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Mattermark Case Study - Inbound 2015

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An HBS-style case presented to attendees at Hubspot's Inbound Conference

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  • @moneyballVC It's pretty clear (to me so I might be completely wrong) that Mattermark doesn't have the strongest inputs. The problem is that they use information which they call data but it seems that most of it is completely self-reported. Mattermark is taking information put out by founders and putting some simple analytics on top of information nobody has verified so if they are ever judged on outcomes it might get dicey.
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  • Minor nitpick : Slide 15 - 500 VCs * 20-30K is 10-15M not 100-150M. I actually did this analysis long back when I was planning to start something similar in 2011 and my math was 100 firms * 100K/yr = 10M/yr which was small and margins would be lower than SaaS since customers (VCs) would want a lot of handholding and customization.
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Mattermark Case Study - Inbound 2015

  1. 1. INBOUND15 Mattermark A Harvard Business School-style case discussion Jeff Bussgang General Partner, Flybridge Capital Senior Lecturer, Harvard Business School
  2. 2. 1. Context for the story 2. The story 3. Three decisions that need to get made 4. Take aways
  3. 3. INBOUND15 1 What Is A Harvard Business School Case? (…and who am I to teach it?)
  4. 4. INBOUND15 • Day job: venture capitalist (Flybridge Capital) • Former day job: entrepreneur (Upromise, Open Market) • On the side: HBS professor • Teach Launching Technology Ventures to MBAs • Full disclosure: invested in Mattermark • Full disclosure: didn’t invest in Hubspot (doh!) Who Am I?
  5. 5. INBOUND15 • Educational innovation pioneered at HBS • Present a challenge, constraints, incomplete information • Put student in role of decision maker • Analyze, debate, discuss, defend – no simple answers • Usually: read beforehand, do some homework/analysis • Today: make it up as we go along Case Method
  6. 6. INBOUND15 2 The Mattermark Story
  7. 7. INBOUND15 Danielle Morrill • Community college drop out • Startup geek, hacker, blogger • Ran marketing at Twilio • Started Refer.ly, YC, shut down • Pivoted to Mattermark: mid-’13
  8. 8. INBOUND15 Value Proposition: Data on Private Companies
  9. 9. INBOUND15 • Raised $2m seed round – June 2014 • Closed $6.5m series A – December 2014 • Board meeting with new investors: tomorrow! “Nothing focuses the mind like a hanging .” – Samuel Johnson The Dilemma • Pour money into sales and marketing for VC market? • Invest in product to expand beyond VC market? $
  10. 10. INBOUND15 Sales team hitting quota Sales cycles short Product usage high, growing 40% test – if product disappeared LTV : CAC > 3 MRR growing > 10% MoM Churn < 30% / year NPS > 20 Criteria for Product Market Fit
  11. 11. INBOUND15 $0 $20 $40 $60 $80 $100 $120 $140  NPS (50) and usage high  MRR growth ~ 10% MoM (founder selling) x MRR growth = flat (new VP sales hired) x LTV : CAC = ~ 1 x Gross churn = 50-60% / year Mattermark’s Data MRR
  12. 12. INBOUND15 An Example of LTV : CAC
  13. 13. INBOUND15 Net Promoter Score: Recommend to Others?
  14. 14. INBOUND15 NPS Example Source: Satmetrix NPS Report 2014
  15. 15. INBOUND15 ~ 500 Active VCs x $20-30k/year willingness to pay $10-15m / year market x 30% market share $3-5m/year How Big Is VC Market? Tiny! Other Benefits?
  16. 16. INBOUND15 10x revenue > $1B Recurring > 50%/year < 20%/year strong 2x revenue < $100M One-time < 30%/year > 30%/year weak How Valuable Is VC Market? Market size Business model Growth rate Churn Network Effects
  17. 17. INBOUND15 • Founders had done all the selling – got to $1m ARR • Then hired “grown up” VP Sales from industry • He failed miserably – big company culture, didn’t dig in • Now have 5 person sales team but no leader BTW, Sales Leadership A Mess • Hire a new VP from the outside? • Promote from within (and keep founders selling)? $
  18. 18. INBOUND15 Sales Leadership Considerations Hire New Leader Promote From Within
  19. 19. INBOUND15 Sales Leadership Considerations Hire New Leader Bring a playbook Provide exec leadership Bring a team Promote From Within Playbook is unique Positive signal to staff Keeps founders selling
  20. 20. INBOUND15 • hire inside sales vs. outside sales? • more reps vs. more marketing programs? • invest in content marketing / inbound vs. outbound? Invest in Sales or Marketing? • Ramp up sales team? • Ramp up marketing team? $
  21. 21. INBOUND15 Sales Organization Inside Sales SMBs ACV < $50k Simple sale Transactional/functional Outside Sales Fortune 1000 ACV > $50k Complex sale Emotional
  22. 22. INBOUND15 Sales Learning Curve “Do things that don’t scale” - Paul Graham
  23. 23. INBOUND15 0 200 400 600 800 1000 Q3'14 Q4'14 Q1'15 SQLs New Deals Why aren’t leads converting? • Analyze the funnel • Training vs. Recruiting issue? • Product vs. Sales execution? • Timing of leads hand offs? • Comp structure? Leads vs. Deals
  24. 24. INBOUND15 3 Make Some Choices
  25. 25. #INBOUND15 Expand in VC or other markets?
  26. 26. #INBOUND15 Hire new VP or promote?
  27. 27. #INBOUND15 Invest more in sales or marketing?
  28. 28. INBOUND15 4 Take Aways
  29. 29. INBOUND15 • Alignment of strategy  opportunity  financing • PMF has to be tightly measured and constantly earned • Sales & marketing alignment: results, activities, incentives • Careful to avoid premature scaling Take Aways
  30. 30. #INBOUND15 Congratulations! You are (sort of) an HBS Graduate! (…and it cost less than $120k…)

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