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WebSummit 2018 - 9 Secrets for Startup Success

The document outlines a roadmap for B2B startups focusing on essential phases for achieving predictable, repeatable, scalable, and profitable growth. It emphasizes the importance of proper sequencing in tasks such as validating product-market fit, establishing a repeatable sales model, ensuring customer success, and making the business profitable while managing cash burn effectively. Key mistakes like prematurely scaling or hiring will lead to cash burn and reduced runway, impacting the startup's growth and sustainability.

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B2B STARTUP ROADMAP MATRIX GROWTH ACADEMY
Conventional Wisdom Search for Product / Market Fit Scaling the Business Works for B2C
BUT B2B FOUNDERS USUALLY DISCOVER… Turn up the spend on sales & marketing, but no consistent results, and a lot of cash burn
There’s an important missing step that’s essential for B2B
The Missing Step Search for Product / Market Fit Scaling the Business Search for Repeatable, Scalable & Profitable Growth Model
Product Market Fit Phase well covered: Search for Product / Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model
WE’RE GOING TO FOCUS HERE: Predictable, Repeatable, Scalable, Profitable Growth Search for Product / Market Fit Scaling the Business Search for Repeatable, Scalable & Profitable Growth Model
The Most Important Startup Questions When will we run out of cash? Are we on track to reach the milestones needed for a successful fundraise?
The Cash Out Graph 2017 Oct Nov Dec 2018 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ($2m) $0 $8m $6m $4m $2m 3 MONTHS Start Fundraising
STARTUPS ARE A RACE AGAINST TIME The way to win is extreme focus and total alignment across all departments
But… WHAT TO FOCUS ON?
Since CASH IS CRUCIAL TO SURVIVAL…
Let’s look at how to SUCCESSFULLY CLOSE YOUR NEXT ROUND
Startup Valuations TIME VALUATION
Startup Valuations – The Reality MILESTONES TIME VALUATION
Startup Value Creation Happens as Key Elements are De-risked “Do we know what problem we are solving?” “Will many people pay?” TIME VALUATION “Does it actually work?” “Will someone pay?” Credit Pete Kazanjy
Key Startup Inflection Points TIME VALUATION Can we scale profitably? Does our growth process scale? Can we scale without excessive churn? Can non-founders sell this? Will many people pay? Does it actually work? Will someone pay? Do we know what problem we are solving? Credit Pete Kazanjy
Not Only is Risk Reduced… but Focus and Business Motion also Change TIME VALUATION Inflection Points
THESE LEAD TO THE SUB-PHASES
The Sub-Phases Test hypothesis “What are we solving? How?” Prove the Value “Does it actually work?” Prove it can be sold “Will someone pay” Search for Product / Market Fit
The Sub-Phases Find repeatable Sales motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Make it Scalable “Does this scale?” Ensure Customer Success “Can we scale without churn?” Make it Profitable “Can we scale profitably?” Search for Repeatable & Scalable & Profitable Growth Model
Scaling the Business The Sub-Phases Hit the Gas & Scale “Does this keep scaling when we hit the gas?” Scale the organization & it’s processes Expand internationally Add additional Product lines
THE SCALING PHASE: Startup Value Increases Rapidly Can we scale profitably? Does our growth process scale? Can we scale without excessive churn? Will many people pay? Does it actually work? Will someone pay? Do we know what problem we are solving? CAN WE KEEP SCALING WHEN WE REALLY HIT THE GAS? TIME VALUATION Can non- founders sell this?
WHY?
