Q: What is a strategy you have employed as a software company to keep sales up during COVID-19?
My favorite strategy looking across my portfolio of investments is not charging customer that right now are struggling.
We did a deep dive on how this turbocharged Gorgias’s growth here, and there are many other examples I’ve seen as well:
You want customers for life. If their revenue is way down now since Covid-19 hit, maybe just keep them. Even if they can’t pay as much, or even anything for a little while. You can monetize them again later, once their revenue is back up.
Mixmax as another example expanded their Free offering since Covid-19 hit … making it Free-er … and didn’t take any revenue hit:
It probably won’t even really cost you much in the short-term. And it likely will make you more in the medium and long term.
Haven’t seen this strategy fail yet.
And finally, while we aren’t all at Slack’s scale yet … you can see from our recent interview with Stewart Butterfield that their Free plan has been on fire. And it’s led to more revenue … not less.
During these Shelter+ times SaaStr is focusing more on our digital events and assets … out of our necessity. Our IRL events are in a holding patten, for obvious reasons.
During this time I’ve re-learned a lot of things.
Perhaps the #1 thing is people don’t get podcasts. Podcasts are your #1 ticket. #1 in speaking. #1 in marketing. #1 in reach.
We’ve recently expanded the SaaStr Podcast to 3x a week for now, and grown to 130,000+ downloads. And yet … and yet … it can be much harder to get guests to come on the podcast than fly across the country or the world to speak at SaaStr Annual.
Now they aren’t the same. The top speakers on stage at SaaStr Annual have their sessions pushed across our YouTube and other channels for years to come. And being live in front of 1000s is a connection you don’t get anywhere else. And the folks you meet in the Green Room, and backstage, are priceless. It’s … special in a way no podcast ever will be.
And yet it is so much work to speak at an IRL event. Getting there. Preparing. Putting together the outfit. Being there early. Even a digital event with a lot of prepared content can be a ton of work. You can lose a full day really here, or the better part of one.
But you can do a podcast in 20 minutes that can reach 130,000+ folks. Or sponsor one, and have 130,000+ folks listen to your ad — captive. They will all hear it.
Yes, podcasts seem to sort of disappear after you do them. You can forget about them. They don’t quite have the long tail of other media assets. You may not even listen to that many yourself, and sort of “not get it”.
But I can’t think of a better use of your time than being on any podcast in your industry that gets even 10,000 downloads, let alone 130,000+ like SaaStr. Where else with 20 minutes of your time can you get in front of 10,000 or 100,000+ customers, prospects, users … and potential hires?
Go on the best ones. Make the time. Reach out to them. And market and advertise on them if your buyers are there. Other don’t get that it works, and why it works. But now, you know. You know the #1 most efficient of your time are the podcasts in your industry.
David Sacks:So, probably the topic that I get asked about the most over the past 20 years, based on my operating experience, is just how do we get more organized? How do we solve this? And, wouldn’t it be nice if somehow we could turn this shit show into an army where instead of having this startup chaos, we could get the team working in lock step. Rather than having this feeling of disconnected functional areas, everyone in the company knows what to work on. Rather than having this erratic schedule around hitting sales targets, or hitting releases, that there’s a feeling that just quarter after quarter the company keeps shipping and selling. To me, that’s what the cadence says.
I learnt this operating myself. First, I was the founding era CEO of PayPal during the PayPal Mafia period, and I was a self taught product person, I learned how to do product management operations there. Then, my next company, I founded Yammer. I was the CEO. We adapted this operating philosophy for a SaaS company. We had to learn how to do sales and sales marketing and compete in heads up battles against other companies selling similar products. We refined the cadence then, and it worked extremely well.
We went from zero to 56 million in sales in under four years, and that resulted in a unicorn, we ended up selling the company to Microsoft in 2012 for 1.2 billion dollars. I think, to this day, it’s actually the fastest unicorn SaaS exit.
Now, during that time, we were competing against Salesforce, they had a competing product called Chatter. So, we studied what they were doing very closely, I read, Marc Benioff has a great book called Behind the Cloud, which I recommend to everybody. And, so we learned and adapted key elements of their system and incorporated it into this cadence. Salesforce is the most successful cloud software company, and so it’s worth, I think, learning from the things that they’ve done.
So, what is the cadence? Basically, it’s based on a few very simple insights, but very few startups are actually doing these things. So, the first insight is that there’s two key systems in a startup. The first system is what I call the sales finance system. And, the second system is what I call the product marketing system.
Both of these systems, in my view, run better on a quarterly cycle, and they should be planned on a quarterly cycle. Then the final, the third insight is that, well if you’ve got these two systems that are running on a quarterly cycle, if you just snap them together with a site off set, and we’ll talk about that, you can then create a single operating cadence for the company.
It’s very simple, I mean this is something that every start up can do. And, when a start up deteriorates into the thing I call the shit show, it’s always because one of these groups, or one of these systems is, either it’s not being run the way it needs to, or it’s not being snapped into alignment with the other systems. All right, so let’s talk about each of these systems and functional areas, and then I’ll explain how they all snap together.
So, the first system is a sales finance system, so let’s start with sales. So, sales, in my view, is best run on a quarterly plan. You can get there by process of elimination. But, two other ways to run a sales team is you can run them on annual quotas, or you can run them on monthly quotas, and in my experience, annual quotas are just too slow to judge performance, it doesn’t let you make modifications and adjustments mid course, you have to wait until the whole year is over.
By the same token, monthly plans are too volatile. Some startups can do monthly quotas if they have an extremely quick sales cycle. But, otherwise, for the vast majority of startups, you want to be on a quarterly quota plan. Then, the other thing you want to take into consideration is that if you adjust quotas and territories more than once a quarter, you’ll really start to affect the morale of the sales team, they’ll start feeling undermined.
So, the first part of the sales finance system is to recognize that sales must be on a quarterly plan, and then that allows you to create a series of milestones within each quarter. So, every quarter is going to start off the same, you’re going to start off with the sales kick off. At that kick off, the sales team is going to receive their plans, their territories, if there is any company objectives, or spiffs, things that the company wants to incentivize, those things will be covered then. And, you’re going to do some significant retraining, you’re going to retrain the sales team on the product, you’re going to train the sales team on any best practices. If some reps have been particularly effective, you’re going to want to share those learnings, that wisdom across the group.
The second month, mid quarter, you’re doing a lot of pipeline inspections, the sales leader is making sure their team is going to hit their goal, they’re making adjustments, giving advice in terms of how to actually close those deals. Then, and we’ll talk about this in a minute, but marketing and product will be generating news in the second month of the quarter, and sales can use that news to warm up prospects, email them news collateral, awards recognition that the company is getting and use that to help put deals over the top. Then, in the third month, you really want to avoid distractions, the team should just be head down on closing and making their number.
So, that’s the sales calendar. The sales calendar is part of one system with the finance calendar. I mean, this is pretty, I think obvious and intuitive, as well. But, the starting point for the finance calendar is to understand that there is a fiscal year, a financial or accounting based fiscal year for the company.
The question really is, well there’s only two choices for that, you can have a fiscal year that ends on December 31st, or you can put the calendar year, or you can have one that ends on January 31st, and my recommendation for most SaaS companies is that you want to have a January 31st fiscal year for the simple reason that you don’t want to be closing deals and have the entire year’s number, because a lot of deals will come down to the wire. You don’t want to be scrambling during that Christmas to New Year’s week when everyone is on vacation. It’s more humane for your sales reps to not make them work during that week, or to have their quarters depend on that. But also, it’s very hard to get hold of prospects during that time, and so I recommend generally a January 31st.
You also avoid being, smart prospects will know at the end of the year to demand discounts, because they know that if the vendor is scrambling to close deals to hit some number, they can get a better discount. You’ll be in a better position of leverage if you’re not having to give year end discounts, so I generally recommend January 31st.
Then, that means that your sales quarters that we talked about, will be based on that fiscal year end. So now, you can basically say okay, well look, if I’ve got that Q4 is going to end now on January 31st, so that means that my Q1, my quarter end is going to be now February, March, April, and then so April is the next quarter. Then, May, June, July, so July is the next quarter end. And then, August, September, October, October is the next quarter end.
So, we can now essentially snap the sales quarters to the fiscal year. You want to do this for reporting reasons, right? I mean, so if the finance team have closed the books on each fiscal quarter, report that to the board, you don’t want to be reporting incomplete, mid quarter sales numbers. You’ll have a much better idea of what’s happening in the business if your sales quarters are snapped to the fiscal year.
Then, the final thing I like to do as part of the finance calendar is make snap board meetings, because you want the board to review the information while it’s still fresh. So, I like to see board meetings, but typically quarterly board meetings occur two to three weeks after the close of these quarters, so we talked about when the results are fresh, that’s when we want to talk about it. And, now the team can get strategic insights from the board right at the beginning of the next quarter, and there’s still time to implement them for that quarter. So, that’s the finance calendar, and the combination of sales and finance working together is what I call the sales finance system.
So, let’s shift gears to the second system, it’s the product and marketing system, and the product calendar. So, the product calendar, I want to tell you about my philosophy on product management, and this is something I learned at PayPal and then refined it at Yammer is, a lot of people, a lot of founders I should say, resist the idea of having planned quarters around product management. I’ve really learned this is a good thing to do. Again, when you’re in that seed stage, when the founder can just run around and tell engineers what to build, that’s fine. But again, we’re talking about the time in a company’s life when they’re expanding from 50 to 500. And, just having the CEO running around every day or every week, telling people what to do just doesn’t scale, and so you need product managers, and those product managers, I’ve learnt, work best on a quarterly calendar.
So, the analogy you can use is, let’s say that you want to fill a jar with rocks, pebbles and sand, we have this graphic here down on the bottom right, and so how do you do it? You see the jar on the left here, they weren’t able to fit the rocks in the jar, because they filled up the sand first, then they put in the pebbles, and then they did the rocks. The right way to do this is to put the big stuff in first, the rocks, then you put in the pebbles then you put in the sand.
Product management is a lot like that, where what you’re trying to do is maximize, it’s about resource planning, right? So, you’re trying to maximize the amount of stuff that you can get pushed through the system with a fixed amount of resources, it’s about maximizing that.
What I found is that companies that don’t think in terms of a quarterly product management calendar, one of two things happens. Number one; they just ship sand, right? They don’t think in terms of shipping tent pole features, new products, major releases. Or, when they do, they end up going wildly, wildly over schedule. So, they’ll put together, and ship a new product, but because they never really planned it, they didn’t scope it correctly, and so you’ll be talking about a product that should’ve taken, or was supposed to take one quarter and you’ll still be doing it two, three, four quarters later. I’ve seen V2s that were supposed to take a couple of quarters end up being literally years late, and it paralyzed the development road map of the company.
So, product management is useful to make sure that you actually do big stuff, you don’t just get the sand done, you actually get some big rocks in there. But, it also helps you make sure you’re scoping correctly. The rule we had at Yammer is that every project we would assign somewhere between two and 10 engineers for two to 10 weeks. So, the absolute biggest project that we could ever do, would be 10 engineers for 10 weeks, and that would be for the absolute most strategic priority. We would just say the max is 10 engineers for 10 weeks, and if we couldn’t do that, the product needs to be re-scoped, it needs to be shrunk down into something that 10 engineers could ship in 10 weeks, that we could put in front of users, get feedback about whether they liked the product before we then went on to the next round.
This is a system that we’ve used, and again what having a product management calendar does is allow you to think in terms of what are the rocks? What are the pebbles? What are the sand? Let’s fill up that jar with rocks first, then pebbles, then sand. You will actually get more done like the jar on the right as opposed to the jar on the left, you will actually fit more through your road map.
Moving on to the marketing calendar. The marketing calendar, I guess a couple of key points here; one is that marketing and product, those calendars are one system for the obvious reason that start ups are product driven, and most news that the company puts out will feed off of new products, new product releases, and so marketing is really going to piggyback off of the product management calendar, it’s going to be marketing those product features. Those product features should be the centerpiece of marketing events.
I also believe that for marketing purposes, having four big releases is better than having 52 small ones. It’s not to say you can’t ship code weekly, or even daily, but in terms of for marketing purposes, and for planning, for product management purposes, you really want to think in terms of a big seasonal release. That’s what Salesforce has done very effectively for 20 years, is that they have a winter, spring, summer, fall release, and the compounding effect of that has been huge.
The other thing you want to think of for marketing purposes is you really want to have an event based marketing calendar, and I don’t know why more start ups and more founders don’t do this. Some of the most successful founder CEOs that we’ve ever had in our industry, have used this technique of event based marketing.
Steve Jobs, I mean the big iPhone release that we think about the big product releases that Apple’s done, they were always based around events. Marc Benioff of Dreamforce, now the largest tech conference, and obviously Elon, whenever he puts out a new product, it’s based on a live product demo.
So, having an event based marketing calendar, I think it does a number of really important things. Number one; it combines, there is so much clutter in the world right now, just putting out a press release doesn’t get it done. When you can combine the press release, that news, with an event, you bring together customers, and fans, and influencers, and you combine it with a live demo, you don’t just put out a press release and create what’s called a lightning strike, it’s much more compelling.
The next thing, though, is that there is an internal benefit, a huge internal benefit to the company in terms of setting dates, setting deadlines in advance. The deadline, the date for these events gets set well in advance. So, if the folks at Tesla know that Elon is going to be going on stage to present the Model 3, they’ve got to hit that deadline. Same thing with Marc Benioff at Dreamforce, knowing that you’re sending your CEO on stage with that product is tremendously motivating for the team inside the company, they know they have to hit those deadlines.
Then finally, it forces the leader of the company, not just the team but the leader of the company to think about prioritization, and what’s really important in a different way. Because, you the leader are going to have to go on stage, and present and explain this big product announcement. You’re going to have to effectively justify why it matters. So, it forces the leader of the startup to think months in advance about what is going to be important to customers.
What I find is that if you think about the product marketing calendar this way, it makes it a little bit more like the sales finance calendar where sales is about selling to customers, sales doesn’t work unless a customer buys what you’re selling. I think that’s a good dynamic, you get market feedback, and I think having to think about the customer and their reaction while you’re doing the product and marketing planning, is a very good thought exercise for the company.
So, that’s how the product and marketing system works. Now, let’s talk about how you snap these two systems together. The most important concept here is very simple, is that you want to have an offset, say a half quarter. You don’t want the product marketing system for their major event, for their launch event, to be coming due at the exact same time that the sales quarter is coming due. You don’t want to light everyone’s hair on fire at the same time, it creates too much chaos inside the organization.
Also, it’s not good change management. You don’t want the product and the product demos changing right when sales is trying to close deals, you want some stability in the product. By the same token, when you have these big lightning strike events in the middle of the quarter, that usually comes with a bunch of positive press coverage, and sales can take those articles, they can email them to prospects, they can use it to warm up prospects who’ve gone cold, or they can use it to help further deals, to help put deals over the top, so it’s just a much more useful time. So, if you think about these two systems, you just want to off set them by about half a quarter, okay?
So, now let’s think about, well how are we snapping this together? Number one, you’re going to decide your fiscal year, it’s going be December 31st, or January 31st, and then you’re going to snap the fiscal quarters to that, that will snap the sales quarters to it, and then you’re going to snap your event schedule, so that events occur in the middle of the quarter, then you’re going to plan your R&D cycle to hit those event deadlines. It’s very, very simple. But, this will give you a super structure for everything happening inside of the company.
Now, one objection that I get to this, I know a lot of you think that when you hear about events that you think no one is going to come to your event. That’s what I thought at Yammer, is that we decide we’re going to do this thing called Yam Jam, and we made it our annual user conference, and we were very worried that no one would care and no one would show up. But, you would be surprised, even our second year as a start up, that a large number of people showed up. If you have product market fit, sufficient to raise a series A and a series B, and you’re scaling from 50 to 500 employees, you have a fan base out there, you have a community and you can engage them.
You may start small, it may only be a few dozen people at this event, but it will grow. Just look at Dreamforce, the products that Elon and Tesla have rolled out, what Steve Jobs did at Apple, obviously those are very sexy products. But, what Marc Benioff has done at Salesforce, that’s CRM, it’s not inherently the most exciting product, it’s business software. And yet, they’ve been able to, starting from very modest beginnings, they’ve been able to turn that into the largest tech conference.
So, you will get people to turn up at your event, and what I recommend here is one user conference a year, and then three smaller webinars, or city events, doesn’t have to be a huge event for the other quarters. But again, it forces that discipline around making sure that what you’re working on matters.
So, let’s translate this. So, now you’ve snapped these two systems together, let’s just quickly review what’s going to be happening in a quarter. The amazing thing about the cadence is I can tell you what’s going to be happening inside your startup, inside a SaaS startup, without even knowing what software problem your business is addressing. But, if you’re using the cadence, you’ll be marching to this beat, and you’ll be well organized.
So, month one is going to be dominated by the idea of planning, and so you’re going to start off with the sales kick off, there’s going to be prep for the sales kick off. And, at the sales kick off, you’re going to get new sales plans, territories and quarters are going to be finalized.
Meanwhile, the finance team is closing out the quarter, and by the way, the PMs are presenting at the sales kick off, they’re basically re-training or training up the sales reps on the latest changes in the product and what’s coming out next, because selling your project road map is a very important part of the sales process as well. So, you’re going to have this cross functional opportunity at all these events for those kinds of interactions.
Next, you’re going to have board meeting prep, and you’re going to have the board meeting. Then, immediately on the heels of that board meeting, you’re going to want to feed those strategic insights that you’ve talked about back into the company, and typically you’re going to do a product road map prioritization for the next quarter’s launch event. Not for the one that’s just about to happen, but for the next quarter.
Meanwhile, code freeze and QA are beginning for the launch event that you’re about to do in month two. So, month two is going to be dominated by, say in week seven, you’re going to do this event. It’s either going to be your user conference, or it’s going to be a city event, or in the days of COVID, it could just be a webinar, that’s fine. But, you’re going to basically have this launch event, and the first couple of weeks of month two are going to be dominated by people getting ready for that, the marketing collateral is going to get finalized, the event prep, event details are going to get finalized. You’re certainly going to be doing QA and testing on the release, you might be in closed beta with some customers.
Then, the other thing that’s happening, though, is that the product managers should be racing ahead to be getting ready for what’s happening next quarter, and they’ll be working on specs and design reviews for what’s happening for the next quarter.
At the end of the month, at the end of month two, you’re going to want to debrief. You’ve just done this big launch event, how did it go? What are the learnings? You may have convened your customer advisory board, what did they say? You’re going to want to debrief and internalize those lessons. You’re going to want to do recognition inside the company, you’re going to want to recognize the people who made it all happen, there should be some celebration. Normally, there are good things to celebrate, you just did a big launch event, and so recognizing and celebrating that accomplishment is a good thing to do.
Like I mentioned, sales reps can now use the marketing news that you just generated at this event to warm up leads, and the engineering team is going to be really busy if you’ve just done a big launch event. If you’ve just done a big launch, there’s going to be bug fixes, and so for a week or so after launch, they’re going to be busy doing that. Meanwhile, the PMs are finalizing the next quarter’s launch, the next quarter’s release.
Then finally, you’ve got the third month of the quarter, which is really a heads down period inside the company. So, what’s happening in month three is that the sales reps are really focused on just closing deals, you want minimal distractions for the sales reps. Then, coding is going to begin, if it hasn’t already, for the next quarter,s release. Remember that in month two, the PMs and designers really finalized their part of the release, the planning, and now coding begins in earnest. So, month three is really this heads down period where people are just cranking out code and closing deals. And, that’s basically the quarter and then you start again with right back at it, now you’re at the beginning of the next quarter, and you’re right back at sales kick off, you’ve got the quarter end close, you’ve got your next board meeting and so on.
So, this really creates an operating cadence within the company. One of the big benefits of the cadence is, I think it has important cultural benefits. So, there’s this old debate about culture inside of start ups which is well, should a start be run like a sprint, or a marathon? You’ll hear founders defend both approaches. My view on this is actually, which one is better? I would say neither. I think the best approach is ladders.
So, for people that are into fitness, ladders are when you sprint for a while and you do a sprint and then you rest, you let your heart beat return to its resting rate, and then you repeat, and then you do it again. If you try to run, the fact of the matter is that start ups do take a long time, they’re an infinite game, and if you try to just run it as a sprint without rest, you will burn people out. Conversely, if you have this attitude that it’s just a marathon, I do think that is a recipe for going slow.
So, to me, ladders are the right balance culturally. Sprint, hit this big launch, let the sales team sprint to hitting their quarter end, but then you have a recovery period. You have the sales kick off, you have that week after the big launch event where you’re letting people celebrate the accomplishments, reflect on what has happened, and then you do it again.
So, let me just summarize. So, what is the cadence? I think the cadence is four key calendars in the company, which consolidate into two synchronized systems, and then one operating cadence when you have those two systems working in tandem with each other with this half quarter offset.
I think human beings are wired to think in terms of seasons and quarters, and I think this is a very natural way for all of us to work, is in terms of these quarterly planning cycles. The first system, the sales finance system, really orients around the quarterly close as its central event, what it’s building up to. And then system two, the product marketing schedule or system is oriented around this big launch event.
You want to use these two systems in tandem with each other. Whenever you have an event, it’s an opportunity to synchronize people inside of the company around cross functional collaborations. So, like I mentioned, the product managers are going to speak at the SKO. And, I also believe in the sales reps attending, say virtually, through streaming any of these product launches. I think it’s very important to involve the whole company in these big events. Then, what you’re going to want to do is, if you think about your all hands meetings, you’re going to want to work backwards from these events.
So, knowing that these are the big milestones inside the quarter, you almost know exactly what each all hands is going to be about. So, after the quarter closed, you’re going to do an all hands meeting to review the results, what just happened. The all hands meeting before the big launch event, you’re going to want to preview what’s coming out. The all hands meeting after the launch event, you’re going to want to debrief on what you learnt. The all hands meeting after the board meeting, I think it’s a good idea to review what you just talked about with the board.
You should also be thinking about, what are these key events, because each one creates cross functional collaboration, but each of these important events also creates the opportunity for an all hands meeting inside the company, so you can keep everybody up to date and synchronized.
Then, I would just tell you, the compounding effect of shipping just four great quarters a year. I know if you’re shipping daily or weekly, and you say well, wait four? Again, I’m not saying you shouldn’t just push code live, I think it makes sense just for version control, you want to push code. But, again in terms of the planning cycle, I know it seems like you’re getting less done to have four lightning strikes, or four mega launch events compared to 52, but again, think about the rocks versus sand, and the compounding effect of implementing the cadence quarter after quarter for years is enormous, because I can tell you most companies in this few hundred employee range, or big companies, they’re lucky if they have one great launch every year. So, if you can do this quarter after quarter after quarter, the way that Salesforce has, the compounding effect of that will be very big.
Then finally, like I mentioned, start ups are not a marathon or a sprint, think in terms of ladders, I think you’ll be pleasantly surprised culturally what that does for you.
Amanda Sibley, Director of Marketing at HubSpot for Startups, is an absolute pro when it comes to using content to drive growth. Recently she visited with Startup Grind to share her best tips for getting early-stage content marketing off the ground running. With years of experience helping startups fine-tune their content engine, Amanda brought a ton of action-based strategies and tactics to the table. Buckle up, viewers. This was a great one.
Key Takeaways from #SGvirtual “Content Marketing for Your Startup”
1. In case you’re on the fence — yes, content marketing is very worth the effort.
Content marketing is a scalable way to grow traffic and leads — without needing an ongoing budget. Not convinced? When you create content that’s able to be used again and again, you’re creating value that doesn’t require additional budget every time it’s reused, reshared, or repurposed.
What’s more, having a clear content strategy from the beginning can be a hugeboon for a startup down the road. Organic traffic and SEO help potential customers find you and your product or service when searching online. When done strategically, investing in content now can help compound your discoverability exponentially over time. Up and to the left, please.
2. Not sure what to write about? Keep a pulse on your customers and your eyes on the data.
Great content ideas are hatched in the intersection of “What do my customers want?” and “What is the keyword data showing me?” When considering content topics, always be sure to look at your numbers without losing touch of what your target customer actually wants or needs. Survey them. Ask them what they’d like to read. Notice trends in the FAQs you keep getting from users.
Once you’ve got a great list of ideas going, prioritize any content idea finalists based perceived impact and available resources.
3. Set goals for every piece of content and then test, test, test.
Not every piece of content will be a slam dunk. In fact, there’s often a big learning curve when you first set out on your content strategy journey. To avoid investing too heavily in a content piece that may or may not work for your audience: start simple (no need for movie-level production on your first product demo video), set specific goals for what you want to achieve from your content (more engagement? more delight? more customers?), and then test, test, test.
And when you do find something that works? A.B.R (Always Be Repurposing). Every successful content piece created should be able to be repurposed often and support multiple goals.
4. Consistency is key.
There’s no hard fast rule when it comes to the ideal posting frequency. Instead, focus on consistent publishing in the early stages. Consistency builds trust with your customers or readers while also helping you establish an editorial routine. A good way to do that is by setting a publishing goal and then sticking with it. Once per week is a great goal in the very beginning, especially if you’re resource-strapped.
And as soon as you do publish, it’s time to promote the heck out of it in order to get in front of the most eyes. The first 24–48 hours are the most important since Google’s algorithm can pay extra attention to an initial burst of engagement. After the first few days, continue to promote using ongoing email, social, newsletters, etc. Amanda has some great recommendations & templates for how to do this in her “Content Marketing for Your Startup” talk.
5. Nervous to write? Don’t sweat it. Creating content is the easy part — you just need to start.
Everyone has a story to tell and everyone can write. It’s just a matter of honing your skills by practicing, plugging into the right resources, and connecting with people who can help you elevate your writing.
Ask people to review your content. Get feedback. Seek to learn from experts. Most importantly, just start getting words on the page. Go get ’em.
And if you really don’t have the time or writing chops, you always have the option to hire a creative intern, student, or freelancer who can crank out interesting pieces.
6. Your content an expression of your brand’s language. Be sure writers have the resources to learn it.
It’s never too early to make sure your voice stays aligned across your messaging. Create a basic voice & style brand kit (it can be as simple as a Google Document) early on so that anyone in the company who’s creating content knows which voice to use, and how to use it.
7. Stuck? There are so many tools to help startups determine what content to create, create it, and measure impact.
We’re in a golden age of tools for content creation and content marketing — take advantage of that! Here are just a few content creation and content analytics tools to add to your stack:
Google Analytics for website traffic.
Google Search Console or Google Keyword Planner for keyword suggestions.
Buzzsumo, SEMRush, or ahrefs for keyword research.
