I think at $30k ACV, you’re in the range where being in Silicon Valley is worth the huge expense.
Silicon Valley / SF is incredibly expensive. Rents, salaries, and perhaps most importantly, turnover. I’ve invested in 5 French start-ups. SF costs 2x Paris, fully burdened. It’s crazy.
I think in 2018, it’s hard to justify a large sales organization in the Bay Area unless the unique expertise in SF is worth the cost.
Self-service, freemium SaaS, apps that are inexpensive — you can start a sales team in SF, but scaling is very hard. Reps are too expensive, the churn is too high, and the numbers just don’t work after the first 5–10 sales reps.
$30k ACV is probably the cut off. Here, you’re edging into a true solution sale. And having an experienced VP of Sales and VP of Marketing that know how to sell and market solutions is important. And having experienced reps (vs. kids fresh out of college) helps a lot.
You will likely scale faster and easier tapping into the best, experienced vets in Silicon Valley in SaaS at $30k+ ACV, even with the crazy expense. I’ll probably build most of the core team in SF at that price point.
But below that? I’d look to Utah, Phoenix, Atlanta and other markets that still have plenty of software and sales talent. They don’t have the same executive bench in enterprise deals. But they have most of the rest. At a much lower price. With half the turnover rate.
