The Latest from SaaStr: 5 Interesting Learnings from Blackbaud at $1B ARR

So on our 5 Interesting Learnings series we try to mix it up with a combination of how “hero” companies are doing, like Monday, HubSpot, GitLab, etc. … how some ones you are doing that you might know less well are doing, like Doximity, Bill (when we first profiled), … and then how some you may have even forgotten about are doing.

Like Blackbaud.  It’s a real oldie in educational and nonprofit software.  It was founded in 1981 (!) and IPO’d in 2004 (!), and transitioned into SaaS later and through acquisitions, and then into a broad platform for fundraising and educational management.  $100 Billion has been fundraised on its platform.

Fast forward to today, it’s at $1B in ARR, growing 14%, cash flow positive (24% non-GAAP EBITDA), and worth a so-so $3.4 Billion.

A story of a sloooow path to $1 Billion in revenues.

And of a segment of the economy that is more resistant to the macro effects many of us are experiencing — non-profits.

It turns out a well-crafted sales and well-designed comp plan does retain sales reps fairly well.

Why? Well, if the comp plan is well put together, then:

• If a sales rep leaves, they sort of have to start all over again earning their bonus, unless they get a draw. And even a draw isn’t perfect.  A standard AE comp plan is often 50/50 base/bonus.  If the AE is already making 100%+ of their OTE, or even more because they are a top AE (say 150% of their OTE) … they really have to almost start from scratch when they go somewhere new.  Especially if sales cycles are longer.
• Top sales reps should make a lot of money. Just the top ones. So if they leave, it’s too risky to try to earn that amount somewhere new.  Again, if you are making well above 100% OTE at a good startup, it’s just risky to think you’ll surely do that again at some next startup you barely know.
• Top sales reps tend to build up a strong pipeline of deals that will close over time. This destresses their life significantly as they have a lot of visibility into deals that will close — and personal and financial success. Top reps don’t want to leave that pipeline behind.  It’s just a lot of work to build it up again.  And it again introduces risk.

So what’s key here?

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

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

The challenges businesses face at each growth stage, from a $1M company through $100M and beyond, are quite different. 

Xero’s Global Chief Strategy Officer, Damien Tampling, takes a philosophical look at some aspects and nuances to consider wherever your business is on this journey. Over the last couple of years, Xero has doubled revenue and operating revenue, tripled annualized monthly recurring revenue, and quadrupled lifetime value. Let’s dive into some of Damien’s top learnings for building a global platform and ecosystem.

SVB failing was a stunning moment in the history of startups.  Stunning,m and I think, actually still underdiscussed.  As SVB’s situation appeared to be deteriorating, I thought based on ‘08-‘09 they might get acquired, or back stopped, or bailed out in some fashion.

I never thought on a Friday morning I’d see a tweet the bank had been shut.  A bank.  The bank.  The bank startups had used for decades.  Shut down, like the Great Depression.  Locked the doors, everyone sent home.

So … where did startups that took out their cash put it?

Kruze Consulting has some great data.  They act as trusted outsourced finance teams for 100s of startups, including some of my investments.

The winner by a large margin appears to be JP Morgan Chase.

Leverage this busy end of month and end of quarter to set yourself up for success in Q2 by investing in the world’s largest SaaS-focused event: SaaStr Europa 2023!

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The tough truth is from 0.5–1.5 sales cycles.  And yes this is true even in tougher times.  Probably even more so in tougher times.

• Sales is tough. It’s a lot of Nos to get to a Yes.
• And while sales is pretty similar in SaaS at a given price point / ACV, different products are still different to sell. A rep good at one product can fail at selling another.
• Training and support matter. Not all reps can work with the limited support, onboarding, and training you get at a start-up.

The best reps “get on the board” fairly quickly.  They may not immediately hit quota (few do).  But they find a way to close something relatively early.  At least, 1 or 2 deals. If you don’t see that in 0.5–1 sales cycles, it rarely works out. They lose their confidence. They haven’t been trained properly. They don’t have the right types of leads and prospects.

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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