(Note; an update of a classic SaaStr post, with 2020+ learnings.)
A little while ago, I Zoomed with a good friend running a SaaS company doing about $4 million in ARR. A really good SaaS company. And he was beside himself.
First, he was just plain exhausted. He was in that zone from $1 to $10m in ARR when it all just gets so hard. Too much to do with too few people. We’ve talked about how The Cavalry Was Coming. That the operational part would get harder before it got easier … but it would get easier once he doubled or so, when he’d finally have some redundancy and fat on the team and the model. (More on that here).
Second, he was almost overwhelmed with The Competition. “They’re in every deal now,” he told me. “And they have five times the headcount and have raised $25 million. They’re all over us.”
I asked how much would he grow this year? He said at least 50%-60%, maybe more.
My advice: I Know It’s Tough. And, Yes, You Want to Be #1. And Yes, You Really Do Want to Be Growing 100% or more at this phase. It does seem like enough, and maybe it isn’t.
Don’t Overly Sweat the Competition — in the Short Term — in SaaS If You Are Growing at Least 50-60% YoY. And certainly — don’t let it take all the wind out of your sails. Or most especially, don’t let it act as an excuse.
Yes, competition can be brutal in SaaS. Super brutal in fact, because especially if you are in an oligopical space, there are very strong economic incentives to not just win in individual deals — but to Kill Your Competition. More on that here and here.
But a few things to think about vis-a-vis competition in SaaS, once you are post-Initial Traction (say $1m-$2m in ARR or so):
Second Order Revenue (Upgrades, Word-of-Mouth, Champion Change) Will Continue to Come In and Work, No Matter How Tough the Competition Is. If you keep your customers happy, they’ll upgrade. They’ll buy more. They’ll tell their friends. Even when your champions leave, and take jobs at other companies, they’ll bring you with them. You don’t even have to be Better. You just have to be Great, and make your customers heroes and a success. More on Second Order Revenue (the key to SaaS economics) here.
If You Are Still Growing 50-60% Or More — You Do Have a Competitive Advantage. Even if It Doesn’t Always Feel Like It. It may not always seem that way. Even if the competition has complete feature parity. Better marketing. A better brand. If you are still getting new customers, you do have an advantage in some segment at least, or you wouldn’t be winning at all. So at least in the short-term, don’t get too bent out of shape about competition. Get bent out of shape on execution. Double down on what is working.
Even 50%-60% Growth at $10m ARR Compounds to Something Awesome. Build a Google Sheet and see where even decent growth takes you in 5 years. You may be shocked to see just how large a business you’ll have then. Even if you aren’t growing like Zoom or Slack.
Net Negative Churn is an awesome force. Even if the competition is everywhere, if your net revenue retention is 120%-130% or higher, that means your existing customer base is still happy to buy more from you. Lean in there. That lasts decades.
Long-term Commitment is a Huge Competitive Asset. SaaS Evolves — and is a 7-10+ Year Journey. You add new features every month, every quarter. And more importantly, new potential customers enter the market over time. You go from Early Adopters to Early Mainstream and beyond. Even if you have a bad year — the next year can be great. What matters is that you maintain the deepest commitment in your space. That may not make you #1. But it will, I think, help you grow even faster. This is one of the many reasons it’s so hard for the Big Guys to compete in SaaS. They often can’t make a 7-10 year commitment to a new market.
Your Competition Will Stumble At Some Point. In some way. They always do, even if you can’t see it as an outsider. If you can keep growing, and wait for them to make their Big Mistake — you can pounce then. And leverage that to grow even faster. Everyone has a bad year on the 7-10 year journey. If you have the long-term commitment, you can take advantage of the competition’s bad year or bad strategic decision.
Seeing the Competition in Every Deal Can Be a Good Sign. It may feel like they’re in all your deals when they weren’t before. But that also means you are in their deals. It’s a sign you are doing a good job, at opportunity creation if not revenue creation. At least you’re got an invite to the party. That’s one of the raw materials of success. Just focus on doing what it takes to close more of these deals, even if you are losing some / a lot / almost all of them. Drive the close rate up, even if it’s just bit-by-bit. Close feature gaps, improve the quality of the sales team and the marketing processes.
Market Pull and Segmentation Down the Road Can Totally Change Things. You may go more enterprise. The market may get 100x larger and change as it does. Room at the Bottom can open up where none exists today. No matter what, things will change, and since you are almost certainly in a growing market — you can take advantage of those changes over time. Things aren’t static in SaaS. Measured over months, nothing changes. Over years, everything does.
My uber-point is this: I think you have about 4-5 years to get “Somewhere” in SaaS. That’s the ultimate real check-in period on the 7-10 year journey to Something Big. If you don’t build something of real scale and size by then, the team will just get too tired, the journey too taxing.
But don’t let competition be an excuse, or a strategic distraction — as long as you are growing. Because 50%-60%+ growth means the competition really isn’t as big a deal as you think. Tactically, of course, sweat competition every day in every deal. And strategically, figure out where the market will be in 2-3-5 years, and make sure you are skating to the winning opportunity there. And if you aren’t growing fast enough, yes that’s a problem. It will hurt with funding, hiring, etc. You want to be #1, no doubt, and kill the competition. But most of all, you want to grow. Grow or Die.
What I can tell you is we had a Year of Hell. You can read about it here. We only grew 50-60% that year, and it was really rough. The sales manager I had at the time blamed it on everything from competition to nascent markets to me. All true, in part.
Ep. 342: On this episode of the SaaStr podcast, our CEO, Jason Lemkin, chats with Zapier CEO, Wade Foster, on Distributed Teams and Building a Cloud Product. Zapier is a global remote company that allows end-users to integrate the web applications they use. Although Zapier is based in Sunnyvale, California, it employs a workforce of 250 employees located around the United States and in 23 other countries.
Below, we’ve shared the transcript of Jason’s interview with Wade.
Announcer:This is SaaStr’s Founder’s Favorite Series, where you can hear some of the best of the best from SaaStr speakers. This is where the cloud meets.
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Announcer:Up today, Zapier CEO, Wade Foster.
Jason Lemkin:All right. You want to hit a few of the things that we wanted to chat about on this list?
Wade Foster:Sure, let’s do it.
Jason Lemkin:First of all, just because it’s fun… Well, actually, before we get there, does everyone get Zapier pronounced right? What are the odds that folks get it pronounced right?
Wade Foster:I think it probably is like 40/60 right to wrong.
Jason Lemkin:[inaudible 00:00:01:04]. Do you roll either way?
Wade Foster:I roll either way because… So here’s what I like to tell myself. This is how I sleep at night. It’s like a gif/jif thing. So there’s an internet controversy, people like a controversy and it creates word of mouth. That’s what I tell myself to sleep at night.
Jason Lemkin:Because I think the zap is a hard consonant and it’s hard to say it.
Jason Lemkin:It’s hard to say, isn’t it?
Wade Foster:Yeah. But you want to zap stuff. That’s what you’re trying to do. You’re trying to zap things. I don’t know, so is Zapier. But when you can’t afford domain names in 2011 because they’re all taken, you get the one with one P because that’s what’s available.
Wade Foster:And it has API in the name so it’s kind of clever.
Jason Lemkin:I didn’t actually know that until the last time we met, that it had API in the name.
Wade Foster:Yeah. It turns out cleverness is not a great marketing strategy.
Jason Lemkin:Like the arrow in the FedEx logo that you don’t know until someone… And then you’re like, “Oh my God, there’s an arrow in there.”
Wade Foster:You can’t unsee it. Or the A to Z in Amazon, right?
Jason Lemkin:I guess if it was a little Z, big API, it wouldn’t have been hip, but you-
Wade Foster:So we did do that. The original logo has API in gray.
Jason Lemkin:I see.
Wade Foster:It’s not super hip, but whatever.
Jason Lemkin:All right. So for folks that don’t know the company, I don’t want to go back and talk about the early days when you went through Y Combinator, that’s all fun. I want to talk about forward looking stuff. But give us a rough sense, where are you at today? How big are you? You’ve talked a little bit about revenues, how many employees? What do you want to accomplish maybe by the end of the year?
Wade Foster:Sure. Zapier, 300 employees, global, fully distributed team. Well over 100,000 customers, last revenue number we talked about was early last year, 50 million ARR.
Jason Lemkin:So more than that today.
Wade Foster:Yeah, more than that today. What do we want to accomplish this year? I think a big part of this, we’ve got the company’s product, we want to do a better job of servicing these mid market users, make sure that we’re there for them. We want to do a much better job of making automation easier. I think there’s an opportunity for us to really make setting this stuff up super simple.
Wade Foster:It used to be engineers did all this work. It used to be that you had IT staff that did all this. Now with Zapier, anyone can do it. But it’s still a little nerdy, it’s still a little technical. And so I think there’s more we can do to abstract away parts of that so you’re run of the mill sales rep or your run of the mill recruiter or whoever can just sort of step in and be like, “Automation is part of my tool set. It’s how I do my job. It’s how I’m more effective at my work.” So there’s a whole bunch of design and simplification and product extensions that we have in mind to really make that first run experience really good.
Jason Lemkin:Essentially, when I think about folks that I work with that use Zapier, I would say, for example, tech focused marketers, folks that are next generation. They love the app, right?
Wade Foster:Yeah. They’re all in.
Jason Lemkin:They’re like, “I can’t connect my dated marketing automation app to my janky CRM to my website,” because we are all using hundreds of apps, right?
Jason Lemkin:So forget about even a lay engineer, I think a technical marketer can use the product and love it, right?
Jason Lemkin:But what’s the next frontier beyond that? I don’t know what the term is, but it’s like web savvy. You got to be web savvy, right?
Jason Lemkin:Do you think someone that isn’t web savvy will be able to use the product as effectively as someone that is by the end of the year?
Wade Foster:I mean, I hope so. That’s the goal.
Jason Lemkin:What do you need to do that? We’re running out of time to talk about no code maybe and all this stuff, but that’s an element of getting beyond the web savvy, right?
Jason Lemkin:Just getting to a level with web aware people. How can a web aware people use your application, right?
Wade Foster:Yeah. I think a big part of it is we get simpler, we get easier, so we find better entry points into the product that as you’re going about just using these tools, you’re prompted to set up zaps and there’s very little configuration to go on.
Wade Foster:I still remember my experience using Squarespace in the early days. When you had to configure the DNS settings and stuff like that, Squarespace has always been easy, but it used to be like you have the tutorial open on one side and then you were going through their setup flow in the other and you’re copying and pasting links into it. It was easy in the fact that it was straight forward, but there was just a lot you had to do.
Wade Foster:Now, when you go in to set up a Squarespace site, you buy the domain and then they have a little spinner and they’re like, “Ta-da. Your site’s ready for you.”
Jason Lemkin:That’s what you want. It integrates with Google domains, right?
Jason Lemkin:And we want that, right? Even I get a headache. I screw it up, I can’t remember what my C name is or my whatever it is and I want to just jump off the roof.
Wade Foster:Yeah. And it’s not that it’s hard, it’s just that there’s a lot of steps and you’re copying and pasting a bunch. That’s our job is to get rid of all that stuff where you don’t care about that. You just want it to work for you and the worst thing is [crosstalk 00:05:57].
Jason Lemkin:And what’s the single hardest part of that that you want to conquer this year? Do you have a sense of what [crosstalk 00:06:03]?
Wade Foster:Yeah, a big part of it is you’re mapping data from different services, one service to another and so how do you extract that stuff away? How do you just say-
Jason Lemkin:It’s always been wrong. It’s always, always the corner in the edge cases break, right?
Jason Lemkin:Fields don’t match, there’s more than 256 characters in the wrong field, the data doesn’t flow the right way. How do you-
Wade Foster:Then you get an error message that a user looks at and they’re like, “What the heck is that?”
Jason Lemkin:You do this at scale.
Wade Foster:Yeah. So I mean, the big part of it is you just get a lot of data and you start to know and you can match on other users use cases and say, “Hey, you’re trying to do this stuff. We’re going to take those configurations and we’re going to make those default configurations for other folks,” so that out of the box it sort of works.
Jason Lemkin:Yep. And last one because I want to tie this into a question, but do you think… I used to hate this term persona, but I’ve evolved. I do think it summarizes a lot of things as organization… I used to hate alignment as a term, now I like it. But as you look to that future, is there different persona that will use the product?
Wade Foster:I definitely think so. Right now-
Jason Lemkin:Do you have a name for this person?
Wade Foster:We don’t have a name yet.
Jason Lemkin:[crosstalk 00:07:07].
Wade Foster:We’re going through all of our segmentation. Yeah. We’re doing all the segmentation work and things like that right now. But I think you hit it on the head where web savvy, tech forward, technology oriented companies love Zapier today. Now it’s about how do you get it in companies that maybe there’s a web savvy person in the company, but maybe the company isn’t tech forward. So how do you enable them to implement it inside their organizations?
Wade Foster:And then how do you go the next step further where it’s like, “I’m just an organization and technology is sort of being foisted upon me and I just got to catch up.” The Cloud is everywhere. Well, how do you make sure you get that sort of last wave of folks on board with it?
Wade Foster:As companies age and grow, you’re trying to get as far through that thing as you possibly can. That’s how you get as much market penetration as you want.
Jason Lemkin:This next question I have, it’s early in the year and you’re at a very interesting point because you’re trying to connect whatever we call them, we can call them… How many apps do you connect? A thousand apps? Five thousand? Five million?
Wade Foster:Yeah, We’re 1,600 right now.
Jason Lemkin:Okay. But there’s a lot of Clouds in those apps that you’re connecting. And you’re trying to do it in a much more effortless way than enterprise products. You’re forced to think about the future of the Cloud in a way different than the Davos sound bites. What do you see down the pipe that other folks don’t see because you’re in this intersection? What do you see happening, not this year, but in three to four years that maybe even could disrupt Zapier, right? That even could change the ecosystem. What are you worried about or excited about that maybe other people don’t see [inaudible 00:08:44]?
Wade Foster:I think there’s just an explosion in the number of tools that people use. We all use the big stuff, right? We all use Slack, we all use Zoom, we all use G Suite. We all use that stuff, but every org has a slice of tools that… You could probably tell me right now a half a dozen tools where I’d be like, “What is that? How does it work? I’m not sure how it is.”
Jason Lemkin:And I rely on them.
Wade Foster:Yeah, and you rely on it. And it’s probably a 10 million ARR business and it’s a really solid business. So I think there is going to be just a… It wouldn’t surprise me if the new sort of family business is a software shop, a SaaS business that does like 10 million in ARR, or a million in ARR, somewhere in between there and it’s pretty successful. Yeah, it’s not a venture scale business and no one ever talks about these types of businesses, but they’re everywhere right now.
Jason Lemkin:They are.
Wade Foster:If you group them all together, there’s pretty significant adoption across all those tools and they need them to work with all this other stuff that they have. I think we like to think of tech as, hey, the Faang companies and these big Saas companies and whatnot, but there’s a lot of tech that’s not that.
Jason Lemkin:Yeah. And what do you think at the other end of the spectrum of things like UiPath and Automation Anywhere that are… Or even Plaid from the other day? I know they sound like a bunch of apps, but they’re taking another approach. They’re bypassing APIs, they’re using next generation scraping, flat files and whatever it takes to make anything work. In some ways it’s opposite end of what you’re doing-
Wade Foster:It really is.
Jason Lemkin:In some ways you’re trying to solve similar problems though, aren’t you?
Wade Foster:Those are important problems to solve. I think they’re transitionary problems is how I would talk about them where they’re big business-
Jason Lemkin:In like 2040?
Wade Foster:I mean, perhaps, yeah. Enterprise moves slow, right? But I think we all know that APIs are a better way to consume data. This is the ideal state. Let’s use files as an example. Drive was into the market before Dropbox was. But Drive said, “It’s all about the Cloud, it’s all about docs and sheets and stuff like that.” They didn’t think about file formats and whatnot. Dropbox was like, “We’re just going to start by syncing your file formats. We’re going to deal with all this crufty, old school, desktop related stuff and do it really well.”
Wade Foster:And in some ways, that’s sort of transitionary. We are all now on the Cloud. Outside of photos and maybe videos, we don’t actually interact with files all that much anymore. So in some respects, Dropbox was focused on a transitionary thing, but they use that to build a billion dollar business out of it. Now they’ve got to figure out how do they exist in a world where most everything is Cloud? I suspect they’ll figure it out.
Wade Foster:But it’s the same thing, I think, with when you look at UiPath and Automation Anywhere, is they’re tackling this thing that is a massive problem, but all those things are somewhat fragile. Businesses don’t want it to operate like that for forever. So 2040, what’s the better way to do this stuff?
Jason Lemkin:Yeah. I want to throw out one thought that you kind of tease at and then I want to hit the next one on our list. But we launched this product called SaaStr University just a couple of days ago to take all of our 6,000 articles and blog posts and organize it for the next generation, and we already have almost 4,000 founders on it. It’s pretty cool.
Jason Lemkin:I didn’t have time. Over the holidays I had extra time and I picked a platform called Mighty Networks. It’s very limited and it’s very slick because it’s like a social network with learning attached and it only has three integrations in it. It has Google Analytics, it has something I forget, and it has Zapier to solve all the things that it doesn’t integrate with. Now that’s profound if you think about it. There’s a bunch of things to think about. That’s a brand that you have, it’s a product. And you know that I’ve gotten passionate about that. Once you have a brand and you’re past that point, how are you thinking about leaning in so that everyone will build… There’s only three products and you probably never even heard of it until I brought it up. You’re the only one of the three and they’re not going to probably put the effort in… Whoever your number two competitor is, I don’t know who it is. They’re not going to do the effort.
Wade Foster:Not for Mighty Networks.
Jason Lemkin:They’re not going to do it, right?
Wade Foster:Mm-hmm (affirmative).
Jason Lemkin:Because they got too much stuff else to do, right?
Jason Lemkin:We already used it to hook up to Marketo and some other things. Are you leaning in on that as you’re kind of thinking about [inaudible 00:13:16] beyond revenue, what are you doing to build on that and not break that relationship and build on your brand?
Wade Foster:Yeah. I mean, at the end of the day, for us, we’re about connecting the tools you use. And so the tools you use are so critical for us where we are going to make sure that we have every app on the platform, period. Everything is going to be supported by Zapier and the stuff that everyone uses is going to be supported super well. We’re going to make sure that the G Suites, the Slacks, the stuff everyone uses is going to be really good. Really, really good.
Jason Lemkin:You’ll do that no matter what it takes.
Wade Foster:We’ll do that no matter what it takes.
Jason Lemkin:You got to have a Slack team internally, don’t you? To make sure that that-
Wade Foster:Yeah. I mean, we have people dedicated to the top in apps on the platform.
Jason Lemkin:Do you get early access to their platform changes and know ahead of time?
Wade Foster:Oh, yeah. We work with them to… And in fact, oftentimes we try and build stuff together for that stuff. So we’re the guinea pigs on new, weird things.
Jason Lemkin:With those ones you’ve got deep relationships, right?
Jason Lemkin:You’re given access to their staging servers and preview releases and all that sort of stuff.
Wade Foster:Yeah. And then for the long tail of folks, you’re trying to provide tooling, you’re trying to export the things you’re learning with your top in apps and make it really easy for them to self serve, to build similar type experiences to what you’re trying to do on this more experimental big side of things.
Jason Lemkin:But Mighty Networks, you’re not making any money off them directly, right? Maybe you are, maybe, but it’s small, right? What are you doing to empower that long tail in 2020?
Wade Foster:Yeah, you just give them tools. You give them the things so they can solve the problems themselves. These orgs, they need it. Their customers are begging for integrations. And so Zapier is the easiest thing they can do to be able to say-
Jason Lemkin:That’s why it’s one of the three. It’s the easiest thing they can do, right?
Wade Foster:Yeah, it literally is the easiest, fastest thing they can do. And so our job is, if it’s not the easiest, fastest thing that we can do, we’re in trouble. So we need to continue to be the easiest, fastest thing they can do to say yes to all these customer feature requests.
Jason Lemkin:There’s just one thing I want to go back in time on because when we were at the Inbound Conference we chatted about it, which was the early days when you had to build the integrations yourself versus crossed over, right? It never fully changes because you’re working with your top customers team. So you’re still building these [crosstalk 00:15:30].
Wade Foster:Yeah, we still build stuff ourselves.
Jason Lemkin:Maybe power dynamics is the wrong term, but when did the relationships change? How should you be aware of it? I see a lot of folks that… Especially folks that have good but not great engineering teams, they want the partners to do all the work.
Jason Lemkin:It’s hard enough just to build an API. If you have no experience, it’s not easy. It’s not easy to build an API and you have four engineers and some pretty good but not great engineer needs six months to build your API. And then Slack comes in and Slack’s not going to build it.
Jason Lemkin:So what did you learn and when is it appropriate to ask the partner to do the work instead of you if you want to have a positive ecosystem?
Wade Foster:I think there’s sort of two things. You have to have something that people want at the end of the day. You’re not going to be a platform if people don’t want it. Typically, that means you got a lot of users because that’s what most of us are trying to do. We’re trying to tap into a user base that we feel like [crosstalk 00:16:27]-
Jason Lemkin:You want to pick a top three platforms and build on them, right?
Wade Foster:Yeah. We’re going to build on Slack because everyone uses Slack and so we’ll get all their users. That’s the dream. It doesn’t really play out like that, but that’s the dream.
Wade Foster:There has to be some other reasons. It’s not for access to your customers. What is it that you’re providing them that they’re willing to say, “You know what? We’re going to do a thing that isn’t going to impact our entire customer base.” I remember the moment–we were having this debate very early on, I remember the moment it flipped a switch in our head was when Aaron from Box, he sends us an email at like 2:00 AM on a Saturday and was like, “Why isn’t Box on Zapier?” And the answer was, “Well, we’re three people just going as fast as we can. Of course Box should be on Zapier, we’re just not there yet.”
Wade Foster:But that got us thinking. He sent us an email in the middle of the night, maybe he would put an engineer on it. If he cares enough to do that, maybe he would do that. And so we just emailed him and said, “Hey, would you put an engineer on this if we had a way for you to do it?” And he was like, “Sure.” And so we were like, “Okay.” That’s enough of a signal for us that if we make the tooling good enough, maybe they would go do it.
Wade Foster:I think a lot of us have this dream that’s like everyone’s going to build on us, but basically no evidence that someone would do such a thing. So for me, it’s like you got to have some evidence that someone’s willing to go do that before you go stake the future of your company on this platform vision.
Jason Lemkin:Yep. And Aaron Levie’s story is a good one. And sometimes what happens, too, is you think everyone’s going to build on your API and no one does. But often what happens in the early days is there’s one or two high affinity partners. Sometimes they’re another little company in YC, sometimes they’re a big company. They may not even be huge. They may be one of your 10 million mom and mom companies, but you solve a big arse problem for them so they bring you into every deal overnight. I’ve had a few. Did you have any experience like that where someone needed you?
Wade Foster:We’ve definitely seen it over the years, where Zapier is basically if you don’t use Zapier alongside the tool, the tool itself kind of doesn’t do enough.
Jason Lemkin:Do they literally package you up with their product and pull you into deals?
Wade Foster:They start, yeah, basically. They’re like, “You should just use Zapier.” A company like Clearbit, take that for example. It’s a dev tool. However, a lot of their companies aren’t devs.
Jason Lemkin:Clearbit’s super interesting. It’s a dev tool and a lot of marketers and others want to use it.
Wade Foster:Yeah. And it’s like, okay, if you want to use it but you’re not a dev, how do you do that?
Jason Lemkin:That’s how our marketing team uses it. Exactly. Even though you’re both dev tools in a sense, are you aligned from a go to market perspective? Is it totally incidental? Do you guys know each other? Do you work together?
Wade Foster:We know each other. It’s mostly incidental. We’re not aligned, we don’t have co-selling agreements or anything like that.
Jason Lemkin:Do you have a BD team or a partner team that helps facilitate this stuff?
Wade Foster:Yeah, we do. [crosstalk 00:19:24].
Jason Lemkin:What’s their KPI? Or do they have a goal for 2020 or a job?
Wade Foster:Yeah, there’s different teams. So we have teams focused on our biggest apps and so that’s a different goal versus teams that are focused on the programs that you put in place of help for the thousand apps and whatnot like that.
Jason Lemkin:Cool. All right. For a couple minutes, before we run out of time, I want to talk about distributed teams, which is your super passion. But I want to dig in on a few topics that maybe you talk about it a little bit less that we’ve chatted about. The first one is just advice. I mean, first of all, I need your advice. I’m struggling to learn how to do this and you could give me personal advice, which I will be grateful for. But the meta point is, I know your point which is great, which is good counsel, which is go all in early, right?
Jason Lemkin:The Zapier story is you have the co-founders, your co-founder goes through YCS to go back to the Midwest and you decided you better learn how to do it because you have no choice. It’s a great story. But a lot of us don’t start that way. I invested in another YC company that I love that’s a rocket ship and they’re 10 dudes, all guys, which is bad in 2020, all working in one room that have coded together for years. And then they just broke it all up and said, “We’re going 100% distributed.”
Jason Lemkin:That’s such a big culture change from [inaudible 00:20:43] to… What’s your advice if you don’t start there? What’s your advice to folks you’ve met that are at [crosstalk 00:20:50] a hundred and it’s not that I want to have a remote, an extra office, because that’s not the same.
Wade Foster:No, it’s not.
Jason Lemkin:It’s not even remotely the same, is it?
Wade Foster:So I’ve given this advice to a few folks and a few folks have followed up on it and it seems to work. If you follow it through, it seems to work. Now, like anything, you have to commit to it, which is, take, let’s call it two weeks. I think two weeks is long enough, but you might need to do longer. It’s enough time where you basically have to deal with it where you can’t say, “I’m going to go back to the office,” For two weeks no one can come to the office. Doors are locked, you can’t show up. It has to be long enough where your default response is not like, “Well, when we’re in the office again, let’s make sure to discuss this.” Or, “When we’re in the office again, let’s make sure to figure this out.” So it has to be long enough.
Wade Foster:It doesn’t have to be the whole company, but just take a team first. So if you have a small team, that team, lock the doors on them, everyone’s from home, even the boss. You have to just do it and figure out, we have a core problem to deal with and we just don’t have any of the tooling, any of the documentation, any of the infrastructure set up to deal with it. And so you’ll just start realizing, okay, we got to start putting in a little bit of a process for this, a little bit of a discipline around this type of thing.
Wade Foster:Then even if you decide, “Hey, we’re not going to be fully remote. We’re actually going to go back into the office,” just the exercise of having done that will make you a better run company. You still decide to run out of an office, you’ll get to bring some good habits from that exercise.
