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We talk a lot about sales here at SaaStr (obviously), but that doesn’t mean that everyone is in love with sales funnels, hitting quotas, and nurturing MQLs into SQLs. A lot of SaaS companies struggle with building sales teams that bring in the big bucks, and Rainforest QA was no different.

Mallun Yen, Chief Business and Product Officer at RPX Corp, moderates this session with Fred Stevens-Smith and Farlan Dowell, CEO & VP Sales at Rainforest QA. Three years of constant struggling set the foundation for some explosive growth in 2015, the same year that Farlan was hired as VP Sales to take control of the sales organization.

Check out the full transcript below! You can view the slides here.

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Mallun Yen:  Good morning. Glad everyone made it this morning after last night’s party. I’m Mallun Yen and I’m thrilled to be here today with these two guys. [laughs]

Farlan Dowell:  We’re thrilled as well.

Mallun:  I work at a company called RPX, which we founded about eight years ago, and took public in 2011. Jason likes to call it “patent protection as a service.” What we do is we reduce risk from patents as well as insure against patent trolls.

We have large companies from like Cisco and Google, to small little tiny startups. I’m so happy to be moderating this session. I asked these guys to write me an intro. I will only read parts of them.


Mallun:  Farlan is the VP of Sales at Rainforest. He’s worked at five startups. Two were acquired. One went public. He’s currently working as the VP of Sales. He’s been in mobile, SaaS, and Web for over 12 years. Prior to Rainforest, he was VP of Sales at Upsight.

Fred is the CEO and founder of Rainforest. It says here that he’s Jason Lemkin’s favorite founder.


Fred Stevens-Smith:  It’s true.

Mallun:  Outside of Rainforest, he likes more hobbies than he can afford, apparently involving high speed. We’ll try and save some time for questions at the end.

Before we dig in…Fred inadvertently insulted me backstage with something, but I think I’m going to still be kind to him.


Mallun:  No, it was harmless. Tell us real quick, what does Rainforest do?

Fred:  Rainforest is…We call it QA as a service. You could think of it as an on demand QA team. The mission of the company is to replace the QA team over the next 5, 10 years.

To build world class software, you do not need to become world class at QA. That’s the objective.

Mallun:  In watching Fred over the past year or so, what strikes me is that, from the outside, what Fred has done looks incredibly easy. You graduated in 2010, which makes him 28, with an econ, poli sci major.

You have a couple of jobs here and there, and you find yourself as an intern at Seedcamp for seven months. Then, he decides to leave. A month later, he finds himself at YC and moves to the Bay Area.

Has a great product, gets funding from the SaaStr as well as others. Finds this great VP of sales. Then ends up with…growth like this, as well as, tweets like these. I don’t know if you can actually see these. Are they too small to read?

Fred:  It’s just Jason saying we’re amazing. That’s basically what it is.

Mallun:  It basically says congratulations…yeah, you actually can’t read this, can you? “If we had Rainforest when we started EchoSign I’d have 30 percent more hair.” That would have been good.

I’m also Jason’s wife, by the way. [laughs] This, how easy was that? Y Combinator. Forgot about Heavybid in there. You end up with this great VP of sales and boom, here you go. Tell us what the real story is though.

Fred:  We should probably go to the next slide. We started the company in May of 2012. If you look at 2015, it looks really amazing, right? We built the best company ever, so easy to grow. 800 percent or whatever it was.

All of this stuff that happened, and we’ll get into it, I guess that’s the point of this talk. All of the stuff that happened in 2015 was a result of the previous three years of struggle and pain. For example…

Mallun:  Share some of that struggle and pain with us, will you?


Fred:  I like how malicious you look when you ask that question.


Fred:  For example, I was at Seedcamp. Seedcamp is like a European accelerator, probably some people have heard of it. I was fired from Seedcamp.

Mallun:  Fired for what?

Fred:  [laughs] Gross negligence.


