1.
Zero to $50M
Roadmap of the Key Stages, and How to Win at Each Stage

2.
Search for Product/Market Fit
Scaling the Business
Search for Repeatable & Scalable
& Profitable Growth Model
The Three Phases of a Startup’s Lifecycle

3.
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?

4.
The Cash Out Graph
$8m
$6m
$4m
$2m
$0
($2m)
Start Fundraising
3 months
Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

5.
Startups are a race against time
• The way to win is extreme Focus
• & total alignment across all departments

6.
But… what to focus on?

7.
Since cash is crucial to
survival…

8.
… let’s look at how to
successfully close your next
round

9.
Startup Valuations
Time
Valuation

10.
Startup Valuations – The Reality
Time
Valuation
Milestones

11.
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
The VC view - How risk changes over time
Risk
As perceived by
the financial metrics
and Growth Investors

12.
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
How risk changes over time
Risk
As perceived by
Early Stage Investors

13.
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
And Valuations are inversely correlated to Risk
Risk Valuation

14.
Evidence of Product/Market Fit
Evidence of Repeatable & Scalable
& Profitable Growth Model
Milestones for a Successful Fundraise: Series A
Series A

15.
Good Evidence of Product Market Fit
• A number of customers have purchased
• Referenceable
• Customers are happy
• Using the product (and would be very reluctant to give it up)
• Realizing the promised benefits
• Evidence of intent to expand usage
• Churn is low

16.
Predictable, Repeatable, Scalable, Profitable Growth
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model

17.
What Growth Round investors are looking for

18.
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

19.
ARR with Flat Bookings ARR with Growing Bookings
Q1 Q2 Q3 Q4 Q5 Q6 Q7Q1 Q2 Q3 Q4 Q5 Q6 Q7

20.
Net New
ARR
Expansion ARR
(Existing Customers)
Churned ARR
(Lost Customers)
New ARR
(New Customers)
The right way to measure SaaS Bookings

21.
Key SaaS chart: 4 components of bookings
$(15.0)
$(10.0)
$(5.0)
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
Jan Feb Mar Apr May Jun
ARR Bookings
New ARR
Net New ARR
Expansion ARR
Churned ARR
Always look at a
chart that shows the
trendlines to see if
there is growth

22.
Break this into phases
Search for Repeatable, Scalable
& Profitable Growth Model
Close early-access
sales
Make the customers
successful
Find Predictable and
Repeatable Motion
Make it Scalable
Make it Profitable

23.
At the beginning: No clear sales path

24.
By the end: Well understood path
• Lead funnel
• Sales motion
• Customer onboarding

25.
Where do you start?

26.
Pick one target market

27.
… with a clear Use Case
Use Case Benefit

28.
Messaging
• Business benefits, not product features
• Clear
• Simple
• Short
• Explains differentiation from competition

29.
Initial Guess at Growth Process
Website Free Trial

30.
The normal approach to Funnel Design
Vendor
Centric

31.
My view: the right approach to Funnel Design
Buyer
Centric
Vendor
Buyer-Centric

32.
Buyer Personae
See Appendix for more info

33.
Map Buyers Process to Your Steps
Research
Shortlist
Vendors
Evaluation
ROI &
Justification
Website Free Trial
BUYER
VENDOR

34.
Get Inside Your Buyers Head
Research
Shortlist
Vendors
Evaluation
ROI &
Justification
Website Free Trial
BUYER
VENDOR
How are they
reacting as they
go through our
funnel steps?
What are they
thinking as they
go through their
process?

35.
Optimize Your Steps to Fit
Research
Shortlist
Vendors
Evaluation
ROI &
Justification
Website Free Trial
ROI
Calculator
Competitive
Features
Matrix
BUYER
VENDOR

36.
Address All Decision Criteria
Address
Security Concerns
3rd Party
Security Audit &
Whitepaper
BUYER
Is this a safe vendor
to choose?
• Customer Stories
• Safe Channel
Partners

37.
Blog post and slide deck:
“Optimize Your Funnel By Getting
Inside Your Buyer’s Head”
http://www.forentrepreneurs.com/launch-scale-2017/

38.
Fire Up an Initial Lead Source

39.
Test and Optimize the Funnel Flow
Fix Conversion
Rate Problems
Suspects Suspects
Suspects
Suspects
Suspects
Suspects
Suspects Suspects
Suspects
Suspects
Suspects
Suspects

40.
Funnel Optimization Meeting
Participants
Sales Marketing
Product
Suspects Suspects
Suspects
Suspects
Suspects
Suspects
Suspects Suspects
Suspects
Suspects
Suspects
Suspects
Customer
Success

41.
Ideal Initial Sales Staffing
Close early-access sales Find Predictable and
Repeatable Sales Motion
Make it Scalable
Founders
1 more Pathfinder/Trailblazer Salesperson
Sales Director (willing to act as a Pathfinder/Traillblazer
rep for a few months)
2 Reps 2 Reps 2 Reps
Make it Profitable

42.
Pathfinder/Trailblazer Sales People
• Not like ordinary sales people – who follow a playbook
• They have to create and evolve the playbook
• Which target market?
• Who in the organization to sell to?
• What messaging?
• What sales motion?
• What pricing?
• What new product features are needed?

