What SaaS Startups and Home Builders Have in Common

Speaker A: Foreign. Strategy show. I'm um, Mike Geraci here with my partner and uh, co conspirator at drmg, Dustin Robertson. Today, this week, semi weekly, we're talking about the similarities between B2B SaaS startups and publicly traded for profit, um, commercial enterprises. Based on Dustin's recent experience participating on a panel, um, at a retreat for a very large developer, let's just leave it at that. Exploring the uh, opportunities that this large for profit, publicly traded organization could apply. From Dustin's experience in the B2B SaaS startup world, bringing in a little bit of uh, unconventional wisdom into the organization. And part of that I believe is Dustin's and tell me if I'm wrong here, kind of surprise, little bit of shock and awe of how similar it actually is, what the challenges and barriers are for. It doesn't matter what organization you're in, you're actually dealing with a lot of the same issues.

Speaker B: Yeah, it is weird. It all boils down, I think it's three things. These are the three things that, that came out strong for them, that allow them to win. It's like one, they need trust. So they need to be trust. They got to have that connection with the customer. They need to be trusted to put more context that they're a home builder. So it's like a publicly traded home builder. So just you can imagine how uh, trust with the customers needs to be pretty high in that transaction. They desperately want to lead with how they're different, but connecting that uh, how it's different to the outcome their customers are seeking is super hard. So they have a ton, a gigantic list of how they're better but how they're actually different. They do have a few things that they've like strategically built into their products, but tying it to the outcome that the customer is seeking for in this important life. Purchase was not connected and it's not straightforward how, how to, how to connect it. And then the third thing is they're all held to sales goals and they have pipelines and they have targets and they're hard to hit. And especially you know, in whatever state of the world is in right now. Right. Like the home builders especially I think are struggling, but most businesses are having a hard time making a buck. And so that um, yeah, that relentless focus on running the pipeline cycle to like bring in somebody who's interested, nurture them, gain trust, convince them that your differentiator is leading to the outcome that they're seeking and then closing the deal. It was the same, exact Same as a SaaS startup as an enterprise business. It was totally, yeah, um, it was totally the same. So it was very interesting to like, oh, I. Cause they invited me to do this because they wanted an outside perspective. It's like, well, you know, I do SaaS software. I'm not sure how applicable this is. And they're like, no, we want, like that's what we want is the outsider's view. And so it turned out to be wildly engaging and people were super into it. So it was, it was fun.

Speaker A: The sales goals and the pipeline and all the kind of the pressures that come from being publicly traded. When things get tough, when uh, the pipeline strix, if you will, and people get a little more conservative with their dollars, especially when you're talking about a big ticket purchase like a house. The instinct from a sales perspective is what is it to double down on better, better, better? Or is it to try to be like, okay, so what I've been trying hasn't been working. So I'm going to back up here and reorient and to come at it from a different um, perspective.

Speaker B: Yeah, you immediately go to like the go to market functions. So it's like, are all my channels working? So in this space it's like, oh, do I need to incent the realtors more or do I need to have bigger signs on the highway, you know, stating this opening price point for the home? Or you know, all of that stuff I think comes to the surface as opposed to like, hey, maybe we do need a bigger sign on the highway to make, increase awareness. But maybe it shouldn't be about the opening price. It should be about this, you know, and this company, their differentiator was they build homes for people who love design. It's like, oh, sick. But that takes a lot of. That's the right way to frame it. It's risky to, to spend that money put out because you're basically saying your homes are not for people who don't care about design. But the reality is their homes cost more. You know, the homes that people don't care about design are down the road and they all look the same, you know. And so I think having the uh, the guts to say who you're not for and go to market with it, that that kind of became clear that, that that's tough. And I think it's tough for all businesses.

Speaker A: What is missing in an organization to have the guts to do that? Is it that um, they just never done it that way before. So there isn't the ah, institutional memory. Is it yeah, it's like we're going to go up further up the funnel, so to speak. It's not going to be new homes Aspen grove starting at499.99.9. You know what I mean? Pricing and having something that's at a higher level is it that the go to market doesn't have the pieces and parts within the organization to connect the dots between the higher level uh, value prop and the uh, further down the funnel Sales M motion.

Speaker B: I mean it's the same as if you're selling SaaS. Software, the game that's on the field, right. For SAS, ah, software is find your ideal customer profile, get them aware right to top of funnel. Make them aware of the problem you solve. Once they're warm, engage with them, bring them in as a marketing qualified lead, then make them a sales qualified lead. Then make them an opportunity, then close win them. Um, so that's the game that's on the field. And so when we look at different ways to change the what's happening in that flow is super difficult. And so everybody's, that's how everybody ends up doing the same thing and sounding the same. And so I think in their space it's this. The, the game that's on the field is very well defined. Like if you're gonna go buy a house, you know, yeah, there's a few new tools like Zillow and whatnot, but it's pretty well like uh, oh, I need a realtor. Which you actually don't need a realtor anymore. Especially if you're gonna go buy one of these new homes from these companies that's like built to like. I think they're, I don't know if you can do it today, but their goal is to like let you buy a house on the website. Um, and so like why should you?

