SaaS 102 #7 The Principles Which Make AfterShip Different As a Company
Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, wrote in his book “Principles”:
“Whatever success I’ve had in life has had more to do with my knowing how to deal with my not knowing than anything I know.”
People can’t possibly know what problems they will encounter in the future. That’s why it’s very important to know what principles to use to decide how to act when faced with an unfamiliar situation.
And principles don’t just tell you what you should do. More importantly, they help you understand clearly what you shouldn’t do.
Both individuals and companies should have principles that they abide by.
At AfterShip, when we make decisions, we must always work together to abide by these five principles:
- Our business must be sustainable in the long term.
- Our business must be scalable globally.
- Our products must be business-to-business-to-consumer (B2B2C).
- We must put the success of our customers first.
- Our business must be mutually beneficial for eCommerce merchants, our partners, and ourselves.
Principle One: Our business must be sustainable in the long term.
For any type of business to be sustainable in the long term, it must be profitable.
Every business should have a profitability model. It’s OK if a product is not immediately profitable, but we definitely need to know what the profitability model for each product is. And we also need to guarantee that:
The amount our customer earns using our product > The amount our customer pays us > Our costs
Our customers are businesses too. If, as a result of using our products, they don’t earn more than they pay to us, then why would they continue to pay us?
Suppose we had a product that did create value for our customers and did help our customers earn more money, but we were selling that product at a price that was too low to cover our costs. In this scenario, the business model for that product would definitely not work in the long term. The more customers we had for that product, the faster we would lose money.
Of course, in the early stages of any product, we’ll need to invest some funds into research, development, and iteration. We can also provide free trials as a promotional method. But all products must become profitable eventually. Only business models that are sustainably profitable can survive in the long term.
Of course, it’s not only about profits. For our business to be sustainable in the long term, it must also:
- Create real value for our customers
- Help our customers and partners to flourish even more as a result of choosing to work with us
In fact, our first principle (“Our business must be sustainable in the long term”) and our fifth principle (“Our business must be mutually beneficial for eCommerce merchants, our partners, and ourselves”) are complementary to each other. We’ll go on to describe the fifth principle more later in this article.
Principle Two: Our business must be scalable globally.
Right now, our main market is the United States. But we also have customers in Europe, Southeast Asia, and China.
Our business must be scalable globally for three main reasons:
- We want to interconnect global eCommerce infrastructure, and make it easy for people everywhere to buy and sell.
- We believe that the future development of eCommerce will definitely be global, and won’t be limited by locality. The COVID-19 pandemic, in particular, has accelerated this trend.
- We want to reduce risk. If our business is concentrated in just one country or region, then if there are sudden changes in that region, such as political changes, war, or disease outbreaks, then that will have a huge impact on our company. But if our customers are spread out across the whole world, then changes in one particular market will have a much smaller effect on our company overall.
Principle Three: Our products must be business-to-business-to-consumer (B2B2C).
Let’s break down what “business-to-business-to-consumer” means when applied to our business model. The first “business” refers to our company, AfterShip. The second “business” refers to our business customers. And the “consumer” refers to the customers of our business customers.
What we aim to do is help our business customers (eCommerce retailers) serve their customers (the consumers who buy their products) better.
Let’s look at our AfterShip product. If one of our business customers uses AfterShip to help with their eCommerce business, then after a consumer makes a purchase in their online store, that consumer can track their package directly using our website or mobile app. They can even have notifications sent straight to their phone every time there’s a package tracking update.
This way, the consumer buying the package gets a better shopping experience. Our business customer, the retailer, saves time on manually checking the package location for the consumer. The consumer is more satisfied, and the retailer benefits from this. Also, our company earns money as part of the process.
Principle Four: We must put the success of our customers first.
A lot of companies say that customers should be treated like royalty. It’s also common to hear that a company’s mission is to serve its customer’s needs. But does anyone stop to ask why this is? Why do we want to help our customers succeed?
Is it because we’re kindhearted?
Actually, the main reason is that helping our customers succeed builds a kind of virtuous circle that we benefit from, too. It works like this:
- We help our customers succeed
- Our customers increase their business
- Our customers earn more money
- Our customers are doing well, so we have a better chance of earning more money from them
But if we do anything which harms our customers interests, then even if that action made us money in the short term, it would harm us in the long term. The customer would either stop using our products, or might even go out of business altogether. We should never kill the goose that lays the golden eggs.
Having successful customers is a prerequisite to being successful ourselves.
Principal Five: Our business must be mutually beneficial for eCommerce merchants, our partners, and ourselves.
We want to recruit potential customers and potential partners onto our team. We’re not afraid of competition, but if we can find solutions that mutually benefit all parties, then we will definitely do so whenever we can.
Most companies and people in the world aren’t looking to engage in cut-throat competition with us. It’s always better to make a new friend and partner than to make an enemy.
We should try to think of solutions that benefit all parties when thinking of solutions to challenges and allocating resources. Our goal should be to try to make the cake bigger for everyone. Any product or project should benefit all participating parties, because only mutually beneficial cooperation can be sustained in the long term.
In 2022, for each 10 US dollars in revenue which AfterShip made, we generated at least 1 US dollar in direct revenue for our partners.
Summary:
At AfterShip, we have five principles to always abide by and use as the basis for our strategies and decisions. They are:
- Our business must be sustainable in the long term.
- Our business must be scalable globally.
- Our products must be business-to-business-to-consumer (B2B2C).
- We must put the success of our customers first.
- Our business must be mutually beneficial for eCommerce merchants, our partners, and ourselves.
It’s important to note that these principles have different priority levels. We do our best to implement all these principles in decision-making and policy.
But what do we do if we come across a scenario where two principles are in conflict? In that case, we still follow the principles as much as possible, but the principles higher up the list take priority.
For example if a customer wanted us to fully support them in developing a certain function or operation. Let’s suppose that following this request would help this particular customer succeed, but wouldn’t help us to make our business global.
In this scenario, principle two (“Our business must be global”) would be in conflict with principle four (“We must enable our customers to succeed”). In this scenario, we would prioritize the second principle. Our goal is to make our business global, and not to limit ourselves to one customer.
Now that I’ve explained what our company principles are, in the next article we’ll go on to consider a step-by-step approach to building a successful SaaS company.
I'm Teddy, Co-Founder & CEO of AfterShip, SaaS 102 is a series of articles where I share my experience in SaaS startups.
We are looking for great SaaS sales talent and welcome you to join us at careers.aftership.com.
(Article translated by Joseph O'Neill)