PROFITABLESCALABLEREPEATABLE THREE CAREFULLY CHOSEN WORDS Easy to say, but hard to achieve
Implies a CASH GENERATING MACHINE
…which GROWTH STAGE INVESTORS LOVE
Trying to force progress by jumping ahead before completing the current phase #1 mistake
Common Variations • Building product before meeting enough buyers to validate the hypothesis • Hiring salespeople before founders have proven they can sell the product • Scaling sales before growth process is repeatable • Scaling sales before solving churn problem
BURN CASH & shorten the runway
What We’ve Learned NOT PREDICTABLE HOW LONG THIS WILL TAKE Search for Product / Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model
Conserve Cash until the Scaling Phase Search for Product / Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model CASH BURN
A Common Mistake… Search for Product / Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model Founders remain in burn avoidance mode Fail to invest for fast growth
Prioritize Focus & Actions based on Stage Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Test Hypothesis Prove the Value Prove it can be sold Find Repeatable Sales Motion Prove non- Founders can sell Make it Scalable Ensure Customer Success Make it Profitable Hit the Gas and Scale Scale the org & its processes Etc. 1 2 3 4 5 6 7 8 9 10 11 Scaling the Business
Avoid jumping ahead Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Test Hypothesis Prove the Value Prove it can be sold Find Repeatable Sales Motion Prove non- Founders can sell Make it Scalable Ensure Customer Success Make it Profitable Hit the Gas and Scale Scale the org & its processes Etc. 1 2 3 4 5 6 7 8 9 10 11 Scaling the Business
Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Our Focus Today:
The key sign that you’re getting there: Bookings - (NOT Revenue or ARR!) For SaaS: Bookings = Net New ARR (New + Expansion – Churned) Q1 Q2 Q3 Q4 Q5 Q6 Q7
ARR with Flat Bookings ARR with Growing Bookings Q1 Q2 Q3 Q4 Q5 Q6 Q7Q1 Q2 Q3 Q4 Q5 Q6 Q7
At the beginning: No clear sales path
By the end: Well understood path
What are we trying to learn? • Which target market? • Who in the organization to sell to? • What pain / use case to target? • What messaging? • What sales motion? • What pricing? • What new product features are needed
Where do you start?
Phase 4 - Find Repeatable Sales Motion Find repeatable Sales Motion “Will many people pay?” Search for Repeatable & Scalable & Profitable Growth Model
Sales Motion Strangers Customers Sales Motion Promoters Customer Success Playbook
Funnel Design Customer SuccessSalesMiddle of FunnelTop of Funnel Strangers VisitorsAttract CustomersCloseLeadsConvert PromotersDelight
Ideal Sales Staffing Founders Pathfinder/Trailblazer Sales Director/Rep Find repeatable Sales motion
Pathfinder/Trailblazer Sales People • Not like ordinary sales people – who follow a playbook • They have to create and evolve the playbook • Which target market and use case? • Who in the organization to sell to? • What Message? • What Pricing? • What Sales Motion? • Key missing product features?
Fire Up an Initial Lead Source
Customer Discovery Somewhere north of 50 real buyer conversations Patterns will emerge
Goal: Pick one target market
… with a clear Use Case Use Case Benefit
Brian Halligan, CEO - HubSpot “In the early days of HubSpot, we couldn’t decide which target persona to go after. We argued about it for years. By not deciding: - our marketing team had to serve multiple personas - our product team had to serve multiple personas - our services team had to create multiple offerings Once we finally got focused on one persona, everyone could focus on attracting and delighting that persona.”
Ideal Customer Profile - ICP Ideal Prospect Characteristics • Industry • Use case • Company Size • Job function • Key characteristics Negative Characteristics
Messaging • Business benefits, not product features • Clear • Simple • Short • Explains differentiation from competition
Credit: Harvard marketing professor Theodore Levitt: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.”
Find Repeatable Sales Motion – Exit Criteria • Sales to multiple customers • Who fit the Ideal Customer Profile • Happy and realizing the promised business benefits • Using a repeatable sales motion that can be taught to a Sales rep • One target market, one use case • How leads are generated • Who to call • What messages to use • How to engage • Pricing • Etc.
Biggest Mistake • Hiring normal (non-pathfinder) sales reps before this step is complete
Phase 5 - Prove non-Founders can sell Find repeatable Sales Motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Search for Repeatable & Scalable & Profitable Growth Model
Ideal Sales Staffing Founders Pathfinder/Trailblazer Sales (Rep/Director) Find repeatable Sales motion Prove non-founders can sell 2 Standard Sales Reps
Prove that an ordinary sales rep can sell • Founders must step back and take a different role: • Hiring • Onboarding & Training • Managing • Coaching • Building sales tools
Can Non-Founders Sell – Exit Criteria • At least one “ordinary” Sales rep selling effectively • Ideally both of the reps • Productivity at > 4x their OTE • Customers remain happy • Realizing the promised business benefits
Common Mistake • Founders don’t hand over selling to the reps • Hard to do, as the reps are so much less capable • It’s OK for founders to keep doing a few deals • But that should NOT be their top priority
Phase 6: Make it Scalable Find repeatable Sales Motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Make it Scalable “Does this scale?” Search for Repeatable & Scalable & Profitable Growth Model
Ideal Sales Staffing Founders Pathfinder/Trailblazer Sales (Rep/Director) 2 Reps 2 Reps 2 Reps Find repeatable Sales motion Prove non-founders can sell Make it Scalable 2 Reps 2 Reps2 Standard Sales Reps
How do we drive Bookings?
