SaaStr Annual 2017': Notes from Day 3

Final day at #SaaStrAnnual 17'. Again, an amazing event. If you want to review my notes from previous days, here’s they are:

Thx @rafaeltorres_2197 for helping with the notes.

Zendesk: From Day 0 to Today: The Lessons Learned

MIKKEL SVANE — CEO & FOUNDER / ZENDESK, DEVDUTT YELLURKAR — GENERAL PARTNER / CRV

When did you knew that it could become big?

We still feel startup alike. Every time we climb a mountain, there's a new one.

Zero to One (million ARR)

  • You need to commit. We took some time to really commit, we were chickening out a little bit. There's a lot of uncertainty. It took 18 months to get to $1m ARR and almost nobody believed in it. Chris was a great angel and helped them build this belief;
  • Chris joined early stage and was always on the sideline. It was an amazing help to get the company ready to the next stage. He helped a lot to model the business so they could talk to investors. Chris helped them understand the SaaS business world;
  • Moved to San Francisco in 2009 to be 100% focused on the company. The team didn't have enough money to live here;
  • Assembled a fantastical team, with fantastic investors;
  • Focused on brand building and great UX since the early days;

From $1m to $10m

  • Another 18 months;
  • Team building and expensive hiring in SF. Hiring americans was interesting. They are very loud on their acomplishments ;)
  • Focused on funnels optimization;
  • When we raised prices we realized how big we were becoming and how our customers were loud. Users revolt. We had to rebuild user trust and loyalty;

From $10m to $100m

  • 36 months;
  • Until 10m they had zero salespeople. This was a big change. We were not sure it would scale;
  • Packaging and pricing is hard. Needed to experiment a lot;
  • Land and expand. Focus on frictionless growth;
  • Started small in Adobe. Single division product. Soon then had thousands of users inside;

Going public

  • It is stressful;
  • You start it years in advance. Hire people, build investors relationships. A lot of compliance and legal work. It can be a big distraction;
  • We were not sure the timing was right. They decided to do it because it was the right thing to do;
  • Maybe we didn't get the best valuation, but it didn't matter. What matters is growth, the team and the path forward;
  • Grew 50% plus in 16';

There's a huge opportunity for you founders now ;)

DoubleUnicorns: How Things Are Different Now. And Things That Never Change.

JOSH JAMES — CEO / DOMO

According to Jason M. Lemkin: This guy should be running SaaStr ;) Domo is a BI platform that puts your company data on your phone, SMS, dashboards, so you can grow your company with mobility. Previously he founded Omniture.

  • Higher expectations on the second time. More investors ;) Access to capital. At Omniture Josh was financing on personal credit cards early on;
  • Omniture was easy to sell. You have a website, you need analytics. Domo was harder to sell. They had to completely relearn sales. Way more consultative sell;

Why are you doing this again?

  • I sold Omniture to Adobe, and I want to make Omniture feel like that little thing that I did long time ago;
  • This time i want to do it for decades. Zero % chance to do a company smaller than $1.8b. We're gonna swim big this time;
  • Jason M. Lemkin adds: You gotta 10x this time;
  • The first couple years of Domo, the NPS was depressing so we didn’t really focus on it. Now Domo has 200% revenue retention. This is crazy cool;
  • Omniture got product scale right. Picked up a LAMP stack, highly scalable. On Christmas, CoreMetrics went down. Wallmart called and they signed them as a customer;
  • Recruiting. No good people walk through the door. Recruit like you sell big customers. I spend 25% of my time on it. Early on i used to spend 50%;
  • "I hate remote employees. Even if my CFO tells me he's working, i don't believe him";
  • "I only care about sales. Don't talk to me about marketing, booth, HR, comp, legal, etc. That can be fixed later with $$$$$". Don't spend $100k on legal, contracts, whatever. Hire another fucking rep!
  • "Spend a few days each year on detailed comp… It is the most powerful weapon you have." I like engineers that are motivated by money. Add as many incentives you can. Get creative. It is fun and i love it;
  • Domo will be one of the most significant companies ever created ;)