43.
Bookings
Driven by very simple math

44.
What Drives Bookings?
No of
Sales People Productivity per Rep
(Average)
x
PPR

45.
Lets look at each of these in turn…

46.
Number of Sales People
One of the most common reasons for missing plan
Didn’t hire sales people fast enough

47.
Sales Hiring
• You will need to build an in house recruiting machine
See my blog post:
“Recruiting: the third crucial Startup Skill”

48.
PPR: Productivity per Rep
• Quality of sales hires
• Sales Training and
Onboarding

49.
PPR: Sales Training and Onboarding
• Sales people: one of the most expensive resources
• Yet typically little effort put in to sales training in early days
• High payback
• Worth having the founders spend time to develop & deliver a lot of the material

50.
Productivity Per Rep (PPR)
Rep Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
John 120 165 180 145 80 110 195
Mary 80 110 135 155 150 145
Fred 60 35 75 40 55
Alice 85 145 160 180 145
Joe 60 110 85 130 145
Mike 155 170 145 190
Sarah 35 45 70 45
Sue 80 145 175 165

51.
% of Reps at Quota
30%
40%
50%
60%
70%
80%
90%
100%
Q1-16 Q2-16 Q3-16 Q4-16
% of Reps above
75% of Quota
30%
40%
50%
60%
70%
80%
90%
100%
Q1-16 Q2-16 Q3-16 Q4-16
% of Reps above
100% of Quota

52.
There’s one other thing that drives PPR
Adequate Lead Flow

53.
Compute Leads Required per Rep
x
No of
Closed Deals
=
Reverse Funnel
Conversion Rate
Marketing Qualified
Leads Required

54.
This becomes the Contract between Sales & Marketing
Marketing Qualified
Leads Required Sales
Marketing
SDR’s

55.
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
More lessons we can learn from the three phase diagram

56.
The Seven Sub-Phases Identified
Build the product
Search for Product/Market Fit
Test hypothesis
using product
mock up on
potential
buyers
Search for Repeatable & Scalable
& Profitable Growth Model
Close early-access
sales
Make those customers
successful
Find Predictable &
Repeatable Sales
Motion
Make it Scalable
Make it
Profitable

57.
#mistake
Trying to force progress by
jumping ahead before
completing the current phase

58.
Common Variations…
• Building product before meeting enough buyers to
validate the hypothesis
• Hiring salespeople before the founders have proven
that they can sell the product
• Scaling sales before solving a churn problem
• Scaling the salesforce before the growth process is
predictable & repeatable

59.
Burn Cash
& shorten the runway

60.
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
What we’ve learned…
Not predictable how long this will take

61.
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Conserve Cash until the Scaling Phase
Cash Burn

62.
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

63.
Milestones for a Successful Growth Round

64.
Proof Points for Investors
• Predictable, Repeatable, Scalable
• Consistent growth in Bookings (not just ARR)
• Proof that you can grow the sales organization, and make them productive
• Proven lead sources that can scale
• Profitable:
• LTV > 3x CAC
• Months to recover CAC ≤ 18
• Product/Market Fit
• Strong customer usage patterns over time
• Low customer churn, Net negative revenue churn

65.
Freemium, Free Trials, Open Source
The Product is
your sales person

66.
WHAT IS YOUR TIME TO
WOW! ?
Thanks to Gail Goodman of Constant Contact

67.
Defining WOW!
Thanks to Gail Goodman of Constant Contact
A moment where your buyer sees
something cool and exciting
• Motivates them to continue exploring
The moment when your buyer
gets excited enough to want to buy
Mini Wow!
Full Wow!

68.
Time to WOW!
• How many steps?
• How much time does it take?
• How much FRICTION is involved

69.
Remove Steps & Remove Friction

70.
EXAMPLE

71.
As eCommerce shoppers…
… what makes us buy?

72.
Photos
Feature Summary
Recommended Accessories
Rich description
Video
Reviews
Detailed Specifications
Answer: Rich Product Content

73.
Salsify – Product Content Supply Chain Automation
Brands
Photos
Videos
Text
Specs
Etc.
Retailer
Portal
Retailer
Portal
Retailer
Portal
Retailer
Portal

74.
Salsify’s Original Trial Experience
Sign up
Wait for
email with
Account
Open the
App
Learn the
UI
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer

75.
Landing Page
Lots of Fields

76.
Next,
Wait for Email…

77.
Sign In… Now What?
• Lots of work still required

78.
Get Inside your Buyers Head and Analyze for
Problems
Sign up
Wait for
email with
Account
Open the
App
Learn the
UI
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer

