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In 2016, the number of seeds has fallen by a 27.6% reduction in the number of seed rounds. But as the chart above shows, the median amount invested in seed rounds continues to increase at about 40% annually. This trend started in 2014 and has continued through the first quarter of 2017. These two forces in opposition netted a 10% increase in total dollars in 2016.

The average number of investors per seed round has plateaued at about two. A few years ago, party rounds seem to prevail in the press. But data doesn’t support a broad change. In fact, the distribution of seed investor count hasn’t changed materially over the last seven years. It’s quite nearly always 2.

There are three kinds of software value propositions. Software that increases revenue, software that reduces cost, and software that promises improved productivity. To maximize the effectiveness of your customer success efforts, you need to understand which type of software company you are building.

Software that increases revenue is the easiest to sell. For most companies, growth is the most important priority. Growth trumps cost-reduction because growth increases the value of the business more. As a result, products that grow revenue enjoy shorter sales cycles and larger budgets. Most sales acceleration and lead generation software falls into this category.

I once asked a VP of Marketing at a top SaaS company how she thought of content programming. What is the right type of content to create? I asked her. She replied with a brilliant little insight, “I look at way the best content marketers in the world do it. The TV networks.”

News dominates the early morning. Then, daytime television takes over targeting those who stay at home. At noon, news for those who power lunch. Soap operas and game shows after midday. News in the afternoon as people come home. Game shows, sitcoms, and drama for after-dinner entertainment.

Most startups go to market with the intent to differentiate their product. Each one of us has an idea what might make a better CRM, marketing automation suite or customer support. Other startups prefer to combine a product innovation with a reinvention of the sales process.

The four key innovations in SaaS sales strategies I’ve observed so far are:

1. Bottoms-up. The buyer is very difficult to reach through traditional channels and consequently is prohibitively expensive to acquire at scale. Typically, the buyer prefers to educate themselves, build consensus internally and influence the ultimate decision. Most developer products have sales processes like this: Twilio, Stripe, Heroku adoption starts as a side project or hobby, and then eventually becomes a corporate purchase. Slack and Expensify start in small pockets of a company, until they grow and become the dominant platform. In these models, customer success teams are the de facto the sales teams.
2. Segmentation. Commodity products dominate the market and consequently,go-to-market differentiation sets the winner apart. Solarwinds leveraged an disciplined inside-sales model with aggressive prospect disqualification in the commodity network monitoring space to build a $4.3B business.
3. Channel. The core buyer market chooses their software based on the recommendations of trusted partners, and a new entrant wins over this channel. Xero used the channel strategy to great success in Australia and New Zealand. They educated accountants, who in turn recommended Xero to their clients.
4. Platform change. These don’t happen very often, but a shift from on-premises to SaaS, or PC to mobile suddenly changes customer acquisition costs. The first to learn the new paradigm and leverage it wins. Salesforce is the canonical SaaS example. But the distinction of the first major-mobile first SaaS company hasn’t yet been awarded.

When startups can combine product innovations with sales innovations, they can certainly create enduring companies. There are a few challenges that are worth mentioning.

After a SaaS startup has gained traction with SMBs and mid-market customers, they often feel a pressure to move up-market. Sometimes, demand for a product is so great, larger customers the pull the company up-market before they are ready. The startup finds itself in a critical position - both the product and the sales motion must evolve quickly.

Zack Kass is a friend who advises SaaS startups on their enterprise selling motions and playbooks, refining the account executive profile, and developing a deal strategy. Together, they form foundation of their enterprise sales strategy. Zack’s expertise comes from experience, and as he’ll tell you, each startup’s enterprise sales strategy is a bespoke suit, sculpted to enhance a company’s strengths.

Every software company competes with another — if not directly, then at least for budget. With global IT spending flat to down in 2015 and 2016, software businesses are fighting for share of wallet. At this point, the critical marketing imperative is to start a conversation with a receptive buyer, and do it thousands of times per year. But how?

I met a master software marketer last week, and he shared some of his wisdom. A luminary, he has built the positioning, packaging, and pricing for several multi-billion dollar software companies.

Esquire writer and master storyteller Cal Fussman describes the experience of interviewing his childhood hero, Muhammad Ali, in a podcast with Tim Ferriss. Fussman spends a week with Ali, during which he the Special Olympics and boxes with the great champion. But there’s one story that stood out to me.

Fussman and Ali must catch a plane, but they are running late. Later in his life, Ali suffered from Parkinson’s disease, which slowed him significantly. Fussman is worried about missing the plane, and is trying to hurry them through security.

The public markets have changed the way they value SaaS companies. The median forward revenue multiple for SaaS business reached its peak in February 2014, fell to its nadir two years later, and has since recovered, hovering at around five times forward revenue – where it has remained with little variance over the last six months. However, that’s not the whole story.

It’s not just that the median has fallen. Rather, every SaaS company is now being valued in a much narrower range than even a few years ago. In 2014, forward revenue multiples ranged from 1× to more than 20x. There were lots of outliers, marked as little points in the box plot above.

All the while, this brand building effort is a substantial investment in reducing cost-of-customer-acquisition.

Dale Carnegie’s seminal book How to Make Friends and Influence People introduced the powerful notion of social proof to millions. Social proof is the psychological phenomenon behind the power of word-of-mouth marketing. The old trope “No one gets fired for buying IBM” is a manifestation of social proof in an enterprise sales process.

Social proof is an incredibly powerful force. The Buffer team wrote a great post detailing the five types of social proof: expert, celebrity, users, wisdom of the crowds, and wisdom of friends. Sales and marketing teams already leverage social proof because it’s so effective. Many SaaS websites feature customer stories very prominently.

Draw an image of a bicycle that depicts how the bicycle works. You might draw something like this bike above.

Or this one.

Or this one. But as Gianluca Gimini discovered when he asked 50 people over the course of six years to draw a bicycle, most people cannot - despite their great confidence of the contrary. Gimini rendered these drawings (on the right) to highlight incorrect most people’s understanding of a bicycles anatomy truly is.