The 7 stages of a startup life-cycle: don’t try and jump ahead!
If you haven’t already guessed from my background, I have a strong preference for data. One of the first talks I went to turned out to also be one of the best in this regard. SaaS guru David Skok talked about the 7 different stages in the life-cycle of a startup from $0 to $50m.
There were so many pearls of wisdom in this talk that you really need to take the time to go through the slides. Some of the best for me were:
- Don’t try and skip ahead prematurely or you will likely fail.
- Perhaps the most important metric to pay attention to is Bookings (New ARR + Expansion ARR − Churned ARR).
- Pick one target market to get started! (we learned that the hard way)
- Be buyer-centric, not vendor-centric. Understand what motivates the buyer!
- You will likely need an in-house recruitment machine to hire enough sales staff for scaling a repeatable sales model. (I think The Sales Acceleration Formula is good reading for scaling sales and David also has a blog post about the subject)
- Be conservative with your cash until you hit scaling phase. You have to spend to scale! A common mistake is not exiting the cash conservation phase when required.
There is a lot there but trust me, the content was that good!
The value of a well executed outbound sales model
One of my favourite books is Predictable Revenue by Aaron Ross. It’s definitely a must read for an B2B SaaS founder (and the follow-up book From Impossible to Inevitable probably is as well). So it was great to see Aaron moderating a panel about how to build an outbound team at the conference. Some things to be aware of with outbound:
- If you get the team composition wrong, it will likely fail. Start with two SDRs hired from within.
- 5 to 15 qualified appointments per month per SDR is industry standard (very good to know!)
- The number of leads in an outbound process isn’t what you should be concentrating on. Rather, focus on optimising the hand-off from SDR to AE.
- Don’t try outbound until you nail your niche. You will need testimonials, case studies, etc. to be successful.
The importance of the customer experience and putting the customer first
If you didn’t already know, we are pretty fanatical about listening to your customers, customer empathy, and technologies to scale that at Kapiche. So it was refreshing to hear a number of speakers talk about how important it is to be customer first. What’s really interesting is that it applies to every step of the journey.
When you are starting out, as David Skok pointed out, product market fit is all about solving a pain for a niche and the only way to validate that is by being fanatical about talking to customers. Once you have some product market fit, the next task is to close those early sales and make those customers super successful. Successful customers that love you and are willing to be referenced is absolutely required to find a repeatable sales process. Once you are into the scaling phase and are concentrating really hard on Bookings, churn is your number 1 enemy. Figuring out how to scale the empathetic relationship you had in the early days (with just a few customers) across the entire organisation is the key to reducing churn — and also coincidentally something we at Kapiche believe we can help out with.
So what now?
These three were just the highlights, and really encapsulated the actionable points I have taken back to Kapiche. Being aware of the 7 stages of a SaaS startup and thinking about the next stages has been really helpful. The SaaS Funding Napkin update has also been an important tool in the process. Both David and the outbound panel led by Aaron discussed the importance of scaling recruitment, and that’s something we are keen to get on top of early. We’ve also double checked we really are buyer-centric. When David was talking, I was thinking about all the times I’ve spoken about the features of Kapiche rather than the problems our potential buyers were facing.
One of the more difficult aspects to encapsulate in a blog post is the people I was able to meet as part of the event, and the customer development I was able to accomplish afterwards as a result. There was a huge range of Australian (and non-Australian) founders and VCs at the event that I was fortunate enough to meet. None of it would of been possible without the generous support of Black Sheep and Full Circle. This type of selfless support of founders is exactly the sort of thing that will continue to grow and foster a vibrant and successful startup community here in Australia. I’m grateful to the two Dans and Rowan for the opportunity and plan to do all I can to pay the generosity forward.
Kapiche was built for companies who want to empathize with their customers at scale. Our multi-structured analytics software helps companies truly understand what their customers are trying to tell them. Learn more at kapiche.com.