3 Startup Lessons from the Valley
TenderScout CEO, Tony Corrigan, visited this year SaaStr and these are his thoughts.
I was chatting with Paul Burfield, Enterprise Irelands’ man in Silicon Valley over breakfast; we were pondering why it was that US startups appear to have more success at scaling than equivalent companies elsewhere.
As I travel back from the SaaStr 2017, an annual orgy of all that is SaaS, held in San Francisco, I’m musing on what I’ve heard from the founders of leading companies like Facebook, Dumo and Zendesk. Many of the speakers, tell stories of their journey to Annual Recurring Revenues (ARR) to $100m within 5 to 8 year timeframes. They tell stories about cracking $1m in their first 18 months and the struggle to get to $5–6m ARR — when the “cavalry arrives” over the next 18 months.
The level of ambition, or perhaps, it’s expectation, amongst US startups is on a totally different scale to that I’ve experienced elsewhere — they’re only getting started by the time their revenues hit $30m; many founders in a different environment are looking for the exit doors.
Having spent time getting under the covers of many of these startups heading for the stratosphere, I’m struck by how ordinary their technology often is. Listening to the speakers at SaaStr, the talk is not so much about technology innovation — mostly (and it is a sales conference!), it’s about building a sales engine.
Many of the solutions SaaStr are centered around optimizing the salesprocess, improving your Net Promoter Score (NPS), better tracking of SaaS metrics — tools for all the other SaaS companies to build their own sales engines. Every solution now comes with ‘machine learning’, which means all things to all men, but in truth, there’s no technology that’s any more innovative or game changing than what I’d commonly see in my home town of Dublin or any of the other startup hubs around Europe.
I’ve distilled the thoughts of the leading minds from Stripe, Intercom and their peers speaking at SaaStr into three strategies.
1. Prioritise Market Definition over Product
Prioritise defining your market above the product you’re going to build. US companies happily go to market with ‘minimum viable products’ and trust that the technology will catch up with the marketing.
2. Recruit Sales Recruitment over Engineers
Prioritise recruitment of sales staff and even marketing staff over engineers. In Silicon Valley, this may be a result of the shortage and the cost of engineering talent, but it’s clear that where Irish companies are knuckling down and writing code, their US counterparts are building momentum through brand awareness and early sales.
3. Build your Sales Machine Early
- Build your sales machine as early as possible. US companies invest in sales technology like Datahug, insidesales.com and pipedrive.com that optimizes lead generation, incorporates predictive analytics and supports a scalable process.
- Measure every element of the sales process — the lead conversion rate, sales velocity, customer acquisition costs, customer retention costs, churn and the all-important monthly recurring revenue. Because at the end of the day, without sales, nothing else matters.
As I travelled home I met startup founders from SwiftComply, Phorest and several Irish companies. Having spent time learning from SaaS pathfinders, they’re more confident than ever in their ability to compete with the very best on the planet.
