Lean and nimble: SaaS companies in Reno not slowed by pandemic
- Part 1: ‘A dam about to burst’: Pipeline of startups eying Reno-Sparks bigger than ever amid COVID
- Part 2: Primed for a pandemic: Two Reno startups that are set up for success in the COVID era
- Part 3: 1 year after launch, Reno Seed Fund halfway to initial goal of 20 angel investments
- Part 4: Tech startup Bookit Sports newest addition to RNOX’s inaugural R.E.A.L. program this summer in Reno
- Part 5: Sparks-based NevadaNano inks marquee deal with Canadian firm
RENO, Nev. — From large corporations to small mom-and-pop shops, the go-to deployment method for nearly every type of business technology in the world is SaaS.
In fact, by 2022, the global SaaS (software as a service) market’s revenue is forecast to grow to $151 billion, a 77% surge from 2018, according to Gartner. In 2019 alone, 23% of the total enterprise software spending was in SaaS, according to Synergy Research.
All told, the SaaS industry has been one of the fastest-growing tech sectors worldwide. And with revenue still streaming into cloud-based software despite the coronavirus pandemic, one could argue SaaS businesses — whether a well-established firm or young startup — are positioned better than most to weather the COVID crisis.
Just ask Clint Vernon, CEO of SnapDesk, a Reno-based SaaS startup that launched in February 2018. SnapDesk describes itself as a “next-gen business text-messaging app with features that turn customer text messages into real-time conversations.”
“We have a much bigger reach being in SaaS and your market is much broader,” said Vernon, who founded the B2B company with his brother, Cory. “We’re obviously based here right in Reno, but every day we’re on the phone and on the internet with people from all over North America.”
Vernon said SnapDesk is focused on small and medium-sized businesses in a broad range of sectors — from plumbers and landscapers to warehousing and food production companies. Since COVID hit, the startup has also seen business trickle in from few local restaurants that had to pivot to taking curbside pick-up orders.
“We were happy to help people try to figure out how to stay in touch with those customers,” he said. “We didn’t see that as an opportunity as much as, ‘OK, let’s try to help them out and see if we can give them a solution.”
What is a SaaS? SaaS, or software as a service, is a delivery model in which a centrally-hosted software is licensed to customers via a subscription plan. A SaaS company maintains responsibility for the servers, database (and the data they contain), and other software that allows their product to be accessed and used over the internet, according to ProfitWell.
With its platforms hosted on the cloud infrastructure, SaaS customers do not need to purchase new hardware or install new software in order to expand capacity or add users. Meaning, a SaaS company can increase capacity quickly, which Vernon feels is the biggest advantage the industry has.
Having a subscription-based, recurring revenue model does not hurt, either, especially when it comes to reassuring investors. Notably, SnapDesk in February closed its first round of pre-seed funding to the tune of $240,000 — a joint investment by the Reno Seed Fund ($215,000) and the Sierra Innovations Entrepreneur Fund ($25,000).
SaaS businesses also are aided by the fact that they can operate with small staffs, are accustomed to working remotely, and don’t have to worry about supply chain impacts, allowing them to move and adapt quickly in a crisis.
“We’re pretty nimble and we don’t have a lot of big anchors we’re hauling around,” Vernon said. “And no matter what the future holds, there’s going to be markets that have things they need, and whatever that market is, SaaS can participate in filling that. We’re not limited by geographic boundaries or market segments.”
Doug Churchill, co-founder and leader of Reno-based ShortStack, feels the same way about the benefits of running a SaaS business during a pandemic.
Founded in 2009, ShortStack describes itself as “all-in-one” contesting software, allows users to create unique landing pages, run social contests, send emails and analyze results.
“When this all started, we had basically zero downtime as far as operations goes,” said Churchill, noting the company has consistently stayed at a “lean” staff of 12 people over the years. “Everybody just went home and kept on doing the same thing that they would do everyday when they were in the office.”
Churchill said marketing agencies that handle online promotions are ShortStack’s “bread and butter.” COVID has not stopped current and new business from coming in.
“We have a lot of bigger customers who are still moving forward with their plans to run promotions,” he said.
That even goes for ShortStack’s biggest enterprise customer, who does concerts and ticketing-type events, Churchill said.
“They’ve been impacted by this, obviously, but they’re still with us,” he added.
One segment of business that has dropped off for ShortStack is from bars and restaurants, which have been forced to dramatically cut costs amid the crisis. However, Churchill said the food and beverage industry makes up only a “small percentage” of the company’s revenue.
To that end, Churchill said he’s “bullish” on his outlook for ShortStack — and the SaaS industry, in general — for the rest of 2020 and beyond.
“We saw a slight downturn from this (pandemic), but nowhere near what I was concerned about,” he said. “We’ve been able to motor along perfectly fine. We’re getting plenty of calls from potential enterprise and brand customers, which is what we’ve really been trying to focus on. They’re still completely interested in the type of service that we offer, and they haven’t seemed to slow down.”
Since launching its new pediatric products two years ago, Neo Medical has seen a 35% growth in sales; moreover, the company has seen revenue grow 15% year-over-year since relocating to Sparks in late 2012.