79.
Redesign Trial Steps for Problems (Friction,
Concerns, & Motivations)
Sign up
Wait for
email with
Account
Open the
App
Learn the
UI
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer
Delay causing
major drop off

80.
First Step in the Redesign
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer
Sign up
Learn the
UI

81.
New Landing Page: JUST YOUR
EMAIL

82.
Motivation: “If these guys are
using it, it must be pretty good…”

83.
Still leaves a problem:
• Locate & Export Content
• Then import to Salsify to have
something to play with
Then:
Land directly in App

84.
Major Friction + Other people involved = Long Delays
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer
Sign up
Learn the
UI

85.
Offer a chance to
start with Sample
Data
Sign up
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer
They now have the
MOTIVATION to
import their own data
Play with
Sample
Data
Mini Wow!
Learn the
UI

86.
Eliminate the risk that they won’t find the path to Wow!
Learn the
UI
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer
• High friction
• Too much risk they
won’t find the path
to Wow!
Sign up

87.
Guided Navigation
Human Help available

88.
Uplift - % Conversion, Before and After
0 10 20 30 40 50 60 70 80 90 100
Before After
Trial Request ->
Logged into App
Trial Request ->
Product Page
Trial Request ->
Taking action 3x Overall Improvement

89.
Next Problem Area…
Sign up
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer
Play with
Sample
Data
• High Friction
• Long Delay

90.
Google Shopping

91.
Problem Solved – Export to Google Manufacturer
Center
Sign up
Import
Content
Locate &
Export
Content
Play with
Sample
Data
Export to
Google

92.
Last Remaining Problem Area…
Sign up
Import
Content
Locate &
Export
Content
Play with
Sample
Data
Export to
Google
• Huge Friction & Delay
• Other People involved

93.
Scrape publicly available data from existing retailer’s
pages
Sign up
Play with
Sample
Data
Export to
Google
No import
needed
Scrape
Content
for them
• They have my content in here already
• They’re showing me all the issues
Mini Wow!

94.
Eliminates Need for Sample Data
Sign up
Play with
Sample
Data
Export to
Google
See their
own Data
Scrape
Content
for them

95.
Final Redesigned Process • Fast Time to Wow!
• High conversion rates
Sign up
Export to
Google
See and solve
problems with
their own Data
Scrape
Content
for them

96.
SUMMARY

97.
Search for Product/Market Fit
Scaling the Business
Search for Repeatable & Scalable
& Profitable Growth Model
Recognize where you are in the lifecycle

98.
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Choose the right actions for your stage
• Don’t jump ahead:
• Expanding sales before product/market fit
• Hiring too many sales people before the sales process is working

99.
Avoid Underfunding -
not enough cash to reach next milestone
Time
Valuation
Next Key
Milestone
x
Cash Out Date

100.
Use the cash out date and financing milestones

101.
… and Alignment

102.
For more details on all these topics:
visit ForEntrepreneurs.com
Presentation Slides:
forentrepreneurs.com/saastr-2018

103.
APPENDIX

104.
Getting to know your Buyer Personae
• Identifying Characteristics
• What are their key business goals?
• How does our product help them achieve those?
• What does their Boss expect of them?
• What pain do they have that we address?
• Is it latent pain, or obvious pain?
• How do they describe the pain and what they are looking
for?
• (Helpful for messaging)
• Are they out there searching for solutions?
• If so, how?
• Is solving this pain a high priority for them?
• If not, what features would make it a higher priority?
• What are the most important features on their checklist?
• What are their reactions to our product/company?
• What will they like? What will they not like?
• What are the main questions and concerns they will have?
• What are the steps in their purchasing process?
• What are their likely decision making criteria?
• Who else has to be involved in the decision (e.g. Business
buyer, IT)?
• Who influences them? (Sites, organizations, and
people)
• (Helps us figure out how to market to them)
• Other characteristics that are relevant to this purchase
• E.g. Developers:
• Don't have a budget
• Prefer Open Source, and don't like to pay for software

105.
A more detailed look at what
drives bookings…

106.
Without Sales people
Leads
Simple linear relationship
Conversion
Rate
Average
Deal Size
x x

107.
But when you add in Sales People…
Ramp
Time
Sales
Capacity
Limit

108.
Growth comes in discontinuous units

109.
The Unit of Growth
Sales Person

110.
Supported by Leads & Customer Success
Sales Person
$’s
Marketing
Spend
SDR’s
Leads Customer Success,
Renewals, etc.

111.
It’s not just the front of the funnel…

112.
The Backend of the Funnel
Closed Deals
Loyal
Customers
who are
Advocates
Renew ExpandOnboard
It’s all about LTV

113.
Top Factors affecting Renewals
• On-boarded successfully?
• Champion still at the company?
• Customer getting meaningful business benefits?
• Is the product Sticky?

114.
Dollar Renewal Rate is King
See last year’s presentation
Customer
Renewal Rate
>Dollar
Renewal Rate