SaaStr Annual — Day 2 Notes

Day 2 was absolutely jam packed, featuring the most events of the weekend. Due to the full schedule it was impossible to see all the speakers I wanted to, and full disclosure I missed a talk while venturing to find the few outlets at the venue. To see the full list of talks and those I attended you can check out my schedule here.

This writeup is a bit longer, so I’ve added asterisks to my favorite talks in case you want to jump to the the best of the best. Let’s get to it.

Twilio: The Inside Story

Jeff Lawson (CEO, Twilio)

Key Takeaways

• The world is becoming more developer centric. Developers are the new entry point so we must sell TO developer.
• The cultural shift that occurred when Twilio went public wasn't tough for developers, but was very difficult for sales.
• “Find a niche, get rich” is terrible advice. Iterations and digging holes to find what works is what Lawson preaches.
• The power of small team to build and operate product is underestimated. 100 engineers aren’t as powerful as 5 to 10 that work together seamlessly.
• OMM is the operational maturity model. It has 6 vectors - testing, monitoring, alerting, security etc. Test teams against OMM model again and again.

Notes

• Twilio is a set of APIs for developers to use to set communications into apps.
• Lawson had so go quiet last year because of potential IPO and didn't speak.
• They’re in their 3rd quarter of public offering.
• Want to provide tool so one day when they come across problem they can build solution in an afternoon.
• After scaling and had 300M run rate there was a need to account for more people in management who care about the product. They’re still developer focused and had a nice tailwind by starting with developer and having them back product.
• Billboard advertising to provide air cover - name recognition, so people have at least heard of it. "People want to have heard of something they haven't heard of". They have a billboard story, Netsuite vs. other product.
• How stakeholders drive changes of the product?

1. Security audit more rigorous.
2. Altering processes based on new customer segments as they grow in numbers
3. Enterprise plan more built out

• Their prices start at a penny and go up as usage increases.
• This helps distinguish what kind of customers they have
• Lawson is a developer by background, always think about culture and freedom etc. He never thought as much about sales culture of an organization. The goal is to build great sales culture next to great engineering. Lots of companies are dominant in one area vs the other, need to have an even split amongst both.
• Published price list changes sales model. Harder to measure what sales should do and measure what they are doing. Because of use based pricing.
• Took multiple iterations to separate organic growth vs. inorganic growth from sales group.
• For many years they made blind investment in sales - doesn't actually say how he tracks when sales has an effect...
• Sales model to start was him as founder talking with customers and showing how to use.
• Admire companies that are super agile. Multiple product lines, Voice first then SMS. Voice customers prompted it even though a separate market all together
• Not content with just having one bet out there, have a number of different ones
• Never kill an API that they build. Invest in core business while also making new bets and separate roadmaps for new rev drivers
• Agility with resiliency is their motto. Conscious moment to either slow down deployments or find root cause - found how to build resiliency
• OMM - operational maturity model. 6 vectors - testing, monitoring, alerting, security etc. Test teams against OMM model again and again
• Sharing the model with their customers. Another unique product benefit
• Customers not comfortable with using Beta so just call everything GA. Once you find what customers want then you fun through OMM and call GA.
• Most excited about video, chat, wireless coming down the line. After IPO now time to come back with customers

*Veeva: The Biggest Vertical SaaS Success Story of All Time

Peter Gassner (CEO, Veeva Systems)

Key Takeaways

• Peter doesn't like to follow the herd. "Don't want to learned how to read when he was a kid". Self learning.
• They had no plan that extended beyond 90 days - we could be out of business. Only quarterly for the first year and a half, then annual plan, then three year, and now five year.
• They have less than 500 customers, high balance of revenue.
• Must know what you think your product is worth, price is self-fulfilling. Assign value.
• Lose mojo when doing other side products and direction.
• 90% of his time is writing down plan, sticking to it, and execution.
• Execution - do things the right way. Good enough is not good enough. Clear and correct target markets. Once past Dunbar's number need engaged teams working together. Who is supposed to do what - I trust other team, I manage my team.

