SaaStr Annual — The Final Day
Zendesk: From Day 0 to Today: The Lessons Learned
Mikkel Svane (Zendesk)
DevDutt Yellurkar (CRV)
- Still hold onto the startup mentality after your public offering. Biggest hurdles ahead. Never feel like you made it big, every morning is a new mountain.
- Flexibility with pricing and packaging can be very disruptive, gives you more options. On the name note their raising of prices made their customer base revolt and almost destroyed the business.
- A non sales focus worked for them until the 10mil ARR mark.
- They settled for a lower valuation than what they could have gotten because the goal was grow and get out there.
- ZenDesk just went public, customer service software. 320 mil in 2016.
- partially incredibly confident, other part tremendously worried. Email saying they will never raise 100 mil.
- 0–1 mil, 1–10, 10–100, and 100-today.
- Founder dynamics is like being in relationship but not willing to commit. No one kneels down and proposes.
- There is a little bit of feeling each other out, trying to figure out way to believe in it despite uncertainty.
- No one in Denmark believed in their idea.
- Christoph Janz role in that was that he was the earliest angel investor. It was a very fragile stage so an angel investor who makes you dig in and adds value is huge.
- Taking money from VCs obviously depends on who is giving.
- VCs worked to smooth out process which was the hurdle for them at the time.
- Building brand that providing joy enlightenment and tranquility with customer service which is the opposite association (same thought process as intercom).
- 0–1M took 18 months and 1–10M took another 18.
- Funny bit on Americans’ confidence and lack of modesty, cultural differences noticeable.
- The initial funnel modeling seemed primitive at the time but buying into it was the key.
- Echoing sentiments of value of raising prices but then it almost killed them. Caused revolt and needed to regain the trust of their customer.
- T-shirts of awful customer sayings a good idea they used.
- 36 months for 10–100 mil.
- Didn’t have sales until 10 mil in run rate.
- Removing friction for customer at every interaction. We use Amazon and other services because so damn easy.
- If customers need help have help ready for them.
- Flexibility with pricing and packaging can be very disruptive, gives more options.
- Going public is something you start years and years in advance.
- Went out with a lower valuation than what they could have gotten but doesn’t matter, more important to grow and get out there. more about team and the path you set yourself up for.
- 50% growth in 2016, lots of change and turnover and new hires.
- Going pre post public all about execution, actually showing you can do that.
- Getting everyone on the same page about their ambitions (doing 2020 roadmap for billion).
- Agility and trajectory is key to CEOs so huge opportunity in B2B market
*Double Unicorns: How Things Are Different Now. And Things That Never Change
Josh James (Domo)
- Doesn’t get easier second time because higher expectations
- Getting younger people in and making it their life to have that great level of energy
- Importance of figuring out complex customers means you can handle anyone and if it’s vaguely in your wheelhouse and go to figure out how you can fix it
- Detailed compensation plans are the most powerful operational plan
- Domo takes all data from your company and puts it on phone.
- He was running Omniture and had idea because they needed to know everything about their business.
- Everyone expects you to fail when you try first time, not the case second time around.
- Getting the band back together to start but lose the ability for those who are trying desperately to make a name for themselves.
- Don’t walk around and complain about each other, if say something about someone make them come into the room and say to their face.
- Tons of credit cards before they knew who was and ran them all right before it.
- More investors means more pressure which was good. asked why are you doing this again.
- CEOs and execs of big company no big difference, they just have market opportunity and decades.
- Going to swing big, if can’t afford to lose money on it then don’t invest.
- NPS was really bad to start then after a couple years figured out the product and use it as a core metric.
- Roll out the red carpet when you’re recruiting, make is a crazy experience they can’t say no to.
- In recruiting like saying something that is going to throw them. if you feel like you can’t have something you want it more, part of pitching.
- Hates remote employees and only do it for the very few, even the best ones that do it he doesn’t believe they are actually doing it.
- $1,000 bucks for every hire, guy has to get quality no matter what.
- Sales plans are tough for incentives because of loopholes, they will find.
Between Us: Scaling Lessons from New Relic & InsideSales
Elay Cohen (Saleshood)
Lindsey Armstrong (insidesales.com)
Hillarie Koplow-McAdams (New Relic)
- “The strength of CEO is is the questions that they ask, not the answers they provide”.
- Winning companies approach scale by these metrics and from a small number of key things.
- Understanding the balance between growth and cash flow.
- As you scale must understand how to get to be cashflow positive.
- Ping pong and snacks isn’t culture.
- Scaling used to mean growth at any cost. That’s no longer the way people look at it, dependent on size of company and must be done off of a strong foundation.
- Scale is just about going as fast as you can BUT can go too fast or too slow — just don’t do it until you know how you are going to dominate market.
- How are you going to synchronize investments?
- Companies often balloon up, try to expand as fast as possible then contract again then balloon out again. get around it by having a super clear understanding of how you are going to it.
- Globalization dependent on specific countries laws and regulations, privacy data for ex.
- Show that you can go into other countries, don’t actually just go and do it if the goal is to sell.
- Building up to certain size, split in half then build each up again and repeat.
- Culture — how do you scale culture? Each company is a little country with their own leaders and culture. Everyone focuses on customer centricity.
- Acquisition of someone with compatible culture.
- CEOs just create vision of company and make decisions.
- Taking data and translate to experience you got and constantly keep moving. learn from decisions and know there will be a lot of mistakes made.
- What would you recommend given the solution? If issue is reversible, push it down. If irreversible push it up.
- Enjoy the ride, have no fear.
Numbers that Actually Matter for Founders
Mamoon Hamid (Social Capital)
- SlideShare here
- Quick ratio — needs to be > 4
- Formula = new + expansion / churn + contraction
- We all dream about beautiful upward growth curve.
