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This is the theoretically ideal organizational chart of a startup. There’s a CEO at the top in red, VPs in orange, senior contributors in dark gray, team leads in green, and junior individual contributors in light gray.
This is the org chart of the typical startup. It’s a very different in reality. The departments are lopsided and scraggly. The span of control is out of control. Sometimes there are directors running teams that should be headed by VPs.
When I started in venture capital, one of the questions I learned to ask very early on was competition. Founders would often reply that competition validates the opportunity. At the time, I thought it was a canned response, a clever parry, to avoid answering the question directly. I’ve since realized I was wrong.
Let’s say you’re creating a category. You need to cross the chasm and reach the second half of the technology adoption curve.
One of the most consistent errors made in sales projections and planning is mismatching the ramp time to the sales cycle. What does this mean? If my startup has a 9 months sales cycle and the VP of Sales projects a six month ramp time, my startup is committing this error.
How should one expect a new account executive to start delivering bookings in their first quarter if the typical sales cycle is longer than the ramp period?
“Basketball can be modeled as two-biased random walks. Each team has a probability. Each team has a probability of scoring each trip down the court…this model suggests a strategy: stronger teams should speed up the game to create more possessions.” If you shoot more accurately, then more possessions over time creates a greater delta in the final score. This is a great idea from Scott Page’s the Model Thinker that I find I quote a lot when discussing competitive strategy.
Next Friday, February 21, SaaS Office Hours at Redpoint welcomes Lisa Lawson. Lisa built the channel program at Optimizely, the leading AB testing platform. Lisa also lleads the channel practice for SaaS Sales Management, the leading bootcamp for SaaS sales leaders.
Developing channel and partner programs is a capital efficient way of growing SaaS companies. But to succeed, a company must understand the key parts of partnering with larger salesteams to make the effort effective.
The debate about partnering with Snowflake went back and forth during the investment committee meeting. It was March 2014. My partners, Satish and John, had met the company and were proposing to lead the Series B. The company was about two years away from launch and heading straight into a dance with elephants.
Google and Amazon both offered competing products and were already in market. Here was a plucky group of founders with deep technical expertise seeking to take on the incumbents with a novel architecture.
Have you ever sold a product while working at the market leader? How about from the market challenger? If you’ve done both, you know how different the role of a salesperson can be in each of these businesses. having them both, I can tell you that though the jobs have very similar titles, the work is quite different.
The market leader benefits from the strength of its brand. Buyers compare other products to the leader.
Net Dollar Retention is one of the most important metrics is a SaaS business. It measures the value of a cohort of customers over time including expansion, cross-sell, and churn (loss of revenue). But how do you measure NDR?
Imagine this is your company’s data. The first column is the cohort month for each cohort in a year. The second column is the revenue of this cohort in their first month.
When we announced our investment in and partnership with Mattermost about a year ago, I wrote about a new architecture for SaaS. I’m starting to see that architecture more and more, but with a twist. The idea behind the new architecture is split a SaaS app into code and the data. The SaaS company writes, updates, and maintains the code. And the customer manages the data. Typically, the data resides in the customer’s cloud account.
Nathan Heller published an article called Is Venture Capital Worth the Risk? in the New Yorker. It’s a well-researched critique of the venture industry. The key question he poses is: has the industry become so large that it needs to be disrupted?
It’s a thought provoking question and a good opportunity to ask for feedback on how we can imrove. If you have ideas for how to improve venture capital for founders, please tweet me or send me an email with the link above.