Building an ultimate SaaS product with Jason Cohen @WP Engine

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 #33, Anna Nadeina talks with Jason Cohen, Founder and CEO of  WP Engine, the most popular managed WordPress hosting platform in the world today.

Background and Genesis of WP Engine

WP Engine represents the culmination of Jason Cohen’s entrepreneurial journey, marking his fourth startup. With a history of bootstrapped ventures, Jason’s experience laid a solid foundation for WP Engine. Initially, WP Engine was bootstrapped for two years, but as the demand for managed WordPress hosting grew, it became clear that the market potential was significantly larger than anticipated.

Reflecting on the inception of WP Engine, Jason shared that his journey began with blogging at his previous company, SmartBear. During this period, he discovered a recurring problem: many WordPress users struggled with site crashes during traffic spikes. This sparked an idea for a hosting service that would not only provide robust infrastructure but also offer expert tech support tailored specifically for WordPress. The vision was to create a platform that delivered superior performance, security, and customer service.

Pricing Strategy: Understanding Value

One of the critical factors in building WP Engine was its pricing strategy. Initially, Jason set the base price at $50 per month, which, over time, has decreased to $20 for the most basic plan. This evolution in pricing reflects the company’s commitment to providing value while adapting to market demands.

When discussing pricing with potential customers, Jason emphasized the importance of understanding their willingness to pay. He argued that price is intrinsically linked to the perceived value of the product. For WP Engine, the key was to demonstrate that while the service might seem expensive compared to shared hosting options, the value it provided in terms of performance, security, and support justified the cost.

Customer Segmentation and Pricing Perception

Throughout the years, WP Engine has refined its customer segmentation strategy. Jason noted that during the pandemic, the company experienced a shift in customer bases. Smaller businesses, which previously viewed WP Engine as a premium service, began to reconsider their spending. Conversely, enterprise clients, who saw WP Engine as a cost-effective solution compared to traditional CMS platforms, began to flourish.

This segmentation highlights the importance of understanding customer needs and perceptions. By tailoring services to different segments, WP Engine has managed to maintain a diverse customer base while maximizing revenue potential.

The Importance of Tech Support

In the competitive landscape of managed hosting, tech support can be a significant differentiator. Jason believes that excellent tech support is not just a nice-to-have but a core component of the WP Engine value proposition. Unlike traditional hosting providers that offer minimal support, WP Engine focuses on providing expert assistance specifically for WordPress users.

This commitment to high-quality support has fostered customer loyalty and retention. Jason explained that while offering exceptional support is costly, it is also a powerful driver of growth. Customers who receive outstanding service are more likely to remain loyal and recommend the service to others.

Strategic Investment in Support

Deciding whether to invest in tech support is a strategic choice that companies must make early on. For WP Engine, Jason recognized that investing in skilled support staff was essential to the company’s success. He noted that while many startups initially rely on cost-effective solutions, as they scale, they must evaluate whether their support mechanisms align with their growth objectives.

Ultimately, Jason believes that investing in support can lead to a stronger brand reputation and increased customer satisfaction. This strategic decision has proven beneficial for WP Engine, contributing to its status as a leader in the managed WordPress hosting market.

Learning from Failure: Key Lessons

Every entrepreneur faces challenges and setbacks along their journey. Jason candidly shared his experiences with failed ideas prior to WP Engine. He emphasized the importance of learning from these failures, particularly the value of validating ideas before investing significant time and resources.

One of the critical lessons Jason learned was the need to dig deeper when gauging customer interest in a product. Many entrepreneurs mistakenly take initial positive feedback at face value, only to find that the enthusiasm does not translate into actual usage or purchases. Jason advocates for a more rigorous approach, encouraging founders to ask potential customers to walk through how they would use a product in their daily lives.

Failure, according to Jason, is not the end but a stepping stone toward success. He believes that quick validation of ideas allows entrepreneurs to pivot or abandon concepts that are unlikely to succeed. This mindset fosters a culture of experimentation, where the focus is on learning and iterating rather than fearing failure.

Building for Success: Defining Your Terms

Jason’s journey with WP Engine has underscored the importance of defining success on one’s own terms. As the company grew, he recognized that the role of a CEO evolved, requiring different skills and focus areas. This self-awareness led him to hire Heather Brunner as CEO, a decision he considers one of his greatest successes.

By stepping aside from the CEO role, Cohen was able to focus on areas where he could contribute most effectively, such as technology and product development. This strategic decision not only benefited Jason personally but also positioned WP Engine for sustained growth and success.

Hiring the right leadership is crucial for any company’s success. Jason’s decision to bring in Heather Brunner as CEO was transformative for WP Engine. Under her leadership, the company has expanded its product offerings, built strong executive teams, and pursued growth opportunities both domestically and internationally.

Jason’s experience highlights the importance of recognizing one’s strengths and weaknesses as a leader. By surrounding oneself with capable individuals, entrepreneurs can create a robust organizational structure that supports growth and innovation.

Effective Cold Communication: A Key to Growth

In today’s fast-paced business environment, effective communication is paramount. Jason shared insights on crafting impactful cold communications, emphasizing the need for brevity and authenticity. He believes that emails and messages should be concise, avoiding corporate jargon and unnecessary fluff.

The goal, according to Jason, is to create a genuine connection with the recipient. A well-crafted message with a compelling hook can capture attention and foster engagement, making it more likely that the recipient will respond positively.