Mistakes less successful (but not total failure) entrepreneurs make:

• They can’t control the burn rate. You can slow down time if you raise a bunch of VC money, but you can’t stop it.
• They hide from tougher metrics. High churn, lower-than-hoped margins, low NRR, low CSAT, high burn, etc. The best founders run toward the tougher metrics, and improve them. The rest sort of hide them, or hide from them, or ignore them.
• They settle on mediocre VP and other key hires. We all make hiring mistakes. But the best founders don’t settle when they hire a mediocre VP etc. The rest settle and move on.
• They settle for slower growth. Almost everyone has a tough phase. But the question is: do you fight your way out of it? Or do you sort of accept it?
• They let better-funded competition pass them by. Capital does not always = the winner in a category. Less successful founders use the fact their competitor has raised more as an excuse.
• They let themselves get burnt out. I do have empathy here, but the best founders recruit the help they need so they don’t get truly broken and burnt out.
• They don’t hire a truly great CTO and dev team. Sometimes, in SaaS, you can get decently far with a good-but-not-great engineering lead and team if the CEO can really sell. But it catches up with you. If that’s you, go fix it.

Do you really need quotas in sales?  

To some that have been raised with a quota, the answer may be of course “Yes”.  But to others, quotas seem almost dated, and a bit draconian.

Quota or not — won’t reps just close as much as they can — since they want to make their commissions?

Especially if the comp plan is a good one, won’t it just incent folks to close as much as possible? Who needs an icky “quota”?

I wasn’t sure for a while. In fact, back in the day at EchoSign / Adobe Sign, we had goals but not really traditional “quotas”.  Our goal was just close at least $30k a month, but it wasn’t a quota, and once we had an engine going, almost everyone blew past it.

I asked a seasoned account exec this question a little ways back, and his answer was, “Quotas don’t matter anymore.  I want to make as much as I can.  In fact, I spend every dollar I make.  Quotas won’t change that.”

But time has gone by and I’ve learned the reality is, you need both:

Commissions are the carrot

Quotas are yes, the stick

All carrot — you stop when you’re full. That may or may not be what the org needs out of sales.

So Zoom is just that crazy outlier in SaaS. Covid fueled it to insane growth like we’d never seen before, going from $1B ARR to $4B ARR … in one year. Yes, one year.

But it wasn’t a gift. As the world reopened, we didn’t need quite as much Zoom. And the enterprise business, while starting to taking off, couldn’t overcome the gravity from so many small customers that didn’t need quite as much Zoom as they did during lockdown.

Fast forward to today it’s a different, more enterprise Zoom. But one that is highly mature, growing 3% today, but with almost 40% operating margins.  And now at $4.6 Billion in ARR. Not so much bigger than after the Covid boom, that warped time for Zoom.

What a crazy story.

The quickest hack I did was answer all calls and chats immediately.

• I opened up a remote phone bank / set of agents just to answer trial users’ questions; and
• I made sure every chat that was in a trial was answered in real-time where practical. 

There are many product-level things you can do. Improve your messaging. Futz with the time period for the trial. Talk for hours about “personas”.

But the simplest thing I did that moved the needle, that I don’t see most folks do, is set up 10 agents quickly to answer the phone and chat for free users during trials and just talk to them and answer their questions.

Most SaaS companies steer away from phone support in general, and especially for lower-end and trial prospects/customers. They think it is too much work, and too expensive. At scale it can be expensive, no doubt.

But especially if you do it outside of the Bay Area, and especially in the earlier-days, in the early days it isn’t that expensive. Especially if you can segment out support issues (where you should still pick up the phone) from questions from prospects and trial users. You will only have just so many bona-fide trial users before say $5m-$10m in ARR, usually.

Not everyone wants to get on the phone, especially these days. So when a prospect does, that often means they want to buy. They have a couple key questions, often even just one. And talking to a real human being, especially to a vendor without a brand that is not that well known, often is all it takes.

Staff it up today with a new phone number and even an outsourced service to start, and see what happens.

This edition of the SaaStr Daily is sponsored in part by Sage

Join 2,000+ peer SaaS finance leaders, such as Jeff Epstein from Bessemer Venture Partners and The SaaS CFO, for this exclusive virtual event on June 5, 2024.

This full-day summit has three different tracks (CFO, Controller, and RevOps) to help you build the processes and teams within fast growth SaaS, AI, and high-tech companies needed to drive efficient growth.

Want to partner with SaaStr? Click here to Sponsor our events, podcasts, newsletters and more.

How do you build GTM efficiency in SMB sales? The CRO at Owner, Kyle Norton, shares his learnings and strategies for building better efficiency into your GTM motion at Workshop Wednesday, held every Wednesday at 10 a.m. PST.

While this title is SMB-oriented, the advice applies to Mid-Market and Enterprise, too. The three topics we’ll focus on are:

• The importance of staying focused and how to say no.
• Ways to scale that don’t include rampant inefficiency and burn.
• How to build operational excellence into your organization at different stages of the growth curve.

There are several key types. Let’s break them into several categories:

• Professional vs. non-professional. Professional angels generally have very specific criteria in terms of valuations, team make-up, check size, etc. You do need to ask and listen to what their sweet-spot is. Non-professional angels often shoot from the hip or fish with a wider net.
• Lead vs follow. This is critical. 90%+ of angels just want to “follow” someone that sets the terms, price — and does the due diligence and hard work. It’s so, so much easier to follow. But you at least need a strong lead to get the ball rolling.
• Valuation sensitive vs. less sensitive. Many traditional angels are very sensitive to price. You can see this on Shark Tank. They want to invest a fixed amount of capital, into a specific number of companies, and own a certain amount of each. But other types of angels may care a bit less about price. This can range from family members, to very rich individuals (price is immaterial to them), to corporates investing for other reasons. Listen and ask.
• Can — and can’t — afford to lose it. Ask — and find out. A professional investor typically won’t put more than 2% of their total investable capital in any one investment, at least not at first in the first check. And they will rarely invest more than 10%-20% of their total net worth in true angel deals. If someone is putting way too much of their life savings into an angel investment, maybe don’t take their money. Way too stressful for everyone. A true angel can lose 100% of any given investment and not care that much. They are hunting for that 1 out of 50 that gives them a 100x+ return. The others don’t need to.
• Net net there are so many different goals and different types of angels. You have to ask.

What are the three most under-discussed metrics on social media, with VCs, and especially with founders?

SaaStr founder and CEO Jason Lemkin shares his top three SaaS metrics that matter in 2024:

1. Net new customer count
2. Growth vs. efficiency
3. The bar to IPO

• SaaStr 737: How to Build Go-to-Market Efficiency in SMB Sales with Owner.com CRO Kyle Norton

• SaaStr 736: What I Learned Selling My Company for $130M with Harry Glaser Founder of Periscope Data and ModelBit

• SaaStr 735: How to Navigate the Shift to Generative AI with PagerDuty’s CEO Jennifer Tejada

Listen on Apple Podcast, Spotify or Google Podcasts

My top hiring tip in 2024:

Do not hire anyone where the first bullet on their last job experience starts with or includes the word "strategy"

A great sales rep does most of the work for the prospect:

Does the scheduling

Does the demos

Solves the problem

Helps sell other stakeholders

Follows up Simplifies deployment

Yes, this is a lot more work than sending a Calendly link the next day,

I do admit

Literally some of the worst senior-ish sales and marketers I have ever worked with are selling books or courses or both

You've been warned

© SaaStr 2024

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