So the best sales reps are just so, so worth it.

They don’t just close 2x the average, sometimes they even close 5x-9x the average rep. And they often do it more efficiently.  The best ones really do make your life easier.

But the best ones often break a few rules, too.

I‘ve recently asked a bunch of sales leaders about this and their teams, and at first they said everyone followed the rules.  But then I pushed a bit more, and they admitted many of their best broke some rules, Maverick-style, in pursuit of being #1.

A few examples:

• Hacking the CPQ system.  A “funny” one, a VP of Sales told me how one of his top reps got around the CPQ system via a software hack to provide slightly higher discounts.
• Churn-and-Burn Deals.  This one is a tougher one, maybe the biggest ones.  Founders often don’t want to close deals they can’t deliver on, and support and success never do.  But if a sales exec can make a quick, big commission — they’ll often close it.
• Side Deals.  These are tough — promises in email outside of the formal contract.
• Exploding Offers That Don’t Really Explode.  This may sound minor, but reps can take it too far.  See the next point.
• Threats.  While this may sound like something the best reps don’t do, in fact threats are part of many reps’ toolkit.  Sign today or we just won’t sell you the product.

It varies based on the situation.

If it was a small round done with SAFEs or promissory notes, the price usually adjusts to a 20% or so discount to the next round, if there is one. So the issue is solved there, in a sense.

If it was a bigger round, but you can still close a “round extension” at the last round price, in the end, everyone will OK with it. They may complain a bit, but in the end, everyone is OK with round extensions at the same price, even years later.

If the company is later sold at a lower price than the last round, you may have to adjust the last round price. They may not agree to the acquisition otherwise.

In the end, what matters most is the “3x Rule” — that you sell for at least 3x the price of the last round.  If you do in the end, it works out.

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

We think globally from day one and understand how to partner internationally, scale at speed, and deliver localized solutions to meet the needs of markets worldwide. There’s a reason why our companies are trusted by some of the biggest brands in the world.

So almost every Cloud infrastructure leader has done pretty well at least during these “macro impacted” times.  They’ve seen some impacts, but not as many as others in many cases.  Everyone has spent the past year managing their budgets more carefully, but the awesome force of simply running more workflows in the Cloud has still pulled growth forward.

HashiCorp is one example to look at. They’ve had some macro headwinds no doubt. But, growth it still 26% at almost $600,000,000 in ARR. Strong, although down significantly from 51% growth at $400m in ARR.

Also, importantly, for them Q1’23 seemed to be their low point of macro impacts.  We’ve seen this also with MongoDB, ZoomInfo, Zoom, and many — though not all — Cloud and SaaS leaders.  Things may not be easy going forward.  But we do seem to be past the lows.

1. Make sure you have a strong Head of Customer Success … whose #1 goal is reducing churn. Too many early-stage VPs of Sales don’t have a strong “wing person” running customer success.  And importantly — resist the urge to have this Head of CS own upsells as their #1 KPI. That may seem to help short-term revenue, but it will lead to a de-focusing on driving down churn.
2. Go visit all your top customers in person, even once a quarter per top customer if you can. Far fewer customers churn if you visit them in person. We’ve been saying this on SaaStr for 10+ years (!), and yet I see fewer and fewer sales execs flying to meet customers.  Zooms are great, and try to do 5-10 Zooms a week with customers, too.  But they aren’t enough.
3. Read your team’s emails and listen to their calls. If you don’t, they’ll often say things that are just plain wrong. And lead to unnecessary churn. You might not want to do this, but you have to.
4. Put together a strong onboarding team. And drive up your activation rates and time-to-value. Try to get every single customer to fully be on-board within 30 days in general — or much faster for many apps. At least 90% at a base case onboarding in 30 days, ideally much faster if you sell to SMBs.  Klaviyo for example hits 90% activation in 30 days even with 100,000+ SMB customers and $600m in ARR.  If customers are slow to use you, they may never really use you. And they’ll be much more likely to churn.
5. Do pilots, if customers want them. Don’t resist them. Too many sales execs resist pilots, since they seemingly add risk to the deal, and often force you to resell the deal just a few months later as the pilot ends, in essence. But a pilot also aligns everyone to value and gets them on the same page. And it in essence roots churn out and identifies it early, during the pilot — when there’s still a chance to do something about it. Just remember to do Paid Pilots only. No one values a Free Pilot or Super Cheap Pilot, so no one puts in the work on the prospect / customer side.