Growth comes in discontinuous units
The Math behind Bookings No of Sales People Productivity per Rep (Average) x PPR
Lets look at each of these in turn…
Number of Sales People One of the most common reasons for missing plan Didn’t hire sales people fast enough
Sales Hiring • You will need to build an in-house recruiting machine See my blog post: “Recruiting: the third crucial Startup Skill”
PPR Quality of Sales Hires Onboarding & Training
There’s one other thing that drives PPR Adequate Lead Flow
Etc. Finding Scalable Lead Sources Facebook Ads Paid Search Lead volume Time Paid lead sources tend to hit a limit
Other Staffing Founders Pathfinder/Trailblazer Sales (Rep/Director) 2 Reps 2 Reps 2 Reps Find repeatable Sales motion Prove non-founders can sell Make it Scalable 2 Reps 2 Reps2 Standard Sales Reps Recruiting, Customer Success, Marketing, Sales Management
Phase 6 – Make it Scalable – Exit Criteria • Predictable, Repeatable, Scalable Growth • Consistent growth in Bookings (not just ARR) • Proof that you can add salespeople, and make them productive in a predictable way • Proven lead sources that can scale • Internal Recruiting function working well • Strong Executive Leadership team in place
Deliverables at the End of the Process Customer SuccessSalesMiddle of FunnelTop of Funnel Strangers Visitors Leads Customers PromotersAttract CloseConvert Delight Marketing Playbook Sales Playbook Customer Success Playbook Sales Enablement Tools Onboarding and Training Tools Automation and Technology layer Metrics
Example Sales Playbook Definition Activities Milestones Clearly identify whether the Opportunity continues through the Sales Process. Conduct a 2-way exchange of Prospect’s business challenges, pain, objectives and goals. Document and confirm we understand Prospect’s goals, objectives, business challenges and pain. What is the potential business impact and value-add with NewCo. Justify the specific Newco solution to the key decision makers. Justify solution with business case, ROI, custom demo, technical review, customer case studies where applicable. Agreement / Contract has been delivered to prospect and agreement to steps as chosen vendor to complete procurement cycle. Validate next steps in the evaluation process including the criteria and decision process. Present solution to champion and executive sponsor. Quantify value and dollarize opportunity in SFDC  Ability to dollarize the solution  Define use case(s) and map solutions value to prospects corporate strategy  Perform demonstration to the Champion that addresses prospects Pain, Goals and Objectives  Confirm decision criteria, process, budget, timeframe  Present detailed sequence of events / closing plan  Deliver custom demonstration to all relevant stakeholders (PoC)  Collaborate and present business case justification, Identify power user and project team  Discuss and present standard onboarding document & Integration review and technical gaps addressed  Engage Legal and Procurement  Update Customer Success section within Opportunity record  Negotiation on legal, price and business terms  Schedule and complete references  Alignment call with customer success team as required  Finalize order document and vendor approval process  Contract signature / Initiate Customer on-boarding process  Identify timeframe, compelling events, current environment  Pitch and present focused on strategic value  Identify executive sponsor to continue evaluation along with additional stakeholders, technical influencers, budget holder, economic buyer  General pricing & budgeting discussion  Identify prospect is at the influencing level and there’s interest in evaluating NewCo. Identify Critical Business Issues, other potential influencers. Is the prospect trying to: - Achieve a Goal - Solve a Problem - Satisfy a Need  Framing, Diagnostic and Confirmation Questions • Solution development / Menu of goals • Pre call plan / confirm persona • Critical Business Issues • “Get before you give” • Solution development prompter • Menu of goals • Plausible emergency • Champion letter • Sphere of Influence • Sequence of Events / Timeframe • Customer stories • Demonstration • Order Form / Terms of Service • Technical Documentation • On boarding documents • Alignment call • References Qualify Discovery Validation Proof Due Diligence 1 2 3 4 5 $ “Why Change?” “Why Now?” “Who / How?” “Why us?” “When?” Tactics / Tools  Identify Pain and Tactical Challenges in Organization  Uncover key Metrics and Strategic Initiatives  Mutual agreement to evaluate  Chosen vendor  Confirm legal complete  Sign order form  Identify Champion  Identify Executive Sponsor  Define, Influence, Confirm the Decision Criteria  Qualify your Champion  Document the Decision Process  Access to Executive Sponsor, executive sponsor and confirm budget  Prospect approves solution  Confirm IT approval & legal process  Confirm access to budget holder & signer  Mutual agreement on business case justification