Fred: Probably being a horrible employee. They should have fired me. Good job that they did. I was fired from Seedcamp and for most people that would be a huge life fail. Me being the person that I am, when they fired me they were like, “You’re a horrible employee. Never come back. But we heard you’ve been working on this thing with this guy Russell and we’d like to fund you.”


Fred:  Me being, again, the person that I am, I was like, “Fuck…” No, I’m not allowed to swear, am I?

Mallun:  There’s a lot of that word going on upstairs.

Fred:  OK great. I was like, “Fuck you guys.” I was so pissed. I was so pissed that they fired me. I was like…

Mallun:  I can’t imagine.


Fred:  I was like, “Fuck you guys.” Like, “I don’t want your money. We’re going to YC.” I just claimed it. I just fully claimed it. I was like, “We’re in. We got into YC. I don’t need you. We’re like in the better Seedcamp.” Love to my Seedcamp homies, if you’re watching this.

I claimed it. We haven’t even applied to YC at the time. It was not even a half truth. It was just a straight up lie.

Mallun:  You were just angry.

Fred:  I was angry. I tend to lie when I’m angry. Not true.


Fred:  This is so incriminating.

Mallun:  You channeled that anger into something positive.

Fred:  Exactly. That’s the right way to put it, Mallun. Basically, me claiming it like that made it my life’s mission to get into YC.

Mallun:  You better get into YC after that.

Fred:  All these people thought we were going to YC already. It’s not necessarily an example of the adversity. Another one is we got to YC and the thing that I always tell to people who get into YC or another, like top tier accelerator and I’ve helped a bunch of people since to get in. When they get in, I tell them, “Enjoy this. This one, two or three days after you got told you’re in, this is the last time you’ll be truly happy until the company is done.” I’m serious about that.quote1-stevens-smith

Everyone here who’s an entrepreneur or is a founder who started something themselves knows the true emotional rollercoaster. Every hour, every day, you go from being like, “I’m the bloody king of the world. This is the most amazing company ever,” to being like, “I’m an idiot. They should fire me. This is going to be a catastrophe.”

You’re constantly going through that. If you imagine, that was three years of that until we got… things started picking up in 2015.

Mallun:  Let’s talk about that. That’s a straight line right there.


Fred:  A flat line is what I usually call it.

Mallun:  So then you realized that maybe you need to do something different in sales. Is that safe to say?

Fred:  That’s very safe.

Mallun:  Tell us how you first started. How did you start the sales process? You were hired as employee 10ish or something like that?

Farlan: Six in San Francisco and then 13 overall.

Mallun:  Which is really early to hire a VP of sales who seems to be doing well. Tell us, how did you learn to love sales because clearly, during that flat line, you weren’t loving it and it clearly wasn’t loving you.

Fred:  That’s fair to say. I think one of the Lemkinisms that we really took to heart was this idea that you should A/B test your first salespeople and you should sell yourself as the founder until you get to a certain ARR number that you shouldn’t rush into hiring a big VP of sales who’s going to try and hire out this whole organization before you’ve even proven anything about the sales model.

That all sounds very rational now. Back when I was going through that, it just felt like pure chaos. All of the lumpiness, all of that bullshit, that was me trying to be good at sales and failing.

Farlan was actually our fourth first sales hire. We hired three first sales hires before Farlan.

Mallun:  That’s like having four first wives.

Fred:  Exactly. It’s exactly like that.

Those are all good people. They’ve gone on to have good careers after us and they had good careers before us. That was all about learning what is the right profile for this first salesperson.

Mallun:  Before we get to what is apparently the right wife, what made the first three not?

Fred:  I can give you just an anonymized version of their profiles. The first two were SEs. One was from Twilio and one was from Cisco.

Mallun:  Great company.

Fred:  Guess what? An SE is not going to build your sales organization from scratch. I know this now. At the time, I didn’t. The third one…

Mallun:  Did you expect when you hired that first salesperson that you needed someone to build a sales organization from scratch or did you just needed someone to do sales because you weren’t really hitting your numbers?

