In Defense of Troublemakers


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In Defense of Troublemakers. I love the title. Who doesn’t want to be a troublemaker? Charlan Nemeth is a professor at Berkeley of Psychology. She’s studied the role of dissent in group decision-making and written this book on the topic. It’s a critical part of a functioning team. Here’s what I learned from the book: The minority, dissenting opinion in an argument is essential to ensure we make the best decisions.
When we are exposed to dissent, our thinking does not narrow as it does when we are exposed to consensus. In fact, dissent broadens our thinking.
This is because dissenters often share a critical perspective or data point that the majority didn’t know or hasn’t considered. That “one piece of unique information could change the whole picture and the final decision” Importantly, dissenting opinions don’t have to be correct to improve the decision. Dissent breaks the blind following of Continue reading "In Defense of Troublemakers"

Answering Readers’ Questions about the Free Trial Survey


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After publishing the survey last week, I received many questions. I’ve answered a few here. I’m happy the data has garnered so much interest and I hope it’s helping with our two goals of sharing benchmarks and sparking conversations about how to optimize trial. If you have stories or data that buttresses or contradicts any of these findings, please share them. I’d love to publish them here. Also, if you have ideas for future surveys like this, send them my way. Matt asked: Is there any meaningful difference in conversion or other metrics for companies in different ARR buckets? Not substantially. Chart below. There are some variances across ARR buckets. I would have expected companies in the $1M or less in ARR to observe lower conversion rates because they are earlier in their go-to-market development. Consequently, earlier startups might have a lower conversion baseline, whereas a business at $20M in
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A Common Mistake in Hiring Plans


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As you build out your startup’s financial model for 2019, a key component will be the hiring plan. You’ll need to calculate the number of managers and individual contributors to achieve your goals. But don’t forget to plan for mishires. You will make mistakes hiring people. We all do and it’s part of the process of building a company. Someone looks great on paper but isn’t a culture fit. Another doesn’t ramp quickly enough. A third might not have the work ethic. Whatever the reason, it will happen. In the hiring plan, you should anticipate this. Many startups plan to over-hire in sales, but not in other departments. Why is this? It’s because AE hiring is directly tied to bookings capacity and consequently growth. A mis-hire might cost the business $500k in ARR, which can be the difference between growing 2x and 2.5x at the early stages. So it Continue reading "A Common Mistake in Hiring Plans"

1.01^365 = 37.7


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Before we’d leave campus - Christmas vacation or spring break or summer vacation - our rowing coach would tell us, “You’re either getting faster or you’re getting slower. There’s no such thing as staying the same.” It was his way of inspiring us to train hard during those times. I’ve never forgotten it. More recently I came across two math equations that confers the same idea, with a twist. The compounding effect of improving every day. What if you could improve how you do something by 1% each day for a year? You’d be 37x better. What if your performance declined by 1% every day for a year. You’d lose 70% of your performance. It’s a reminder that getting just a little bit better every day has dramatic effects in relatively short periods of time. To bastardize Einstein: Compounding improvement is the most powerful force in the universe.

Top 10 Learnings from the Redpoint Free Trial Survey


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At Saastr yesterday, I presented the top 10 learnings from the Redpoint Free Trial Survey that we distributed in October. The data confirmed many rules of thumb but also raised some interesting new questions about the best way to use trials. When we distributed the survey, we never would have expected the response. About 600 companies submitted data. They span single digit ARR businesses to publicly traded SaaS companies. These businesses sell at every price point and sell to every operational buyer. From product to sales, from legal to marketing. We processed the data with 1000+ lines of R code to parse the insights from the data and test for statistical significance. In sharing the results, we have two goals
  1. Share benchmarks to calibrate your startup’s free trials
  2. Spark conversations about new free trial tests to run for your startup.
Let’s jump into the list. Annual Contracts Dominate. Between 60-80% Continue reading "Top 10 Learnings from the Redpoint Free Trial Survey"