Sales Onboarding at the Scaling Phase • Section Titles • Company Information • Case Study & Stats • Our Products • Market Landscape • Battlecards • Account Executive Role • MEDDIC Sales Methodolgy • Customer Success • Business Development Rep
Phase 7: Ensure Customer Success Find repeatable Sales Motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Make it Scalable “Does this scale?” Ensure Customer Success “Can we scale without churn?” Search for Repeatable & Scalable & Profitable Growth Model
Ensure Customer Success • Has to be done at all phases • But called out as a separate phase as it’s common to see churn increasing as sales starts scaling
Possible Solutions • Tighten definition of who is a good customer • Understand the best and worst segments • Don’t sell to the wrong customers • Stop sales from over-promising, or selling when the fit with the customer is poor • Adjust sales compensation to reflect whether the customer stays or churns • Improve the Product to fix areas that are causing customer unhappiness • Improve onboarding • And the customer success organization and processes
Ideal Staffing Founders Pathfinder/Trailblazer Sales (Rep/Director) 2 Reps 2 Reps 2 Reps Find repeatable Sales motion Prove non-founders can sell Make it Scalable Ensure Customer Success 2 Reps 2 Reps2 Standard Sales Reps Recruiting, Customer Success, Marketing, Sales Management
Common Mistakes • Hitting the gas and accelerating when churn is still too high
Ensure Customer Success – Exit Criteria • Customers are consistently successful and happy • Negative Dollar Churn
Phase 8: Make it Profitable Find repeatable Sales Motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Make it Scalable “Does this scale?” Ensure Customer Success “Can we scale without churn?” Make it Profitable “Can we scale profitably?” Search for Repeatable & Scalable & Profitable Growth Model
Make it Profitable – Exit Criteria • LTV:CAC > 3 • Time to recover CAC < 12-18 months • Gross Margins > 70%
Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Phase 9: Scaling the Business
Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Scaling Phase – Total Change in Mindset Cash Burn
Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model A common mistake… • Not hiring enough sales people in the Scaling phase • Founders remain in burn avoidance mode
Common Mistakes • Failure to build a really strong recruiting function • Leading to failure to hire key functions (including sales reps) on time • Failure to hire a really strong team of Executives
SUMMARY
Prioritize Focus & Actions based on Stage Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model 1 2 3 4 5 6 7 8 9 Test Hypothesis Prove the Value Prove it can be sold Find Repeatable Sales Motion Prove non- Founders can sell Make it Scalable Ensure Customer Success Make it Profitable Hit the Gas and Scale Scale the org & its processes 10 Etc. 11
Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Don’t Jump Ahead! • E.g.: • Hiring too many sales people before the sales process is repeatable • Expand internationally before you have nailed scaling profitably in the US • Etc.
Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Manage Cash Burn According to Stage Cash Burn
Don’t run out of cash before reaching next milestone Time Valuation Next Key Milestone x Cash Out Date
[ ]FOR MORE INFORMATION WWW.FORENTREPRENEURS.COM

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WebSummit 2018 - 9 Secrets for Startup Success

  • 1.
  • 2.
    Conventional Wisdom Search forProduct / Market Fit Scaling the Business Works for B2C
  • 3.
    BUT B2B FOUNDERS USUALLYDISCOVER… Turn up the spend on sales & marketing, but no consistent results, and a lot of cash burn
  • 4.
    There’s an importantmissing step that’s essential for B2B
  • 5.
    The Missing Step Searchfor Product / Market Fit Scaling the Business Search for Repeatable, Scalable & Profitable Growth Model
  • 6.