Fred:  That’s what I thought. I just thought, “This person can do it better than me because they’re a professional. So, fuck it, let’s try it.”

I did that twice. It didn’t work out. Then we went to…

Mallun:  Tell me when on this line are the…

Fred:  We hired our first salesperson about the end of Q1 of 2014. We fired them at the end of Q3 and then we hired another one and we fired them by the end of Q4. You fit three. There are three people in 2014 essentially.

The third guy was proper enterprise SaaS. He’s much closer. He’s a super experienced enterprise SaaS salesman, but he came from selling basically widgets. He was the widget salesman. “Hey, look at this amazing washing machine. It does X, Y and Z.”

That forced the learning that Rainforest is a solution. Not a widget. You need to hire a salesperson who has been selling solutions for the last five years of their life.

Mallun:  Did you view Rainforest as a solution before that? Did it help you?

Fred:  I thought it was just blog bullshit that you say solution instead of product and it makes it more expensive. That’s what I thought. Later on, I learned it’s the actual thing.

Mallun:  It actually works?

Fred:  Yeah.

Mallun:  The third one wasn’t right, then you have Farlan. Farlan, you have a lot of experience, a lot of startups, a lot of success. How did you end up working with this guy?

Farlan:  Last year, January 2015, I was just getting back after a three month mini retirement, finished my gig at Upsight as VP of sales and wanted to just travel. It was amazing. Got back and said, “All right, I’m ready to do the next one.”

I literally talked to at least 50 to 70 companies through networks, through cold pings, through who was hot, and then I found these guys at HeavyBid. We had a whole bunch of connections in common and started the conversation from there.

Mallun:  What made you pick Fred and Rainforest?

Farlan:  Three things. Product, product, and product. It was absolutely clear when I looked at the opportunity. You had an Eng first founded company with what would be me as the first business person in the company. Through the due diligence process, I just saw the way that they were selling and the way that they were interacting with customers, I could help right off the bat.

But more so, I saw a massive market opportunity. They’re selling a commoditized product which I certainly did in analytics, the three years previous. It was super fun. We had a lot of success. And then they’re selling a non-commoditized product.

The fact of the matter is we have zero comparables. We had that when I started. We basically have that now in terms of direct head to head competition. That’s an awesome opportunity. Then I get to work with crazy English founders. Fred is absolutely crazy. It’s been awesome.

Mallun:  You joined in…

Fred:  He joined literally where the 20 percent growth starts, third month of 2015.

Mallun:  I think that’s what people want to hear about. What did you do? How did you drive that growth?

Fred:  Next slide.

Farlan:  A couple of things.

Mallun:  Look, there’s a slide. How we did it.

Farlan:  A couple of things. I’ll give you a few tracks. This is the how we did it. The first one, you’ll see in bold. Does everybody see that? What’s that say in the back of the room? Can anybody see that? Yell it out. I want audience participation. Are you guys paying attention?quote2-dowell

Pricing increase. We increased price four times. We went from an ACV of 10k to an ACV, ending of January, at 56k.

Mallun:  That’s easy. We should tell everyone, just raise your prices. How did you do that and keep your customers?

Farlan:  Two things. We created a lot more value through the product and we went up market. When we started and I came in there, we were a lot of YC friends and family deals.

It’s a very different scenario to sell this platform into a startup as it is to sell it into a midmarket company where you can have a real remarkable difference on how you can impact their QA organization. It’s a difference between in a startup being their first hire for QA or offsetting 10 heads.

We could talk a little bit more about that, but those were two that really affected price. One of the main themes in terms of what we did overall, if this is helpful for VC backed founders that are in the audience, is I really kept it simple.

I did two things. I came in and said, “We need to put a process around how we’re selling deals.” Before I came in, you had Fred doing an awesome job talking to customers that were inbound on Hangouts and talking product, but there was no real system to take a deal from start to finish.