Jason Lemkin:I love that idea. I’m going to think about that. Based on those learnings and your own, what about folks who they really enjoy being in the office if you have an office? It’s their time away, it’s their third place and they don’t want to work, I mean, I’m looking at you on Zoom in your home office, which I’ve seen on a few videos. But not everyone has a home office. Maybe there’s four of us in an apartment in San Francisco and we don’t even want to go to WeWork, right?
Jason Lemkin:Maybe that’s the answer. But what do you do for folks that it’s not just collaborating, they literally want a third place.
Jason Lemkin:Because you’ve got 500 employees, right?
Jason Lemkin:So you have to have thought about this.
Wade Foster:Yeah. We’ve got 300. So we are at a point now where… So first thing, there’s a certain amount of this where if your social life comes from the office, if that’s how you get your connection to your community, a fully distributed team, it might just be tough for you. It just could be a thing of like, “Hey, you should opt out of that.” That said, some of these companies are getting big enough that we’re starting to solve some of these problems too.
Wade Foster:At Zapier, certain cities have a pretty high number of employees. I think Portland has like 25 people for us. And there’s a whole social scene around work for folks in Portland, where we don’t have an office for them, but a person on that team schedules coffee shop meet ups and happy hours and come over to our family’s house for dinner on a Friday night events for the team. Where you start to build camaraderie and a real sense of community around the people you work with.
Wade Foster:And so I think you try and just find little nuggets like that, where you can provide some of that. It’s never going to be the same thing as showing up in an office 40 hours a week. But I don’t know that you need that. I don’t know that everyone wants the full thing, they just want a little bit. They don’t want to feel like they’re on an island by themselves.
Jason Lemkin:Yeah. All right, man. Well, this was great. Thanks for being part of the SaaStr community. I think you were at SaaStr like 2016 or 2017 or something.
Wade Foster:Yeah. It was a long time. If I remember it was like sub-1000 people was the first one I was at or something like that.
Jason Lemkin:Yeah. You’re coming back this year which is great. You’ve done the podcast before. So thanks for everything and thanks for teaching us. I mean, I know doing this kind of stuff is good, but I think really we are learning about distributed teams and no code from you in a big way and I’m personally learning. So thanks for everything that you do.
Wade Foster:Yeah. I appreciate it and thanks to you, as well. I think we’re all learning from the SaaStr community together.
Jason Lemkin:The Cloud keeps evolving, we’re all learning, right?
Wade Foster:Yep. That is the truth.
Jason Lemkin:All right, man. I’ll see you in San Jose and we’ll chat in a little bit.
Wade Foster:Awesome. Thanks, Jason.
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There are some questions in SaaS that are at some level, are almost a mystery:
Why was Veeva able to burn only ~$10m net on its way to an IPO?Yet Box needed $250m? Both sell to the Enterprise. So it’s not that. Yes, Veeva has a very high ACV, with prepaid contracts. That helps a ton. Yet … is that really the whole story?
Why did Atlassian essentially need no capital to IPO, yet Slack raised epic amounts? The same with Qualtrics vs Medallia. Don’t they sell to basically the same customers?
Why was Dropbox so insanely capital-efficient, when Box wasn’t? It’s not just because it’s freemium. Box had a freemium component too, albeit a pretty small one now.
Why did Zoom basically burn nothing, yet equally “fairly viral” DocuSign consume vast amounts of capital? Both big wins. But with vastly, vastly different burn rates.
Why are burn rates so divergent in SaaS?
Now, at a micro-level, we can come up with a lot of factors that explain various burn rates:
Some founders certainly are scrappy. Others aren’t. At the first SaaStr Annual, all the CEOs on our “Second Timers” panel had relatively high burn rate, well-funded start-ups. Perhaps in part because they had that luxury — they already had a win on their belt.
Market-dominant strategy does work in SaaS, at least muchly. If you are good at it, you can win in spaces you are weaker in — once you have a brand. So you might as well play this card if you can and are good at it. A longer SaaStr post on Dominant Strategies in SaaS here.
Some spaces have higher CACs than others. I guess. Maybe. But that’s not really the answer. It’s just a derivative of what I think the “root cause” is. Because if you’ve ever bid on Adwords, you know exactly what drives the price of an Adword up. Competition.
Do you want to compete where it is expensive to compete? Or where it is cheap to compete? The answer is not simple. Because there is a lot of revenue to grab in the spaces where it is expensive to compete.
Now I have had the luxury of working with about 30 SaaS companies directly, in one form or another (institutional investor, advisor, angel, friend). And I have also my personal experience to build on. We got to cash-flow positive bu $4m-$5m in ARR growing > 100% YoY with a sales-driven model. So it can be done. If I did, you can probably do it too.
And yet, in the end, the average SaaS unicorn raises a stunning $370,000,000!
I think one thing is clear to me: your burn rate in SaaS is highly correlated to Your Chosen Competition. If you want to win in every space, that costs more. If you want to directly take on entrenched competitors, that costs more. If you don’t do freemium right, it doesn’t really decrease your CAC. Etc. etc. Who are you? What are you best at? And how do you want to win?
First, find the CAC that works for you. This may sound silly, but it isn’t. As interesting as the 40% rule may be, it’s just an average or a median. If you’re in a highly competitive space, and you’re playing to win, you probably need to spend more to take the incumbents on directly. But if that doesn’t work for you, focus for now on the segment where you are 10x better and get the leads to (eventually) come to you. If you’re a Second Timer and can raise $15m tomorrow, you can go head on with anyone you want. If you can’t .. don’t. Average burn rates, like CAC Averages, are misleading.
Be careful of others’ models and burn rates. You usually don’t know the whole story. Get the real story. Yes, Mailchimp will get to $1b in ARR without raising any money. But do you know why? Yes, it seems like Zoom came out of nowhere. But that’s not really true. The competition was much, much stronger when Zoom started. Do you know why? Before you try to copy Zoom’s business model, you really need to understand it. More on that here:
Capital is a weapon. But don’t let that discourage you. You may need an extra $100m to win your category (more on that here). But if you can’t pull that off, focus on your competitive advantage and triple down there until your cost of capital becomes trivial.
Net-net, if you have a truly differentiated product, that’s a real solution … there’s more than one way to get to $10m in ARR. In today’s world, where everything is growing faster than ever in SaaS, I’d throw fuel on the fire as much as you can. Grow as fast as humanly possible. Just don’t let your peers’ burn rates and pre-Initial Scale growth strategies confuse you. You can pick and choose how and where you compete, and at least in part, your way up to the top.
The true test of marketers. Are you a revenue driver or a cost center? You cannot afford to be the latter. Marketing leaders must focus their teams on the areas that will drive revenue while they cut costs – the biggest impact for the business. Join TripActions CMO Meagen Eisenberg at SaaStr Summit as she highlights her approach to ensuring Marketing delivers on its mission-critical role even in times of uncertainty or crisis.
Meagan Eisenberg | CMO @ TripActions
For four years at MongoDB. Today we’ll talk a little bit about the marketing trade-offs during Coronavirus, or really any, I would say, crisis type mode and things that we’re all learning to adjust to and really about driving revenue while cutting cost. A little bit more about my background. I’ve advised more than 25 companies, seven of which have been acquired in the last two years and three of which have gone out of business. So I’ve seen both sides of it.
But one thing I know through pattern recognition, there’s a lot of similarities across startups and companies as they go through the different stages. Every company is different. They have different personas, different messaging, but there’s certainly some things that I see that are familiar. And so today I’m looking forward to sharing some of those learnings and what I’ve seen.
I was fortunate enough two years ago to be part of a case study that Stanford GSB did on MongoDB with my current partner here at TripActions, Carlos Delatorre is the CRO here and was the CRO with me at MongoDB. And so today I thought I would put it in a case study format. But this case study occurred in the last five weeks. So very new and fresh for all of us. And the case study of course is going to be on TripActions.
So I think a ten-second background on us and what we do. We are a business travel management and a new model for corporate T&E. We are very much a different model in that we’re one platform where you have your booking travel, your consumer-like interface married to your world class travel agents all in one. And so we’re a great experience for your employees but also for your finance teams who are trying to control costs and save money.
So here we are, the unfortunate truth. Companies have found themselves unprepared in the midst of COVID-19 crisis. It’s unlike anything many of us have faced. And with that, we’ve got a complexity of a health crisis and an economic one. We’re all aware we see declining pipeline in revenue, cost controls are at the high, we’ve got major expense scrutiny. We’re looking at everything we do from software to people.
Our workforce is remote. We’re going through layoffs and furloughs, recession planning and for me as the CMO, facing really massive cuts to marketing budgets and headcount. As you imagine, you’re looking at your costs and what you can really adjust. And what I can say more than ever is there’s a Latin proverb out there that says, if no wind, row. And I’ll tell you that is what we’re doing in this case study and I think across the board.
I’ve talked to many CMOs and even CEOs really looking at the current situation and all of us are rowing right now. And as a business, TripActions, we about five weeks ago had to focus immediately on the core. There were four things that we focused on, our customers. We knew immediately we’re in business travel, our travel managers needed our help. Think about what was happening five weeks ago, we were starting to shut down travel to Asia as a start and trying to figure out what does that mean.
And then it started to spread and it started to spread over to certain countries in Europe, all of Europe, UK, and went on from there. So I’ll talk a little bit about what we did to focus on our customers. Second, product market fit. We knew that this is a new world. This is a very different thing that we need to be ready for. And one thing I’ll say about tech companies is that in a time like this what is going to get us out of this is technology.
We see all over Twitter right now, digital transformation, everyone’s working from home. If you have not set your workforce up to deal with this and you are not online and in the cloud and all the things that we need as employees in a business, you’re making that transformation now. Product market fit matters more than ever and technology is what’s going to get us out of this, the understanding of data and getting the insights and how fast we move in tech.
And then third of course, cash preservation. In the five weeks ago my dad, 74 years old. He’s always been in tech over 30, 40 years. And he saw a lot of the news going on and he sent me a text and in the text it said an old saying from a tech guy who’s been through multiple recessions that said, love cash more than your mother. And I got that text and I kind of smiled. It’s so true.
Of course, in fairness to him my parents are divorced. And so I do love my mother, but I understood what he meant. Cash means a lot to really get through what we’re going through. And then of course your employees. More than ever you need to motivate and help your employees get through this. We launched a podcast this week and really it’s around open for business. But the first topic is on wellbeing.
So these are the four things we focused on as a company. I think all companies need to think about. So let’s think about our customers. Five weeks ago on a Friday, the CEO Ariel pulled a bunch of us execs in a room and said we need to pivot immediately. We need to build immediately. We need to do what we need for our customers. Right now they’re dealing with the duty of care. They’ve got to find their travelers and get them home, but there’s more than that that we’re hearing from our customers.
And he said, “Product and engineering are going to build this weekend. They’re going to build a bunch of things that we need. Meagen, sales. Everyone, customer success. You need to be prepared to launch this. Launch it to our customers, launch it to the sales team, launch it to prospects.” And in my mind I was thinking, well, we’ve always cared about traveler health and safety. We have a map. We know where they are.
We know where future travelers are coming. So what are we building over the weekend? And what we talked about is what they needed right away is information. And they needed to come into the tool so they could make decisions. They needed the data and the insights. And the engineering team built an integration to the CDC that fed in level one, two and three. And at the time he really cared about level three, certainly even level two countries and making sure your travelers didn’t go there.
And could I, as a travel manager, start to find out what countries I need to get people out of and get them home? But then also, what do I need to do to block new travelers and make sure they’re aware? You can’t afford to have only a percentage of your workforce on a platform. You need to know where everyone’s at. So if you found yourself in a situation where it was unmanaged and people had booked on consumer site, you didn’t know where they were, who you needed to get home.
So we built out integration very quickly. And then as a marketer, I had to think a lot about, okay, these things are starting to change and what our travel managers care about in this situation. And the third thing is that they needed to blacklist. First, they needed to blacklist by country and continent, Asia. But then we started thinking, well, actually cities as it hit the US and we started to shut down routes as a travel system, what are the tools you need?
And I think tech is uniquely situated to deal with this issue because one, we were a five year old company born after the iPhone and our ability to pivot and build very quickly and our agility is what allowed us to deliver for our customers and what we need moving forward from a product market fit standpoint. And so we built. And really our approach to our customers and the market had to pivot immediately. And that of course affected everything we were doing in marketing.
So as a CMO, I had to focus my team on driving revenue while cutting costs. Because as you know, we took a hit on head count and we took a hit on a budget. So how could I be a lot smarter about it and focus my team on what we needed? And the three things we needed to focus on were messaging and the narrative and the new world, and what customers needed and prospects needed. Two, we had deals in the cycle.
What did we need for our sales team from an enablement standpoint and our CSMs? Our customer success managers needed to focus on what our customers needed in the moment to protect their employees and travelers and protect them moving forward. And then of course, sales pipeline and the livelihood of our business. And what did we need to do for demand gen? Because demand gen landscape changed dramatically.
As we know, people aren’t traveling, events weren’t happening. So I’m going to go into that. I’m going to start with messaging. So look at this. This is our website a little over five weeks ago. What’s wrong with this picture? This is what’s wrong with this picture. The best experience in business travel. Nobody in the last five weeks has been having a good experience in business travel.
People that were away were trying to get home, whether you were for business or for personal, our travel agents were busy. We went 7X on call volumes and chat volumes in a week. It was immediately. And it started in Asia and it started to spread around the world, everyone needed to get home. And then it turned into a wave of everyone needed to cancel future travel. And we even had CEO’s that use our product that were on vacation that needed to get their families home and they called into the airline, to the hotel and they couldn’t get on the phones. All the phones were busy.
And so they actually called into our travel agents and our travel agents immediately got them flights, got their families home, brought them home. So we were helping our customers, we were helping our customers’ families. It was very busy, but it was not a best experience in business travel. And so as a CMO I realized, oh my goodness, all the work we’d done in the last year, every email, every nurture, everything had to be audited and we needed to rewrite it and we needed to do it very fast because the tone and the environment had changed.
We were going into a mode, the tone was serious and it wasn’t this happy, cool, hip thing. It was this, let’s get people home, let’s be serious. And we pivoted very quickly to the power to manage business travel and expenses. And what you see on the right is what we did in about a year of rewriting content in five days, 15 hour days. I had the team working weekends, late nights. And we went through all of these items.
Right away, we had to pivot the sales deck and shift with what we spoke about and what we highlighted. Many of these things, the product already had. We had duty of care. We had things that helped you with business continuity, but it wasn’t what we led with and what we started with. Because before five weeks ago, you cared about the traveler experience and controlling costs. Now you cared about traveler safety and controlling cost.
And so we started to pivot. The sales team had to be trained, all our MDR and SDR outreach had to be changed. We had outreach sequences, we had over 60 of them. We audited them all. We had to rewrite them. We rewrote our entire website. Screenshots changed, graphics changed, quotes with customers changed. We had over a hundred emails that we were doing in nurture that had to be pulled down, rewritten and then re posted, pausing people through them, social media copy.
All our social handles, think about Twitter, Facebook, they all said the best experience in business travel. We had to redo all of those. And then also a week before this really hit, so about six weeks ago, we had launched a new product called TripActions Liquid. It is a corporate card for expensing. And our tagline was, don’t you wish all business travel was this smooth, and really playing off the liquid side of it.
But really travel wasn’t that smooth, it didn’t make sense. And now it was about spend diligence, it was about people starting to work from home and how you enable them to understand your expenses in real time, not waiting a month or two months when they submitted it. People needed to order monitors at home. So how could you enable them? And so we had to change all our display ads, all our magazine ads, you name it. It was a massive rewrite of work.
And what I will say is if you’re today looking at all your content, you should do an audit and do a lot of this pivot in your messaging so you’re relevant for today. And there was a lot of discussions on the channels around not being tone deaf and making sure you weren’t taking advantage of the situation, but that you were really delivering what your customers and prospects needed. And this is just another example of what we featured and quoted started to change and our customers, we had built all these products and we were getting great feedback and they were more than willing to allow us to talk about it.
And it wasn’t about the amazing booking experience and our world class travel agents, we had that. It was about employee safety, duty of care and controlling costs. So if you think about it, everything, when you pivot your messaging, now my second priority was sales enablement, making sure that we took what we had to pivot and what we were building and get it into the hands of the sales team and make sure they were delivering it appropriately.
And that really starts with your pitch and the value that you provide in times of crisis and for business continuity. And so we spent in a very short amount of time what we needed to do to enable the field around that. And then the third thing really getting into driving sales pipeline and what did we need to do from a demand gen standpoint. And here, if you think about pre COVID times, now and post, if you look about your buyer mindset, really we were all focused on our function.
How do I optimize my function? Even myself, how do I optimize what we need to do in marketing? And if you’re at HR, how do you optimize onboarding? And you’re recruiting, you’re focused on that. And now all of a sudden, you hit this period, the great pause, right? And you’re distracted, things are uncertain, you don’t feel connected, people are working remote. In HR, you’re trying to figure out first safety.
Then second, you’re trying to think about how do I get people that are now a part to come together and to work together? Once you get through this moment and you get set at home, now you need to get your employees back to being productive, because we can’t afford the couple of weeks of slow down and then now not to operate as productive as we were prior to this period. So what do we do to motivate?
And across the board, every buyer that we’re working with, that change, things they focused on. And what I would say the most important thing for us was how do we become a trusted resource in this time? What are we doing to provide value? People are seeking information. They’re watching the news. They’re jumping on Twitter more than ever. I mean, Twitter must be exploding. I know I’m on there. I see a lot of conversations, these little town halls popping up, having conversations.
So things are shifting very quickly and you need to realize and shift with your audience. And so how does that play out? Well, we do what we always have done in marketing. You’ve got to make sure people know who you are and where you’re at and how to connect with you, but then you need to hone in and be very targeted and think about how this impacts your account based marketing, your ABM. And now do this with less money and maybe less people.
And so here we are, how do we market in a world where we have to be six feet apart, work from home and not come across as tone deaf? And all these different things that are distracting our buyers and our folks and what do they care about to get business done? Some of you may remember I did a talk at SaaStr a few years ago about how the hell do you get leads right now and more than ever. That is what we’re thinking as we get through this, how do we build pipeline? How do we bring them in, how do we drive value?
And this was the funnel that I shared. And what this is is the mix of things. On the left, you’re really looking at all the awareness. So that casting the wide net, what are all the tools we have as marketers to bring people in? And what do we do to accelerate the pipeline and then keep them as customers? And I’ve gone through and crossed out a few things. Because as we know, we’re not doing events right now, we’re not doing trade shows. We’ve moved to a virtual world like today.
But those in-person things and the way that we created awareness in a greenfield space was to get out there in person to get them aware of us, but then to bond them to us, to have them become fanatics of our brand, that interaction. Direct mails have changed, right? Nobody’s in the office, you can’t go buy an office list and address and send it to them and surprise and delight them. What’s great is the companies out there like Sendoso have pivoted and given us a way where we can engage with them on email and they can privately update their information.
One of the things I love that I saw was Matt Heinz. He sent an email out to CMOs, a few of us and said, “Hey, I’m starting a book club. I’m going to send you a book if you’re interested. We’ll read it in the next couple of weeks. We can come together online and look at it.” And I gladly gave my personal address and I got the book yesterday. And I think what a great way to reach out to your audience to bring something to value.
It was change and adversity. How do we deal with adversity and marketing around that? So I can see the world pivoting and coming up with creative ideas. And part of leading for your team and in marketing is what got you to respond? What are you seeing that gets your attention? What actually makes you open the email, the line? What do you see on Twitter or on Facebook or on LinkedIn that gets you to read it? And how can you apply that to your own company?
And so these things have changed. Now we have less money to do all of them so we’ve got to be really smart. And I think the trick is creating content and value and what your customers need now. And so here we are, that cast in the wide net, brand awareness. How do we let everyone know we’re here to stay in this new world of marketing? Well, we’re not going to do these things, or at least we’re not going to do them the way we used to.
Maybe we’re going to do virtual events and instead of have some cool experience at the event, we’re going to send Uber Eats to them and send them some coffee. Or maybe we’re going to take them to lunch at home and allow them to order because if we were in a sales cycle, we’d take them to lunch. So let’s find creative ways to surprise and delight the people we need to talk to and reach out. But we’re going to pivot.
And one of the things we’ve done is we’ve really looked at what can we do online with videos and ads to engage with folks that are still online. Now I will tell you, things went dead for definitely two and a half weeks. I didn’t see things start to rebound out there in traffic until about April 8th, April 9th. But I think the world went quiet as we all figured out how to get home, how to deal with the situation, homeschooling. I know I have three kids.
How do we make sure they’re set up and what they’re doing? How do we keep our businesses running? How do we figure out the new world and market and learn? The other thing is on the right, press community and social media. Think about this. About a week and a half into this, after we pivoted all our messaging, we decided, you know what? Everyone has questions. Everyone certainly in the travel industry is trying to figure out Coronavirus, where’s it hitting? What’s the CDC doing? What are [inaudible 00:20:20] are out there.
There’s all these questions coming up for our specific community. So within 48 hours, we figured out how to launch a community. And the systems and tech team, Schwartz on my team went out there and he evaluated what was available that we could… We had to buy it, procure it really quickly, went out on G2. What are the technologies that we could stand out? What could we afford?
We were lucky we found technology called Vanilla for that we knew we could go through the procurement process. We might’ve skipped a few steps to get them to stand them up. I had the content team working on the content calendar. Corporate marketing was working with our influencers, partner marketing was working with our partners. Can we stand a community up? And in 48 hours, we did stand a community up.
We had one topic, it was Coronavirus. We’ve now since expanded it. It was a blue background, it was very bland. But then within a few days, we added a much better interface. We learned how to use the product a little better, we add other topics. And we launched community.tripactions.com and we started to see traffic come in and it sits on our domain. And we were able to interact and start to provide value. Our suppliers came in, our airlines and hotels came in and started contributing content.
And it was a great way, I think, for us to build and provide value to our community in a time of what they were needed and what they were searching for. We also were sitting around feeling sorry for ourselves, I think in travel is sad. Things are grounded and people weren’t traveling. And there was a lot of things not great going on. We were working from home and we were missing our colleagues. And we were brainstorming, what can we do?
And we came up with the idea called PassThePlane. And I’ll go into it a little bit more on the next slide, but it was, what can we do in this moment to reach… We’re separated, but how do we come together when we’re apart? Our mission is all about bringing people together. So this is a very awkward time for TripActions folks that were all about the circles and squares and bringing them together. And so we had to think about what could we do?
And we kicked this off as a company and we started to make paper airplanes and pass it around. And most of us have paper, maybe we even have a bill that we can fold up and throw. And we threw it to our employees and I threw it to a colleague in Seattle, and they threw it to a colleague in Palm Springs. And we started to really feel a connection that way. The other thing we did is we started looking at consumer brands.
I feel like consumer brands really get these types of things. We saw McDonald’s, they started separating their arches and really trying to do public service announcements around social distancing. And we thought, “Oh, what can we do?” Well, we can separate our circles and squares. And we did that. We separated them and we said, “Hey, let’s take a few weeks.” And hashtag social distancing, what are the creative things that we can do from a brand standpoint to support what we need to do in the world and be part of it and resonate with our audience and not be tone deaf in what’s going on in the world out there?
And then of course, you’re always thinking about your customers and as you pivot your messaging and product, you need to have the right customer case studies, the stories that you could put out there that make sense. And then really thinking a lot about our blog content and our SEO strategy, what do we do with not a lot of budget? You need to bring traffic to your site and how do you bring traffic to your site? You write content that people value and come to and share.
And so we continued to build a lot of content that was relevant for what we’re doing today and what’s needed and get it on our blog and share it and work with our influencers. So that’s the brand side of the world. Here’s PassThePlane. So far we’ve reached over 5.6 million. I certainly invite all of you to do it. There’s something, I think, amazing out of the sadness when you do this with your colleagues as one and even your family.
My dad is remote and at home, isolated of course. And I know he loves airplanes and I pinged him. I text him and I was like, “Hey, you love airplanes. Will you make an airplane and throw it?” And he was all over it. He took a video of it, did it, he videoed it and then he sent it and he tagged my nephew that’s down in Albuquerque. And then my nephew did it. And it’s amazingly easy to do and I did it with my kids that day as well. And to see them doing it and having a little bit of joy in times that are not great and how it can bond and bring you together.
And there’s something I know in your company and in your world that would resonate with your audience in ways that can bring you together. And so that’s something that we did and that we launched. So to balance the brand awareness and what are you doing out there with your community is now how do we translate this into demand and identifying our targets and getting them in there and really thinking about the ABM side? Well, we can’t do these things the same way anyway.
We certainly can’t do thought leadership round tables in person, and we can’t do the sporting events. And the direct mail, we can adjust it to the email and trying to personalize it or sending them things like I said about Uber Eats. And one of the things that we did that we’ve seen a lot of success with is thought leadership office hours. We thought, well, people are coming together in the community. We brought our CAB together, our customer advisory board, but we also realized CFOs right now are working double time.
They’re trying to figure out how to preserve cash, how to control costs, how to forecast out, how to run the business and maintain it successfully through this time. They have things they need to talk about. Could we create a webinar to bring them together? And we have run four of these now where we brought CFOs together and seen an amazing response. And it’s not about us talking about our product. This is about letting CFOs and our customer network and our prospects come together to talk about what they’re dealing with and ideas.
Same thing we brought together HR leaders and bringing them together and thinking about procurement leaders and certainly travel managers. And so can you bring communities together? I know I’ve joined several CMO ones that I have found invaluable to be learning from my peers and understanding and working with them. Certainly measuring and tracking. We’re trying to figure out what’s working, what’s not. Our budget more than ever, we need to make the most of it.
There’s a lot of great technologies we’re relying on right now to give us that information. We’re doing much more personalized videos and ads. So we’re only putting ads in front of our target accounts. So we are efficiently spending our money. We’ve been working with Terminus to target our strategic accounts and major accounts and seeing some really good results and partnering with our sales team. We’re building out micro sites for those accounts. So it’s very relevant to what they want.
Our sales team has relationships they’re building as they go through the funnel. And it’s important that when this company comes to the site, they see the things that matter to them specifically. And then of course, our persona messaging. More than ever, there’s a lot of noise out there. And if you have a few different personas and you’re sending them all the same thing, they’re just going to delete it. What does finance care about? What does your CFO care about right now? What does procurement care about? What does the travel manager and HR…
I guarantee they’re all different things and that they need the relevant information. So as I said, we created office hours for the different personas but also just messaging to make sure that we’re on spot. And what I will say, my team has definitely been rowing, right? Really trying to figure out what do we do to keep the moment up and moving forward. And with that, these are some examples, generating demand by becoming a trusted resource. That’s what bonds you to your customers as you’re adding value to them.
