You know how you know you had a good time at a conference? You skip the final party and download a health app. Hello Noom! Four months of CBT, here I come!
SaaStrAnnual was my first software conference where I wasn’t selling and no one was selling me anything. That’s conference bliss. Bring on the talks. Bring on the beers. Bring on the serendipity.
Here’s my thoughts on the best of SaaStrAnnual 2021, and a special thanks to Jason Lemkin for putting on the whole show.
Mark Roberge, Stage 2 Capital -- “The Most Common Growth Potholes and How to Avoid Them”
Mark’s session appeared to be the most attended session the whole week. And for good reason. Mark has a novel approach, backed by loads of experience, and tempered with some good old nerdy MIT equations. (Full disclosure: Mark was my boss at HubSpot and I’m an LP in his fund.)
Mark’s first pothole is a doozy. Most sales plans reward reps for selling as much as possible up front. This was certainly the case at HubSpot for many years and I saw a methodical and successful transition to help sales reps solve for customer adoption and upsell. We’ve all heard of land and expand, but what you may not have realized is that the opposite approach could be killing your business. When customers realize you oversold them and they aren’t getting the bang for the buck, they start looking at your competitors. Seller beware!
By far my favorite idea coming from Mark’s brain these days is his insistence on finding a metric that is a leading indicator for Product Market Fit. You can’t wait for churn numbers because it takes at least a year for those numbers to show up. You can’t drive a car looking in the rear view mirror. Here are three examples of how a software company might define early customer success which is correlated to low churn.
Learn more of Mark’s philosophies by reading his ebook Science of Scaling and book Sales Acceleration Formula.
The title of this speech doesn’t do it justice. It takes courage to stand on the big stage at a conference and tell your peers they’re stark raving mad. Melissa politely pointed out that the fastest growing industry in the world is celebrating valuation milestones while their sales reps are struggling to hit quota. When only 57% of reps hit quota, that’s not exactly the bedrock of an inclusive culture. I wonder how many DBI talks at SaaStr were from companies with so many sales reps failing to hit quota?
Melissa told of Hootsuite’s transition to an annual sales plan that aimed for all sales reps to hit quota. I loved that she had the courage to get up on stage while she is in the middle of this transition. She spoke first hand about how her team was progressing. The following slide really hit home when I considered that revenue growth is mostly tied to how many fully ramped reps are selling. When reps stay around longer, you grow faster. Build a system where they can be successful and feel included in the success of your company!
You need to go read this entire report. TL;DR: it has never been a better time to be a cloud software company. The public markets are at all time highs. There is one new unicorn software company per day in 2021. And yes, the valuations are high, but the companies are outperforming everyone’s revenue expectations, so you’d expect that.
The folks over at Craft Ventures have created this gem of an online tool. It gives you heaps of benchmarking data. It’s the best free online tool I’ve seen since websitegrader.com.
Something I had never heard before: If you’re a SaaS startup, one easy way to get a sense of your valuation is 200x last quarter’s revenue. - Ethan Ruby, Craft Ventures
Fundraising tip: “It’s a continuous fundraising journey nowadays. If you’re a company just starting out, be ready for 2+ years of continuous fundraising. It used to be a round every 18-24 months and you were funded for that amount of time. Now you might only get 9 months of funding and it comes in chunks.” - Itamar Novick, Recursive Ventures
Term Sheets: I don't know about you, but VC term sheets scare me. It's clearly because I don't understand the potential disasters that can come from the "fine text." What's worse is I live with a VC. Should I know better? Well, now I more thanks to the folks at TIMIA Capital. Check out their blog post here that covers the VC terms that can ruin your startup.