Mining and SaaS – not as diverse as you may think

Intro:

It wasn’t the standard choice for a boy from London to study Mining Geology. I put it down to my grandad’s stories of working in the coal mines and holidays in the Lake District surrounded by rocks…or something like that!

Anyway, with my newfound skills in mineral exploration and mining I was determined to use them and took the first job that came along. In the late eighties, I found myself in a South African gold mine where I spent a large chunk of my time 3 kilometres underground in spaces no higher than 1.5 meters. Add to this 40+ degree temperatures, near 100% humidity and regular seismic activity that bothered the Richter Scale to the tune of 6…it wasn’t your standard first job. Fast forward 10 years and I’m back home and the Co-Founder of a SaaS business – quite the career switch!

Today, more than two and a half decades later, I still regularly think in terms of mining and mineral exploration in the tech setting. So, what are the parallels?

Finding your Gold:

In mining, before you sink a shaft and incur all the capital expenditure involved, you’ve got to have a very clear picture of the ore body you’re targeting and its overall worth. This involves an enormous amount of research.

In SaaS terms I consider the gold to be customer pain. Without this there’s no solution, nor money to be made. Before we sink our own personal money or that of investors, we must really understand the extent of the pain, specifically who it relates to and the value that can be extracted by solving it.

Back to the gold mines. The next step is to evaluate where to sink our shaft. If you’re going for the deepest, highest-grade ore you need highly specialised skills and investors who are in it for the long haul. If you want to mine the lowest grade ore you need to be highly operationally efficient and automated. In SaaS terms, the market is the market, but you need to be entirely realistic as to where your skills and resources are best deployed, particularly in the early years.

Everything changes when you’re on the rock face:

Where I worked the geology was complex. The exploration boreholes drilled from the surface to create the initial mine evaluation could only pick up the major faulting in the rock below. Much later, and with many millions of dollars invested, you’re on the actual rockface and you see (and sometimes dramatically feel) the extent of all the less obvious faulting. This throws you off track. When you hit a fault the gold ahead is either above or below where you assumed it to be. As Mike Tyson famously said, ‘everyone has a plan until they get punched in the mouth’.

The parallel in SaaS is we’ve got to keep exploring, keep probing for that pain and adapting as it moves. If this isn’t an embedded discipline, you’ll end up mining waste at great expense and personal cost. I know, I’ve been there!

Get uncomfortably narrow:

Once you’ve identified the customer pain, it’s really tempting to expand your product offering to address every pain point your target market has, particularly as customer voices become louder.

In our experience the great SaaS founders constantly obsess about customer pain, in addition they have an innate ability to distinguish between what’s an opportunity and what’s a distraction.

In the first picture below a much younger me is on a face that’s out of control. Half the rock (everything that’s green and has no pebbles in it) has miniscule amounts of gold content. All the gold is in the top half of the face. Through ill-discipline and by drilling too deep, we’ve diluted the value of our returns by 50% whilst expending the same effort. To make matters worse there’s gold bearing rock left in the roof – money left on the table so to speak. If our team doesn’t know what good looks like we’re out of control.

In the second picture everything’s more confined but it’s far easier to keep the workforce safe and everyone’s making the money they forecast.

Move at pace:

When you’re mining 3km underground you have to move fast. When you don’t everything closes in on you. The roof (hanging wall) has 3km of rock above it and the floor (footwall) has had the pressure of 3km of rock released and wants to rebound…you’re getting squeezed. I see this as the forces of competition, self-doubt and indecision that we need to get ahead of. Know your market, place your bets, be brave and execute fast.

Conclusion

Mining and SaaS seem worlds apart, but the principles are uncannily similar. What I learnt, mainly from my mistakes, in SaaS are:

• Before you put capital or people at risk be sure to do your research thoroughly. Customer pain is your gold, you need to know exactly where it is, how valuable and how extensive.
• As with mining, the environment moves. Keep probing and obsessing about customer pain.
• Find your niche and execute fast. Only expand from here when you can afford to do so.
• Keep your people, your proposition and GTM uncomfortably narrow, fool’s gold is easy to find.

If you’d like to chat more – about mining (!) or the SaaS consultancy we run today, give me a shout!