This week, as I mentioned, we launched a new podcast. We’d love to have you all go and check it out. It’s called Open for Business, which all of us hopefully will be in the… We are now certainly, but as we come out of this and get everyone back to business in the next couple of weeks, coming months. We launched one this week. We’ve also set up workshops that are specific and we worked with an agency called FESTIVE ROAD that are helping businesses figure out what is the tools, what is the roadmap, what are the policies that they need moving forward?
And we’ve launched something called Route-Based Recovery. It’s the reverse of blacklisting. If you think about it, we started to shut down routes as travel in the world started to be impacted. Now there’s going to be routes that are going to open back up. You may fly SFO to Norida or to EWR or whatever your routes are for your company. And you’re going to want to only open the routes that you find out that are safest for your employees or at least you’re informed.
And so we have that integration with the CDC, how do we help our travel managers figure out where they can start to allow their essential workers to travel? Because executives are going to need to get on the road to talk with customers and prospects. Your top salespeople are going to need to get out there to meet. We know more than ever that end person connection does matter. And when folks and the country and the world is ready to do that, we want to make sure businesses have the tools they need.
So workshops are a great way to help and provide value. I talked about the persona based wiki resource centers. We’ve launched these amazing resource centers by persona that’s not just about us. If you make it about you, they won’t stay for long. It’s got the information they need out in the market to do their job better. We also launched… it’s been a busy week. Thank you marketing team for building. We launched our TripActions Academy. We launched six courses this week.
One thing we know during recessions and depressions is people go back to school and they retool. Community colleges get really busy and all of us need to retool our skillset for where people are hiring, what people need. It’s a competitive marketplace. And so we’re launching this to get people certifications and learning so they can be even better at their job. And also people are at home right now and they may have some time to focus and learn. And what better time than to do online courses in school.
So we’ve launched academy.tripactions.com for our customers and for prospects, and really anyone who wants to better themselves in this time. And then persona based calculators and different ROI tools. Right now in finance, they just canceled a bunch of flights and they need to understand what’s the impact. What’s the financial impact of flights and credits that they have and cancellations and the tools that they need so they can spend wisely and make sure they’re taking care of their businesses?
So all ideas and things that you can do to provide value to your customers and move forward and help them. And I definitely believe more than ever, I’ve always thought a true test for marketers, are you a revenue driver or a cost center? And I thought about that before this, but really now more than ever we can’t afford as marketers not to drive revenue and show our value and to be able to showcase that.
And I believe more than ever you need marketers in this world because we’re understanding the audience, what we need to do and enable our field team to quickly pivot and message. We need to be creative right now. We can’t be tone deaf, we have to add value. There’s just so much that we need to do right now. And really that’s what I have to share with you. Thank you for your time. And I’m open for questions. Let me see. We have a Q&A here. And I might need some help from the SaaStr side. Let’s see here. Clicking on the Q&A, maybe I have to escape out of here for a second. All right. Here we go. I see our chat.
Hey, Meagen. I’m also happy to read you a few questions if that helps.
Yes, if you would. For some reason the Q&A is… There it is, now it’s popping up. So Meagen, I’m interested to know if you’re able to generate any prospects after changing all the messaging, especially in the industry you’re in. Yeah, that’s a great question. We are usage based model. So if people are not booking hotels and travel, we don’t have that revenue coming in. But what is interesting about this time, we had our second largest month in the history of the company in March.
And why? You ask why would that be? What people found is certainly if you were unmanaged, you did not have a platform where you could track or know what your employees had booked, you could not fulfill duty of care. If your employees went and booked on a consumer site, you had no idea where they were. And how do you reach out? How do you protect them? How do you get them home? How do you look at future travel and make sure they cancel those and get that money back for the company?
And so we saw a lot of unmanaged companies go to managed, also enterprise and mid-market that had managed solutions more than ever needed not just the traveler map that we had and the ability to find out future travel, they need to blacklist and they need to get this data and information. So yes, pivoting the messaging and making sure we’re on point definitely brought in prospects and conversations and made us very relevant more than ever. Because there’s certainly employee traveler safety and controlling costs.
The second largest cost for companies is actually T&E for most companies, it’s either second or third. And so this is top of mine. And as I mentioned before, you’ve got a lot of credits you need to manage those. So second question, how big is your team to be able to pivot of your content that fast? How much in house versus outsource? So I did take a hit as we scaled back a little bit, my team is now 32 people. And I did not outsource, actually we cut budget.
So I have a very strong team and we really are builders and created a lot of content. And I have the systems folks in house, I have the content, I have the corporate marketing. We have really good relationships with customers and our partners. And so we were able to pivot and we have strong sales enablement and alignment between marketing and sales to make that pivot. But there were some long hours. I don’t want to necessarily ever go through that experience again. But we were able to do that in house but it was definitely a balance of tough love and motivation for all of us to get through that.
Next thing. It sounds like your team came up with a lot of creative ideas for adapting to the new situation. Can you talk about the ideation process used a bit more as a leader? How did you encourage? So we immediately imagined we’re all remote. I did stand up meetings every day in the morning, and we still do these with my directs, and then did a rap meeting at the end of the day at 4:30, 5:00.
And so at the beginning of the day it was, “These are our top three priorities: messaging, sales enablement and sales pipeline. Where are we on the projects? What do we need to get done? Who’s owning what? What’s the feedback?” It was very like a war room every day in the morning. And I feel like we’re still kind of in war times. And then at the end of the day, it was check in with the entire marketing team, how’s it going? What are we seeing here? Can we follow up with this? What does the sales team need?
So more than ever, you need to come together and communicate. And it is a balance of, like I said, this tough love. You need to motivate everyone but be very clear around the situation that we’re in and what we need to do to get through it. As far as fostering innovation, every meeting I kept a section, an expansive section where it was brainstorm. I need everyone’s ideas, the whole no idea’s dumb and nobody cut it down.
Let’s start riffing on a few ideas and everyone just start… what are you seeing in the market? What have you seen consumer brands do? What can we be doing? And just get those ideas out there and can we build on it? And then also we’re very busy on Slack with ideas and the marketers are creative, right? So I was very proud and impressed by the team. We just kept coming up with ideas. Let’s build a community, can we pass the plane to each other? Can we do something to bring us together?
Can we build an academy and a university? What are we needing? I think this is the fun part about being in marketing. It was horrible but yet fun. The art and science of marketing like what data, what is it telling us, but now how do we get to do the art side of it? So the next one, how do you think about reprioritizing program and ad spend? Specifically would you… It moved. Would you focus… I lost it.
Specifically, would you focus first on capturing high intent bottom of funnel programs or instead focus on lower conversion, lower costs? Oh man. What I kept thinking about was how do I do it most efficiently and what’s converting. Something I saw interesting is certainly in the travel industry, a lot of companies had to make cuts as you can imagine to conserve cash and to go to the core. We saw people stop bidding on our brand terms.
So we didn’t have to spend as much money on brand terms because the smaller players are cash preserving, everyone’s focused on their core business. And so I don’t think it’s a time to pull out of paid search at all, but actually we are able to spend more on different types of terms like business travel management because I think marketing teams got distracted or cut. And so our ability to keep building content that people needed and to keep bringing traffic in.
I don’t necessarily have a good answer. I think you have to look at what you’re seeing in your business, your traffic and what’s converting and what’s not and focus on that. I think it’s going to be a little different for everyone. But I do think paid search and organic is something you should focus on. And content really matters, focus on the right content and tap into your influencers. They’re out there. Everyone’s willing to help.
Our influencers and partners were awesome in this environment. They got it and we were creating content that was necessary and valued and they supported us. It says, if you had to find places to cut social search, where and why? Originally I was thinking we need to pull back in social, but actually I think people need social more than ever because everyone’s on social. We’re separated and isolated and we’re all going online to figure this out.
I’ve spent quite a lot of time looking at Twitter, communicating, exchanging ideas. So I still think you need social, but I think that’s something many people can get involved in. Our CEO’s involved in that, our sales team is on social, has been trained and enabled and your customer success managers and your product… a lot of people you can bring them up to speed if they’re not up on speed.
But I think it’s a worthwhile all hands conversation with your company about what you need from them and how their reach and their networks matter. And it’s, I think, a cost effective way to do it when you don’t have a lot of budget. Let’s see. What should we do with all the physical material we had planned for our previous marketing campaigns? We definitely have the surprise and delight marketing materials. If you’re running social programs and people want to privately opt in for you to send them stuff, there are great programs like Sendoso I mentioned, or Snappy I think.
There’s a couple out there that will allow you to engage with customers and prospects where you could ship directly to them. There is a time that we are going to come back together. So as long as it doesn’t say 2020 on it, we may change our dates on things. I think you can use it or is there a way you can check in with your employees and do things for them? And I think there’s always ways to surprise and delight, or can you donate it to a local organization that could use it? Do you have something of valuable…
There’s lots of organizations trying to help people. I think it’s a time to be creative with that stuff for now. And if it’s branded best experience in business travel, maybe wait a little bit on that stuff. Let’s see. How much time are you investing in creating COVID-19 related content? I would say the first couple of weeks, very much in that. I mean, everything we’re building will help in any really, I think, crisis. But specific to us it’s very relevant in business travel.
There was SARS, there was 911, there’s been many things that have disrupted travel where you need tools to take care of your travelers employees. There’s always going to be times that we need to control costs more than ever. I mean, we should be always thinking about controlling costs, but making sure people have the tools for that. So I think it matters. We don’t know how long things will go, there’s many unknowns. I don’t know. I feel like it was more than worthwhile to focus on what our customers and people needed in that time.
Next question. How do you tailor marketing messaging to reduce churn and increase engagement from current customers? I mean, churn matters right now more than ever and especially in SaaS. Your CFOs are looking at your spend and they’re ranking your software and they’re drawing a line and they’re questioning are these still necessary? If you had to rank your software, what do you need in the future and where are you cutting? They’re negotiating and they’re doing different things.
So more than ever you need to enable your CSMs. Part of the three things I had to focus on, the second one was sales and CSM enablement. Your CSMs need to be connecting with the customers, driving value and making sure one, they know we’re there for them, but that we’re building for them. And if you’re a tech company, which most of you probably are and SaaS, I mean, what’s going to get people’s business back to business is tech.
What we do and what we build and the data we have access to companies need and we can provide value and we can pivot and find product market fit. That’s what startups do, that’s what tech does. And so be communicating with your customers what you’re doing to add value so you reduce churn. And some, you won’t be able to reduce. If you have a lot of SMB and commercial companies and they start to go out of business then that’s out of your control. But what’s in your control is what companies need and what you can build for them and focus on those.
It says, we are a very small team at the company I work at, resources are limited. I’m also entry-level marketer. How do you overcome feeling overwhelmed and help create content in a timely manner? Definitely all of us are feeling that. At least once a week, we did it twice a week in the first couple of weeks, but take your team on a Zoom walk, follow social distancing rules. They can walk around their apartment, their yard, their house.
Keep the distance but there’s nothing like being on Zoom and seeing the blue sky and getting some sunshine. So first of all, if you’re feeling that, get some vitamin D. If you’re in the Bay Area, we got beautiful weather coming. Sit out on your porch, your balcony, your front step and soak up that sun for 10 minutes then come back in, take a deep breath and start building content.
I do think you have to balance your mental health and feelings so that you can be productive. And so do that, take that moment and then come back in and get busy. I’m also a morning person. I do my best work in the morning. I wake up at 4:30, the house is quiet. Like I said, three kids, three dogs. I take that time to recharge, to get ready, to answer follow up and to create and build and write content.
So I think that balance matters, but you do need to build content and put yourself in the shoes of the people you’re writing for and what they need or call up your customers and ask them, what do they need? What’s top of mind, what information did they search for to do their job? And then try and curate it and find it for them. Let’s see, you said you had a large month in March. Yep. Do you think this mainly due to the change of voice from SDRs? How did the process change?
I think it was large because we delivered something that people need and we tapped into what they’re looking for and the value. And I think that it’s your awareness and you’re messaging that you’re putting out there and the content that you’re putting out there, it’s making sure your SDR certainly and your BDRs understand the environment and what needs to happen. It says, how did the process change for sales to be able to close new prospects as the pandemic continues?
Well, I mean, they need to focus on their target accounts, what those target accounts need. One of the things we’re certainly seeing as we deliver T&E, so travel and expenses, is our CFOs need to know right away what people are expensing. You can’t afford someone to maybe leave your company and turn in three months of expenses, $40000 worth of expenses you didn’t even know that was coming. So what you do need is to know in real time.
So what are we delivering in real time for CFOs? Well, we have something called TripActions Liquid that shows you what they’re expensing in real time and you can set the policies and you know and you’re not caught off guard. It’s making sure you’re showing what your persona and audience needs right now. So what I would say is moving forward, we’re making sure our sales team is talking to what our audience needs right now and the engineering team is building. We are building what they need, and then we are quickly making sure we understand and deliver that to market and we have the right messaging.
What about the customers asking for a discount in the interim period, likelihood for churn? I mean, that’s the natural state of things. Some of your customers are going to need to do that. They’re like all of us trying to figure out how we do it. And some cases, if they’re in dire straits, you’re going to figure out how to support them and do what they need in the time. Maybe you’re going to give them some reprieve for a month or two months, or maybe you’re going to, okay, full due at the end of the year.
I don’t know. You’ll figure out that creative thing that you need to do so you can keep your customers and understand their situation. Certainly I ask for those customers that are doing well and on the other side of this cut some slack to your vendors. But it’s a partnership and I do believe we’ll get through this, we’ll figure out what that is and we’ll have the conversations. This is not the first time companies have gone through recessions or negotiations during tough times. And so we’ll figure out what that looks like.
Did you use platforms like G2 and Capterra? If so, did you see any increase in lead flow from these channels? Yeah. So I’m a huge fan of G2 for some obvious reasons. But yes, I mean, we use G2, we look to our customers, they’ve got a great quarterly report that they put out there that shows that we use as enablement for our sales team. They just did a great report for all of us, the top SaaS companies, the top tech companies, the most loved companies.
So they’re doing a great job to help all of the tech companies and SaaS companies out there to surface the voice of their customers. And that’s what we should look to. We should look to people’s customers and what value they’re getting out of the software and have the voice of them. And so, yeah, we’re definitely to answer that question, leveraging G2. Let’s see. With the different marketing streams discussed, what is your rough allocation of each?
Well, five or six weeks ago? I would say budget, we probably did 40% towards events and pipeline and acceleration and person stuff. So when I took a budget cut, I whacked that. And that’s probably the right thing to do. Now when I look at it, people right now are focused on building content. It’s the software we need to take stuff to market. I would say it’s paid search. And it’s content syndication, it’s working with our vendors.
Skift and BTN are out there creating amazing content for travel managers so we’re working with them to make sure we can provide value as well. So I would say it’s content syndication, it’s paid search, those types of things, direct mail through creative means. How are you to manage to be a revenue generator and how did you calculate that? Well, part of being a revenue generator is being able to prove that you drove the revenue.
And we’re fortunate that we do have a pretty, I would say, sexy text deck. We added over 20 martech in the last year that allows us not only to optimize our website, but to understand and really look at our funnel. We have things for sourcing and attribution like Visible, we use Full Circle CRM. We’ve got obviously Salesforce, we’ve got LeanData. We have a bunch of tools that are allowing us to monitor everything that comes in and then see what’s sourced converted and prove it’s not just about MQLs, I follow serious decisions.
It’s not just about qualified leads. It’s actually, did you help build and source pipeline? And then what close did it come from marketing or not? And can you trace that back? So you definitely need the systems to prove that you drove the revenue. And then influence. I would say there’s not many things that get closed in business that you didn’t influence somehow from a marketing standpoint.
Somehow they found out about you. Prior to this thing they found out about you through word of mouth, they found out about you through an event, through something on display, through conversations, a lot from your customers, through paid search. But then they came to your website, which if you’re in marketing or running your website and optimizing and capturing the people that are there, they came through content networks and syndication. And then you had to provide proof.
There’s hurdles they went through to buy your product. Did they want to find out if you were secure? Yeah, they did. Did they want to find out if you’re going to be around for a while? Yes you are and this is the proof. Your sales team can tell you what hurdles they’re facing and what enablement content they need to do that. So all the content you create, you should be tracking. We create campaigns in Salesforce for every piece of content. And whether it’s sources it or influences it, we can tell every person that has touched this content and we track that and look at it and then all the ways they come in through the channel.
Has your organization TripActions seen the uptick in webinar attendance? Yes. Our office hours are awesome. I’m really impressed to see the number of CFOs right now, VPs of finance that are attending our webinars and that are engaging with us after. We don’t sell in the webinars, we’re bringing them a community together. But they come to us and they ask us. They hear about something that we’re doing because our customers are there and they’re talking about some of the tools that they get from us to solve problems and then they’re coming to us.
So yes, our webinars, I call those webinars, they are there. They’re Zoom, they’re office hours. So yes, we’re seeing really good success with that. I mean, and look at right now here we’re on SaaStr summit. And the number of people that I have registered and attend is high because we’re all trying to get information to figure out how to build and run our businesses. How much budget should be spent by startup for their ads currently via ed techs? Okay, for ed tech.
I mean, it depends. If your audiences are there and you’re seeing you’re getting in front of them. I mean Terminus, we use, is a great way to get in front of exactly the audience we want. They can do it by the company. And we use Bombora as well just to understand which companies are in market now. So that combination is a great combination. And so I think it depends what’s working for you and where your audience does that.
So I’d ask your customers, what are they looking at? And then go put your content there because they represent your future customers for the most part, unless you only have five. But if you have at least 20 to 100 customers, they know. So let’s see. So would direct outreach be a good strategy in the current situation? Direct outreach, yes, is a great strategy if you have something compelling for them.
So if you have a message that resonates and you’ve enabled your SDR team with the exact messaging or your sales team. Because you get 14 seconds, right? We all have, I always heard, the attention span of a goldfish is so many seconds. So you need to be able to give value immediately before you get hung up on. And so are you saying exactly what that person needs to figure out at that time? So yes, outreach works if you have the right messaging when you make that call and your field team’s enabled.
Any advice or plans on how to reduce customer churn in this recovery period? Provide value. We launched our academy to better them, to make sure they’re learning and they come out of this with even better information and we’re helping them control their costs and save money in this environment and what they need. So, yes, if you want to reduce churn, provide value, deliver what they need, pivot the product if it’s necessary, make sure your CSMs have everything you need.
And bond with your customers, be creative. If you’re on virtual conferencing or Zoom, create clever backgrounds when you come in. We’re all playing with it. But what if you find out your customer loves The Warriors, can you put like The Warriors on the background of your Zoom and just surprise them? Or they’re from Texas and they like a Texas team, can you do something with Texas in the background or what’s their alma mater?
I don’t know, find something to bond with your customers and surprise and delight them in the environment that we’re in now and be there for them. What do you think about doing virtual events? Would we see the same ROI? I don’t know. We did a big conference traverse. We saw a ton of money from our customers bonding with us and signing up and enterprise and all of that stuff.
What I meant to say was we spent a lot of money on it to bond with our customers and we were going to do it again. And now we need to figure out are we going to do a virtual event? And we probably will, we’re probably going to test it, but it’s going to be different. And we’re going to have to find ways to bond with them and we’re going to have to do it in a cost effective way. And we’ll see, I think it’s going to be a big test for a lot of us.
Part of being in marketing is that you’re testing and more than ever, we have a new environment we’re testing. And if we do ours in September or October, I’ll let you know. Or I bet SaaStr will have a good case study on this for all of us after this week. But we’ve got to find a way to bond. And if people that’s how they’re digesting information, then that might be the way to go. Let’s see. What type of demand gen campaigns are you running during the pandemic?
Well, we’re talking a lot about business travel continuity and the business travel continuity checklist. So we’re creating things that people will need to deal with the situation, ROI calculators I talked about, all of those are things that are value that people are willing to exchange their information for. And so those are things that are relevant that are customers’ need. And we’re seeing a lot of inbound around these types of checklists, ROI calculators, stuff like that.
When you launched TripActions Academy, was it targeted to the unemployed that would learn skills to get a job? No it was not. Actually it’s for our customers out of the gate. We invited our customers. We enabled our CSMs to talk about it. This is like version one phase zero, whatever you want to call it, the six core courses. And we have 20 under works that we’re going to launch. And it’s open to anyone, but we will invite others to join.
And I think if you do them really well, even when we are hiring and onboarding in the future, our own employees will take this. It’s teaching them about the industry, the business, it teaches about best practices and managing travel, what our customers care about. So I think it’s a really great investment almost for any company right now. So no, it wasn’t built for the unemployed, it was built for our customers. It was built for our future customers from that standpoint.
Two questions. On which social media platform are you seeing most traction and how much of a conversion? So I mean, when I talk about social media it’s more about engagement. Over a month ago, I would’ve said Facebook. I still think a ton of people are on Facebook, but Twitter, like I mentioned, I think is blowing up. People are having conversations on Twitter. That’s a really fast way to get information. It’s kind of fun.
Some parts are sad, there’s a lot out there, but it does kind of keep you top of mind and in marketing on what people care about in the moment, what they’re thinking about. So I would say Twitter is a big one. Instagram, we used to be out there in the world taking all these cool pictures of what’s happening in the world, now we’re all taking pictures of our backyards and spraying and things. But people are still on Instagram and that converts over to Facebook. And your really deep networks are on Facebook so I think it’s a great way to connect with your deeper networks.
And then certainly LinkedIn. A lot of people are in LinkedIn right now, whether it’s talking about the value they can bring to customers or looking for kind of their next thing. So I think those are kind of the top four. Let’s see. With the gas lighting and major saturation of COVID related content, how are you keeping a finger on the pulse, the psychology of our consumer, blogs, writers sources to keep an eye on? I think your customers are the light of it.
You yourself, as a human, think about how you’re feeling as a human and what you want to see and hear and what turns you off and what makes you curious. So for me, I mean, I wake up early and I get on and I look and I start to exchange with my colleagues that are all either in Europe or the East coast, they’re on talking. My team that’s in London, Katie and team are sending me stuff and things that they’re seeing.
So I think part of keeping out a pulse is you need to be out there. If you’re in marketing or you’re a CEO of a company, you should be there engaging and talking. And that’s how you kind of stay up on it. And your marketing team, I mean, we have a marketing channel and folks are engaging and dropping topics and generating ideas of what they’re seeing and what they think and create that environment where you’re team feels comfortable doing that.
Let’s see. What do you think about renewals? People don’t have cash flows. I’m not sure I understand that question. What do you think about renewals? People don’t have cash flows. I mean, I think if you’re saying, should we be concerned about renewals as a SaaS tech company? Yes, focus on your customers, they’re going to be picking where they’re going to spend their money and what’s going to help their companies the most and what they need. Come up with creative ways to support your customers and add value.
Let’s see. Most travel tech companies are usage based, do you think we will start seeing more subscription-based? You know what I think is interesting about that? Is if I’m buying software, if I’m not using it, I don’t want to pay for it. So if you’re subscription based and I’m not using you and I’m paying you, I think that model actually in this time is not great. If I am using you, then I should pay for what I use. So while it sucks right now because nobody’s traveling, I actually think usage based is an advantage.
When you use us, you’ll pay for what you’re using. So I think as we come out of this we’ll be attractive to those that are controlling costs. What are the metrics you’re looking at as leading indicators to measure the return to normal? Well, we have a ton of data on people booking. I will say people are starting to book. So we are definitely getting excited to see and to look at kind of how far out they’re booking, where they’re going. So definitely seen that tick towards the future.
Our leading indicators are people booking. That tells us they have a place to go, they’ve got some essential travel, things might come back to normal in the next month or two. But let’s see, right? We’re going to follow the government and follow the CDC and do what’s right for the world. How do you engage with customers and prospects to keep your company top of mind? Add value, making sure you’re delivering. What is the one thing you would recommend marketers not do?
Well, we had a situation ourselves where a competitor actually put out in the market that we’d gone out of business. And they did it in a way, they pinged our customer that they had lost to us at the beginning of the year. And they said, “Hey, well, what are you going to do now that TA’s out of business?” And our customers forwarded that to us. And it was such a sad moment and time to see a competitor take advantage of a really horrible situation and to lie and to put false information out there. That is something, if you are enabling your BDRs, your SDRs, now is not a time to lie about your competitors or put forward any of that stuff that’s not true.
And so how did we react? I mean, we created a blog. We wrote, we reached out to our customers, let them know, “Nope, we’re here. We’re in Europe, we’re in Asia, we’re all around the world.” We had to do what was smart for our business. We had to preserve the core. So we are here for our customers now, tomorrow, in the future. And we know we did what’s right for the business and we had to address it. But that is something I would not be doing as a marketer, have some integrity as companies and don’t do kind of stuff.
You said, when marketing budget profit fall down a company, in this situation what should we do? I think what you’re saying, if budgets are cut what should we be doing? I mean, what I did is I focus on what I think matters the most. I prioritized, I had my team align around three very… now’s the time to focus and execute and track results. So that’s what I would do. And I think content is the way. You can build content and get it out there and it drives organic and it drives value and that’s what you should do.
Can you talk a little bit more about PassThePlane challenge success metrics, goals? Yeah, I mean, we didn’t set up success metrics for PassThePlane. That was something we needed to do as a company, we needed to do as human beings. We certainly were excited when we saw it take off, when we saw partners get engaged, when we saw our employees all around the world pass things, when we saw people we didn’t even know, when we saw families and a glimpse into family’s lives and their kids.
That I think was the great part that came out of it. We did not have goals. Normally, you would set up these brand campaigns and you would say, “This is what we want to see. These are how many reach,” and all that. We moved very fast. We didn’t set those up. And it was something that we did initially with the company and we saw it and we started to put it out there and we built a landing page to educate people on it.
We didn’t brand it with our colors. We invited our competitors to get involved. We really just want it to be something for the travel industry, which as many of you know is really taking such a big hit. And so that was what we did it for. But certainly excited to see over 5 million folks be part of that. Is it that a manual thing to track your marketing in Salesforce or what tools help you to do that to track campaigns?
We use the campaigns module in Salesforce, allows you to track members or leads and it spans across the leads’ and contacts’ databases to track all the way through the funnel. And so as you create campaigns as leads come in, they need to be tagged. So when you go web to lead or web to Salesforce, you need to have it set up on your forms to assign it and track it to the campaign, to put it all the way through.
