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Take-Aways from a CEO of a Startup From 5-50 Employees in 12 Months


I attended a meetup recently with a Q&A session with George Azih CEO of LeaseQuery, a company that has grown from 5 to 50 employees in the last year. His company is solving a real pain-point. In fact, what his tool provides addresses a mandate by upcoming financial reporting regulations — specifically, lease accounting.

Having spent several years growing the business largely alone, he de-risked much of the business by proving traction. The company has been able to grow at rocket-pace all while still being bootstrapped. Nice.
A couple points that he attributes to the company’s success so far:
  • The product is a SaaS application that helps companies comply with new accounting regulations around lease accounting. Read: This is a MUST-have.
  • He has a strong leadership team that he regards as the three legs of a stool – he runs product and has two partners, Chris and Brendan, running sales and engineering, respectively.
  • The company sells and collects 3-year commitments upfront. This reduces the risk of vendor change after one year (and two). Instead of providing discounts, the company assures customers their price will be locked with continual product improvement.
  • His primary role as CEO is now removing impediments from the team. He enables his team to do their best work.
  • The real impetus for George to focus on the product/ company after 3 years as a side-gig was a stress-induced illness.
  • Building the business slowly also helped George become a deep expert in this area of accounting. He shared his knowledge via blog posts to build credibility with his target audience.
  • The CEO’s number one tip is how bad things can actually be good… and conversely, good things can be bad. Read: do your best with what you’ve got.

Not to take away from the great leadership and team in place executing, but it’s powerful to see how a MUST-have product can help a company grow.

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Negative Churn: Continued Growth Beyond New Customers

Negative churn – a major milestone for any company. Negative churn occurs when the growth of revenue offsets the loss of revenue from customers who leave (churn). This is a great metric for SaaS companies, especially.
Churn, if you recall, is the rate of loss of customers (leave). Just about every company will experience loss of customers in recurring revenue companies.
In effect, companies who have negative churn can continue to grow without having to sign any new customers (at least, short-term). That is a remarkable milestone, and one that is highly valued by investors. It points to growth opportunities with up-sell and cross-sell opportunities as well as high retention. It points to a loved company and its products.
Achieve low churn. Then, aim for negative churn. 
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Lessons from My First Year Working at Startup

One year ago, I announced I jumped full-time with a startup called SalesWise. It had been several years since I had worked for a company (April 2012, I left Chainalytics and the corporate/ consulting world). They say one year in consulting is like working seven years in “corporate” job. I’d say that’s more fitting to say from my one year at SalesWise, and hungry for more.
SalesWise is still an early-stage company. When I joined, I was the first business hire. It enabled me to get in on the ground, and start building out… well, everything – sales, marketing, customer success, and more.
A few lessons learned:
  • It’s been a lot harder. When I joined, I was thinking, “wow, the product is great! The two founders are experienced. The CEO has even started four with all four successful exits. This will be a rocket ship!” Not so much. Modern B2B sales is harder than most people think. Every new startup is a new company with, likely, a new idea. There are tools to make things easier, better equipped, but it’s still very, very hard to build a company.
  • I’m doing what I feared I would – keep wanting to do more. I joined the company because I felt I was starting to distrust others. I joined to help me trust working with others. But no matter what, I catch myself wanting to do more, so I don’t have to rely on others. I think to myself how can I learn to program some, just so I can help speed things up. It’s crazy. I’m already manhandling the other sides of the business. I want us to be successful, and I have this insatiable hunger to do more – to test, to deliver, to sell. I need to specialize on my side of the wall, and let others specialize where I don’t.
  • There are so many tools to help a company… and confuse. The number of SaaS tools available for companies is daunting. There are so many analytics programs, customer success tools, support apps, marketing platforms, etc. It’s a dizzying array of programs to help a company know everything that’s happening, and to keep the company buzzing. However, it can be too much. I have four screens around me – most split-screened so I can monitor everything. Is it too much? Maybe. The key is using each tool effectively for what it’s supposed to do.
  • A passionate, highly intelligent team members is more amazing. I didn’t meet everyone at the company before I joined. However, it’s been fascinating the personalities at the company. Each person is highly, highly intelligent – perhaps the smartest folks I’ve had the pleasure of working with. Most are very passionate about the direction of the company, and they truly own their areas of expertise. We have plenty of passionate debates during team lunches. They’re all healthy, and they give perspective to create the best approach.
  • Following a highly successful leader who is also very transparent and honest is… amazing.I can’t tell you how often I’ve been amazed at how my CEO has been open about our company’s direction and funding. He’s listened to everyone’s input, and though he may disagree at points, he hears us all out. He’s taken time to share his intentions while looking out for our own ownership stakes in the company, and he’s making decisions in the best interest of us, our customers, and our investors. There hasn’t been as much of explicit 1-on-1 mentoring with me, per se, but I’ve been absorbing everything just in everyday interactions. It’s been fascinating, refreshing, and hugely motivating.

