We're getting down to the wire now -

there's just 45 days til SaaStr Annual 2023: September 6-8 at the San Mateo County Events Center in the heart of the Bay Area. 

Each year, the SaaStr community comes together for 3 epic days of content, networking, mentorship, epic evening events, and meetings with like-minded individuals at our yearly Annual event.

SaaStr Annual is unlike any other B2B/ SaaS event you've ever been to. Our attendees are the top revenue leaders and Founders in SaaS, and our speakers from leading SaaS companies are all there to help you scale faster. See for yourself. 

Grab your ticket here with a 20% discount before prices go up August 1st. 

Hey SaaStr Community,

Here’s the fundamental flaw in SaaS sales, that as founders and executives you need to try to address:  SaaS sales is seen as way, way too transactional.

SaaS sales reps see everything as a “deal”. 

It’s not to customers.  It’s much more than the money and the contract.  It’s about putting in a ton of time and effort to change the way they do business, so that they can do business materially better.

So to help, here few objections reps think they can overcome … that they can’t:

We literally do not need this product now. There’s the classic rule that only about 10% of prospects are truly in-market at any given time, and that’s about right in my experience.  Too many reps do too many lame cadences and break things.  Sometimes, checking back in next quarter or later really is the best way to go.

I’m already stuck in another long-term contract. This can be overcome with a buy-out deal, but many don’t do them. They should.  

I don’t have time right now. Too many reps try to force it, when really, the prospect may have more time next month or quarter.  It’s not just about the deal to the customer.  It’s about all the time and soft costs and training it will take to deploy your app, too.

It’s not a priority anymore. The reality is most enterprises can only bring in a few new critical vendors a year per department or org. Priorities do change.

I need to start with a pilot. Oftentimes they just do. Trying to “overcome” this can lead to a lost deal.

You’re not secure enough. A lot of customers really do need SOC-2, HIPAA and other compliances. Just do them.

Here’s one way to think about it:

Give them shares worth 1.5x-2x the amount of cash their time is worth … vesting over the time they deliver the help.

Why 1.5x?

Well, any valuation for a start-up is a bit artificial in the early days. And the shares are also illiquid, maybe for a very very long time. So 1.5x seems fair in the early days.

So let’s do some rough math:

• Assume you ask a well-established CRO to be “Chief Sales Advisor”
• She makes $500k OTE today. That’s $250 an hour or so.
• You want her to help 4 hours a month, for 24 months.
• 24 x 4 x 250 = $24,000 in equity.
• Now multiply by 1.5-2x, and convert to shares.

This edition of the SaaStr Weekly is sponsored in part by New Zealand Trade & Enterprise 

New Zealand technology is made for the world. From sustainable space travel to AI-driven agritech, we deliver innovative technology on a global scale.

So Datadog is just the SaaS and Cloud leader that just … has never stopped. 

It’s now at about $2 Billion in ARR, still growing a stunning 33%, with a $36 Billion market cap.

And it’s gotten pretty darn efficient, with strong cash-flows and operating margins.  And it’s growing new customers as fast as it’s growing revenue. 

It just doesn’t get much better than that.

#1, Just 25,500 Customers.  At lot of you use Datadog, but really it’s pretty darn enterprise. They have 300+ $1m a year customers and 2,910 $100k+ customers.  In fact, they have only 25,000 customers at $2B in ARR.  Fairly amazing for a product that starts with Free. 

Datadog’s customer base is very, very top-heavy by revenue.  And that seems to work just fine for them.

What’s FUD, if you haven’t heard the term before? Fear, Uncertainty, and Doubt.  Winning a deal vs. a competitor by getting the prospect to worry about the competitor.  Often by stretching the truth a bit, or even a lot.

I remember back in the day DocuSign got really aggressive on this in competing with us.  The had a ton of FUD, and a playbook they’d hand out to all the sales reps.  Of top things to say to prospects to scare them away from using Adobe Sign / EchoSign.  Top of the list was saying our product was “illegal”.

Now this was 99.9% wrong, but rooted in a hint of something that made a hint of sense, as some of the best FUD is.  What was actually true is that there are certain disclosures in e-signatures required in certain scenarios, and we allowed more flexibility in the disclosures if the customer wanted based on which scenario they were using.  In some cases, we put the disclosures in the Terms of Use (not all, just some cases).  We had top law firms review this, and all agreed it was OK.  But we allowed the customer to choose in some cases how to opt-in to these disclosures.  DocuSign claimed this made us “illegal”.

Not true. But it did both create enough FUD to confuse prospects, and required us in some cases to do some explaining.  And the mere act of explaining can cause a prospect to doubt a vendor.

Really, do all the “security stuff”, but especially just do the SOC-2.  Just embrace it early.

Why? 

First, you’ll have to do it to close even slightly larger buyers.

Second, you’ll be scrambling later to do it once you are forced to by a bigger customers.

This latest data from G2 was helpful:

86% of buyers require a security assessment prior to purchase, BUT

only 24% involve a security stakeholder during research

So doing that SOC-2 and more early can let you check the box and avoid having a “security stakeholder” involved.

2023 has been a difficult year for many tech companies. Markets have been all over the place, layoffs occurred, and investors weren’t funding as much as usual.

However, Sam Blond, Partner at Founders Fund & Host of the SaaStr CRO Confidential Podcast, believes there are reasons to be optimistic for the rest of 2023.

In a special workshop, Sam shares advice on how to spot bottlenecks, reallocate the right resources, and grow revenue in 2023. 

• SaaStr 677: MongoDB at $1.5 BILLION in Revenue: An Epic Growth Story with SaaStr CEO Jason Lemkin
  

• SaaStr 676: CRO Confidential: How to Grow Revenue Faster in the Second Half of 2023. Hosted by Sam Blond, Partner at Founders Fund

• SaaStr 675: Why You're Unfundable in 2023: The Cold, Hard Truths About SaaS Part 2 with SaaStr CEO Jason Lemkin

Listen on Apple Podcast, Google Podcasts or Spotify

I know it's been said before

I know it's almost trite

But if you have the runway ... now is the time to play offense

Just cruise past your nervous competitors that are still in work-out mode

Never met a sales rep that didn't feel underpaid

It's just the way

For a long while, you probably aren't a great CEO

But you know the customers

The software

The feature gaps

The roadmap

The competition

How to sell it

How to market it

How to build it

So maybe as flawed as you are

You are still the best CEO

© SaaStr 2023

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