When to sunset your SaaS company? with Zoltan Patai and Wolfgan Woerner @Eversync

saas.unbound is a podcast for and about founders who are working on scaling inspiring products that people love, brought to you by https://saas.group/, a serial acquirer of B2B SaaS companies.

In episode #11, Anna Nadeina talks with Wolfgang and Zoltan, co-founders of Eversync, a platform that monitors and automates business operations.

Zoltan and Wolfgang’s journey began in the consulting world, where they honed their skills at McKinsey. Zoltan transitioned into a leadership role at Delivery Hero, overseeing significant growth. Meanwhile, Wolfgang ventured into building his own B2B SaaS business, gaining insights that would later inform Eversync’s direction. With a shared vision of addressing operational inefficiencies in businesses, they founded Eversync, a platform designed to monitor and automate business operations.

Identifying the Problem

The inception of Eversync stemmed from Zoltan’s experiences at Delivery Hero. He witnessed firsthand how operational issues often led to customer dissatisfaction and lost revenue. Despite having access to extensive data, the company struggled to proactively address these challenges. Zoltan realized that a software solution was needed to enable operations teams to set up proactive monitors and automation without needing extensive developer involvement.

The pain points identified included:

• Inadequate delivery resources leading to customer delays.
• Vendor management issues resulting in lost orders.
• A lack of tools for operations teams to automate their processes.

Building the Product: Challenges and Surprises

With funding secured, Eversync quickly built its product. They hired a team of developers and launched their solution within months. However, reality soon set in. The founders encountered unexpected challenges during the implementation phase. It became clear that while the user and buyer personas were aligned, the integration phase required additional technical expertise, complicating the onboarding process.

Another surprise was the state of data management. Contrary to their expectations, many companies struggled with clean, structured data, which hindered Eversync’s functionality. The urgency of the operational problems also varied among potential customers, making it difficult to gauge the market demand accurately.

Hypothesis-Driven Approach to Startup Development

Throughout their journey, Zoltan and Wolfgang adopted a hypothesis-driven approach. They tested various assumptions about their market, product, and customer needs. This involved validating their ideas with potential users and iterating based on feedback.

One critical realization was that while many operations managers acknowledged the existence of the problem, convincing higher-ups to invest in a solution was a significant hurdle. This multi-persona dynamic complicated their sales process, as different stakeholders had varying priorities and pain points.

Navigating Investor Relationships and Transparency

Transparency was a cornerstone of Eversync’s relationship with its investors. The founders maintained open lines of communication, providing regular updates on their progress, challenges, and learnings. This transparency fostered a supportive environment, with investors understanding the complexities of the startup journey.

When the decision to sunset the company arose, investors were surprised but ultimately supportive. They recognized the founders’ commitment to making an informed decision based on the realities of the market and the sustainability of the business model.

Business Model Exploration and Sustainability Challenges

Eversync initially adopted a straightforward pricing model, charging between €500 and €11,000 per month. However, as they engaged with customers, it became clear that the pain point they were addressing wasn’t significant enough to justify such pricing. The operational complexities required extensive hand-holding and consulting, which diluted the potential for scalable revenue.

The founders explored various business models, including targeting e-commerce customers with readily available data from platforms like Shopify. They aimed for a product-led growth strategy to lower customer acquisition costs. However, they soon realized that the need for consulting and support remained a significant barrier to scalability.

Deciding to Sunset: A Rational Approach

After extensive market testing and iterations, Zoltan and Wolfgang faced the difficult decision to sunset Eversync. They recognized that despite having runway and a dedicated team, the fundamental market dynamics and business model were not sustainable. The founders prioritized transparency, clearly communicating their decision to investors, customers, and the team.

They explained that the operational challenges faced by their customers required a level of support that was not feasible within their business model. This honesty was appreciated by all stakeholders, who understood the rationale behind the decision.

Team Dynamics and Customer Communication

Communicating the decision to shut down to the team was one of the most emotionally challenging aspects of the process. Zoltan and Wolfgang emphasized that the team’s contributions were invaluable and that the challenges faced were not a reflection of their efforts. They fostered an environment of transparency, ensuring that team members understood the reasons behind the decision.

Customers were similarly engaged in one-on-one conversations, where the founders explained the rationale behind the sunset decision. This approach helped maintain goodwill and understanding, even among disappointed customers.

Reflecting on Wins and Future Aspirations

Despite the challenges faced, Zoltan and Wolfgang reflected on several wins during their journey. The most significant was the strong team they built, which thrived in a remote-first environment. They also highlighted their ability to iterate quickly and respond to market feedback, a crucial skill for any startup founder.

As they move forward, both founders are eager to apply the lessons learned from Eversync to future ventures. They emphasize the importance of founder-market fit, encouraging others to build in industries where they have deep knowledge and experience.

Key Hacks for Founders: Asking for Money and Market Fit

One of the key takeaways from Eversync’s story is the importance of understanding market fit early on. Zoltan advises founders to ask for money as soon as possible, even before the product is fully developed. This approach helps gauge interest and commitment from potential customers.

Additionally, the founders stress the value of being hypothesis-driven. By clearly defining assumptions and testing them rigorously, entrepreneurs can avoid common pitfalls and make informed decisions about their businesses.