First, you have to decide if you are going to “hold the line on burn” after a fundraising. If you plan to — tell everyone. They will get it. Is your goal to hire 100 reps next week and 10x the marketing plan? That’s one approach. But everyone will expect all budgets to grow overnight. Another approach is to use the capital as a “buffer” so “we have plenty of runway”. If you communicate you are doing the second approach, most folks won’t expect out-of-turn raises. They’ll get the goal is to de-risk the company, not to grow the burn rate.
Here’s what I look for to try to get a sense if they’ll perform:
Do they call out top performance with metrics? The best reps are often quite precise. E.g., hit 152% of Quota last year, 143% year before, etc. Maybe they are exaggerating, that’s besides the point. The question is, do they love to win and have a history of it? Metrics are a good indicator here.
Have they sold at your core price point? This may be a little work, but look at where they worked and see if it’s a fit for your price point. If not, maybe move on.
Are their LinkedIn recommendations solid? Yes, of course these can be gamed a bit. But I don’t mind that. That’s part of sales. Most top reps and top leaders have 3+ glowing LinkedIn recs. I just want to see them there. Tablestakes.
Required is a strong word … but the answer is Yes.
Everyone can benefit from leadership training. Especially, the folks so senior that traditional training doesn’t cover them. Who trains the trainer?
We just got back from the SaaStr Fund founder retreat and while I was a bit reluctant to do it, we did leadership training. This year it was focused around messaging and presenting your company.
Everyone loved it, from prenicorns like Algolia to folks that are still becoming rocketships.
As CEOs, we all tend to find mentors over time and they do help. But that’s not the same as training.
We have blind spots, we fall into ruts, and we only have the experiences we have.
Mediocre training programs are tough on everyone, and I tended to walk out of some as a CEO and a VP.
But the great ones, we all need. At $1m, $10m, $100m, Continue reading "Should all CEOs be required to have annual leadership training?"
Because you save a lot. You save a lot on dilution, and a bit (but not THAT much) on fees.
When you IPO, you generally sell 15%-20%+ of the company, inclusive of a green shoe. And investment banker fees can approach 6%-7%, all-in, of what you raise.
Think of that as much as 25% effective dilution when you IPO.
That’s a lot of dilution. It’s like another large venture round.
Now, if you need the money to IPO, it doesn’t much matter. And it’s still often a relatively efficient way to raise capital. And it does follow a more established pattern than a direct listing, which can make it easier to sell stock through an IPO. You also lose access to a true army of agents out their selling your stock for you in a traditional IPO. Your brand really has to sell itself to do a direct listing. This
Roughly, when Demand Gen is no longer the core function of marketing. This also often is the time when you are ready to expand beyond a core small, effective, efficient marketing team.
When you have enough of a lead generation engine going, AND enough of a brand, that brand and corporate marketing strategy and positioning are more important than finding new leads and helping search out raw new opportunities.
Put differently, once you truly have an established brand in an established category, the game changes. It’s then less about letting folks know you exist than letting them know why now is the time to buy. And reminding them why to buy from a/the leader.
Often this is roughly around $20m ARR.
Until then, maybe focus first on a VP of Marketing whose #1 job is being VP of Demand Gen.
You can add the rest on top of that engine.
Continue reading "At what stage should a startup hire a CMO?"
Almost everyone in business checks it multiple times a day. And importantly,
Senior folks are super-engaged with their inbox. They do less work themselves, and spend more time monitoring what their team is doing. Sometimes, senior execs do little more in a crowded day than attend meetings — and monitor their inboxes.
They aren’t as dependable. This doesn’t mean they are “worse”. It does mean be careful how you use them.
This is issue #1. A few like Salesforce Ventures and GV are an exception, but let me explain:
Corporate VCs often do not write a “second check”. But most institutional VCs save reserves for another check, if you are doing OK but not great. Institutional / financial VCs have motivations to bridge you if you need it. Corporate VCs often do not.
Corporate VCs rarely lead rounds. What is most valuable is a lead. Someone to write the first, main check. Few corporate VCs do this. At least not for the earlier rounds.