For Entrepreneurs Blog

Join me for my AMA on GrowthHackers Thursday 9/24

I’m excited to announce that I’ve partnered with GrowthHackers to conduct an AMA this Thursday, 9/24 from 9:30-11am PT. I’ll be available to answer all your questions on growth and building a business, cloud computing, sales and marketing. Click here to queue up your questions in advance!

I’ve recently written on each of these topics, and always enjoy the dialogue with readers in the comments section of each post. The GrowthHackers AMA will allow the opportunity to expand on these discussions and interact with you all directly.

To spur your questions for the AMA, feel free to read up on my recent posts about Recruiting as a crucial startup skill, Onboarding your new hires, an all too common mistake made in Sales Planning, and my take on the recent Consumerization of the Enterprise.

Head over now to post your questions in advance on my GrowthHackers AMA page, or join me on Thursday at 9:30am PT to ask your questions live. I look forward to hearing from you!



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Sales and Employee Onboarding Best Practices

An Interview with Andrew Quinn of HubSpot

Having a high performing team means:

  • Hiring the right people
  • Creating a structure and culture for them to do great work
  • Equipping them with the knowledge and skills to work effectively

These first two topics have received a lot of attention in the startup community. In fact, I recently wrote a post on this former topic discussing why startups need to build their hiring muscle internally.

But, where I’ve seen less discussion is on the topic of employee onboarding. As a founder and first-time CEO, it may be tempting to skip over this topic (and not read this blog post), as you may find yourself assuming that all the hires you make will just figure out what to do on the job. This is a serious mistake, as it will take far longer for your new hires to become effective, and you are likely to miss your plan as a result.

Nowhere is this more important than sales. As I talked about in my previous blog post “The Irrefutable Math behind Sales and Marketing”, the bookings numbers in a B2B company are heavily dependent on being able to recruit salespeople on time, and ramping them to full productivity over a short period of time.

Investing your personal energies in getting a great onboarding course can have huge paybacks. Don’t be surprised to find that you are likely the best person to explain the customer’s pain point, and the company’s vision for how to address this. You are also likely to be the best person to describe the culture you want to build. So invest your own energy in creating these parts of the onboarding course. It’s the most scalable way to pass on the valuable knowledge that you have locked up in your head. Continued…

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A Shockingly Common Way that Sales Misses Plan

It’s just after the end of a quarter, and for VC’s that means many board meetings to review how portfolio companies have performed. Over the years of doing this, I’ve been shocked and surprised how many times I’ve seen good companies with great product/market fit miss their sales targets for an incredibly avoidable reason: they missed their sales hiring targets. As a result, they didn’t have enough quota carrying sales reps to make their number.

In many cases this wasn’t disastrous, and could be corrected in subsequent quarters. But in several cases, it caused significant problems with an upcoming financing, and damaged the company’s cash flow.

It was also frustrating seeing the founders realize that they could have easily avoided the problem, had they just been warned about it in advance. That’s the reason that I am writing this post.

The problem occurs because recruiting A-players is hard (see my last blog post “Recruiting – the 3rd critical startup skill”), and is frequently given a lower priority than is needed.

There’s another likely explanation why this happens and it has to do with the mental shift that is required of founders when it’s time to scale. As you’ll see in the diagram below, I believe there are three phases in a startup’s lifecycle.


In the first two phases, founders should be minimizing spend to buy themselves as much time as possible to figure out product/market fit, and a repeatable/scalable sales process. However once they have these figured out, they enter an entirely different phase, where they need to scale the company aggressively. This requires a huge mental shift, away from saving money and staying lean and mean, to hitting the accelerator pedal, and investing and hiring aggressively to scale the proven sales process. I think many founders don’t recognize the moment when that mental shift is required, and how their thinking and behavior has to change.  Founders are used the feeling that it’s OK to be a little late with hiring as you’ll save some cash. But in the third phase, hiring misses turn out to be an execution failure that have direct and significant consequences. Continued…

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We have officially kicked off our 2015 Private SaaS Company Survey!

For the fourth year in a row, I am working together with David Spitz and his team at Pacific Crest Securities, an investment banking firm (@dspitz and @PacCrestSec, respectively on Twitter) with a specific focus on SaaS, to survey SaaS companies in order to share benchmarking data and insights on the growth and operations of the companies in this space.

The survey probes business, operating and financial metrics across a wide variety of SaaS companies.  We will be publishing the results, providing insights and analysis to help companies gauge performance and drive productive change–there’s nothing else like it.

The survey depends on participation from CEOs and CFOs of SaaS companies. The community here at forEntrepreners have been enthusiastic supporters of the survey in the past–taking the survey and sharing it with their networks. Thank you for all your support!

If you are the CEO or CFO of a SaaS company with monthly recurring revenue over $50,000, we would like to invite you to participate in this year’s survey.