If anybody is a professional buyer, and CTOs are and we sell to CTOs, they know how to do a dance. They have multimillion dollar budgets. It’s not their first rodeo with a vendor and you have to have a process to take them through a proper deal cycle. You have to mirror that in Salesforce.

I didn’t come in and say, “OK. We need these systems. We need this platform. We need to set this up to scale.” I basically said, “Let’s keep it simple. Let’s do the bare minimum and let’s put cash on the board.”

I started on April eighth. On April 30th, we had booked whatever it was, 100k plus in new ARR and grown the REV stack 20 percent.

Mallun:  What did the team look like when you joined? What did the sales team look like?

Farlan:  It was me…plus Fred who was an awesome sales engineer and helped out wherever I could get it from Russ. It was me. I got on after two weeks. Fred was like, “All right, you got the inbounds. Run with it.”

Fred:  Also, from the founder’s perspective on the price increase, something that I’ve seen with almost every founder that I know is that we were not buyers of enterprise software in a past life. I’m part of the pirate generation. The most I ever paid for anything is 10 bucks a month.

To go out there and say, “I built this thing and I spent a year building it with my co-founder and it’s just some random little thing that we built in a garage in Mountain View and you should pay ten grand a month for it,” that’s a pretty weird thing, psychologically. Of course, most people don’t.quote3-stevens-smith

I think the other side to it was professional sales process is super important. Understanding how to message the value to the buyer is super important. Also, just frankly having the balls to say, “Yeah, it’s worth this much and shut up.” Either buy it or you don’t buy it because that’s how much it’s worth.

That’s something that is very, very hard to do just as a founder. I think that’s something that’s really, really helpful, when you get someone who has a benchmark of how much people are willing to pay for enterprise software which was, in our case, Farlan.

Farlan:  You can take an objective view. When you’re talking about the product, it’s your baby. When I’m talking about it, it’s a platform that can have a remarkable difference on your business and save you literally hundreds of thousands of dollars a year. I’ll show an example of that as we go up the chart here.

That’s in the beginning. When I got in there, we were just doing free trials. Free trials for the platform, it is not a self serve platform. It’s an enterprise onboarding. We had to hunker down, put a roadmap together, get a CSM on boarding in place. You’re really building a value as you take customers on properly.

We had three really good months. We were really happy. We were like, “Wow, I can sell this.” That’s all I came in to do. I didn’t come in to be a VP of sales. I didn’t want a big title. We didn’t negotiate some big package. We said, “Hey…”

Mallun:  In fact, that wasn’t your title coming out.

Farlan:  I said, “OK. Cool, guys. It seems like you have something cool. I like you. You like me. You’re from England. I’m from Canada. Let’s see if we can sell this.” And we did.

Cool. Everything is awesome. What do you do? The chart starts to go like that. What do you do? Shout up. Give me an answer. What do you do when you got one guy, you start to scale, what’s your next move?

[off mic comment]

Farlan:  Hire more sales. Thanks. Stack them in. Stack them and rack them. Let’s get 20 sales guys in. Let’s flood the market. Let’s jam them in. It happens all the time. I’ve seen it before.

Most times, it sucks because when you bring sales guys to the table, what do they need? They need food. You have to put food on the table.

I hired two SDRs. Hiring two SDRs in an Eng first organization is not a given. This is where understanding the company and culture that you’re in is really important.

It’s like, “Hey, we’re not going to hire two guys to do spammy marketing stuff. We’re going to hire a couple of guys who are super intelligent,” and they were, “super curious,” and they were, “very experienced as SDRs and get some proper cadences together and see if we can do an experiment and get some traction in outbound.”

We’re pinging VP of sales. We’re pinging VP Eng, CTOs. It was amazing. After a month and a half, I was doing eight demos a day. Usually, when you get on an outbound demo, it’s a really hard conversation. Here’s how the conversation goes. “OK. I gave you the time. What do you got?”quote4-dowell

But it wasn’t. I would get on the phone and there would be CTOs that would say, “I’ve never responded to a cold email in my life, but this is very timely.” Part of the reason that outbound works for us is because QA is really hard. Nobody is really good at it. It’s a pain in the ass.