Between Us: Scaling Lessons from New Relic & InsideSales

ELAY COHEN — CO-FOUNDER / SALESHOOD, HILARIE KOPLOW-MCADAMS — PRESIDENT / NEW RELIC,LINDSEY ARMSTRONG — COO / INSIDESALES.COM

  • New Relic is an application monitoring platform. $250 million run rate. Mass market is measuring customer experience in the digital world. Went public 2 years ago;
  • InsideSales.com uses data to help companies predict how to sell better;
  • Scale out of a strong foundation. You need to understand the relationship on burn and growth. You need to understand how to get cash flow positive, even though you don't need to be there now, but you need to be able to do that at any given moment;
  • Don't scale until you're sure you can dominate a market. Syncronize investments. Product, Sales, CS, etc…
  • "When you scale, add customer-facing people just in time. Let infrastructure lag just a bit…"
  • Scale your CEO, so you're able to retain the right people;
  • The people who’ve been there & stuck with you should be valued… but balanced with those who will take you into the future;
  • "One of @newrelic’s core values is being authentic. Everyone at our company is proud of this value — we celebrate it.”
  • Have no fear, just do it ;)

Numbers that Actually Matter for Founders

MAMOON HAMID — CO-FOUNDER & GENERAL PARTNER / SOCIAL CAPITAL

Sorry, ran short on notes here:

  • Quick Ratio = New MRR + Expansion MRR / Churned MRR + Contraction MRR — Must be higher than 4;
  • The north star is the value that you deliver to your customers. You need to measure it. At Facebook it was DAU/MAU = 55%;
  • Slack, FrontApp, have similar usage patterns;
  • A good north star measures value delivered. Do not focus on MRR, focus on value delivered;
  • Sample North Stars:
  • — Box #of file actions;
  • — Intercom: #of customer interactions. WAU/DAY;
  • — Greenhouse: #hires made
  • — OneLogin: Apps signed onto/DAU;
  • Keep quick ratio alive and healthy. Do not become a SaaS Zombie;

The Inside Story of AngelList, And How Funding Is — And Isn’t — Being Disrupted

NAVAL RAVIKANT — CEO & FOUNDER / ANGELLIST, CONNIE LOIZOS — FOUNDER & MANAGING EDITOR / STRICTLYVC

  • AngelList heps startups find money, customers & recruit;
  • Almost all deals are private (90%);
  • 200 syndicates on the platform;
  • Some institutional funds invest in syndicates;
  • $5b in follow on after Angel:ist companies;
  • 40–60 deals/month;
  • AngelList gets 5% carry on the profits from investments;
  • A lot of cash in the bank;
  • They are aiming to become profitable in 2017;
  • Startups today raise $$ because they can, not because that they need to;
  • “America transitioning from a republic to a democracy with the help of technology/social media”;

Top Lessons Learned after 200+ SaaS Investments

JOHN SOMORJAI — EVP CORPORATE DEVELOPMENT / SALESFORCE VENTURES, MARK SUSTER — PARTNER / UPFRONT VENTURES

Should we work with corporate VC?

  • Fred Wilson said no;
  • Right of first refusal, 2 board seats, used to be common terms. Now they are not anymore. SF asks for quarterly financials and notice rights. No acquisition blocking rights;
  • Salesforce disclosures the aggregated value of their portfolio;
  • Mark advises startups to never accept a ROFR (right of first refusal);
  • SF Ventures Goal: Invest in companies that generate more value for their customers. Invest in businesses that grow their platforms. Invest in integration partners;
  • 170 active companies, 40 exits. IPO's include Twilio & Box. Oracle bought some of their companies. They do not block the sale;
  • Focus on co-investing with VC's. Do not lead often, small teams. Any stage. Check size: $250k up to $10m;
  • To attract investment, approach them directly. They'll help/introduce to other VCs if makes sense;
  • SFVC follows the Salesforce 1–1–1 model and incentivizes companies to do that;
  • M&A: The best way to start to prepare for an acquisition is developing great partnerships with potential acquirers;
  • SF looks if their customers are enjoying the products, so they can evaluate M&A scenarios. If you're considering selling vs fundraising, go for an spreadsheet, exercise and analyze your options;

