A VC’s Notes from SaaStr 2018
As an early stage enterprise tech investor, I was excited to go back to SaaStr Annual this year. For VCs, industry conferences are great for meeting with entrepreneurs, stress testing investment theses and learning from industry leaders to help our own portfolio companies. Since we are early stage investors at Ascent, most of the sessions at SaaStr were valuable and relevant to our portfolio companies. I’ve recapped a few takeaways from SaaStr 2018. Feel free to jump to the most relevant topics to your company:
When we invest in companies, they are more than doubling or tripling revenue annually. To effectively scale for the long term however, forget revenue and focus on customer value and engagement.
Value: What is the value of your product to your customers? That value might change. Continue getting better at delivering that value.
Engagement: Make sure you’re tracking how, how often, when and in what context your customers are using your product. Always be touching the end customer and drive for higher engagement metrics. Watch what your customers do, and not necessarily what they say. Results from listening to and studying your customers should inform all parts of your business strategy including: product, pricing and packaging, business development and messaging and positioning.
2) A COO can be awesome when you’re ready to let go.
A couple of our CEOs are starting to think about hiring a COO – when is the right time to add that person to the team? According to Karen Peacock, COO of Intercomm, a CEO is ready for a COO when (s)he is ready to let go of some aspects of the business. While the conventional wisdom calls for a COO who likes to do everything the CEO doesn’t, that actually creates a split leadership. Instead, a CEO and COO should have a few overlapping strengths and interests, for example: Product.
3) You can measure the ROI of HR.
Having just invested in gr8 People, the role of HR and people operations has been on my mind. Everyone knows to invest in your people, but few organizations have a framework for calculating the ROI on your people operations. Maia Josebachvilli, the former VP Strategy and People at Greenhouse, provided a model to calculate the lifetime value of an employee.
The line above the gray area shows an employee’s productivity through each phase of his/her tenure at the company, from onboarding to exit. The gray area is the employee lifetime value (ELTV). There are ways to increase ELTV along each point of the employee life cycle:
a) Onboarding: just like SaaS companies invest in customer success for customer onboarding programs, building a robust new employee onboarding process is key to employee happiness, productivity and retention.
b) Hiring: almost every company we invest in has big hiring plans in the next twelve months, but has largely relied on ad-hoc hiring practices. Finding amazing people that can up-level your organization is key to hitting your budget, so now may be the time to crank up recruiting. A couple of tips:
- Great people know other great people. Build an employee referral program. Payback on different hiring channels varies by company, but generally referral programs give companies the most bang for their buck.
- Build relationships with great recruiters in your market. For example, FoundHuman is a Boston recruiting firm which specializes in entry-level and manager-level hires with a non-traditional pricing structure. They also act as an extension to your company, and could be a great solution if you’re not ready to hire an in-house recruiter.
- Invest in recruiting software.
- Begin building a process and tracking metrics around your hiring function.
c) Employee development and culture: According to Maia, the two main reasons employees leave are due to bad managers and bad culture. We advise our companies to start providing sales training as soon as you hire your first BDR team, and start formalized leadership training as soon as you promote or hire mid-level managers. Not all star individual contributors have the natural skills to effectively lead, hire, promote, or fire others. By failing to provide new managers will the tools to effectively lead, you’re at risk of losing a star performer, everyone reporting to him/her, and lowering company morale. We see this pattern often as companies scale beyond the early stage.
4) Building an outbound sales team
Aaron Ross, author of Predictable Revenue led a discussion on how to build out an outbound sales team. Firstly, you should expect that it takes 6 months to 1 year to get your program running before seeing results. In his words, “if it’s taking more than a year to see results, you have a people problem.” Secondly, start with two prospectors and one manager. Each prospector should generate 5-15 SQLs per month for $10K to $100K ACV deals. Once you have your team in place, spend a quarter being on the front lines doing the same activities as your sales team. Send emails, listen in on BDR calls, go on prospect visits or demos. Give you and your BDR each 100 leads and race them to 10 demos. Last tip: keep the quality of your pipeline high. Check and audit every opportunity that ends up in your pipeline. Speaking of: don’t get caught up in vanity metrics. It requires careful tracking of every stage in the funnel and the right goal alignment to set your team up for success.
That’s it from me for now. The above topics are all aspects we’re working with our portfolio companies on at Ascent. If you’re an early stage SaaS company, chances are the list will resonate with you as well. The last thing I’ll leave you with is that every conference should involve puppies:
Yappy Hour hosted by MongoDB and Family Dog Rescue.