Vitamins vs painkillers – the role of a CTO in a SaaS company with TrusTrace’s Madhava Venkatesh

The CTO vs Status Quo series studies how CTOs challenge the current state of affairs at their company to push it toward a new height … or to save it from doom.

“We should treat security and privacy as vitamins rather than painkillers.”

SaaS companies are facing a new existential threat. Unlike in the past, this time, the challenge is no longer technical. It’s more about vision.

In this interview, Madhava Venkatesh, TrusTrace’s co-founder and CTO, discusses the biggest challenges of modern SaaS businesses. Although TrusTrace is in a unique position as a category-defining SaaS company, it faces many of the same obstacles as SaaS businesses. 

It may be surprising, but the biggest roadblocks for him aren’t technical. He explains why, as AI continues to disrupt the technological landscape, SaaS companies need to focus on:

• going back to basics,
• learning to innovate faster,
• reimagining their software for the AI age.

Along the way, you’ll also learn why the speed of releasing features isn’t always critical for SaaS and how sustainability has changed in the last few years.

About Madhava

TrusTrace – a category-defining SaaS

Jakub Piłucki: Hello, Madhava! Congratulations on TrusTrace’s inclusion in CNN’s “Going Green” series. Can you tell us more about that?

Madhava Venkatesh: Hi Jakub, thanks for having me. The series is about helping companies go green. We focus on supply chain risk and compliance. A significant impact for the fashion brand gets created in the supply chain, be it how the raw material is produced or how the different parts are manufactured, both from a social and environmental perspective.

TrusTrace gives brands visibility into the practices used by the supply chain. They can then measure and improve their impact. Our mission is what got us picked by CNN.

That’s huge, and it’s clear that TrusTrace is on a mission. However, you still need to provide clear business benefits through the traceability platform. Can you tell us more about how you combine those two objectives?

Early in our journey, sustainability had no proper definition. Every company defines its own sustainability goals. But in the last few years, regulation has actually been playing the common denominator game. There’s reputational risk as well as the impact of regulations, which helps us focus on business outcomes.

In the current landscape, because of climate impact, we’re expanding into resilient material flow. We’re moving from a sustainable to a resilient material flow – that’s the shift in the narrative we’ve been seeing. 

If you have a bad reputation, it impacts your top line directly. A bad reputation can come from misbehavior in your supply chain or a shipment getting stopped because it’s from a forced labor region. This has been a big transition in the last two years.

Tell me a bit more about the nature of your business. I’ve seen TrusTrace referred to as a category-defining SaaS company. What does that mean?

Supply Chain Traceability is not a well-defined category like CRM or ERP. In defined categories, the customer knows what they’re buying and how much they have to pay. The differentiation across products is based on technology, UX, or services offered.

In our industry, the value of supply chain data is not very well understood. We started with sustainability. Then, the regulations came. Now, we’re talking about resilience. In the last six years, there’s been a significant shift in how we leverage the supply chain data.

We spend time aligning customers to a common denominator. It’s not easy because this is a new field, and the problem is not well-defined or understood in the same way across multiple customers.

We’re in the process of defining the category for supply chain traceability around three pillars: risk, compliance, and impact. Using traceability data, you can manage your supply chain risk, ensure compliance with regulations, and measure and improve your impact. This is our definition of traceability. Resilience might become our fourth pillar.

Given how new the territory you’re entering is, I’m guessing that educating your customers is a core function of your business. How do you do it?

Three years ago, we started a series called “The Traceability Playbook.” It features common definitions, use cases, and benefits of traceability. We’re now on our third edition. 

In addition, we participate in focused groups where we educate our customers and learn about their evolving requirements. It’s a continuous process, and the Playbook has been a major investment from our side in terms of helping to shape this market.

CTO in a SaaS company

TrusTrace is quite unique, but you probably face a lot of the same technical challenges as many other SaaS companies. Analysts predict that the SaaS market will keep growing through 2030. But with everything evolving so quickly, it’s been said that many companies have skill gaps that might prevent them from capitalizing on that growth. For example, the inability to quickly pivot or achieve compliance in a new market. What’s your perspective? 

The overall technology landscape is changing, and so is the role of SaaS. Gen AI acceleration is playing a big part in it. Traditional software focused on standardizing workflows. Gen AI has shifted towards a co-pilot model. Instead of you adapting to the software, the software adapts to you.