Notes

• Veeva 10 years old, industry cloud for life sciences. Help those people bring better medicine. 600M run rate.
• Suite started in pharmacy, then went into content management and now newer products in data for life sciences
• Ability to not follow herd and experience - if everyone thinks you're wrong means you are early
• “Who are you trying to be like? Not trying to be like anybody”
• Didn't want to be CEO, thought if succeeded would just hire a CEO.
• In early days no brand, they had great people working on great tech, not a big team but doesn't matter. Sell yourself first.
• Not trying to get the most out of something, trying to get the right value.
• Must know what you think your product is worth, price is self-fulfilling. Assign value
• Company starts up from a product, find product market fit. Product is company and company is product. Many fail when they go against that and start another product that isn't an add on. If building something different must be bigger than your initial product to be worth it
• Raised 7 mil only used 3 mil.
• Need to be big enough to hire people dedicated to the product.
• Learnings from only burning 3mil - pressure to spend more, he didn't get why he needed to. All kinds of outside pressure, no chance of being great unless you go against the herd.
• Get product out quick, sell to as big as customer as you can, don't give away people - if they aren't worth customers paying for them they aren't worth anything.
• Going cash flow positive after an IPO is bit of magic
• They just want customers to be happy so think maybe subsidize services but not worth it.
• Non profitable like a drug, when are you going to get off of it.
• Just hire more and grow twice as fast, not because no longer profitable and more risky.
• Revenue drive head count or headcount drive rev.
• Product is a 4 year soup.
• Pushing for top line rev means inefficiencies and unhappy customers because of desperation. You sacrifice that to make reps not desperate.
• They do this undercover on reps - slightly fewer sales people and sacrificing top line rev.
• They build long term relationship so don't want to slight anywhere.
• Justify price by picking a problem that is hard solving and can provide immense value.
• Now how to build a 100 year company after 10 years in business.
• Every three weeks take a break and have someone challenge my thinking. Take a day and meet with people outside of daily routine but adjacent and force yourself to talk to them and be open.

AI: The New Platform for SaaS

Tomasz Tunguz (Redpoint)

Ludo Ulrich (Salesforce for Startups)

Key Takeaways

• 2 steps of ML - feature selection and model tuning. Deep learning automates both processes.
• When they invest they want:

1. Proprietary access to data
2. End to end applications, not platforms
3. Strong GTM enabled by ML
4. Experts in the field
5. Potential algorithmic advance

• They don't want to see or feel machine learning, it’s best behind the scenes. Can you pitch the startup without mentioning machine learning?
• A couple years from now he thinks that we will still be on machine learning.

Notes

• Hard to avoid machine learning in 2016 — self driving car, Alexus from Amazon, etc.
• ML is just finding patterns in data: optimize, identify objects, find anomalies and segment.
• Convergence of computing, data, and algorithms.
• Machine learning will occur in horizontal areas as well as offline industries.
• Go to market and experts in field are the two biggest things for finding investments (voice recognition also was a big want for them).
• Fear of ai from Hollywood - how do you reduce that fear? Set the expectation or people will lose interest. Build trust when building this robots
• What value can you add on top of mono cloud platforms. Assume everyone has speech recognition and other basics, what is new that you bring to the table
• Build workflow app so people give you the data, make it yourself. SaaS companies asking larger players for data and a little cash to build them something for them

After Marketo: 10 Things I'm Doing Even Better The Second Time

Doug Pepper (Shasta Ventures)

Jon Miller (Engagio)

Opening joke from Jon Miller (white guy): “People ask me all the time why I was born in Ethiopia. I tell them, well I wanted to be close to my parents.” (not exactly hilarious but I did remember it so there’s that...)

Key Takeaways

• Start with demand gen then try account based marketing.
• Goal is to define and create categories then build the leading company in that area.
• Building great product doesn't mean you built a great company - didn’t end well with Marketo.
• Marketo suffered as they got larger without core values.
• Loves Patrick Lencioni.
• Focus on quality meetings. People daydream, go on phone or laptop. Debate makes a meeting good.
• Work life balance - set point for how hard you work. Don't work all night but work ass off when in office.
• Obviously better to be second timer, awareness, fundraising, but pressure to uphold that name.

Notes

• Were fishing with nets with demand generation, moved to fishing with spears for account based.
• 2.6 mil in ARR after one year with 100 customers.
• Looked in google trends for account based marketing.

1. Great market
2. Great product
3. Great sales and marketing

^ all three are given, don’t guarantee complete success

• Building great product doesn't mean you built a great company. need one that is smart and healthy (Patrick Lencioni).
• Now trying to focus time on building a healthy company, starting with core values.

