SaaStr Annual 2017': Notes from Day 2
Amazing content yesterday, if you want to check day 1 summary, click here. Here’s the notes for Day 2:
Twilio: The Inside Story
JEFF LAWSON CEO / TWILIO
Twilio is a cloud communications platform for developers, used for embedding communication into apps. If you use Uber, you use Twilio.
Developers are the entry point to the market. The developer first approach starts with making your tool on their hands to solve their problems and challenges. Enabling them to experiment and prototype is much more efficient than getting salespeople pitching in front of potential customers.
Selling to complex enterprises
The salesforce comes inside to align multiple stakeholders, but almost always it starts with the developers. The developer is the champion. It is not a “hero sales”, where you need a salesperson presenting first. At 300m+ ARR, it is still pretty much like the early days.
The IPO and the brand
Name recognition helps the developers sell Twilio internally. Brand greases the sales process. Getting known is important and takes time, and the IPO helped. The brand gives air cover. The Silicon Valley NetSuite billboard helps build credibility even if you’re not familiar with Netsuite. It builds the brand. “Let’s go with Netsuite, I’ve seen their billboards”.
Adding enterprise Sales
Adding enterprise sales changes the culture. One of the challenges, in a self service product is how to account the sale. Every account at Twilio starts with a couple penny’s.
As a developer the CEO used to think in terms of developer, engineering culture. When you ad salespeople, you need to care about creation the sales culture. Adding enterprise sales urged Twilio to add a great sales culture that work well together with engineering culture. As the CEO, your goal is to make sure both cultures are working well and become an enabler of the 2 sides of the business.
The product sells itself?
This is a lie that a lot of founders believe. The product must start, but you need sales to get to 300m.
Multiple product lines
Twilio started with voice. Pretty fast customers asked for SMS and 18 months later they launched the SMS product. Exploring customers needs and give what they want is important. You should Ignore the “Find a niche, get rich”, “Focus, Focus, Focus” advices. Twilio ultimately wanted to solve customers problems. Each product you launch is a bet and you need to get more runners on the bases to get more chances to win. The potential outcomes in business are limitless. Jeff is a believer in small teams to launch new products.
Developer trust, agility with resiliency
Twilio never killed one API, and this builds developer trust. Their main API is extremely consistent and they never break it or make incompatible changes.
The goal of a high performance engineering organization is to move fast and be resilient. At Twilio they ship fast, ˜100 deployments a day. They had some troubles in the past, but they figured out that slowing shipping would not work for them. Quarterly releases are not the answer. They trained their people and focused on small teams to ensure speed and resiliency, so the teams could ship fasert and mantain the product with quality. The Twilio operational maturity model trains everybody in security, architecture and ensures that everyone can mantain the product stable with speed.
What’s next for Twilio:
- The IPO takes time, for this year, Jeff wants to meet at least 3 customers/month ;)
Veeva: The Biggest Vertical SaaS Success Story of All Time
PETER GASSNER FOUNDER & CEO / VEEVA SYSTEMS
Veeva Systems raised $7 million, only used 3m, and was unicorn IPO’d without additional funding. 10 year old, 1700 people, building the industry cloud for life sciences.
Peter was an early Siebel VP, then joined Salesforce in 2002. He retired a bit after SF and decided to start Veeva in 2007. The key factor, in his opinion was his ability not to follow the herd allowed him to go against the mainstream and start the company.
Veeva started focused on a building a very specific phamaceutical platform on top of Salesforce. His friends/mentors told him that the niche was small and he shouldn’t bet there. That’s what motivated him. At first, he didn’t want to be the CEO, his idea was, if this thing works, we’ll find a CEO. Over time he started getting to like it, and to get better at it.
In the early days, you don’t have any branding. Peter had one meeting where he heard: “We have more people in this room than you have in your company”. He replied: “We have great people, and are building great technology”. Sell yourself first and set the price accordingly. If you build a premium product, charge premium.
Suite of products
Companies start with a product, find PMF and stay. A lot of companies fail when they decide to diversify, for not picking the right market opportunity. The second product needs to be bigger than the first. It is impossible to know if it is, but is very important to think about it. Picking a smaller market is not aggressive enough and can become a trap. You loose intellectual capital and energy. Don’t tap into a second product if you do not have the resources.
After the first product’s success, Veeva entered the content management space for the same industry, and this new product line now accounts for 35% of their revenues.