With Gen AI, business workflows can be reimagined. It’s about reimagining the entire user experience and workflows. It’s not replacing anybody, just augmenting me to do my job.

Building software from a user perspective to augment their day-to-day work is a different approach than just improving productivity. It’s about giving me superpowers. For example, as a CTO, I can get the gist of a new technology using AI within 30 minutes.

The question is, what is the role of SaaS software in this equation? That’s a huge shift. We definitely lack skills in reimagining processes from an AI-first approach now. Whoever cracks that skill is going to be the next Google or Apple out there. With that skill, I believe there’s a significant gap.

What are some other CTO challenges that you consider especially important in the SaaS space today?

Since we’re a category-defining company, we’re more sales-led than product-led as of today. We’re mostly focused on large customers because building and defining the category with a large customer is easier than working with 100 different smaller enterprises with significantly varying requirements.

Building a product that is scalable across a larger number of customers in the most configurable way that adapts to their specific requirements is a major challenge. Getting faster feedback is crucial for SaaS to thrive. You launch, get feedback, fail fast, and improve. Identifying the 20% of features that will be used by 80% of the customers is a trick in itself. We’ve set up processes to identify those opportunities and co-develop with customers. 

As the company grows, aligning people to a common objective becomes crucial. OKRs and other frameworks are helpful, but significant effort still needs to be put into aligning an organization.

Lastly, with such a major disruptive technology on our hands, we need to protect the current business while investing in the future – a classic prioritization problem that’s even more amplified now. Keeping the existing solution alive while introducing new tech is a big challenge.

SaaS CTO priorities

Let’s explore some challenges a bit deeper, starting with economic uncertainty. There has been a lot of global market turmoil in the past few years, and tech companies are frantically pivoting and cutting costs. Are you worried that in a difficult market, clients may be unwilling to invest in your solution?

Sustainability is still an emerging area, and people have been pulling back. As we move forward, there’s definitely a risk in terms of our customers’ priorities. Their margins and existence are under threat, and we’re having a secondary or third-degree impact because we’re not directly selling to end consumers.

That’s where, with the headwinds and the technology transformation, it’s a dilemma. How much do you want to invest to protect the current business growth, and how much do you want to invest to ensure you continue to exist?

More than the threat to the economy, I think the threat of AI is much bigger because it’s an existential crisis. People can pay $25 for GPT and get a lot of support. With agentic workflows and how software is getting reimagined, I would say that AI is a much bigger threat than the economic crisis. 

The economic crisis will go away – you just have to wait for the market to bounce back. But with AI, you have to do something. How you react to it is completely under your sphere of influence as a CTO.

The CTO can also help their SaaS company differentiate so that the target audience can’t resist their value proposition. How would you go about it?

The most important underlying factor is friction. A product with a lot of friction in terms of how it’s designed, from onboarding to scaling the usage of a customer, will introduce multiple friction points. Thus, the biggest role of a CTO is to simplify it for their own teams. If the team can’t understand or articulate what we’re building, our customers won’t be comfortable using it.

The less friction your product has in terms of adoption and scaling, the more likely it is to sell on its own, as long as the problem you identified is big enough.

Some of the CTOs I talked to pointed to software delivery as a way to remove friction. But I’ve also heard that being fast might not be enough for SaaS companies today. Clients are used to continuous updates and everything on-demand. They’re more concerned about privacy, data protection, ethics, and sustainability. Do companies need to prioritize those values?

If you talk to any CTO or CEO of the buying organization, security may be the number one priority. Security is the primary objective, especially when a small company like ours is selling solutions to a very large enterprise. Most of the customer’s data is governed by multiple regulations and internal trade secrets.

When it comes to continuous updates, the value proposition of continuous updates is gone. It’s no longer a valid proposition because everybody expects features to be up to date. It’s no longer a differentiation.

So, is speed irrelevant for SaaS companies, or do we need a paradigm change?

We cannot generalize speed in terms of SaaS. However, speed might be critical in some markets where companies copy features and undercut prices.

Speed is not critical for all software products. Certain products require more time. For example, in our area, the quality of data and interactions is much more important than the speed at which we deliver features.

Local compliance is a major problem in expansion with data privacy, various industry standards, and local requirements. It calls for a lot of technical expertise. Many governments are simultaneously encouraging digital transformation while introducing new regulations, like the UK Online Safety Bill. What’s your take on compliance at scale? How big is this issue today?