1. Freedom and transparency
2. Excellence and execution
3. Happiness and positivity

• The 5 dysfunctions as a team (Lencioni)
• Once you identify core values you need to make sure pushed to all company processes such as:

1. Hiring
2. Perks
3. Onboarding, learning and development
4. Performance management
5. Office environment and fun
6. Social responsibility

• They have culture day - everyone sign up for making sure that each process meets core values.
• Focus on quality meetings. People daydream, go on phone or laptop. Debate makes a meeting engaging!
• Engagio raised more cash than Marketo. 32 mil in 18 months.
• More money raised but less spent for strategic flexibility with a detailed financial roadmap.
• Market map to understand all players in category.
• Account based marketing taken off quickly because more partnerships working towards same goal.
• Focus on bigger deals, 40k contract goal. 26k contract value right now, so building enterprise muscle earlier.
• Driving outbound sales to start instead of waiting 6 years like Marketo.
• How are goals different with Engagio:
• Most successful entrepreneurs not financially driven, driven by vision (seen in many talks here).
• Desire to build incredible product, prove himself as CEO not just marketer.
• CEO vs. not CEO means more doubt when led by yourself.
• Great transparency and self confidence are essential.
• Skills side for CEO - product skills and sales skills.
• Think about the team way before CEO status — create wish list of who you want to join.

12 Key Levers of SaaS Success

David Skok (Matrix Partners)

Key Takeaways

• Skok’s full presentation is available here.
• We generally want customers to do something that they aren't motivated to do - our job is to lessen that friction.
• Skok uses a reverse funnel that mirrors top with onboarding, brand, loyal customers
• Two major metrics to consider: how many things at the top of funnel and the conversion rate for it.
• Salespeople have a capacity limit, so some are making the unit of growth how many sales people they have. The # of salespeople times PPR (productivity per rep).

Notes

Three Phases:

1. Search for product/market fit.
2. Search for repeatable, profitable sales growth machine.
3. Scaling the business.

• Skok keys in on the second phase, most interesting to him
• Signs that you got there - bookings growth, not ARR or Revenue!
• Also look at average deal size and cost to run someone through funnel, along with the amount of time to run someone through the funnel
• Touchless self service model (like Zendesk).
• Have leads from site --> free trial --> paying customers.
• # of people of each stage of time.
• Different sources for leads will change shape of the funnel. Consider overall ROI for each.
• How good is your product market fit to start?
• Make sure customer segments have the right fit.
• Messaging needs to convey business value not feature
• JBoss: one of his investments, 5 mil downloads but no data base. Didn't ask for email because it cut download rates dramatically.
• What is friction that hits customer and what are there concerns.
• Need motivation that is big enough to pull customers through those concerns and friction.
• How do I get traffic to website?
• Hubspot used website grader, provided free lightweight tool that anyone could use.
• They give you a bad score and need to improve.
• Need to create value, product can do that.
• Draw a micro funnel for blockage points to closely examine issue.
• With J Boss free trial.
• Get access to current data and import.
• Invite colleagues, test feature.
• Wow moment! Thing to show customers that a purchase is worth it. Different buyers have different moments.
• What does a sales rep cause you? Pain. People hate being sold to. Best way to sell is to treat customer like bank account. Make deposit and create value for them before getting any benefit.
• Customer --> business goals --> buying process --> funnel.
• People don't hire sales people fast enough (opposite of Veeva CEO sentiments).
• Maximize by building recruiting machine that brings in amazing talent.
• Lose money in booking if you miss hiring enough reps.
• An over assignment of quota needed to hit plan lets you double check forecast.
• PPR - focus on quality of sales hire and sales training and onboarding.
• Huge payback for early training but no one wants to do it.
• PPR by individual rep in color grid for ref.
• Taken from Hubspot, look at reps above 75% of quota and 100% of quota.
• Assigning #s to funnel metrics to see where you need to be.
• Backend of the funnel is LTV.
• Optimize your funnel by diagramming it and drawing the micro steps for key parts.
• Sparketing - sales, marketing, product

Levers

1. Product market fit
2. Top funnel lead flow
3. Conversion rate
4. Cost of funnel through
5. Sales reps
6. Productivity per rep
7. Enough leads to support that many reps
8. Pricing for negative churn
9. Customer retention rate
10. Months to recover from CAC
11. Recruiting, onboarding and management

How to Actually Get More Leads: From The Veterans

Menaka Shroff (Betterworks)

JD Peterson (Trello)

Jen Grant (Looker)

Joe Chernov (Insightsquared)

Key Takeaways

• Leads aren't from one magic ad or campaign, that’s not how it works. It is a balance of all of the things. Try everything.
• Execution is what matters, most people share the same stacks at this point.
• People don't buy off of logic, they buy off of emotion or other random factors like sales rep, what happened that week, etc.
• With freemium it's easy to gather but very difficult to scale.
• Be open to a little bit of religion and cultish feel. Certain things you can't measure but will see glimmers of evidence that validate.