Click here to take survey

The survey is ANONYMOUS AND CONFIDENTIAL, and usually takes less than 15 minutes.  By submitting a completed survey and your email address (email address will not be linked to your submission of the survey), we will also share with you EARLY ACCESS TO RESULTS.

Here are a few highlights from the 2014 SaaS Survey:

How Fast Did / Will You Grow GAAP Revenues?


Historical rates for the group were 37% for 2013, while the median projected growth for 2014 is 42%. These rates remain very healthy, but both are lower than the 2013 survey’s results of 41% and 47% for 2012 historical growth and 2013 estimated growth.

CAC(1): How Much Do You Spend for $1 of New ACV from a New Customer? (Excluding companies <$2.5MM in Revenue)


Respondents, excluding the smallest companies, spent a median of $1.07 to acquire each dollar of new ACV from a new customer. This drops to $0.90 if we include the companies <$2.5MM in revenues. This result excluding the smallest companies is noticeably higher than the $0.92 and $0.90 we derived in the 2013 and 2012 surveys respectively. (With pressure on growth rates, it’s possible that companies are spending more to stay competitive. In the cost section to come later we see higher sales and marketing spend, particularly for the larger companies whose growth increased.)

What Percentage of New ACV is from Upsells to Existing Customers?


The median respondent gets 14% of new ACV sales from upsells,whereas larger companies rely more heavily on upsells. The $10MM – $15MM and $15MM – $25MM cohorts have a noticeably lower median % of new ACV from upsells compared to the 25% and 22% in the 2013 survey, respectively.

Subscription Gross Margins: “What is your gross profit margin on just subscription/SaaS revenues?”


Median subscription gross margins are 79% for the group (78% when removing the smallest companies from the group), which are very similar to 2013 and 2012 results.

Annual Gross Dollar Churn (Excluding Companies <$2.5MM in Revenue)


Annual gross dollar churn (without the benefit of upsells) is 6%. The results were virtually the same when including companies <$2.5MM in revenues. This result is lower than the 2013 result of 8%, but higher than the 5% we found in 2012.

For full results to the 2014 SaaS Survey click here.

Click here to take survey

We thank you again for your ongoing support to the forEntrepreneurs community, and in our effort to continue providing valuable data and insights to SaaS companies.

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Recruiting – The 3rd Crucial Startup Skill

I used to believe that there were two critical startup skills:

1. Building a great product that has clear product/market fit.

2. Building a sales and marketing machine.

I would argue with my partner at Matrix Partners, Antonio Rodriguez about whether you could get away with just having a great product. Or whether you could take an organization that was spectacular at sales and marketing and sell anything. Ultimately, for most companies, I personally concluded that you’d need both of these skills to be really successful in the B2B world.

In the last two or three years, I’ve witnessed something new: a hiring crisis so severe that it is crippling startup’s abilities to get products built on time, and starving them of the talent they need to market and sell those products. There is an intense skills shortage created by the explosion in startups over the past few years. Demand has drastically outstripped supply. I’m pretty sure that I don’t need to describe this phenomenon as most of my readers are living with this problem day to day.

When I talk with the founders of my portfolio companies, much of the discussion is about hiring, and how hard it is. It’s no longer surprising to hear that as much as 70% of their time is spent on hiring. There are plenty of candidates out there, but finding the right candidates is a huge challenge.

Something important has changed in the recruiting process: the best people are almost never on the market, and you are going to have to develop recruiting processes to find and sell passive candidates. In many cases, it will take months or years of relationship building with these candidates to find the right moment when they are open to considering a change. And closing them takes greater selling efforts than in the past due to the intense competition over the good candidates.

Recruiting - now the third startup skill

This leads me to believe that there is now a third crucial startup skill that needs to be developed: recruiting. Before 2012, it was usually sufficient to work with outside firms for most recruiting needs until the company became fairly large. In the key tech centers this strategy no longer works, and the successful startups are those that are building in-house recruiting muscles early in their lifecycle.

Unfortunately recruiting is not a skill that is typically taught in college, even at the best business schools. Some VC firms have tried providing their portfolio companies in-house recruiting. Having a senior person from your VC advising and working on a few key exec hires makes a lot of sense. Beyond that, I believe companies are better served developing this muscle internally. At my firm, Matrix Partners, we host intensive recruiting seminars for our portfolio executives to equip them with the skills to build their own highly effective recruiting funnel. As I’ve heard very strong feedback that these sessions have been invaluable, I thought it would be helpful to write this post and share some of the insights.


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Bridge Group 2015 SaaS Inside Sales Survey Report

Survey results from 342 B2B SaaS companies on key inside sales metrics including group structure, ramp and retention, quota and compensation, activity & technology and leadership.


