The document discusses the three phases of a SaaS startup's lifecycle: searching for product-market fit, scaling the business, and searching for a repeatable and profitable growth model. It emphasizes the importance of recognizing what phase a startup is in and taking the appropriate actions, such as not jumping ahead or expanding sales too quickly before completing the current phase. Cash conservation is also stressed until reaching the scaling phase. Aligning sales, marketing, and other functions is highlighted as important for predictable growth. The phases and lessons provided serve as a guide for SaaS founders to strategically navigate their company's development.

1. The SaaS Founder’s Journey
What matters 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
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
$0
$2m
$4m
$6m
$8m
($2m)
Start Fundraising
3 months

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. Scaling the Business
Evidence of Product/Market Fit
Evidence of Repeatable & Scalable
& Profitable Growth Model
Very Approximate look at Round Types
Seed Series A Series B Growth Financing

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

16. 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

17. Milestones for a Successful Growth Round

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

19. 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

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

21. 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

22. % 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

23. 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

24. 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

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

26. Common variations…
• 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

27. Burn Cash
& shorten the runway

28. 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

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

30. A FINER LOOK AT THE PHASES

31. Search for Product/Market Fit
Search for Product/Market Fit
Develop MVP
Figure out MVP
Close early-access
sales
Make the customers
successful
Validate the idea
Identify initial
target market

32. The number one problem at this Stage
• Not enough customer meetings set up for validation
• Both before, and during product development
• Results:
• Product doesn’t quite fit the needs of the market
• Interest is there, but can’t close sales
• Lots of wasted time, and cash burned

33. Search for Repeatable, Scalable, Profitable Growth
Search for Repeatable & Scalable
& Profitable Growth Model

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

35. At the beginning: No clear sales path

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

37. Where do you start?

38. Pick one target market

39. … with a clear Use Case
Use Case Benefit

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

41. Initial Guess at Growth Process
Website Free Trial

42. The normal approach to Funnel Design
Vendor
Centric

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

44. Buyer Personae
See Appendix for more info

45. MAP BUYERS PROCESS TO YOUR STEPS
Research
Shortlist
Vendors
Evaluation
ROI &
Justification
Website Free Trial
BUYER
VENDOR

46. 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?

47. OPTIMIZE YOUR STEPS TO FIT
Research
Shortlist
Vendors
Evaluation
ROI &
Justification
Website Free Trial
ROI
Calculator
Competitive
Features
Matrix
BUYER
VENDOR

48. ADDRESS ALL DECISION CRITERIA
Address
Security Concerns
3rd Party
Security Audit &
Whitepaper
BUYER

49. Blog post and slide deck:
“Optimize Your Funnel By Getting
Inside Your Buyer’s Head”
http://www.forentrepreneurs.com/heavybit/

50. Fire up an initial lead source

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

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

53. Initial Sales Staffing
Close early-access sales Find Predictable and
Repeatable Sales Motion
Make it Scalable
and Profitable
Founders
1 to 2 Pathfinder/Trailblazer Salespeople
Sales Manager
2 Reps 2 Reps 2 Reps

54. 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?

55. When to hire your first Sales Manager
• Wait till you think the process is repeatable
• The managers job is to scale something that works
• Make sure you see a path to viable unit economics
• LTV > 3x CAC
• Months to recover CAC ≤ 18

56. Sales Manager’s job
1. Ensure your sales process is Predictable, Repeatable, Scalable, Profitable
2. Scale the process
• Recruiting
• Training and onboarding the new sales people
• Coaching
• Forecasting & Deal/Pipeline management
• Making the number

57. Bookings
Driven by very simple math

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

59. Lets look at each of these in turn…

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

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

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

63. 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

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

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

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

67. Scaling phase
Scaling the Business

68. 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

69. SUMMARY
The SaaS Founders Journey – What Matters at Each Stage

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

71. 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

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

73. Use the cash out date and financing milestones

74. … and Alignment

75. For more details on all these topics:
visit ForEntrepreneurs.com
Presentation Slides:
forentrepreneurs.com/saastock-2017

76. APPENDIX

77. 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

78. A more detailed look at what
drives bookings…

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

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

81. Growth comes in discontinuous units

82. The Unit of Growth
Sales Person

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

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

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

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

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