The Latest from SaaStr: Is Cold Calling Dead?

So even after doing SaaS all this years, and being perhaps the biggest fan of SaaS sales and sales processes out there … I still struggle with the idea of cold calling.  Personally, I never answer a cold call, and want at least my initial discovery to be done over email.

But I’m not the average tech buyer, and you probably aren’t either.

So I put out the latest survey to see how many folks were successful doing cold phone outbound (not email) in 2023?

The answer: a lot.

To expand using a bottom-up model, SaaS businesses need to create a more delightful experience for every user.

These experiences don’t just happen when customers unlock your product’s value without jumping through several hoops.

The opportunity to delight goes beyond the product level and occurs with every encounter on social media, marketing channels, and with company executives. 

Few SaaS brands have been able to hone in on this the way Scratchpad and OpenPhone have.

Co-founder and CEO of Scratchpad, Pouyan Salehi, and OpenPhone’s Co-founder, Daryna Kulya, share how they consistently engineer delightful experiences for their customers. 

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Merge’s Unified API allows you to access 150+ integrations across HR, payroll, ATS, accounting, CRM, and ticketing systems.

So VCs have a lot of “-isms” that simplify a lot of complex things, as many -isms do.

One is how certain startups will just “grow into their valuations”.

It’s a good rationalization when you’ve invested in a good company that just was way, way overvalued at the peak, or for whatever reason, in the last round.

Today, a $20m ARR startup growing 100% that magically raised at $1B in 2021 might fetch only a $200m valuation, for example.  A far cry from $1B.  

But … if the startup’s burn rate is low and it won’t need to raise for years, you can rationalize it.  That $20m growing to $40m (pretty impressive) next year, then $70m, then $120m … and boom.  They’ve grown into their $1B valuation from 4+ years ago.

And that’s a slow process that’s rolling out all across tech and SaaS now.

Every top VC has several of these unicorns and pre-microns in their portfolios that are doing fine, but aren’t worth a fraction of their last round price.

But that doesn’t mean issues don’t lurk, even if you are well funded, and your burn rate isn’t very high, if you are way overvalued and have to grow into your valuation.

Getting acquired can sound like an endpoint, a magical outcome. 

And sometimes it is.

But the reality is, it’s just the start of a new process for your product and team.  There is still tons of software to build and customers to close.

I can make a long list of challenges and overlooked details in acquisitions, but I think they all stem from 1 issue: all sides not being honest about what things will look like in 24 months. 

Does the CEO really want to stay? If not, just staying for an earn-out may be OK, but it’s not the same as wanting to stay.

Why would the CEO work for someone else? I don’t hear this discussed honestly enough. If you’ve been a CEO for say, 5 years, why would you want to work for some SVP at a BigCo? You wouldn’t. Not really. So how can this work out best?

Are the founders (too) burnt out? It might be asking too much for them to sustain the same energy. Many folks sell because they are tired. And then, the acquirer asks them to own even more. E.g., run an even bigger business unit.

Are the founders OK if big changes are made? If not, it’s best to discuss up front. What if the name changes? If the business is merged into another business? If another product becomes more important / strategic?

Up Next: Wednesday, March 15th @ 10AM

Topic: Selling. The Seven Things all Founders Should Know About Sales.

Speaker: Dave Kellogg EIR at Balderton Capital

Workshop Wednesdays is new series where we’ll be bringing some of the best SaaStr speakers to you LIVE, every Wednesday. 

Each workshop will be hosted in a live, interactive 30-minute format at 10am Pacific each and every Wednesday. This workshop will be 100% LIVE, not pre-recorded, and will be hosted in an, interactive 30-minute format, including Q&A.

I’ve invested in 5 start-ups that had a $1,000,000,000+ cash exit or IPO.

Advice is very context-sensitive, so take this post with a grain of salt.

But I thought I’d take a stab at the Top 10 Pieces of Classic SaaS Advice … that, in my experience at least, are usually Just Plain Wrong. 

 “Ask VCs for Advice When You Want Money, Money When You Want Advice”. I don’t know who started this, but they must be smarter and more perceptive than me.  I get asked for advice a lot.  I get asked for money a lot.  I have 60 hours a week.  Please help me really know which you want.  Especially the money part.  I probably will pass on investing in you if I don’t know you want money.  We recently did a New New in Venture event, and I asked the question of many top VCs, including David Sacks, Keith Rabois, Aileen Lee, and more.  Most say the same — just send us the pitch when you are ready.  We move quickly.

“Just Give the VP of Sales More Time”.  This is always terrible advice.  If a VP of Sales can’t improve things in one sales cycle or less, or at least just a smidge longer — they never will.  And you are better off without them.  This doesn’t mean the improvement has to be magical.  But it does have to be there, quantitatively.  In one sales cycle, or less.  It’s your fault for making the wrong hire, but more time won’t fix it.

“We Can’t Afford It”.  Bear with me here.  If something is accretive — you can afford it.  As CEO, you need to find a way.  That’s your job.  If a great VP of Marketing can double your inbound leads — of course you can afford her salary.  If an outbound sales team really can generate more revenue than it costs … if an event can generate more customer revenue than it costs to put on … if an engineer can build more features, that close more customer revenue than her salary … etc. etc.  You can’t afford stuff that doesn’t make you money until you are relatively big.  But after just $1m-$2m in ARR, you can afford everything that makes you money.  Find a way.

This edition of the SaaStr Daily is sponsored in part by LARK

Lark is a collaboration tool designed to improve team productivity. Get chat, email, video conferencing, calendar, and docs together in one place.

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