When I started, we were launching a product for sales (reps and leaders). We had no customers. We pivoted a couple times last year before landing on our current direction. We’re now selling specifically for sales leadership. We have a dozen customers who are passionate about what we’re doing, and we’re seeing engagement numbers climb steadily. Our close rates are incredibly high at about 4 of 5 trials converting. We just raised $1.3M to build a repeatable customer acquisition process before cranking up the machine. We’ve hired several sales professionals, and are now in the market looking for a marketer. We’re building out the Business Relationship Intelligence category. It’s going to be an exciting next year.
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Sales and Customer Success Hinge On WOW

I’ve been reading a lot about customer success and onboarding recently. It’s top of mind for me these days as we continue to onboard more and more customers at SalesWise. Two articles that have stood out: 

The Slack article was more about go-to-market strategy. In it were important tenets that were also echoed by WP Curve. This includes the importance of getting to the “wow” factor.
I wrote a post before titled “U in UX Stands for You: The Evolution of Consumer Engagement”. I highlighted the importance of early user experience like Spotify which enables users to get up and running quickly. Then, I highlighted the importance of empty-state design in “Starting With Nothing: Solving Early Churn With Empty State Design”.
After reading the WP Curve and Slack articles about the “wow” factor, it’s important today more than ever to present value immediately. For Slack, the “wow” moment was user engagement. For Spotify, it was signing up and browsing channels before listening. For a marketing automation platform, it’s seeing an automated campaign in action.
At SalesWise, many customers share their “wow” moment — getting real-time visibility into insightful data they hadn’t seen before. We do this with simple, secure Oauth for services like Gmail and Salesforce. In 10 minutes, an entire company can be up and running. The algorithms and heuristics work in the background to organize it all. That’s how we get to “wow” fast.
One President of a customer company said it simply: “You deliver on the SaaS promise”. That is, our platform just worked. Some customers share how other SaaS platforms they started trials with took too much effort to set up. Even in today’s world of SaaS and APIs, set-up friction is high.
Body Boss, back in the day, required too much effort to get to the “wow”. We required too much setup of strength coaches. Thus, we had many coaches bail after the first and second visits.
It’s critical for companies to recognize “wow” moments, and how to deliver that as soon as a user signs up. The SalesWise “wow” factor is seeing real-time sales activities automatically organized. We’re developing some new features that will highlight even more “wow”. We’ll be able to help our customers instantly identify sales opportunities that may fall through the cracks. This will drive immediate value by spurring a sales rep to take action. This, in itself, will be massive in value to our customers.
Find your “wow” factor, and deliver it as soon as possible. Find ways to present value and insights without having to do much set up. Show enough to get the user to get value. You can always get more data and do more set up once the user sees immediate value.
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5 Highlights from Measuring B2B Tech Engagement Talk

I am a big fan of data, analytics, metrics and… you get it. So much so, I’ve recently published several posts:

Fitting that one of my colleagues shared a talk by the Director of Marketing, Diana Smith, of technology startup Segment: “Measuring for B2B Engagement”.

In this talk, Diana shares what and how to measure engagement in technology products/ services, especially (my favorite). It’s a quick sub-14’ video, but if you’re looking for the highlights, I’ve got you covered.
  • Develop a Tracking Plan. What events to track? Why? What properties should be captured? Location of the events to track (i.e. website page, app screen)?
  • Key to the Tracking Plan is defining a naming convention. The naming convention should start with the Object (i.e. user, account, document) and the action (i.e. signUp, delete, edit). Consistent naming conventions enable teams to easily and quickly align on metrics. Examples: userSignUp, accountDelete, documentEdit.
  • Question WHY you want to track. Understand WHAT you want to track and why. Start with 3-5 events. Diana recommends these three areas to start: Discovery(how the user has displayed interest), Engage (how users explore top feature(s)), and Convert (where users pay).
  • Pre-signup, be simple. When considering what to track pre-signup, track the origin of people hitting entering the site and conversion. Use Google Analytics.
  • Think about the important events of an app/ user from the very beginning. This enables everything downstream to be smoother and easier.

Diana gave a decent high-level talk on tracking without getting too technical. Check it out, and ensure your tracking aligns enables your business/ growth strategy.

