Whether you’re just starting out in SaaS or have a successful SaaS startup, founders and startup teams can learn a lot from those who have found success in the industry through its ups and downs.
That’s why SaaStr founder and CEO Jason Lemkin held an “Ask Me Anything” session at this week’s Workshop Wednesday, held every Wednesday at 10 a.m. PST.
In this Ask Me Anything Part 1, Lemkin answers the questions:
- Many VCs talk about funding, yet you’re so focused on sales. Why is that?
- When do you know you have a good SDR or AE?
- How do you build high-quality content that’s consistent and repeatable?
- Do you see any segments getting stronger in the next 12-18 months?
Let’s find out the answers.
Question #1: Why Are You So Focused On Sales When Other VCs Are Focused On Funding?
During Lemkin’s time as a founder at AdobeSign/EchoSign, he made the same mistake that 70-80% of founders make today, which was hiring the perfect logo guy for his first VP of Sales.
That VP of Sales came out of Salesforce. He was tall and strapping, had a deep voice, knew how to say ARR and NRR, and claimed he could recruit 50 reps in a week.
Well…
He did all of that, and revenue plummeted, the burn rate tripled, and they almost ran out of money.
Lemkin’s Hail Mary was hiring Brendon Cassidy when that first VP of Sales quit. Brendon was the first Head of Sales at LinkedIn and was also an early customer for EchoSign.
And a magical thing happened!
Their sales doubled in 60 days.
How to increase sales in SaaS?
How did Brendon come in and double sales in 60 days?
A hint of the answer is that sales were higher before they made the mis-hire, so by course correcting, you do better.
They had eight reps at the time.
Brendon got rid of seven and kept one young SDR named Sam Blond, who many of you know if you’ve been part of the SaaStr community for any amount of time.
Sam went on to become a CRO at Brex and is now a Partner at Founders Fund.
But, back to critical hires for your Saas company.
Brendon kept two breakouts and brought in three people from LinkedIn.
What happened with this new team?
- They were already much better, and it tripled the revenue per lead.
- They trained new folks faster and were running a more confident playbook.
- They doubled revenue in the first 60 days and tripled and quadrupled revenue over the next 12 months.
Our First VP of Sales Lost Confidence In Us
Lemkin’s first VP of Sales lost confidence in them and didn’t think they had a big enough market.
By bringing in Brendon, an early customer who used their product in the field, they already had someone who knew the product and believed in it.
The takeaway here is…
When you bring in your first VP of Sales, they should be able to improve things within the first 30-60 days.
Brendon upgraded the team, got rid of underperformers, and believed in the product.
Many founders have profound stories like this one.
When you go through that, you become passionate about sales.
There is no sales magician.
Someone bringing in 20 reps when you have no customers or product market fit won’t change the world.
But if you have something, just a smidge of traction or demand or leads, a great sales team and sales leader can come in and do somewhere between 50% and 500% better than a mediocre one.
You’ve got to be a zealot about finding this talent at all levels. Not just sales.
Question #2: When Do You Know You Have A Good SDR Or AE?
SaaStr has talked a lot about hiring a great VP of Sales, but what about a great SDR or AE, especially when the founder has been in charge of hiring them up to this point?
Lemkin shares that his first 2 to 3 did well, and the next ten all failed.
For a founder, training anyone beyond the first 2-3 is too much. You’re too busy. You can’t put in the time for those next 7-8 reps.
“Training by osmosis with a couple of street-smart reps doesn’t scale much past 2-3 reps,” says Lemkin.
Ultimately, you have to pause, find a manager to scale them, listen to them, and train them.
Founders at this stage have a choice…
- Get overwhelmed by managing another three reps
- Put together a formal training program for someone to train SDRs and AE for the first 30-60 days, pair them with a leader, have them do sales calls together, onboard them yourself, etc.
- Hire a Head of Sales
Lemkin wrote a SaaStr classic… You Have To Train Reps 3-100+. They Won’t Train Themselves.
The Takeaway:
If you don’t hire someone or deeply become the VP of Sales yourself, it won’t work.
If you’re selling to Enterprise, you have a little more time because velocity is slower, but training is really high.
When you get hands off, you close nothing in sales.
SMB is more transactional, and Enterprise reps need to be subject-matter experts, know the industry, the workflow, the competition, etc.
All in all, you need a VP of Sales. A great VP of Sales will find and train a great SDR or AE.
Question #3: What Is A Content Strategy For SaaS?
Pick what you’re most passionate about and do it every single week. Add value to your niche, something that no one else knows, and you’ll attract a meaningful audience.
It always works.
Content marketing is so important.
Folks who do mediocre outsourced content or a boring podcast won’t move the needle.
How important is content marketing?
Let’s look at some examples.
The founders of Hubspot each wrote a blog post every day in the early days.
At SaaStr, Lemkin has written one post a day since 2012, and it used to be two pieces.
That’s just under 10k pieces of content from just the founders.
The Learnings
You have to do it at an elite level. No one needs the 11th most boring article on compliance.
You also have to do it consistently.
SaaStr’s content marketing strategy includes:
- Holding a customer webinar every week. Invite customers and prospects.
Sometimes, no one wants to do it, and so you skip a week. Later on, you might try to start it up again, and no one comes. So you have to do it every week. It’ll build on itself.
- Picking a medium you enjoy if you’re doing content yourself.
Most people can not write. If you can, do it. If podcasts are your jam, do it. YouTube is weird, but if you like the effort to make A-tier quality video for your industry, do it.
Don’t outsource tweets to someone who does the same tweets for 11 other clients.
The trick is to do what you know and what you’re passionate about.
If it takes a month to research a category you don’t know about, you’re wasting a lot of time.
Everyone’s An Expert At Something
By a million or two million in ARR, you’re an expert at something.
If you know what 800 customers want, you know what 8,000 want.
Add value to your industry and existing customers, and it always compounds.
Lemkin wrote a post called Content Marketing Almost Always Works, But Only If You Do It Right.
An iconic piece of content early on can make you stand out, something that truly adds value to your industry.
Question #4: Do You See Any Segments Getting Stronger In The Next 12-18 Months?
There’s a lot of talk about economic downturns and pulling back, so what does the next 12-18 months look like?
At SaaStr Annual, Lemkin will do a deep-dive opener on SaaS trends of 2023.
One of the most confusing things going on right now is a tale of two worlds.
- The heavily impacted or decimated world
- And the immune world
What is the SaaS market prediction for 2023?
The U.S. economy remains on fire. Unemployment approaches zero, and most segments are growing.
Restaurants are full, cars are struggling a little, and housing is tricky because mortgages are 99% interest.
Some categories of SaaS selling to normal people in the normal economy are doing pretty darn good.
Two examples: Toast and Monday.
Toast is restaurant tech, and their growth shows a flattening but good growth. The last quarter was a record.
Monday is selling outside of tech to ordinary companies, and they remain a rocket ship.
Toast and Monday are the immune.
And then you have folks selling into heavily impacted categories.
They’re typically a lot of sales, marketing, and productivity apps, and they got slammed.
For example, Zoominfo is most successful in terms of market dynamics.
They held out well, but in Q1 of ‘23, they got whacked in the head.
But if you weren’t as big or as good as Zoominfo, you got slammed faster and bigger.
The Takeaway
We’re seeing a cautious recovery in some segments that got hit hard.
Yet, things will never go back to 2021.
Some categories never got impacted, others landed somewhere in the middle, and some were destroyed.
Ultimately, big companies got fitter and more efficient. But what the velocity is for different segments…
No one knows.