The SaaS model has become mainstream, and is everywhere. Gone are the early fears of data privacy and security, and now even late adopters are using SaaS for a variety of functions. Software as a Service didn’t just change the delivery mechanism, business model and associated metrics, it also changed the way software is sold. In most SaaS companies, the model of choice is Inside Sales (occasionally coupled with a smaller team of field sales reps).

Lower price points, less upfront capital, and no IT involvement have all led to a far lower risk purchase, which in turn means fewer decision makers, and shorter sales cycles.

In parallel with these changes, we’ve seen the Internet dramatically change the customer buying journey and resulting sales process. As everyone now knows, buyers are completing 75% of their buying journey before even talking to the company. New marketing and sales technologies have evolved to address the challenges, bringing measurability to both marketing and sales. This has given rise to the data driven funnel. And at the same time, the data driven sales manager.

Savvy sales managers now measure each micro step in the sales process, and use the resulting data to identify which reps aren’t performing a certain task well. They can also spot the reps that are best at that task and use them to provide coaching to weaker performers.

Given the new data driven approach, more and more sales managers seek to benchmark their data against their peers to see how they stack up. What does best in class look like? What are the best practices? The annual Bridge Report provides answers to these questions, and is an absolute treasure trove for anyone managing an inside sales organization.

I am a huge believer in the power of data to drive improvement, and that is why I have collaborated with The Bridge Group to help produce the report, and have asked readers of to contribute their data. Inside this report, you will find answers to the most frequently asked questions for sales managers: how are inside sale functions organized, and compensated? What kind of results are they able to produce? What percentage of reps can be expected to reach quota? What level of experience is typically seen, and how long will it take for them to ramp? What is the average tenure of a rep? Etc. etc.


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Sales Predictability Through Data, Science, and a little bit of Glengarry Glen Ross (The ABC’s of selling)…

The following is a guest post by Tim Bertrand. I have the pleasure of knowing Tim since the late 1990’s when we worked together at my last startup. Tim now heads up world wide sales and field operations at Acquia, an Enterprise class cloud computing company founded by the creator of Drupal, Dries Buytaert. In this post, he offers some great advice for how to get consistent results in taking marketing qualified leads (MQLs) through to closed deals. 

In a day & age where knowing your metrics cold, and selecting the right tools & productivity platforms for your sales team takes center stage – the one problem I’ve seen is that some start ups get away from basic sales skills and processes (the ABC’s of sales) that have existed since Glengarry Glen Ross, and many years before that!  In this post, I’m going to discuss some tactics that, when combined with reliable data, scientific demand generation & some hard work can help drive much better predictability and will ultimately help you scale your business. Continued…

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Consumerization of the Enterprise – Phase 2

Consumer VCs like to make light of the Founders Fund mantra ‘We wanted flying cars, instead we got 140 characters.’ For those of us working in the enterprise, it’s actually the reverse, “They promised us 140 characters, instead we got Workday.”

Since 2010, SaaS applications were supposed to “consumerize”, but as anyone who has used the majority of SaaS applications released prior to 2014 knows, they are still clunky, punishing interfaces that happen to be hosted in someone else’s datacenter. 2014 is proving to be the year where this changes, with a large wave of new-generation SaaS apps that really deliver on a delightful user experience. Employees and managers are taking notice of these new user-friendly tools, causing adoption to explode from the bottoms up. Continued…

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2014-15 Bridge Group SaaS Inside Sales Research Survey


The Bridge Group is known for publishing insightful studies that aid SaaS Sales & Marketing leaders to build and optimize their inside sales strategies. They are working on the 5th round of their SaaS inside sales research and would like our help completing a 6-7 minute survey. Your answers will remain anonymous, and in return the research promises action-oriented guidance on compensation benchmarks, selling strategies, productivity and performance best practices, and more.

If you are able, please take a few moments to fill out the survey:

2014-15 Bridge Group SaaS Inside Sales Research Survey

As we saw with my own SaaS survey results published last month, when we all contribute, we can get powerful information to fuel our businesses.

To see results from a previous round of this survey, check out The Bridge Group’s 2012 Inside Sales Compensation and Metrics report.

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2014 Pacific Crest Saas Survey- Part 2

Last week I shared the results from Part 1 of our survey  in which 300+ SaaS companies shared data on their growth and go-to-market strategies. This week we dive into the results from Part 2 of the survey where we compare application delivery methods, operational costs and gross margins, contract terms, churn rates, capital requirements and accounting methods. This being our 3rd annual SaaS survey, we’re able to share this year’s results and look at how key metrics have changed.  I look forward to hearing your comments below.


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2014 Pacific Crest SaaS Survey – Part 1

For the third year in a row, we worked together with Pacific Crest Securities, an investment banking firm with a specific focus on SaaS, to survey 306 SaaS companies. This represents nearly double the # of respondents from last year, giving us deeper benchmarking data and insights to share on the growth and operations of the companies in this space.

