The simplest way is to get sales and marketing to work together is to (x) align marketing’s #1 goal to a revenue-related “commit” that (y) sales agrees to.
That marketing commits to, and reports every week to, as their #1 goal. Not PR as #1, or social media impressions as #1, or webinar participants as #1. But a lead / opportunity / revenue commitment as Goal #1 for marketing.
What should this goal be?
Sometimes, marketing simply signs up for the ARR goal for the year (i.e., to hit $5m ARR this year). The pro here is that’s the same thing sales is signing up for. The con is that it’s hard to tell how much of the effort is due to marketing. My recommendation is not to do this. It leads to way too much “best efforts” talk and actions.
At the other end of the continuum, sometimes marketing signs up just for a “raw” lead commitment. To deliver X leads per month to sales, so sales can hit its revenue and bookings number. This is simple to measure and the most traditional metric for marketing in SaaS.
The con here is potentially around lead quality. If everyone doesn’t agree on lead quality, and how to measure it, and how to maintain it, then a lead commit will lead to plenty of disagreements on if the leads are “any good”, and just as importantly, if they are declining in quality. Sales almost always complains the leads are getting “worse”.
More importantly, perhaps, if marketing is just measured on raw leads, they won’t nurture the leads as much. If you have deals of even $3k-$5k a year or bigger, they’ll need to be nurtured for weeks, months, or even years before they close. If marketing is only responsible for raw leads, they won’t be as incented to nurture them once they are measured and captured.
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Back at the first SaaStr Annual, in February 2015, we kicked off the day with Aaron Levie from Box — who had just IPO’d a week or so before. And we ended the day with an incredible combo of the hottest app at that time (and one of the hottest ever), Slack, who likely was around $30m ARR or so … and hadn’t yet added a sales team!
And David Sacks was kind enough to join us and compare and contrast the Yammer experience to Slack.
Fast forward to today, and Slack is coming up on $2 Billion in ARR, with the majority of its revenue being bigger enterprise deals … with a sales driven motion. From PLG innovator at $30m ARR to a top SLG+PLG leader at $1B in ARR.
But here’s a chance to look back at how Slack really was as it began to explode at tens of millions in ARR, but before it had added a single sales rep. We were lucky enough to do an incredible compare-and-contrast session with David Sacks of Craft Ventures, coming off founding Yammer, and with Stewart Butterfield, just as Slack was exploding. Magic.
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So both of SaaStr’s mega events are coming up. First up, the 4th SaaStr Europa is finally coming to London on 6-7 June. 4,000+ of us will get together there to share, scale and learn.
Next up is the 9th SaaStr Annual in the SF Bay Area, Sep 6-8, once again in sunny San Mateo on our 40 acre campus right between Palo Alto and San Francisco. 11,000-12,000 of us will gather there this year. 11 stages, 1000 mentoring sessions and braindates, 800+ VCs.
Which should you join, if you are picking one?
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This edition of the SaaStr Daily is sponsored in part by Infinicept
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Learn how to bring payments in-house without taking on extra costs and risks and create a better payment experience.
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So there’s a strategy exercise I like to go through with startups I’ve invested in that are past $20m-$30m ARR or so:
Who would you buy with 10% of your market cap?
I.e., who would you give 10% of your company away to buy?
It turns out this is an important threshold. The SEC generally defines this as “material”. It’s also enough of your company that everyone will suffer a lot of dilution, and enough that you can’t do more than a handful of these deals ever.
Versus later, when you are bigger, you can do a ton of tiny acquisitions. If you are worth $10 Billion and buy a small startup for, say $50m, really, you’ll never notice the dilution or, in some cases, even the cash spent.
But I like this exercise because it focuses founders that are starting to achieve scale on maybe just one out-of-the-box idea for combining with someone to do something even bigger and better.
And now is a good time to think about this.
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There are times as a founder when, if you are venture-backed, you’ll look at your VCs and just see … them working less hard, for a lot more money. And yet taking up a ton of space on the cap table.
It won’t quite seem fair at times, and it will often seem somehow almost better. Easier. (Maybe.)
A few things to learn before you get jealous of your VCs:
Venture Capital is a tiny industry. Tiny. It’s a tiny asset class, and most VC firms have just a handful of partners and a handful of additional investors.
There are very limited promotion paths in venture. Yes, the largest and top firms promote a handful of folks to partner. But it’s just a handful of slots per year, really. Few firms really have a traditional partnership promotion path. Small partnerships just don’t need to add … too many new partners.
It’s a sales and finance job. And you are just a number. Yes, VCs are much closer to founders than public market investors. But in the end, you are just a number — your returns. And to get strong returns, you have to hunt, find, and close top deals.
Only the very best startups matter — in venture. It’s a bit of a sad thing, but in all but the smallest funds, only unicorn+ ($1B+ valuation) investments move the needle. There’s almost no point in investing in any startup that can’t be worth $1B+, at least potentially. Yet, so many amazing startups just won’t quite fit this narrow niche.
It can take 15+ years or more to get real profits from your investments. VCs don’t take profits until they pay back their own investors first. Add to that the fact you may not share in any of the profits when you start in venture … well, it can be 15+ years until you really make any profits personally from your investments.
It’s fiercely competitive. The best startups generally have far, far more investor interest than shares available. Why will you win? Do you know?
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Now, when raising the next round in venture is so much harder than it was during the Crazy Times of late ’20-early ’22, an important but subtle issue is coming up for a lot of start-ups.
The subtle issue is this: A Weak Investor Syndicate.
What does this mean?
A Weak Investor or Syndicate, or group of investors:
- Is all tapped out and has little to no more money to invest in the company. This can happen even with great funds and investors.
- Is unable or doesn’t want to do its pro-rata.
- Has a big fund as a very large investor that doesn’t really want to invest anymore, or isn’t really involved; This is especially an issue if you took a pre-seed or seed round from a billion+ fund. They often don’t really care that much about their seed investments. AND/OR
- Can’t bring you good leads for the next round. This can happen even if the current investors have fancy fund names.
Note something important. This can happen even if you have the best VC brands in your start-up. And conversely, sometimes no-name funds can make a strong syndicate. Social signals can be confusing here.
First, as CEOs and founders — you need to know this. Because if you have a weak syndicate raising the next round likely will be harder.
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This edition of the SaaStr Daily is sponsored in part by SAP
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Your business can thrive with agile and innovative solutions to help automate business processes to scale your business. SAP Cloud ERP is at the core of making these capabilities come to life and helping your business grow.
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I went through a rapid but clear progression of roles:
- Start-up attorney, meet 20+ CEOs, attend dozens of board meetings. Watch and listen and observe.
- Director at Start-Up, report to CEO.
- Then add direct reports, manage a department.
- Get acquired for $1b, IPO. Watch and learn.
- VP at Start-Up, report to different CEO.
- Raise $35m for that CEO/company.
- Get up nerve to be a founder.
- Founder & Chief Business Officer at Start-Up.
- Founder & CEO at Start-Up.
I got to work with all different sort of CEOs, watch them, then report to several, then be a manager, then a VP, then a founder, then a CEO.
That was about as good as I was. I needed to go through each step.
Others can skip them. The key is recruiting an amazing team, and starting to learn early.
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Up Next: Wednesday, April 19th @ 10AM
Topic: Secrets to Scale a Company in Hypergrowth Mode with Celonis
Speakers: Shelli Vivona, SVP Global Business Development and Customer Engagement at Celonis and Chris Donato, President Global Sales @ Celonis
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.
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