Hey SaaStr Community,
So, so much has changed since the peak crazy days of 2021. For some, actually, like Palantir, Cloudflare and more — these are actually still the best of times. Other are deeply struggling.
One thing though that everyone learned was wrong from the Go Go Days is that there’s no such thing as Free Capital.
What seems free, when times are good?
- Raising a high-priced round, just to raise it
- Raising a lot of extra money on SAFEs
- Raising too much “non-dilutive” capital
Used right, these tools all can work well. We’ll get to that next. But what are the cons?
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What’s the difference between a VP of Marketing and a VP of Demand Gen?
Perhaps nothing. Perhaps. A lot of demand gen leaders want to be a “VP of Marketing” next, and that can be a great hire, and a great title to give them.
But in most cases, likely everything. Most VPs of Marketing cannot do demand gen. Most. They simply cannot.
A classic VP of Marketing will do 4-5 things (although of course, no one is great at all 5):
- Brand and Corporate Marketing. You need very little of this in the early days, but it’s much more important when you cross $50m ARR or so. Gets the color of the logo right. Does stuff for the brand. Manages press. Manages inbound (vs outbound) PR. Works with the analysts in the space (which is important, but gets more important over time). Big companies have a lot of these folks. So if you hire a VPM from a big company, this is the primary skill set you often get. Do you even need that today? A little yes. But not 40+ hours a week.
- Product Marketing. This is confusing. Ultimately, product marketing and demand gen have >>nothing<< to do with each other, but in big companies, product marketing is closely tied to brand and market positioning, so is part of “marketing”. It’s not always even clear this should be part of “marketing” in a start-up. A Director of Product Marketing often reports to your VP of Product and isn’t even directly part of the marketing team in many organizations.
- Field Marketing. Events, steak dinners, supporting a field sales team. This is a specialized and important skill set. But if you don’t do bigger deals, you won’t actually need a ton of this in the early days. Good field marketers do demand gen, in the sense that their events are responsible for a pipeline commitment out of the events. But they don’t know how to get you a ton of higher velocity, inbound leads.
- Demand Generation. This is something that many marketers have never done, believe it or not. This means two things. It means getting you leads. And it means managing the leads you do get through the funnel. But most importantly, what it really means is holding a true lead commit. 95%+ of “VPs of Marketing” have never held a lead commit.
- Growth Marketing. A cousin of Demand Generation, but often with little experience supporting a sales team, and much more experience support a self-serve or product-led motion. This can be good too, but bear in mind they often aren’t interested in supporting sales. And they’re often particularly good at digital marketing and other similar motions. Make sure that the most fruitful channel for you before you hire a Head of Growth instead of a Head of Demand Gen.
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This edition of the SaaStr Weekly is sponsored in part by Stripe
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Stripe Sessions brings together business leaders and builders to discuss the most important internet economy trends. In 2024, we’re focusing on what’s possible—and what’s inevitable—as technological advancements change the world and the global economy with it.
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Want to partner with SaaStr? Click here to Sponsor our events, podcasts, newsletters and more.
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I think the #1 thing to think about is context.
Software all sort of all, rough-and-tough, costs the same to build and ship. Why is Calendly $10 a month, when Salesforce is $200 a month per user? Why can Workday charge $20,000,000 a year for something that might be the same amount of work to build, ship, and serve as something that costs $20,000 a year?
It’s not just value. It’s not just how big a problem you are solving — although that’s a very large part of it. It’s not just competition and costs.
It’s the context. If your product is like Salesforce, but 5x more important, and that is clear to customers — then yes, you probably can charge 5x as much as Salesforce, or at least as much. Once you figure out how to really sell.
And context is also budgets. There are often rough fixed budgets for certain product categories. You can get more than this if you truly redefine a category. But otherwise — it’s tough.
Most first-time SaaS CEOs price too low and don’t drive ACVs up quickly enough because they don’t quite yet understand the context of the product.
And as your product gets better, and more valuable — and you get better at selling that value — redefine the context. At least annually.
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So Okta is one of our favorite SaaS and Cloud leaders.
The story is super inspiring. Founder CEO Todd McKinnon was VP of Engineering at Salesforce and left to start Okta in the depths of the last downturn. Salesforce and Marc Benioff at first said the core market, security identity, was too small of a market. Then, they brought out a competing product :). That mostly failed.
Today, Okta is at ~$2,500,000,000 in ARR!
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So years ago on SaaStr, I wrote a post on how everyone in your company should do customer support once a month. I learned this from Intuit, brought it back to my startup, and forced everyone to do it. Even engineering, which at first strongly resisted.
I still believe this is a best practice. It forces folks not just to listen to customers, often for the first time, but to actually go solve their problems!
Do it. But it can add some stress when team members have to answer chats and calls but can’t solve the problems. This is easier to implement if they sit next to (virtually or IRL) a customer support lead and really handle the questions together. Not hard to implement, but it does take a decent amount of organization as well as help from support.
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So recently I caught up with a great founder and a beloved product. They rocketed to $20m ARR, and then … growth radically slowed. To 15% a year.
From 100% growth at $10m ARR, to 15% at $20m ARR.
That’s rough. But rapidly slowing growth has happened to many the past 24 months. The tough part? The burn and the churn.
The burn was at a stunning $2m a month, and the churn had spiked. True NRR had probably fallen to 80% or so.
Look, this is tough. It’s sort of a death spiral:
High churn, but no burn = struggle, but the engine self-perpetuates to an extent.
High NRR, but high burn = tough, but your 140%+ NRR ultimately often pulls you through.
Those two are tough but founders find a way. What’s really hard to solve is The 3H’s: High Growth for a while — but High Churn. And High Burn.
VCs often enable these models. The bigger funds are wired to fund hyper growth and high burn together. Blitz scaling. But you have to make 1000% sure this playbook actually works for you.
The big D2C failures are prime examples. Selling meal boxes to customers that never come back and purchase again can look great at first, but these models can collapse with 5%+ churn a month. But the initial glow of hypergrowth blinds folks to the perils of high churn + high burn.
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With everything in AI moving so rapidly, what’s the best way to price Artificial Intelligence products or SaaS tools with custom AI features and integrations? Should it be subscriptions, usage, solutions, or something entirely different? While companies are scrambling to roll out these new tools, they also want reliability and predictability in the value they’re getting from your products, which can make pricing extremely difficult.
So we asked the expert, Sandhya Hegde, General Partner at Unusual Ventures to share her best practices and trends for pricing and packaging AI products. Sandhya has been in the startup ecosystem for about 15 years, with the last two years heavily focused on investing in AI-native startups, primarily on the application and Enterprise software side. Over the past year, people have started to recognize how challenging pricing and packaging are for AI products, as well as the competitive pressure. Why is pricing so tricky?
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The Official SaaStr Podcast |
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New Episodes of the SaaStr Podcast with Founders Fund, Gusto, and Sapphire!
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- SaaStr 728: How to Double Your Magic Number and Increase Your Go-to-Market Efficiency with Sapphire Ventures
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SaaStr 727: High-Velocity Techniques to Maximize Sales with Gusto’s CRO and Head of Go-to-Market
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SaaStr 726: How to Build Out Your SDR Function in 2024 with Sam Blond, Partner at Founders Fund
Listen on Apple Podcast, Spotify or Google Podcasts
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It's "funny", a lot of founders I've met IRL for a pitch over the years
I still have a real connection with
The ones over Zoom?
Nothing
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