We also welcome this year the participation of OpenView, an expansion stage venture capital firm specializing in B2B Software, who brought additional support.

I want to extend my personal thanks to the many readers of this blog who participated in the survey. My thanks also go out to David Spitz and his team at Pacific Crest Securities (@dspitz and @PacCrestSec, respectively on Twitter) for their hard work on the survey. Part 1 of the results of the survey, which focuses on growth rates and go-to-market trends, are posted below. Part 2 of the results, which compare application delivery methods, operational costs and gross margins, contract terms, churn rates, capital requirements and accounting methods, can be found in  Part 2 of the SaaS Survey. Continued…

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Using Outbound Prospecting to reach highly targeted prospects

As most of my readers know, I am a big fan of Inbound Marketing. However there are times when inbound leads aren’t either enough, or the right kinds of leads needed to reach your best potential customers. In those situations, one tool worth considering is the use of a dedicated sales team to do outbound prospecting (Cold Calling 2.0). I prepared the following presentation for a New York city CRO conference, with the goal of showing how this technique works, and discussing how it can be made to fit in with Inbound Marketing principles, where the customer gets value from the interaction.


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Métricas SaaS 2.0 – Definiciones detalladas

Traducido por Alberto Peralta.


Esta página complementa el artículo Métricas SaaS 2.0 – Guía para medir y mejorar lo que importa. Proporciona la definición detalladas para cada una de las métricas principales que se que se usan en ese artículo.

clip_image001 Continued…

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Growth Hacking Free Trials: Time to Wow! is the key to success

This article is part of a series titled “The Art & Science of Growth Hacking” that will be published over time. My thanks to Gail Goodman, the founder and CEO of Constant Contact for introducing me to this concept.

Free trials and freemium products are two of the best ways to sell your product. They help the buyer address key concerns such as:

  • Will this actually work in my particular situation?
  • Will I get enough value to make the effort of using it worthwhile?

For a buyer, being able to get this level of proof is far better than having to trust what a web site or sales person has told them. Think about how you buy a car. How important is it to you to test drive the car before you part with tens of thousands of dollars?

Free trials (and freemium) also have another huge benefit for SaaS and consumer internet companies: the buyer does most of the work of selling themselves. If you have read any of my previous posts on the importance of CAC (Cost to Acquire a Customer), this can be a very powerful way to reduce CAC.

What is Wow!

Wow! is the moment in a free trial where your buyer suddenly sees the benefit they get from using your product, and says to themselves “Wow! This is great!”.  It’s also the moment where you have converted them into a fan who is likely to buy.

If you’re going to use free trial (or freemium) as a key part of sales funnel, it pays to understand exactly where in the free trial experience your buyer says “Wow!”. Then you will want to focus on the following set of questions:

  • How long does it takes to get to Wow!? (Time to Wow!)
    • Can we shorten the number of steps required to get to Wow!
  • What is the drop out rate of trial users on their way to Wow!?
    • Which step in the process has the highest drop out rate?
    • Why are users failing at that step, and can this be addressed?
  • Is the Wow! moment clear and strong enough?
    • What is the Wow! to Work Ratio?
  • Are different buyers interested in seeing different Wow! moments? (This is often the case in a product that has several modules.)
  • Are we providing the buyer with clear guidance on how to get to Wow!? Continued…
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That’s a nice little $40M ecommerce company you have there. Call me when it scales

It will surprise a lot of entrepreneurs to learn that building an e-commerce business with $10 million to $20 million in revenues is not that hard. It also surprises many to learn that it’s not actually that valuable. This is in stark contrast to, say, a SaaS business, which is very difficult to build to that level but valuable when you do. As I read this week’s board deck for one of our portfolio companies, JustFab, I was struck by one of the reasons this discrepancy exists: marketing leverage. Most retail businesses (traditional or online) have to spend marketing money to acquire a new customer at scale. Small e-commerce companies can be exempt from that – if you fill a niche and you have distinctive product-market fit with a set of customers, you can and should land them virally or cheaply. But as the business grows, you need channels of acquisition that you control beyond sitting around and hoping your customers tell their friends. Having a product that delights the user and drives high levels of customer satisfaction (which leads to high levels of referral) is crucial for building a killer business. It separates the great businesses from the good ones at scale, and in the early years, it is often sufficient to drive growth with no need for paid media. It is an important topic, but one for another day. What demands further inspection is the fact that many companies stall out when it comes time to transition off organic growth and add paid media as the primary growth vector as they scale. Customer acquisition costs money and this is where things get tricky in retail. What is the lifetime value of a retail customer? It’s a non-trivial question. In SaaS, for example, this far more predictable due to the subscription model. Continued…

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