On capital & Planning
Have enough to bring dedicated people. First challenge was get to a dozen people as fast as they could, with a great team. Do not plan long term, start with quarterly plans. Veeva burning only 3m and suffered a lot of pression from investors saying “Spend more!”. He thought: “I don’t get it. It is not right”. He didn’t want to dillute and take more money, and this was a controversial thought as well.They focused on the capital they had and were very disciplined. Big deals, pre paid early is the best was to fund yourself.
Advice: Don’t waste money. Get a great product out there, sell it for a great price, fast. Also, professional services needs to be charged early on. It was an important rule for them and they never gave professional services for free. Customers will pay if they get the value. They never wanted to raise more money, to build companies for the long term, you need to be profitable.
On the IPO roadshow, investors were pitching him to double the sales team, but for them, it really didn’t make sense. Veeva always choose to stay profitable. “We run a profitable business, that’s what we do”.
If you want revenues in 4 years, hire people now. Veeva’s product has a 4 year cycle, and takes a long time to capture. They don’t want desperate reps that leave a bad taste in the customer mouth, doing desperate things. They are focused on 20 year plus relationships. Rather then optimizing sales quotas, they rather focus on having less, better reps.
Pricing in enterprise
Pricing is relative on enterprise deals. $20m/year deals are not expensive if you generate the value for the customers. Over the long term pricing relates to competition (is there something better out there?) and generating a huge value. Veeva makes the life sciences industry more efficient, by adding a lot of value for them.
One example: They have a system for collaboration on new medicine clinical trials. It is a very specific business process, and 4k people participate on it. If this workflow doesn't work, the lab looses hundreds of millions in research investments. That's the kind of big problem you need to look for.
On Peter's words: I'm a Swiss American. I like trains to run on time. Good enough is not good enough. I like the execution part, but as you scale, you need to have engaged teams working together. Execution matters the most, and I spend most of my time execution. Execution is enduring.
How Selling Sunny Delight and Software are Similar — 5 Truths of B2B2C
JENNIFER TEJADA — CEO / PAGERDUTY
Pagerduty helps developers make sure that they're ready to manage unplanned, unwanted events.
Jennifer started her talk with a story:
She started her career at P&G to learn about marketing. The P&G customer was the household mom, but their marketing efforts were more focused on the retailers. She started on field in cleveland, trying to sell P&G products to small retail store owners.
Back then, SunnyD was a product marketed as an alternative to milk. It had a technical pitch, focused on vitamins/nutritional power. SunnyD was not focused on solving big problems, but on new features that didn't solve a problem.
Here's the lesson
In tech we need to think "Solution to market fit" and not "product market fit".
In B2B, B stands for balance. You need to balance your pitch to companies and consumers. SunnyD focused only on the customer, and not on the retailer. You also need to focus on people, because the customer is betting on you.
The best innovations come from customers. SunnyD worked well with vodka, and the customer was not the household man, but the thirsty Cleveland Football fan. Pagerduty engages with the customer to find their use cases, by listening. Nothing is more frustrating than a product looking for a problem. Flip it up.
Time is the most valuable thing now. It is the new currency. Don't waste your customer's time and clearly figure out how to you give them time more time. Optimizing for giving more time to your customer. Enjoy SunnyD!
What Changes at $20 Million ARR?
JASON GREEN — FOUNDER & GENERAL PARTNER / EMERGENCE CAPITAL, GODARD ABEL — SVP & GM / SALESFORCE QUOTE TO CASH, SCOTT BERG — COO / SERVICEMAX, KATY KEIM — CMO & GM / LITHIUM TECHNOLOGIES
Emergence Capital (panel moderated) invested in ServiceMax, Success Factors, Box and is focused on SaaS since it's early days. Everyone on the panel has done it twice.
What made these companies great?
- Service Max & Success Factors were both simple business concepts, easy to explain. Both companies went after a big problem, early. Both picked unsexy industries and gave sexy solutions to it;
- Lithium and ServiceSource were focused go to market strategy and had amazing unit economics.
- Big Machines and Steelbrick were also a "bad idea" early on. But they persevered and built great teams. On the second time the market was also more mature, so they could build it way faster.
What it takes to build a company like this?
