So 2023 was a strange year, with many of the biggest, public Cloud and SaaS leaders on a tear, from Microsoft to Cloudflare to Palantir — but at the same time, so many startups and especially those in traditional B2B struggled to grow.
The best of the best pulled away in many cases, but so many apps were also cut when they weren’t viewed, for now at least, as mission-critical. For now at least.
So what’s the overall vibe check? We did a survey with 2,000+ respondents.
The learnings? For some, sales is easier these days, at least a bit. But for just about the exact same number of folks, it’s harder. And the biggest category said things were … about the same.
|
|
|
Building off the popularity of our AI Day at last September’s SaaStr Annual, we’re bringing it back online this March on Wednesday, March 27th for a completely live, digital event that will bring the global SaaStr community together with the brightest innovators in Artificial Intelligence for a day of digital content. (And don’t worry we’ll be bringing it back to the Annual this September too.)
SaaStr AI Day will be a completely immersive, live digital event for Founders and Revenue Leaders to explore the intersection of where SaaS Meets AI and the intersection of the two. We’ll bring the global SaaStr community together with the brightest innovators in SaaS for the inaugural AI Day. Based on the popularity of AI Day at SaaStr Annual, we’re hosting a full AI Day as a digital event at the end of March 2024.
AI Day is back! Geared towards Founders, Revenue leaders, SaaS executives and Investors alike, SaaStr AI Day will showcase New Features from leading SaaS companies, highlighting their AI integrations and advancements, sharing What’s New in AI via in-depth interviews with some of the top CEOs in SaaS, and of course – bringing actionable insights and expert speakers in to round out AI Day in March 2024.
As SaaStr’s AI Day is free to attend, sign up here!
|
|
|
This edition of the SaaStr Daily is sponsored in part by Adyen
|
Welcome to the new era of platform potential –
See how platforms are revolutionizing SMB banking. Insights into the products with strongest SMB demand, quickest path to market, and revenue uplift potential of up to 70%.
We conducted global research with over 50 leading platforms and marketplaces and over 2,000 SMB users to evaluate the potential of embedded finance for platforms.
|
Want to partner with SaaStr? Click here to Sponsor our events, podcasts, newsletters and more.
|
|
|
So this is a simple post, in many ways, but I think an important one for leaders.
These days, it seems like even more folks are quitting, not working out, etc. etc. We all saw the Cloudflare sales rep on social media not work out. And there were so many comments, thoughts, and more.
It reminded me of a golden rule it took me years and years to figure out:
If a new hire doesn’t work out, it’s always 100% your fault
What do I mean? Well, as frustrating as it can be when a new VP, a new Director, a new IC doesn’t work out … it was your fault.
It was your fault not slowing it down and not doing enough diligence to make sure it was truly a fit:
- Did you really do reference checks? Did you do good ones?
- Were you really sure they could do the job? Or did you more love their LinkedIn and experience?
- Did the hire really meet the bar? Or did you sort of get tired and settle, even just a bit?
- Did you test the hire for real before they started? Did you make them do a real 60-day plan? Did you make the SDR, AE or CSM do a real demo? Did you really make them sell you this pen?
- Did you truly believe they’d crush it?
First, most of us skip some of the key, classic steps above these days. I bet you did if a hire didn’t work out.
And second, even more importantly, no candidate has enough time to do enough diligence. They almost never can truly know what it takes to succeed at your org. But you know. That’s your job. You’ve been working there since Day 0 as founders, or at least, for a while as an exec.
|
|
|
There’s a fun — and very lucrative and rewarding — exercise I like to go through with most of the startups I work with.
It’s goes like this:
- First, who’s your largest customer? OK.
- Now, do you have a prospect in the pipeline that’s somewhat similar?
- You do? Great. Now …
- On that deal … go quote twice your highest price ever. Go try to do that.
This is a terrific exercise to drive your deal size up.
It does >not< mean rip off your customer.
|
|
|
You can back into it.
Ultimately, in most SaaS startups, the sales reps will take home about 20% of the total deal value they close. Maybe 25% if SMB sales and/or a startup is very well funded. At scale, this will come down, ultimately to about 10% of deal value as bonus.
At scale, the ultimate state of almost all sales is a 10+10 plan. Sales reps take home about 10% of what they close as bonus, and another 10% or so as base. One way or another.
In the early days, especially if the company is venture-backed, it might be more, as much as 30% or even a smidge higher with accelerators, etc. VC dollars are there to accelerate growth, and if paying a bit more to the sales reps helps there, that can often be worth it.
The numbers are often a smidge higher with SMB sales too. In many cases, reps just can’t close quite as much revenue with SMBs, and if the reps are in higher expense locations, that can force you to pay more than 20%. (Even for SMBs, you still eventually need to approach 20%. That often means moving sales to a lower-cost center).
|
|
|
This edition of the SaaStr Daily is sponsored in part by ChurnZero
|
In the Forrester Wave™ Customer Success Platforms, Q4 2023 Report, Forrester recommends that CS platform buyers look for providers that:
- Prioritize digital-led strategies for success at scale.
- Leverage AI and machine learning to harness predictive analysis and optimize resources.
- Include rich reporting and integrations out of the box.
“CS teams need to find alternatives to high-touch models and manual processes and invest in digital-led programs designed to meet customers where they are,” writes Shari Srebnick, principal analyst, Forrester.
|
Want to partner with SaaStr? Click here to Sponsor our events, podcasts, newsletters and more.
|
|
|
Most likely:
- trying to buy 15-20%+ of a company,
- that is reasonably capital-efficient,
- and has at least product-market fit and some early traction,
- that hasn’t done endless seed rounds before the Series A,
- at a post-money valuation of < $30m-$40m
The “traditional” or “old-school” venture business of Series A investments was built on $3-$5m checks that bought material ownership. Today, call it $6m-$8m with inflation.
This traditional model also rolled up nicely into early-stage VC partners each investing $50m or so over the life of a single fund (e.g., 3 partners x $50m each = $150m fund), because each partner could do 10+ deals, save room for later rounds, and have material ownership in each deal.
The endless seed, YC, AngelList, the explosion of non-professional angels, ramen efficiency, the dramatic increase in valuations, and so many other newer factors have lessened the number of “old-school” Series A deals. 1,000 unicorns make almost every investment style look like it worked.
But to some extent now, they’re back in fashion.
|
|
|
For hot seed and even Series A investments? 20 minutes into the first face-to-face meeting.
The average VC basically makes the initial decision to tentatively invest very quickly — pending due diligence, confirming her theories are correct, and making sure what they think is the case actually is.
Now, sometimes that 20 Minute Moment is delayed. It might be you meet a founder, you believe in her, but it’s too early for you. But then you meet 90 days later, she has another 10 customers, she’s made progress … and that 20 Minute Moment Happens.
And the later stage the investment, the more “homework” they want and need to do on a deal after than 20 minute test. But even there, they generally know 20 minutes into the first meeting.
Once you’ve made a few good investments, you know you are looking for the subtle difference between Great and Very Good.
When you see it — you jump.
Right off your chair, almost.
And the Very Goods … they are interesting. Tempting. But in the end, for most VCs … they fail the 20 Minute Test. And all those discussions lead nowhere.
|
|
|
Up Next: Wednesday, February 28th @ 10AM
Topic:Pricing and Packaging for AI Products with Unusual Ventures
Speakers: Sandhya Hegde, General Partner at Unusual Ventures
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.
|
|
|
© SaaStr 2024
644 Emerson St. Suite 200, Palo Alto, CA, 94301
If you'd like to stop receiving the SaaStr Daily, click here
|
|
|
|