What are your thoughts on event tracking and analytics? What are the metrics you care about and why? 
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Vertical SaaS? Horizontal SaaS? It’s All News to Me

Not sure why, but I have only recently heard of a term called “Vertical SaaS”. Okay, there’s also “Horizontal SaaS”, too. Based on some light research, looks like vertical SaaS is also a growing trend and the number of companies fewer than horizontal SaaS providers.
Vertical SaaS borrows its moniker from the concept of vertical integrationwhereby there is more control over a supply chain from raw materials to point-of-sale. Here, vertical SaaS companies focus on a niche market (industry) offering a solution that enables more process control.
Horizontal SaaS providers get really good at a particular offering, and widen their market to reach scale. Their focus is on breadth of market, and thus, its sales and marketing strategies can require more resources.
Many vertical SaaS companies (such as Veeva Systems, Guidewire, Fleetmatics) are doing well usurping legacy systems of traditionally slow-tech-adoption industries. Here, vertical companies develop a best-of-breed product, and focus on selling only into that industry. This tends to create “winner-take-all” situations, especially given the smaller number of vertical SaaS providers.
Horizontal companies continue to expand and can create extreme competition due to its vast go-to-market strategy. Horizontal SaaS companies tend to create category winners like Dropbox, Zendesk, and Salesforce.
There isn’t necessarily a “better” strategy, but it’s clear that go-to-market strategies, product strategies, and organizational structures are highly affected by going horizontal or vertical.
Resources:

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Start Out Focused: Lessons from Intercom’s Cofounder (pt 2)

Leaning on Des Traynor’srecent talk “Lessons Learned In Growing A Product”, I want to highlight Des’ message on starting out very focused and simple. Des cited Gall’s Law around systems theory to build a successful company.

A complex system that works is invariably found to have evolved from a simple system that worked. A complex system designed from scratch never works and cannot be patched up to make it work. You have to start over with a working simple system. – John Gall (1975, p.71)**

I’ve written plenty of times about starting very focused including a chapter in Postmortem of a Failed Startup titled “Start Small and Targeted and KILL IT.” I believe it’s the smartest, quickest, and cheapest route to building a successful product/ company.
Some key points from Des about starting simple:
  • “Insanely big ideas should start insanely small”
  • Salesforce’s website started way back in the day with two calls-to-action/ messaging: “Free trial/ membership” and “Forecast the Pipeline”
  • “Start not where successful companies are, but where they started.” This point resonated with me greatly, too, because many big, successful companies tend to start very small solving a major problem. Over time, its breadth of products and services grow pushing complexity and pricing beyond many companies (especially smaller). This creates a gap for new players to come in simple, small, and focused. (And thus, the circle of life…)
  • When you know the problem well, distill to workflows which you build features to enable
  • “A small list of ‘target users’ beats a big list of non-customers”. This point goes into the importance of knowing your audience and solving their real pains.

There are lots more good points from Des’ talk to which I highly recommend you check out.

What are some of your take-aways from Des’ talk? Any of these messages resonate with you? Why?
** Note: John Gall was an American author and pediatrician who wrote in 1975 a book, General systemantics : an essay on how systems work, and especially how they fail….
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Diligence on the Roadmap: Lessons from Intercom’s Cofounder

I watched one of Intercom’s cofounders, Des Traynor, give a talk “Lessons Learned In Growing A Product”. It was instantly one of my favorite talks giving a bit of conceptual, visionary/ motivational, and technical.
One of the tenets that really resonated with me was “be insanely diligent about roadmap”. He talks about how most new features are flops, and shares good practices in diligence. Here are some of the key points:
  • Understand the relationship between how often people use a feature to how many people use the feature. He illustrates a chart with “frequency of use” on the y-axis and the “number of users” on the x-axis. The features with high frequency and many people using them represented the core features
  • When improving features, consider improvements (“change”) in quality, importance, satisfaction, and frequency
  • To motivate more use, consider creating: habits, triggers, rewards, defaults, context, and, generally, more uses
  • When launching a product: “exit by feature set or by a deadline, but above all, exit”. The point here is you can go on and on trying to develop a product, but launching enables testing and market traction

There are a ton more golden nuggets in Des’ talk to which I’ll likely spread out over the next couple blog posts. (Yes, I enjoyed it that much.) I highly encourage everyone watch it, even if you don’t know much about startups or technology.