So ever since I started in SaaS, I’ve been trying to answer a basic question: how quickly do the best take off and get to $10m ARR?

It took us about 5.5 years back in the day, but SaaS was much smaller then.  And I worried when I compared us to Dropbox, Yammer, Box and others that were our peers that got there faster.

Then I started investing and I came up with a basic ruie that the best startups needed to grow at least 8% a month once they crossed $1m ARR.

I realized many got there in all different amounts of times.  But once you hit $1m ARR, you sort of needed to grow at that rate to break-out.  Roll that over a few more stages and you get to “Triple Triple Double Double”, i.e. that the best SaaS companies triple at $1m ARR, triple the next year, and at least double each year after that. That puts you on a path to $100m+ ARR in 7-8 years or so.

Now ChartMogul has summarized all this in one very useful chart in their latest report summarizing the data from their 1000s of SaaS customers.

So I use SaaStr itself as a bit of a lab to keep my learnings on sales & marketing fresh.  We have 150+ sponsors and I continually learn from them.

One thing I’m a bit embarrassed to admit is we didn’t actually crunch the numbers to see what happens when we go visit our sponsors in person.

The answer? 

40% higher revenue per sponsor, and about 10% higher logo retention when we showed up in person.

So our weekly live Workshop Wednesdays have been a hit!!  We bring in a top, tactical SaaStr speaker live on Zoom for a deep dive on a core topic, then open it up for some great AMA!   Almost 4,000 folks have signed up so far!

Upcoming ones:

• September 13th: Stephanie Opdam, Principal @ Notion Capital
• September 20th: Kristina Shen, General Partner @ A16z 
• September 27th: Patrick Moran, Former CMO and CRO @ Calendly and Rafael Alenda, Former Vice President, Product Marketing @ Salesforce
• October 4th: Andreas Helbig, Partner @ Atomico and Laura Connell, Partner @ Atomic
• Oct 11th: AMA with Jason Lemkin
• Oct 18: Lavanya Shukla, VP of Growth @ Weights & Biases
• October 25th: Sterling Snow, Former CRO @ Divvy

• SaaStr 685: Why Investors Love SaaS with SaaStr CEO Jason Lemkin and QED Partner Amias Gerety on Fintech Beat         

• SaaStr 684: A Deep Dive Into G2, The Power Of AI, Going Multi-Product, And The 2023 Ecosystem                        

• SaaStr 683: How To Live Your Values While Building A Unicorn with Notion, Motive, and Incredible Health          

Listen on Apple Podcast, Google Podcasts or Spotify

Having a truly great cofounder is rarer than anyone realizes

You can just go so far, for so long

And no one can really stop you

Remember to tell them a couple of times this year. Maybe even today.

So I’m seeing a quiet return of “solopreneurs” and consultants …

to real, full-time roles

It’s hard to make real money selling courses. How many do we need?

It’s hard to make real money being a highish-priced consultant to startups. They really only need so many.

The gigs dry up, unless you truly have a strong, current brand.

“Passive income” sounds wonderful … until you end up with not enough of it and too much energy managing those rental units.

Work-life balance is critical.

But maybe, sometimes, for some of us, the only way to achieve is it to do great things at work.

There are only so many shortcuts in life

Maybe the only real cheat code is just to do great things with

other folks on a great journey.

The best bosses push you harder than you want to be pushed

Not always, but at key times

The best in turn rise to the challenge If that's not you, whatever you do ... don't report directly to the CEO

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