Daniel Zarick, founder and CEO of Arrows, on building SaaS products on top of data platforms

Daniel: “On the other hand, we were confident that improving the customer-facing checklist would differentiate our product and help convert prospects into customers. So we took a bold decision: rather than just forgoing improvements to the dashboard, we opted to remove it entirely. We deleted all that code and replaced it with HubSpot’s native dashboards by building deep integration.”

I recently spoke to Daniel Zarick, the CEO and founder of Arrows, a customer onboarding SaaS built on top of Hubspot. Arrows, backed by Hubspot Ventures and Gradient Ventures, makes it easier for customer success teams to onboard new customers by converting onboarding into a collaborative activity so that the customers can reach their desired goals with their purchased software faster. Arrows is used by businesses of all types, from B2B SaaS to agencies. It’s also a popular customer success app on the HubSpot marketplace with over 750 installs.

Arrows started as a standalone tool, but in early 2022, the Arrows team restructured the product to become tightly integrated with Hubspot, deleting one-third of its code in the process. Here’s a glimpse of what you can expect as you read along:

• How deleting 1/3rd of their code made the product 10x better
• The difference between narrow innovation and broad innovation products
• How founders should decide if they should build on top of a platform
• The product and GTM benefits of becoming tightly integrated with one platform

Be honest if you are building a narrow innovation product or a broad innovation product

Daniel believes there are two ways to build products—Broad Innovation and Narrow Innovation.

Daniel: “Figma is a broad innovation product. It has many features that cover a full workflow for a team because the designer doesn’t want to use the product only to do a part of their work. They want their entire workflow to be addressed by one tool. I think that works well when customers understand what they're buying and understand at a deeper level what tools are in the market and how to evaluate them. They have a high threshold of feature completeness for any new product in the category.”

Whereas with the tool we're building, a customer onboarding tool, it's much more specific, the thing they need to do this one thing but do it really well. This, I would say, is narrow innovation.”

If you are solving for a narrow use case and build many features adjacent to the core use case (in Daniel’s case, customer onboarding), it will confuse the buyers. They will not know the mental category in which they should slot you, making it harder to sell your product. For a narrow innovation product, becoming the best-in-class in the core use case helps you educate the market about a tool they may not even be looking for (as was the case with Arrows when customers weren’t looking for a collaborative onboarding tool as none existed).

Daniel: “Being narrower and going deeper has allowed us to make it clear what we are, where we fit in, and help customers who aren't in the market yet more quickly understand Arrows and our functionality.”

Founders often feel an inherent desire to solve more problems for more people, but this comes at the cost of GTM efficiency. Daniel strongly suggests that founders be honest with themselves and figure out if they need to build a broad innovation or a narrow innovation product. When building a narrow innovation product, avoid the urge to bake in too many features.

When asked if narrow innovation products have smaller TAM, which restricts their ability to be venture-backed, Daniel shared DocuSign as an example, a narrow innovation tool with an ARR of $2.5B.

Daniel: “There are hundreds of thousands customers of sales CRM. Those are all companies that are tracking sales deals. Almost all sales deals probably could use a tool like Arrows in the same way that almost every sales deal could use a signature tool like DocuSign. We think of Arrows being similar to an e-signature tool.”

Follow the Google Sheets and find your next SaaS startup idea

Daniel: “Early on with Arrows, we thought we were more of a Customer Success tool, maybe more squarely, something only Customer Success teams would use internally to grow customer accounts.”

“When researching our customers, we saw a lot of Google Sheets, Trello boards, and custom reports built in the CRM. The onboarding professionals were using these to manage the actions they needed a customer to take. And then, about half the time, those actions or those spreadsheets were shared with the customer. So, they wanted something collaborative that they could share and make obvious to the customer what they were expected to do.”

This led Daniel and the team to build Arrows as a collaborative customer onboarding tool. 

Deleting 1/3rd of their code to become 10x better

While Arrows is deeply integrated into Hubspot today, it started as a standalone product with much lighter Hubspot integrations. Its users worked with Arrows entirely outside Hubspot.