Security is a foundational capability. These regulations are not very different. There are basically two or three categories of regulations: accessibility-related regulations, privacy-related regulations, and, in general, cybersecurity-related regulations.

If we follow any of the standard frameworks like ISO or SOC, major data security requirements are taken care of. GDPR provides fairly good privacy coverage. It’s important that we invest in some of the best principles as a foundational skill rather than just reacting. It has to be a vitamin, not a painkiller. Security, by design, should be a part of how we build and deliver software.

Interestingly, today, most of the cloud players also help you. For example, AWS Well-Architected lets you take an assessment and check for any vulnerabilities or bad practices in the way you’ve built the software.

The SaaS CTO evolution

In a recent interview, we discussed the increasing overlap between the competencies of a CTO and a Chief Product Officer. Would you agree that CTOs are incorporating the Product role more and more?

The CTO role has always been and will always be close to the customer. Whoever is closer to the customer understands the requirements and provides the best solution. 

But now, with AI, the approach we can take or the way we can think about or look at a problem is completely changing. As I said, we’re moving from a user interface to a co-pilot-based approach. The user interface is very constrained, whereas a co-pilot is much more flexible with regard to the user interaction.

So I think that’s a shift. This means that the CPOs and CTOs need to work more closely. And, of course, the trends we are seeing in terms of how pricing is going to be impacted – it’s going to be $25 per user, right? That is the benchmark that ChatGPT has set for months. So your feature has to operate with that competition now.

But, some say that the talent supply is not keeping up with the pace of growth in SaaS. Will that be an obstacle to achieving that?

The tech skill equation has changed. AI has democratized software engineering, and we’re seeing some early benefits. I hope this will help us overcome the talent challenge.

But I think we need more skills in terms of people who can understand the problem and be creative and innovative. We need people who can run quick experiments; this skill is what we should reward. We need more continuous learners. Learning is a skill. Learn and keep adapting. That is the most important skill.

In addition to talent acquisition, one should also think of retention. I imagine that in a fast-growing SaaS company, the attrition rate among developers may be high, and the costs of replacing these developers can be significant. How do you prevent that?

People connect with the cause we’re working on. Developers are not just focused on technology. If they’re excited about the problem we’re solving, they will be passionate. Most of the people who join us are passionate about solving the problem of sustainability and climate change.

Other than that, we strengthen our hiring process.

Conclusions

We’ve discussed several challenge areas for CTOs in SaaS companies today. What are the main takeaways from all that?

The entire business model is getting challenged. Software’s role is going to get commoditized, which means that even as software engineering becomes less premium, so will the software. If you take the traditional systems that run the business, like ERPs, companies are finding that the best way to differentiate themselves is to innovate using AI on top of their existing core systems.

The role of SaaS software is being questioned because it has always addressed some specific business user’s needs. It was not a company-wide system. So, it’s going to be very critical to find a niche role for SaaS moving forward.

With software getting commoditized, SaaS prices will be under severe pressure, especially with an economy that is also struggling. That is going to have a significant pricing impact.

Resources

We usually end the interviews with an open question regarding additional learning resources that we could recommend to other CTOs who want to go more in-depth into the areas we’ve covered today. Is there anything particular that you can think of?

Prioritization is key. The biggest challenge facing us right now is prioritization. Maybe we should go back to basics, like a “Start with Why” type of book, to understand the why behind every decision. We could go back to basics like lean UX, improving on and building a sprint framework, like the Design Sprint methodology. The need to innovate faster is ever-increasing.

And how do you keep up with new trends, like AI?

I get my hands dirty. You just have to keep playing with it. Build a research team and continuously do experiments. There is no other choice, I feel.

What’s next? Three actions CTOs to take

After talking to Madhava, it is clear that he has a deep understanding of what it takes to build great products. While business gurus online might tell you that you need complex tactics, for Madhava, it is more important to focus on the basics:

• Focusing on aligning your company and teams around specific vision and objectives.
• Reduce friction by making the requirements and roadmap clear for your teams and shorten feedback loops. 
• Reimagine your software from an AI-first perspective while maintaining existing features.

That way, you can proactively prepare your business for the unknown challenges that you’ll encounter along the way instead of just reacting to them – vitamins over painkillers!