This Is Why I Never Hire Product Managers

Editor’s Note: The following post is republished from David Cancel, CEO of Drift. You can read the original post here. Also be sure to listen to David’s podcast on hiring product managers below.  When I first got into tech and startups, the most valuable and sought after asset was experience. And when it came to product management, every product manager wanted to leave their current job to go out and get a business degree. Business skills were super valuable, while product management sat at the bottom of the totem pole in most organizations. Because of that, a lot of people were trying to escape from product management. Today, the power balance has completely shifted. How often do you seen startups on Product Hunt or coming out of YC boasting that they have “business-driven co-founders.” Never. That’s because today, product and design are the differentiators for most modern
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Land, Expand, Retain

In ServiceNow’s Q1 Investor presentation are the first semblances of SaaS metrics in public company reporting. If you sift through the 40+ public SaaS businesses, you won’t find mention of annual recurring revenue, churn, account expansion, or cash collection cycles in most of them - even though these are the the metrics the management teams employ to evaluate and steer their businesses. ServiceNow hasn’t published metrics on ARR or payback period, which for most public investors are still esoteric terms. Instead they frame their growth in three parts, familiar to SaaS operators everywhere: land + expand + retain. The image above shows Q1’s triptych of new customer additions, expansion as a percentage of new quarterly bookings and quarterly dollar revenue retention. A second slide reveals the contract length for each element of the growth trio. 32 month average contract duration for new business; 23-26 month for upsell and renewal. At Continue reading "Land, Expand, Retain"

Friday Q&A: Should Early-Stage Startups Raise Money to Hire Developers?

Every Friday, we’re answering your questions about business, startups, customer success and more. Happy Friday! This week’s question comes from Joshua, who asks: Obviously there’s no blanket answer here that applies to all startups. But here’s my take. There are things I would’ve done differently (and I’ve blogged about many of them), but raising more money isn’t one of them. There are so many dangers to raising cash early on that I’ve seen materialize among friends. One of the biggest is that there’s a really good chance that, like many startups, you may have to pivot to reach product/market fit. The investors who buy into your vision today might not love the thought of your new direction. A lot of people who think they want to invest in startups don’t truly have the stomach for what being involved in a startup really means, and they end up getting scared Continue reading "Friday Q&A: Should Early-Stage Startups Raise Money to Hire Developers?"

Why Product Qualified Leads are the Answer to a Failing Freemium Model

Editor’s Note: This post first appeared on OpenView’s new Medium publication, Expand Upon. Be sure to follow us on Medium here.  tl;dr — pure freemium has a low ceiling in B2B, but high-touch sales is expensive; combining the two motions to efficiently sell to free users could be your team’s next breakthrough.

The case for a new SaaS playbook

Playbooks for SaaS demand generation, predictable revenue and customer success are becoming widely known and implemented. Companies that have mastered these fundamentals of inside-sales-driven SaaS distribution find themselves in search of step-function improvements to unit economics. Ultra high growth organizations constantly seek ways to expand reach and awareness, and to turn that demand into happy customers that refer friends and coworkers. In search of step-function improvements we look to the nature of the acquisition funnel itself to find blockages; what steps and flows for buying and adopting the product can we fundamentally
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I’m a startup founder weighing multiple VC term sheets at similar valuations. How should I choose?

My force-ranked list of criteria: #1.  Who do I truly trust the most? This doesn’t mean who is the “best guy”, or smiley-est, or nicest.  In fact, be wary of “grin frackers”.  Find out — who can I truly trust?  If any of them.  You will be so, so, so much better off if you pick the one you can truly, really trust.  So, so much better off.  A different way to ask this question — is who will most have my back? #2.  Who can truly help the most?  In later rounds, this doesn’t matter much, but in the earlier ones it does.  Pick that one. #3.  Who will the Next Round VCs most want to follow? This is hard to know without really asking, but if you pick a VC that other great VCs Continue reading "I’m a startup founder weighing multiple VC term sheets at similar valuations. How should I choose?"

Is it common for early-stage SaaS startup revenue to plateau around $2-3ML ARR? Any milestones or stages that may contribute to this?

It shouldn’t be, and yet, you see it fairly often. There’s generally one root cause:  you don’t get better at sales & marketing. Often what I see by the time you get to about $1.5m-$2m is a consistent but not really growing anymore stream of in-bound leads.  I.e., the lead stream flattens out.  It’s been, e.g., 20 organic in-bound leads a month (or 30 or 100 or 10 or whatever) for the past 3-4 months. You’ll get past it.  But … If you don’t get better at sales by phase, if you don’t drive up revenue per lead, if you don’t get an outbound engine going, if you don’t crank up demand gen by then … then all things being equal, growth will slow down because lead flow stays constant. Eventually, if you stick at it, your “mini-brand” grows Continue reading "Is it common for early-stage SaaS startup revenue to plateau around $2-3ML ARR? Any milestones or stages that may contribute to this?"

The 11 Pieces of Bad Startup Advice That You Should Ignore

There’s a lot of bad advice out there. Here are the worst offenders that won’t seem to die. We still have a long way to go, but we’ve come a long way from where we started. And throughout that journey, I’ve worked hard to learn as much as I can from people who have done it before me. I’ve gotten a lot of amazing advice that has helped us make huge breakthroughs in our business. I’ve also gotten plenty of very good advice that, for various reasons, didn’t work for our particular situation. I’m still thrilled to have gotten that advice, though, and have been able to pass it on to other founders who have found success with it. But there’s some advice that, in my experience, typically comes from people who have spent more time coming up with advice that sounds good than actually executing on growing a business.
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The Top Ten Do’s and Don’ts of Startup Marketing Management

Editor’s Note: This is the last post of a three part series on scaling startup marketing. Read parts one and two or download the complete Startup Marketing eBook here. Startup marketing management is incredibly challenging. You never have enough money. You never have enough people. And, you must constantly innovate to survive. Moreover, startup marketing challenges evolve alongside revenue as a company scales from A-round to B-round to C-round and beyond. As a rule, marketing managers spend about 95% of their time thinking about marketing and about 5% of their time thinking about management. In fact, while we have no shortage of tools and technologies for marketing, there are very few for marketing management (something we are trying to change at my own marketing management software startup, Markodojo). This final post in the ABC’s of scaling startup marketing series attempts to give startup marketing managers a leg up on
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What are typical commission ranges for referral partners for Enterprise B2B SaaS?

There is a rough set of parameters that most folks in general for lower volume, higher ACV partnerships:
  • 10% for a warm lead.
  • 20% for a lead that wants to buy, i.e. a Qualified Opportinity.
  • 25-40%+ for a customer closed by the partner — i.e., “on partner’s paper”.  Sometimes, these are booked as net of the revenue share if the rev share is high.
Key is these are % of first-year ACV … not an annuity. Some of these numbers may sound high, but in sales-driven SaaS, they aren’t.  If it costs you 100% of your first year ACV in sales & marketing costs to close a customer … and a partner can do it for less than half that, that’s a bargain.  At least for a while. Where it gets murky and mucky later is once your brand is established, Continue reading "What are typical commission ranges for referral partners for Enterprise B2B SaaS?"