For an enterprise software company, what percent of total expenses should the marketing department take up?

In the end, you probably don’t want to spend too much more than 20% of the first-year customer value in marketing. You can justify spending more if you have a long customer lifetime (e.g., true enterprise customers), material upsell down the road (then the deal size is really larger), and if you have a lot of capital to spend to grow faster. So maybe 20% if you are leanly funded or not funded, maybe up to 50% if you have a ton of capital. Remember, if you have a sales-driven model, sales costs are probably going to eat up 30% of that first-year revenue on a fully-burdened basis. More on the math here: How Much Can You Really Spend on Marketing? (And The “Problem” With The S+M=ACV Axiom) | SaaStr But … The thing is, if you have super happy customers, Second Order Revenue really matters. Getting the Continue reading "For an enterprise software company, what percent of total expenses should the marketing department take up?"

SaaStr Podcast #183: Eoghan McCabe, Co-Founder & CEO @ Intercom on The Right Way To Structure Your Org Chart

Welcome to Episode 183! Eoghan McCabe is the Co-Founder & CEO @ Intercom, one of the fastest growing SaaS companies of the day, providing a new and better way to acquire, engage and retain customers. Due to their phenomenal growth they have raised over $240m in funding from some of the best in the world including Kleiner Perkins, Social Capital, Bessemer, and Index, just to name a few. As for Eoghan, prior to co-founding Intercom, he founded an award-winning software design consultancy called Contrast, and co-founded Exceptional, a developer tool startup acquired in 2011 and now a part of Rackspace. In Today’s Episode You Will Learn:

Should you introduce Freemium in a B2B SaaS startup to boost growth?

Probably not — because it’s too late. If you don’t start Freemium, it’s very very hard to add that DNA later, once you have real revenues, processes and software optimized around larger customers and deal sizes Freemium:
  • Requires a much more elegant onboarding (no human assist) that most enterprise software
  • Requires millions of users to make the conversion funnel work. More on why here: Why You Need 50 Million Active Users for Freemium to Actually Work | SaaStr
  • Requires that the users get huge value out of the product in minutes, without human interaction to explain that value
  • Distracts the sales team
  • Distracts the marketing team
  • Etc.
If you start there, and do OK there, you can then go upmarket. Your product and your team will have the DNA. But if you have a product today that has thousands of users (not millions) and requires onboarding, selling, training … the Continue reading "Should you introduce Freemium in a B2B SaaS startup to boost growth?"

As a SaaS founder, can you tell us the story of how you found product-market fit?

I had to brute force it, at least the second time at EchoSign. When we launched we had a small but decent number of sign-ups, and once we had a paid product in a few months, a small number of reasonably happy paying customers. Not many. But at least a few that were happy. Enough to say “push on”. But it wasn’t enough. We only got to about $200k in ARR by the end of the first year, and were running low on cash. We had something for sure — but not enough, and not growing fast enough, for true product-market fit. In the end, we had to go more enterprise, and have a richer product, and develop more critical integrations (Salesforce, etc.) to find true product-market fit for real, which in the end took probably 18 months from Day 1. At that time, there wasn’t a big enough
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Smooth Scaling: 3 Female Tech CEOs. Lessons on How to Scale Faster, Better & Farther. (Video + Transcript)

In the below session from Annual 2018, CEOs Jennifer Tejada (PagerDuty), Michel Feaster (Usermind), and Amy Chang (Accompany) discuss the challenges of scaling culture, their biggest career mistakes, and more with humor and candor. It’s definitely worth a watch. And in case you haven’t heard, we’re building a completely immersive experience for SaaStr Annual 2019! With 3 full days of sessions, featuring over 300 speakers from the best SaaS companies around the world, SaaStr Annual will be filled with actionable thought leadership to help grow your business. Get your tickets to the SaaS show everyone will be talking about! Announcer:  Please welcome Jennifer Tejada, CEO of PagerDuty, Michel Feaster, CEO of Usermind, and Amy Chang, founder of Accompany. [applause] Jennifer Tejada: All right, good morning? Audience: Good morning. Jennifer: Wow, are you guys alive? Good morning. Audience: Good morning. Jennifer: Oh, much Continue reading "Smooth Scaling: 3 Female Tech CEOs. Lessons on How to Scale Faster, Better & Farther. (Video + Transcript)"

When You Need a CMO. And The #1 Reason CMOs Fail.