Notes

• Some people are proud of doing zero marketing, which is a terrible philosophy. Imagine if you actually did.
• It takes a village, the whole company must support.
• The main aspect of one marketer is to make sure team is pouring out brand message.
• Not just capturing name and email, get more leads by a high NPS score and a product that people identify with and promote on their own.
• Content piece on goal setting and goal science for what we want to do.
• Free sign up to ___ or purchase and what channel you choose is simple. How do you make sure it aligns with segment and audience is tough part.
• Tying a value to a lead depends on what constitutes a good lead. Who makes decision in their company.
• Mary Meeker report
• Zendesk most leads when they got hacked.
• What to do with no historical data - about finding lighthouse customers that are perfect fit for product.
• Start from sales goals and sales reps.
• As many as possible people on the phone doing a demo.
• Brand starting to make comeback - is it measurable?
• Brand critical when so noisy and competitive, why are you unique?
• People more likely to click search ad or fb ad if they have seen you elsewhere.
• If you read the economist it seems like all from the same exact person - being consistent about brand is a way to do it without spending a boat load of money. Make sure tone, messaging all in line.
• Be as niche as possible, think about where your audience goes.
• What model works, account based, etc. It's a enterprise strategy that doesn't work well on small businesses.

The Unconventional Road to 20,000 Customers

Eoghan McCabe (Intercom)

Ilya Fushman (Index Ventures)

Key Takeaways

• Their founders had worked together for 4 or 5 years beforehand and all shared same set of values, mistakes made and a ton of practice.
• Need to give people room to make mistakes and celebrate failure. Experimenting and doing crazy shit is the most effective way to find opportunity.
• You’ll gain energy from people who can admit they are still learning and growing.
• Trying to make it fun, friendly, approachable, different. Content a big part of that, telling it as a story much like children's story books

How their approach was different:

• Last year was 5th year, 350 employees and started with 100 something at start of year.
• Their biggest milestone was feature on Silicon Valley.
• The ability to stick to principles and not grab everyone else's advice.
• Reinvent themselves and constantly question what you're doing. Pricing, packaging, etc.
• Want to show people the future but need to come to world as well, some things are too ahead and not ready.
• Struggle to explain what the product actually is.
• Biggest opportunity for those who invent their own category. Unlikely to work but bigger reward. Not something you plan, you fall into it.
• Playful, easy to use, delightful - how do they do that? Through values they have within the company and motivation they have for doing it. See this amongst all speakers, what is the reason you're doing it?
• Marketing, cartoon characters, book. Way they present themselves and branding. People in tech and software take themselves too seriously, wanted to combat that. Stock photography and boring things don’t cut it.
• Robotic and impersonal doesn't get it done, wanted to bring humans back into the equation.
• Product people and were behind in sales in marketing. They started to blog a lot and over time they saw the content didn't create acquisition opportunities. It was instead an opportunity to show people that they cared about the issue and might be the right person to listen to.
• Books, podcasts, world tour as new branding opportunities.
• Advice and words cheap, need to be ready to hear these things or it's all useless.
• Raising money - he would be bad at processes and he isn't organized and patient enough. Focused on building amazing product and spreading message and any channel they could find which brought in customers and investors.
• Chose people who got it and had similarities in product usage and who they want.
• Some companies super investable, they have logo on everyone's websites as way to cheat.
• Raising money much harder without that visibility.
• Invested money in customer support and people - mission to make it personal.
• Use support team to step into tech world and be a part of company.
• Future: mission to make business personal so making more people use intercom - potential to be next gen for customer platform.

*Get to $100m ARR While Burning Almost Nothing: 6 Learnings in 6 Years

Eric Yuan (Zoom Video Comm)

Mallun Yen (RPX Corp)

Key Takeaways

1.) Take someone who invests in you, not your product.

2.) Don't wait to raise money.

3.) Spend more, burn less. Prove something works then double down.

4.) Don't grow too fast (speeding and getting a ticket analogy).

5.) Hire people with potential for growth (don't hire with intent to top).

6.) Culture is #1 priority.