- After $20m, moving upmarket made sense for Steelbrick. They focused on it because they had great unit economics. Logos didn't matter that much then. Logo acquisition is cool early, but at some point it is possible that you have to choose a focus area;
- ServiceMax is crushing quotas for 12 quarters. The key is to have a system and a process in place. Another important thing is to build a great management team, the second leadership. ServiceMax plans the sales team capacity on an early basis;
- When you're not extremely predictable (quarterly velocity), land and expand is the way to go. For Lithium ($75k ACV), it became a way to kick the door open and prove themselves. Once the results were in, it helped their champion to want even more results, so expansion happened naturally;
- ServiceMax sold to services organizations, as a system of record. To break into these companies as a startup, it was scary. He needed to move from pilot to deal fast, but once they proved themselves, the thing just worked. The pilot puts the focus on customer success, so they always made the customer successful. At first they tried to get the foot on the door, then they could expand;
On the marketing side:
- Marketing at $20m+ ARR changes a lot. Category creation is a big challenge. It is very expensive. At ServiceSource, they built an awesome customer program, awards, and it soon became a good PR channel as well. Selling to industry analysts is also important;
- As the category gets more educated, you change focus to enabling customers better;
- Customer marketing and getting into the Gartner report is important. On the other hand, Gartner and Forrester take 3 years to write the report, but platforms such as G2Crowd helps you get customer marketing right earlier and faster.
- Big Machines raised some money early, but bootstrapped for several years then. Annual upfront payments helped a lot. They didn't see it as a race, and that allowed them to keep growing disciplined. "Once you learn to be a frugal entrepreneur, you can't forget about that". Later on, capital helped them catch up and become the leader.
- Every time you raise a round of financing you should ask yourself. Is this the last one? But you can also be a little opportunistic if you have inbound interest from investors. If you raise, raise when you don't need the capital.
- As you go out and look to expand your solution portfolio you need to understand how to integrate things. It takes a long time for it to work, and sometimes you struggle. You need to be able to materialize it in terms of unit economics.
Building a great org:
- It starts with culture and finding talent that works on the same principles. A lot of people look good on their resumes;
- You want to promote from within, but sometimes you also need to bring external help. It is though to hire bosses for your team, but specialized hires in pivotal positions are very important. If you're going into a multi-product strategy, you need to look for these pivotal positions, and put your internal stars on them;
- V2MOM is a great framework to align the company. (vision, values, methods, obstacles, and measures);
- Plan ahead, look forward, even in the early days;
- From $20m to $100m, find the patterns, and remove the distractions;
- Be intentional. Play to win. Build a great company, not just a great product.
12 Key Levers of SaaS Success
DAVID SKOK — MATRIX PARTNERS
Slides (better than notes) here:
Top 5 Things That Change at $50m ARR
TIEN TZUO — FOUNDER & CEO / ZUORA, AARON SKONNARD — CEO / PLURALSIGHT, SCOTT DORSEY — MANAGING PARTNER / HIGH ALPHA, NITSA ZUPPAS — CHIEF MARKETING OFFICER / VEEVA SYSTEMS
- Scott founded ExacTarget, the leader on Email Marketing. Sold to SalesForce for $2b +. Recently launched High Alpha, a venture builder recently;
- Nitsa is CMO of Veeva (see previous talk);
- Aaron founded Pluralsight, a company that helps fill the tech skills gaps for the workforce. $100m+ run rate;
The Climb: Getting to $1b ARR
For more context, see this post.
Go to market strategy for $50m ARR
- ExactTarget filed to go public in Dec 07, at $50m ARR, but had to pull back. Great PMF, focus on SMB, no clear paths for 100m then. So they focused on segmentation, and started moving upmarket. Enterprise was a key lever. The second most important lever was international. The third pillar was M&A for becoming a multi product company. Sweet spot for unit economics was mid market, but enterprise was great for logo acquisition and also provided big growth;
- At Veeva, for passing U$50m they focused on expanding into new markets and getting reference customers. Then they would prove the product, and start scaling sales. Then they became the standard upon RFPs were written based on and started demand gen.
- Pluralsight is in the middle of their enterprise move. "It is harder than you can imagine". Amazing product, land and expand, and it's still hard for them. In enterprise success means a different thing. Enterprise sales need you to sell value based, consultative. This means a big pivot, and you need to find leaders that can change the organization in that direction;
Overall strategy: Go upmarket, international, leverage M&A to increase product breadth.