There are two things that are absolutely certain today that are keeping CTOs up, especially as you move upmarket. One, websites are getting much more complex. Would you not agree? Web apps are getting much more complex. Feeds in, feeds out. Also, they’re deploying more often. That is a perfect storm.

It’s interesting. When I got in there, I saw, “Wow, QA folks are allergic to this product, i.e. disruption and change.” B, we’re riding the wave of continuous deployment. Any potential billion dollar company, ask those two questions. What are you really disrupting? Is it bullshit or is it real? What wave are you riding?

Outbound has been awesome for us. In Q4, we had an amazing Q4. You can see the graph really go up remarkably there. I’ll tell you in December, we eclipsed our entire REV stack that we had when I started in April. Half of that was from outbound.

From starting outbound in June to July, if we didn’t do it, that graph just goes like that.

Mallun:  To be clear, how much outbound did you do before you started your outbound effort?

Farlan:  Great question. Zero. We had a steady drumbeat of inbound leads that I was able to convert and then we said, “We’re going to need more.” You do two things at that point. You can say, “All right, let’s hire marketing and then our inbound SQLs are going to go like that.”

I wouldn’t assume that. That’s not a given. I wanted to have control in the business. I knew that if I was going to build a repeatable machine and a predictable sales model, which is what you need and where most companies go wrong in terms of, “All right, here’s our FY 2016 plan,” and then they just assume leads are going to be there. I wanted to have some control in the business.

It’s been a boon. It’s been awesome.

The second thing I’ll highlight is the team. We have SDRs that started and have grown into account executives. We had one SDR who’s amazing. He was there for five months. He became an account executive in December and closed a couple of hundred of thousand dollars in business.

That’s a true story. That’s awesome to see. That, to me, is like the juice of this graph going up into the right.

I hired our first sales executive. I was lucky enough to get our number one sales exec from my previous team. He started around September. He had lots of leads to convert.

Mallun:  Which one is he?

Fred:  It’s the one with the…

Farlan:  Don’t do it.

Fred:  …blue vest, doing that thing.

Farlan:  Recruiters, stay away.


Fred:  True.

Farlan:  He wouldn’t leave anyways.

The themes are sales system increase ACV. It’s interesting. In April, we grew the REV stack 20 percent and closed nine deals. In December, we grew the REV stack 20 percent and closed nine deals. That ACV going up didn’t mean we had to close 30 deals in December, which we would’ve, at the April ACV to grow that number.

You can see, we moved up market. We closed a $250,000 deal. That’s cash paid upfront. That’s awesome. The really cool thing there is the value. We saved them $750,000 this year offsetting 10 to 12 heads. We’re seeing phenomenal value as we move up market.

It’s funny. When I look at these things, I almost have to pinch myself. Those 30 outbound SQLs, those are very transferable into what those are in terms of SQL dollars, what our close rate is and what that’s going to bring us in 78 days which is our average close rate.

Then, you can start to build that predictable machine. Today…

Mallun:  What was your average close rate before you started this process?

Farlan:  30 days ish. 30 days. Back in June July-ish, 30 to 45 days. Those sales cycles get longer as you get those deal values going up. We moved up market and we went from a sales team of 1 to 12, 13 as of next Monday. We’ve done it in a methodical way.

I’d say, that’s the fourth point is that this graphs are really fun but, in the scheme of things, this is a spurt. This is a growth spurt. We’re not a unicorn. We’re not a rocket ship. We barely lifted off the ground.

Where my head is at is building a sales team and a sales foundation that you can actually grow from, thinking about 2017, 2018. You can see, I pointed out there, sales ops and recruiting. We hired Sarah who is amazing to our organization in terms of keeping the trains running on time and having that infrastructure, having that onboarding and having that recruiting funnel.