Speaker A: And that's kind of the big change in the world. Right. It's like you don't, you no longer need a realtor to buy a house.

Speaker B: Right. But they can't lead with that because that would totally disrupt the go to market flow. And if the realtors think they're not for them, then they're not going to bring any clients by and they still kind of have a stranglehold on the pipeline gatekeepers.

Speaker A: Can we make the realtor the enemy?

Speaker B: Not right now. I mean I think that would be that. I think that's for them where, why it's super challenging is they, they know that that's where the future is but they can't actually be the ones to break ground there because they're not that big. They're, you know, they're not big enough where they could survive without realtors. These publicly traded builders, I think will be the ones that disrupt the realtors, because there's some of them that are pretty probably close to big enough to be like, yeah, you can bring a realtor, that's fine. We're not, we're only going to pay the realtor 1% or whatever is a,

Speaker A: uh, is an intermediate step then to that future state that uh, we, um. The no realtor future state is that they're actually solving a problem for the realtors. They're not solving a problem for customers. If you, if you look at it from their, um, icp. Is it the realtor that you're saying, like, look, we're going to provide a solution here to make selling a house, closing a deal much easier than it currently is?

Speaker B: Yes. But that, that, I don't, I mean, devalues the realtor. I don't think it solves a problem for them. Right. They want the process to be complex and confusing so that they can justify taking 6% of the deal. Um, so I would say potentially the go to market industry in real estate is set up to, to solve a problem for the realtor, which is get me business, get me like, make sure I have customers to service. That. That is probably what's. What's wrong and why it will flip. Because real estate's built for people buying homes, not for realtors.

Speaker A: Isn't. Aren't realtors mostly like independent contractors? They're not usually employees of a, uh, realty company.

Speaker B: Yeah, I think so. There's like a. You work for a brokerage if you're the principal broker. Um, I think that's, there's like different legal licensing statuses and not to like bag on realtors. A bunch of friends that are realtors and they do provide service, like especially. Right. I mean, you hooked me up with your buddy up there and he totally knew the area and was able to show me around and I mean, I'd have no problem, uh, paying him a commission. But that's kind of boutique real estate.

Speaker A: Right.

Speaker B: And we're talking, you know, Jackson, Wyoming or, you know, rural Colorado. Like you need a realtor in those spots. Yeah. If you're in the Denver suburbs and you're looking for a 2,000 square foot home, you don't really need a realtor. There's thousands of options in neighborhoods and these companies are there to show you why, uh, you would want to Buy theirs.

Speaker A: So walk me through. We do this exercise in our workshops called different or Better, and it forces leadership to clearly identify the differentiating aspects of the company, of the product, of the culture, um, um, anything related to that, because ultimately that's what you want to lead with. But walk me through the kind of aha moments for this group when you really started pushing on them to be clear about if it's different or better.

Speaker B: Yeah. And that went the same as it does with the SaaS company. So this is where I was. I just felt like we were in a workshop. Um, um, it was really interesting and it was kind of eye opening, like, oh, we could actually just run our process for this, for sure, for this industry, but I think a bunch of other industries and deliver, like, a gigantic outcome. I think when you nail the messaging and you're actually selling it to a large consumer audience versus when you nail messaging, you're selling it to a defined ICP and SaaS. There's just a much larger opportunity to win with, like, what as far as our messaging and having people tell and sell the story. So, um, that was interesting. But, yeah, the way it goes is, you know, so they broke into groups of five. There was like, I don't know, 50 people or something there. So they had all these groups and they were coming up with, you know, their list of why they were different. And then basically have people present their ideas. And as you go, if your idea got presented, you know, you just mark it off and you don't present it again. Um, and so by the time you get to the end, ideally you'll have, like, generally, like, with one or two things that are actually different. And the way it starts is like, boom. Half the things on the list that they said are different are actually better. And so you got to go, like, pressure test each one. And so for, like, this business, one of the first things that got brought up by a lot of people was how they're. How they're commissioned. So the sales offices in these neighborhoods, they run it. Like, uh, what is it when you go to a restaurant and all the servers pull the tips? And so everybody's there to say, yeah, pool tips. Pool tips. So they basically do a pool tip model. So no matter who you touch in the office or whenever you come, like, they're all very excited to help you.

Speaker A: They're invested.