    Product Market FitPhase well covered: Search for Product / Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model
  • 7.
    WE’RE GOING TOFOCUS HERE: Predictable, Repeatable, Scalable, Profitable Growth Search for Product / Market Fit Scaling the Business Search for Repeatable, Scalable & Profitable Growth Model
  • 8.
    The Most Important Startup Questions When will werun out of cash? Are we on track to reach the milestones needed for a successful fundraise?
  • 9.
    The Cash OutGraph 2017 Oct Nov Dec 2018 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ($2m) $0 $8m $6m $4m $2m 3 MONTHS Start Fundraising
  • 10.
    STARTUPS ARE A RACEAGAINST TIME The way to win is extreme focus and total alignment across all departments
  • 11.
  • 12.
  • 13.
    Let’s look athow to SUCCESSFULLY CLOSE YOUR NEXT ROUND
  • 14.
  • 15.
    Startup Valuations –The Reality MILESTONES TIME VALUATION
  • 16.
    Startup Value CreationHappens as Key Elements are De-risked “Do we know what problem we are solving?” “Will many people pay?” TIME VALUATION “Does it actually work?” “Will someone pay?” Credit Pete Kazanjy
  • 17.
    Key Startup InflectionPoints TIME VALUATION Can we scale profitably? Does our growth process scale? Can we scale without excessive churn? Can non-founders sell this? Will many people pay? Does it actually work? Will someone pay? Do we know what problem we are solving? Credit Pete Kazanjy
  • 18.
    Not Only isRisk Reduced… but Focus and Business Motion also Change TIME VALUATION Inflection Points
  • 19.
  • 20.
    The Sub-Phases Test hypothesis “Whatare we solving? How?” Prove the Value “Does it actually work?” Prove it can be sold “Will someone pay” Search for Product / Market Fit
  • 21.
    The Sub-Phases Find repeatableSales motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Make it Scalable “Does this scale?” Ensure Customer Success “Can we scale without churn?” Make it Profitable “Can we scale profitably?” Search for Repeatable & Scalable & Profitable Growth Model
  • 22.
    Scaling the Business The Sub-Phases Hitthe Gas & Scale “Does this keep scaling when we hit the gas?” Scale the organization & it’s processes Expand internationally Add additional Product lines
  • 23.
    THE SCALING PHASE: StartupValue Increases Rapidly Can we scale profitably? Does our growth process scale? Can we scale without excessive churn? Will many people pay? Does it actually work? Will someone pay? Do we know what problem we are solving? CAN WE KEEP SCALING WHEN WE REALLY HIT THE GAS? TIME VALUATION Can non- founders sell this?
  • 24.
  • 25.
    PROFITABLESCALABLEREPEATABLE THREE CAREFULLY CHOSENWORDS Easy to say, but hard to achieve
  • 26.
  • 27.
  • 28.
    Trying to forceprogress by jumping ahead before completing the current phase #1 mistake
  • 29.
    Common Variations • Buildingproduct before meeting enough buyers to validate the hypothesis • Hiring salespeople before founders have proven they can sell the product • Scaling sales before growth process is repeatable • Scaling sales before solving churn problem
  • 30.
  • 31.
    What We’ve Learned NOTPREDICTABLE HOW LONG THIS WILL TAKE Search for Product / Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model
  • 32.
    Conserve Cash untilthe Scaling Phase Search for Product / Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model CASH BURN
  • 33.
    A Common Mistake… Searchfor Product / Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model Founders remain in burn avoidance mode Fail to invest for fast growth
  • 34.
    Prioritize Focus &Actions based on Stage Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Test Hypothesis Prove the Value Prove it can be sold Find Repeatable Sales Motion Prove non- Founders can sell Make it Scalable Ensure Customer Success Make it Profitable Hit the Gas and Scale Scale the org & its processes Etc. 1 2 3 4 5 6 7 8 9 10 11 Scaling the Business
  • 35.
    Avoid jumping ahead Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Test Hypothesis Prove the Value Prove it can be sold Find Repeatable Sales Motion Prove non- Founders can sell Make it Scalable Ensure Customer Success Make it Profitable Hit the Gas and Scale Scale the org & its processes Etc. 1 2 3 4 5 6 7 8 9 10 11 Scaling the Business
  • 36.
    Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Our Focus Today:
  • 37.
