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SaaStr Q&A
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Q&AEmployees that work on commissions, how common is it for a business to cheat employees, or twist the rules in favor of another long-term, or favorite employee? I’ve heard stories, but does this really happen?
In B2B companies, commission plans almost always have a clear clause that they are 100% subject to the discretion and judgment of the company. I don’t see much cheating in…
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How much should a SaaS company invest in professional services?
A rough yardstick is that most enterprise-focused SaaS companies tend to get about 10%-20% of their revenues from professional services. Now how much to invest is a different question. Many…
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Q&ADoes Your Sales Team Need to Be So … “Salesy”?
Well, yes. But not necessarily in a used-car salesperson way. I get that you don’t like the used car salesy approach, the high pressure approach, or even just the feeling…
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Why is it said that “once an entrepreneur, always an entrepreneur”?
I think it varies whether this is the case, or not. From my cohort of CEOs, I know several who had amazing exits and are … done. Simply done. Not…
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Q&AIs it normal for Series A investors to buy up previous seed investor’s equity?
It’s much more common today than a few years ago. Today, most Series A-B-C-D firms want to buy every share they can in any round they lead — not split…
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Blog Posts, Early, Leadership, Q&A7 “Little” Things That Almost Caused My Startups to Fail
I haven’t failed yet, but boy every time, I’ve come close. Let me make a list of the “little things” I let go, but that I shouldn’t have, that almost…
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How can enterprise software (SaaS) pricing be optimally defined, taking into account that two of three versions of the software can be offered, e.g. ‘small’, ‘medium’, ‘large’?
Let’s look at Salesforce.com — it now has 11 (!) different enterprise products, with different approaches to pricing! Some categories, like Sales and Support, have relatively transparent pricing, with 4…
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Why did SAP acquire Qualtrics, days before its IPO?
Because M&A almost always requires a “forcing function” to finally get done. Big Companies look to buy a number of companies, especially to fill key gaps (smaller deals) or to…
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Q&AWhen is it too soon to target enterprise clients in SaaS?
It too soon to target enterprise clients when you can’t support their needs 90 days after you close them. It’s sort of OK in the enterprise to promise features and…
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As an entrepreneur, how do you know if your company is ready to go to the next level?
It can be tough to know, especially in the early days. Progress can seem so slow, and the absolute numbers so tiny. Is there really any difference between $500 a…
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What’s a good example of a SaaS business with professional services?
Basically every SaaS company that sells to large enterprises. Veeva is a great pure play example, with a $12b+ market cap and many many $1m+ deals. Like many other folks…
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Which SaaS companies do good case studies? What makes them good?
I’m no expert but I always try to look at newer but current leaders in the market for corporate market and communications. Twlio is a great one, rocketing to $1b+…
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Q&AWhat is a typical organizational structure for a SaaS startup with sales reps?
A rough structure from 1–25 sales reps: Early days: CEO acts as VP of Sales. CEO hires 2 reps, in the beginning, each barely pays for themselves, but by months…
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Q&AOnce your equity vests in a startup, what are the advantages of staying around?
It’s an interesting and subtle question, especially these days in the Bay Area, where many barely stay 1 year to their cliff, let alone the full 4–5 years to vest….
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Q&AWhat are the most important qualities to look for when hiring a sales manager for SaaS?
The top 3: #1: Have they hired 2+ quota-meeting/exceeding reps before. This is #1 by far. If they’ve never hired 2+ great reps before, you are taking on a lot…
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Q&AWhat are the 5 main differences about how sales is scaled in Europe vs the US?
Having invested in 22 Europe->U.S. companies, I am not sure the differences are all that huge, absent cases where there are regulatory differences. But in SaaS, there are fewer veterans…
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Q&AHow can you land a big client as a SaaS that no one has heard of?
Solve one of their top pain points, for real — that no other vendor is solving. If you haven’t sold to the F500 / Global 2000 before, you’ll be somewhat…
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Q&AHow would you go about implementing a sales process for a low ARPU product (less than $200)?
It’s very tough, but it can be done. Just not in San Francisco using traditional SaaS employees and processes. Assume in the end, sales takes home 20% of a deal…
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Q&AHow should your approach to segmenting customers change as your sales team scales up?
I’m not sure I have any magic insights. After maybe $8m-$10m ARR, you probably should segment into 3–4 categories, assuming you have customers in all segments: “Commercial”. This often means…
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Q&AWhat is the most horrible part about being an entrepreneur? Why?
The most horrible part is the feeling of failing and being 100% on the hook for it. And almost everyone goes through this. Even if it’s not 100% failing, it’s…
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Q&AWhat are some common mistakes when scaling a sales team for SaaS?
A few key mistakes I see start-ups making > 50% of the time: Hiring Early Reps (#1 – #3) That You Personally Wouldn’t Buy From. Don’t hire someone with the…
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Q&AWhat’s the best way to fire your co-founder who was once a friend?
Treat them the way you’d like to be treated. It’s over. If you truly have to fire (vs. demote in some fashion) your co-founder, the relationship is broken. If not…
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Q&AIs the “sell me this pen” question still relevant?
Possibly more than ever. On the one hand, in SaaS these days, we hopefully are all selling solutions. Not random widgets. So used car techniques and such have little place…
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Q&AAre startup founders ever treated differently by their acquirer’s employees because they’re richer?
It’s a real issue with VP/SVP-led acquisitions. It’s not so much an issue for founder or CEO-led acquisitions. Microsoft just bought Github for $7.5b and made each of the co-founders…
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Q&AIf a US-based company walks away from a contract with a US-based SaaS provider, which auto renews, without paying or using the service at the time of auto-renewal, what are the chances that it will get sued?
The odds you get sued from walking away from an auto-renewal are low. The claims, even if valid, are almost certainly not worth the legal fees and expenses. The odds…
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Popular Q&A
What is the best piece of advice on closing deals for a new, inexperienced salesman?
Add value. Most new salespeople focus a lot on the transaction. What’s your budget? Do you need a discount? How big a discount? Can I give you a bigger discount? What questions do you have? If I give you an even bigger discount, can you sign right now? Your discount...
What is the difference between running a 10 person startup and a 100 person startup?
The biggest structural difference is you have to hire all the VPs by employee 50–100. You won’t be able to scale this far without a full management team — VPs of Sales, Marketing, Product, Engineering, Customer Success at least. But the toughest personal challenge for...
What were aspects of your startup that were easier than you anticipated?
The part I didn’t originally get was how relatively easy is it to grow exising accounts and account size if your customers are happy. We segmented customer retention by Small, Medium and Large accounts after about 24 months and saw a pattern that I now know is fairly...
What should B2B SaaS companies do to ensure the success of their customers and reduce churn?
I know this sounds overly simple, but the answer is: Measure it. Set goals to improve it. Pay people to improve it. Too many start-ups don’t even know their CSAT and NPS. Too many start-ups don’t even visit their customers in person. Too many start-ups don’t know why...
What are some rookie mistakes founders make during VC meetings?
A few that are easy to fix: Not standing (when you present to > 2–3 folks). When you stand, you present better. Period. Standing turns you into the center of the audience, into the owner, the presenter. Sitting is great for a small convo, but sucks all the energy out...
How should I design sales reps compensation plans at $10k MRR?
Figuring out your very first sales comp plan when you don’t have a repeatable process or much revenue is confusing. I was exactly in the place you were (first rep at $10k MRR) and everyone faces some similar challenges: There’s no way this early you can expect a rep...
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