Speaker B: Yeah. And I guess that's different. Like, nobody else does it that way. And it's like, well. But, like, very easily, anybody could do it, and then actually somebody else, I think Said, oh, no, I used to work here. And they did that way. So it just very quickly was like, okay, that's. That's a better thing. Like, that's cool. Um, but it's not different. And honestly, like, at the end of the day, when a customer's considering the story they want to tell and sell about why they bought a home from you, it's probably not that, like, anybody in the sales office was super eager to close the deal because they all get paid.

Speaker A: That's right. And there's a follow up to. These are always like, and why is that important? Like, so you came up with something, it could be different, it could be better. But let's talk about why it's important from the ICP's perspective to make sure that there's a value prop there.

Speaker B: Yeah. And in this exercise, I think that was what kept coming up is like, most of the things that they were doing were different, but they were different to try to disrupt this realtor go to market complex that is established. This company had aggressively put things in place to offer something, an alternative to that. And they had. They're not messaging that or positioning on it, but that's just.

Speaker A: You can stuff.

Speaker B: Yeah. Well, all the way down to, like, their dream of, like, selling a home on the website. And so, uh, they're building like, this foundation to position themselves against realtors, but there's no way they would ever say that. Um, and so it was very, uh, very interesting to peel it apart. And then, you know, we finally, like, it came out, right? It was like, hey, they have. There's some famous designer. I forget who it is. But anyways, he's kind of like the thought leader for how they design these homes. And we start talking and we're like, okay, well what, why does that matter? And he's like, oh, well, when, you know, when people. Because again, these are, these are not custom homes, right? So they're not track homes, but they're kind of like built in neighborhoods. And so you can compare it to like, the one next door, Right. And like, take Las Vegas, for example. There's thousands of these planned, uh, track home communities. And when the customers go into their homes, they feel better. Like, just straight up, he's like, they just. Our, uh, homes feel better. I was like, oh, okay, tell me more. We, like, start peeling it apart. And it turns out it's because they're well designed. And like, great design doesn't need to be explained. You just know it. You go, this is amazing. Like, okay, yeah, if you want to understand how they did it. Sure. Explain it. But that's, you know, nobody wants. Nobody wants to understand the architectural, uh, angles and placement of windows that caused you to walk into the home and be like, oh, this feels amazing. And you were just at the one, you know, five miles down the road, and it did not feel amazing.

Speaker A: The feels. The feels is an interesting point of entry into that.

Speaker B: Yeah. And this is a big deal, right? Because this is like people's big life purchase. And you're. You're. You have something that feels better. And if you put that alone, you're like, well, we can't go out and say that that's not different. Uh, well, it's. It's not. But it's an outcome that people want. And so let's figure out why it's different. And. Yeah, and then one of. And they. These are all their words. Like, I didn't come up with any of this. Right. I was just there kind of facilitating. And then that's when somebody said, like, we build homes for people who love design. I was like. I was like, oh, that's. That's pretty good. And then the room was kind of like. They're like, that is pretty good again. But I don't think any. It would take a lot of work before they would put that on a billboard, um, and, like, lead with that.

Speaker A: But yeah, And I don't think. I mean, like, that's internal, Right. So that's strategic. That's a positioning statement. And how would you express that externally in a way that appeals to your icp? Whether that's something along those lines would appeal to both realtors, because they're giving them a differentiator and as well as the. The customer, the buyer, because that's ultimately what they want, is they want to walk into something they just invested a shit ton of money in and feel really good about that investment. And I'm speaking from personal experience right now.

Speaker B: You bought a custom home, though, an unfinished custom home. It needs work.

Speaker A: Um, it needs work for the feels. We're working on the feels. Um, and the feels aren't cheap, and neither are, like, Persian rugs, I'm discovering. But that idea of, like, we build homes for people that love design that could be internal and then can't give me an external way to, like, tap into that feels thing. And that could be something you would put on a billboard, and that would be something. That's an interesting point of entry into this go to market action that, um, that limits and identifies the people that. That's really important for that. They're not just looking for like the cheapest block house or um, you know, 2,000 square foot house in the Denver suburbs. They're looking for something that feels really good.

Speaker B: Totally. Um, yeah. So that it was. And again this was. This transpired over, you know, when we didn't run the full workshop. Right. We just did this part. So yeah. Yeah, it's like 35 minutes.

Speaker A: Then once you identify that trust and feels like think about all the uh, assets and all the um, marketing and sales materials that that informs at a higher level and how that clarifies everything.

Speaker B: Totally. Yeah, it was, it was super fun.

Speaker A: It's always great when the light bulb goes on.

Speaker B: Totally. Yeah. And the group was really engaged, so it was cool.

Speaker A: What are your speaking fees? What other panels are you going to be on?