    The key signthat you’re getting there: Bookings - (NOT Revenue or ARR!) For SaaS: Bookings = Net New ARR (New + Expansion – Churned) Q1 Q2 Q3 Q4 Q5 Q6 Q7
  • 38.
    ARR with FlatBookings ARR with Growing Bookings Q1 Q2 Q3 Q4 Q5 Q6 Q7Q1 Q2 Q3 Q4 Q5 Q6 Q7
  • 39.
    At the beginning:No clear sales path
  • 40.
    By the end:Well understood path
  • 41.
    What are wetrying to learn? • Which target market? • Who in the organization to sell to? • What pain / use case to target? • What messaging? • What sales motion? • What pricing? • What new product features are needed
  • 42.
  • 43.
    Phase 4 -Find Repeatable Sales Motion Find repeatable Sales Motion “Will many people pay?” Search for Repeatable & Scalable & Profitable Growth Model
  • 44.
    Sales Motion Strangers Customers SalesMotion Promoters Customer Success Playbook
  • 45.
    Funnel Design Customer SuccessSalesMiddleof FunnelTop of Funnel Strangers VisitorsAttract CustomersCloseLeadsConvert PromotersDelight
  • 46.
    Ideal Sales Staffing Founders Pathfinder/TrailblazerSales Director/Rep Find repeatable Sales motion
  • 47.
    Pathfinder/Trailblazer Sales People •Not like ordinary sales people – who follow a playbook • They have to create and evolve the playbook • Which target market and use case? • Who in the organization to sell to? • What Message? • What Pricing? • What Sales Motion? • Key missing product features?
  • 48.
    Fire Up anInitial Lead Source
  • 49.
    Customer Discovery Somewhere northof 50 real buyer conversations Patterns will emerge
  • 50.
    Goal: Pick onetarget market
  • 51.
    … with aclear Use Case Use Case Benefit
  • 52.
    Brian Halligan, CEO- HubSpot “In the early days of HubSpot, we couldn’t decide which target persona to go after. We argued about it for years. By not deciding: - our marketing team had to serve multiple personas - our product team had to serve multiple personas - our services team had to create multiple offerings Once we finally got focused on one persona, everyone could focus on attracting and delighting that persona.”
  • 53.
    Ideal Customer Profile- ICP Ideal Prospect Characteristics • Industry • Use case • Company Size • Job function • Key characteristics Negative Characteristics
  • 54.
    Messaging • Business benefits,not product features • Clear • Simple • Short • Explains differentiation from competition
  • 55.
    Credit: Harvard marketingprofessor Theodore Levitt: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.”
  • 56.
    Find Repeatable SalesMotion – Exit Criteria • Sales to multiple customers • Who fit the Ideal Customer Profile • Happy and realizing the promised business benefits • Using a repeatable sales motion that can be taught to a Sales rep • One target market, one use case • How leads are generated • Who to call • What messages to use • How to engage • Pricing • Etc.
  • 57.
    Biggest Mistake • Hiringnormal (non-pathfinder) sales reps before this step is complete
  • 58.
    Phase 5 -Prove non-Founders can sell Find repeatable Sales Motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Search for Repeatable & Scalable & Profitable Growth Model
  • 59.
    Ideal Sales Staffing Founders Pathfinder/TrailblazerSales (Rep/Director) Find repeatable Sales motion Prove non-founders can sell 2 Standard Sales Reps
  • 60.
    Prove that anordinary sales rep can sell • Founders must step back and take a different role: • Hiring • Onboarding & Training • Managing • Coaching • Building sales tools
  • 61.
    Can Non-Founders Sell– Exit Criteria • At least one “ordinary” Sales rep selling effectively • Ideally both of the reps • Productivity at > 4x their OTE • Customers remain happy • Realizing the promised business benefits
  • 62.
    Common Mistake • Foundersdon’t hand over selling to the reps • Hard to do, as the reps are so much less capable • It’s OK for founders to keep doing a few deals • But that should NOT be their top priority
  • 63.
    Phase 6: Makeit Scalable Find repeatable Sales Motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Make it Scalable “Does this scale?” Search for Repeatable & Scalable & Profitable Growth Model
  • 64.