So have you restructured your team during this crisis? Like I said, I shored up on content. My field team shrank and started to focus on webinars and online events. I pivoted some folks that were focused on some of the social side really heavy on digital and social. And let’s see. As far as scaling back on my original 2020 plan, I mean, events went out the window so that was a big scale back. We had plans to do more out of home advertising obviously. Not many people are going out of home right now and billboards and stuff. So that got put on hold.
Advice for early stage travel SaaS startups, figure out your market. Product market fit matters. So really any startup focused on those first five customers, the next five, get to 10, get to 20. It’s really more about solving a problem for the customers right now and partnering with them to solve that problem and then figuring out what sticks and find the product that many people will need so you can scale.
How do you validate your ideas and choose from a bunch? I mean, as you start to run it, it gets validated, the people engage and it turns into it or not. If you have a bunch of ideas, I mean, I think that’s part of being a leader is figuring out what you’re going to go test. You’re listening to your team, you’re thinking about you got a gut feeling, you’re pulling your customers and you’re bringing all of that data together to make a decision and you hope you make the right decision. And you have to give people the ability to fail, right?
Not every idea is going to work. And I think if you don’t allow some ideas to fail, you’re not going to get good ideas and the crazy ideas, right? It’s the crazy ideas that sometimes win that you’re not expecting, because that’s what breaks through the noise. So that’s my thoughts on… you don’t really know until you test it, you have some gut feeling but go for it. And if it doesn’t work, stop it. Try something new.
I mean, goodness knows we’ve tried a bunch of things in the last five or six weeks and learned pretty quickly and engaged with the market. And if we got information back that said, “Hey, no, that’s not working.” Then we stopped it and then we tried something new.
Hey, Meagen. It’s Webber from SaaStr. Just giving you a quick update. You have about time for one or two more questions.
Thank you. I know we’ve gone long and I appreciate those that have stayed on. It says, could you summarize the vendors you mentioned on this talk that helped you all? So let’s see here. Vanilla forums helped us get our community kicked off. TalentLMS open source, way to stand up your academy. We had to procure software really quickly, it had to be affordable and in our budget and something we could put together and learn very quickly.
Sendoso helped us from a direct mail standpoint. Snappy, a lot like FESTIVE ROAD, is an awesome partner of ours that we’ve been working with. BTN, if you’re in the travel space and Skift. Terminus, another vendor that’s done awesome work with us to get our targeted ads out there and quickly learn and go through stuff. I’m sure I’m missing… Podcasts, we’ve worked with some podcast stuff I don’t know off the top on that.
Let’s see. What tools are you creating for your calculators? I’m not going to remember the name of the calculator. I might have to post that later. But we do have one that we’re working with. Did you guys cut budget? Yes, we cut budget by half, 50%. So yes, we definitely cut budget. That’s the way to become efficient and productive and really help your team prioritize. Lose your budget or half your budget to nothing like focus and I guarantee you gravitate to the stuff that’s going to work when you do that.
Let’s see. How do you set yourself apart from other big TMCs providing tools, et cetera, these tools are still out there? Well out of the gate, there’s a reason we have 4000 customers using us. We are a very different… you need to tell your value prop. We are differentiated because we are one platform. We are amazing tech, that is the booking side of it. We’re a consumer like thing with travel agents. We have a service and support. We have live travel agents all in one platform.
The Legacy providers were built before the iPhone over a decade, if not 20 some years ago. And they are not able to pivot and iterate like a startup can, they’re not agile like we are. And by not having it on one platform, guess what happens if you booked in one tool and now you’re traveling and your agents another tool? You could not quickly figure it out how do you go and get stuff canceled and wait in long hours to get your call back?
I mean, our agents, our SLAs are under 60 seconds because we use a technology we built ourselves called Travel Zen that has everything about you personalized. We know who you are immediately when you call us or chat us. We know what trip you’re on, we know where you are in the world. We know your preferences, your loyalty and the problem you’re facing. And so we can respond very quickly because of that. Our product and our service differentiate us out of the gate.
And if you were out there and had to call in, what I was saying is our SLAs are under a minute, usually 27 seconds. Now our volume went up 700%. We still kept our answering and response under six minutes those two weeks of terror for everyone. We had everyone online, trained, ready to go to support. Our agents were amazing. And that is because we leverage tech. That is because we are a modern platform, we have access to data and we were built in modern times. So that’s how we set ourselves apart from the Legacy TMCs. What percentage of…
One more I guess, because we need to end this. Have you tried word of mouth through your employees, influencers, any advocacy tools? Yes. Definitely. We use GaggleAMP for that. I use community tools like Influitive. Advocacy is a great way and your employees have great networks and can get the word out there. And so yes, we do use word of mouth and we enable our customers as well to shout from the rooftops their experience with us. Thank you everyone. I know I’ve gone way over, appreciate your time. And Earth Day 2020, 50 years celebration, an interesting time to be on the planet.
Thanks so much, Meagen. And thank you everyone else. We’ll see you in the next session
How much do you talk about Customer Marketing? Be honest.
While the concept may sound old hat to those that have been in the software business for a long time, in SaaS in particular, very little tools, processes, and software are applied to marketing to customers after they are closed.
Over the last 5+ years, we’ve all started to turn Customer Success into a science and a key discipline in SaaS. But Customer Success in many ways has been defined as an extension of Sales. Sales closes, and hands off to CS. While that’s chronologically accurate in most cases, really CS’s cousin should be Customer Marketing. If you do it right, you can keep your customers for 10+ years. Or even longer. And like retention, a marketing journey should also begin again once a customer closes.
Customer Marketing is similar to Demand Gen, but with very different end goals — retention and net account growth. The playbook is similar, but not the same, and needs different content, marketing, and ultimately, staffing:
Customer and Field events. These should be just as much about retaining customers and growing accounts. It’s fine even if no prospects come to your new Digital Event. It’s plenty great if 50 existing customers come. What % of your soft and hard budget for events goes to retention, and what % to lead gen? You can wing it in the early days, but you need a firm ratio and strategy after that.
Webinars and similar. Webinars are an underrated asset. Done regularly and right, they are great way to authentically interact with groups. Do a weekly webinar on something. But what % should be for prospects, and what % for retaining and enhancing existing customers?
Drip marketing. You’ve probably set up automated campaigns to your pipeline now. But what about your customer base? Are you sending them thoughtful content every week or two designed to help them get more out of the product? If so, is it any good? When was it last updated? I bet you don’t even know.
Whitepapers and static content. I bet right now all your whitepapers are about ROI calculators and similar pitches to leads. But how are you helping spread adoption and engagement at the customers you already have? How good is your onboarding content? I bet more effort went into the latest case studies to support sales.
Podcasts, blogs and video content. Podcasts are everywhere today. But it’s hard to get distribution on podcasts and blogs for your nichey-vendor content. They may not generate many leads. But you know who will read and listen? Your top customers. The ones that are responsible for your app, day-in and day-out. It might be better for just 50 of your customers to listen to your podcast than 1,000 folks who will never even convert.
Etc. etc. As you can see, almost every part of the demand gen toolkit can be repurposed for customer marketing.
What should you do? Well one big challenge is resource contention. Your marketing team will get a ton of pressure to generate leads. To help create pipeline. To help sales grow, grow, grow. And that pressure is good. But lead gen also has clear quantitative goals, e.g. grow leads 110% this year. More on that here. If you don’t come up with clear quantitative goals for Customer Marketing, it will never get enough attention.
So while these rules and guidelines aren’t perfect, and need to be tweaked over time, from say $2m to $30m in ARR, you can probably use the 10+10 Rule:
10% of your Revenue Up For Renewal should be invested in customer marketing. Yes, that may seem like a lot at first. But it’s a lot less than you are likely spending to acquire those customers. That’s probably 20%-30% or your first year ACV or more. You’ve gotta spend a decent fraction in retention, or you aren’t doing it right. and
10% of your Targeted Account Expansion $$ should be invested in customer marketing. If you want to grow say $2m of your existing base to $3m this year … that’s $1m in growth. Consider allocating $100k to customer marketing to help “close” that upsell. Don’t just leave it in the hands of Customer Success, Account Management, and Sales.
Depending on how your business runs, this may be a lot of money, and a lot of change. You can tweak the 10%+10% numbers. At least set goals and spend commits here once you have say 2 years of revenue under your belt.
Ultimately, if Second Order Revenue drives a huge amount of your growth (40%+) and you’re not following the 10+10 program … you are probably concentrating much too much of your marketing dollars on getting folks into the funnel. Rather than making sure they are Customers for Decades.
It’s 2020 and SaaS buyers are more skeptical and suspicious, more disbelieving, more unconvinced than they were in 2019. Or 2018. Or 2017. The situation is getting worse. The SaaS Trust Crisis is making it harder to market and sell software and services than ever before.
Godard Abel | Co-Founder and CEO @ G2
FULL TRANSCRIPT BELOW
Thanks to Jason Lemkin and the SaaStr Team for putting on this event in a very tough time. And what I’d like to talk to you about today is the SaaS Trust crisis we’re seeing. Both, how did we get here today? And more importantly for us in the SaaS community, how do we get beyond it? How do we win back the trust of our customers? Today, I’m going to start by telling you a little bit more about me. My background as a SaaS entrepreneur, and then share the big trends we’re seeing in the world of SaaS, both what we’re seeing over the next few years and then also zeroing in on what has changed in the last few weeks in the middle of this COVID crisis. Then I’m going to talk about the crisis of Trust that we’re facing at SaaS industry, and how can we, as SaaS entrepreneurs, SaaS marketers, Saas salespeople, how can we win back buyer trust, so we can grow together with our customers.
A little bit about me. I’ve been building SaaS companies now, since 1999. So for over 20 years. The first company I built was Big Machines. We started way back in 1999 in the midst of the dot-com era. And that’s actually … shortly thereafter, I lived through my first crisis, the bust, the dot-com bust. And big machines, though, ultimately did have a lot of success. We partnered with Salesforce and with Oracle and the company was ultimately acquired by Oracle after a dozen years. Then we went on to build another company called SteelBrick, another SaaS configure price quoting solution. And that company grew very quickly. And after just two years, we were acquired by Salesforce. And then I spent a year at Salesforce working on Marc Benioff’s extended leadership team, and really had a chance to learn how important trust can be, and also really learn from Salesforce, from Mark, how do you really build a global SaaS leader at scale?
And today, I’m very excited to be the co-founder and CEO of G2 where we’re building the world’s leading marketplace for SaaS software. And what I’m very excited about at G2, is we’ve been growing very rapidly. Just last month, we had over five million SaaS and software buyers, coming to G2, to find trusted SaaS solutions, and what those software buyers are looking at on G2, are trusted peer reviews. We have over a million of them on G2, and we validate every review on G2, both with LinkedIn profiles to make sure that these are real professionals that can be trusted, and we have a research team that vets all the reviews to make sure it’s very high quality content for satisfiers. And we’re also pleased, now to have almost a hundred thousand different SaaS products listed there, and being backed by a hundred million dollars from LinkedIn and some great investors that do allow us to keep investing in this marketplace.
And in this time of COVID, we’re also pleased we are able to give back. So we’re supporting charities like Girls Who Code, New Story charity, the American Cancer Society with our G2 Gives initiatives. And G2 Gives, we partner with philanthropies, we partner with some of our customers like AWS and Google Cloud, who can then make donations for every review, to thank their customers. They can make donations for those charities. And just in the last year, we’re pleased to have donated over $300,000, and we’re doubling down on those efforts this year to help where we can. And we’re also very excited, at G2, we did just announce our best-of awards. And please check those out, but it includes many great SaaS vendors starting with companies like Dropbox, SurveyMonkey, Atlassian that, based on amazing customer reviews, we’ve recognized as some of the best software products for 2020.
And now what are the big trends we’re seeing in global SaaS, and how is that affecting software buyers and trust? And I was very inspired when we were starting G2 back in 2012, by this quote from Mark Andreessen, most of you know him, but he was the founder, originally, of Netscape, Mozilla, and really started the whole internet revolution with the browser. And now, he’s an investor, but in 2012, he coined this very famous quote that, “Software is eating the world.” And I think by that, he meant that every business process in every industry is going to be automated by software. And this does create that tremendous opportunity for our SaaStr community, to help companies use that software to automate their whole business. And since Mark shared that quote in 2012, he was very impressioned the software industry is really booming. It’s growing tremendously quickly. And when we started G2 in 2012, software, globally was about a $295 billion industry, already a massive industry. But what’s amazing today, the industry is almost doubled at 546 billion in total revenue.
And what’s really exciting for our SaaStr community, and for me, and for all of us as SaaS entrepreneurs, is this industry’s just going to keep growing. And this is data from Battery Ventures, but you can see that in the next eight years, we’re expecting industry to double, to be a trillion dollar global industry. And even that’s really just the beginning. This was a 30 year mega trend into the future. And you can see by 2050, this industry will be 10 times bigger. And so all of that is what’s leading to the growth of the SaaStr community because businesses need this software, they need to automate their business more than ever. And what is also exciting is that SaaS customers are buying more and more software. And this is true across segments. On the left, you can see data on small and midsize companies, how much software are they buying?
And we have a product that G2 we call G2 Track, where with G2 Track, we’re tracking SaaS spend for almost 2000 companies now, and what’s been exciting over the last three years, we’ve really seen the number of applications they’re using grow. So we’re now seeing small, mid-sized companies using about 90 different SaaS apps. And what’s also exciting is that it keeps growing 20% a year, as there are more and more great SaaS apps out there. And in the large enterprise, there’s an interesting study by Netskope, that they published, but that the average large enterprise now, is running 1,295 different cloud apps and services. And that’s also growing 10% a year. So the average enterprise is adding about a hundred SaaS apps per year. And you can see marketing is the number one user of software, probably no surprise, many of you are marketers. There’s the MarTech 5000.
On G2 alone, we have about 10,000 different forms of marketing software because marketers are really going a hundred percent digital. They’re buying more and more software, but it’s really every team, not a company. You can see HRs is running a hundred apps. There are 87 different collaboration apps in most companies. And so really, for every business now, in every industry, software is becoming more and more essential. And on G2.com, where we’re building, deleting software marketplace, we’re also seeing software booming. Where now, we have 90,000 different SaaS and software products listed on G2. It’s more than doubling year over year, and it is in 1700 different categories. As software does keep getting more niche, new categories are popping up all the time, and you can see on the right, the biggest kind of areas, I mentioned marketing software, the MarTech stack keeps growing, also ERP financial software, office and collaboration software, HR software.
But again, I think this is very exciting for us SaaS entrepreneurs. There is, you know, tons of innovation, tons of new categories being created every year. And we’re seeing this as a global trend. And last year at G2, we took our company global. So we opened offices in Bangalore and Singapore, for Asia, and we also opened an office in London. So now we’re getting data really, globally on how is the software industry growing? And what is really exciting is that, especially in Asia, and, in January, I was in Chennai, where they have a SaaSBooMi conference now, which is kind of the SaaStr of India, I would say. And there were thousands of Indian SaaS entrepreneurs there. But what they’re really seeing is, in Asia and India, SaaS is really growing explosively, as it is globally. But we saw just in Asia, 127% growth last year in software buyers. Europe also growing 120% last year. And of course, it does keep growing here in the US but now SaaS is a global phenomenon and software buyers everywhere in the world are looking for better products.
And what’s changed more recently in the last few weeks? Now, I think we’ve all seen it, felt it. Hopefully, you’re all keeping healthy, but we’ve seen a tremendous impact on the economy, you know, as we’re all now forced to work from home. And so we did do a survey and we’ve been doing research to see how is the COVID-19 economy, how’s that changing the state of software buying. And so I’d like to share a few insights. And what’s interesting, we just did a survey of 676 different companies on how is COVID impacting their business, how’s it changing how they’re buying software. And no surprise, 88% of businesses, this was an unexpected shift that we had to go all remote. And so, a lot of businesses weren’t really ready. And I think those of us that are in the SaaS community, we’re likely already using zoom.
We’re using tools like Slack to collaborate, so I think all of us, whether we were totally remote or Part remote, I think we all had the digital tools, but the reality is in most industries, most companies weren’t ready at all. And so this has led to now a sudden increase in businesses looking for online collaboration tools and software. And specifically, here’s the kinds of software that companies are now looking for based on our G2 survey. But, no surprise virtual meetings, Zoom, we’re on a Zoom, but I think apps like that, I think every business now, if you didn’t already have them, they need them, or they need better ones. Messaging apps, certainly apps like Slack so that people can collaborate virtually across the world, remote desktop tools, screen-sharing, webinars, and time tracking, so companies can better track their employees work when they’re remote, as well as collaborative whiteboards.
And so no surprise here that now every business, all of a sudden needs collaboration software. And we’ve also seen that on G2, where we really had kind of a nonlinear spike in web traffic in March, and just in March, web traffic was up 49%. So almost 50% month over month. And as we’re seeing more and more companies, businesses around the world shopping for software to help them get digital faster.
And what categories particular are software buyers looking for, and businesses are looking for. And we’re on a webinar right now, but I think everyone now wants to do webinars because that’s the best way to connect with people at scale. People are looking for virtual classrooms, both for learning. And I know my three kids, they’re in Palo Alto, our home, learning remotely right now. So virtual learning, but also in the business environment. I know we’re taking all of our training, all of our enablement online and so, online learning platforms are really growing, video conferencing, remote desktop, whiteboards. And there’s literally, I think, almost a hundred categories we’ve seen on G2 really surging. And so this does create some exciting opportunities if you’re SaaS entrepreneur in one of these categories. And what’s also interesting, most businesses that we surveyed and most of the buyers on G2, they’re saying they’re going to keep this technology.
So this will not just be a one-time event, but this will truly be a shift where I think companies, a lot of them are enjoying and seeing the potential now of remote work. I know I am. In some ways, you can be a lot more productive. And so a lot of businesses are saying … 76% of them, 76% of businesses are saying they’re going to keep this new technology in their business. And I think most companies, as you can see here, is that these new technologies, 33% of companies are saying the new processes, the new technologies, they’re going to stick beyond this crisis. And so, I think we will see a permanent shift towards more SaaS, towards more online collaboration. And that is an exciting opportunity for our industry. And companies in general, are also right now, investing more in software and digital.
And you can see here, 66% of the companies, so almost two-thirds of the companies we surveyed are actually going to buy at least one new product to help them manage in this new environment. And 25% of companies are even saying they’re going to buy five or more apps to really help them get through this crisis and be more productive. Of course, on the flip side, you know, we all know that there are major economic challenges. I know it’s also challenging for G2. We mainly serve software marketers, and a lot of software marketers are cutting back. And so we’re feeling pain like a lot of companies. And it’s also been the news, a lot of companies are cutting back, a lot of companies are doing layoffs. So the reality is also a lot of companies are decreasing spend. It was, you know, 12% in our survey, that are decreasing spend.
So it does create some challenges for us as a SaaStr community. And what we’re seeing is that businesses are really scrutinizing their existing technology stack. They’re scrutinizing their existing status and cloud spend more than ever. And they are all trying to find immediate savings as well as there’s a heightened concern about privacy. And I think we’ve seen that with Zoom where now everyone’s using Zoom and it’s an amazing technology, but it also does lead to some bad actors trying to find security holes, Zoombomb, et cetera. And so businesses are also very concerned to make sure that their tech stack, that their software is secure and it’s private. And from G2 track, we’ve gotten some interesting data where we’re tracking SaaS usage and spend for about 2000 companies. And from G2 track, we’re seeing that 30% of software licenses are not used and, probably no surprise, but just a combination of one team will buy an app, maybe the person leaves, they stop using it, or in some cases, companies have bought too many licenses, and so … but this is something companies are really going to be scrutinizing.
And I think as a SaaS vendor, it’s more important than ever to make sure that you’re also secure, that your privacy’s up to date because companies are going to be looking at that. And we’ve seen, from our G2 track research, that companies are estimating about $7.9 million would be the cost if they have a breach. And so I think this does put heightened pressure on us, as SaaS vendors, to make sure our customers are adopting our technology and to make sure that it’s secure and compliant.
And here’s some interesting data also, on the challenge for SaaS vendors, for all of us, that we will, a lot … most of us will see increased churn. I know we’re seeing that at G2 where, you know, some marketers are cutting back and a lot of them are saying, “Hey, we love G2, but we’re not going to come back as a paying customer until we get through this crisis.” And I imagine a lot of you are seeing similar things. And here’s an interesting study from Nick Mehta, the CEO of Gainsight, and Gainsight is a customer success company that helps companies manage churn, but they were also studying, in a recent survey, how are SaaS vendors expected to be impacted by this? And you can see here across the board, companies, SaaS companies are expected increased churn. It’s most severe in the SMB world.
And I think it was small companies, are having the hardest time in this crisis. We’re also seeing that, but I think, estimated here, that churn in small ECB contracts, typically small business customers, the churn is expected to go up 15.8%. So quite significantly. And the good news is that, in the enterprise world, it’s a little bit less, but really across the board, companies are looking to save money. And so we will have additional churn challenges across SaaS.
And this really brings me to the crisis of trust. And I think, especially in this economy now, I think winning the trust of our customers is more important than ever. And this challenge, for us as an industry, is exacerbated by what’s going on in the world. And there truly is a crisis of trust. I think people in general are no longer trusting tech giants like Facebook and, yeah, there have been all the news about concerns, data risks with the large tech platforms like Facebook. Also government, it is right now in this time, hard to know who to trust. Do you trust your County representative, do you trust the mayor, do you trust the governor, do you trust the president? Especially when they’re all saying different things. And so, it’s very hard to trust government. And as a society, we’ve just had the MeToo crisis, which continues.
So I think, you know, all power is being rightfully questioned, and this does also make it harder for us, as a SaaS industry, to win that trust of customers. And so at G2, we also studied specifically in SaaS, do customers trust us? And the reality is most of them don’t, most of our customers and prospects don’t trust us, especially those of us in sales. And as an entrepreneur, I do consider myself in sales and I believe sales is a noble profession. But the reality is 94% of SaaS buyers that we surveyed don’t trust us. They don’t trust our sales pitches, and if you’re in marketing, you can’t feel too much better because 93% of software buyers don’t trust marketing either. And you know, we all make these beautiful videos, beautiful slides, beautiful websites, but the reality is the customer … so much noise and so much beautiful marketing, that I think the customers also tend to filter it all out.
And as a result, when we did this survey last year, most of you in marketing and in sales are finding it harder to get a prospect’s attention. 75% are saying it’s getting more difficult. And 65% of SaaS sales and marketing people have said, it’s getting harder to do your jobs because the buyers tend not to trust you.
And so who do people trust? And Brian Halligan, the founder and CEO of HubSpot, really has an excellent perspective on this. Where, what he says is, “Who do we trust? Well, we really only trust people we know, we trust our peers.” And that’s who we go to for advice in life. We go to our friends, we go to trusted friends, and in the work setting, it’s really going to our trusted peers, either inside or outside our company. And we asked him, “Hey, what do you really think? Does this app really work for you?” Or if we’re recruiting someone, “Do you know this person, will they do great work?” And so, it is really becoming all amongst … trust is really only a gained through peers. And so, I think that really also changes how we assess vendors can go to market.
And what we’ve seen on the G2 platform, when we surveyed over a thousand buyers of software, top of the funnel, what kind of information do SaaS buyers want when they’re first making their short list? When they’re doing their top of funnel research? And no surprise, vendor websites are a very useful source. And most of you probably already have great websites, but the other top sources are peers and colleagues. So people will go on LinkedIn, they’ll ask their fellow marketers, “Hey, what marketing automation do you run? What are you using for ABM?” And so, this is happening all the time. People are asking peers and colleagues in terms of which vendors to consider. And also it is interesting, for us, sites like G2 are being increasingly used, where it’s now one of the top three sources also, of building short lists, building the top of funnel.
And also exciting for me is it’s now ahead of the traditional analysts. Now where that’s kind of down to 30%. And obviously, so we believe at G2, is that people want real time insight from peers. And that’s what our data is showing. That’s what people do at the top of the funnel. And also when you get to the bottom of the funnel and you’re about to make a buying decision, this is becoming even more prevalent where the number one source that B2B buyers are saying they’re using, at the bottom of the funnel to confirm their decision, are review sites. And the beauty of sites like G2, you can obviously see the reviews, but you can also, through LinkedIn, reach out to those people and say, “Hey, what do you really think?” I think the same shift is happening in recruiting.
Now, I know when I’m about to hire somebody, if I don’t know them already, I’ll go to LinkedIn, go to my first degree, connections, see who knows them. And now, with platforms like G2, software buyers can do the same thing, find out which of their peers are running the app and ask them what they really think. And so really top and bottom of the funnel, this trusted buyer voice, customer voice is more important than ever. And so now, how do we, as a community, how do you, as a SaaS entrepreneur, a SAS marketer, or a sales person, how do you win that trust of the buyers? And how do you do that in this, you know, more challenging environment than ever.
And here, I’m also very inspired by Marc Benioff. As I mentioned, Salesforce acquired my company, SteelBrick, and I had a chance to be on Marc’s extended leadership team at Salesforce. And how Marc really built Salesforce from the beginning was on top of trust. It’s always been Salesforce’s number one value. And I think he has a great quote here that, especially in this world today … “If trust isn’t your highest value, something bad is going to happen to you.” And so it really has to be the foundation for almost any company that wants to serve and win customers, and have success. And for Salesforce, this is not just a mantra now for Marc and the CEO, but also Stephanie Buscemi, the CMO of Salesforce, has also made it central to how they do marketing. And I think traditional SaaS marketing was all about, “Hey, how do I just generate some leads?”
And I think what Stephanie says today, “You first have to earn the trust of your customers, of the market, of your prospects. And only once you have your trust, can you engage them.” And I think this is also where companies like HubSpot, who I mentioned earlier, do a great job rather than just trying to put lead forms in front of you, they want to engage you with compelling content, with compelling advice. And only then do you get to leads, you get the customer, and you get to growth? And so I think it’s really changing how we marked it as an industry. And the B2B playbook specifically, how do we see it evolving? And I think there is a shift from vendor generated content, whether or … and I remember when I started my career, it was all about white papers, it was all by your own website, and doing very fancy customer studio videos, having amazing testimonials, and then pinging your prospect by email or by phone.
But I think today, we’re in a different world where software buyers, they no longer trust that because there is so much noise and everyone has beautiful marketing. So yes, it’s table stakes, but to really differentiate, what software buyers are looking for are third party, trusted sources of information. They’re looking for content that really helps them learn how to be better at their job. And they’re looking for peer insights from professionals they already know and trust. And I think also the shift in marketing, I think rather than just emailing or cold calling thousands of people, I think that the modern way to do it is to really go where the buyers are and the buyers are on social networks or on LinkedIn, they’re on Twitter. And if in context, you can share insights, you can help them learn. Then that’s proving to be the best way to engage in this new world, to engage them with trusted content at just the right time when they’re shopping.
