October 15, 2015 by David Miller
So today I was fortunate enough to attend the launch of a new Dublin based initiative targeting technology companies seeking to attend a Bootcamp organised by the Dublin Commissioner for Start-Ups, Niamh Bushnell, and sponsored by Ireland’s business focussed radio station Newstalk FM. The seminar was held in the Dublin Docklands Development Authority on Custom House Quay on the banks of the river Liffey in the heart of Europe’s technology capital. Check out the view on the way in:
The purpose of this post is basically to act as an aide-memoire for me to gather in one place the learnings I gleaned from my attendance. Hopefully you might enjoy it as much as I did!
As the name of the seminar suggests, it was specifically targeting SaaS (Software As A Service) businesses in Ireland who are looking to learn about the programme/Bootcamp, for B2B tech business looking to:
- build scalable sales engines
- build scalable marketing engines
- leverage international best practices in SaaS sales and marketing
- give access to the best local and international practitioners
The programme (which is competitive based and will commence in November 2015 and culminate in a demo day in February 2016) is aimed at organisations that are:
- B2B focused
- have strong revenue
- a live product
- multiple customers
Keynote Speaker & Panel
The Keynote Speaker was Fergus Gloster. Fergus served as Managing Director of EMEA at Marketo, Inc. from May 2011 to February 2015. He was a founding director of salesforce.com’s European business in 2000 and spent nine years building the corporate sales model. Prior to salesforce.com, he was Technology director in Oracle Ireland and also held senior positions in Andersen Consulting and Wang. He currently serves as Non-executive Director of Fieldaware, NewVoiceMedia and Brightpearl.
The launch event was hosted by Brian Caulfied, a partner at VC firm Draper Esprit, and who sits on the boards of Datahug, Movidius, MTT, Clavis Technology and the Irish Times. He is also a personal investor in a number of early stage technology companies including Cicero Networks, GridStore and Teamer.
Panel Members along with Brian and Fergus were:
The bulk of my tweets were from the keynote talk given by Fergus Gloster, who gave actionable targeted nuggets of wisdom hewn out of years at the coalface of SaaS businesses over the last decade plus. My advice? He should write a book.
To the Guillotine
This was a great preface to Fergus’ speech: i.e. that talk is cheap and that actions speak louder than words. It’s all well and good knowing what you need to do – you just need to go and get it done! Great advice. Execution, execution, execution.
SalesForce – Simple is as Simple Does (or did)
Fergus directly referenced the V1 of Salesforce, which had less than half a dozen tabs. His point? Yes, it was simple – but that’s the product that they had in the market.
Pretty sure this screen-grab below is what Fergus was talking about… Clearly it did the job, but slick and the start of a multi billion dollar company? Far from clear that was where it was headed.
A clunky non-word of a term, but it does communicate what Fergus described as the power of the SaaS model in terms of breaking into and serving customers in international markets: breaking the chain of distribution models, whereby SaaS companies can place their services directly in front of customers in countries on all the continents of this mighty world.
CAC v GPM
There was a fair sprinkling of sales based metric language and acronyms throughout the whole seminar – here Fergus alludes to the relationship between the cost borne by a SaaS technology company of acquiring a customer (where the cost is all incurred up front) as against the fact that the revenue stream is spread out over monthly payments, such that the point where the revenue earned outweighs the cost spent by the business in acquiring that customer, can in fact be even 12 months after the date of acquisition. The long lead-time in recouping that initial investment in acquiring your customer is part of the reason why having a Gross Profit Margin (or, revenue left over after deduction of SaaS goods sold) north of 70% is so important in enabling a business justification incurring a Customer Acquisition Cost that takes such a long time to be recouped by the business.
Where the Rubber hits the Road
Reality check stuff is crucial in attending any SaaS event: Fergus made it clear there just ain’t no silver bullet, and the Panel speaker Peter Coppinger of Teamwork.com made the same point later on: it’s hard, hard work that’s required, and it’s not for the faint-hearted.
I got my S’s the wrong way round here of course! Oops 🙂
It should read ‘The clue is in the LAST letter ‘S’ of SaaS: it’s a *Service* u r selling, *not* a product. Create SaaS culture”.
Specialisation in Roles & Territory
I found this part of the talk particularly interesting, given the speaker’s experience working in sales for some of the world’s foremost technology SaaS businesses. He spoke of a need to apply what might be loosely called a BigCo approach (my words) to every level of SaaS sales and marketing: dividing up and naming the areas of speciality in which both Sales and Marketing reps focus.
Deconstructing Yours Sales Quota
The notion of deconstructing your sales quota I think is a continuation of the spectrum that Fergus was talking about in terms of giving Sales and Marketing areas of specialisation. Not an area of which I’d have a full understanding.
Facing the Chasm
The failure to align Sales and Marketing efforts in a SaaS technology company can lead to fatal results for that company. I used the word ‘cataclysmic’ to convey what I think Fergus meant. Plenty of food for thought in this area alone.
False Pipelines & Busy Fools
I liked this bit. He actually used the word ‘love’ when talking about pipeline leads. I used the idea of being ‘privileged with’ those leads since, at the end of the day, any SaaS business lives – or dies – by its relationship to, and ability to convert, leads into customers. But I like that idea of being ‘privileged’ to deal with those leads: the opportunity to serve businesses who you’ve never met, and might never meet, but for whom you and create value through your service offering. Does it get any better than that?