Notes

• Left WebEx to start Zoom 5.5 years ago.
• Had idea before he left, thought that video conferencing was too private.
• Raised money before working on product.
• Find investor to invest in the person, not the business.
• Investor like wife analogy.
• Had all of first round in bank when he raised second round and same for the third round.
• Try to stay cash flow positive by not spending too much.
• Don't want to grow to fast, want to first make pre-existing companies happy.
• Car speeding analogy, want sustainable growth.
• 0-100mil in 5 and a half years.
• Stanford was their first customer before sales and marketing existed.
• What rev bucket was hardest? First one million MRR is very difficult.
• Billboard "put your Dongle away, Use Zoom".
• Lot's of billboards now, from a frugal guy which is interesting. Don't know if it works or not because hard to measure brand. Brand awareness - business travel professionals saw them in the airport.
• Freemium to get qualified leads. Gets people to test the market and because market is crowded they needed it. Cut off all free users at 40 min. Most effective meeting time is 45min (from Webex).
• Going too fast makes you not focus on the existing customers.
• NPS of 68-69 while competition is in 20s.
• How do hire people, hire for growth, not those that are overqualified. Makes them loyal to company when you hire from lower, are more humble and don't just focus on past successes.
• Self learning and self motivating mentality is the most important.
• The process is more important than the outcome - builds sustainability. Need environment where people enjoy the place they work at.
• Hardest thing to go through in building Zoom is loss of confidence from issues and small setbacks, in that moment everything seems wrong and it's all falling apart.
• Thoughts on immigration order - we embrace diversity, if we lose that you lose perspective.

*Fast Growth, Mindful Business

Dustin Moskovitz (Asana)

Alex Konrad (Forbes)

Key Takeaways

• Work life balance at Facebook was awful, made him a less productive person. Culture of tech industry and silicon valley is romanticized over working. It is a marathon, needs to work in a sustainable way.
• Hackathons and Sprints argument is that is forges culture and creates a bond like a frat, lose value not doing that? Dustin says you can do that in different way. Hackathons can be good for younger employees.
• Healthy approach need to vet for in hiring process? Little of both, people self select for Asana. People who have both burnt out and those who value balance.
• Being involved in causes that matter grounds him as a CEO. Came into a lot of capital super early in life and wanted to not just wait until end to give away so giving earlier is more important now. found the givewell team and their premise is to donate every dollar in the most leveraged way possible.

Notes

• Work tracking is bread and butter - helps answer critical questions like what's happening with next goals, when will they be done.
• They’re up to 20,000 customers.
• They are at a maturing stage, lots of growth, current customers expanding.
• Still large market out there, all "knowledge trackers". People that don't use an kind of work tracking.
• Most of market is using old tools like emails, status meetings etc.
• Both co founders have equal leadership and compliment each other's skill sets. Justin product and external communication, he most focused on execution.
• Glassdoor rating has perfect score and he has perfect score a leader.
• That comes from mindfulness and culture from the start. After 12 months the book is basically sealed.
• Work hard live well blog post on Medium. Take breaks in day, rest as night. Take vacations.
• How do you embrace those excited and make sure they aren't over zealous? He says some people overdo it, talk to them about it and let them know not always best for health. Off sprint is catching up on other smaller areas of responsibility.
• Perks and catered meals at 8:30 as handcuff of gold? Keeping them that late is shooting themselves in foot because not as productive. Day ends at 6:30 for them.
• About a third of company stays for dinner and other don't not a big deal. Helpful to those with families in later stage of life.
• Ageism in other companies? Yes, he sees it in small startups but those companies group up and conform the culture to make it possible and become less agist
• First steps to practicing these goals? The best fix is upper management acting differently and setting tone for those underneath in company
• Taking breaks during the day, use a timer, app that reminds you to take a breath and pause.
• Warning signs that burnout is coming? get more irritable and am worse in conversation (me) and become less productive. don't just sit as desk and not work.
• Global health and dev, global catastrophic risks and US public policies and criminal justice reform.
• Signed the Amicus brief.
• How to leverage without a ton of cash? still figuring that out would be being active, paying attention and not turn away just because it is upsetting. talking to people in your networks that think differently. engaging with the political apparatus if in red or purple districts.
• If start culture early will be much easy later on in terms of diversity. people from underrepresented groups don't want to be first in the door for a company. unconscious bias training, setting up candidates for success.
• 1 on 1s with lots of people and make yourself available.

I’ll be posting Day 3 and final thoughts later this week to wrap things up — stay tuned.