A New Architecture for Next-Generation Software Companies: Announcing Mattermost


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The first wave of SaaS is 20 years old. Today, the SaaS model dominates. But we’re seeing the emergence of a different type of next-generation software company. A new wave of companies that is responding to the changing needs of customers by innovating their architecture. Very simply, they liberate the database from the application. In license software, the database ran alongside the application on-prem. In SaaS, the database runs next to the application in the cloud. But what if you freed customers from this constraint, and gave the customer the choice of where to run each? Suddenly, the customer is in control of their data in a way they never can be with SaaS. Customers can choose where to host the database, how to secure it, monitor it, ensure it complies with new data privacy regulations, limit access, and service it. They can run it in their cloud, in a Continue reading "A New Architecture for Next-Generation Software Companies: Announcing Mattermost"

The Two Things You Need From Early Customers that Matter More than Cash


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As you start to go to market, there are two things to prioritize from early customers that matter more than cash. Feedback and marketing rights. The feedback matters for obvious reasons. The product is early; customer feedback will help you hew the raw granite of your initial product into shape. The second may not be so obvious. Every prospect championing a software purchase will be asked by the opponents of the sale and decision-makers: “Who else is using the software?” The more impressive your customer list, the stronger the case your champion can extol. Logos confer credibility. Software vendors are in the business of selling promotions. And the best way to fight the inertia in sales is to equip your champions. Social proof is one of the strongest influences for buyers and best ways to defeat the preference for buyers to continue as they are. There is safety Continue reading "The Two Things You Need From Early Customers that Matter More than Cash"

Sharing the Learnings from the Redpoint Free Trial Survey


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Late last year, my colleague Pat Chase and I announced the Redpoint Free Trial SaaS Survey. Over the course of a few weeks, we received roughly 600 responses from SaaS startups who use these marketing techniques. They span companies from $1M in ARR to more than $100M. The respondents sold into every key function of a business and at all different price points. On February 5 at 10am, I’ll be sharing the top 10 learnings from the survey at Saastr. After the conference, I’ll post the slides with the conclusions here. This is the first time we’ve run a large scale survey. We were surprised in three ways. The first is the amount of responses; we were stunned by the volume of data and willingness to share. Thank you to everyone who contributed. Second, it takes quite a bit of work to analyze the data, far more than I expected. Continue reading "Sharing the Learnings from the Redpoint Free Trial Survey"

What Makes a Great Leader?


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It’s very difficult question to answer. How do you judge a leader? Is it financial success? The loyalty they engender? Their ability to inspire? There are war-time leaders and peace-time leaders. Leaders may be understated or zealous. I’m not sure we’ll ever be able to say definitively what constitutes a great leader. Regardless, we all want to improve our ability to lead, whether it’s a small team or a Fortune 500. But how? One way of looking at leadership development is through Adult Development Theory, an idea pioneered by Dr. Robert Kegan, a developmental psychologist at Harvard that borrows from others in the field. Adult development theory has five stages. The first two we develop in childhood: impulsive mind and imperial mind. The next three we learn in adulthood. I’ve put together a quick summary below. For greater depth, there’s a good overview here. Socialized Mind (most adults): we Continue reading "What Makes a Great Leader?"

Infinity Wells and Deep Work


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Over the weekend, the NY Times interviewed a classmate of mine from Dartmouth and fellow oarsman on the freshman crew team, Cal Newport, about his book and his idea, Deep Work. Here’s the crux of the idea:
Deep work is my term for the activity of focusing without distraction on a cognitively demanding task. It describes, in other words, when you’re really locked into doing something hard with your mind…In order for a session to count as deep work there must be zero distractions. Even a quick glance at your phone or email inbox can significantly reduce your performance due to the cost of context switching.
The costs of switching and of interruptions is real. The typical American worker is interrupted every 210 seconds. But half of those interruptions are self-interruptions. If we check our phones every 12 minutes or 70 times per day, the question is how much Continue reading "Infinity Wells and Deep Work"