Daniel: “We didn't start on HubSpot. We only did that a little over a year ago, in April 2022. And we've been building the product for about two years before that. So, we started off as an onboarding platform that was its own little island. It was very easy to use, but it was a separate tool. What we found after a while was that the deal would close in the CRM, and then as a user, you have to remember every time, let me go open Arrows and create an onboarding plan. It might be simple to create because there's a template, but it takes a diversion of activity outside of my usual whatever I did before, whatever is comfortable.”

Early in 2022, while planning their next six-week product development cycle, the Arrows team faced a dilemma: Should they spend time improving the weakest part of their product, the dashboard, or refining the feature its customers love, the customer-facing checklist?

Daniel: “Even with a six-week effort, the dashboard would only see marginal improvement and still require significant work to meet customer expectations. Moreover, we doubted that these enhancements would effectively attract more customers. On the other hand, we were confident that improving the customer-facing checklist would differentiate our product and help convert prospects into customers. So we took a bold decision: rather than just forgoing improvements to the dashboard, we opted to remove it entirely. We deleted all that code and replaced it with HubSpot’s native dashboards by building a deep integration.”

Daniel urges the founders to ask themselves a core question: If we started over and said, with everything we know today, if we were building the product from scratch, how would we do it?" What would the product be if we just delete all of our code and start over? " 

Improving weakness vs. doubling down on strengths

When building a product, you can take one of two approaches—identify where your product sucks and improve it or pick those parts of your product that are great and double down on them. While it may be very tempting to do the former, as you want to make all parts of your product shiny, Daniel suggests finding your strengths and going all-in provides better returns.

Daniel: “As a resource-constrained startup, we've found a lot of value by being very focused on a few things. So, we thought, let's not just be good at multiple CRMs and integrations. Let's be exceptionally good at one, and we doubled down on HubSpot.”

“We could have said that not having integrations with Salesforce or Pipedrive is a weakness, and we should spend some time doing it. We have had those distractions, but we've been very good about exploring those ideas but not putting them into practice. Because when we come back and really are honest with ourselves, we find it way easier to just be really good at one thing.”

Daniel believes this approach makes your GTM more efficient by making you the most obvious choice for one type of customer and enabling your sales team to understand your customer more deeply.

Daniel: “We want to be the obvious choice for a certain type of customer. If you are a HubSpot customer with an onboarding need and see Arrows, it should be obvious that you shouldn't even look at another tool. And that's truer now than it was a year ago. It's still not totally true. So how do we keep going until that's true? Because we think it's a big enough opportunity. And if we are tempted to do other stuff, we will lose focus. And that won't become true.”

“When we double down, we see customers using the product more deeply, more prospects coming in excited about what we're doing, and us solving more use cases for more types of companies. Then, our sales team talks about the problems more deeply and builds a deeper understanding of the customers.”

Should you build as an island or become a part of an ecosystem 

Daniel: “A lot of companies use their sales CRM as the operating system of their business. It's the Hub where they put all their data, reports, and automation.”

Daniel suggests that founders should follow the data gravity instead of running away from it when building for teams that live inside system-of-record platforms like CRM, ERP, or commerce platforms. Anything that pulls a user out of that system is a really hard sell.

Daniel: “When researching how sales teams work with customers, we tried to see where they were doing their jobs. For Arrows, sales teams would live inside the CRM. They would update deals in the CRM and move a deal to a closed won. Arrows, as an onboarding tool, would start there at the closed won or right before the closed won. So, if the work was already happening in the CRM, there's no reason to pull them into another tool. And actually, it's incredibly difficult to pull a user into a different tool.”

The tools that work really well as an integration with a platform are the ones where the users are already living inside the platform, and the tool provides a differentiated value that the platform cannot natively provide.

Daniel: “At Arrows, our unique value is the collaborative customer-facing layer on top of the CRM. So, it could be a layer on top of the CRM because our dashboard, our internal process, is not that useful. Most companies want all that internal work inside the CRM, all the visibility in the CRM.”