Segmentation & Pricing:
- Pluralsight segmented by #of tech employees;
- Veeva started with very large customers, than went down market and launched multiple products. They segmented by markets and focused on strategy people into the org. To figure out pricing you need to really be able to quantify and communicate the value;
- Pricing and packaging is extremely important for SaaS. ExactTarget was considered cheap by some segments and very expensive by others. You need to be able to describe and measure your ROI.
- If you can find pricing/packaging people early on, hire them.
- Consider not publishing your pricing on the website if you're selling mid market/enterprise. If you're early stage, do not publish your prices. Wait for PMF to do this kind of move;
- Try buying enterprise software to see how they pitch on value. The best enterprise sales reps always find a new ceiling for pricing;
- Pluralsight: B2C & B2B pricing are completely different. Enterprise companies are willing to pay more than B2C. Do not take your B2C pricing an multiply it on a per seat basis. There's a lot more value for the enterprise;
Organizational issues at $50m
- Once you figure out that everybody on the room is on the biggest job in their career, you probably need to bring people who went further;
- Develop a culture of achievement and development, so, as you bring other people in, they get accepted. The leadership has to make external hires accepted by the organization;
- As a founder CEO you're almost always on the biggest job of your life. Allow people to contribute to the business. At $50m + you need to create communication systems to multiply your leadership;
- As the CEO, find the minimal set of responsibilities so you can focus on what matters. Let the team take off. You need to be connected to the future and protect the mission. Everything else can be delegated. It is hard, but necessary;
- If you're VC backed, add independent directors to your board as early as possible. The way VCs think about of the business are not as longer term as you do. Bring people who been in bigger/more experienced relevant positions before;
- As you get bigger, it gets more fun. You get more resources, you make more difference in the world. Dream big and know that you can grow and expand as a CEO of a larger enterprise, making a huge difference on people's lives;
- Don't worry about international, M&A early on. Focus on team building and culture;
- Build on the shoulders of giants. Look for opportunities to punch above your weigh class. Either partners, platforms or huge customers;
- At $100m, your ability to recruit and attract talent to your company is amazing, it allows you to become a better CEO;
Navigating Your Career in the SaaS World: A Primer
BILL BINCH — MANAGING DIRECTOR, AUSTRALIA/NEW ZEALAND / MARKETO, LESLEY YOUNG — GLOBAL SVP SALES / BOX
MARC HUFFMAN — SVP, NETSUITE GLOBAL BUSINESS UNIT / ORACLE, JEFF SERLIN — VP SALES OPERATIONS & STRATEGY / CAMPAIGN MONITOR
- Marc started his career at Oracle, created NetSuite and then was acquired by Oracle last year;
- Lesley has led Box sales operations for 6y;
- Jeff runs ops at Campaign monitor;
- Get people to invest in you, and you have to earn it. A lot of people compete for your mentor time. You have to take additional responsibilities and deliver higher performance. If your mentor ever recommends you for a role, the other people in the room have to shake their heads in agreement. Be proactive on relationship building and deliver results always;
- In high growth companies there are infinite problems to be solved. Find hard problems, pick one of those and solve it. Stay close to people that have skills that you don't. Find out what's in for the mentor to spend time with you;
- Learn, earn and return.
- Sales training and sales enablement are critical to have high level execution. At some point you can’t just stay side by side anymore .Invest early. Create classes and bring people at the same time;
- Use online resources, certifications and gamification to evolve your sales training game. Have a dedicated person;
- Look at new salespeople cohorts. Dedicated training will accelerate your ramping up;
The new generation workforce:
- People want to work on a company that fulfills them. Loyalty is a 2 way street. Companies need to take action to do things that keep this new employee and align with his goals.