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8 Metrics from Proper Instrumentation of a Business and Its Product

I want to continue my post from Tuesday about the importance and value of instrumentation. Today, I want to share SaaS metrics that can be answered with proper instrumentation (operational and business).
  1. Cost of acquisition. This is cost to capture an unaffiliated buyer. Need to know the costs associated with closing this opportunity including marketing costs, engineering support, etc. For this metric, it’s important to track the flow and behaviors of a customer through websites, sales touches, etc.
  2. D1, D7, D14, D30 retention metrics. Here, D stands for “day” and the number refers to the number of days since a user first enters the system. This metric tracks the percentage of returning users to the service in D days –gauge “stickiness”.
  3. Open and Click-Through Rates of Emails. Many products these days have email engagement and nurture campaigns. Here, companies measure if users are opening these emails and, if applicable, are they clicking into a destination the company is looking for.
  4. Drop-off During Sign-up Process. Many products have multi-stage sign-ups which can deter and annoy users from completing sign-up. By measuring here, the company can quickly ascertain if the sign-up process needs to be simplified or be very valuable to motivate complete sign-up. If they never enter, they’ll never see the great product! (This, by the way, is why so many apps use Facebook, Twitter, Google login… plus, companies get personal data shared from those platforms.)
  5. In-App Engagement.This is a big bucket including what pages, tabs, profiles, features are viewed and used. You want to understand how users interact with the product – are they finding pages useful? Are features cumbersome?
  6. Customer Lifetime Value. Same concept of the revenue of a customer (or net profit) but extrapolated against the number of times a customer buys (subscription, multiple products, etc.).
  7. Churn.That is, what percentage of customers stop buying annually? Good annual churn for SaaS businesses according to Sixteen Ventures is 5-7%. High churn may point to poor value, mismanaged expectations, or an inherent problem in the product.
  8. Average Revenue per Customer. To be explicit, it’s total revenue divided by customer. In this case, revenue would naturally be weighted by where most of revenue comes from.

I get excited when a company properly instruments their products and services. It demonstrates tremendous maturity and understanding to recognize engagement data will drive confirmation (or rejection) of hypotheses, and thus, enables smarter business decisions.

What are some other metrics you find useful? How would you measure success in your company?
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Who’s poised to profit in this fragmented, online dating world of startups?

If you’re single and ready to mingle, chances are good you have a number of “online dating” apps on your phone. They’re everywhere — the usual suspects of Match.com, eHarmony, OkCupid (a Match company now actually), Plenty of Fish, etc. are joined by the swipe-addicting Tinder, Hinge, Twine, and so many more. Most of those apps and companies didn’t exist three years ago. However, this post isn’t about dating apps.

Looking across different industries, you see the same explosive growth in companies. From travel, you’ve got Travelocity, Expedia, Hotwire, Kayak, and Booking.com with more recent newcomers including Airbnb, Hipmunk, SafelyStay, etc. Even in the CRM space you had SAP, Oracle, etc. with their own solutions and then Salesforce has pretty much taken over, but you have to add in the SugarCRM, Zoho, and so many more. Now, let’s also add in the explosion of wearable technologies to be spearheaded by Google’s announcement of a designated OS called Android Wear. Yowza.
A couple posts ago, I shared some recent trends I had been seeing and perhaps not explicitly said, it’s apparent the suppliers of markets are growing — refer to “Trends for Startups and Ideas to Build the Future“. Each company with its own take on how to do “it” better. So what does this all mean? Where are we headed with all this fragmentation?
  • APIs are a great way for especially software and hardware players to integrate into existing platforms, and enable customers to get set up quickly.
  • The big players are establishing themselves as the common integration point creating another sustainability point with added revenue-stream implications — you can definitely see this in Apple’s App Store, SalesForce’s App Exchange, Facebook‘s ubiquitous login option, and even NCR’s Cloud Services.
  • Smaller startup players will have a frantic fight over the next years to stay in the game and relevant. Switching costs for customers are becoming much lower meaning the power is virtually all in the customers’ hands.
  • Hardware manufacturers are getting in on the exact with APIs such as Thalmic Labs’ Myo Band, Atlas Wearables, Jawbone Up, Logitech peripherals, etc.
  • There will likely be much consolidation in the markets over the next few years as the smaller players get gobbled up by other startups or by the big platform companies themselves. And of course, there will be the natural attrition of startups who just peter out.
  • There’s still significant opportunity for markets where there isn’t an established platform whereby large swaths of companies plug into. Or, you can be an integrator/ middleware connector by which startups connector through you to platforms
In the end, the the power lays largely with the buyers/ customers in many of these markets as suppliers are so vast. However, it also creates some stumbling blocks for customers to pick the right cloud platform. In the B2C market, for example, fragmentation creates an annoyance for many users where there may be, especially, a social aspect and communities are split. But in the end, customers do win with more innovative solutions in a competitive market. This time of market frenzy will last a few years, I believe, before the consolidations really take place. And at that time, the cycle will restart where startups will sprout up again creating opportunity.
What are your thoughts on today’s growth of companies and solutions? How do you think the markets will play out? 
And perhaps more for fun, what dating app are you on? 😉
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