How do you choose which platform to build on top of?

Once you decide to build on top of an existing platform, you’ll have various options, and arriving at the answer of what you should integrate with is part art, part science.

Here’s the checklist that you can run through with your team based on my conversation with Daniel.

• What are you good at—selling or developing? Building on a new, evolving platform means less competition but a lot of heavy lifting for developers, as the APIs and documentation are imperfect. On the other hand, if you choose a mature platform, like Salesforce, with stable APIs, there will be hundreds of similar apps, so you need to be very good at crafting a unique sales narrative for your product.
• What do the bulk of your existing customers use? For Arrows, one-third of their customers at the time were on HubSpot, and almost one-third of the inbound deals were coming through HubSpot.
• How easy to use are their APIs? Do they provide good API documentation and developer support?
• How many customers does the platform have? Are their customers enthusiastic about using the platform? For instance, in Arrows' case, they found that HubSpot's customers are enthusiastic and love good integrations. HubSpot has over 177,000 customers willing to pay for high-quality integrations.
• How sticky are the platform’s customers? In the case of Arrows, Daniel believes that while many startups use HubSpot, now even many large customers are beginning to use it. And customers are staying longer with HubSpot even if they become much larger instead of shifting to, say, Salesforce.
• Does the platform extend into the customer lifecycle where you sell? For instance, Arrows comes in the post-sales stage, which is often managed in HubSpot already. They didn't choose Pipedrive or Intercom because they saw fewer sales and post-sales activities happening inside those tools.
• Can you build a great working relationship with the partnerships team at the platform?
• Can you find ways to measure the platform risk? There’s always a chance that the platform will build something similar, and your app will become a feature of the platform. In Arrows' case, Daniel says they looked at other products built on top of HubSpot and saw them growing robustly, giving them confidence. For instance, Aircall is a top-rated product inside HubSpot, doing $100M in ARR with a very close relationship with HubSpot. Similarly, standalone tools like E-sign and Panda Doc exist inside HubSpot.
• What timeline are you operating on as a founder? Daniel believes a founder needs to have enough conviction in the platform to make a bet for the next decade because that is how long it will take to become a top app on a popular platform and reap the benefits of being found by its customers.

The benefits of building your product on top of another data platform

Daniel says the biggest benefit of building on top of another platform is that all their features are now yours. Now, you can offer best-in-class features to your customers that you couldn’t earlier because you did not have the engineering bandwidth to build them yourself.

Daniel: “We had customers before we did the HubSpot integration who asked us for automation or reporting functionality, wanted to edit the emails the Arrow sends or send SMS instead of emails. And while these are great ideas, we could not build them because we were resource-cosntrained.”

“What you get from the deep integration, which is really cool, is HubSpot is a really awesome reporting functionality, an awesome automation functionality, powerful email-sending capabilities, and an app ecosystem of other apps that you can use all that data with, so you can add say an SMS-sending app. And what we achieved by putting all of our data into HubSpot is now all that functionality of HubSpot is Arrows functionality, so our product immediately got way more powerful.”

Daniel also shares that their go-to-market strategy changed from direct selling to educating thousands of HubSpot’s customers on managing their customer onboarding better, even though they may not know Arrows exists. 

Daniel: “Many people in the HubSpot ecosystem aren't looking for Arrows. But they are looking for how to get my customers to schedule an onboarding call faster. We can show them how to do that with workflows and automation in HubSpot. And if you want to do it even better, attach Arrows.”

This also helps Arrows build strong relationships with the HubSpot team and the entire ecosystem, as they provide a lot of free value, and then those people come back to become customers. 

When it comes to the app marketplace, Daniel suggests that you should be careful about understanding the long-term vs. short-term benefits of being on the App store. Early on, it will not be a huge marketing channel for you as no one is searching for you yet.

Daniel: “Having a highly installed app with great reviews pays off over time, so we're focused on it for that in the long term. In the short term, having our app on the HubSpot app store helps us have a marketing page for HubSpot employees to discover us and feel confident that we're an app they can recommend to their customers.”