To many of you, “CMO” will seem like an almost silly title.  At say $2m in ARR, when you’re just figuring our demand gen, SDRs and BDRs and all that … why would you need a CMO?  You need a VP of Demand Gen!  Maybe a VP of Marketing.  But the last thing you probably need is a fancy title running around, spouting marketing-ism. But over time, things will change.  Roughly, once you (x) have an established brand, and (y) have a marketing engine that is working, and (z) most importantly, once demand gen has finally become somewhat routine … you’ll need a CMO.  Because you’ll need a marketing quarterback.  Most CMOs aren’t demand gen gurus.  Some are, but even if they were, they’ve often left the details a bit behind.  But you’ll need someone to manage a diverse team of
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As an entrepreneur, how do you make tough business decisions? Is it better to slightly overthink it or adapt later?

I’ve screwed up a lot of tough business decisions. A lot of them. For me at least, I think the rule I’ve realized is:
  • Accelerate 90%-95% of decisions, ones that won’t kill the company
  • Push down as many decisions as you can to your team, even if you are in a better position to make the call. Decision-fatigue is real. But …
  • Slow down the few that really are make-or-break.
As founders, we are so overloaded with decisions, drama, crises, customer challenges, etc. that it can be hard to take a pause on the most important decisions. We end up with decision overload. The big ones … that customer, that offer, that opportunity, that partnership, that critical hire … it will still be there next week. It really will be. Those 2–3 critical decisions a year, go talk to your mentors. Stew it over. And probably, if these ones don’t Continue reading "As an entrepreneur, how do you make tough business decisions? Is it better to slightly overthink it or adapt later?"

Did you start your business with the intention for it to be acquired?

The truth is, this strategy can work. It’s just super risky. If you know a particular acquirer well, and you know you are right in the middle of a phase transition for them, and you have a unique asset … it can work. In my first start-up, our ultimate acquirer offered to buy us for $9m before we’d even incorporated the company. They flew us out, had a steak dinner, and said they wanted to buy us then. Obviously, the interest was real. If structurally we could have done it, we probably would have sold for $9m. But our company didn’t even legally exist yet, and that posed a bunch of challenges in this particular case. They then offered to lead our entire seed/A round instead. We passed on that. We then closed $6m in deals with their Top 2 customers. So, 12 months later they offered to buy us Continue reading "Did you start your business with the intention for it to be acquired?"

Connect with 12,500 of the Best & Brightest in SaaS! The Top 7 Reasons You Can’t Miss SaaStr Annual 2019.

If you’ve been binge reading our content lately, you’ve probably noticed an increasing number of posts about the SaaStr Annual — our yearly show in the San Francisco Bay Area that brings together the best & brightest minds in SaaS. But if you haven’t had the chance to attend the show before, you’re probably asking yourself:

WHAT IS SAASTR ANNUAL?

It’s the largest gathering in the world for B2B software. Its humble beginning started back in 2015 as a 1-day event with 2,000 people and has since grown to a 12,500 – 15,000 person, 3-day+ event in 2019. It’s an event where SaaS greats and legends, like Jeff Lawson, Leyla Seka, Stewart Butterfield, Therese Tucker, Aaron Levie, and many more come to pass on their knowledge and hard-earned lessons to the SaaS community. It is the place to come learn how to scale and grow your business and take it from
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Only 9 Spots Left in the Sponsor “Inner Hub” at SaaStr Annual

The 2019 SaaStr Annual is going to be the very best one ever. We’ve moving to the San Jose Convention Center, which will be 350% bigger than 2018 and 2017.   More space to network, to meet, to share learnings and more.  So even with 12,500+ attendees expected, there should be a lot more elbow room. Last year was fun but at times overloaded.  The sponsor expo itself worked very well.  It was the center of the action — all the braindates, food, drinks, and most of the meet-ups were there.  Traffic was constant, and it was pretty awesome. We’re doing that again, but even better.  The sponsor expo will be sandwiched right in between the two largest stages, and all the traffic, all day long, including meals, mentoring, recharging, and more will be right inside the expo.  From before the first session to
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