- The quick ratio gets worse after the first three years, churn makes the quick ratio lower and if 2 or lower you’re screwed.
- Leaky bucket problem, losing customer faster than it is to add to the ones at the top.
- Product market fit — churn, expansion, contraction of MRR is a lagging indicator.
- Need to focus on a leading indicator
- DAU to MAU ratio of 55% for Facebook until 2012, now up to 65%
- Big troughs in this ratio because of holidays.
- After 16 years the quick ratio can get as low as 1.
The Inside Story of AngelList, And How Funding Is — And Isn’t — Being Disrupted
Naval Ravikant (Angel List)
Connie Loizos (Strictlyvc)
- Angellist advertisement
- Fundraising, finding talent, finding customers (product hunt).
- 23,000 companies using that with A-List.
- Platform to take people and enable them to find deals.
- 200 syndicates running the platform, these people also have their backers on angellist. the LPs behind the GPs.if get bluechip angel on angellist to write them check can exponentially grow that.
- 60 people, goal to be profitable by the end of this year.
- Doesn’t see tech running out of cash.
- Right now raise money because they can, not because they should.
Top Lessons Learned after 200+ SaaS Investments
John Somorjai (Salesforce Ventures)
Mark Suster (Upfront Ventures)
- Large amount of acquisition is liking and respecting the people.
- 111 program — 1% of employee time can take a week and go help any cause they want to charities like stocks over cash.
- Building out partnerships with potential acquirers is the best way to start. They can grow and learn tech and easily get info they need.
- Don’t play game of milking price for highest possible amount, will damage relationships with VC after.
- Fred Wilson — you shouldn’t work with corporate venture capitalists.
- Diff types of corporate venture firms — they are strategic investors that focus on building out cloud enterprises.
- They ask for notification right if you are about to be acquired but no blocking right or anything involved.
- Also ask for quarterly financials and that’s the way they track performance for whole portfolio.
- They just have to disclose the aggregate value of portfolio over time.
- Goal is to invest in companies that are involved with their app.
- People don’t need to worry about end game sell, they don’t block sales supposedly.
- If you raise another round how much dilution? how much loss of control whenever you actually IPO.
- How does he feel about guys trying to strong arm deals? Talk to place that will be best place for you and employees.
- People try to maximize price but that leaves wake of carnage around deal — after deal you deal with these people in the future and don’t want animosity with your partners. have to justify the higher valuation and deal will be viewed as a failure if it doesn’t pan out.
- When to talk to corp dev or business — always start off by talking with the business. Reaction from sales teams is how they start checking out a deal.
The State of the Cloud
Byron Deeter (Bessemer Venture Partners)
Kristina Shen (Bessemer Venture Partners)
- 4x more M&A than any other year, 60 billion dollars
- How to scale — the CAC cocktail formula = sales rep productivity, marketing, and sales support
- Tree analogy, small companies that drive innovation.
- 8 years for dropbox to get to 1 billion.
- 1–10 mil ARR for these guys anywhere from 1 to 14 years.
- 4 years good, 3 years better, 2 years best.
- They like rule of 40 but think it’s a cascading scale.
- Companies at different stages have efficiency scores.
- If >30 mil revenue efficiencies.
- 70% for expansion
- 50% for IPO
- 30% for public
- Net new ARR:Net cash burn should be > 1
- How much should I burn?
- Still inner dependency and complementary relationship with humans and ai.
- APIs as backbone of majority of cloud infrastructure.
- Mobile first and mobile only for worker productivity.
- How is it a strategic advantage for us?
- NPS everything!
- Millennials are high performing but high turnover.
- Much worse to hire net new employee than to retain
- The screenless software movement — voice recognition.
- 20% of google searches are done through voice
- Diverse teams win.
Venture-Backed CEO: Lessons Learned Inside and Outside of Silicon Valley
Promise Phelon (Tapinfluence)
- We have to fight the pattern of white male from Harvard pitching, VCs like patterns and they don’t fit that.
- Leading is about discipline, not motivation.
- Stay curious, hobbies are soul, staying uncomfortable.
- Because scale of companies more people will start having them outside of the valley.
- Tapinfluence is place for influencers to connect with brand.
- Leadership hiring — people needs extreme ownership.
- What is actually culture? Free lunch isn’t it, like other speakers noted.
- Managing your board, in the valley everyone on like 8 boards, boulder much different situation, more about relationship building.
- Managing time, avoid the attempts at motivation because it isn’t sustainable.
- CEOs need time to self reflect
- One min recording of what happened that day.
- Morning pages, get down all notes.
The Best of the Best: YC SaaS Founders
Sam Altman (Y Combinator)
Tracey Young (Plangrid)
Joshua Reeves (Gusto)
Spencer Skates (Amplitude Analytics)
- Being a leader is a completely separate skill set than a marketer, developer, salesperson, etc.
- VCs have to let control of team and not micro manage.
- Too often people spend money to grow before the product is good enough and it is useless.
- When making offers give full financial statement to the people they offer to.
- Who is your best rep and why? If yourCEO doesn’t know those things then that’s a bad sign.
- Leader maybe isn’t your best engineer or salesperson, but just the best leader.
- VCs have to let control of team and not micro manage.
- The more senior the person is the longer it takes the person to onboard.
- Can’t expect people to come in and be effective within the first two months.
- Day to day is changing, PR work, fundraising, finance, hiring.
- Only focus on one or two things each quarter.
- When starting need to handle and act as 10 people.
- Time allocation as company scales most important, high leverage but people are not proactive enough about it.
- Can’t just do anything, don’t do the last thing or advice you were told.
- Head of product for their company is an old user, know product better than you do.