We’re talking about building a proper base. For folks in the audience who are in sales, who are looking for their next gig, whether it’s sales engineer, director of sales, whatever it is, the company that you’re talking to, ask them, “What are the values in the sales culture?”

We have values that we’ve put together. We have three very defined values that are purpose driven. We have a very tight knit collaborative, non lone wolfy team that fits into the overall culture.

That’s the biggest challenge, is figuring out how you actually build a sustainable platform. Otherwise, you could be like a weightlifter. Hire 20 sales folks, jam them in, pump up the number, pump yourself full of steroids and then where are you a year later?

Mallun:  The theme of the last day of conference is Zen Learnings. You’ve been through a lot, Fred. What is your role now with respect to sales? Also, share some Zen learnings with us, please.

Fred:  I was going to say what Farlan was just saying reminded me of something which is that we were in YC Summer 2012. We had Instacart, Coinbase, Mattermark and all of these other companies that were like “Bang.” 10 mil ARR one year out the gate. We’re not very close to 10 mil ARR right now, let me tell you.

The common thing, not to single out any of those companies, absolutely not, but in general the common thing that I’ve seen is that once founders feel like that they have a product/market fit but they’re not like a sales founder, they’re more product-oriented founders like me and Russel, they are like, “OK, shit. Now, we have to bolt on sales.”

They just have this Glengarry Glen Ross thing in their mind, they’re like, “Well, fuck it. We may as well sacrifice the culture to make lots of money.” I’ve seen every single time that happen. It just happens every single time where the founder is like, “Well, these are just salespeople, so whatever. We’ll just put up with it.”

Not to say that we have the answers, but something that we absolutely have not done is accept that. It’s reflected in Farlan, you probably get a sense of that in him talking about the sales team. The culture of the company is so amazingly important. Sales is part of that culture.

I know so many companies, where there are different floors, sales and engineering. It’s like, “How the fuck can you sell the product if you don’t speak to the engineers at lunch time?” How can you truly have a cohesive, coherent company when these two parts don’t even speak to each other?

That’s probably the one, I don’t know how sound it is, major learning for me which I’ll definitely take to the next company is that culture is what matters first and foremost because to be a great long term company, to build huge value over the long term, it’s just about people. To retain amazing people, you need great culture.quote5-stevens-smith

A lot of those companies from our YC cohort who are now breaking out and in the unicorn stage or whatever, all of the early employees have left. And why is that? It’s because they sacrificed culture at the altar of revenue. That’s something that we’re not interested in doing because ultimately it’s a short term opinion.

Mallun:  I’m going to ask Farlan in a moment what his Zen learning is. After I ask him that, I’ll open it up for questions. If you have questions, put up your hand because someone’s running around with a microphone.

Farlan, any Zen learnings?

Farlan:  Keep it simple and have fun. That’s what I tell the sales team every day. When our first two SDRs…it’s funny. I don’t call out their names because recruiters will go after them because they’re amazing.

We’d be sitting in the sales meeting, the three of us. I’d say, “Guys, just remember. These are the good old days. Enjoy it.” They are. Every day is awesome. Up and to the right, like, “Yay, this looks really fun.” The juice for me is the sales team that I get to work with and they’re just super awesome. It’s awesome to see them grow. It’s awesome to see them learn new things, close deals. That’s been the juice for me.

I don’t get out of bed every day and be like, “Yay, let’s go attack the day.” I don’t. On my way to work, I’ll jump up and click my heels in certain days and be like, “This is really cool. I get to go and work with an awesome team and do this.” We are not…

Fred:  Click your heels?

Farlan:  We’ll never…

Fred:  Is that a Canadian thing?

Farlan:  It’s not Zen. We’re never going to compromise that. We’re just looking for awesome curious people. We’ll never have a gong. Fuck that.

But yeah, thank you.

Mallun:  We have time for probably a couple of questions. Does anyone have questions they’d like to ask? Right there. Is there a microphone?


Fred:  Just shout it out.

