VCs are checking out on struggling investments in droves now — but not all of them.  Overall though, it seems to be at record levels.  It may or may not be right.  But it is natural.  If a VC made 20 investments in the Peak of 2021, and 17 of them were overfunded startups without a plan today — it just makes sense to spend less time there.

As a top VC said to me recently, “I wish in my whole career I’d just make 2 of my investments, the two worth $10B+ today.  I wish I’d make none of the rest of them.”  In essence, a waste of a huge amount of time, energy and money on the rest.  Tough to hear, but also — that’s VC math.

If growth has slowed and your VCs don’t seem to be responsive anymore, don’t care about board meetings, etc. — maybe that’s what you want.  Maybe for prefer to just be left alone. If so, no problem.

But if you want your VCs more engaged, maybe for help, maybe for another check down the road — it’s not that hard.

When startups struggle, VCs get it. They are looking for founders (1) that are still truly giving it 110% and (2) that have a genuine plan to get back to real growth.

So this past quarter was a big one for Salesforce.  For the first time ever, it projected next year, growth would fall to the single digits, to as low as 7%.  The markets reacted strongly, driving down the stock as much as 20%.

Salesforce is a more profitable, leaner entity than it was a few years back. It’s reacted to activist shareholder pressure, and changes in the market.

But while efficiency matters today, so does a certain amount of growth.  Salesforce’s $50 billion dollar drop in market cap shows growth is still at least twice as important as efficiency.

This edition of the SaaStr Weekly is sponsored in part by QA Wolf

Testing LLMs is not simple. The probabilistic output makes failures hard to identify while running the models repeatedly tends to become very expensive quickly.

In this blog post, QA Wolf engineer John Gluck covers 6 things the team learned about building automated black-box regression tests for genAI applications.

So there are few things more frustrating than when hit “Contact Me” — which after all, is a high-intent signal — and no one gets back to you that day.  Or the next. Or just as bad, a few days later, a BDR or SDR gets back to you — but not to help, but to qualify you.

So frustrating.

Later, when you have RevOps and SalesOps and a proven VP of Sales, they’ll own this. At least hopefully.

So David Obrand, CEO of Salesloft, had a great post the other day on consistency being one of the biggest challenges with enterprise sales.

In SMB sales, you see the variance in performance among reps really fast, and you can take action fast. That’s the nature of a very short sales cycle.

But in the enterprise, a “B Player” rep can take over a year to fully and clearly … be a B Player. You don’t have that time.

David points out one of the top super skills of a great VP of Sales: They Make the B Players Good Enough.

In theory, everyone should be a top tier player at your startup. The reality is in sales, it won’t be the case, especially as you scale from reps 3-300.   You’ll end up with an A Team and a B Team in sales. A group that exceeds quota and crushes it. And another that struggles to hit it, but comes close-ish.  That still puts points on the board.

The best VPs of Sales know this. They know they need their top performers.  But they also know they need a broader qualified, trained team to hit the plan. So they will hire a more diverse set of reps than you would at the founder-led stage.

Some … you won’t quite see it. You’ll tell them not to hire some of the reps your VP of Sales wants to hire. But they’ll tell you they can get Jim or Jane to work. They’ll tell you to trust them, it’s the right hire.

So I grew up in a sales world where there were basically two ways to distribute leads to the sales team:  round-robin, or territories. And even when you went to territories, leads were generally routed round-robin in that territory.

Four reps? Each got 1 out of 4 leads.

As time went on, I learned to modify this a bit. Some reps could handle more leads than others and maintain efficiency. Some would stop following up after 40-50 leads a month. And some would handle bigger deals better. So we went from Round Robin to … Modified Round Robin. Reps would roughly all get a similar amount of base leads, but 20%-30% of leads would be specifically routed at reps better at certain deals, or industries, or that could close more.

More and more though now I’ve worked with companies that are outbound-first. We were inbound-first. And they often have an “earn it” model for inbound leads.

In many outbound-first environments, when someone joins in sales, they have to go hunt and close a certain number of customers themselves. Then and only then do they earn a shot at some of the inbound leads. And then, the higher the close rate of those inbounds, the more they earn.

Gong’s CEO and Co-Founder Amit Bendov sat down with SaaStr Founder and CEO Jason Lemkin at SaaStr Europa 2024 to talk about all things AI and the lessons learned while scaling to billions.

Back in 2015, Google AI beat the world chess champion easily. AI was starting to diagnose diseases better than doctors. Amit asked himself, “How hard would it be to understand customers better than salespeople?”

That was the idea for Gong, an early vision of an autonomous customer management system that could capture customer conversations, understand them, and turn insights into action. Believe it or not, Gong struggled to raise money because people didn’t believe that AI would be big one day.

In this session, you’ll learn what Gong’s CEO thinks about:

• AI-enhanced sales in two years
• Where we’re too optimistic with AI in the near term
• What the AI budget actually looks like
• B2B last year vs. summer of 2024
• How to handle coopetition
• What to expect next year

• SaaStr 741: The Future of AI in Sales with Gong’s CEO and Co-Founder Amit Bendov

• SaaStr 740: The Top 10 GTM Mistakes I See Founders Making Today with SaaStr CEO and Founder Jason Lemkin

• SaaStr 739: The Three SaaS Metrics That Matter in 2024 and Will IPOs Be Back? with SaaStr Founder and CEO Jason Lemkin

Listen on Apple Podcast, Spotify or Google Podcasts

Quiet stress in venture, #243:

Seed funds target 10%+ ownership for checks of ~2% of fund size or less

Even a $60m seed fund would on average have to pay $12m post max Choices:

- Own less, pray for a decacorn (or two)

- Hunt deals no one else quite sees or gets

- Take high concentration risk (rare, few do this)

I'd say about 66% of founders step back from sales when they hire a VP of Sales

95% of the time, it backfires 

You don't get that time back. You just use it in different parts of the sales process.

Liquidity is thin in startups 

It's entirely possible for you to have had a $100m acquisition offer last year and 0 offers today

Or to close an oversubscribed round just a few months ago and have 0 VC interest today

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