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Last night, SaaS Office Hours hosted go-to-market guru Kenny van Zant. Kenny is a serial entrepreneur started his career as founder and COO at BroadJump, a broadband software company that grew to $100M in bookings. He was awarded the Ernst & Young Entrepreneur of the Year in 2002. After BroadJump, Kenny built the go to market organization at Solarwinds, a $4B market cap infrastructure software company, and Asana, a fast-growing productivity company, both of which exemplify a unique go-to-market approach, Flywheel Model, brilliantly.

What is the optimal quick ratio for your SaaS startup? Is it 4?

Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)

The quick ratio measures a SaaS company’s growth efficiency. The formula for quick ratio is above. It’s the new monthly recurring revenue (MRR) in a month plus the expansion MRR divided by the sum of the churned MRR and the contraction MRR. Churned MRR are customers who have not renewed contracts and contractions are those customers who have decreased their payments.

Last week, a friend asked me what I thought the future of software would be. At some point, all the workflow processes that still conducted on paper and pencil will be digitized, all of the tasks completed in Excel will be optimized, and the majority of limitations of traditional software will be overcome. It’s not to say that software innovation in its current form will continue to exist for decades, but what is the fundamental shift that resets the ecosystem like the cloud did in the early 2000s?

Quota attainment is an incredibly powerful diagnostic tool when understanding your SaaS startup’s go-to-market health. Quota attainment measures both the success of individual account executives and the performance of the team. To achieve best-in-class quota attainment, a startup must execute the go-to-market strategy well across five dimensions.

First, the startup must supply the sales team with a growing volume of high quality leads. SaaS companies generate leads in many ways including through sales development reps, search engine marketing, paid social, lead capture on the home page, events, customer referrals, evangelists and channel partners. Consistently growing qualified leads is essential to quota attainment.

Taxis. Food. Cars. Mobile phones. Communications. Banking. Healthcare. Entertainment. In the past ten years, is there an industry startups haven’t upheaved?

Startups have been the most transformational force in US society over the past 20 years. Uber has transformed the taxi industry, reducing taxi rides in yellow cabs in San Francisco by 65% in 2 years. Hampton Creek has created an eggless mayonnaise that terrified the US egg industry. Android is arguably the most widely distributed consumer software in history. WhatsApp delivers 50% more messages than all global SMS volumes. As banks stopped lending after 2008, market place lenders like LendingClub and Prosper bloomed and originated $12B of loans in 2014. OneMedical and DoctorsOnDemand have transformed medical experiences for tens of thousands of people. Finally, YouTube and Spotify and Pandora are shifting the media consumption patterns. More than 20% of US homes in 2015 will have cut the cord - and stopped paying for cable TV service.

Last week, I interviewed Tien Tzuo, the former CMO & CSO at Salesforce, and founder/CEO of Zuora. During our conversation, he spoke about one of the major challenges facing fast growing startups. He called it recognizing the breaking points of management.

At the founding a startup, the structure of the company is flat. Everyone is effectively a peer. At about 8 people, a leader must emerge to shepherd the growing team, and so the first management layer is created. Then again, somewhere around 60 employees, the company must add another management layer, and then again when the company reaches a few hundred employees. Marco Zappacosta, founder and CEO of Thumbtack told me once, “As CEO, I changed from a contributor, to a manager, to a manager of managers, to a manager of manager of managers. And each time, I needed to learn again what it meant to be CEO.”

On November 4, SaaS Office Hours at Redpoint will welcome Kenny van Zant, former COO of Asana and Chief Product Strategist at Solarwinds, a $4.1B market cap maker of infrastructure software. Kenny is renowned for pioneering the flywheel sales model that propelled Solarwinds to a $150M company profitably.

Unlike traditional sales models, the flywheel sales model requires sales people to close business only from existing users. No outbound prospecting allowed. This requirement unifies the go-to-market efforts of companies, and spins a customer acquisition flywheel faster and faster to achieve terrifically efficient growth.

Last night, at our inaugural event, SaaS Office Hours welcomed Bill Macaitis, CMO of Slack, former CMO of Zendesk and former SVP of Online Marketing and Operations at Salesforce. Having worked in three hypergrowth companies, Bill is an expert in building massively successful marketing teams. These are the five kernels of wisdom I learned last night.

When is the right time to hire a head of marketing? The right time to hire a head of marketing for your startup is when the company has found product market fit. Marketing amplifies a message, but rarely do marketing teams ignite the fire.

How much should your startup pay its sales people? According to Pacific Crest’s Annual SaaS survey, 9% of a sales rep’s annual contract value. This figure doesn’t vary much on whether your startup’s salespeople are inside reps or outside/field sales reps.

The table below computes the effective salary + commission of a sales reps as a function of average contract value and an estimated quota. The quota is an estimate based on deal velocity, how many deals a salesperson must close each year to attain quota.

In 1964, IBM announced a mainframe computer family called the System 360. The mainframe wouldn’t ship for another three years, but the announcement reduced the mainframe sales of their competitor, Control Data Corporation, sufficiently to warrant an FBI investigation. And so a new marketing technique was born.

To be clear, there are many different forms of vaporware. Coined in the early 80s by Esther Dyson to describe software companies preannouncing a product, the term vaporware can refer to three different types of these announcements. There’s IBM’s practice of pre-announcing a product with the intent to gain competitive advantage, which violates antitrust law. Second, vaporware also refers to products that were announced but never shipped like the iPhone predecessor, Apple’s Wizzy Active Lifestyle Telephone or WALT.. Last and most useful, vaporware is software that’s pre-announced to gauge customer demand.