Hey SaaStr Community,

It’s never remotely easy until you have a steady stream of leads and a decent 1.0 revenue team.

But here are some things that can help in the early days even before then:

• Always hire at least 2 reps to start. If you just hire 1, you won’t really know what is working, and not working, and why.
• Don’t expect a sales magician. You ideally need to close the first 10–20 customers yourself, and then hire sales folks to help. Don’t expect magic. Instead, just expect some leverage as you continue doing founder-led sales.  Stepping out of sales, or expecting some rep you just hired to magically take over sales from you, doesn’t work.
• Talk to as many customers as you can by Zoom / voice, and a bunch each month in person. Even if they are $5 a month. You will learn so much. For each customer of a certain type you close, there are another 10–1000 just like them out there. But if you don’t talk to them, you won’t see the pattern. At least, not as quickly.
• Begin drip marketing as soon as you have any sign-ups at all. You have to market to folks that don’t buy today. If they somehow found your tiny start-up no one has ever heard of, there is a decent chance they may buy later. 

This year has been tougher for almost everyone — hiring freezes, budget cuts, layoffs, and macroeconomic headwinds. 

For those in the business of getting customers for their companies, you might be expected to cut down on spend, yet you’re still expected to grow the company and find ways to sell. 

Datadog CMO Alex Rosemblat took the stage at SaaStr Annual 2023 to share how marketing teams can get more deals done with less budget. 

Was the operating mode of the past couple of years counterproductive or, at a minimum, less efficient for getting deals done?

X marks the spot.

Next year marks the 10th edition of SaaStr Annual and will feature 3 days, and 13,500 B2B/ SaaS Founders, Executives and Investors, coming together to share their learning in the heart of Silicon Valley. 

We’ll once again take over the 40+ acres of the San Mateo County Events Center for SaaStr Annual 2024 on September 10-12th and we'll bringing the best in SaaS with us. Use our exclusive newsletter code for a discount on early bird tickets.

So Domo is an interesting case study on SaaS entrepreneurship.  Founder Josh James had one of the earliest $1B+ exits in SaaS when Adobe bought his first start-up, Omniture, for $1.8 Billion way back in 2008. 

Omniture, now Adobe Analytics, is still big and it dominated web analytics, especially for bigger companies in the earlier days of the internet.

After a less-than-fun time being acquired, he came back and founded a next-generation enterprise analytics company, Domo.

It launched in a much more competitive environment but still grew quickly and IPO’d back in 2018.  After decades running SaaS companies, it was time for a break in 2022, and Josh eventually stepped down as CEO.

But then … things slowed down, to 5% a year at $360 million in ARR.

So in 2023, Josh came back as CEO again to return the company to growth.

So we’ve been talking about customer success at SaaStr longer than almost anyone else, going back to our very first posts in 2012, including on Second Order Revenue.

And we’ve used a lot of anecdotal data to suggest how much to spend on CS:

• $2m per CSM at scale
• $1m per CSM as you are scaling, if you can afford it
• Maybe even more in the early days if you have cash

And our SaaStr survey from a little ways back showed many startups are indeed leaning in here, and investing more.

But you can only spend so much of each $1, that’s the thing.  Especially in this new age of efficient growth.  At SaaStr we’ve been huge champions about investing early in CS.  But again, there’s only so much money.

So what’s the current, actual spend for CS?

Gainsight did a survey across all its top customers at its recent CXO conference and quantified it:

“At our CXO Conference 2 weeks ago, we shared that the customers in the room averaged 5.3% of fully-loaded CS cost as a percentage of ARR.”

So 5.3% is a number to back into, at scale.  And in fact, it’s even a bit less really than $2m per CSM.  Especially since it’s fully-loaded.

This edition of the SaaStr Weekly is sponsored in part by Secureframe

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Ok to some of you this will make no sense.  But now I’ve seen this happen again and again, including just the other day at one of my top portfolio companies.

The #1 or #2 rep in a start-up, that’s making lots of money, and has it all dialed in, and doesn’t want to be a VP or Director — still quits.  Often, for another job where realistically, they won’t make nearly as much money.  And often, where the working environment isn’t clearly any better.  And where they have to start all over again.

Why would a sales rep quit a job where they are making top 1%-5% money, respected, treated well, and have it dialed it?

It may not be 100% logical, but looking back, here’s where I see it happen:

• A new VP of Sales comes in.  Always a risky time.  The #1 rep will usually stick it out, but if they don’t feel they are treated well, they may leave.  Even if they are treated well — just not the same as before.  The best VPs of Sales know how to handle this.  But hire a mediocre VP of Sales?  You’ll often see the #1 rep leave for the hills pretty shortly thereafter.  A real risk.
• The VP of Sales leaves.  Also a risky time.  Often, the #1 rep is sheltered and protected by the VP of Sales.  Anxiety levels can go up if their VP leaves.
• Their comp goes down, or simply, looks harder to achieve.  A sales exec I know in their first true AE role was the #1 rep at a startup doing $20m ARR, and made almost $800k.  She quit to go a big public company as one of hundreds of reps, and start over.  I asked her why.  She said the next year just looked a lot harder.  But so it was for almost everyone.

The constant here? Change. We all think folks understand there is change in startups, and they do.  But often the #1 rep doesn’t want too much change.

AI is rapidly changing the way we work. It’s only been ten months since ChatGPT launched, and since then, we’ve seen a huge increase in AI applications being created and used globally. 

OpenAI’s Head of Sales, Aliisa Rosenthal, joined OpenAI a year and a half ago — before ChatGPT launched. She joined a team of two, and there was a lack of product-market fit beyond small groups of researchers. 

After the launch of ChatGPT, they went from 30 leads a week to 10,000. 

How did they get here? 

Aliisa took to the stage at SaaStr Annual to share how far AI has come since the launch of ChatGPT, how it can change the way we work for the better, and what the future holds. 

• SaaStr 694: Unlock Profitability and Growth - The Key Strategies with Expensify's COO Anu Muralidharan                         

• SaaStr 693: The Secrets to Scaling and Growth in an Unpredictable Market with monday.com’s Co-founder and Co-CEO, Eran Zimman, and SaaStr CEO and Founder, Jason Lemkin                                        

• SaaStr 692: How To Perfectly Pitch Your Seed Stage Startup With Y Combinator's Managing Director Michael Seibel 

             

Listen on Apple Podcast, Google Podcasts or Spotify

Multiples are down

Growth rounds are tough

Series A-C has slowed down

It'll get better, though, right?

It's just ZIRP and the Covid Hangover?

Maybe But what if we stay in a 6x ARR world ... forever?

It used to be you really couldn't raise a ton of VC money in

SaaS until you hit $10m ARR

That had one side benefit: it meant almost any good M&A offer at that stage would make the founders big $$$

Now, way too many SaaS founders raised too much before $10m ARR

They're trapped

Maybe it's just me but still feel like this is one of the

Top 10 Default Terrible UX Experiences That is Just Everywhere Still

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