    Ideal Sales Staffing Founders Pathfinder/TrailblazerSales (Rep/Director) 2 Reps 2 Reps 2 Reps Find repeatable Sales motion Prove non-founders can sell Make it Scalable 2 Reps 2 Reps2 Standard Sales Reps
  • 65.
    How do wedrive Bookings?
  • 66.
    Growth comes indiscontinuous units
  • 67.
    The Math behindBookings No of Sales People Productivity per Rep (Average) x PPR
  • 68.
    Lets look ateach of these in turn…
  • 69.
    Number of SalesPeople One of the most common reasons for missing plan Didn’t hire sales people fast enough
  • 70.
    Sales Hiring • Youwill need to build an in-house recruiting machine See my blog post: “Recruiting: the third crucial Startup Skill”
  • 71.
  • 72.
    There’s one otherthing that drives PPR Adequate Lead Flow
  • 73.
    Etc. Finding Scalable LeadSources Facebook Ads Paid Search Lead volume Time Paid lead sources tend to hit a limit
  • 74.
    Other Staffing Founders Pathfinder/Trailblazer Sales(Rep/Director) 2 Reps 2 Reps 2 Reps Find repeatable Sales motion Prove non-founders can sell Make it Scalable 2 Reps 2 Reps2 Standard Sales Reps Recruiting, Customer Success, Marketing, Sales Management
  • 75.
    Phase 6 –Make it Scalable – Exit Criteria • Predictable, Repeatable, Scalable Growth • Consistent growth in Bookings (not just ARR) • Proof that you can add salespeople, and make them productive in a predictable way • Proven lead sources that can scale • Internal Recruiting function working well • Strong Executive Leadership team in place
  • 76.
    Deliverables at theEnd of the Process Customer SuccessSalesMiddle of FunnelTop of Funnel Strangers Visitors Leads Customers PromotersAttract CloseConvert Delight Marketing Playbook Sales Playbook Customer Success Playbook Sales Enablement Tools Onboarding and Training Tools Automation and Technology layer Metrics
  • 77.
    Example Sales Playbook DefinitionActivities Milestones Clearly identify whether the Opportunity continues through the Sales Process. Conduct a 2-way exchange of Prospect’s business challenges, pain, objectives and goals. Document and confirm we understand Prospect’s goals, objectives, business challenges and pain. What is the potential business impact and value-add with NewCo. Justify the specific Newco solution to the key decision makers. Justify solution with business case, ROI, custom demo, technical review, customer case studies where applicable. Agreement / Contract has been delivered to prospect and agreement to steps as chosen vendor to complete procurement cycle. Validate next steps in the evaluation process including the criteria and decision process. Present solution to champion and executive sponsor. Quantify value and dollarize opportunity in SFDC  Ability to dollarize the solution  Define use case(s) and map solutions value to prospects corporate strategy  Perform demonstration to the Champion that addresses prospects Pain, Goals and Objectives  Confirm decision criteria, process, budget, timeframe  Present detailed sequence of events / closing plan  Deliver custom demonstration to all relevant stakeholders (PoC)  Collaborate and present business case justification, Identify power user and project team  Discuss and present standard onboarding document & Integration review and technical gaps addressed  Engage Legal and Procurement  Update Customer Success section within Opportunity record  Negotiation on legal, price and business terms  Schedule and complete references  Alignment call with customer success team as required  Finalize order document and vendor approval process  Contract signature / Initiate Customer on-boarding process  Identify timeframe, compelling events, current environment  Pitch and present focused on strategic value  Identify executive sponsor to continue evaluation along with additional stakeholders, technical influencers, budget holder, economic buyer  General pricing & budgeting discussion  Identify prospect is at the influencing level and there’s interest in evaluating NewCo. Identify Critical Business Issues, other potential influencers. Is the prospect trying to: - Achieve a Goal - Solve a Problem - Satisfy a Need  Framing, Diagnostic and Confirmation Questions • Solution development / Menu of goals • Pre call plan / confirm persona • Critical Business Issues • “Get before you give” • Solution development prompter • Menu of goals • Plausible emergency • Champion letter • Sphere of Influence • Sequence of Events / Timeframe • Customer stories • Demonstration • Order Form / Terms of Service • Technical Documentation • On boarding documents • Alignment call • References Qualify Discovery Validation Proof Due Diligence 1 2 3 4 5 $ “Why Change?” “Why Now?” “Who / How?” “Why us?” “When?” Tactics / Tools  Identify Pain and Tactical Challenges in Organization  Uncover key Metrics and Strategic Initiatives  Mutual agreement to evaluate  Chosen vendor  Confirm legal complete  Sign order form  Identify Champion  Identify Executive Sponsor  Define, Influence, Confirm the Decision Criteria  Qualify your Champion  Document the Decision Process  Access to Executive Sponsor, executive sponsor and confirm budget  Prospect approves solution  Confirm IT approval & legal process  Confirm access to budget holder & signer  Mutual agreement on business case justification
  • 78.
