The Beginning of The End of Customer Success, SDRs, and Support Agents

So it does seem like some of the biggest changes to the human side of SaaS are now coming.

I’ve talked with three CEOs at leading vendors in sales and post-sales at $200m+ in ARR the past few weeks and they’ve all reinforced these are some of the biggest changes in a generation.

What we’ve seen in the first 15 years of SaaS:

• Specialization in sales.  Segment reps, and have closers close.
• The rise of the SDR and productizing outbound and qualifying inbound with humans.  Outbound is nothing new, but the formal role of the SDR exploded the past decade.
• The rise of customer success as a new, empowered function.  Everyone has fully staffed CS over the past decade.  We’ve all become NRR, GRR, and CSAT experts, and CS owned it all.
• Human support remained imporant, at least for paying customers.  Sometimes begrudgingly, but everyone has some level of human support, especially for larger customers.  In fact, leaders from Intercom to Front to Gorgias to Zendesk exploded as this function, while not remotely new, became standardized.

The reality is this is all now changing, for the first time. AI isn’t the only reason, the real drive is efficiency. But it is the accelerant.

So one thing that’s changed radically in SaaS over the past few years is everyone has realized to truly scale, you need to be multi-product.  Sometimes by as early as $20m ARR, sometimes by as late as $200m ARR, or later.

Net net, the average public SaaS company has 35,000 customers.  So once you cross 3,500, let alone 10,000 — you’re starting to saturate most B2B markets.  You’re hitting 10%-20% market share or more, especially of your core customer base, and growth almost always slows at that point in SaaS.

Now you can keep revenue growing even with slower new customer growth by driving up deal sizes, adding enterprise editions, going global, raising prices, and more.  That works time and time again.

But at some point, you can’t just raise prices and add enterprise editions to keep mixing it up and growing.  At some point, you have to sell your customers a true second product to truly scale big.

Don’t do it. If you only see a 5% chance of succeeding, don’t do it.

With both my start-ups (maybe three, if you count SaaStr and SaaStr Fund) … I was 100% sure we’d succeed.

And I was 99% wrong once I got into it.

• The first one, we sold for $50m after 12.5 months. I closed $6m in revenue in the first 180 days. But we almost lost all our customers. I almost had to declare bankruptcy to cover the $750k note I put in. We lost our key outside hire, our COO, who we couldn’t do it without. Our odds went from 100% on the model to 1% in the real world.
• The second, the founding team imploded. Yes, we sold for a lot more this time. But we almost died the first year. And the second. The market evolved in a very different way than we thought. We spent all the venture money. We barely, barely got to $1m in ARR and $2m ARR. (After that, the issues faded).

What I do know, is if I’d had less than 100% conviction — we would have failed for sure.

Of course the odds of success in a start-up are low — by the numbers.

But if you think the odds are less than 100%, I say pass. The best founders both don’t believe that. And somehow, somewhat — they bend the odds in their favor.

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Just start with comps. With comparables.

Software is very expensive to build, but for the most part, costs almost nothing to ship. It might cost you $0.10 a month in hosting charges per user for an app that isn’t server or storage intensive.

So why is one app $5 a month and another $150 a month? 

The answer is value provided, yes (that’s why Salesforce and Workday can charge so much) … and also, comparables.

• If your app is about as valuable as Box, then price it like Box.
• If your app is about as valuable as Twilio, then price it like Twilio.
• etc., etc., etc.

At this point, every company has bought between 1 and 200 SaaS apps. You’re not the first. They are used to it, and used to certain organic price points.

Your prospects and customers are now veterans for the most part, and they “know” what an app should cost — based on the value they think it provides relative to other apps they pay for.

No, you do not.  This is a common misunderstanding.

It may even be a negative to be truly rich when you join a VC firm.First, you do have to invest a lot of your own money to be a true partner into the fund. But it’s OK. It’s not quite as big of a deal as it sounds.

When you join a VC firm as a partner, you do have to make a large “capital contribution” to the fund, likely millions of dollars in a large fund — spread out over 10+ years.

But, usually, one way or another, if it’s a well-established fund, you can fund that contribution via specialized loans, or from your salary (fees), or other ways. Your true out-of-pocket here often isn’t that big in established funds.

And often, the senior partners will cover your “capital commitment” in part for you (often, as part of keeping some of the gains in funds where they are no longer all that active).

No one is going to ask you to go broke to join an established, sizeable venture firm.

No one. Period.

Now in small funds, you can easily get an bit upside down in the short term — often this “capital contribution” can exceed your salary and fees, and you can go negative or close to it. My initial salary at SaaStr Fund was effectively $0 on a net basis, and my capital contribution was pretty large, relatively speaking.

But in large funds, you’ll take out more than you put in. It works itself out.

“My App Stack” is a new series where we dig in with top CMOs, CROs, CTOs and CEOs on just what apps they’re really using to run their business.  I always learn a lot from these — they are in essence a best practices list from each leader.  Last week we had a great one with Neeracha Taychakhoonavudh, Global Head of Customer Experience at Asana, check it out here.

This week we have Kyle Coleman, CMO at Clari!

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