And one great example of a company that is really built on trust is Zoom. And I had the privilege of interviewing Zoom founder, Eric Yuan, also their CEO, at our G2 REACH conference last year. And Eric talked about how everything at Zoom is about delivering happiness to customers, as well as delivering happiness to the team. And so, Eric wants all his employees thinking about that all the time. And he’s also been very forward thinking in taking all forms of customer feedback, including platforms like G2, and he does see as a great way to get his team to be more customer focused. And what’s also interesting about Eric, some SaaS entrepreneurs I meet, they get very concerned when they get a negative review and they say, “Hey, Godard, can you take down that one star review?” And Eric really looks at it the opposite way. Most of his reviews are five star.
Most customers love them, but when he gets to negative feedback, he sees it as an opportunity. He reads all the one star reviews, all the negative feedback personally, and then immediately turns in a better product. And I think we’ve just seen that, where Zoom has had some also challenging publicity around security and they immediately responded, where Zoombombing, they immediately coded waiting rooms, they’ve usually delivered solutions for their customers. And I think it is that customer obsession, that focus on delivering happiness, that has made them such an amazing company. And what we are seeing, thanks to companies like Zoom being so focused on customer success, and just last week, they were also pointing people to G2 to write more reviews, but we are seeing our traffic keep growing. More and more software buyers are coming to G2 to see who can they trust. And just last week, we’re up to one of the top 1000 websites in America. Because more and more software buyers are seeking that trusted information. And-
Hey, Goddard, I’m so sorry to cut you off. We’ve actually run out of time, but we will be saving all of this Q&A so that we can answer some of these questions that people have asked in the next few weeks, and we’ll be sharing them of course, with your team.
Okay. And could I just … I’ll just go to my last slide, if I may?
And to summarize this, I think for those of you in the SaaStr community, we have also created a playbook on how do you market in this time of COVID crisis. A step-by-step playbook, how do you amplify this trust? How do you engage buyers in this modern world? And so, please come check it out and hopefully it can help some of you both survive and thrive in this crisis, and win the trust of all of your customers. Thank you.
Q: “What should your sales team do with marketing qualified leads?
There will be a lot of spirited debate between marketing + sales in the lead hand-off process. Do you have MQLs and then … SALs? (Sales Accepted Leads)? Does sales get to reject leads from marketing? How long do they have? Etc. etc.
As you scale, and refine this, you’ll have more and more nuances here in your lead qualification process.
-> What matters most maybe even all the way to $10m ARR though I’ve found is a clear SLA where all leads need to be followed up on.
As you begin to get to even $1m-$2m in ARR, reps will naturally start to focus on the “hot” leads. Maybe even earlier. That’s natural.
1/ reps don’t always know what a hot lead is or at least get it 100% right, even with lead scoring (which always/often is imperfect)
2/ there almost always is money in “warm” and “lukewarm” leads. why else would they inbound, especially? If a rep doesn’t want to follow up on a specific lead because they don’t think it’s a good enough lead … you need to send it to a hungrier rep. There is still money in that lead, even if there’s less of it than a “hotter” lead.
3/ reps simply miss stuff. even the best of them. they miss an email, or forget to follow-up, or were off that day, or whatever. even the best of them.
So if nothing else, you need an SLA. A firm process where every lead gets touched within X minutes or Y hours. And is then followed up again with X days. And this is key. If those criteria aren’t met … the lead is automatically assigned to someone else.
Ep. 335: David Spinks is the Founder @ CMX, the premier network for community professionals. In 2019, CMX was acquired by Bevy, where David now serves as the VP of Community. Bevy is a customer-to-customer community management platform, building products that brands use to build, grow and manage their community event programs, both virtual and IRL for companies like Slack, Twitch, Salesforce, Atlassian, and Duolingo. Prior to CMX, David founded 2 prior startups centred around different forms of community building and before that was Community Manager in the early days of LeWeb the largest tech/startup conference in Europe.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How David made his way into the world of SaaS and came to found CMX. Why David believes that community is so central for all SaaS companies today?
* How does David advise teams on expectation setting around virtual events? How ambitious should they be? What big mistakes does David often see in the early days of the planning? How does this differ if you have an existing cohort of users vs are starting new with no audience?
* How dependent is the success of the community on the platform it is hosted on? What is the ideal size for Slack, Telegram and Whatsapp communities? Should the host seed the discussion or allow it to be natural? How important is it to establish a handbook of expected actions and behaviors? Should you cull members who are inactive?
* What does David believe separates good from great when it comes to discussion groups? What innovative strategies has David seen work when it comes to bringing a virtual event to life? What is the right amount of people in that discussion group? What is the core role of the moderator for the group?
Ep. 336: Leveraging survey data from 66+ enterprise SaaS companies, Matt Garratt, Managing Partner of Salesforce Ventures, shares the landscape of how businesses are shifting their sales & GTM strategies to react to today’s uncertain times. Adnan Chaudhry, SVP of Sales at Salesforce, then provides actionable takeaways on how to refocus your sales teams, engage with customers, adjust your sales comp and how you can properly forecast in today’s new landscape.
Below, we’ve shared the transcript of Harry’s interview with David.
Harry Stebbings:Welcome back to the official SaaStr podcast with me, Harry Stebbings, and you can suggest both questions and guests for future shows on Instagram @Hstebbings1996, with two Bs. And I always love to see you there. But to our episode today. And there’s one question every SaaS company is asking themselves right now, “How the hell do I do virtual events, and what makes the best so good?” Well, diving into this today, I’m thrilled to welcome David Spinks, founder of CMX Media, the premier network for community professionals. In 2019, CMX was acquired by Bevy, where David now serves as the VP of Community. Bevy is the leading provider of in-person community software, powering community programs and incredible companies like Slack, Twitch, Salesforce, Atlassian, and more. And prior to CMX, David founded two other startups centered around different forms of community building, and before that was community manager in the early days of LeWeb, the largest tech startup conference in Europe.
Harry Stebbings:But enough from me, so now I’m very excited to dive into this extravaganza on what makes the best virtual events, with David Spinks, founder of CMX Media.
Harry Stebbings:David, it is so great to have you on the show today. And what you probably don’t know is I’ve been an admirer of yours from afar, mostly on Twitter, for a while. So thank you so much for joining me today, David.
David Spinks:Honored to be here.
Harry Stebbings:I would love to start, though, with some context. So tell me, how did you make your way into the wonderful world of startups, SaaS, and how did you come to found CMX?
David Spinks:Yeah, it’s a long story, but to make it as brief as possible, I’ve been building communities online since I was a kid. Started in middle school, around video games, Tony Hawk’s Pro Skater 4 was my game of choice, built a big online forum around that, and just became pretty fascinated by how technology could connect people and create community. And so I did that, I was just active on every online community platform I could. Eventually that became my career and I became community manager, joined a startup in Philly called Scribnia, at the time. And we were in an accelerator program for three months, and halfway through that accelerator program, we pivoted and started SeatGeek, which, everyone will know SeatGeek, and no-one will know Scribnia. And we kicked that off and that was my first entry into tech. And I ended up running that first company, Scribnia. I was the managing director and ran that company. And that just got me in the door and that led to more and more opportunities to work with different tech companies.
David Spinks:I ran community at a company called Zaarly for about a year, I ran community for LeWeb, which you may know was one of the biggest tech conferences in Europe for many years.
Harry Stebbings:Sure. Absolutely. Loic.
David Spinks:With Loic Le Meur. Yep. And helped Udemy kick off their first community program, and also started companies. So I started a company called Feast, which was delivering ingredients to your home, and you get this home cooking experience with videos that teach you how to cook.
David Spinks:And ultimately kicked off CMX six years ago, because throughout my career, starting companies and building community for companies, ironically, there was no community for community professionals. And so I would do everything I can to find other people who are doing this work and just get to meet up with them, ask them questions. I co-founded thecommunitymanager.com with a couple of friends, about eight or nine years ago as a place to just start writing about this stuff.
David Spinks:And eventually led to starting CMX Summit six years ago, which is our conference, as just a place to bring everyone together who’s doing this work, building community for companies. And so that grew, we bootstrapped it for five years. Last year, at the start of last year, we were acquired by a company called Bevy, which powers event programs, event communities for companies. And that’s how I’m here.
Harry Stebbings:And the rest is history. Speaking of communities today, every company in the world is thinking, “Shit, how do I move from physical to virtual events?” I want to dive into that because I think many are foundering and a lot of scratching their heads, doing it for the first time. So you’ve had a starting point, and expectations set slightly when thinking about the transition to virtual events. So when you think about maybe expectation setting for these companies, how do you advise companies to approach just how ambitious they should be when it comes to that first virtual event?
David Spinks:Yeah. It’s funny because I’ve been banging this drum of community for more than 10 years now, and all it took was a global pandemic, and all of a sudden everyone’s like, “Wait, this is important.” I’m like, “Yeah, I know.” And so there’s companies that have been doing this for a while, but even the ones who have been doing it for a while were probably still reliant on in-person events, and they’re trying to pivot. And then you have companies who weren’t really doing much in terms of community, or weren’t doing anything online and they’re kicking it off for the first time. If this is your first time doing that, I think just getting started’s really important.
David Spinks:It’s easy to overwhelm yourself and try to do too much, and launch a massive forum, and throw a huge virtual conference. But you can start in very simple ways with just simple discussion calls, kick off a Zoom call with your 10 top customers. People are craving community right now, they can’t connect with each other in person. And so they’re looking for any opportunity to connect with each other, and they’re all dealing with this epidemic. It’s affecting everyone, and so everyone has a lot of shared challenges and lot of things they want to ask each other right now. And so just start creating those spaces for them to come together, and a lot will start to happen organically.
Harry Stebbings:Can I ask, when you create these spaces for them to come together, and sorry, this is off schedule, but I’m intrigued, do you seed the discussion threads themselves, or do you let the discussions flourish naturally within the participants?
David Spinks:Ideally, it’s all happening organically, and you’re just sitting back and nudging the direction or facilitating. More realistically, you’re going to launch an online space and you’re going to have this vision of everyone showing up, and participating, and engaging. And then it’s just going to be crickets. There’s so many spaces for people to engage today, that to create a new space, you really have to put in the work and facilitate. And so in those early days, I think you really want to be creating a lot of the content yourself, be putting out discussions, be putting out conversations that you think would be interesting, and then don’t even wait for people to respond. As soon as you post it, message five people that you know, and already have a relationship with and say, “Hey, I just posted this question. I’d love to get a conversation going. Do you have a minute today to jump in and post a response?”
David Spinks:And so you’re manufacturing the example that you want others to see. So when someone new joins a group, now they see activity, they see people engaging, they see thoughtful responses in there. And now, that sets an example for them to be thoughtful in their responses and start posting. And it just puts out the message that this is an exciting place to be. It’s the same reason that a bar might only let some people in at a time, in order to create a long line, so it looks like it’s in high demand. Same kind of thing for communities, if people show up and it just looks empty and it looks dead, that’s not going to feel like an exciting place to participate, but if you start to create that experience of engagement and excitement in the community, then when people join, they’ll feel drawn into that group.
Harry Stebbings:So, as I said there, we write these schedules and then we just go completely off script, but I much prefer it that way. In terms of the platforms, I’m really intrigued. How dependent is the success on the platform choice that you make? Because you could do anything from a WhatsApp group to a Telegram group, to a Slack channel, to any of the collaboration tools that we have today. How dependent is success upon the platform choice?
David Spinks:Yeah, it’s a big question. If you already have an engaged audience, and a lot of people who are trusting the brand, aware of the brand, engaged with you, it’s going to be easier to launch your own owned platform. Maybe you kick off a Discourse forum, or you use one of the enterprise platforms, and you bring people to your site and your community, because they’re already engaged, because you already have an audience, that’s going to be easier.
David Spinks:If you’re starting from scratch and people still don’t know who you are, and they’re not fully engaged with your brand, and your team, and your product yet, maybe you don’t have a lot of users yet, it’s going to be really hard to get people to participate in a new space as well. You’re just creating a new habit, and people are so used to going to big social to interact now, that it’s hard to get people’s attention. And so in that case, it might be better to go to where they are already, which might be a Facebook group, Slack is really popular because people are already in there, Discord is really big for gaming, and use that to build the community. And then, once you have that engagement, once you have an engaged community, the community is the people, it’s not the product. And so once you have the people engaged, then it becomes easier to move them to different spaces that maybe they otherwise wouldn’t have.
Harry Stebbings:Totally get you. Can I ask, in terms of those groups and communities that you build in those initial days, how do you think about optimal size? Because you want enough where there’s enough discussion and enough content going around, to where it feels like the velocity of thought is high, but you also don’t want too much where there’s apathy and too much noise. How do you think about the optimal size in those early days?
David Spinks:Smaller is often better, right? A good quality group of 10 people is going to be much more valuable to someone than a hundred people that weren’t as curated, and in an experience that isn’t as intimate. And everyone knows that, like you go to a dinner with 10 really awesome people, this is the best experience, right? Everyone loves that kind of experience.
David Spinks:But then you go to the meetup with a hundred people just casually drinking, and it was open to anyone, that’s not nearly as valuable. It’s not as facilitated. You don’t get to talk to people as deeply. It doesn’t feel as curated. And so in general, I think smaller is better to start, and then you want to grow it incrementally. So if you’re looking at an online group, maybe ten’s a little small, unless you’re in a WhatsApp group, or a chat space that works with a small group, but let’s say you did a Slack or a Facebook group. You’re going to want more people than that, I would say maybe 50 or a hundred’s a good starting point.
David Spinks:And then you want to grow it gradually. So you don’t want to overwhelm it, right. Going back, I keep using bar examples, I don’t know why. It’s on my mind, I guess, I haven’t been to a bar in months, but you ever go to a bar, and you’re with friends, and it’s not that crowded and you’re having a great time, and you can hear each other and you have space to move, and you can get a drink quickly, and then rush hour hits. And all of a sudden it’s packed with like 500 people, and you can’t get to the bar and you can’t hear each other, and you don’t have space, and it no longer feels like it’s there for you? That’s what it feels like when someone kicks off an online community and they have a hundred people in it, and then they invite 500 people into the group. It just completely overwhelms the community dynamic that you had in there.
David Spinks:And so maybe a good rule of thumb is to keep it to like 50% growth each week, or each month, or even 25%. So if you have a hundred, then add 25 more each week, and then you can welcome those people properly. Everyone who’s in the group can contribute to welcoming them properly. And you create more of what feels like an organic growth, rather than a manufactured growth.
Harry Stebbings:Can I ask a tough one? Do you cull people who don’t engage or who don’t consistently show themselves to be a meaningful part of the community?
David Spinks:Usually, no. It depends on the format. Let’s say you did bring together 10 people in a discussion group, and it’s noticeable that someone is not participating, that they’re not showing up, that they’re not engaging. Then I might call that. And I might say to that person, “Hey, it seems like maybe this isn’t the best fit for you, so totally cool. But we want to make sure that we keep this group really focused. And so we’re going to keep rotating members out based on engagement.” You might be able to do that in that small group, just to keep it really high quality. In a larger group, it doesn’t matter. You actually want to have people, even if they’re passively engaging in these large groups, because that becomes an audience for those people who are creating, that makes them want to create.
David Spinks:So there’s the 90-9-1 rule is this old study on large online communities, and it basically said that 90% of people will passively consume in a community, 9% will be responding and engaging, and 1% will be creating. And so realistically, every community is going to have a very small percentage of people who are actively creating and contributing, and then a much larger percentage who are passively consuming. And then there are people who just go completely inactive. And at the end of the day, unless you’re paying per user, or some meaningful metric to you, you can just let those people do what they do. And you can also run campaigns to try to reengage them. So everyone plays a role in the community at all different levels of activity.
Harry Stebbings:Can I ask, we mentioned the different levels of activity and we mentioned some different behaviors there, in terms of very active, responsive, and then creating. In terms of guide books, or guidelines, when initiating people into the group, how important is it to have almost a guide book, a set of rules? “This is how the community operates.” How important is that, versus letting it be much more free flowing?
David Spinks:It’s absolutely critical. There are communities out there that prefer to just be completely free flowing. I think we’ve seen that historically devolves into some pretty bad behavior. And I think it’s really important that you have a lot of intention in any community space that you create. And so there’s a concept called setting the container. And I think that applies to anything from a small discussion group, where you’re trying to essentially explain, “Here’s how to participate in a quality way, and here are the rules that will make sure everyone feels safe and comfortable participating here,” right? So it’s not just rules, it’s not just what not to do. It’s also being explicit about, “Here’s how to contribute in a great way. Here’s the kind of behavior we encourage in this group.” That’s going to guide people to know how to participate in a quality way, that they may not have realized, or may not have been comfortable doing that before.
David Spinks:And so it’s really important to have that. That said, you should always be open to evolving and changing and learning from your community members. And so maybe someone one day recommends a different kind of guideline, or they do something within the boundaries that you’ve set, and you realize, wow, that was a great way of approaching this problem. Let’s turn that into an official guideline or rule. So you can constantly adapt and evolve your guidelines, but you always want to be intentional about how you want people to participate, and how you don’t want them to participate in the community.
Harry Stebbings:We’ve spoken quite a lot about discussion groups there, and I think a lot of companies in particular, are scratching their heads in terms of how to really encourage engagement within the community. I’d love to hear your thoughts, having seen so many different kinds of viral and vibrant communities, in terms of really, what cool methods of engagement have you seen really work well in virtual events?
David Spinks:Yeah, so the world of virtual events is evolving rapidly right now. And I honestly think everyone was sleeping on the value of virtual events before, and now that they don’t have a choice, everyone’s getting a crash course in it. The default has been the Zoom call. The Zoom webinar, the traditional webinar. Have a speaker, everyone watches that speaker. There’s a chat feed where they can respond, or ask questions, or talk to each other. And maybe there’s a Q and A at the end. It’s pretty one way, right? It’s one person broadcasting to a lot of people.
David Spinks:That’s not really going to be a virtual event in the same way that a physical event, you have the opportunity to meet people, to turn to your neighbor and talk, to network. And so the really great virtual events are incorporating more opportunities for those attendees to engage, to participate, to network with each other. And so, events that do this really well have a combination of different formats. They do have speakers that are presenting and educating, and then they have speed networking, so icebreaker.video is a really great tool for this, or if you use Hopin. A lot of these tools have speed networking built into it, where each attendee gets randomly matched up with another attendee. Icebreaker does a good job of giving discussion prompts for them as well. And you can choose the time that it rotates out. So you can do three minute talks, or five minutes talks, or seven minutes, and then it fades out then at seven minutes, and you get matched up with someone else. So our community loves that, that’s been really effective.
David Spinks:And then just a small discussion group. When you have a speaker broadcasting to everyone, no-one else is getting to meet each other or discuss the content. And so using breakout rooms, using smaller group discussions, is a really awesome way to make it feel more like a real event where they’re getting to meet people. They get to participate in the discussion, they get to bring their questions and hear from others. And so that’s a really valuable way of making your virtual event more engaging.
David Spinks:And you can combine these things, right? So we do, CMX Connect is our global event program that’s run by members of our community. We have over 60 chapters around the world. And for all of the events that we do, we combine all these different elements into one event. And so we might have 30 minutes of speed networking to start, and then we’ll have a speaker talk on a topic, like measuring your community, or running virtual events. And then we’ll break out into discussion groups, so that people can discuss that topic amongst themselves, and share their own challenges and their own lessons. And we might mix up that order, and mix and match different formats, but you can think it as modular like that, you have these different event modules, and you can combine them to make a more holistic experience for your community members.
Harry Stebbings:I’m really pleased you mentioned Hopin there, it’s one of our favorite platforms. So, really pleased to hear that. And you also mentioned discussion groups, and I’ve heard you say before that one of the key rules is, it’s under 10 and over 30. Explain this ratio and rationale to me here, David.
David Spinks:So it’s just a way of remembering how to make a discussion group really valuable. And it’s not a hard and fast rule, but more of a guideline. So under 10 means less than 10 people. We’ve all been in discussion groups with 15 people or 20 people, and there’s just no way that everyone gets an opportunity to have their voice heard, not everyone’s going to get to participate in the discussion. If you try to involve everyone, you just don’t get to go very deep. And so I think ideally discussion groups are generally six to eight people. I think 10 is about the most you want to have, so shoot to have less than 10 people per group.
David Spinks:And then over 30. So this depends, but generally, especially if the entire event is a discussion group, 30 minutes is just not going to be enough time. You want to have enough time for people to introduce themselves, for you to kick off the conversation, and then really give people opportunity to bring their challenges, bring their voice, be able to respond to each other, be able to get into conversation. And just so many discussion groups, especially virtual ones, which just take a little bit more time to really facilitate and engage, they get cut off at 30 minutes, and that’s when the conversation usually starts getting good. And so, just making sure that you have ample time for people to have that discussion, and you keep the group small enough that it can be a meaningful discussion.
Harry Stebbings:Totally with you there in terms of giving it ample time. You mentioned the facilitation, there. I’m interested, because it’s a tough role, being a facilitator. What’s the most important role for a facilitator to enforce, in your mind?
David Spinks:I think it’s about equity of voice. I think their job is to identify who hasn’t had a chance to speak, and making sure they create the space for those people to speak, and their job’s to see when somebody is taking up too much airspace, and moderate and facilitate and say, like, “Thank you so much for sharing. It’s been really great to hear from you. I’d love to hear from other members of the group. Harry, what do you think about this topic? Anything that you’d like to share?”
David Spinks:And so without that moderation, every single discussion group I’ve ever participated in has devolved into one person talking a whole lot, and everyone else is having to sit there and listen. And when people participate in a discussion group, they don’t feel like they’re in a position of power or authority to moderate themselves. And if they did, it might feel very, they’re bringing conflict to the group. And so first of all, every discussion group should have a moderator, a facilitator. You should never have an unmoderated or unfacilitated group. You always want to have someone who’s responsible for facilitating the discussion, and it’s that person’s job to make sure that everyone has an equal opportunity to share their voice
Harry Stebbings:Totally with you in terms of the voice equity. There’s one element, which is always challenging, which is that terrible, awkward silence, especially when you throw an open question out and everyone’s waiting for everyone else to answer. I’m interested, in terms of the awkward silence, what’s the right way for the facilitator to act and engage in those awkward silence moments?
David Spinks:You just got to sit with it, honestly. It’s always tempting to try to fill in empty space. You always want to take out the discomfort for everyone, but I think a good facilitator is comfortable just sitting with that silence and letting others fill it in with their voice. And sometimes it’s just people wanting to be polite, and they don’t want to be the first one to speak, and they want to give other people a chance to speak. I remember in elementary school or middle school, not wanting to be the first one to raise your hand. People just are hesitant to be the first one to volunteer, but then once one person gets going, then it opens it up, and others want to share.
David Spinks:And so just being comfortable with those uncomfortable silences, letting it sit and letting people fill it in themselves. I’ll just sit there on the Zoom call and smile, and see them start to smile as they realize that no-one’s saying anything. And then inevitably someone, within 30 seconds, which might feel like a lifetime, but it’s usually only 30 seconds, someone will be like, “All right, I’ll go.”
Harry Stebbings:That’s funny. 30 seconds, as a facilitative before, 30 seconds does feel like a lifetime, I tell you, David. I do have to ask, though, when we do Q and As, as well, the awful moment is when you say, “Does anyone have a question from the audience?” And you get the really awkward, no questions. What do you do in those situations? Do you seed people in the audience? Do you have backup questions ready? What’s the right way to approach that really awkward element?
David Spinks:Yeah. I think that you really do want to seed it ahead of time, if possible. And you want to continue to remind people to post those questions. One really fun thing you can do is ask people to send in questions ahead of time. And if you’re doing it like a webinar or Zoom call, you can actually have them send in videos of themselves asking the question, and then you can pull in the video and play it live, so it actually looks like someone came on and asks a question and then you bring it back to the speaker to answer the question. So that’s a fun way to make it work on virtual events that you couldn’t even do elsewhere and offline, but seeding things upfront is really good throughout the event.
David Spinks:Reminding people, like, “Hey, just as a reminder, we’re going to be moving to Q and A in 10 minutes. So please put in your questions now, so we can get rolling right away.” Right? So that’s the kind of thing, because sometimes you open up to Q and A and you forgot to remind anyone that it’s coming up, and then they’re not ready to ask a question. And so you want to try to seed it as much as possible. And then when you get to that Q and A point, if you realize that there are no questions in there, don’t stop and say, like, “All right, any questions?” Just keep rolling through it and say like, “All right, well, I have a few more questions that we seeded from the community ahead of time. Please keep posting your questions here in the chat, but let’s dive into the first one.” And so you don’t have that dead air time. And so that’s different, right?
David Spinks:If you’re facilitating a discussion group, uncomfortable silences are really good. If you are putting on content, you’re performing, you’re creating, it’s like doing a podcast or doing a radio show. You don’t want dead silence on a TV or on a radio. It’s the same thing in your webinar, you don’t want to be sitting there live with 200, or a thousand, people watching you and just saying like, “All right, any questions?” That’s just awkward and that just looks like people aren’t engaged, which isn’t a good look. And so I’ll just keep rolling through it, and just go right into those pre-seeded questions that you’ve already pulled in, or prepared. Or just make it up, say like, “Oh, we collected these questions ahead of time. Let’s dive into that.” Even if you literally made up those questions right before the call.
Harry Stebbings:Trust me, David, with my over-excited British way, there is never an awkward silence in my podcast, but I totally agree with you there. I do want to ask this, so we have this event, and we want to know if it’s successful, and we need to measure it. In terms of measurement, I’ve heard you say before that there were two lenses with which to really measure the success of your event. What are those two lenses and how do you break them down?
David Spinks:Yeah. So in working with any community team, we map it out that you have two, what do we call them, dual objectives. So you have a business outcome that you’re hoping to achieve, and then a community outcome that you’re hoping to achieve. And you should be able, in theory, to achieve both with any sort of experience or program that you run. So if it’s a forum, you have your engagement in the forum, your monthly active users, your daily active users, your sense of community, you can actually survey people, you can get NPS, and all these ways of measuring the health of community. And you might be looking at something like reducing support costs, or collecting feedback on your product, or retaining customers. And so you have both the community and the business objectives.
David Spinks:And it’s the same thing for events. You’ll have aspects of the event that you want to tie back to, are we building a healthy community? And in the same way as an online group or forum, you can send out surveys. “Do you feel like you belong in this community? Do you feel safe in this community?” Net Promoter Score. You can look at number of attendees. How many RSVPs did you have, and what percentage of them showed up? How many of those people were repeat attendees? So these are all kinds of things that show you, is your community happy, healthy, and engaged?