    Sales Onboarding atthe Scaling Phase • Section Titles • Company Information • Case Study & Stats • Our Products • Market Landscape • Battlecards • Account Executive Role • MEDDIC Sales Methodolgy • Customer Success • Business Development Rep
  • 79.
    Phase 7: EnsureCustomer Success Find repeatable Sales Motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Make it Scalable “Does this scale?” Ensure Customer Success “Can we scale without churn?” Search for Repeatable & Scalable & Profitable Growth Model
  • 80.
    Ensure Customer Success •Has to be done at all phases • But called out as a separate phase as it’s common to see churn increasing as sales starts scaling
  • 81.
    Possible Solutions • Tightendefinition of who is a good customer • Understand the best and worst segments • Don’t sell to the wrong customers • Stop sales from over-promising, or selling when the fit with the customer is poor • Adjust sales compensation to reflect whether the customer stays or churns • Improve the Product to fix areas that are causing customer unhappiness • Improve onboarding • And the customer success organization and processes
  • 82.
    Ideal Staffing Founders Pathfinder/Trailblazer Sales(Rep/Director) 2 Reps 2 Reps 2 Reps Find repeatable Sales motion Prove non-founders can sell Make it Scalable Ensure Customer Success 2 Reps 2 Reps2 Standard Sales Reps Recruiting, Customer Success, Marketing, Sales Management
  • 83.
    Common Mistakes • Hittingthe gas and accelerating when churn is still too high
  • 84.
    Ensure Customer Success– Exit Criteria • Customers are consistently successful and happy • Negative Dollar Churn
  • 85.
    Phase 8: Makeit Profitable Find repeatable Sales Motion “Will many people pay?” Prove non-founders can sell “Can non-founders sell this?” Make it Scalable “Does this scale?” Ensure Customer Success “Can we scale without churn?” Make it Profitable “Can we scale profitably?” Search for Repeatable & Scalable & Profitable Growth Model
  • 86.
    Make it Profitable– Exit Criteria • LTV:CAC > 3 • Time to recover CAC < 12-18 months • Gross Margins > 70%
  • 87.
    Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Phase 9: Scaling the Business
  • 88.
    Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Scaling Phase – Total Change in Mindset Cash Burn
  • 89.
    Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model A common mistake… • Not hiring enough sales people in the Scaling phase • Founders remain in burn avoidance mode
  • 90.
    Common Mistakes • Failureto build a really strong recruiting function • Leading to failure to hire key functions (including sales reps) on time • Failure to hire a really strong team of Executives
  • 91.
  • 92.
    Prioritize Focus &Actions based on Stage Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model 1 2 3 4 5 6 7 8 9 Test Hypothesis Prove the Value Prove it can be sold Find Repeatable Sales Motion Prove non- Founders can sell Make it Scalable Ensure Customer Success Make it Profitable Hit the Gas and Scale Scale the org & its processes 10 Etc. 11
  • 93.
    Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Don’t Jump Ahead! • E.g.: • Hiring too many sales people before the sales process is repeatable • Expand internationally before you have nailed scaling profitably in the US • Etc.
  • 94.
    Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Manage Cash Burn According to Stage Cash Burn
  • 95.
    Don’t run outof cash before reaching next milestone Time Valuation Next Key Milestone x Cash Out Date
  • 96.
    [ ]FOR MOREINFORMATION WWW.FORENTREPRENEURS.COM

Editor's Notes

  • #2 I'd like to share some learnings from my time as an entrepreneur and board member.
  • #3 One of the best books giving startup advice was Lean Startup. However it gave the impression that right after finding product/market fit you would be ready to hit the gas and start scaling. While this works for B2C, it doesn't for B2B.