Mallun:  You can go ahead and start, but you can hand it to her. Thanks.

Audience Member: Thank you so much. Really, great talk. I love the things that you said. I hope even my company sees that growth. Here’s a question. You came in and you increased the pricing. Would you do that even if the product is still not ready as compared with the competition out there?

Fred:  I’ll take the question. I wouldn’t hire sales if the product is not ready. What he said, he wasn’t just being a facetious salesperson like, “Product, product, product.” You need a product/market fit. For me, a salesperson is just like fuel that you pour into that engine and the engine is the product in the market.quote6-stevens-smith

If you don’t have product/market fit, then adding a salesperson, you’re either going to get a crappy salesperson because great salespeople don’t want to sell something that doesn’t have product/market fit because they don’t make their commission, or you’re just going to do a whole bunch of unsustainable selling and then you’re going to have churn.

It depends how harsh you’re being with yourself.

Farlan:  Legit sales, you should hire when you have something that’s kind of product/market fit. One of the criteria I looked out before I joined any company was, have the founders or the sales champion internally, CEO, have they closed 10 deals? I want them to feel the pain. I want them to viscerally the pain of what it goes through to close a deal.

If you started a company and they don’t know about that and they’ve been using the consultants, nonstarter. At your stage, it might be embryonic business development, maybe, but I would go close some deals yourself.

Mallun:  I’m curious, Fred on chart, when did you view the product as ready?

Fred:  When we raised money from Jason, which was the end of 2014, the premise was…frankly speaking, we had two months payroll left. We weren’t very good at checking our bank balance so that was a surprise to us.


Fred:  You’re laughing but it’s not a joke. It is funny though. At that moment when we looked to the bank balance we were like, “Oh, shit. We’re going to run out money. We’re not anywhere near A numbers. So what the fuck are we going to do?” The premise was, we have amazing product/market fit.

If anyone knows QA, there’s no competition that is meaningful in the space. Our customers were very happy. We were like we think that we’re good at the product stuff. We just shit at this business stuff. That was the premise when we went out and we raised money. And I guess Jason believed it. What was the question though? Was that…

Farlan:  Where did you raise? How did you raise?

Mallun:  You know you’re good. [laughs] We are actually out of time, but thank you very much. This was a lot of fun and I…

Audience Member: Thank you so much.

Audience Member:  Can we get one more question?

Farlan:  I’m on your right, yes of course.

Mallun:  Farlan says it’s OK.


Fred:  These things always go over.

Audience Member:  I already had the microphone in my hand. It would have felt a little bit gypped and so I…[laughs]

Mallun:  No worries.

Audience Member:  It seem like you guys use price increase a lot to help grow the company. I think that it really helps your sales team when your prices were thousands of dollars because each sale there’s a lot more money tied up. Do you think that there’s a price floor or a minimum price plan that you have to offer to make a sales cycle work like that?

Fred:  It depends who you want to work with.

Audience Member:  OK.

Farlan:  By tweaking price and running pricing experiments, we were self selecting who we wanted to work with. As we took away the minimum price, there were four when I started. We just have one price and then enterprise plan now because it’s just much more simple.

As we raised price, the inbounds went upmarket. Automatically, we legitimized ourselves not to companies 50 under but to 50 to 100. Then 100 to 200. Now we’re in the mid-market. Price will also be a determinant of who will talk to you.quote7-stevens-smith

Fred:  It’s really true that price is a legitimizing thing. When you speak to someone and you’re like, “Hey, here is the solution and it’s 500 bucks a month.” They’re like, “Go fuck yourself. That’s not a solution. That’s just some little thing that you built.”

If you’re like, ‘It’s 10,000 a month.” Then miraculously, they’re like, “Oh, you’re for real, OK. I guess we have to pay it.”

Farlan: CTOs want to do big deals too. It’s funner for them.

Mallun:  Great. Well, thank you guys.

Fred:  Thanks.

Farlan:  Yeah, thank you.

You can view the slides here.

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