David Spinks:And then you’re going to have the business objectives. We use a really simple framework for identifying the business value of community programs. It’s called the SPACES model. So that breaks down into support, product, acquisition, contribution, engagement, and success. And so those are the six areas and you could probably figure it out from the name, but support is people supporting each other, answering questions, giving each other support with their technical problems. That tends to be more in an online forum space, but it can work in events as well.
David Spinks:Product is, you’re collecting feedback and insights on how to improve your product from your community members. So, did you collect that feedback at a booth at your event? Or did you have people fill out a survey at the event to help you improve your product?
David Spinks:Acquisition is growth. So this is actually a really key one for events, and everyone should be doing this, and every event platform should hopefully be able to help you do this. And so you should be able to say, who came to our events, how many people came, how many of them were new leads? How many of them were new prospects? How many of them were opportunities? How many of them ultimately closed to sale? How many of them were customers? And so that gives you a good idea of how your events are actually impacting pipeline.
David Spinks:Contribution is, if you have a platform, let’s say, Airbnb, you have hosts who are contributing to the platform. They run lots of events for their hosts, and they want to see that those events are helping their hosts become more successful at contributing to the platform.
David Spinks:Engagement is essentially customer attention. And so, are our customers more likely to be loyal, to stick around, customer lifetime value as a result of attending our events.
David Spinks:And then success is, customer success. It’s helping people be more successful at using your product, and growing in their career through education programs.
David Spinks:And so all of those can be powered by your events and your online communities, and you can tie any of those events back to one of those business outcomes.
David Spinks:And the last thing I’ll say there is just, we tend to think of these events as one-offs, right? We think of it as like, “This is an event and this event needs to drive this business value, this community value.” And that’s it. We look at it in that bubble, but what you should look at your events as, is touch points with your community over time. And so your goal is to build an ongoing, engaged community over years. And that event is just one single touch point amongst many touch points, that can include your forum, it can include your email, it can include events, in-person events, when those come back. It’s one touch point in an ongoing community member journey that people are having with you.
David Spinks:And so, think about holistically for your event program. Maybe you’re doing a big conference twice a year, and you’re doing regular meetups every month, and you’re doing office hours every week. Those are different kinds of events that you can create, and each one of those is going to have a different community goal, and it might even have a little bit of a business goal. Or maybe some of the events don’t have a business goal, it’s just about engaging the community, knowing that later it’s going to drive business value. And so when you think about it, now you start thinking about your entire community program holistically, and all the different events and touch points that might feed into that customer journey.
Harry Stebbings:I absolutely love that holistic perspective. And I really liked the breakdown there between the two different lenses. So I think that’s an awesome clarity to what is quite a murky, “How do I measure success?” I do, though, David, want to move into my favorite, which is the quickfire round. So, I say a short statement, and then you hit me with your immediate thoughts and I’m going to throw in a couple that aren’t in the schedule that you just mentioned because I’m too intrigued. So just roll with that. Okay. So you mentioned that RSVP to confirm in attendance, what’s a good measurement and a good success rate in terms of that RSVP to attendance of virtual events?
David Spinks:That range is going to be huge, because it depends on the size of the event, right? If you have a 10 person event, you probably want all 10, or at least nine out of 10 people to show up, because you personally invited them. If you have a big conference, it’s going to be lower and we’re seeing the range all across the board. Some people are seeing higher attendance rates than their offline programs were, some people are seeing lower rates, and so offline, historically we’d see for a free meet-up, or a free event, you’d see about 40% people show up. We just hosted CMX Global. We had 3000 people RSVP for that event and we had 2200 show up. It was about 70% showed up, which awesome. It was really cool to see that high of a turnout rate.
David Spinks:It’s hard to have a benchmark, just compare against your own events. So if you did a conference, how do you compare against the last one? If you do a meet-up, how do you compare against your previous meet-ups? And see what you can do to continue to improve that conversion rate by improving your emails, your communication flows, things like that, that might help people be reminded that the event’s coming up, and make sure they have it on their calendar, and that they’re ready to join when it kicks off.
Harry Stebbings:What a terrible question from me, I apologize for that. Benchmark- [crosstalk 00:30:08].
David Spinks:Well, it’s a terrible, “It depends,” answer, which everyone hates.
Harry Stebbings:Tell me, what’s the biggest misconception around virtual events?
David Spinks:There’s a belief that you just can’t build real community through virtual events, there’s just no way you can replace in-person experiences with virtual experiences. And that is true, that you can’t replace it, and there’s a hundred percent, many elements of in-person gatherings that we are just never going to be able to replicate virtually. Even if you got the VR experience perfect, and you have your haptic suit, and you could feel everything. And even then, it’s still not going to be the same as just being able to run into someone in the hallway of an event. It’s the serendipity that you miss out on.
David Spinks:That said, there are a lot of things that you can do to create really meaningful experiences that help people actually connect with each other, and form relationships and form legitimate bonds. And so you have to get creative, and you have to figure out ways of creating serendipity and connecting people with each other in ways that aren’t just a webinar.
David Spinks:You can replicate a good amount of things that you have in an in-person event. Will it do it a hundred percent? No, but there’s a lot of value that you couldn’t even do in an in-person event, because virtual events are just more accessible, for one. So people who may have not been able to travel, or afford a ticket, they can all come together in a virtual event in a way they couldn’t in person. So look for the unique values, or the unique opportunities that virtual events provide, rather than just trying to copy what an in-person event is.
Harry Stebbings:Totally agreed in terms of not being a copy of the in-person. Final one, but a really interesting one for me to hear is, obviously you have CMX, but of all the other virtual events you’ve been to, what has been your favorite virtual event, and what made it so good?
David Spinks:it would be the virtual Passover Seder that we hosted with our friends and family.
Harry Stebbings:Got you. And what made it so good was the bond between friends and family?
David Spinks:Yeah, it was awesome. It was a virtual Seder and, so Seder means order. And so it’s basically, you go through the order of Passover, and you read the stories and you sing the songs. And we had, everyone pulled up a virtual Seder, and they each read from it. So we rotate around. So everyone felt involved, everyone felt included, you drink a lot of wine during it. So it was fun. And so we used to host Seders at our house all the time, every year.
David Spinks:Obviously we couldn’t do that this year. So we did it virtually, but my family is in New York. I grew up in New York, I live in San Francisco now. And so they’ve never been able to be there for the Seder that we host. And this year they were able to join from New York. And we even had two other friends, from Australia, join us. It was morning for them, so they maybe had a little less wine than us, but it was really cool to be able to have our really close friends in San Francisco and our family involved. And just seeing that melding of different groups, that I think otherwise would have been really hard, because everyone would have just done it with their friends, or with their family, to be able to bring those groups together was really special.
Harry Stebbings:David, as I said, I’ve been an admirer from afar for a long time. So I can’t thank you enough for joining me today, and this has been fantastic.
David Spinks:Awesome. Well, thank you so much for having me.
Harry Stebbings:Absolutely loved that deep dive with David. And if you’d like to see more from David, you can find him on Twitter @DavidSpinks. Likewise, it’d be great to welcome you behind the scenes here. You can do so on Instagram @HStebbings1996, with two Bs.
Harry Stebbings:As always, I so appreciate all your support. And I can’t wait to bring you another fantastic episode next week.
Ep. 331: Jessica Lin is a Co-Founder and General Partner @ Work-Bench, one of New York’s leading early-stage enterprise funds with a portfolio including the likes of Cockroach Labs, X.ai, Dialpad, VTS and Catalyst to name a few. Prior to Work-Bench, Jessica was a Learning and Development Manager at Cisco Systems, where she worked with the Engineering organization on Agile transformation, innovation and culture. Jessica is actively involved with the education and workforce development community in New York City and as chair of the Industry Advisory Board at Opportunities for a Better Tomorrow.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How Jessica made her way from learning Swahili into the world of enterprise and into the world of venture with the founding of Work-Bench?
* How should founders expect to see their new business pipe be impacted by COVID? What does Jessica believe is the right way to do proper pipe reviews? What specific elements does Jessica really double click on in reviews? Where does Jessica find managers and founders do pipe reviews wrong?
* What does Jessica believe is the right way for sales reps to engage with new customers during this time? What is the right tone to adopt that achieves both empathy and a business objective? How should sales teams and CS respond to requests for discounts? What should be the compromise with discounts?
* What specific and deliberate things can startups do not just to prevent churn but also to increase usage and upsell? Does Jessica agree with the rule of thumb that in enterprise, on an annual basis, 95% of your customers should retain? What other strategies has Jessica seen work really well for retention?
Ep. 332: Prepare for the worst, hope for the best. Hear from Garry Tan, co-founder and managing partner at Initialized Capital, about how to protect your business during a crisis. He’ll cover remote work, team management, sales, marketing, product development, and more.
Below, we’ve shared the transcript of Harry’s interview with Jessica.
Harry Stebbings:Welcome back to the official SaaStr podcast with me, Harry Stebbings. And if you’d like to suggest future guests or questions for the show, you can on Instagram, @hstebbings1996 with two Bs. But to our episode today, and I’ve been such a fan of the model this team have built. They’ve also been incredible community builders and players in the New York tech ecosystem over the last few years, and I’m so very excited to welcome Jessica Lin, co-founder and general partner at Work-Bench, won new York’s leading early stage enterprise funds, with a portfolio including the likes of Cockroach Labs, X.ai, Dialpad, VTS and Catalyst, to name a few.
Harry Stebbings:Prior to Work-Bench, Jessica was a learning and development manager at Cisco Systems where she worked with the engineering organization on agile transformation, innovation and culture. Jessica is also actively involved with the education and workforce development community in New York city, and serves as chair of the Industry Advisory Board at Opportunities for a Better Tomorrow.
Harry Stebbings:But enough from me. So, now I’m very excited to hand over to Jessica Lin, co-founder and General Partner at Work-Bench. Jessica, it is such a pleasure to have you on the show today. I’ve heard so many great things from the one and only Jonathan Lehr. So, thank you so much for joining me today, Jessica.
Jessica Lin:Thank you so much, Harry, for having me.
Harry Stebbings:Not at all. I’ve actually really wanted to see this one for a long time. I love the Work-Bench model. But I do want to start today with a bit about you. So, how did you make your way into the world of SaaS, and how did you come to co-found Work-Bench? What was that aha moment?
Jessica Lin:Well, again, as you said, you may know us at Work-Bench as IT to VC with my co-founder Jonathan Lehr, who joined your podcast in 2017, John coming from Morgan Stanley corporate IT, my colleague Kelly coming from Forrester Research. But I’m actually not only IT to VC, I’m also Swahili to VC. So, I studied International Development in Swahili in undergrad, thought I was going to end up in a career in global health, but then serendipitously ended up taking an engineering class in my senior year of college that led me down a path of working with student startups.
Jessica Lin:Then, serendipitously again, took on a role at Cisco Systems, working with really great internal engineering teams. So, my story is the ultimate story of pivots, of having really lived and breathed our motto at Work-Bench as an enterprise tech VC fund, which is that great things happen at the intersection of suits and hoodies.
Harry Stebbings:Absolutely it does. I have one very pressing question. Have you ever used your Swahili in work?
Jessica Lin:I need to find more use cases for that for sure.
Harry Stebbings:It’s a burgeoning enterprise ecosystem, I’m sure.
Harry Stebbings:I do want to dive in straight though because it’s such a pressing and interesting environment right now, and I want to start on the lifeblood of any business, which is the sales. Everyone is anticipating COVID will kill the majority of pipe and new business discussions. If we get a sense of the lay of the land, when you sit down with your company’s pipe reviews, how should founders expect to see their new business pipe be impacted?
Jessica Lin:Absolutely. And how we review pipe now is actually the same as how we review any other time with our portfolio companies. I think a lot of SaaS VCs tend to look only at booked business or MRR, but where we like to spend time is actually a layer deeper, because we know just how nuanced enterprise sales can be, and most of all that they take a very long time and can be very complex. So, that means in every pipeline review, understanding, one, deal velocity. How are your meetings progressing, who are they progressing with, are the right stakeholders in the room, what’s the next action step, how fast is the next followup meeting getting scheduled, how are pilots going, and what else can we be doing to get our clients onboarded as soon as possible?
Jessica Lin:Then, most of all, really the quality of the pipeline. How can we continue experimenting to grow the top of the funnel, whether it’s content, now virtual events and more. We’re of course taking into account COVID, that there are delays, that stakeholders may be distracted, but we’re also still hearing demand from our corporate network.
Harry Stebbings:Can I ask, and this is totally off schedule, but why not? In terms of the stakeholders themselves, I always have the perception in my mind that if you’re not a top one, two, or three enterprise buy for the CIO, it’s going to be fundamentally challenging. And honestly, I don’t find it so interesting. Is that shortsighted of me given the huge amount of software that CIOs and the stakeholders have to engage with today, or do you think it is right to have that very rigid prioritization in mind?
Jessica Lin:One of the things that we talk a lot about with our companies and with our Work-Bench community is that the misconception is to go straight to the CIO. The CIO is the top dog, they have all the budget dollars to spend. But in our experience at Work-Bench, what we’re seeing is that the actual stakeholders who are evaluating and assessing your tech as a vendor is really N minus one, N minus two, N minus three. So, the titles may be MD, VP, director, and we actually advise our companies to go deeper within the org, and that’s where you’re going to find technologists who really appreciate and have the bandwidth and capacity to understand what you’re doing.
Harry Stebbings:Can I ask, how do you deepen that relationship when the CIO or the stakeholder is maybe more in the top echelons of the enterprise? How do you deepen that relationship and look to build those maybe more product champions when your key primary contact is in the higher echelons?
Jessica Lin:Yeah, and this is so much of what even we do at Work-Bench as we build up the corporate network, it really is about how do you provide value to those executives? And a lot of them really love tech. That’s the key part is that they really love learning about new tech, about what’s out there, about how these technologies will transform what they’re doing in their business. So, we really advise our companies to be able to build those relationships really authentically.
Jessica Lin:A sale may not happen within three months or even six months, but the more you can provide value to them, whether it’s connecting them with other peers, whether it’s inviting them to events, whether it’s sharing, those are the types of relationships and investment where you can see the enterprise relationship pay off, maybe sometimes even one to two years down the line, but can be very worth it.
Harry Stebbings:Totally, in terms of that sales cycle. You also mentioned pilots there, and it can be a nice onboarding into a much longer and more formal relationship. How have you seen the best engage with offering pilots, and what’s the structure of the pilots that you tend to advise when selling to enterprise?
Jessica Lin:Yeah, I think that’s the number one thing for especially the enterprise. And a big part of it is that time kills all deals, and this is more true than ever. So, how do you get people using and loving your product asap? So, you really need to speed up onboarding, especially for an enterprise customer. So, our company, Arthur, an explainable AI company, realized that the regulated industries they sell into also want their solution on prem, even during a pilot phase. So, they set up an install that now only takes 15 minutes per deployment, and also rolled out sample data sets and models so that customers can download and get models pumping into their platform in minutes.
Jessica Lin:Our company Fire Hydrant and Incident Response platform has set up what are effectively sandbox simulations where their prospective customers can actually use Fire Hydrant in the case of a simulated outage. So, it pulls the now-remote now-distributed reliability teams together and lets them collaborate on solving the problem where they can feel the power of the platform firsthand. So, I always advise our companies, it’s really accelerating the time to value.
Jessica Lin:How can you make sure your customer gets fully onboarded as soon as possible, which again, sometimes can take up to three months in the enterprise with implementation and deployment, and then make sure that there’s really high usage and active engagement within the first three months so that customers can see your ROI in value in that time, and that the next six months then can be focused on upselling and cross selling in the renewal.
Harry Stebbings:In terms of optimizing the onboarding, often for enterprise it can be a launch part, coaching, professional services, very much in-person, high touch, where the team really comes in and spends time on site. How do you think that high touch professional services onboarding changes in a COVID world?
Jessica Lin:Yeah, I think so much of that is being creatively done now, and we’re finding that there’s new ways, and a lot of it is blending. I think so much of new sales and customer success are blending together, and that’s actually for the best, but the love you show for your existing customers, you can now extend to new prospects as well. And I love that joke around VCs, “Let me know how I can help.” Well, this is true for enterprise start-ups too, instead of saying in generic, “How can I help?” go to your customers and prospects with three specific needs where you can help out the most based on other customers you’re working with.
Jessica Lin:So, for example, our company, RippleMatch, they started hosting community chats for university recruiters across their enterprise customers and prospects. These were really curated sessions where small groups of campus recruiters could have a safe space and come together and share what they’re doing around recruiting this year. Our company, Catalyst, a customer success platform, has been offering trainings, not only to customer success managers, but to so many other functions like support and product, since customer success and retention is so critical in this time cross-functionally.
Jessica Lin:So, I think it just looks and takes on a slightly different form, but being able to offer something that will truly help improve your customers and prospects lives is really what’s going to make you stand out during this time.
Harry Stebbings:You mentioned some of the companies that, in terms of Catalyst, RippleMatch, they’ve really done it well. When you look across the landscape and suite of companies, where do you think many potentially go wrong in terms of really engaging that enterprise sale, also maybe in the midst of COVID?
Jessica Lin:For many people, it’s tempting to throw out all messaging out the door and try to sell to COVID, and that may be relevant in a few industries like healthcare, but for most other enterprise software companies the principles still hold true. What is the technology, what is a unique opportunity, and what is the ROI that I can bring to my customer? We had Kelly Breslin, previously the EVP of Sales at Tableau, who led the company to over $1 billion in revenue, on one of our webinars yesterday at Work-Bench. And she said that, with Tableau in 2008 during the financial crisis, they actually didn’t change their messaging. If anything, actually reinforced their current mission, which became more important than ever.
Jessica Lin:So, if anything, it’s not just selling features, it’s not just selling functions, it’s about telling your story. So, for your customers, sharing with them user stories, how are other customers using your product. It may help illustrate new use cases that your prospects may not have known about before. Now, on the flip side, there is a chance that your messaging does have to change during this time in this new environment, and Bob Tinker, the founder and former CEO of MobileIron, shared with us that in 2008, for their smartphone security and management product, the downturn actually forced them to change their messaging.
Jessica Lin:They had previously gone out with a productivity pitch, but they realized that what was way more compelling to customers was cost savings, which honestly ended up being a huge inflection point for them, even better for them in the long run. And the hardest thing, Bob said, is for founders to let go of their founding idea. It can feel really uncomfortable. But you may need to go out and test new ideas, potentially refine or go-to-market urgency fit by validating customer’s new top pain points during this time.
Harry Stebbings:Yeah, no, absolutely. I totally agree, especially in terms of that more human narrative behind it. I guess, thinking about that human narrative, how do you advise founders and reps on the right tone to engage with potential customers in this time. It’s such a tough time, because you need to be empathetic, kind and caring, but you also have to achieve business objectives. So, what’s the right blend in terms of the tone that you adopt these discussions?
Jessica Lin:Bob said it best. During tough times like these for founders, you have to have both empathy, but also ruthlessness. And that gets talked about less. And I love that duality. And I see it in our founders. All of our enterprise companies still have sales targets. They may be adjusted, but the targets are still there, and they may just have to be more creative than ever to hit them. And I do think there is a way to strike that balance. And the best way really to do that is simple. It’s to truly care about your customers. And if you truly care about your customers in an authentic, genuine way, then you can be ruthless [inaudible 00:13:42] about solving problems for their business.
Harry Stebbings:Can I ask you, you mentioned target sales, and it’s such an interesting talking point for me, in particular. I’m really passionate about this one. And it’s, when you think about target assessing with your companies, and you were really part of that active discussion, how do you set targets that are ambitious and really stretch targets, but also you don’t want to create ones which are unachievable and will create disincentives within the team and then lack of morale if they’re not hit? How do you strike that fine balance, and what does that decision making process look like for you with the founders?
Jessica Lin:I think about that a lot, especially for sales teams who may be harder for them right now to close new sales during this time. And I think the key takeaway and lesson here is really just to over communicate. And what I mean by that is saying, “Hey look, we may have to adjust targets. This is how we may be able to make it up to you, whether it’s through spiffs, through other accelerants,” but to constantly be clear with your sales teams. Something I’ve heard from a lot of account execs right now, it’s less about the fact that they may not hit their original targets, but it’s the fact that they don’t have a clear roadmap in mind. What should I be doing with my time?
Jessica Lin:And again, sales teams tend to be very competitive. They like to have goals, they like to have metrics. So, I think as long as it’s very clear to the sales teams, “Hey look, we may have you focus less on closing new sales, but can we have you work at the top of the pipeline? Can we help you help out more with customer success?”, then I think that can be something that’s really important for sales teams and founders to be seen right now.
Harry Stebbings:Can I ask, I had Ben [inaudible 00:15:10], CR of [inaudible 00:15:11] on the show, and he denigrated the specialization of sales and said, really, you lose that natural human relationship when he was simply passed off from SDR to RAP to AE. How do you think about the specialization of sales, if that’s right, and do you lose that human relationship with the mechanical policy?
Jessica Lin:I do think, like I said earlier, that customer success and sales are blending now, and so much of what you were doing, again, for existing customers you should be doing for new prospects. So, I do think perhaps in the future that those lines will be a bit more blurred. I do think it’s still helpful to have some organizational structure, especially as teams grow bigger and bigger, but that customer success mindset coming to the center or for the organization. I actually think it’s a change for the better.
Harry Stebbings:I do agree. I think it’s better for the customer, fundamentally. I do want to ask, you mentioned customer success, that being more and more important than ever. If we dive in a bit, what specific and deliberate things can start-ups do, not just to avoid churn, but also on the upside, to expand the usage and upsell?
Jessica Lin:Yeah. So much of what I shared a bit with RippleMatch and Catalysts I think is so critical. And the key is how do you get customers using the product during this time. And there are of course products perhaps within dev ops, security, automation, that will be seen as more essential during this time, but it’s really proving that time to value that I mentioned earlier that is going to be so critical so that when renewal does come up, you can prove very clearly to them, “Hey, this is how much you’ve been able to use our product and for this ROI.”
Jessica Lin:And a great example, like I mentioned, is our company, Catalyst, the customer success platform, and what they’re seeing with their platform is more and more usage, again, not with just customer success managers, but across product, across sales, across marketing, coming in and using their platform to understand customer health, and again, what their customers need. So, it’s a bit meta, but it truly is showing that customer success is now the center of our organization.
Harry Stebbings:We love a good meta point, don’t we, on that one. But you mentioned that the renewals, and one thing I think we will see obviously a lot of, and I’m by no means that wise person for this, but I think we’ll see a huge obviously amount of discounts coming back. How would you advise, and how do you advise your founders to approach discounts, and how to think that through?
Jessica Lin:Yeah, I do believe at least at the early stage that we’re investing in, at the C2, that offering a discount to an enterprise or a larger logo can be worth it in this environment, but then you do have to write in your contract around price increases for your two, or just make it a one year deal, and then you readjust when the macro environment improves. And I do still think big contracts can still get done at the enterprise. We’re seeing this with our start-ups selling into large Fortune 500s. We just had a company close a multi-year, multi hundred thousand dollar deal with a large pharma company.
Jessica Lin:And the key is, of course, which sector and function. But if it’s a true pain point at the enterprise, it shouldn’t be a budget issue, from what we’re seeing. It tends to be a bit more black and white for large enterprises. Either there’s a budget freeze, or there’s cash to spend, and it might just get pushed back a quarter or two.
Harry Stebbings:Totally. And I always find a give and take, we give the discount, but then we’d also love for an extensive case study to be available from you guys, as a bit of a compromise. I think there’s a lot that you can negotiate with. I do want to ask, because there’s a lot of rules of thumb in enterprise around churn specifically, and that when we’re talking about customer success, often people will say logo should retain 95% on an annual basis. This is one of the core rules of thumb. Would you agree with this, and how do you think about the rules of thumb around churn, and maybe the ones you agree with versus disagree with?
Jessica Lin:Yes, I do think that’s a general good rule of thumb. What I will say is different than perhaps SMB is that, in the Fortune 500 with enterprise customers, your contracts are either churning, renewing at flat, or expanding. And it tends to be a bit more tied to the hip is what we see. And that’s why enterprise deals are of course so much more painful to close, but when you do get them they’re stickier. It’s that 12 to 18 month sales cycle versus the two to three month SMB contract. So, we do see that a bit more closely tied together, logo versus all our retention.
Harry Stebbings:Yeah, no totally, especially in the tie. I’m interested, because a lot of VCs always shirk when they hear the elements of professional services. I personally quite like it. Obviously not as good for the margin, but fundamentally, I think great for the retention and usage. How do you feel on the professional services basis, and what do you think is a healthy ratio of product to professional services rev?
Jessica Lin:At the early stage, what we’re seeing, we really advise our companies to just invest as much as possible in customer success and professional services. And especially in the early days where product is still getting built out, that’s where actually so much understanding from your customers of what needs to be built into products so it can be automated more in the future, is so important. So, the more that you can invest there in customer success, it feeds so much better into product, and that’s where staying close to your customer, customer feedback, can be such a critical part of your product roadmap and development.
Harry Stebbings:Yeah, no, I’m totally with you in terms of that, super tight communications channel. Can I ask, I want to delve into Work-Bench a bit more as an organization now, especially in terms of the current times, because Work-Bench has a specific strategy around events and community, and it’s absolutely killed in the last years. As I said, I love your model, and so many people talk to me about your events. It’s incredible. But I wanted to talk about how it’s been impacted in the recent environment. So, how have you adapted your approach and strategy in the face of COVID and the rise of virtual events?
Jessica Lin:Absolutely. Community has been such a core part of our DNA at Work-Bench since day one. We’ve, in the past, hosted up to 200 enterprise events a year in New York, and we’ve moved everything online. And in a way that surprised me. I’ve actually enjoyed it a lot more than I thought we would. It’s easier than ever to spin up events. There’s more access, more people across the country, the world can join. So, we’ve been doing at least one or two webinars and events a week with Fortune 500s, founders, sales leaders, our corporate round tables, sales leader chats. And the number one thing I always say is that, content still needs to be number one. And I think most conferences assume that speakers got it. And I actually think the opposite. I think most speakers need practice, they need feedback, they need run-throughs. So, don’t assume that can be masked on a Zoom.
Harry Stebbings:I totally agree. Can I ask, what do you find about the best speakers that makes them so good? I certainly have a lot of thoughts on this given the podcast, but what do you find makes the best so good?
