[0:02:44]

Hiten: What you probably don’t know is it typically fails. And it’s not that you don’t know t