Interviewing and recruiting landmines:
- Printed resumes. Please stop;
- Hire people that ask what you're looking for. People that listen first and try to match their skills;
- Try not to review the resume;
- A big red flag is someone that moves a lot. Specially in sales;
- It is about accomplishments. Look for previous successes;
Non-Obvious Lessons Learned Selling to SMBs
KERI GOHMAN — PRESIDENT / AMERICAS AT XERO, ALEX FALA — CEO / VEND, MATT RISSELL — CEO / TSHEETS.COM, AMIT MATHRADAS — GM & HEAD,SMALL BUSINESS / PAYPAL
- Tsheets.com has 200 employees and 40k customers;
- Paypal has 50m SMB customers;
- Vend has 50k stores, 200 employees;
- Small business do not want systems that do everything. Solve 1 big problem, integrate seamlessly with other stuff;
- Nail a niche and do exceptionally well;
- Be a lean startup;
- Use analytics. Track everything and find ways to prove your hypotesis;
- Do not get boring. Empathize eith the customer life;
Get to $100m ARR While Burning Almost Nothing: 6 Learnings in 6 Years
MALLUN YEN — CHIEF BUSINESS & PRODUCT OFFICER / RPX CORP, ERIC YUAN — CEO / ZOOM VIDEO COMMUNICATIONS
- After $100M raise in 5 yrs, first $5M of MRR was the hardest to get to without marketing or sales team;
- When you need to raise, you may not get it. When you don’t need money, you’re more likely to get it. Raise when you can.
- “Prove it first, then double down!” Most of our leads were organic leads. We tried not to spend money to generate leads.
- Billboards work;
- “The goal of SaaS is to spend more and burn less.”
- “I hire people with the potential for growth. They’re more humble, more loyal, more trainable.”
- Yan says that the ideal online meeting last 45 minutes. So he cut off free version at 40;
- Culture is #1 priority;
Fast Growth, Mindful Business
DUSTIN MOSKOVITZ — CO-FOUNDER & CEO / ASANA, ALEX KONRAD — STAFF WRITER / FORBES
- Asana is now at 20.000 customers;
- Vast majority of knowledge workers are not really using any solution. It will take a few years to reach and convert them;
- The Facebook stress didn't make Dustin a more productive person. On Silicon Valley people romanticize workaholics and pulling all nighters. Eventually you burn out. Find better patterns to build sustainable habits;
- “Companies that grow quickly tend to focus on product & market and ignore culture.”
- You can still do hackathons and sprints… but after the launch, you have to actually rest afterward;
- Asana has fewer meetings;
- Catch up with other things in off sprints. Polish the product. Building a business is bloody hard. It’s ok to acknowledge more important things in life and prioritize those;
- “Work hard, live well. Take breaks during the day. Be intentional with your time”;
The Salesforce MBA: What We Learned
LEYLA SEKA — SVP & GM DESK.COM / SALESFORCE, GEORGE HU — FORMER COO / SALESFORCE, CATHY POLINSKY — CTO / STITCH FIX, TOD NIELSEN — PRESIDENT & CEO / FINANCIALFORCE
- Incredible energy and commitment to get things done;
- Customer focus;
- Alignment and V2MOM are great tools for prioritization;
- Vision, values, methods, obstacles, and measures;
- Former forcers bring this everywhere they go;
- As you grow, this prioritization model is very effective. "If everything is important, nothing is important.”;
- Get management together, write down the 3 single most important things that the company needs to do. People will bring different things. So it is important to realign constantly;
- Create a personal V2MOM!
Talent & team building:
- SF people are execution/delivery focused. They also extremely focused on partnerships;
- Managers are focused on developing their team;
- Heroku team average age was 27. They only hired new engineers after they completed their "starter project". This kept the bar really high;
- Do not hire because of time pressure. There’s nothing worse than making the wrong hire & wasting a year cleaning it up;
- Focus on your people & culture as much as the technology;
Mistakes made at SF:
- Getting aggressive on trying to release too much code at the same time;
- Getting something out of the door too fast, made us miss adoption targets;
- Problems don't get better on their own. You can't ignore the problems. Bite the bullet and do the right thing. Fix the problem;
- Psychosis: Self limiting beliefs that will appear once you become an exec. Have people around that will help you overcome those weaknesses. You need mentors;
Success after SF. Why?
- Focus on results, customers, nice people. Benioff has a very generous soul and this creates a great culture of generosity. It sets the tone for who Sforcers are;
- The company started in the early days of the cloud, and it needed people that are able to disrupt. If you're disruptor, you'll make an impact on the world;
- San Francisco has a great talent pool. Not everybody wants to leave on the suburbs. This gave the company an advantage in the early days;
- SF did not document their culture. But the culture was embedded in the company stories.
- The Heroku team was a bunch of crazy people after the acquisition. They hated Salesforce and Salesforce hated them. So the manager always had to say "I'm sorry" to bridge the gap. To succeed he needed to convince the team that it is ok and good to have a rich uncle. 9 months after they saw the value and synergies with the mothership.
— End of day 2. See ya'll tomorrow! —
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