Speaker B: Uh,

Speaker A: anything else come out of this conversation? Um, was there any other aha's or things that you were like, oh man, crazy how similar this is to the B2B SaaS startup work we do?

Speaker B: No, it was identical. That was the crazy part, I guess. Um, um, and what was also interesting is we in SaaS, like we just work with the, with the founders, the CEO, like executive team over the small team. And this was a large group like each revenue leader for around the country. Wherever these people have, um, they have sales offices were there. And so that it was super interesting to do it in a large group because we always do it in a small group kind of purposely. Like we don't want, um, we don't want the stuff done by committee. And so yeah, it was just cool to see it in a larger group. Still be pretty productive.

Speaker A: Yeah, Right on.

Speaker B: Love it.

Speaker A: All right, anything else we need to talk about on this topic? We missing anything?

Speaker B: No, just super interesting. We'll see if we can follow up with them as they roll stuff out and maybe they'll come say who they are.

Speaker A: Quick question. If there were, if coming out of this and you were going to go talk to the CMO or the CEO and say, here are the top two things you should do as a follow up to that session, what would the top two things you would recommend the leadership team undertake? Uh, outside of hiring us, like, what could they do themselves?

Speaker B: Yeah, I would, um, I mean not uh, to like say follow our process, but they, they're not aligned on the problem they solved and the big change in the world to like, why that problem needs to be solved. There's multiple things that they could go after and honestly like the realtor thing is a tough One. Right. Because if they are kind of dancing around it and totally understand why they can't probably go with that. So like what can we go with? Um, I would spend a lot of time figuring that out because they're kind of already building the foundation to sell a home online and kind of like eliminate the Realtor or at least like minimize the need. And so they're kind of building the product without the messaging framework for it. And so they're kind of going to get like painted into a box if they don't solve this higher level messaging. And you know, this could be huge. Like, and again it doesn't have to be anti Realtor and I don't. That's not what they're doing. But they are going to make buying a home like much more enjoyable. Just like happened to cars. Right? Like remember selling a car online? People like, oh, they mean it was illegal in Utah to sell a car online. Like Tesla couldn't be here because like the government's really small here and lawyer Miller was a giant donor to the church and he literally got a law pass. You know our car, our car dealerships are not open on Sunday in Utah. No, um, for usury laws like no financing transactions can happen on Sunday. So that's still a lot. But uh, anyways, now you can buy all sorts of cars online and a lot of people like to do it that way. Right. They don't want to go get.

Speaker A: Do you frame this? When you're looking at it from the Realtor's perspective and there is disruption going on in the Realtor in real estate in terms of the government coming in and saying they're capping their transaction fees or their like, I, uh, can't, I'm not going to put the right language on this, but there was some big regulatory hurdle that popped up about a year ago. Is that accurate?

Speaker B: Yeah, yeah. The commissions are the buyer and the seller, I guess have to negotiate them with the realtors. Like I did look at some real estate recently and I had this. You have, you have to sign an agreement to go look at a home. Now you cannot just go to an open house. You have to. Or maybe you can open house, but you can't go look at property without having representation. That's the law now. And so in that agreement you agree. So I was the buyer and so I had to agree what I was going to pay the Realtor and I was going to pay something in this, this awesome Realtor didn't make me pay anything but that it's in there. Like the buyer and the seller kind of have to negotiate what they're paying.

Speaker A: And that's part of the disruptive landscape, too, that maybe you can like, come in on and be like, okay, here's another dynamic going on. What does this mean to the, you know, future state of our business? And how do we triangulate around all those things to come up with this higher, higher level value prop that addresses all those pain points?

Speaker B: Yeah, no, this, I mean, this space is primed for disruption. They're building a, um, a platform to be ready for it, so they should do the messaging work.

Speaker A: So maybe this is a topic. I'm going to say this, this is a topic for another pod, but regulatory disruption and the need for category strategy, when that occurs to your market, because all of a sudden there's these limitations, uh, obligations that weren't there before, and business as usual is no longer usual. And you have to address that with something new and different.

Speaker B: Oh, what we should do is we should figure out what, what is the new positioning for realtors.

Speaker A: Totally. We should workshop that. All right, that's. Those are, um. Now that we're back to our semi weekly, uh, cadence here on the SaaS Brand Strategy show, we'll have lots of, uh, topics to explore. Um, but I got to run. Thanks for listening. Welcome back. If you have any questions, if we're wrong on anything, um, if you really feel compelled by anything we said, hi, RMG co. Just check our site, drmg co, and you can find us on LinkedIn. Uh, we're pretty active on LinkedIn, probably more than anywhere else. The DRMG page, not so much, but Mike and Dustin's pages, personal pages, you can find us there. Um, so thanks for listening and we'll be back next week with another edition of the SaaS Brand Strategy show from DRMG.