Jessica Lin:I think it’s a lot of practice to be honest. We hosted a massive women in enterprise tech summit two years ago called Navigate, and the amount of time I saw our speakers put into their individual presentations, I think, has a direct correlation. The more time you put in, the more feedback you get, the more comfortable you’ll be, the more fun you’ll have. And I think that really comes through and resonates with the audience.
Harry Stebbings:Yeah, no, I’m totally with you in terms of the preparation. I guess, for you as the organizer of the event, have there been any big learnings in terms of what it takes to run a really successful online event, and I guess, why do you think many are maybe going wrong today as they make that transition?
Jessica Lin:I think even if mistakes are being made right now, they’re being made in the spirit of creativity, and we’re seeing so much creativity and personality and full throwers. I love what our company Fire Hydrant did. They actually created a video for a sponsored happy hour at a virtual developer conference on how to make an old fashioned drink. It was so well done, it had a great sense of humor, and I think it just really resonated. And we always do it. I worked [inaudible 00:22:40] at our events, it’s a tradition. And we had a presenter last week actually show a photo of herself via Zoom screen share of her sitting on an ostrich. These are things that were hard to do in person before. So, I think it’s having fun and recognizing that we’re all learning along with each other. That is so important during this time.
Harry Stebbings:Well, I mean I’ve never quite had anyone share a photo of them on an ostrich, and I’ve done over 3000 entities. So, clearly I’m missing something. I do want to move into my favorite element now, Jessica, which is the quick fire round. So, I’ll say a short statement, and then you hit me with your immediate thoughts, about 60 seconds or less. Are you ready to dive in?
Jessica Lin:Ready to go.
Harry Stebbings:Okay. So, the New York tech ecosystem, the pros and the cons.
Jessica Lin:The pros, I love our pizza, our hustle, our [inaudible 00:23:22], our geography, getting uptown and downtown in minutes, our diversity of industries, the number of suits and customers in New York, unmatched anywhere else in the country. And we’re all missing New York City so much right now, and praying for it to fight and come back during this time. What’s hard for New York, and I think specific to enterprise, is that certain enterprise roles are, of course, so harder to hire for. And it’s really just a function of not having had that long time enterprise ecosystem here. So, talent like enterprise marketing, product managers with a lot of experience, that’s still quite competitive to hire them.
Harry Stebbings:Can I ask, with the cost inefficiency of the Valley, with, I think everyone would agree, probably worsening living conditions in the Valley, are you seeing a migration of top tech talent from the Valley to New York?
Jessica Lin:We absolutely are. And we’re seeing a lot of folks say, “Hey, I’ve always wanted to live in New York,” come out. We’ve seen founders, serial founders who may have started their first company out in the Bay but have decided to start their second or third company in New York city. So, we’re so excited for that and we welcome them with big arms.
Harry Stebbings:Tell me the hardest element of your role with Work-Bench today.
Jessica Lin:I think it’s the hardest, but it’s also the best, which is just constant context switching and so much learning. So, constantly learning, constantly having to teach myself new things, new technologies, companies, peoples, deals, events, content, customer insights, our own fundraising, hustling alongside our start-ups. And it’s the best part of the job, but also by Friday my head actually hurts from just so much stuff in it. And we always joke at Work-Bench that on Fridays, “Did that happen this week?” because whatever happened on a Monday usually feels like two weeks ago by then.
Harry Stebbings:I totally agree, and I think in some ways magical thing about founding your own firm, knowing that I … It’s such a start-up, and I don’t think people quite realize how much of an operator founder fund managers are.
Harry Stebbings:Tell me, what would you most like to change in the world of SaaS and enterprise SaaS today?
Jessica Lin:I would say this about enterprise, which is, at Work-Bench, honestly, we’ve tried to just make enterprise more fun and more accessible. It’s historically been a white man’s game, and I think that’s why enterprise tech faces more diversity challenges than perhaps consumer tech or other verticals. But we’re making inroads, and that’s why we do so much to grow the New York tech community. Tons of events, think a lot about how to make it welcoming, and do a lot in supporting women enterprise across our women and enterprise founders database, our workshops, our lunches or conferences, and more.
Harry Stebbings:Jessica, hit me. Final one. What’s the most recent publicly announced investment, and why did you say yes and get so excited?
Jessica Lin:This is great timing because again, our company, Catalyst, a customer success platform, just announced their $25 million series B led by Spark Capital yesterday, and we actually met the founders back in 2016 through our New York city community when the founders were at Digital Ocean, and Ed, the CEO, led customer success there. And given our community with the VP customer success dinners, and [inaudible 00:26:21] we hosted, we saw this tremendous demand for truly unified customer success platform, and how Ed and Kevin [inaudible 00:26:28] really stood out.
Jessica Lin:So, they started Catalyst in 2017. We’ve led their C2 back in 2018, and we’ve been honored to be a part of their ride in New York City ever since. And as we’ve talked about so much, customer success is now being moved to the center of the org. And for us to have met them as a part of our Work-Bench community so many years ago, it just feels very full circle.
Harry Stebbings:Jessica, as I said, been a huge fan of the model for a long time. I loved having Jonathan on. I’ve wanted to make this happen for quite a while, so, thank you so much for joining me today, and it’s been a lot of fun.
Jessica Lin:Thanks, Harry, it’s been such a blast.
Harry Stebbings:As I said at the beginning, huge fan of that model and such exciting times ahead with Work-Bench. And if you’d like to see more from us behind the scenes, you can do so on Instagram at hstebbings1996 with two Bs. I always love to see that.
In these Shelter-and-Beyond days, many of you are trying to dial-up the media and content side of your business. Which is good. IMHE, content marketing, done right, always works. Webinars almost always work. Corporate blogs almost always work. Podcast almost always work. Viurtal events can work. But you have to do them right. More on how here:
What’s the key? The key, like most things, is to pick the right goals and KPIs.
I see so many marketers tweeting and LinkedIn about how they have 1,000 signed up for their virtual event. But — so what?
What matters is who, not how many. At least for most of us.
The world does not need another digital summit, or yet another podcast. There are millions of podcasts already, literally. Over 30,000,000 podcast episodes are already out there in fact. And more digital events now each week than any human being in your industry could ever possibly attend.
But … but … your prospects will come. If you design it to help them do the discovery they want to do. Because they want to learn about you and your product.
Your customers will come. But only if you help them get better at your product, for real. Because they are invested. They will take a half-day out to come to your digital conference, if it’s awesome. Because your app matters to them. To their job. To the value they provide at their company.
So don’t worry about how many folks come. If 80 folks come to your digital event, but that includes half of your top customers, that’s a win. If 30 people listen to your podcast, but one is a prospect that now decides to buy because they learned you are the expert in the space — that’s a big win.
You need to track who. Who comes. Who listens. Who downloads. Not how many. Not vanity metrics. Get at least someone great to come, to listen, to download, to watch. And then, figure out how to get 2 of then.
You need to carefully tailor the content and distribution to the who. Not to maximize how many. You don’t need the same guests everyone else has on their podcasts. You don’t need to write the same boring blog post on Work From Home. Even worse, don’t outsource it if you can avoid it. And certainly, don’t outsource cut-and-past content. That won’t get you any leads.
Be authentic. Only do what adds true value. A smaller topic that you are the expert on, in the entire world? That can be your entire podcast or blog series. Do nothing that does not add unique value to your prospects or customers. If it doesn’t, just take a pause.
That will get you leads. Eventually at least.
Even for us at SaaStr, and maybe we sort of are a media “company”, in some ways. But the content we produce without goals, without a core target audience in mind, with a strategy. That content isn’t terrible. But it just doesn’t really get us anywhere.
Ep. 329: Navin Chaddha is the Managing Director @ Mayfield who just last month announced $750M in new funds split across their core and select funds. As for Navin, under his leadership Mayfield has raised over $2.2Bn in new funds and he has backed some of the best of the last decade including Poshmark, Lyft, Hashicorp, CloudGenix and more. During his career Navin has invested in 50 companies, 17 have gone public, 20 have been acquired. Prior to VC, Navin was an entrepreneur where he co-founded or led 3 startups, all of which had successful exits with one being acquired by Microsoft.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How did Navin make his way into the world of venture from successfully founding and exiting 3 businesses? What made him take the jump into investing full-time from being an EiR?
* How does Navin expect the B2B landscape to be impacted by COVID-19? How does Navin advise B2B founders to think about how renewals will be impacted? How does Navin advise founders to think through how to approach the topic of discounting with their customers? In what situations does Navin agree to provide discounts to customers?
* How does Navin foresee the B2C landscape to be impacted? How does Navin advise founders to think through the level of aggression with which they pursue traditional marketing channels, now with much lower CACs? Will these CACs remain low priced? How does Navin expect company pricing to change over the next few months?
* How has Navin seen himself evolve and change as a board member over the last decade? What have been his major moments of learning? What advice would he give to new board members joining their first boards? What can board members do to build a relationship of trust and intimacy with their founders? What works? What does not?
Ep. 330: The true test of marketers. Are you a revenue driver or a cost center? You cannot afford to be the latter. Marketing leaders must focus their teams on the areas that will drive revenue while they cut costs – the biggest impact for the business. Join TripActions CMO Meagen Eisenberg at SaaStr Summit as she highlights her approach to ensuring Marketing delivers on its mission-critical role even in times of uncertainty or crisis.
Below, we’ve shared the transcript of Harry’s interview with Navin.
Harry Stebbings:Welcome back to the official SaaStr podcast with me, Harry Stebbings, and it would be great to hear your thoughts and feedback on the show. You can do that on Instagram at hstebbings1996 with two Bs.
Harry Stebbings:However, to the show today, and it’s been far too long since we crossed the side of the table to the world of venture, and I’m thrilled to be joined by an individual who’s been on the Forbes Midas list no less than 12 times. Navin Chaddha, managing director at Mayfield, who just last month announced $750 million in new funds, split across their core and select funds.
Harry Stebbings:As for Navin, under his leadership Mayfield has raised over $2.2 billion in new funds, and he’s backed some of the best of the last decade, including Lyft, Poshmark, HashiCorp, CloudGenix and more. During his career Navin has invested in 50 companies, 17 of which have gone public, and 20 have been acquired, an incredible record there.
Harry Stebbings:And prior to VC, Navin was an entrepreneur where he co-founded or led three startups, all of which had successful exits and one of which was acquired by Microsoft.
Harry Stebbings:I do also want to say a huge thank you both to Tim Chang and Rishi Gaga at Mayfield for some fantastic question suggestions today. I really do appreciate that, chaps.
Harry Stebbings:However, that’s quite enough from me. So now, I’m very, very excited. Hand over to Navin Chaddha, managing director at Mayfield.
Harry Stebbings:Navin, it is such a pleasure to have you on the show today. I’ve heard so many great things from your wonderful partners, Tim and Rishi, so thank you so much for joining me today, Navin.
Navin Chaddha:Harry, it’s a pleasure to be here with you.
Harry Stebbings:It’s very kind of you, but I would love to start with a little bit of context. So tell me, how did you make your way into the very wonderful world of venture and come to be an MD today at Mayfield?
Navin Chaddha:Yeah, I’m a serial entrepreneur turned venture capitalist. I started my first company in 1995 while I was an engineering graduate student at Stanford University. In my early twenties I founded three companies between 1995 to 2004 which all had successful exits, including an acquisition by Microsoft and an IPO.
Navin Chaddha:I joined the venture capital business as an entrepreneur in residence in 2004 to work on my fourth company and one thing led to the other and I became a venture capitalist. As far as Mayfield is concerned, I’ve been leading Mayfield as its managing director since 2008 and it’s been an incredible decade of learning for the firm and me personally.
Harry Stebbings:Absolutely. It’s been an incredible decade for the firm and once you go into VC you never go back. So that’s very interesting to hear. I do want to start there, Navin, on a bit of a more macro perspective and where we’re at today in the environment.
Harry Stebbings:It’s a greater time of uncertainty than ever before, virtually the whole economy is down as Howard Marks actually said on the show. So if we start by taking it maybe by vertical, when looking at the B2B landscape today, what can we expect from the current economic landscape, in your mind?
Navin Chaddha:So Harry, I’m an eternal optimist and believe company building is a marathon, not a sprint. And crisis is only an opportunity for the bold. While we are in challenging times, I do believe that some iconic companies will be created and strengthened during this downturn.
Navin Chaddha:Two of my rules for the road for building iconic companies are that you have to sell painkillers, not vitamins, and that startups die of indigestion, not starvation. Companies that are crisply able to articulate their value proposition is a must-have and are hyper focused on a handful of priorities will do extremely well.
Navin Chaddha:Specifically, I think areas such as privacy and security, cloud native companies, future of work, as it relates to distributed and deskless workers, next generation training, knowledge sharing within the enterprise, and sales engagement companies will do extremely well.
Navin Chaddha:At the same time, B2B companies will have to figure out how to build market and sell virtually in this remote-first world, and here one of our companies, HashiCorp is doing an excellent job as a remote-first company, as they grew out of the open source roots and were set up as a distributed company from day one.
Navin Chaddha:At the same time capital-intensive companies will have a struggle with fundraising and companies which require an onsite visit to customers or a physical installation in person will be the most impacted.
Harry Stebbings:I mean, I absolutely agree with you there. I’m picking up on one string that you said, and sorry, going off schedule but I’m too intrigued. You said there about indigestion, not starvation, and I do agree with you normally. I guess my question is, how do you advise companies that you work with and sit on the boards of today when it comes to capital allocation and specifically burn preservation? How are you advising them today?
Navin Chaddha:So first and foremost we are telling companies, come up with your top three priorities. Secondly, make sure the current cash you have lasts you for another two years, and third, just make sure you have rational growth and just don’t focus on top line growth, also look at profitability. So I think those are the three things I would say we are advising our companies right now.
Harry Stebbings:Speaking of that kind of growth there, I am intrigued because a lot of companies that I work with say, “So far, we haven’t been impacted from a revenue standpoint.”, and I guess specifically for SaaS companies, Mark Souster said about the where, because it’s renewals and it’s discounts that will really be effective. Do you agree with Mark, in terms of really focusing on the renewals and the discounting, and the delayed impact of them?, And I guess to what extent do you think they will be hit as two significant factors?
Navin Chaddha:Yeah. The best place for companies in this environment, whether SaaS or not SaaS, is to invest in building deeper relationships with their existing customers. As they do focus on renewals and upsells, I expect most customers will bring up discounts and it will end up being a negotiation on a case-by-case basis.
Navin Chaddha:The first quarter of this year was just the beginning. Companies and customers are still adjusting to the new norm. So I think in the second quarter and third quarter we’re going to see a lot of these requests come from customers.
Harry Stebbings:Can I ask, in terms of those requests, how do you advise founders who are faced with them? Because we’ve seen in likes of Stewart Butterfield at Slack offer heavy discounting and sometimes free use of the tool, but that’s not always available to start ups in the earliest stages when capital is much more precious. How do you advise founders when faced with heavy discounting discussions? Stay strong or be a little bit more flexible.
Navin Chaddha:So I would say my feeling always is it’s about creating a win-win among the different constituents. So I would advise founders to not take a hard stance but really understand what the customer pain is and work together with them to find the best solution.
Harry Stebbings:Absolutely. And I think there’s also many ways that you can make it as a win. Offer the discount, but then you also heavy case studies, referrals and really make that win-win and give-take scenario. So totally agree with you there.
Harry Stebbings:I guess my question is, you’ve also banned some of the most iconic consumer companies in the last decade from Poshmark to Lyft. And so, if we switch hats a little bit, what does the current economic cycle do to the B2C landscape, in your mind?
Navin Chaddha:So first and foremost, consumer confidence is an all time low and staying healthy for all of us is the number one priority. With the loss of jobs, whether it’s 25 million today or as expected to be 40 to 50 million, definitely there will be reduced consumer spending.
Navin Chaddha:At the same time, we are seeing resurgence of spending on secondhand goods, so sharing economy. Companies like Poshmark, which you mentioned, are thriving. We have sustainable e-commerce companies like Growth Collaborative, and at the same time, on-demand delivery companies like Instacart and DoorDash are doing really well.
Navin Chaddha:I see some new areas of opportunity emerging to cater to the needs of millennials who want to rent things versus owning them, and that urge is only going to go up in today’s environment. At the same time, there are new technologies emerging which will change the way we work, live and play in this new remote-first world.
Harry Stebbings:You said that about the reduction in consumer spending. Every VC is talking about the reduction in pricing that we’re expecting to see. Having said that, there’s so much dry powder sitting on the sidelines and there’s so many people willing and active to engage in this environment. Do you think we will see this reduction in pricing, and how are you thinking about that specifically?
Navin Chaddha:So my feeling is, right, in this new norm there will be an adjustment on pricing and terms. And again, to what I said earlier, what is important is both the founders and venture capitalists look at the situation and take a long-term view to make sure it’s a win-win for everyone involved and not take advantage of the situations founders might be finding themselves today.
Harry Stebbings:No, I totally agree. Especially in terms of not taking advantage of them. Going back, you mentioned some of the companies that are doing very well. CACs, for the first time in a long time, are looking a lot more reasonable. I guess my question to you is here, how do you advise founding teams on how to think through the level of aggression with which they test this new environment for much more reasonable CACs? What’s your thoughts on this?
Navin Chaddha:So CACs are coming down as marketing budgets are being cut drastically by companies. However, I would caution that this could be short-lived. I’m a firm believer in playing the long game, ensuring you have rational growth and keep an eye on metrics like CAC payback, gross margin, and LTV.
Navin Chaddha:Bottom line in my mind is just the revenue growth is not enough as you need to keep an eye on profitability. So I would say, take a long view, take a balanced view, and do things accordingly.
Navin Chaddha:At the same time, rather than just spending on marketing, I think it’s a good time to double down on your investment in content marketing and social to build deeper relationships with customers where personalization is key and trust is your only currency.
Harry Stebbings:Can I ask, when you look back at your portfolio, as we said, you’ve worked with some of the best, who do you think exemplifies this most, and what do you think that they did so well?
Navin Chaddha:I would say Lyft is a good example doing this. Poshmark is doing the same. In fact, Poshmark, with most companies going down in revenue, in this environment they actually cut back on their marketing spend and are profitable and making money. So one has to continuously adjust their growth with sites to profitability and adjust the knobs accordingly.
Harry Stebbings:I’m so interested, sorry. You mentioned the knobs there of growth and profitability. Do you think that they are paradoxical? Do you think that they’re opposing or do you think that there is a balance that can be struck where they’re in unison? Because often people say, you lean towards profitability and growth declines, or you lean towards growth and profitability declines. Do you think that they are in contrast?
Navin Chaddha:My feeling is there is a rule of 40 eventually that Wall Street is going to look at, where your revenue growth plus free cash flow has to be greater than 40. So one has to find the balance on how much growth do you focus on and what is your free cash flow? And if the sum total of those is greater than 40 you’re doing extremely well. So that’s where my feeling always is. Take the long view, see what that metric for your business is, which is revenue growth plus free cashflow and converge towards that long-term model.
Harry Stebbings:I do have to ask, we spoke about pricing now on the VC side, investing in companies and as the times move, many are suggesting we’ll see the return of maybe more dubious VC behavior, akin to that, maybe many decades ago. Do you think this is fair about the suspicion of the return of dubious behavior and what do you think we can do to prevent this?
Navin Chaddha:I am a strong believer in sticking to your values and demonstrating leadership in both good and bad times. I can’t comment on what other VCs are doing, but at Mayfield we are always focused on creating a win-win situation for everyone and treating founders with respect and being fair and equitable and not proposing onerous terms, even in today’s environment.
Navin Chaddha:I believe alignment with founders is the most important thing in our business because people make products, people build companies, and it’s not the other way around. My advice to founders would be too careful about giving these nonstandard terms as they will stay forever and they’ll come into play in future rounds as well.
Harry Stebbings:In terms of those onerous terms, if we think about first time founders who aren’t maybe so aware of the intricacies and nuances of term sheets, are there specific terms that one should watch out for?
Navin Chaddha:So there are a couple. The first one would be the liquidation preference. We are seeing some resurgence of participating preferred, where preferred investor are supposed to get their money, and then they participate like common shareholders.
Navin Chaddha:At the same time we are seeing terms like two X senior [inaudible 00:14:34] pref come in, and I would say these are just not worthwhile and there is not an alignment with the founders because if you are running a marathon and not a sprint along with the founders, why come up with such terms, and at the same time founders should be really careful about giving blocking terms to VCs. Both those stones are going to show up in this environment.
Harry Stebbings:Yeah, no, they absolutely will. When I was chatting with Mark Suster the other day at Upfront, he said, “We’ve already seen the return of pay to play.”, and he said actually, it eliminates that free rider problem of someone not reinvesting in the new round, obviously. And maybe it being fair in some respects. I guess, how do you think about the pay to play element and how do you see that evolving over the next few months?
Navin Chaddha:So we are beginning to see this already. Personally, I feel mixed about this, as new investors who are proposing this are concerned about existing investors not participating and hence moving them to common stock. So my advice is let’s be careful in dealing with this on a case-by-case basis.
Navin Chaddha:First I want to understand what the concern is, and then discuss it with the existing board and management team to see if we can come up with a solution to treat everyone fairly and create a win-win for everyone.
Navin Chaddha:But if some side has the money and is still not playing, then it’s fair for the pay to play to happen. But if they really don’t have money as an investor and are still supportive and doing everything they can to help the company, then let’s be accommodative and do this in a fair and equitable manner.
Harry Stebbings:Yeah, no, listen, I agree. Especially on the case-by-case basis. I think it’s very nuanced. Post the terms that we discussed that are being agreed, often that the VC tastes a seat on the board and we mentioned some of the companies that you’ve invested in. You’ve also sat on the boards of some of the most meaningful companies of the last decade.
Harry Stebbings:I guess my first question, and I love this one, is how have you seen yourself evolve and change as a board member over the last decade, Navin?
Navin Chaddha:So I’m continuously evolving because my belief is, right, like dinosaurs never survive in any business. So you are in a continuous process of learning and improving. So having come into the business as a serial entrepreneur, the most important growth area for me as a board member was holding back on the urge to jump in to solve problems versus acting as a coach rather than being a player myself. So that’s what my struggle was for the first three, four years. How do I act as a coach rather than jumping in and start playing?
Harry Stebbings:How did you prevent yourself? Because it is such a challenge for more operational minds. How did you prevent yourself from jumping in and play more of an advisory role in those early days?
Navin Chaddha:I would say it was very similar to parenthood where you don’t do the homework of your kids. And when that triggered in my head, all kinds of bells went on. And then, at Mayfield we do believe in continuous learning and continuous assessment. And that was showing up in my 360s as an area where I could improve and do better. So that’s how it happened. It happened based on feedback and certain realizations of what the role for good board member is.
Harry Stebbings:Speaking of the role of a good board member, there is a new generation of VCs and senior VCs who are very young. When you think about advising new board members, what advice would you give someone early in their venture career when it comes to joining their first few boards?
Navin Chaddha:So the most important thing in my mind is trust with the founders to make sure you’re able to build that relationship early with these founders. You need to go beyond the board meeting interactions to understand their mental models and motivation and build personal relationships so that you’re in their zone of trust. Once you have that, just great things are going to happen in that relationship between the founder and you as a board member.
Harry Stebbings:Yeah, no, I do agree with you. I mean, speaking of that relationship of trust, how do you create an environment of trust and safety for the founder at the board level? It can be such an intimidating environment, especially for first time founders who maybe aren’t used to it. How do you create that environment of trust and safety for the founder?
Navin Chaddha:So this is what I try to do. I spend a lot of time with founders before we make an investment in really understanding their mission, vision, and values. Once we have alignment on those and common rules of engagement, the journey ends up becoming a lot of fun and I always watch the founders back and I’m there for them first, in both good and bad times. So those are some of the things which have worked well for me in over 50 board seats I’ve held in my venture career over the last 17 years.
Harry Stebbings:I mean, it’s amazing, almost 50 board seats. I do have to ask before the quick fire, you mentioned there about really spending the time on the mission, vision, and values. We’ve seen a compression in fundraising timelines incredibly over the last few years to very, very short. I think Josh Kaufman, the average time sheet for them is nine days from first meeting down from something like 100 five to seven years ago. How do you feel about the compression in fundraising timelines?
Navin Chaddha:I would say it’s a problem because decisions are being made very, very quickly without people understanding if they’re even aligned on values. So my feeling is in this new norm, hopefully you at least get three to four weeks on both sides to make informed decisions because at the end of the day venture and company building is running a marathon, not a sprint,
Harry Stebbings:I do want to, though, move into my favorite, Navin, which is the quickfire round. So I say a short statement, and then you hit me with your immediate thoughts. Are you ready to dive in?
Navin Chaddha:Absolutely. Always.
Harry Stebbings:Okay. So what do you know now that you wish you’d known when you entered venture as that EIR in 2004?
Navin Chaddha:I wish I knew how long it takes to become successful in this business.
Harry Stebbings:Yeah, no, I absolutely agree with you. What’s the hardest element of your role with Mayfield today?
Navin Chaddha:It’s balancing my role as an investor where I’m a player against managing and leading the firm where my role is that of a coach and switching back and forth between these roles is not easy.
Harry Stebbings:No, it’s not at all actually, and I don’t think many people fully comprehend and understand the fund management perspective as well as the investing perspective, and the challenges of doing both at the same time. So I do totally agree with you.
Harry Stebbings:Tell me, what motto or quotes do you most frequently revert to?
Navin Chaddha:It’s all about people because people make products, products don’t make people.
Harry Stebbings:Tell me, the most recent publicly announced investment, and why did you say yes and get so excited, Navin?
Navin Chaddha:The most recent announced investment is Nuvia where we saw a renaissance of silicon coming. Being people-first investors, we made a bet on founders who were responsible for building the microprocessors for iPhone for the past decade and now have a [bee hag 00:21:03] about building a new processor for the server cloud market to take on Intel.
Harry Stebbings:I mean, that’s phenomenally exciting and, as I said, it’s been an incredible last decade for Mayfield. Navin, I’ve wanted to do this one for a long time, so thank you so much for joining me today and this has been a lot of fun.
Navin Chaddha:Yeah. Thank you for including me in this wonderful podcast series, which is helping the founder community and is a must listen, according to me.
Harry Stebbings:Fantastic to have Navin on the show there, and as I said, it’s been an incredible decade for Mayfield, and if you’d like to see more from Navin, you can find him on Twitter at navinchaddha. Likewise, it’d be great to welcome you behind the scenes here. You can do so on Instagram at hstebbings1996 with two Bs. It would be great to see you there.
Harry Stebbings:As always, I so appreciate all your support and I can’t wait to bring you a fantastic episode next week.