Accountability in Sales & Marketing
One of the beautiful things about SaaS is that the notion of transparency and accountability can be brought right to the fore of all areas of your business. The speaker’s point was that in the area of Sales and Marketing that transparency and accountability – and primarily the latter – bring rigour and discipline to the company’s efforts in these areas.
If data is king, it’s only because it helps to inform real-world decisions, that in Sales and Marketing include understanding when to press the Big Green Button to hire more sales/marketing experts, and when to press the Big Red Button.
Love Those Leads
Tongue in cheek perhaps, but his point reinforced Fergus’ point that leads are the lifeblood of a business’ potential, and that applying structure and discipline to how each and every one was dealt with in the early days of Salesforce, in part helps you to understand how that company is the company it is today.
CAC : Revenue of $1 : $10
This comes back to the notion of the Customer Acquisition Cost and that in an ideal SaaS world your business can say that for every $1 it spends, that $1 brings in $10 in revenue. Sounds like nirvana!
The area of meaningful content creation is probably one of the harder areas for technology start-ups to crack at the start. But the speaker was clear: go for it. But keep your eye on the fact that creating a demand for your content is, while valuable, it is not the same as creating content that ultimately leads to consumers of that content turning to you for delivery of a (paid) service. DemandGeneration v RevenueGeneration.
The Daily Grind
Again, it ain’t for some of the cool kids, but bringing rigour and discipline to the area of sales and marketing is just part of the Daily Grind and is what will ultimately enable your business to grow and scale.
Helpful pointer by Fergus that this isn’t a secret sauce restricted to large multinational SaaS companies: this is for the early stage startups getting their businesses off the ground as much as it’s for a $10M ARR business.
The tweet says it all: I hope the speaker writes a book sometime, I’d buy it for starters!
At this stage there was short panel discussion, chaired by Brian Caulfield, venture capitalist, with a sprinkling of questions from the floor. (I noted the lack of female representation on the panel; not a blame issue, but it’s something to reflect upon, whatever the size of the tech gathering in my view).
Peter Coppinger of Teamwork – who have thousands of SaaS customers on a price point from €50pcm upwards – was one of the first to put his hand up and say that he and the business had a way to go in the whole sales and marketing field. Refreshing to see someone at his level saying they’re a long way from having all the answers!
Optimise, Optimise, Optimise that Free Trial
DJ from Datahug made a big play around the notion of ensuring that during a Free Trial that you get your prospective customer to truly understand your value offering, and to do so as quickly as possible. That also means that in a 30 day free trial if you’ve convinced your Free Trial user of that value offering, then don’t be afraid to ask them to go on the paid plan on day 3 if that’s right for them.
Outsized Deals Can Lead to Sales Complexity
A word of caution sounded here by Fergus: while going for The Big Fish can seem attractive from a market economics point of view, going after That Big Fish (my words) can – and will – introduce new levels of complexity into your Sales Cycle – and that this is something of which to be wary. Also that regardless of what you think as the company that’s pitching for BigCo’s business, ultimately the vast majority of the decision-making process on the Sale will proceed without you even having a seat at the table!
While market incumbents can move like their feet are stuck in a sea of treacle (my words), it’s naive to think that these companies aren’t catching up rapidly on the User Experience and User Interface developments that have doubled down in SaaS over the last 5 to 10 years. The catch up is taking place right now; and has been for a good while.
You Say You’re Ambitious?
This was one of the most resonating points of the talk for me. Fergus was, to my mind at least, clear: the level of a technology company’s Ambition, and, importantly, the ‘level’ or ‘cap’ of that Ambition, has a direct causal correlating impact on the company’s potential to achieve true revenue and customer Scale. Ambition is a nebulous word, easy to say but hard to define: and yet he seemed to suggest that even seemingly successful technology companies might on the surface seem to have ‘achieved’ great success; but earlier on had they had a far more expansive ambition (and vision) then the level of Scale being enjoyed today by that company might just be a multiple of what it is now.
Float Like a Butterfly, Sting Like a Bee
DJ’s point here reminded me of the Butterfly Effect; that seemingly small changes and tweaks to the sales and marketing model at an early stage, can have a vastly disproportionate impact on customer base, revenue and churn sometimes 1, 2 or 3 years into the future. The takeaway? To build into the sales and marketing engines a consistent structured approach that requires small tweaks/changes that can have cumulatively large future impacts.
Material Negative Net Churn
As Lincoln Murphy of SaaS Growth Strategies defines it in his blog
Net churn is the amount of dollars lost after taking into consideration new, reactivated, or expansion revenue for the same time period or cohort.
Putting numbers on it therefore means that
A 5% monthly churn results in… a 46% annual churn rate!
Brian finished out his contribution touching on the importance of Negative Net Churn and especially how as a venture capital investor, he’s looking for companies that are not simply in Negative Net Churn territory; but ‘material’ Negative Net Churn territory. Why? Because it’s such a key indicator of growth levels and scalability projections.
What the above serves to remind any SaaS tech company founder or exec is that basically if you don’t understand this stuff then you’ve got a heck of a rocky road ahead of you; and that, conversely, getting a decent grip on it gives you a fighting chance of navigating the shoal waters that cling to the SaaS customer shorelines.
Big thanks to the Office of the Dublin Commissioner for Startups; NDRC; and Newstalk for making the event happen.