The State of the Cloud

BYRON DEETER — PARTNER / BESSEMER VENTURE PARTNERS, KRISTINA SHEN — VICE PRESIDENT / BESSEMER VENTURE PARTNERS

  • Salesforce growth and Linkedin's acquisition proved we're living an exciting moment;
  • Industry growing constantly, on a volatile journey;
  • 12 IPO's on the last 2 years. Total $15b;
  • M&A last year was 4x more than any other year. $60b;
  • Public cloud companies: >$300b market cap;
  • 1000’s of private companies, >U$400b market cap;
  • Last year they put together the Forbes Cloud 100;

The 3 questions to become there:

  • How fast should i grow?
  • How much should i burn?
  • How do I scale?

Grow:

  • Dropbox took 8 years to get to $1b;
  • Twilio got to $10m ARR in 1y
  • Slack got to $10m did it in months;
  • From $10m to $100m: Top 25% took average 5,3years;
  • Years to 10m: Good: 4y, Better: 3y, Best: 2y;
  • Years to 100m: Good: 10y, Better: 7y, Best: 5y;

Burn:

  • Net new ARR / Net Cash burn > 1

Scale:

  • TOTAL ACQUISITION COSTS = Sales productivity + Marketing spend + Sales Support;
  • No perfect sales model, but upsells are a major driver;

Predictions for 17':

  1. The year of Human assisted AI;
  2. API's become the backbone for software infrastructure;
  3. Architect for success in an infinite compute world. Optimize costs as you grow;
  4. Mobile unlocks non desk worker productivity. Be mobile awesome;
  5. NPS everything;
  6. Screenless software movement. Google Home, Alexa, Watches. 20% of searches are voice;
  7. Diverse teams win. Data proves it;

DOWNLOAD SLIDES HERE!!! HIGHLY RECOMMENDED!

The AppDynamics Story: From Idea to $3.7B…The Journey Continues

JYOTI BANSAL — FOUNDER & CHAIRMAN / APPDYNAMICS

  • Sold to Cisco for 3.7b, right before the IPO;
  • Feels crazy selling. Things were going well for the IPO, everything changed fast;
  • There was an white space on the consumerization of enterprise software;
  • On premise still made sense back then. 80% of customers still wanted on prem;
  • Going after a stabilished market you need to be better than the incumbents;
  • Learnt to sell when they figured out that the market share was 80% enterprise. He studied other enterprise sales companies, disruptors, such as Splunk. Beeing fremium helped a lot, but they also had a strong field sales team as well. First head of sales came from Splunk, at zero revenue.
  • Once you have big customers, it is easy to attract salespeople;
  • A round: 5m. Pitched 20 vcs!
  • The magic for fundraising is convincing VCs that you can be a billion dollar company. Show validation/social proof;
  • H1B visa allows you to work, but you can’t found a company. Getting a green card takes up to 10 years. He spent 7 years to get a green card and then found the company. The great thing about Silicon Valley is getting close to great people, experience, mentorship and culture;

Advice to 20 something engineers:

  • Focus on yourself;
  • Become business sawwy;
  • Become people sawwy;
  • Develop Sales sawwyness;

Great moment: Selling means inspiring people to join you.

  • Spent a lot of time with customers;
  • Third rules: 1/3 time in product, 1/3 in customers, 1/3 in the business (board, VC, hiring, etc.);
  • Prove that you deliver the ROI after the sale. Go back on month 3 and month 6;
  • Sometimes you don't deliver the estimated ROI. Monitor, be upfront e create a plan to deliver. Keep your promisse. That's how you get high NPS scores;
  • International these days: Way easier than before. Focus on the bigger economies and then expand.
  • You can't plan it all: Do it one step at a time. Have the plan and focus on achieving it step by step.
  • "Back then unicorn valuations were rare. When you start seeing and believing it, and repeating it so many times, it becomes true. Billion dollar valuation is U$100m ARR growing fast. "

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