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As we readjust to the impacts of the coronavirus, I’ve been asking myself: what is a basic useful model for estimating the growth impact to a software company? Of course, every business should develop a more conservative model, focused primarily on cash management to provide a longer runway. I expect the venture market to slow round counts for a quarter, but then resume. As growth rates fall, valuations should move similarly. My hunch originates from this analysis of the 2008 crisis. But it’s too early to say for sure.

What could happen to the fundraising market in the coronavirus era where organizers cancel events, the financial markets suffer from a bear market, and there is a lot of uncertainty? The most recent event to use as an analogy is the 2008 financial crisis. In 2008, I had just joined the venture industry, and then Lehman fell. So this was a bit of a trip down memory lane. Let’s look at the data.

Recently, we welcomed Lisa Lawson to SaaS Office Hours to talk about building a channel go-to-market strategy for SaaS companies. Lisa built the channel at Optimizely, which accounted for a meaningful fraction of new business. I learned quite a bit from the sessions with the five companies who attended the one-on-one sessions. Here are my notes.

Where to Start The first place to start is to learn to sell your startup’s product well. To make a partnership successful, your startup will need to teach another sales team to sell your product. That means understanding your ideal customer profile, developing enablement materials to close those customers, and training new account executives to succeed in that effort consistently.

I was on a panel yesterday to speak about the impacts of the coronavirus on financial markets and startups. Later in the afternoon, I read the Sequoia black swan memo. So I figured today, I’ll summarize my outlook on the next few months.

Startup Growth Rates
For startups, things will likely slow down. Longer sales cycles will be the leading indicator. At least, that’s my key metric for startup health over the next few months.

The 9 Disciplines of Great SaaS Companies remains one of the most popular posts on marketing on this blog. It’s a wonderful framework by Bill Macaitis, who was the CMO at Zendesk and Slack. Gabe Larsen, the VP of Growth at Kustomer, has a marketing scorecard that goes one level deeper and breaks down some of the key elements of key marketing processes.

This morning, there were many tweets talking about the impact of the coronavirus on the fundraising environment. It’s as a result of last weeks’ wild swings in the stock market. According to Koyfin’s analysis technology was the second hardest hit sector, falling 14%. The S&P overall was down 11%. Let’s double-click on the impact of last week on the valuation environment.

If you’re looking for a primer on many of the responsibilities of being a startup CEO, read The Great CEO Within. Matt Mochary wrote the book. He founded a company which he sold to MCI and now coaches startup CEOs, amongst other philanthropic efforts. The best part of this book is that it combines descriptions of the key jobs to be done and the frameworks to accomplish them.

As CEOs grow their teams and their companies, their calendars densify with meetings until there’s no space to work. “The top goal framework will help you fix this. Greg McKeown, who wrote a phenomenal book on productivity called Essentialism: The Disciplined Pursuit of Less, boils this down to one key concept: Schedule two hours each day (i.e., put an event in your calendar) to work on your top goal only. And do this every single workday. Period.”

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. Other times, departments are missing leaders and so another leader takes the helm. Is this so bad?

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. I found a beautiful technology curve online and have replicated it above. A small number of innovators and early adopters might use a minimal feature set product.

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? One argument is that the territory is warm. Leads have been nurtured in that territory for a while. The account executive starts with business that has made some progress in their customer lifecycle journey.